LOAN AND SECURITY AGREEMENTSecurity Agreement |
|
|
You are currently viewing: This Security Agreement involves
JAZZ SEMICONDUCTOR, INC. | NEWPORT FAB, LLC | WACHOVIA CAPITAL FINANCE CORPORATION. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
|
|
|
|
[EXECUTION VERSION] LOAN AND SECURITY AGREEMENT by and among JAZZ SEMICONDUCTOR, INC. and NEWPORT FAB, LLC, as Borrowers and WACHOVIA CAPITAL FINANCE CORPORATION (WESTERN), as Lender Dated as of: January 6, 2006
i
ii
iii
iv This Loan and Security Agreement dated as of January 6, 2006 (this " Agreement ") is entered into by and among Jazz Semiconductor, Inc., a Delaware corporation (" Parent " as hereinafter further defined) and Newport Fab, LLC (d/b/a Jazz Semiconductor Operating Company), a Delaware limited liability company (" Operating Company " as hereinafter further defined, and Operating Company together with Parent, collectively, the " Borrowers " and each of them individually, a " Borrower " as hereinafter further defined), and Wachovia Capital Finance Corporation (Western), a California corporation (" Lender " as hereinafter further defined). W I T N E S S E T H: WHEREAS, Borrowers have requested that Lender enter into financing arrangements with Borrowers pursuant to which Lender may make loans and provide other financial accommodations to Borrowers; and WHEREAS, Lender is willing to make such loans and provide such financial accommodations to Borrowers on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. DEFINITIONS For purposes of this Agreement, the following terms shall have the respective meanings given to them below: 1.1 " Accounts " shall mean, as to each Borrower, all present and future rights of such Borrower to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or (d) arising out of the use of a credit, charge or debit card or information contained on or for use with such card. 1.2 " Accounts Sublimit " shall mean, at any time, the amount equal to $20,000,000, as reduced by any reduction thereof pursuant to Section 2.1(f) hereof. 1.3 " ACH Transactions " shall mean any overdrafts, cash management or related services, including the automatic clearing house transfer of funds by Lender or any of its Affiliates for the account of any Borrower or any of its Subsidiaries, in each case pursuant to agreements entered into with such Borrower or any of its Subsidiaries. 1.4 " Act " shall have the meaning set forth in Section 13.8 hereof. 1.5 " Adjusted Eurodollar Rate " shall mean, with respect to each Interest Period for any Eurodollar Rate Loan comprising part of the same borrowing (including conversions, extensions and renewals), the rate per annum determined by dividing (a) the London Interbank Offered Rate for such Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof, "Reserve Percentage" shall mean for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Loans is determined), whether or not Lender has any Eurocurrency liabilities subject to such reserve requirement at that time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to Lender. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage. 1.6 " Affiliate " shall mean, with respect to a specified Person, any other Person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds twenty percent (20%) or more of any class of Voting Stock of such Person or other equity interests in such Person, (b) any Person of which such Person beneficially owns or holds twenty percent (20%) or more of any class of Voting Stock or in which such Person beneficially owns or holds twenty percent (20%) or more of the equity interests and (c) any director or executive officer of such Person; provided , however , that with respect to Borrowers, no portfolio company held by The Carlyle Group shall be considered an "Affiliate" of Borrowers solely because of The Carlyle Group's ownership of such company. For the purposes of this definition, the term "control" (including with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise. 1.7 " Bank Products " shall mean any one or more of the following types of services or facilities extended to Borrowers or its Subsidiaries upon Borrowers request by a Bank Product Provider: (a) credit cards, (b) ACH Transactions, (c) Hedging Transactions, and (d) foreign exchange contracts. 1.8 " Bank Product Providers " shall mean Wachovia and any of its Affiliates. 1.9 " Bank Product Reserve " shall mean any and all reserves that Lender may establish from time to time with Borrowers' consent for the Bank Products provided by any Bank Product Provider which are then outstanding. 1.10 " Blocked Accounts " shall have the meaning set forth in Section 6.3 hereof. 1.11 " Borrowers " shall mean, collectively, the following (together with their respective successors and assigns): (a) Jazz Semiconductor, Inc., a Delaware corporation; (b) Newport Fab, LLC (d/b/a Jazz Semiconductor Operating Company), a Delaware limited liability company; and (c) any other Person that at any time after the date hereof becomes a Borrower; each sometimes being referred to herein individually as a " Borrower ". 1.12 " Borrowing Base " shall mean, at any time, the lesser of: (a) the sum of (i) with respect to Tranche A Loans, the amount equal the difference of (A) eighty-five percent (85%) of the Eligible Accounts of Borrowers, minus (B) Reserves relating to Accounts; plus (ii) with respect to Tranche B Loans, the amount equal to (A) the product of (I) seventy percent (70%) times (II) the "net orderly liquidation value" of the Eligible Equipment of Borrowers determined in a "balanced market", as such balanced market, as of any date of determination, shall be defined in the most recent appraisal of Equipment then received by Lender in accordance with Section 7.4 hereof, minus (B) Reserves other than those set forth in Section 1.12(a)(i) hereof; minus (iii) $5,000,000; (b) one hundred percent (100%) of the "net orderly liquidation value" of Eligible Equipment determined in a "weak market", as such weak market, as of any date of determination, shall be defined in the most recent appraisal of Equipment then received by Lender in accordance with Section 7.4 hereof; or 2 (c) the sum of the Accounts Sublimit plus the Equipment Sublimit. 1.13 " Borrowing Base Certificate " shall have the meaning given to such term in Section 7.1(a)(ii) hereof. 1.14 " Business Day " shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of California, the State of New York or the State of North Carolina, and a day on which the Reference Bank and Lender are open for the transaction of business, except that if a determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market or other applicable Eurodollar Rate market. 1.15 " Capital Expenditures " shall mean the Borrowers' maintenance capital expenditures in the amount of $11,000,000. 1.16 " Capital Leases " shall mean, as applied to any Person, any lease of (or any agreement conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee which in accordance with GAAP, is required to be reflected as a capital lease on the balance sheet of such Person. 1.17 " Capital Stock " shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of such Person's capital stock or partnership, limited liability company or other equity interests at any time outstanding, and any and all rights, warrants or options exchangeable for or convertible into such capital stock or other interests (but excluding any debt security that is exchangeable for or convertible into such capital stock). 1.18 " Carlyle Management Agreement " shall mean that certain Carlyle Management Agreement dated as of March 12, 2002, by and between Specialtysemi and TC Group, L.L.C., a Delaware limited liability company. 1.19 " Cash Equivalents " shall mean, at any time, (a) any evidence of Indebtedness with a maturity date of ninety (90) days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof; provided , that the full faith and credit of the United States of America is pledged in support thereof; (b) certificates of deposit or bankers' acceptances with a maturity of ninety (90) days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $1,000,000,000; (c) commercial paper (including variable rate demand notes) with a maturity of ninety (90) days or less issued by a corporation (except an Affiliate of any Borrower) organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. or at least P-1 by Moody's Investors Service, Inc.; (d) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $1,000,000,000; (e) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within ninety (90) days or less from the date of acquisition; provided , that the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985; (f) investments in money market funds and mutual funds which invest substantially all of their assets in securities of the types described in clauses (a) through (e) above; and (g) investments in any Borrower's investment plan as in effect on the Effective Date or as previously disclosed to and approved by Lender. 3 1.20 " Change of Control " shall mean (a) the transfer (in one transaction or a series of transactions) of all or substantially all of the assets of any Borrower to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), other than as permitted in Section 9.7 hereof; (b) the liquidation or dissolution of any Borrower or the adoption of a plan by the stockholders of any Borrower relating to the dissolution or liquidation of such Borrower, other than as permitted in Section 9.7 hereof; (c) the acquisition by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), except for one or more Permitted Holders, of beneficial ownership, directly or indirectly, of twenty percent (20%) of the voting power of the total outstanding Voting Stock of Parent or the Board of Directors of Parent; (d) following any initial public offering of any Borrower, during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board of Directors of such Borrower (together with any new directors who have been appointed by any Permitted Holder, or whose nomination for election by the stockholders of such Borrower, as the case may be, was approved by a vote of at least sixty-six and two-thirds percent (66 2 / 3 %) of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of such Borrower then still in office; or (e) the failure of Parent to own directly or indirectly one hundred (100%) percent of the voting power of the total outstanding Voting Stock of any other Borrower other than as permitted in Section 9.7 hereof. 1.21 " Code " shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto. 1.22 " Collateral " shall have the meaning set forth in Section 5.1 hereof. 1.23 " Collateral Access Agreement " shall mean an agreement in writing, in form and substance reasonably satisfactory to Lender, from (a) any lessor of premises to any Borrower where Collateral with a fair market value in excess of $1,000,000 in the aggregate is stored, or (b) any other person (i) to whom any Collateral with a fair market value in excess of $1,000,000 in the aggregate is consigned or (ii) who has custody, control or possession of any such Collateral with a fair market value in excess of $1,000,000 in the aggregate or (iii) is otherwise the owner or operator of any premises on which (A) any financial books and records of any Borrower is located or (B) any Borrower stores, manufactures or fabricates any of such Collateral with a fair market value in excess of $1,000,000 in the aggregate (including, without limitation, as of the Effective Date, the following location: 4321 Jamboree Road, Newport Beach, California 92660), in favor of Lender with respect to such Collateral at such premises or otherwise in the custody, control or possession of such lessor, consignee or other person. 1.24 " Conexant " shall mean Conexant Systems, Inc., a Delaware corporation. 1.25 " Conexant Lease Agreements " shall mean collectively: (i) the Half Dome Lease Agreement between Specialtysemi and Conexant dated March 12, 2002, as amended, supplemented or otherwise modified from time to time; and (ii) the El Capitan Lease Agreement between Specialtysemi and Conexant dated March 12, 2002, as amended, supplemented or otherwise modified from time to time. 1.26 " Consolidated EBITDA " shall mean, with respect to any Person for any period, Consolidated Net Income of such Person and its Subsidiaries for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) Consolidated Net Interest Expense of such Person and its Subsidiaries, amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including unused line fees and administrative fees and charges with respect to the Credit Facility), (c) depreciation and amortization expense, (d) amortization or impairment of intangibles (including, but not limited to, goodwill) and organization costs, (e) any extraordinary, unusual or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such 4 period, losses on sales of assets outside of the ordinary course of business), (f) any other non-cash charges, expenses or losses, including in relation to earn-outs and similar obligations (except to the extent such charges, expenses or losses represent an accrual of or reserve for cash expenses in any future period or an amortization of a prepaid cash expense paid in a prior period), (g) restructuring and integration costs related to any acquisition transaction or Joint Venture permitted hereby, (h) stock-option based compensation expenses, (i) transaction costs, fees and expenses related to this Agreement, or related to a completed acquisition transaction or a Joint Venture transaction permitted hereby, or related to a potential initial public offering of equity, (j) all fees and expenses paid pursuant to the Management Agreements, only in the event such payments have not actually been made in cash in the most recent fiscal quarter and continue not to be made, (k) the non-cash portion of straight-line rent expense, (l) proceeds from any business interruption insurance (in the case of this clause (l) to the extent not reflected as revenue or income in such statement of such Consolidated Net Income), (m) losses recognized and expenses incurred in connection with the effect of currency and exchange rate fluctuations on intercompany balances and other balance sheet items and (n) cash expenses relating to earn-outs and similar obligations and minus , to the extent included in the statement of such Consolidated Net Income for such period, the sum of (i) interest income (except to the extent deducted in determining Consolidated Net Interest Expense), (ii) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business), (iii) any other non-cash income or gains (other than the accrual of revenue in the ordinary course), all as determined on a consolidated basis, (iv) cash payments in connection with "straight-line" rent expense which exceed the amount expensed in respect of such rent expense and (v) gains realized and income accrued in connection with the effect of currency and exchange rate fluctuations on intercompany balances and other balance sheet items. 1.27 " Consolidated Net Income " shall mean, with respect to any Person for any period, the consolidated net income (or loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. 1.28 " Consolidated Net Interest Expense " shall mean, with respect to any Person for any period, (a) total cash interest expense (including that attributable to capital lease obligations) of such Person and its Subsidiaries for such period with respect to all outstanding Indebtedness of such Person and its Subsidiaries, minus (b) total cash interest income of such Person and its Subsidiaries for such period, in each case determined in accordance with GAAP. 1.29 " Contribution Agreement " shall mean that certain Contribution Agreement among Specialtysemi, Conexant and Carlyle Capital Investors, L.L.C. dated February 23, 2002, as amended, supplemented and otherwise modified from time to time. 1.30 " Credit Facility " shall mean the loans and letters of credit provided to or for the benefit of any Borrower pursuant to Sections 2.1 and 2.2 hereof. 1.31 " Credit Party " shall mean, collectively, each Borrower, each Subsidiary thereof (other than any Foreign Subsidiary, any Joint Venture and Jazz WOFE), and each Obligor. 1.32 " Customer Concession Reserve " shall mean a Reserve established for concessions made or reasonably expected to be made by any Borrower to its customers consisting of credits other than product returns, which Reserve shall be calculated quarterly based on sales made during the twelve-month period prior to, and ending on, any date of determination and the concessions actually made during such period and to the extent reflected on such Borrower's books and records consistent with its historical practices. 1.33 " Default " shall mean an act, condition or event which with notice or passage of time or both would constitute an Event of Default. 5 1.34 " Deposit Account Control Agreement " shall mean an agreement in writing, in form and substance reasonably satisfactory to Lender, by and among Lender, the Borrower with a deposit account (other than any deposit account specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Borrower's salaried employees) at any bank and the bank at which such deposit account is at any time maintained, which provides that such bank will comply with instructions originated by Lender directing disposition of the funds in the deposit account without further consent by such Borrower and has such other terms and conditions as Lender may reasonably require. 1.35 " Effective Date " shall mean the date hereof. 1.36 " Eligible Accounts " shall mean Accounts created by each Borrower that in each case satisfy the criteria set forth below as determined by Lender. Accounts shall be Eligible Accounts if: (a) such Accounts arise from the actual and bona fide sale and delivery of goods by such Borrower or rendition of services by such Borrower in the ordinary course of its business which transactions are completed in accordance with the terms and provisions contained in any documents related thereto; (b) such Accounts are not unpaid more than sixty (60) days past due or ninety (90) days after the date of the original invoice for them; (c) such Accounts comply with the terms and conditions contained in Section 7.2(b) of this Agreement; (d) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return, sale on approval, or other terms under which payment by the account debtor may be conditional or contingent; (e) the chief executive office of the account debtor with respect to such Accounts is located in the United States of America or Canada ( provided , that , at any time promptly upon Lender's request, such Borrower shall either (A) exclude Accounts of an account debtor with its chief executive office or principal place of business in Canada unless any such Account is otherwise reasonably acceptable to Lender (subject to such lending formula with respect thereto as Lender may determine) or (B) execute and deliver, or cause to be executed and delivered, such other agreements, documents and instruments as may be required by Lender to perfect the security interests of Lender in those Accounts of an account debtor with its chief executive office or principal place of business in Canada in accordance with the applicable laws of the Province of Canada in which such chief executive office or principal place of business is located and take or cause to be taken such other and further actions as Lender may reasonably request to enable Lender as secured party with respect thereto to collect such Accounts under the applicable Federal or Provincial laws of Canada), or if the chief executive office and principal place of business of the account debtor with respect to such Accounts is located other than in the United States of America or Canada, then if either: (i) the account debtor has delivered to such Borrower an irrevocable letter of credit issued or confirmed by a bank satisfactory to Lender and payable only in the United States of America and in U.S. dollars, sufficient to cover such Account, in form and substance satisfactory to Lender and if required by Lender, the original of such letter of credit has been delivered to Lender or Lender's agent and the issuer thereof, and such Borrower has complied with the terms of Section 5.2(f) hereof with respect to the assignment of the proceeds of such letter of credit to Lender or naming Lender as transferee beneficiary thereunder, as Lender may specify, (ii) such Account is subject to credit insurance payable to Lender issued by an insurer and on terms and in an amount reasonably acceptable to Lender, (iii) such Account is guaranteed in form, manner and substance reasonably satisfactory to Lender by an affiliated entity of such 6 Account Debtor located in the U.S., or (iv) such Account is otherwise reasonably acceptable to Lender (subject to such lending formula with respect thereto as Lender may determine); (f) such Accounts do not consist of progress billings (such that the obligation of the account debtors with respect to such Accounts is conditioned upon such Borrower's satisfactory completion of any further performance under the agreement giving rise thereto), bill and hold invoices or retainage invoices, except as to bill and hold invoices, if Lender shall have received an agreement in writing from the account debtor, in form and substance reasonably satisfactory to Lender, confirming the unconditional obligation of the account debtor to take the goods related thereto and pay such invoice; (g) the account debtor with respect to such Accounts has not asserted a counterclaim, defense or dispute, or such counterclaim, defense or dispute is not otherwise reflected in such Borrower's financial statements, or such account debtor is not owed or does not claim to be owed any amounts that may give rise to any right of setoff or recoupment against such Accounts (but the portion of the Accounts of such account debtor in excess of the amount at any time and from time to time owed by such Borrower to such account debtor or claimed owed by such account debtor shall be deemed Eligible Accounts to the extent that such portion would otherwise be eligible as "Eligible Accounts" pursuant to this Section); (h) there are no facts, events or occurrences which would materially impair the validity, enforceability or collectability of such Accounts; (i) such Accounts are subject to the first priority, valid and perfected security interest of Lender and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any liens except those permitted in this Agreement; (j) other than Conexant and any other Person that is an Affiliate of any Borrower because a director or officer of such Person serves as a director of such Borrower, neither the account debtor nor any officer or employee of the account debtor, as applicable, with respect to such Accounts is an officer, employee, agent or other Affiliate of any Borrower; (k) the account debtors with respect to such Accounts are not any foreign government, the United States of America, any State, political subdivision, department, agency or instrumentality thereof, unless, if the account debtor is the United States of America, any State, political subdivision, department, agency or instrumentality thereof, upon Lender's request, the Federal Assignment of Claims Act of 1940, as amended or any similar State or local law, if applicable, has been complied with in a manner reasonably satisfactory to Lender; (l) there are no proceedings or actions which are pending against the account debtors with respect to such Accounts which could reasonably be expected to result in any material adverse change in any such account debtor's financial condition (including, without limitation, any bankruptcy, dissolution, liquidation, reorganization or similar proceeding); (m) the aggregate amount of such Eligible Accounts owing by a single account debtor (other than Conexant and Skyworks) do not constitute more than ten percent (10%) of the aggregate amount of all otherwise Eligible Accounts, and such Accounts owing by Conexant do not constitute more than twenty percent (20%) of the aggregate amount of all otherwise Eligible Accounts, and such Accounts owing by Skyworks do not constitute more than forty percent (40%) of the aggregate amount of all otherwise Eligible Accounts (but the portion of the Accounts not in excess of the applicable percentages shall be deemed Eligible Accounts to the extent that such portion would otherwise be eligible as "Eligible Accounts" pursuant to this Section); 7 (n) such Accounts are not owed by an account debtor who has Accounts unpaid more than sixty (60) days past due or ninety (90) days after the original invoice date for them which constitute more than fifty (50%) percent of the total Accounts of such account debtor; (o) the account debtor is not located in a state requiring the filing of a Notice of Business Activities Report or similar report in order to permit such Borrower to seek judicial enforcement in such State of payment of such Account, unless such Borrower has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then current year or such failure to file and inability to seek judicial enforcement is capable of being remedied without any material delay or material cost; (p) such Accounts are not non-trade Accounts, including without limitation billings for facility services and repairs; and (q) such Accounts are not Accounts that have been paid or otherwise satisfied by customer deposits, except to the extent in excess of such deposits, maintained by any Borrower. Any new criteria for Eligible Accounts may only be established by Lender in good faith based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Lender has no notice thereof prior to the date hereof, in either case under clause (i) or (ii) which materially adversely affects or could reasonably be expected to materially adversely affect the Eligible Accounts. Any Accounts that are not Eligible Accounts shall nevertheless be part of the Collateral. 1.37 " Eligible Equipment " shall mean, as to each Borrower, Equipment of such Borrower used in the ordinary course of such Borrower's business, that in each case satisfy the criteria set forth below as reasonably determined by Lender. Eligible Equipment shall not include: (a) Equipment located outside the United States; (b) items of Equipment that are or have become fixtures other that trade fixtures which are readily removable from the premises on which they are located; (c) leased Equipment; (d) Equipment subject to a lien or security interest of any Person other than Lender except for non-consensual liens or security interests that are permitted under Sections 9.8(b), (c) or (d) hereof; (e) worn-out, obsolete or out-of-service Equipment; (f) Equipment acquired by any Borrower after the date hereof located on or affixed to the Premises (as defined in that certain Landlord Agreement dated as of the date hereof, by and among Parent, Conexant and Lender (the " Conexant Landlord Agreement ") with respect to which Equipment the parties to such Conexant Landlord Agreement shall not have agreed upon and delivered a revised Exhibit B to such Conexant Landlord Agreement pursuant to the terms thereof, which revised Exhibit B shall designate such Equipment as added to or included within the definition of "Personal Property" as set forth in the Conexant Landlord Agreement; and (g) any individual items of Equipment with an original cost or purchase price of less than $10,000. Any new criteria for Eligible Equipment may only be established by Lender in good faith based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Lender has no notice thereof prior to the date hereof, in either case under clause (i) or (ii) which materially adversely affects or could reasonably be expected to materially adversely affect the Eligible Equipment in the good faith determination of Lender. Any Equipment that is not Eligible Equipment shall nevertheless be part of the Collateral. 1.38 " Environmental Laws " shall mean all foreign, Federal, State and local laws (including common law), legislation, rules, codes, licenses, permits (including any conditions imposed therein), authorizations, judicial or administrative decisions, injunctions or agreements between any Borrower and any Governmental Authority, (a) relating to pollution and the protection, preservation or restoration of the environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety, (b) relating to the exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, 8 production, release or disposal, or threatened release, of Hazardous Materials, or (c) relating to all laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials. The term "Environmental Laws" includes (i) the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable state counterparts to such laws and (iii) any common law or equitable doctrine that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Materials. 1.39 " Equipment " shall mean, as to each Borrower, all of such Borrower's now owned and hereafter acquired equipment, wherever located, including machinery, data processing and computer equipment, computer hardware, computer software (whether owned or licensed and including embedded software), vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located. 1.40 " Equipment Sublimit " shall mean the amount set forth on Schedule 1.40 with respect to the period set forth opposite such amount. 1.41 " ERISA " shall mean the Employee Retirement Income Security Act of 1974, together with all rules, regulations and interpretations thereunder or related thereto. 1.42 " ERISA Affiliate " shall mean any person required to be aggregated with any Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code. 1.43 " ERISA Event " shall mean (a) any "reportable event", as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Pension Plan, other than events as to which the requirement of notice has been waived in regulations by the Pension Benefit Guaranty Corporation; (b) the adoption of any amendment to a Pension Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) a complete or partial withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Pension Plan; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (f) the imposition of any liability under Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower or any other Credit Party in excess of $1,000,000 and (g) any other event or condition with respect to a Plan including any Pension Plan subject to Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate that could reasonably be expected to result in liability of any Borrower in excess of $1,000,000. 1.44 " Eurodollar Rate Loans " shall mean any Loans or portion thereof on which interest is payable based on the Adjusted Eurodollar Rate in accordance with the terms hereof. 1.45 " Event of Default " shall mean the occurrence or existence of any event or condition described in Section 10.1 hereof. 1.46 " Excess Availability " shall mean the amount calculated at any date, equal to: (a) the lesser of: (i) the Borrowing Base and (ii) the Maximum Credit, minus (b) the sum of: (i) the amount of all then outstanding and unpaid Obligations of Borrowers (but not including for this purpose Obligations of 9 Borrowers arising pursuant to the then outstanding aggregate principal amount of any outstanding Letter of Credit Obligations and Obligations of Borrowers for interest and other amounts not then due and payable), plus (ii) the amount of all Reserves then established and outstanding in respect of Letter of Credit Obligations, plus (iii) the aggregate amount of all then outstanding and unpaid trade payables and other obligations of each Borrower which are outstanding more than sixty (60) days past due as of the end of the immediately preceding month (other than trade payables or other obligations being contested or disputed by such Borrower in good faith), plus (iv) without duplication, the amount of checks issued by each Borrower to pay trade payables and other obligations which are more than sixty (60) days past due as of the end of the immediately preceding month (other than trade payables or other obligations being contested or disputed by such Borrower in good faith), but not yet sent. 1.47 " Exchange Act " shall mean the Securities Exchange Act of 1934, together with all rules, regulations and interpretations thereunder or related thereto. 1.48 " Executive Order " shall have the meaning given to such term in Section 9.20 hereof. 1.49 " Existing Letters of Credit " shall mean, collectively, the letters of credit issued for the account of a Borrower or for which such Borrower is otherwise liable listed on Schedule 1.49 hereto, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. 1.50 " Financing Agreements " shall mean, collectively, this Agreement and all notes, guarantees, security agreements, deposit account control agreements, investment property control agreements, intercreditor agreements and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by any Borrower or any Obligor in connection with this Agreement. 1.51 " Fixed Charge Coverage Ratio " shall mean the ratio for the applicable period of (a) Consolidated EBITDA to (b) Consolidated Net Interest Expense plus cash payments for taxes plus the current portion of scheduled debt repayments plus Capital Expenditures. 1.52 " Foreign Assets Control Regulations " shall have the meaning given to such term in Section 9.20 hereof. 1.53 " Foreign Subsidiary " shall mean any Subsidiary of any Borrower incorporated or organized under the laws of any jurisdiction other than a state of the United States of America or the District of Columbia. 1.54 " Funding Bank " shall have the meaning given to such term in Section 3.3(a) hereof. 1.55 " GAAP " shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board which are applicable to the circumstances as of the date of determination consistently applied, except that, for purposes of Section 9.17 hereof, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements delivered to Lender prior to the date hereof. 1.56 " Guaranty " shall mean a Guaranty and Security Agreement executed by a Subsidiary (other than a Foreign Subsidiary) of any Borrower in favor of Lender and delivered pursuant to Section 9.7(b), Section 9.10(h) or Section 9.10(i) hereof. 1.57 " Governmental Authority " shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, and any public entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. 10 1.58 " Hazardous Materials " shall mean any hazardous, toxic or dangerous substances, materials and wastes, including hydrocarbons (including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or any other similar substances, materials, or wastes and including any other substances, materials or wastes that are or become regulated under any Environmental Law (including any that are or become classified as hazardous or toxic under any Environmental Law). 1.59 " Hedging Transactions " shall mean (a) any and all rate swap transactions, basis swaps, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options, forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transaction, currency options or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, or (b) any and all transactions of any kind, and the related confirmations, that are subject to the terms or conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., or any other master agreement, as amended, restated, extended, supplemented or otherwise modified in writing from time to time, including but not limited to, any such obligations or liabilities under any such agreement. 1.60 " Indebtedness " shall mean, with respect to any Person, any liability, whether or not contingent, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes, debentures or similar instruments; (b) representing the balance deferred and unpaid of the purchase price of any property or services (other than an account payable to a trade creditor (whether or not an Affiliate) incurred in the ordinary course of business of such Person and payable in accordance with customary trade practices); (c) all obligations as lessee under leases which have been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation, contingent or otherwise, of such Person to pay or be liable for the payment of any indebtedness described in this definition of another Person, including, without limitation, any such indebtedness, directly or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof, or to maintain solvency, assets, level of income, or other financial condition; (e) all obligations with respect to redeemable stock and redemption or repurchase obligations under any Capital Stock or other equity securities issued by such Person which obligations become due prior to the maturity date hereof; (f) all reimbursement obligations and other liabilities of such Person with respect to surety bonds (whether bid, performance or otherwise), letters of credit, banker's acceptances, drafts or similar documents or instruments issued for such Person's account; (g) all indebtedness of such Person in respect of indebtedness of another Person for borrowed money or indebtedness of another Person otherwise described in this definition which is secured by any consensual lien, security interest, collateral assignment, conditional sale, mortgage, deed of trust, or other encumbrance on any asset of such Person, whether or not such obligations, liabilities or indebtedness are assumed by or are a personal liability of such Person, all as of such time, provided that if such indebtedness is not assumed by such Person, the amount of such indebtedness shall be the lesser of the fair market value of the property subject to such lien or encumbrance and the amount of such indebtedness; (h) all obligations, liabilities and indebtedness of such Person (marked to market) arising under swap agreements, cap agreements and collar agreements and other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency or commodity values; (i) indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer to the extent such Person is liable therefor as a 11 result of such Person's ownership interest in such entity, except to the extent that the terms of such indebtedness expressly provide that such Person is not liable therefor or such Person has no liability therefor as a matter of law and (j) the principal and interest portions of all rental obligations of such Person under any synthetic lease or similar off-balance sheet financing where such transaction is considered to be borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP. 1.61 " Indemnitee " shall have the meaning given to such term in Section 11.4 hereof. 1.62 " Information Certificate " shall mean the Information Certificate of Borrowers constituting Exhibit A hereto containing material information with respect to Borrowers, their businesses and assets provided by or on behalf of Borrowers to Lender in connection with the preparation of this Agreement and the other Financing Agreements and the financing arrangements provided for herein. 1.63 " Intellectual Property " shall mean, as to each Borrower, all of such Borrower's now owned and hereafter arising or acquired: patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, copyright applications, copyright registrations, trademarks, servicemarks, trade names, trade styles, trademark and service mark applications, and licenses and rights to use any of the foregoing and all applications, registrations and recordings relating to any of the foregoing as may be filed in the United States Copyright Office, the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof, any political subdivision thereof or in any other country or jurisdiction, together with all rights and privileges arising under applicable law with respect to any Borrower's use of any of the foregoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights to sue for past, present and future infringement of any of the foregoing; inventions, trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals, and operating standards; goodwill (including any goodwill associated with any trademark or servicemark, or the license of any trademark or servicemark); customer and other lists in whatever form maintained; trade secret rights, copyright rights, rights in works of authorship, domain names and domain name registrations; software and contract rights relating to computer software programs, in whatever form created or maintained. 1.64 " Interest Period " shall mean for any Eurodollar Rate Loan, a period of approximately one (1), two (2), three (3), or six (6) months duration as Borrowers may elect, the exact duration to be determined in accordance with the customary practice in the applicable Eurodollar Rate market; provided , that, Borrowers may not elect an Interest Period which will end after the last day of the then-current term of this Agreement. 1.65 " Interest Rate " shall mean, (a) (i) as to Tranche A Loans that are Prime Rate Loans, a rate equal to three quarters of one percent (0.75%) per annum in excess of the Prime Rate, and (ii) as to Tranche B Loans that are Prime Rate Loans, a rate equal to one percent (1.00%) per annum in excess of the Prime Rate, (b) (i) as to Tranche A Loans that are Eurodollar Rate Loans, a rate equal to two and one-half percent (2.50%) per annum in excess of the Adjusted Eurodollar Rate, and (ii) as to Tranche B Loans that are Eurodollar Rate Loans, a rate equal to two and three-quarters percent (2.75%) per annum in excess of the Adjusted Eurodollar Rate (in each case, based on the London Interbank Offered Rate applicable for the Interest Period selected by Borrowers as in effect two (2) Business Days prior to the commencement of the Interest Period, whether such rate is higher or lower than any rate previously quoted to any Borrower). 1.66 " Inventory " shall mean, as to each Borrower, all of such Borrower's now owned and hereafter existing or acquired goods, wherever located, which (a) are leased by such Borrower as lessor; (b) are held by such Borrower for sale or lease or to be furnished under a contract of service; (c) are furnished by such Borrower under a contract of service; or (d) consist of raw materials, work in process, finished goods or materials used or consumed in its business. 12 1.67 " Investment Property Control Agreement " shall mean an agreement in writing, in form and substance reasonably satisfactory to Lender, by and among Lender, any Borrower and any securities intermediary, commodity intermediary or other person who has custody, control or possession of any investment property of such Borrower, acknowledging that such securities intermediary, commodity intermediary or other person has custody, control or possession of such investment property on behalf of Lender, that it will comply with entitlement orders originated by Lender with respect to such investment property, or other instructions of Lender, and has such other terms and conditions as Lender may reasonably require. 1.68 " Jazz WOFE " shall mean Jazz Semiconductor (Shanghai) Co., Ltd., a China Wholly Owned Foreign Entity, organized and existing under the laws of China. 1.69 " Joint Venture " shall mean (a) Operating Company's partnerships with Advanced Semiconductor Manufacturing Corporation, a company organized and existing under the laws of Shanghai PRC, and Hua Hong NEC Electronics Co., Ltd., a company organized and existing under the laws of Shanghai PRC, and (b) following the date hereof, Operating Company's other partnerships or joint ventures with any Person that is not a wholly owned Subsidiary of a Borrower. 1.70 " Lender " shall mean Wachovia Capital Finance Corporation (Western), a California corporation, and its successors and permitted assigns. 1.71 " Lenders " shall mean, collectively, the financial institutions who are signatories hereto as Lenders and other Persons made a party to this Agreement as a lender in accordance with Section 13.6 hereof, and their respective successors and permitted assigns. 1.72 " Lender Payment Account " shall mean account no. 5000000030321 of Lender at Wachovia Bank, National Association or such other account of Lender as Lender may from time to time designate to Borrowers as the Lender Payment Account for purposes of this Agreement. 1.73 " Letter of Credit Documents " shall mean, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk or (b) any collateral security for such obligations. 1.74 " Letter of Credit Limit " shall mean $4,000,000. 1.75 " Letter of Credit Obligations " shall mean, at any time, the sum of (a) the aggregate undrawn amount of all Letters of Credit outstanding at such time, plus (b) the aggregate amount of all drawings under Letters of Credit for which the issuer thereof has not at such time been reimbursed. 1.76 " Letters of Credit " shall mean all letters of credit (whether documentary or stand-by and whether for the purchase of inventory, equipment or otherwise) issued by an issuer for the account of Borrowers pursuant to this Agreement, and all amendments, renewals, extensions or replacements thereof. The issuer of the Letters of Credit shall be, and all references to such issuer herein shall mean, Wachovia Bank, National Association and its successors and assigns or such other bank as Lender may from time to time designate. 1.77 " License Agreement " and " License Agreements " shall have the meanings set forth in Section 8.11 hereof. 1.78 " Loans " shall mean the loans now or hereafter made by or on behalf of Lender on a revolving basis pursuant to the Credit Facility (involving advances, repayments and readvances) as set forth in Section 2.1 hereof. 1.79 " London Interbank Offered Rate " shall mean, with respect to any Eurodollar Loan for the Interest Period applicable thereto, the rate of interest per annum (rounded upwards, if necessary, to 13 the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in U.S. Dollars at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided , that, if more than one rate is specified on Telerate Page 3750, the applicable rate shall be the arithmetic mean of all such rates. If, for any reason, such rate is not available, the term "London Interbank Offered Rate" shall mean, with respect to any Eurodollar Loan for the Interest Period applicable thereto, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided , however , if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates. 1.80 " Management Agreements " shall mean, collectively, (a) the Carlyle Management Agreement, and (b) that certain Conexant Management Agreement dated as of March 12, 2002, by and between Specialtysemi and Conexant. 1.81 " Material Adverse Effect " shall mean a material adverse effect on (a) the financial condition, business, performance or results of operations of Borrowers taken as a whole; (b) the legality, validity or enforceability of this Agreement or any of the other Financing Agreements; (c) the legality, validity, enforceability, perfection or priority of the security interests and liens of Lender upon the Collateral; (d) the Collateral or its value; (e) the ability of any Borrower to perform its obligations under this Agreement or any of the other Financing Agreements as and when to be performed; or (f) the ability of Lender to enforce the Obligations or realize upon the Collateral or otherwise with respect to the rights and remedies of Lender under this Agreement or any of the other Financing Agreements. 1.82 " Material Contract " shall mean any contract or other agreement (other than the Financing Agreements), whether written or oral, to which any Borrower is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto would have a Material Adverse Effect. 1.83 " Maximum Credit " shall mean the amount equal to $35,000,000, as reduced by any reduction thereof pursuant to Section 2.1(f) hereof. 1.84 " Multiemployer Plan " shall mean a "multi-employer plan" as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years contributed to by any Borrower or any ERISA Affiliate and with respect to which any Borrower, any Obligor or any other Credit Party is reasonably expected to incur any material liability. 1.85 " New Subsidiary " shall have the meaning given to such term in Section 9.10(i) hereof. 1.86 " Non-Excluded Taxes " shall have the meaning given to such term in Section 6.4(c) hereof. 1.87 " Non-U.S. Lender " shall have the meaning given to such term in Section 6.4(e) hereof. 1.88 " Obligations " shall mean any and all Loans, Letter of Credit Obligations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of the Borrowers to Lender and/or any of their Affiliates, including all obligations arising under or in connection with Bank Products, in each case including principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, in each case, arising under this Agreement or any of the other Financing Agreements or on account of any Letter of Credit and all other Letter of Credit Obligations, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to any Borrower under the United States Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and 14 become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or unsecured. 1.89 " Obligor " shall mean any guarantor, endorser, acceptor, surety or other person liable on or with respect to the Obligations or who is the owner of any property which is security for the Obligations, other than any Borrower. 1.90 " Operating Company " shall mean Newport Fab, LLC (doing business as Jazz Semiconductor Operating Company), a Delaware limited liability company, and its successors and assigns. 1.91 " Other Taxes " shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement. 1.92 " Parent " shall mean Jazz Semiconductor, Inc., a Delaware corporation, and its successors and assigns. 1.93 " Pension Plan " shall mean a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which any Borrower sponsors, maintains, or to which any Borrower or any ERISA Affiliate makes, is making, or is obligated to make contributions, other than a Multiemployer Plan and with respect to which any Borrower, any Obligor or any other Credit Party is reasonably expected to incur any material liability. 1.94 " Permits " shall have the meaning given to such term in Section 8.7(b) hereof. 1.95 " Permitted Holders " shall mean the persons listed on Schedule 1.95 hereto, Affiliates thereof and their respective successors and assigns. 1.96 " Person " or " person " shall mean any individual, sole proprietorship, partnership, corporation (including any corporation which elects subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof. 1.97 " Plan " shall mean an employee benefit plan (as defined in Section 3(3) of ERISA) which any Borrower sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multiemployer Plan has made contributions at any time during the immediately preceding six (6) plan years and with respect to which any Borrower, any Obligor or any other Credit Party is reasonably expected to incur any material liability. 1.98 " Prime Rate " shall mean the rate from time to time publicly announced by Wachovia Bank, National Association, or its successors, as its prime rate, whether or not such announced rate is the best rate available at such bank. 1.99 " Prime Rate Loans " shall mean any Loans or portion thereof on which interest is payable based on the Prime Rate in accordance with the terms thereof. 1.100 " Qualified Cash " shall mean, as of any date of determination, the amount of unrestricted cash and Cash Equivalents of Borrowers and their respective Subsidiaries that is in deposit accounts or in securities accounts or investment property accounts, or any combination thereof, and each of which deposit accounts or securities accounts or investment property accounts is subject to the first priority lien of Lender pursuant to a Deposit Account Control Agreement or Investment Property Control Agreement, as applicable, and not otherwise encumbered other than by the banker's lien or right of offset of the bank or securities intermediary or commodity intermediary at which such account is located, and is maintained by a branch office of the bank or securities intermediary or commodity intermediary located within the United States, and is set forth on Schedule 1.100 (as such Schedule 15 may be updated from time to time upon the opening of any such account in accordance with Section 5.2(d) or Section 5.2(e), as applicable); provided , that "Qualified Cash" shall not include any such amount of unrestricted cash and Cash Equivalents that is (a) in any such accounts or combination thereof (i) specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Borrower's or any such Subsidiary's salaried employees, or (ii) that are operating, overnight or other accounts, the amounts in which are subject to being debited in order to honor or otherwise satisfy checks written or issued thereon, but only to the extent checks actually have been written in respect of such amounts, and (b) in any Blocked Account to the extent such amounts have been applied against the Loans pursuant to Section 6.3(b) hereof; and further provided , that "Qualified Cash" shall only include such amounts of unrestricted cash and Cash Equivalents for which Borrowers have provided evidence thereof with respect to such accounts to Lender, which evidence shall be reasonably satisfactory to Lender. 1.101 " Real Property " shall mean, as to any Borrower, all now owned and hereafter acquired real property of such Borrower, including leasehold interests, together with all buildings, structures, and other improvements located thereon and all licenses, easements and appurtenances relating thereto, wherever located. 1.102 " Receivables " shall mean all of the following now owned or hereafter arising or acquired property of each Borrower: (a) all Accounts; (b) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account; (c) all payment intangibles of such Borrower; (d) letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to any Borrower or otherwise in favor of or delivered to any Borrower in connection with any Account; or (e) all other accounts, contract rights, chattel paper, instruments, notes, general intangibles and other forms of obligations owing to any Borrower, whether from the sale and lease of goods or other property, licensing of any property (including Intellectual Property or other general intangibles), rendition of services or from loans or advances by any Borrower or to or for the benefit of any third person (including loans or advances to any Affiliates or Subsidiaries of any Borrower) or otherwise associated with any Accounts, Inventory or general intangibles of any Borrower (including, without limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any Borrower in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to any Borrower from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance covering the lives of employees on which any Borrower is a beneficiary). 1.103 " Records " shall mean, as to each Borrower, all of such Borrower's present and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of any Borrower with respect to the foregoing maintained with or by any other person). 1.104 " Reference Bank " shall mean Wachovia Bank, National Association, or such other bank as Lender may from time to time designate. 1.105 " Renewal Date " shall have the meaning set forth in Section 13.1(a) hereof. 1.106 " Required Lenders " shall mean, at any time, those Lenders whose pro rata share of the obligations to make Loans and/or issue Letters of Credit, as the case may be, pursuant to Section 2 hereof aggregate at least fifty and one tenth of one percent (50.1%) of all such obligations, or if such 16 obligations shall have been terminated or have otherwise expired, Lenders to whom at least fifty and one tenth of one percent (50.1%) of the then outstanding Obligations are owing. 1.107 " Reserves " shall mean as of any date of determination, such amounts as Lender may from time to time establish and revise in good faith reducing the amount of Loans and Letters of Credit which would otherwise be available to Borrowers under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as determined by Lender in good faith, materially adversely affect, or would have a reasonable likelihood of materially adversely affecting, (i) the Collateral constituting Accounts or Equipment, its value or the amount that would reasonably be likely to be received by Lender from the sale or other disposition or realization upon such Collateral, or (ii) the security interests and other rights of Lender in the Collateral constituting Accounts or Equipment (including the enforceability, perfection and priority thereof) or (b) to reflect Lender's good faith belief that any collateral report relating to Accounts or Equipment furnished by or on behalf of any Borrower or any Obligor to Lender is or may have been incomplete, inaccurate or misleading in any material respect or (c) to reflect outstanding Letters of Credit as provided in Section 2.2 hereof or (d) in respect of any state of facts which Lender determines in good faith constitutes a Default or an Event of Default. Without limiting the generality of the foregoing, Reserves may, at Lender's option, be established to reflect: (A) dilution with respect to the Accounts (based on the ratio of the aggregate amount of non-cash reductions in Accounts, other than reductions specifically reserved in Customer Concession Reserves, for any period to the aggregate dollar amount of the sales of such Borrower for such period) as calculated by Lender for any period is or is reasonably anticipated to be greater than five percent (5%); (B) except as provided in the Customer Concession Reserve, returns, discounts, claims, credits and allowances of any nature that are not paid pursuant to the reduction of Accounts; (C) amounts past due to owners and lessors of premises where any Collateral is located, other than for those locations where Lender has received a Collateral Access Agreement that Lender has accepted in writing; (D) the Customer Concession Reserve; (E) the Sales Return Reserve; (F) the Bank Products Reserve; and (G) any other Reserve, including without limitation any Reserve for deferred revenue to the extent reserved by any Borrower on its books and records consistent with its historical practices. The amount of any Reserve established by Lender shall have a reasonable relationship to the event, condition, Event of Default or other matter which is the basis for such reserve as determined by Lender in good faith. To the extent Lender may revise the lending formulas used to determine the Borrowing Base or establish new criteria (with respect to new information, circumstances or facts) or revise existing criteria for Eligible Accounts or Eligible Equipment so as to address any circumstances, condition, event or contingency in a manner satisfactory to Lender, Lender shall not establish a Reserve for the same purpose or a Reserve that is otherwise duplicative of any other Reserve or change in criteria. 1.108 " Sales Return Reserve " shall mean a Reserve established for potential future returned sale items to Borrower, which Reserve shall be calculated quarterly based on returns made during the twelve-month period prior to, and ending on, any date of determination and to the extent reflected on such Borrower's books and records consistent with its historical practices. 1.109 " SiGe Technology License Agreements " shall mean collectively: (i) IP License Agreement between Specialtysemi, Operating Company and Conexant dated March 12, 2002, as amended, supplemented or otherwise modified from time to time; (ii) Transferred IP License Agreement between Specialtysemi, Operating Company and Conexant dated March 12, 2002, as amended, supplemented or otherwise modified from time to time; and (iii) License Agreement between Parent and Conexant dated as of July 2, 2004. 1.110 " Skyworks " shall mean Skyworks Solutions, Inc., a Delaware corporation. 1.111 " Solvent " shall mean, at any time with respect to any Person, that at such time such Person (a) is able to pay its debts as they mature and has (and has a reasonable basis to believe it will 17 continue to have) sufficient capital (and not unreasonably small capital) to carry on its business consistent with its practices as of the date hereof, and (b) the assets and properties of such Person at a fair valuation (and including as assets for this purpose at a fair valuation all rights of subrogation, contribution or indemnification arising pursuant to any guarantees given by such Person) are greater than the Indebtedness of such Person, and including subordinated and contingent liabilities computed at the amount which, such person has a reasonable basis to believe, represents an amount which can reasonably be expected to become an actual or matured liability (and including as to contingent liabilities arising pursuant to any guarantee the face amount of such liability as reduced to reflect the probability of it becoming a matured liability). 1.112 Specialtysemi " shall mean Specialtysemi, Inc., a Delaware corporation (now named "Jazz Semiconductor, Inc."). 1.113 " Subsidiary " or " subsidiary " shall mean, with respect to any Person, any corporation, limited liability company, limited liability partnership or other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority of the outstanding Capital Stock or other interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency), managers, trustees or other controlling persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more subsidiaries of such Person. 1.114 " Subsidiary Investment " shall have the meaning given to such term in Section 9.10(i) hereof. 1.115 " Target " shall have the meaning given to such term in Section 9.10(i) hereof. 1.116 " Trading With the Enemy Act " shall have the meaning given to such term in Section 9.20 hereof. 1.117 " Tranche A Loans " shall have the meaning set forth in Section 2.1(a). 1.118 " Tranche B Loans " shall have the meaning set forth in Section 2.1(b). 1.119 " UCC " shall mean the Uniform Commercial Code as in effect in the State of California, and any successor statute, as in effect from time to time (except that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of California on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Lender may otherwise determine). 1.120 " U.S. " or " United States " shall mean the United States of America. 1.121 " voidable transfers " shall have the meaning set forth in Section 12.9. 1.122 " Voting Stock " shall mean with respect to any Person, (a) one (1) or more classes of Capital Stock of such Person having general voting powers to elect at least a majority of the board of directors, managers or trustees of such Person, irrespective of whether at the time Capital Stock of any other class or classes have or might have voting power by reason of the happening of any contingency, and (b) any Capital Stock of such Person convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of such Person described in clause (a) of this definition. 1.123 " Wachovia " shall mean Wachovia Capital Finance Corporation (Western), a California corporation, in its individual capacity, and its successors and assigns. 1.124 " Wafer Supply Agreements " shall mean, collectively, (a) that certain Wafer Supply and Services Agreement dated as of March 30, 2002, by and between Conexant and Specialtysemi, and (b) that certain Wafer Supply and Services Agreement dated as of May 2, 2003 by and between Parent and 18 Skyworks and that certain Amendment One to the Wafer Supply and Services Agreement dated as of May 2, 2003 by and between Parent and Skyworks, and each of them a " Wafer Supply Agreement ". SECTION 2. CREDIT FACILITIES 2.1 Loans . (a) Subject to and upon the terms and conditions contained herein, Lender agrees to make revolving loans (each such loan, a " Tranche A Loan " and collectively, the " Tranche A Loans ") to Borrowers from time to time on any Business Day on or after the Effective Date in amounts requested by Borrowers up to an aggregate amount at any time not to exceed the Accounts Sublimit at such time. (b) Subject to and upon the terms and conditions contained herein, Lender agrees to make revolving loans (each such loan, a " Tranche B Loan " and collectively, the " Tranche B Loans ") to Borrowers from time to time on any Business Day on or after the Effective Date in amounts requested by Borrowers up to an aggregate amount at any time not to exceed the Equipment Sublimit at such time; provided , however , that Lender shall not be required to fund or make any Tranche B Loans at any time unless and until the Borrowers have borrowed the maximum amount of Tranche A Loans available to be borrowed at such time pursuant to Sections 2.1(a) and 2.1(c). (c) Loans made under this Agreement shall first be allocated as Tranche A Loans up to the amount equal to the lesser of (i) the Borrowing Base applicable to Tranche A Loans (without giving effect to the subtraction of the amount set forth in clause (iii) of the definition of "Borrowing Base") and (ii) the Accounts Sublimit, and thereafter allocated as Tranche B Loans up to the amount equal to the lesser of (i) the Borrowing Base applicable to Tranche B Loans (without giving effect to the subtraction of the amount set forth in clause (iii) of the definition of "Borrowing Base") and (ii) the Equipment Sublimit. As the Borrowing Base and its components change from time to time pursuant to the terms hereof, the Loans shall be reallocated as necessary pursuant to any such change to ensure that the Tranche A Loans shall be fully utilized by Borrowers as provided in this Section 2.1 prior to the allocation of any Loans as Tranche B Loans. (d) Except in Lender's discretion, the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time shall not exceed the Maximum Credit. (e) At no time shall, (i) the aggregate amount of the outstanding Loans and the Letter of Credit Obligations exceed the Maximum Credit or the aggregate Borrowing Base, or (ii) the aggregate principal amount of outstanding Tranche A Loans exceed either (A) the Borrowing Base based on Eligible Accounts or (B) the Accounts Sublimit, or (iii) the aggregate principal amount of outstanding Tranche B Loans and Letter of Credit Obligations exceed either (A) the Borrowing Base based on Eligible Equipment or (B) the Equipment Sublimit. If any of the events set forth in clauses (i), (ii) or (iii) of this Section 2.1(e) shall have occurred, such event shall not limit, waive or otherwise affect any rights of Lender in such circumstances or on any future occasions, and Borrowers shall, upon demand by Lender, which may be made at any time or from time to time, promptly repay to Lender, or reallocate as provided in Section 2.1(c) above, the entire amount of any such excess that results from the occurrence of any such event for which payment is demanded. (f) By providing ten (10) Business Days' written notice to Lender, Borrowers may request that the amount set forth in the definition of "Maximum Credit" hereof be reduced in an amount or amounts which shall not cause such amount set forth in such definition to be less than $20,000,000, which reduction shall be in increments of no less than $5,000,000; provided , that no Default or Event of Default shall have occurred and be continuing prior to or after giving effect to any such reduction; and further provided , that Borrowers may not make any such request more than 19 two (2) times per year. Upon giving effect to such reduction, the amount set forth in the definition of "Accounts Sublimit" shall be reduced pro rata with such reduction. 2.2 Letters of Credit . (a) Subject to and upon the terms and conditions contained herein and in the Letter of Credit Documents, at the request of Borrowers, Lender agrees to provide or arrange for the account of Borrowers one or more Letters of Credit containing terms and conditions acceptable to Lender and the issuer thereof. (b) Borrowers shall give Lender three (3) Business Days' prior written notice of its request for the issuance of a Letter of Credit. Such notice shall be irrevocable and shall specify the original face amount of the Letter of Credit requested, the effective date (which date shall be a Business Day and in no event shall be a date less than ten (10) days prior to the end of the then current term of this Agreement) of issuance of such requested Letter of Credit, whether such Letter of Credit may be drawn in a single or in partial draws, the date on which such requested Letter of Credit is to expire (which date shall be a Business Day and shall not be more than one year from the date of issuance), the purpose for which such Letter of Credit is to be issued, and the beneficiary of the requested Letter of Credit. Borrowers shall attach to such notice the proposed terms of the Letter of Credit. The renewal or extension of any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new Letter of Credit hereunder. (c) In addition to being subject to the satisfaction of the applicable conditions precedent contained in Section 4 hereof and the other terms and conditions contained herein, no Letter of Credit shall be available unless each of the following conditions precedent have been satisfied in a manner reasonably satisfactory to Lender: (i) Borrowers shall have delivered to the proposed issuer of such Letter of Credit at such times and in such manner as such proposed issuer may require, an application, in form and substance reasonably satisfactory to such proposed issuer and Lender, for the issuance of the Letter of Credit and such other Letter of Credit Documents as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit shall be reasonably satisfactory to Lender and such proposed issuer; (ii) as of the date of issuance, no order of any court, arbitrator or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that the proposed issuer of such Letter of Credit refrain from, the issuance of letters of credit generally or the issuance of such Letters of Credit; (iii) after giving effect to the issuance of such Letter of Credit, the Letter of Credit Obligations shall not exceed the Letter of Credit Limit; and (iv) the Excess Availability, prior to giving effect to any Reserves with respect to such Letter of Credit, on the date of the proposed issuance of any Letter of Credit, shall be equal to or greater than an amount equal to one hundred percent (100%) of the Letter of Credit Obligations with respect thereto. Effective on the issuance of each Letter of Credit, a Reserve shall be established in the amount set forth in Section 2.2(c)(iv). (d) Except in Lender's discretion, the amount of all outstanding Letter of Credit Obligations shall not at any time exceed the Letter of Credit Limit. (e) Borrowers shall reimburse immediately the issuer of a Letter of Credit for any draw under any Letter of Credit issued for the account of Borrowers by such issuer and pay such issuer the amount of all other charges and fees payable to such issuer in connection with any Letter of Credit issued for the account of Borrowers immediately when due, irrespective of any claim, setoff, defense or other right which Borrowers, or any of them, may have at any time against such issuer 20 or any other Person. Each drawing under any Letter of Credit or other amount payable in connection therewith when due shall constitute a request by Borrowers to Lender for a Prime Rate Loan in the amount of such drawing or other amount then due. The date of such Loan shall be the date of the drawing or as to other amounts, the due date therefor. Any payments made by or on behalf of Lender to an issuer and/or related parties in connection with any Letter of Credit shall constitute additional Loans to Borrowers pursuant to this Section 2. (f) Borrowers shall indemnify and hold Lender harmless from and against any and all losses, claims, damages, liabilities, costs and expenses which Lender may suffer or incur in connection with any Letter of Credit and any documents, drafts or acceptances relating thereto, including any losses, claims, damages, liabilities, costs and expenses due to any action taken by any issuer or correspondent with respect to any Letter of Credit, except for such losses, claims, damages, liabilities, costs or expenses that are a direct result of the gross negligence or willful misconduct of Lender. Each Borrower assumes all risks with respect to the acts or omissions of the drawer under or beneficiary of any Letter of Credit and for such purposes the drawer or beneficiary shall be deemed such Borrower's agent. Each Borrower assumes all risks for, and agrees to pay, all foreign, Federal, State and local taxes, duties and levies relating to any goods subject to any Letter of Credit or any documents, drafts or acceptances thereunder. Each Borrower hereby releases and holds Lender harmless from and against any acts, waivers, errors, delays or omissions, with respect to or relating to any Letter of Credit, except for the gross negligence or willful misconduct of Lender. The provisions of this Section 2.2(f) shall survive the payment of Obligations and the termination of this Agreement. (g) In connection with Inventory purchased pursuant to any Letter of Credit, Borrowers shall, at Lender's request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash, checks, Inventory, documents or instruments in which Lender holds a security interest that upon Lender's request, such items are to be delivered to Lender and/or subject to Lender's order, and if they shall come into any Borrower's possession, to deliver them, upon Lender's request, to Lender in their original form. Except as otherwise provided herein, Lender shall not exercise such right to request such items so long as no Event of Default shall exist or have occurred and be continuing. Except as Lender may otherwise specify, Borrowers shall designate Lender or the issuer of the Letter of Credit related thereto, as the consignee on all bills of lading and other negotiable and non-negotiable documents. (h) Each Borrower hereby irrevocably authorizes and directs any issuer of a Letter of Credit to name such Borrower as the account party therein and to deliver to Lender all instruments, documents and other writings and property received by issuer pursuant to the Letter of Credit and to accept and rely upon Lender's instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the Letter of Credit Documents with respect thereto. Nothing contained herein shall be deemed or construed to grant any Borrower any right or authority to pledge the credit of Lender in any manner. Lender shall have no liability of any kind with respect to any Letter of Credit provided by an issuer other than Lender unless Lender has duly executed and delivered to such issuer the application or a guarantee or indemnification in writing with respect to such Letter of Credit. Borrowers shall be bound by any reasonable interpretation made in good faith by Lender, or any other issuer or correspondent under or in connection with any Letter of Credit or any documents, drafts or acceptances thereunder, notwithstanding that such interpretation may be inconsistent with any instructions of any Borrower. (i) So long as no Event of Default exists or has occurred and is continuing, any Borrower may, after notice to Lender, (i) approve or resolve any questions of non-compliance of documents, (ii) give any instructions as to acceptance or rejection of any documents or goods, (iii) execute any and all applications for steamship or airway guaranties, indemnities or delivery orders, and (iv) with Lender's consent, grant any extensions of the maturity of, time of payment for, or time of 21 presentation of, any drafts, acceptances, or documents, and agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or conditions of any of the Letter of Credit Documents. (j) At any time an Event of Default exists or has occurred and is continuing, Lender shall have the right and authority to, and none of the Borrowers shall, without the prior written consent of Lender, (i) approve or resolve any questions of non-compliance of documents, (ii) give any instructions as to acceptance or rejection of any documents or goods, (iii) execute any and all applications for steamship or airway guaranties, indemnities or delivery orders, (iv) grant any extensions of the maturity of, time of payments for, or time of presentation of, any drafts, acceptances, or documents, and (v) agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or conditions of any of the Letter of Credit Documents. Lender may take such actions either in its own name or in any Borrower's name. (k) Any rights, remedies, duties or obligations granted or undertaken by any Borrower to any issuer or correspondent in any application for any Letter of Credit, or any other agreement in favor of any issuer or correspondent relating to any Letter of Credit, shall be deemed to have been granted or undertaken by such Borrower to Lender. Any duties or obligations undertaken by Lender to any issuer or correspondent in any application for any Letter of Credit, or any other agreement by Lender in favor of any issuer or correspondent relating to any Letter of Credit, shall be deemed to have been undertaken by Borrowers to Lender and to apply in all respects to Borrowers. SECTION 3. INTEREST AND FEES 3.1 Interest . (a) Borrowers shall pay to Lender, (i) interest on the outstanding principal amount of the Tranche A Loans at the Interest Rate applicable to Tranche A Loans and (ii) interest on the outstanding principal amount of the Tranche B Loans at the Interest Rate applicable to Tranche B Loans. All interest accruing hereunder on and after the date of any Event of Default and during the continuation thereof or termination hereof shall be payable on demand. (b) Borrowers may from time to time request Eurodollar Rate Loans or may request that Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans continue for an additional Interest Period. Such request from Borrowers shall be received at least three (3) Business Days prior to the end of the applicable Interest Period and shall specify the amount of the Eurodollar Rate Loans or the amount of the Prime Rate Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to be continued (subject to the limits set forth below) and the Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and conditions contained herein, after receipt by Lender of such a request from Borrowers and after the end of the applicable Interest Period, such Eurodollar Rate Loans shall be made or Prime Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case may be, provided , that , (i) no Default or Event of Default shall exist or have occurred and be continuing, (ii) no party hereto shall have sent any notice of termination of this Agreement, (iii) Borrowers shall have complied with such customary procedures as are established by Lender and specified by Lender to Borrowers from time to time for requests by Borrowers for Eurodollar Rate Loans, (iv) no more than four (4) Interest Periods may be in effect at any one time, (v) the aggregate amount of the Eurodollar Rate Loans must be in an amount not less than $3,000,000 or an integral multiple of $250,000 in excess thereof, (vi) the maximum amount of the Eurodollar Rate Loans in the aggregate at any time requested by Borrowers shall not exceed the amount equal to the lowest principal amount of the Loans which it is anticipated will be outstanding during the applicable Interest Period, in each case as determined 22 by Borrower in good faith, and (vii) Lender shall have determined that the Interest Period or Adjusted Eurodollar Rate is available to Lender through the Reference Bank and can be readily determined as of the date of the request for such Eurodollar Rate Loan by Borrowers. Any request by Borrowers for Eurodollar Rate Loans or to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the contrary contained herein, Lender and Reference Bank shall not be required to purchase United States Dollar deposits in the London interbank market or other applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if Lender and Reference Bank had purchased such deposits to fund the Eurodollar Rate Loans. (c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate Loans upon the last day of the applicable Interest Period, unless Lender has received and approved a request to continue such Eurodollar Rate Loan at least three (3) Business Days prior to such last day in accordance with the terms hereof. Any Eurodollar Rate Loans shall, at Lender's option, upon notice by Lender to Borrowers, be subsequently converted to Prime Rate Loans upon termination of this Agreement. Borrowers shall pay to Lender, upon demand by Lender (or Lender may, at its option, charge any loan account of any Borrower) any amounts required to compensate Lender, the Reference Bank or any participant with Lender for any loss (including loss of anticipated profits), cost or expense incurred by such person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the foregoing other than any such conversion as set forth in the first sentence of this subsection (c). (d) Interest shall be payable by Borrowers to Lender monthly in arrears not later than the first day of each calendar month commencing on February 1, 2006 and shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed. The interest rate on non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an amount equal to each increase or decrease in the Prime Rate effective on the first day of the month after any change in such Prime Rate is announced based on the Prime Rate in effect on the last day of the month in which any such change occurs. In no event shall charges constituting interest payable by Borrowers to Lender exceed the maximum amount or the rate permitted under any applicable law or regulation, and if any such part or provision of this Agreement is in contravention of any such law or regulation, such part or provision shall be deemed amended to conform thereto. 3.2 Fees . (a) Borrowers shall pay to Lender, monthly, an unused line fee at a rate equal to three-eighths of one percent (0.375%) per annum calculated upon the amount by which (i) the lesser of (A) $35,000,000, as reduced by any reduction thereof pursuant to Section 2.1(f) hereof, or (B) the sum of the Accounts Sublimit plus the Equipment Sublimit, exceeds (ii) the average daily principal balance of the outstanding Loans and Letters of Credit during the immediately preceding month (or part thereof) while this Agreement is in effect and for so long thereafter as any of the Obligations are outstanding, which fee shall be payable on the first day of each month in arrears. (b) In the case of letters of credit, Borrowers shall pay to Lender, a fee at a rate equal to one and one-quarter percent (1.25%) per annum on the average daily maximum amount available to be drawn under all of such Letters of Credit for the immediately preceding month (or part thereof), payable in arrears as of the first day of each succeeding month, computed for each day from the date of issuance to the date of expiration. Such letter of credit fees shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed and the obligations of Borrowers to pay such fee shall survive the termination or non-renewal of this Agreement. In addition to the letter of credit fees provided above, Borrowers shall pay to the issuer of any Letter of Credit the customary charges from time to time of such issuer with respect to the issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit. 23 (c) Borrowers shall pay to Lender a closing and underwriting fee in the amount equal to $350,000, which fee shall be earned and payable in full on the Effective Date. (d) Borrowers shall pay to Lender quarterly a servicing fee in an amount equal to $5,000 in respect of Lender's services for each quarter (or any part thereof) while this Agreement remains in effect and for so long thereafter as any of the Obligations are outstanding, which fee shall be fully earned as of and payable in advance on the date hereof and on the first day of each quarter hereafter commencing with January 1, 2006. 3.3 Changes in Laws and Increased Costs of Loans . (a) If after the date hereof, either (i) any change in, or in the interpretation of, any law or regulation is introduced, including, without limitation, with respect to reserve requirements, applicable to Lender or any banking or financial institution from whom Lender borrows funds or obtains credit (a " Funding Bank "), or (ii) a Funding Bank or Lender complies with any future guideline or request from any central bank or other Governmental Authority in effect after the date hereof or (iii) a Funding Bank or Lender determines that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, in each case, as in effect after the date hereof, has or would have the effect described below, or a Funding Bank or Lender complies with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, in each case, as in effect after the date hereof, and in the case of any event set forth in this clause (iii), such adoption, change or compliance has or would have the direct or indirect effect of reducing the rate of return on Lender's capital as a consequence of its obligations hereunder to a level below that which Lender could have achieved but for such adoption, change or compliance (taking into consideration the Funding Bank's or Lender's policies with respect to capital adequacy) by an amount deemed by Lender to be material, and the result of any of the foregoing events described in clauses (i), (ii) or (iii) is or results in an increase in the cost to Lender of funding or maintaining the Loans or the Letters of Credit, then Borrowers shall from time to time within 30 days of receipt of a reasonably detailed written invoice therefor pay to Lender additional amounts sufficient to indemnify Lender against such increased cost on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified). A certificate as to the amount of such increased cost shall be submitted to Borrowers by Lender and shall be presumptively correct, absent manifest error. (b) If prior to the first day of any Interest Period, (i) Lender shall have determined in good faith (which determination shall be presumptively correct) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Adjusted Eurodollar Rate for such Interest Period, (ii) Lender determines that the Adjusted Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to Lender of making or maintaining Eurodollar Rate Loans during such Interest Period, or (iii) Dollar deposits in the principal amounts of the Eurodollar Rate Loans to which such Interest Period is to be applicable are not generally available in the London interbank market, Lender shall give telecopy or telephonic notice thereof to Borrowers as soon as practicable thereafter, and will also give prompt written notice to Borrowers when such conditions no longer exist. If such notice is given (A) any Eurodollar Rate Loans requested to be made on the first day of such Interest Period shall be made as Prime Rate Loans, (B) any Loans that were to have been converted on the first day of such Interest Period to or continued as Eurodollar Rate Loans shall be converted to or continued as Prime Rate Loans and (C) each outstanding Eurodollar Rate Loan shall be converted, on the last day of the then-current Interest Period thereof, to Prime Rate Loans. Until such notice has been withdrawn by Lender, no further Eurodollar Rate Loans shall 24 be made or continued as such, nor shall Borrowers have the right to convert Prime Rate Loans to Eurodollar Rate Loans. (c) Notwithstanding any other provision herein, if the adoption of or any change in any law, treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or other Governmental Authority or in the interpretation or application thereof, in each case, occurring after the date hereof shall make it unlawful for Lender to make or maintain Eurodollar Rate Loans as contemplated by this Agreement, (i) Lender shall promptly give written notice of such circumstances to Borrowers (which notice shall be withdrawn whenever such circumstances no longer exist), (ii) the commitment of Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert Prime Rate Loans to Eurodollar Rate Loans shall forthwith be canceled and, until such time as it shall no longer be unlawful for Lender to make or maintain Eurodollar Rate Loans, Lender shall then have a commitment only to make a Prime Rate Loan when a Eurodollar Rate Loan is requested and (iii) Lender's Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Rate Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, Borrowers shall pay to Lender such amounts, if any, as may be required pursuant to Section 3.3(d) below. (d) Borrowers shall indemnify Lender and to hold Lender harmless from any loss or expense which Lender may sustain or incur as a consequence of (i) default by Borrowers in making a borrowing of, conversion into or extension of Eurodollar Rate Loans after Borrowers have given a notice requesting the same in accordance with the provisions of this Agreement, (ii) default by Borrowers in making any prepayment of a Eurodollar Rate Loan after Borrowers have given a notice thereof in accordance with the provisions of this Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans on a day which is not the last day of an Interest Period with respect thereto. With respect to Eurodollar Rate Loans, such indemnification may include an amount equal to the excess, if any, of (A) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or extended, for the period from the date of such prepayment or of such failure to borrow, convert or extend to the last day of the applicable Interest Period (or, in the case of a failure to borrow, convert or extend, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Eurodollar Rate Loans provided for herein over (B) the amount of interest (as determined by Lender) which would have accrued to Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurodollar market. This covenant shall survive the termination or non-renewal of this Agreement and the payment of the Obligations. SECTION 4. CONDITIONS PRECEDENT 4.1 Conditions Precedent to Initial Loans and Letters of Credit . The obligation of Lender to make the initial Loans or to arrange or provide for the initial Letters of Credit hereunder is subject to the satisfaction of, or waiver of, immediately prior to or concurrently with the Effective Date of each of the following conditions precedent: (a) all requisite corporate or limited liability company action and proceedings in connection with this Agreement and the other Financing Agreements shall be reasonably satisfactory in form and substance to Lender, and Lender shall have received records of requisite corporate or limited liability company action and proceedings which Lender may have requested in connection therewith, such documents where requested by Lender or its counsel to be certified by appropriate corporate or limited liability company officers or Governmental Authority (and including a copy of the certificate of incorporation or certificate of formation, as the case may be, of each Borrower 25 certified by the Secretary of State (or equivalent Governmental Authority) which shall set forth the same complete corporate or limited liability company name of such Borrower as is set forth herein and such document as shall set forth the organizational identification number of such Borrower, if one is issued in its jurisdiction of incorporation or formation); (b) no material adverse change shall have occurred in the assets or business of Borrowers taken as a whole since the date of Lender's latest field examination (not including for this purpose the field review referred to in clause (c) below); (c) Lender shall have completed a field review of the Records and such other information with respect to the Collateral as Lender may require to determine the amount of Loans available to Borrowers (including, without limitation, current agings of receivables and/or roll-forwards of Accounts through the date of closing, together with such supporting documentation as may be necessary or appropriate, and other documents and information that will enable Lender to accurately identify and verify the Collateral), the results of which in each case shall be satisfactory to Lender, not more than ten (10) Business Days prior to the date hereof or such earlier date as Lender may agree; (d) Lender shall have received the Collateral Access Agreements, duly executed and delivered by the parties thereto; (e) the sum of the Excess Availability as determined by Lender, as of the date hereof, plus Qualified Cash shall be not less than $30,000,000 after giving effect to the initial Loans made or to be made and Letters of Credit issued or to be issued in connection with the initial transactions hereunder and the payment of all fees and expenses with respect thereto; (f) Lender shall have received, in form and substance satisfactory to Lender, Deposit Account Control Agreements by and among Lender, each Borrower, as the case may be, and each bank where such Borrower has a deposit account (other than any deposit account specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Borrower's salaried employees), in each case, duly authorized, executed and delivered by such bank and such Borrower, as the case may be; (g) Lender shall have received evidence, in form and substance satisfactory to Lender, that Lender has a valid perfected first priority security interest in all of the Collateral; (h) (i) Lender shall have received and reviewed lien and judgment search results for the jurisdiction of organization of each Borrower, the jurisdiction of the chief executive office of each Borrower and all jurisdictions in which assets of each Borrower are located, which search results shall be in form and substance satisfactory to Lender; and (ii) Lender shall have received, in form and substance reasonably satisfactory to Lender, all releases, terminations and such other documents as Lender may request to evidence and effectuate the termination by all secured parties, with a lien or security interest on any Collateral with priority over the security interest of Lender granted hereby, of their respective financing arrangements with Borrowers or any Borrower, as the case may be, and the termination and release by it or them, as the case may be, of any interest in and to any assets and properties of Borrowers or such Borrower and each Obligor, duly authorized, executed and delivered by it or each of them, including, but not limited to, (A) UCC termination statements for all UCC financing statements previously filed by it or any of them or their predecessors, as secured party and Borrowers, any Borrower or any Obligor, as the case may be, as debtor; and (B) satisfactions and discharges of any mortgages, deeds of trust or deeds to secure debt by Borrowers, any Borrower or any Obligor, as the case may be, in favor of it or any of them, in form acceptable for recording with the appropriate Governmental Authority; 26 (i) Lender shall have received evidence of insurance and loss payee endorsements required hereunder, in form and substance reasonably satisfactory to Lender, and certificates of insurance policies and/or endorsements naming Lender as loss payee; (j) Lender shall have received, in form and substance reasonably satisfactory to Lender, such opinion letters of counsel to Borrowers with respect to the Financing Agreements and such other matters as Lender may reasonably request; (k) Lender shall have received payment of the fees and commissions due under this Agreement through the date of the initial Loans or Letters of Credit and, to the extent invoiced, expenses incurred by Lender through such date and required to be paid by the Borrowers under Section 9.22 hereof, including all legal expenses, to the extent invoiced, incurred through the date of this Agreement; and (l) Lender shall have received an Investment Property Control Agreement with respect to any investment account, securities account, commodity account or other similar account existing on the date hereof held by or in the name of any Borrower, duly executed and delivered by the parties thereto; (m) this Agreement and the other Financing Agreements and all instruments and documents hereunder and thereunder shall have been duly executed and delivered to Lender and shall be effective on or before January 6, 2006. 4.2 Conditions Precedent to All Loans and Letters of Credit . The obligation of Lender to make any of the Loans, including the initial Loans, or to arrange or provide for any Letter of Credit, including the initial Letters of Credit, is subject to the further satisfaction of, or waiver of, immediately prior to or concurrently with the making of each such Loan or the issuance of such Letter of Credit of each of the following conditions precedent: (a) all representations and warranties contained herein and in the other Financing Agreements shall be true and correct, in all material respects, with the same effect as though such representations and warranties had been made on and as of the date of the making of each such Loan or providing each such Letter of Credit and after giving effect thereto, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate, in all material respects, on and as of such earlier date); (b) no law, regulation, order, judgment or decree of any Governmental Authority shall exist, and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any court or before any arbitrator or Governmental Authority, which (i) purports to enjoin, prohibit or restrain the making of the Loans or providing the Letters of Credit; (c) no event or condition shall exist or have occurred and be continuing since December 31, 2004 that has a reasonable likelihood of creating or resulting in a Material Adverse Effect; and (d) no Default or Event of Default shall exist or have occurred and be continuing since the Effective Date and on and as of the date of the making of such Loan or providing each such Letter of Credit and after giving effect thereto. SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST 5.1 Grant of Security Interest . To secure payment and performance of all Obligations, each Borrower hereby grants to Lender, a continuing security interest in, and a lien upon, all personal property and fixtures, and interests in personal property and fixtures, of such Borrower, whether now owned or hereafter acquired or existing, and wherever located (together with all other collateral 27 security for the Obligations at any time granted to or held or acquired by Lender, collectively, the " Collateral "), including: (a) all Accounts; (b) all general intangibles, including, without limitation, all Intellectual Property; (c) all goods, including, without limitation, Inventory and Equipment; (d) all fixtures; (e) all chattel paper, including, without limitation, all tangible and electronic chattel paper; (f) all instruments, including, without limitation, all promissory notes; (g) all documents; (h) all deposit accounts (other than deposit accounts specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Borrower's salaried employees); (i) all letters of credit, banker's acceptances and similar instruments and including all letter-of-credit rights; (j) all supporting obligations and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Receivables and other Collateral, including (i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral, (ii) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, (iii) goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, Receivables or other Collateral, including returned, repossessed and reclaimed goods, and (iv) deposits by and property of account debtors or other persons securing the obligations of account debtors; (k) all (i) investment property (including securities, whether certificated or uncertificated, securities accounts, security entitlements, commodity contracts or commodity accounts); provided , that with respect to the Capital Stock of any Foreign Subsidiary of such Borrower, the amount of such Capital Stock of such Foreign Subsidiary included as Collateral hereunder shall be limited to 65% of the Capital Stock of such Subsidiary; and (ii) monies, credit balances, deposits and other property of such Borrower now or hereafter held or received by or in transit to Lender or its Affiliates or at any other depository or other institution from or for the account of any Borrower, whether for safekeeping, pledge, custody, transmission, collection or otherwise; (l) all commercial tort claims, including, without limitation, those identified in the Information Certificate; (m) to the extent not otherwise described above, all Receivables; (n) all Records; and (o) all products and proceeds of the foregoing, in any form, including insurance proceeds and all claims against third parties for loss or damage to or destruction of or other involuntary conversion of any kind or nature of any or all of the other Collateral. Notwithstanding the foregoing, "Collateral" shall not include any lease, license, permit, contract, property right or agreement to which any Borrower is a party or under which any Borrower has any right or interest (including any Intellectual Property or Equipment of such Borrower that is the subject of such lease, license, permit, contract, property right or agreement) if and only for so long as the grant of a security interest hereunder shall constitute or result in a breach, termination or default under any 28 such lease, license, permit, contract, property right or agreement (other than to the extent that any such term would be rendered ineffective under Sections 9406, 9407, 9408 or 9409 of the UCC or any other applicable law or principle of equity); provided , however , that such security interest shall attach immediately to any portion of such lease, license, permit, contract, property right or agreement that does not result in any of the consequences specified above in this paragraph. 5.2 Perfection of Security Interests . (a) Each Borrower irrevocably and unconditionally authorizes Lender (or its agent) to file at any time and from time to time such financing statements with respect to the Collateral naming Lender or its designee as the secured party and such Borrower as debtor, as Lender may require, and including any other information with respect to such Borrower or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction as may be necessary to perfect the security interest granted herein, together with any amendment and continuations with respect thereto, which authorization shall apply to all financing statements filed on, prior to or after the date hereof. Each Borrower hereby ratifies and approves all financing statements naming Lender or its designee as secured party and such Borrower, as the case may be, as debtor with respect to the Collateral (and any amendments with respect to such financing statements) filed by or on behalf of Lender prior to the date hereof and ratifies and confirms the authorization of Lender to file such financing statements (and amendments, if any). Each Borrower hereby authorizes Lender to adopt on behalf of such Borrower any symbol required for authenticating any electronic filing. In the event that the description of the collateral in any financing statement naming Lender or its designee as the secured party and any Borrower as debtor includes assets and properties of such Borrower that do not at any time constitute Collateral, whether hereunder, under any of the other Financing Agreements or otherwise, the filing of such financing statement shall nonetheless be deemed authorized by such Borrower to the extent of the Collateral included in such description and it shall not render the financing statement ineffective as to any of the Collateral or otherwise affect the financing statement as it applies to any of the Collateral, and each Borrower authorizes Lender to file a financing statement with a collateral description of "all assets" or "all personal property". Except as otherwise provided in this Agreement with respect to Lender's obligations to provide releases of Collateral or termination statements, in no event shall any Borrower at any time file, or permit or cause to be filed, any correction statement or termination statement with respect to any financing statement (or amendment or continuation with respect thereto) naming Lender or its designee as secured party and such Borrower as debtor. (b) None of the Borrowers has any chattel paper (whether tangible or electronic) or instruments as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower shall be entitled to or shall receive any chattel paper or instrument after the date hereof, Borrowers shall promptly notify Lender thereof in writing. Promptly upon the receipt thereof by or on behalf of any Borrower (including by any agent or representative), such Borrower shall deliver, or cause to be delivered to Lender, prior to the occurrence of an Event of Default, all tangible chattel paper and instruments with a face value in excess of $250,000 individually or $500,000 in the aggregate that such Borrower has or may at any time acquire, accompanied by such instruments of transfer or assignment duly executed in blank as Lender may from time to time specify, in each case except as Lender may otherwise agree; provided , that, upon the occurrence and continuation of an Event of Default, all such chattel paper and instruments (without regard to the face value thereof) and instruments of transfer or assignment shall be delivered to Lender. At Lender's option, each Borrower shall, or Lender may at any time on behalf of any Borrower, cause the original of any such instrument or chattel paper with a face value in excess of $250,000 individually or $500,000 in the aggregate to be conspicuously marked in a form and manner acceptable to Lender with the following legend referring to chattel paper or instruments as applicable: "This [chattel paper][instrument] is subject to the security interest of 29 Wachovia Capital Finance Corporation (Western) and any sale, transfer, assignment or encumbrance of this [chattel paper][instrument] violates the rights of such secured party." Upon the occurrence and continuation of an Event of Default, Borrow shall, or Lender may on behalf of any Borrower, mark all such chattel paper and instruments (without regard to the face value thereof) as set forth in the preceding sentence. (c) In the event that any Borrower shall at any time hold or acquire an interest in any electronic chattel paper or any "transferable record" (as such term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), such Borrower shall promptly notify Lender thereof in writing. Promptly upon Lender's request, such Borrower shall take, or cause to be taken, such actions as Lender may request to give Lender control of such electronic chattel paper under Section 9105 of the UCC and control of such transferable record under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction. (d) None of the Borrowers has any deposit accounts as of the date hereof, except as set forth in the Information Certificate. No Borrower shall, directly or indirectly, after the date hereof open, establish or maintain any deposit account unless each of the following conditions is satisfied: (i) Lender shall have received not less than five (5) Business Days prior written notice of the intention of such Borrower to open or establish such account which notice shall specify in reasonable detail and specificity reasonably acceptable to Lender the name of the account, the owner of the account, the name and address of the bank at which such account is to be opened or established, the individual at such bank with whom such Borrower is dealing and the purpose of the account, (ii) the bank where such account is opened or maintained shall be reasonably acceptable to Lender, and (iii) on or before the opening of such deposit account, such Borrower shall deliver to Lender a Deposit Account Control Agreement with respect to such deposit account duly authorized, executed and delivered by such Borrower and the bank at which such deposit account is opened and maintained. The terms of this subsection (d) shall not apply to deposit accounts specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Borrower's salaried employees. (e) None of the Borrowers owns or holds, directly or indirectly, beneficially or as record owner or both, any investment property, as of the date hereof, or have any investment account, securities account, commodity account or other similar account with any bank or other financial institution or other securities intermediary or commodity intermediary as of the date hereof, in each case except as set forth in the Information Certificate. (i) In the event that any Borrower shall be entitled to or shall at any time after the date hereof hold or acquire any certificated securities, such Borrower shall promptly endorse, assign and deliver the same to Lender, accompanied by such instruments of transfer or assignment duly executed in blank as Lender may from time to time specify. If any securities, now or hereafter acquired by such Borrower are uncertificated and are issued to such Borrower or its nominee directly by the issuer thereof, such Borrower shall immediately notify Lender thereof and shall (A) cause the issuer to agree to comply with instructions from Lender as to such securities, without further consent of any Borrower or such nominee, and (B) upon the occurrence and continuation of an Event of Default, arrange for Lender to become the registered owner of the securities. (ii) No Borrower shall, directly or indirectly, after the date hereof open, establish or maintain any investment account, securities account, commodity account or any other similar account (other than a deposit account) with any securities intermediary or commodity 30 intermediary unless each of the following conditions is satisfied: (A) Lender shall have received not less than five (5) Business Days prior written notice of the intention of such Borrower to open or establish such account which notice shall specify in reasonable detail and specificity acceptable to Lender the name of the account, the owner of the account, the name and address of the securities intermediary or commodity intermediary at which such account is to be opened or established, the individual at such intermediary with whom such Borrower is dealing and the purpose of the account, (B) the securities intermediary or commodity intermediary (as the case may be) where such account is opened or maintained shall be acceptable to Lender, and (C) on or before the opening of such investment account, securities account or other similar account with a securities intermediary or commodity intermediary, such Borrower shall (i) execute and deliver, and cause to be executed and delivered to Lender, an Investment Property Control Agreement with respect thereto duly authorized, executed and delivered by such Borrower and such securities intermediary or commodity intermediary, and (ii) upon the occurrence and continuation of an Event of Default, arrange for Lender to become the entitlement holder with respect to such investment property on terms and conditions acceptable to Lender. The terms of this subsection (e)(ii) shall not apply to deposit accounts specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Borrower's salaried employees. (f) None of the Borrowers is the beneficiary or otherwise entitled to any right to payment under any letter of credit, banker's acceptance or similar instrument as of the date hereof, except as set forth in the Information Certificate or on Schedule 1.49 hereof. In the event that any Borrower shall be entitled to or shall receive any right to payment under any letter of credit, banker's acceptance or any similar instrument, whether as beneficiary thereof or otherwise after the date hereof, such Borrower shall promptly give written notice to Lender thereof (except in the case of any such letters of credit, banker's acceptances or similar instruments with a face value less than $100,000 individually and $500,000 in the aggregate); provided , that upon the occurrence and continuation of an Event of Default, Borrower shall promptly notify Lender in writing of all such letters of credit, banker's acceptances or similar instruments without regard to the value thereof. Such Borrower shall immediately, as Lender may specify, either: (i) prior to the occurrence of an Event of Default, use all commercially reasonable efforts to deliver, or cause to be delivered to Lender, with respect to any such letter of credit, banker's acceptance or similar instrument with a face value in excess of $250,000 individually or $500,000 in the aggregate for all such letters of credit, banker's acceptances or similar instruments, the written agreement of the issuer and any other nominated person obligated to make any payment in respect thereof (including any confirming or negotiating bank), in form and substance reasonably satisfactory to Lender, consenting to the assignment of the proceeds of the letter of credit to Lender by such Borrower and agreeing to make all payments thereon directly to Lender or as Lender may otherwise direct, provided , that , upon the occurrence and continuation of an Event of Default, without regard to the face value of such letters of credit, banker's acceptances or instruments, all such written agreements of such issuer and such other nominated person obligated to make any payment in respect thereof shall be so delivered to Lender; or (ii) after an Event of Default has occurred and is continuing, cause Lender to become, at Borrowers' expense, the transferee beneficiary of the letter of credit, banker's acceptance or similar instrument (as the case may be). (g) None of the Borrowers has any commercial tort claims in excess of $500,000 as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower shall at any time after the date hereof have any commercial tort claims in excess of $500,000, such Borrower shall promptly notify Lender thereof in writing, which notice shall (i) set forth in reasonable detail the basis for and nature of such commercial tort claim and (ii) include the express grant by such Borrower to Lender of a security interest in such commercial tort claim (and 31 the proceeds thereof). In the event that such notice does not include such grant of a security interest, the sending thereof by such Borrower to Lender shall be deemed to constitute such grant to Lender. Upon the sending of such notice, any commercial tort claim described therein shall constitute part of the Collateral and shall be deemed included therein. Without limiting the authorization of Lender provided in | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AGREEMENTS / CONTRACTS
CLAUSES
| Get Email Updates |
