AMENDMENT NUMBER FOUR TO CREDIT AGREEMENT AND WAIVER AND AMENDMENT NUMBER THREE TO SECURITY AGREEMENT

 

 

This AMENDMENT NUMBER FOUR TO CREDIT AGREEMENT AND WAIVER AND AMENDMENT NUMBER THREE TO SECURITY AGREEMENT (this “Amendment”), dated as of January 31, 2011, is entered into by and among POWERWAVE TECHNOLOGIES, INC., a Delaware corporation (“Borrower”), the lenders identified on the signature pages hereof (such lenders, and the other lenders party to the below defined Credit Agreement, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “Lender” and collectively as the “Lenders”), and WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company (formerly known as Wells Fargo Foothill, LLC), as the arranger and administrative agent for the Lender Group (“Agent”), and in light of the following:

 

 

WHEREAS, Borrower, Lenders, and Agent are parties to that certain Credit Agreement, dated as of April 3, 2009 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, Borrower and Agent are parties to that certain Security Agreement, dated as of April 3, 2009 (as amended, restated, supplemented, or otherwise modified from time to time, the “Security Agreement”);

 

WHEREAS, Borrower has informed Agent that the following Events of Default have occurred and are continuing (collectively, the “Designated Events of Default”):

 

(a)           Borrower failed to provide Agent with a copy of the Powerwave Technologies 2010 Omnibus Incentive Plan a Material Contract, within the time period required pursuant to Section 5.14 of the Credit Agreement,

 

(b)           Borrower failed to notify Agent within the time period required under Section 6 of the Security Agreement of its application for and/or registration of certain of the Patents (as defined in the Security Agreement) or applications identified in Schedule 4.13 attached in Exhibit C hereto,

 

(c)           Borrower failed deliver to Agent within the time period required in the Security Agreement a duly executed Pledged Interests Addendum (as defined in the Security Agreement) with respect to the shares it acquired of Powerwave UK, Ltd. after the Closing Date, and

 

(d)           Borrower and its Subsidiaries kept Inventory and Equipment prior to the date hereof at the addresses listed in Schedule 4.25 attached in Exhibit C hereto, which addresses are not listed on Schedule 4.25 of the Credit Agreement, in violation of Section 5.15 of the Credit Agreement.

 

WHEREAS, Borrower has requested that Agent and the Lenders waive the Designated Events of Default;

 

WHEREAS, Borrower has requested that Agent and Lenders make certain amendments to the Credit Agreement and the Security Agreement; and

 

WHEREAS, upon the terms and conditions set forth herein, the parties hereby agree to amend the Credit Agreement and Security Agreement as follows.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1. Defined Terms.  Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Credit Agreement, as amended hereby.

 

2. Amendments to Credit Agreement.

 

(a) Schedule 1.1 to the Credit Agreement is hereby amended by amending and restating, or adding (as applicable) the following definitions in the appropriate alphabetical order:

 

““Alcatel Percentage” means 20%.”

 

““Approved Currency” means Euros, Pounds and any other currency acceptable to and approved in writing by Issuing Lender and Agent in each of their sole and absolute discretion from time to time.”

 

““Bank Product” means any one or more of the following financial products or accommodations extended to Borrower or its Subsidiaries by a Bank Product Provider:  (a) credit cards, (b) credit card processing services, (c) debit cards, (d) stored value cards, (e) purchase cards (including so-called “procurement cards” or “P-cards”), (f) Cash Management Services, or (g) transactions under Hedge Agreements.”

 

““Bank Product Obligations” means (a) all obligations, liabilities, reimbursement obligations, fees, or expenses owing by Borrower or its Subsidiaries to any Bank Product Provider pursuant to or evidenced by a Bank Product Agreement and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, (b) all Hedge Obligations, and (c) all amounts that Agent or any Lender is obligated to pay to a Bank Product Provider as a result of Agent or such Lender purchasing participations from, or executing guarantees or indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided by such Bank Product Provider to Borrower or its Subsidiaries.”

 

““Bank Product Provider” means Wells Fargo or any of its Affiliates (including WFF).”

 

““Bank Product Reserve” means, as of any date of determination, the Dollar amount of reserves that Agent has determined it is necessary or appropriate to establish (based upon the Bank Product Providers’ reasonable determination of their credit exposure to Borrower and its Subsidiaries in respect of Bank Product Obligations) in respect of Bank Products then provided or outstanding.”

 

““Base LIBOR Rate” means the rate per annum rate appearing on Bloomberg L.P’s (the “Service”) Page BBAM1/(Official BBA USD Dollar Libor Fixings) (or on any successor or substitute page of such Service, or any successor to or substitute for such Service) 2 Business Days prior to the commencement of the requested Interest Period, for a term and in an amount comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrower in accordance with the Agreement, which determination shall be conclusive in the absen ce of manifest error.”

 

““Base Rate” means the greatest of (a) the Federal Funds Rate plus ½%, (b) the rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its “prime rate” with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate, and (c) the Base LIBOR Rate (for an interest period of 1 month, which shall be determined on a daily basis).”

 

““Base Rate Margin” means, as of any date of determination, the applicable margin set forth in the following table that corresponds to the Average Availability of Borrower for the most recent fiscal quarter as calculated by Agent; provided, however, that any time an Event of Default has occurred and is continuing, the Base Rate Margin shall be set at the margin in the row styled “Level III”:

 

Level	Average Availability	Base Rate Margin
I	> $33,335,000	2.00 percentage points
II	< $33,335,000 but > $16,665,000	2.25 percentage points
III	< $16,665,000	2.50 percentage points

The Base Rate Margin shall be calculated as of the end of each fiscal quarter and, except as set forth in the foregoing proviso, shall be re-determined quarterly on the first day of each quarter.”

 

““Cash Management Services” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement,  merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements.”

 

““Commencement Date” has the meaning specified therefor in the definition of Financial Covenant Period.”

 

““Convertible Notes Redemption” means the optional redemption of the 1.875% Convertible Notes or the 3.875% Convertible Notes by Borrower so long as:  (a) such redemption is permitted by applicable law and the 1.875% Convertible Notes Indenture or the 3.875% Convertible Notes Indenture (as applicable), (b) no Default or Event of Default shall have occurred and be continuing or would result therefrom, and (c) both before and after giving effect to such redemption, Domestic Liquidity is greater than or equal to $15,000,000 (of which there must be Availability of at least $10,000,000).”

 

““Defaulting Lender” means any Lender that (a) has failed to fund any amounts required to be funded by it under the Agreement on the date that it is required to do so under the Agreement (including the failure to make available to Agent amounts required pursuant to a Settlement or to make a required payment in connection with a Letter of Credit Disbursement), (b) notified the Borrower, Agent, or any Lender in writing that it does not intend to comply with all or any portion of its funding obligations under the Agreement, (c) has made a public statement to the effect that it does not intend to comply with its funding obligations under the Agreement or under other agreements generally (as reasonably determined by Agent) under which it has committed to ext end credit, (d) failed, within 1 Business Day after written request by Agent, to confirm that it will comply with the terms of the Agreement relating to its obligations to fund any amounts required to be funded by it under the Agreement, (e) otherwise failed to pay over to Agent or any other Lender any other amount required to be paid by it under the Agreement on the date that it is required to do so under the Agreement, or (f) (i) becomes or is insolvent or has a parent company that has become or is insolvent or (ii) becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, or custodian or appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, or custodian appointed for it, or has taken any action in furtherance of, or ind icating its consent to, approval of or acquiescence in any such proceeding or appointment.”

 

““Defaulting Lender Rate” means (a) for the first 3 days from and after the date the relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Advances that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto).”

 

““Designated Senior Indebtedness” has the meaning specified therefor in (a) the 1.875% Convertible Notes Indenture, (b) the 3.875% Convertible Notes Indenture, and (c) each Permitted Convertible Notes Refinancing Indenture.”

 

““Dollar Equivalent” means, at any time, (a) as to any amount denominated in Dollars, the amount thereof at such time, and (b) as to any amount denominated in any other currency, the equivalent amount in Dollars based on the Exchange Rate in effect on the Business Day of determination.”

 

““Domestic Letter of Credit Usage” means, as of any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit that are payable in Dollars.”

 

““Domestic Liquidity” means the sum of (a) Availability plus (b) Qualified Cash.”

 

““Euro” or “€” means the single currency of the European Union as constituted by the Treaty on European Union and as referred to in the EMU Legislation.”

 

““Exchange Rate” means, on any day with respect to any currency, the rate at which such currency may be exchanged into any other currency (including Dollars), as published in The Wall Street Journal (Eastern Edition) on such day for such currency.  In the event that such rate does not appear on The Wall Street Journal (Eastern Edition), the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed by the Agent and the Borrower, or, in the absence of such agreement, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of Wells Fargo in the market where its foreign currency exchange operations in respect of such currency are then bein g conducted, at or about 11:00 a.m., local time, on such date for the purchase of the relevant currency for delivery two Business Days later.”

 

““Financial Covenant Period” means a period which shall commence on any date (the “Commencement Date”) on which Availability is less than $15,000,000 and shall continue until the later of:

 

(a) the date that is the last day of the second full fiscal quarter after the Commencement Date, and

 

(b) the last day of the fiscal quarter in which Average Availability for a period of 90 consecutive days after the Commencement Date is greater than or equal to $15,000,000.”

 

““Fixed Charges” means, with respect to any fiscal period and with respect to Borrower determined on a consolidated basis in accordance with GAAP, the sum, without duplication, of (a) Interest Expense accrued (other than interest paid-in-kind, amortization of financing fees, and other non-cash Interest Expense) during such period, (b) principal payments in respect of Indebtedness that are required to be paid during such period, and (c) all federal, state, and local income taxes accrued during such period.”

 

““Fixed Charge Coverage Ratio” means, with respect to Borrower and its Subsidiaries for any period, the ratio of (i) EBITDA for such period minus Capital Expenditures made (to the extent not already incurred in a prior period) or incurred during such period, to (ii) Fixed Charges for such period.”

 

““Foreign Letter of Credit Usage” means, as of any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit that are payable in a currency other than Dollars, calculated as if such Letters of Credit are payable in Dollars based on the Exchange Rate as of such date of determination.”

 

““Hedge Agreement” means any and all agreements or documents, including any “swap agreement” as that term is defined in Section 101(53B)(A) of the Bankruptcy Code, now existing or hereafter entered into by Borrower or any of its Subsidiaries that provide for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging Borrower’s or any of its Subsidiaries’ exposure to fluctuations in interest or exchange rates, loan, credit exchange, security, or currency valuations or commodity prices.”

 

““Hedge Obligations” means any and all obligations or liabilities, whether absolute or contingent, due or to become due, now existing or hereafter arising, of Borrower or its Subsidiaries arising under, owing pursuant to, or existing in respect of Hedge Agreements entered into with one or more of the Bank Product Providers.”

 

““Hedge Provider” means Wells Fargo or any of its Affiliates.”

 

““Interest Expense” means, for any period, the aggregate of the interest expense of Borrower for such period, determined on a consolidated basis in accordance with GAAP.”

 

““Issuing Lender” means WFF or any other Lender that, at the request of Borrower and with the consent of Agent, agrees, in such Lender’s sole discretion, to become an Issuing Lender for the purpose of issuing Letters of Credit or Reimbursement Undertakings pursuant to Section 2.11 of the Agreement and the Issuing Lender shall be a Lender.”

 

““Letter of Credit” means a letter of credit issued by Issuing Lender or a letter of credit issued by Underlying Issuer, as the context requires.”

 

““Letter of Credit Collateralization” means either (a) providing cash collateral (pursuant to documentation reasonably satisfactory to Agent, including provisions that specify that the Letter of Credit fee and all usage charges set forth in the Agreement will continue to accrue while the Letters of Credit are outstanding) to be held by Agent for the benefit of those Lenders with a Commitment in an amount equal to the sum of 105% of the then existing Domestic Letter of Credit Usage plus 115% of the Dollar Equivalent of the then existing Foreign Letter of Credit Usage, (b) causing the Letters of Credit to be returned to the Issuing Lender, or (c) providing Agent with a standby letter of credit, in form and substance reasonably satisfactory to Agent, from a commercial bank acceptable to the Agent (in its sole discretion) in an amount equal to the sum of 105% of the then existing Domestic Letter of Credit Usage plus 115% of the Dollar Equivalent of the then existing Foreign Letter of Credit Usage (it being understood that the Letter of Credit fee and all usage charges set forth in the Agreement will continue to accrue while the Letters of Credit are outstanding and that any such fees that accrue must be an amount that can be drawn under any such standby letter of credit).”

 

““Letter of Credit Disbursement” means a payment made by Issuing Lender or Underlying Issuer pursuant to a Letter of Credit.”

 

““LIBOR Rate Margin” means, as of any date of determination, the applicable margin set forth in the following table that corresponds to the Average Availability of Borrower for the most recent fiscal quarter as calculated by Agent; provided, however, that any time an Event of Default has occurred and is continuing, the LIBOR Rate Margin shall be set at the margin in the row styled “Level III”:

 

Level	Average Availability	LIBOR Rate Margin
I	> $33,335,000	2.75 percentage points
II	< $33,335,000 but > $16,665,000	3.00 percentage points
III	< $16,665,000	3.25 percentage points

The LIBOR Rate Margin shall be calculated as of the end of each fiscal quarter and, except as set forth in the foregoing proviso, shall be re-determined quarterly on the first day of each quarter.”

 

““Loan Documents” means the Agreement, the Account Charge Agreement, the Bank Product Agreements, any Borrowing Base Certificate, the Controlled Account Agreements, the Control Agreements, the Copyright Security Agreement, the Fee Letter, the Flow of Funds Agreement, any Guaranty, any intercompany subordination agreement, the Letters of Credit, the Mortgages, the Patent Security Agreement, the Security Agreement, the Trademark Security Agreement, any note or notes executed by Borrower in connection with the Agreement and payable to a member of the Lender Group, any letter of credit application entered into by Borrower in connection with the Agreement, and any other agreement entered into, now or in the future, by  Borrower or any of its Subsid iaries and the Lender Group in connection with the Agreement.”

 

““Maturity Date” means August 15, 2014.”

 

““Obligations” means (a) all loans, Advances, debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), reimbursement or indemnification obligations with respect to Reimbursement Undertakings or with respect to Letters of Credit (irrespective of whether contingent), premiums, liabilities (including all amounts charged to the Loan Account pursuant to the Agreement), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), Lender Group Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding , regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, covenants, and duties of any kind and description owing by any Loan Party pursuant to or evidenced by the Agreement or any of the other Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all other expenses or other amounts that Borrower is required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents, (b) all debts, liabilities, or obligations (including reimbursement obligations, irrespective of whether contingent) owing by Borrower or any other Loan Party to an Underlying Issuer now or hereafter arising from or in respect of an Underlying Letter of Credit, and (c) all Bank Product Obligations.  Any reference in the Agreement or in the Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.”

 

““Permitted Intercompany Advances” means loans made by Borrower to any of its Subsidiaries in the ordinary course of business for purposes of funding such Subsidiaries’ operating expenses so long as (i) no Event of Default has occurred and is continuing or would result therefrom, and (ii) both before and immediately after giving effect to such loan, Borrower has Domestic Liquidity of greater than or equal to $15,000,000 (of which there must be Availability of at least $10,000,000).”

 

““Permitted Preferred Stock” means and refers to any Preferred Stock that is not Prohibited Preferred Stock that is issued by Borrower and the proceeds of which are used solely to repurchase or redeem the 1.875% Convertible Notes or the 3.875% Convertible Notes in connection with a transaction that is permitted under the Agreement.”

 

““Pounds” means pounds sterling, the single currency of the United Kingdom.”

 

““Pro Rata Share” means, as of any date of determination:

 

(a)           with respect to a Lender’s obligation to make Advances and right to receive payments of principal, interest, fees, costs, and expenses with respect thereto, (i) prior to the Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such Lender’s Commitment, by (z) the aggregate Commitments of all Lenders, and (ii) from and after the time that the Commitments have been terminated or reduced to zero, the percentage obtained by dividing (y) the outstanding principal amount of such Lender’s Advances by (z) the outstanding principal amount of all Advances,

 

(b)           with respect to a Lender’s obligation to participate in Letters of Credit and Reimbursement Undertakings, to reimburse the Issuing Lender, and right to receive payments of fees with respect thereto, (i) prior to the Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such Lender’s Commitment, by (z) the aggregate Commitments of all Lenders, and (ii) from and after the time that the Commitments have been terminated or reduced to zero, the percentage obtained by dividing (y) the outstanding principal amount of such Lender’s Advances by (z) the outstanding principal amount of all Advances; provided, however, that if all of the Advances have been repaid in full and Letters of Credit remain outstanding, Pro Rata Share under this clause shall be determined based upon subclause (i) of this clause as if the Commitments had not been terminated or reduced to zero and based upon the Commitments as they existed immediately prior to their termination or reduction to zero, and

 

(c)           with respect to all other matters as to a particular Lender (including the indemnification obligations arising under Section 15.7 of the Agreement), (i) prior to the Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such Lender’s Commitment, by (z) the aggregate amount of Commitments of all Lenders, and (ii) from and after the time that the Commitments have been terminated or reduced to zero, the percentage obtained by dividing (y) the outstanding principal amount of such Lender’s Advances, by (z) the outstanding principal amount of all Advances; provided, however, that if all of the Advances have been repaid in full and Letters of Credit remain outstanding, Pro Rata Share under this clause shall be determined based upon subclause (i) of this clause as if the Commitments had not been terminated or reduced to zero and based upon the Commitments as they existed immediately prior to their termination or reduction to zero.”

 

““Reimbursement Undertaking” has the meaning specified therefor in Section 2.11(a) of the Agreement.”

 

““Underlying Issuer” means Wells Fargo or one of its Affiliates.”

 

““Underlying Letter of Credit” means a Letter of Credit that has been issued by an Underlying Issuer.”

 

““WFF” means Wells Fargo Capital Finance, LLC, a Delaware limited liability company (formerly known as Wells Fargo Foothill, LLC, a Delaware limited liability company).”

 

(b) Schedule 1.1 of the Credit Agreement is hereby amended by deleting the definitions of “1.875% Convertible Senior Subordinated Notes”, “1.875% Convertible Senior Subordinated Notes Indenture”, “L/C”, “L/C Disbursement”, “L/C Undertaking”, “Margin”, and “Risk Participation Liability” in their entirety.

 

(c) The definition of “Eligible Accounts” appearing on Schedule 1.1 to the Credit Agreement is hereby amended by amending and restating clauses (i) through (r) and adding new clauses (s) and (t) in their entirety as follows:

 

“(i)           Accounts with respect to an Account Debtor (other than Team Alliance, Samsung, Nokia, Alcatel, or Ericsson) and its Affiliates whose total obligations owing to Borrower exceed 10% (such percentage, as applied to a particular Account Debtor and its Affiliates, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor or its Affiliates deteriorates) of the obligations in respect of all Eligible Accounts and Eligible Foreign Accounts, to the extent of the obligations owing by such Account Debtor and its Affiliates in excess of such percentage; provided, however, that, in each case, t he amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts and Eligible Foreign Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit,

 

(j)           Accounts with respect to Nokia to the extent that the obligations owing by Nokia exceed 40% (such percentage, as applied to Nokia, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of Nokia deteriorates) of the obligations in respect of all Eligible Accounts and Eligible Foreign Accounts; provided, however, that the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts and Eligible Foreign Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit,

 

(k)           Accounts with respect to Team Alliance to the extent that the obligations owing by Team Alliance exceed 30% (such percentage, as applied to Team Alliance, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of Team Alliance deteriorates) of the obligations in respect of all Eligible Accounts and Eligible Foreign Accounts; provided, however, that the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts and Eligible Foreign Accounts prior to giving effect to any eliminations based upon the for egoing concentration limit,

 

(l) Accounts with respect to Samsung to the extent that the obligations owing by Samsung exceed 15% (such percentage, as applied to Samsung, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of Samsung deteriorates) of the obligations in respect of all Eligible Accounts and Eligible Foreign Accounts; provided, however, that the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts and Eligible Foreign Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit,

 

(m)           Accounts with respect to Alcatel to the extent that the obligations owing by Alcatel exceed the Alcatel Percentage (such percentage, as applied to Alcatel, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of Alcatel deteriorates) of the obligations in respect of all Eligible Accounts and Eligible Foreign Accounts; provided, however, that the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts and Eligible Foreign Accounts prior to giving effect to any eliminations based upon the foregoin g concentration limit,

 

(n)           Accounts with respect to Ericsson to the extent that the obligations owing by Ericsson exceed 20% (such percentage, as applied to Ericsson, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of Ericsson deteriorates) of the obligations in respect of all Eligible Accounts and Eligible Foreign Accounts; provided, however, that the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts and Eligible Foreign Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit,

 

(o)           Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to which Borrower has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Account Debtor,

 

(p)           Accounts, the collection of which, Agent, in its Permitted Discretion, believes to be doubtful by reason of the Account Debtor’s financial condition,

 

(q)           Accounts that are not subject to a valid and perfected first priority Agent’s Lien,

 

(r)           Accounts with respect to which (i) the goods giving rise to such Account have not been shipped and billed to the Account Debtor, or (ii) the services giving rise to such Account have not been performed and billed to the Account Debtor,

 

(s)           Accounts with respect to which the Account Debtor (or its Affiliates) is a Sanctioned Person or Sanctioned Entity, or

 

(t)           Accounts that represent the right to receive progress payments or other advance billings that are due prior to the completion of performance by Borrower of the subject contract for goods or services.”

 

(d) The definition of “Permitted Convertible Notes Refinancing” appearing on Schedule 1.1 to the Credit Agreement is hereby amended by amending and restating clause (c)(iii) thereof in its entirety as follows:

 

“(iii) [intentionally omitted],”

 

(e) The definition of “Permitted Investments” appearing on Schedule 1.1 to the Credit Agreement is hereby amended by (i) deleting the word “and” appearing at the end of clause (j), (ii) relettering clause (k) as clause (l), and (iii) inserting the following new clause (k) immediately after clause (j):

 

“(k) Investments resulting from entering into (i) Bank Product Agreements, or (ii) agreements relative to Indebtedness that is permitted under clause (h) of the definition of Permitted Indebtedness, and”.

 

(f) The sixth sentence of Section 1.4 of the Credit Agreement is hereby amended by amending and restating such sentence in its entirety as follows:

 

“Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations shall mean the repayment in full in cash or immediately available funds (or, (a) in the case of contingent reimbursement obligations with respect to Letters of Credit, providing Letter of Credit Collateralization, and (b) in the case of obligations with respect to Bank Products, providing Bank Product Collateralization) of all of the Obligations other than (i) unasserted contingent indemnification Obligations, and (ii) any Bank Product Obligations that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding without being required to be repaid or cash collateralized.”

 

(g) Section 1 of the Credit Agreement is hereby amended by adding a new Section 1.6 immediately after Section 1.5 as follows:

 

“1.6           Exchange Rates.

 

(a)           The Agent shall determine the Dollar Equivalent of any Letter of Credit denominated in an Approved Currency as of (i) a date on or about the date on which the applicable Issuing Lender receives a request from Borrower for the issuance of such Letter of Credit, (ii) each subsequent date on which such Letter of Credit shall be renewed or extended or the stated amount of such Letter of Credit shall be increased, and (iii) at such other times as may be determined by Agent, in each case using the Exchange Rate for such Approved Currency in relation to Dollars in effect on the date of determination.

 

(b)           Each amount determined pursuant to clause (a) of this Section shall be the Dollar Equivalent of the applicable Letter of Credit until the next required calculation thereof pursuant to the preceding sentences of this Section 1.6.  Upon the request of Borrower, Agent shall notify Borrower and the applicable Lenders of each calculation of the Dollar Equivalent of each Letter of Credit denominated an Approved Currency.

 

(c)           Wherever in this Agreement in connection with the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Letter of Credit is denominated in an Approved Currency, such amount shall be the Dollar Equivalent of such Approved Currency amount (rounded to the nearest unit of the Approved Currency, with 0.5 of a unit being rounded upward).”

 

(h) Section 2.3(b) of the Credit Agreement is hereby amended by inserting the following sentence as the second sentence of such section:

 

“Anything contained herein to the contrary notwithstanding, the Swing Lender may, but shall not be obligated to, make Swing Loans at any time that one or more of the Lenders is a Defaulting Lender.”

 

(i) Section 2.3(c) of the Credit Agreement is hereby amended by deleting subsection (iii) in its entirety.

 

(j) The last sentence of Section 2.3(d)(ii) of the Credit Agreement is hereby amended by amending and restating such sentence in its entirety as follows:

 

“Each Lender with a Commitment shall be obligated to settle with Agent as provided in Section 2.3(e) or Section 2.3(g), as applicable, for the amount of such Lender’s Pro Rata Share of any unintentional Overadvances by Agent reported to such Lender, any intentional Overadvances made as permitted under this Section 2.3(d)(ii), and any Overadvances resulting from the charging to the Loan Account of interest, fees, or Lender Group Expenses.”

 

(k) The third sentence of Section 2.3(e)(i) of the Credit Agreement is hereby amended by amending and restating such sentence in its entirety as follows:

 

“Subject to the terms and conditions contained herein (including Section 2.3(g)):  (y) if the amount of the Advances (including Swing Loans and Protective Advances) made by a Lender that is not a Defaulting Lender exceeds such Lender’s Pro Rata Share of the Advances (including Swing Loans and Protective Advances) as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. (California time) on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Protective Advances), and (z) if the amount of the Advan ces (including Swing Loans and Protective Advances) made by a Lender is less than such Lender’s Pro Rata Share of the Advances (including Swing Loans and Protective Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m. (California time) on the Settlement Date transfer in immediately available funds to the Agent’s Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Protective Advances).”

 

(l) The third sentence of Section 2.3(e)(iii) of the Credit Agreement is hereby amended by amending and restating such sentence in its entirety as follows:

 

“If, as of any Settlement Date, Collections or payments of  Borrower or its Subsidiaries received since the then immediately preceding Settlement Date have been applied to Swing Lender’s Pro Rata Share of the Advances other than to Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the Lenders (other than a Defaulting Lender if Agent has implemented the provisions of Section 2.3(g)), to be applied to the outstanding Advances of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Advances.”

 

(m) Section 2.3(e) of the Credit Agreement is hereby amended by inserting the following new subsection (iv) at the end of such section:

 

“(iv)           Anything in this Section 2.3(e) to the contrary notwithstanding, in the event that a Lender is a Defaulting Lender, Agent shall be entitled to refrain from remitting settlement amounts to the Defaulting Lender and, instead, shall be entitled to elect to implement the provisions set forth in Section 2.3(g).”

 

(n) Section 2.3 of the Credit Agreement is hereby amended by relettering subsection (g) as subsection (h) and adding the following new subsection (g) immediately after subsection (f):

 

“(g)           Defaulting Lenders.  Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrower to Agent for the Defaulting Lender’s benefit or any Collections or proceeds of Collateral that would otherwise be remitted hereunder to the Defaulting Lender, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments (A) first, to Swing Lender to the extent of any Swing Loans that were made by Swing Lender and that were required to be, but were not, repaid by the Defaulting Lender, (B) second, to the Issuing Lender, to the extent of the portion of a Letter of Credit Disbursement that wa s required to be, but was not, repaid by the Defaulting Lender, (C) third, to each non-Defaulting Lender ratably in accordance with their Commitments (but, in each case, only to the extent that such Defaulting Lender’s portion of an Advance (or other funding obligation) was funded by such other non-Defaulting Lender), (D) to a suspense account maintained by Agent, the proceeds of which shall be retained by Agent and may be made available to be re-advanced to or for the benefit of Borrower as if such Defaulting Lender had made its portion of Advances (or other funding obligations) hereunder, and (E) from and after the date on which all other Obligations have been paid in full, to such Defaulting Lender in accordance with tier (L) of Section 2.4(b)(ii).  Subject to the foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrower for the account of such Defaulting Lender the amount of all such payments received a nd retained by Agent for the account of such Defaulting Lender.  Solely for the purposes of voting or consenting to matters with respect to the Loan Documents (including the calculation of Pro Rata Share in connection therewith) and for the purpose of calculating the fee payable under Section 2.10(b), such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero.  The provisions of this Section 2.3(g) shall remain effective with respect to such Defaulting Lender until the earlier of (y) the date on which the non-Defaulting Lenders, Agent, and Borrower shall have waived, in writing, the application of this Section 2.3(g) to such Defaulting Lender, or (z) the date on which such Defaulting Lender makes payment of all amounts that it was obligated to fund hereunder, pays to Agent all amounts owing by Defaulting Lender in respect of the amounts that it was obligated to fund hereunder, and, if requested by Agent, provides adequate assurance of its ability to perform its future obligations hereunder.  The operation of this Section 2.3(g) shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by Borrower of its duties and obligations hereunder to Agent or to the Lenders other than such Defaulting Lender.  Any failure by a Defaulting Lender to fund amounts that it was obligated to fund hereunder shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Borrower, at its option, upon written notice to Agent, to arrange for a sub stitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Agent.  In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being repaid its share of the outstanding Obligations (other than Bank Product Obligations, but including (1) all interest, fees, and other amounts that may be due and payable in respect thereof, and (2) an assumption of its Pro Rata Share of the Letters of Credit); provided, however, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to c onstitute a waiver of any of the Lender Groups’ or Borrower’s rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.  In the event of a direct conflict between the priority provisions of this Section 2.3(g) and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other.  In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.3(g) shall control and govern.”

 

(o) Section 2.4(b)(ii)(H) of the Credit Agreement is hereby amended by amending and restating such section in its entirety as follows:

 

“(H)           eighth, ratably (i) to pay the principal of all Swing Loans until paid in full, (ii) to pay the principal of all Advances until paid in full, (iii) to Agent, to be held by Agent, for the benefit of Issuing Lender (and for the ratable benefit of each of the Lenders that have an obligation to pay to Agent, for the account of the Issuing Lender, a share of each Letter of Credit Disbursement), as cash collateral in an amount up to the sum of 105% of the then existing Domestic Letter of Credit Usage plus 115% of the Dollar Equivalent of the then existing Foreign Letter of Credit Usage (to the extent permitted by applicable law, such cash collateral shall be applied to the reimbursement of any Letter of Credit Disbursement as and when such disbursement occurs and, if a Letter of Credit expires undrawn, the cash collateral held by Agent in respect of such Letter of Credit shall, to the extent permitted by applicable law, be reapplied pursuant to this Section 2.4(b)(ii), beginning with tier (A) hereof), and (iv) ratably, to the Bank Product Providers based upon amounts then certified by the applicable Bank Product Provider to Agent (in form and substance satisfactory to Agent) to be due and payable to such Bank Product Providers on account of Bank Product Obligations,”

 

(p) Section 2.4(b)(ii) is hereby amended by deleting tiers (I) and (J) of such section and replacing such tiers with the following tiers (I), (J), and (K):

 

“(I)           ninth, to pay any other Obligations other than Obligations owed to Defaulting Lenders,

 

(J)           tenth, ratably to pay any Obligations owed to Defaulting Lenders; and

 

(K)           eleventh, to Borrower (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.”

 

(q) The last sentence of Section 2.5 of the Credit Agreement is hereby amended by amending and restating such sentence in its entirety as follows:

 

“Borrower promises to pay the Obligations (including principal, interest, fees, costs, and expenses) in Dollars (which, in the case of a reimbursement obligation (or the Advance that is funded to satisfy such reimbursement obligation) in respect of any Letter of Credit Disbursement with respect to a Letter of Credit that is denominated in an Approved Currency, an amount in Dollars equal to the Dollar Equivalent of the amount of such Letter of Credit Disbursement, as of the time when such Letter of Credit Disbursement is made) in full on the Maturity Date or, if earlier, on the date on which the Obligations (other than the Bank Product Obligations) become due and payable pursuant to the terms of this Agreement.”

 

(r) Section 2.6(a) and Section 2.6(b) of the Credit Agreement are hereby amended by amending and restating such sections in their entirety as follows:

 

“(a)           Interest Rates.  Except as provided in Section 2.6(c), all Obligations (except for undrawn Letters of Credit and except for Bank Product Obligations) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof as follows:

 

(i) if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and

 

(ii) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.

 

(b) Letter of Credit Fee.  Borrower shall pay Agent (for the ratable benefit of the Lenders with a Commitment, subject to any agreements between Agent and individual Lenders), a Letter of Credit fee (in addition to the charges, commissions, fees, and costs set forth in Section 2.11(e)) which shall accrue at a per annum rate equal to the LIBOR Rate Margin times the Daily Balance of the undrawn amount of all outstanding Letters of Credit.”

 

(s) Section 2.10(b) of the Credit Agreement is hereby amended by deleting the reference to “0.75%” and replacing it with “0.50%”.

 

(t) Section 2.11 of the Credit Agreement is hereby amended by amending and restating Section 2.11 in its entirety as follows:

 

“2.11           Letters of Credit.

 

(a)           Subject to the terms and conditions of this Agreement, upon the request of Borrower made in accordance herewith, the Issuing Lender agrees to issue, or cause an Underlying Issuer (including as Issuing Lender’s agent) to issue, a requested Letter of Credit.  If Issuing Lender, at its option, elects to cause an Underlying Issuer to issue a requested Letter of Credit, then Issuing Lender agrees that it will enter into arrangements relative to the reimbursement of such Underlying Issuer (which may include, among, other means, by becoming an applicant with respect to such Letter of Credit or entering into undertakings which provide for reimbursements of such Underlying Issuer with respect to such Letter of Credit; each such obligation or undertaking, irres pective of whether in writing, a “Reimbursement Undertaking”) with respect to Letters of Credit issued by such Underlying Issuer.  By submitting a request to Issuing Lender for the issuance of a Letter of Credit, Borrower shall be deemed to have requested that Issuing Lender issue or that an Underlying Issuer issue the requested Letter of Credit and to have requested Issuing Lender to issue a Reimbursement Undertaking with respect to such requested Letter of Credit if it is to be issued by an Underlying Issuer (it being expressly acknowledged and agreed by Borrower that Borrower is and shall be deemed to be an applicant (within the meaning of Section 5-102(a)(2) of the Code) with respect to each Underlying Letter of Credit).  Each request for the issuance of a Letter of Credit, or the amendment, renewal, or extension of any outstanding Letter of Credit, shall be made in writing by an Authorized Person and deliver ed to the Issuing Lender via hand delivery, telefacsimile, or other electronic method of transmission reasonably in advance of the requested date of issuance, amendment, renewal, or extension.  Each such request shall be in form and substance reasonably satisfactory to the Issuing Lender and shall specify (i) the amount of such Letter of Credit, (ii) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (iii) the expiration date of such Letter of Credit, (iv) the name and address of the beneficiary of the Letter of Credit, (v) whether such Letter of Credit is to be denominated in Dollars or in an Approved Currency and (vi) such other information (including, in the case of an amendment, renewal, or extension, identification of the outstanding Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit.  Anything contained herein to the contrary notwithstanding, the Issuing Lender may, bu t shall not be obligated to issue or cause the issuance of a Letter of Credit or to issue a Reimbursement Undertaking in respect of an Underlying Letter of credit, in either case, that supports the obligations of Borrower or its Subsidiaries (1) in respect of (A) a lease of real property, or (B) an employment contract or (2) at any time that one or more of the Lenders is a Defaulting Lender.  The Issuing Lender shall have no obligation to issue a Letter of Credit or a Reimbursement Undertaking in respect of an Underlying Letter of Credit, in either case, if any of the following would result after giving effect to the requested issuance:

 

(i) the Letter of Credit Usage would exceed the Borrowing Base less the outstanding amount of Advances, or

 

(ii) the Letter of Credit Usage would exceed $30,000,000,

 

(iii) the Foreign Letter of Credit Usage would exceed $10,000,000,

 

(iv) the Letter of Credit Usage would exceed the Maximum Revolver Amount less the sum of (A) the Bank Product Reserve, and (B) the outstanding amount of Advances.

 

Each Letter of Credit shall be in form and substance reasonably acceptable to the Issuing Lender including the requirement that the amounts payable thereunder must be payable in Dollars or, subject to the limitations set forth in this Section 2.11, an Approved Currency.  If Issuing Lender makes a payment under a Letter of Credit or an Underlying Issuer makes a payment under an Underlying Letter of Credit, Borrower shall pay to Agent an amount equal to the Dollar Equivalent of the applicable Letter of Credit Disbursement (based on the Exchange Rate applicable as of the time when such Letter of Credit Disbursement is made), on the date such Letter of Credit Disbursement is made and, in the absence of such payment, the Dollar Equivalent of such Letter of Credit Di sbursement (based on the Exchange Rate applicable as of the time when such Letter of Credit Disbursement is made) immediately and automatically shall be deemed to be an Advance hereunder and, initially, shall bear interest at the rate then applicable to Advances that are Base Rate Loans.  If a Letter of Credit Disbursement is deemed to be an Advance hereunder, Borrower’s obligation to pay the amount of such Letter of Credit Disbursement to Issuing Lender shall be discharged and replaced by the resulting Advance.  Promptly following receipt by Agent of any payment from Borrower pursuant to this paragraph, Agent shall distribute such payment to the Issuing Lender or, to the extent that Lenders have made payments pursuant to Section 2.11(b) to reimburse the Issuing Lender, then to such Lenders and the Issuing Lender as their interests may appear.

 

(b)           Promptly following receipt of a notice of a Letter of Credit Disbursement pursuant to Section 2.11(a), each Lender with a Commitment agrees to fund its Pro Rata Share of any Advance deemed made pursuant to Section 2.11(a) (in Dollars based on the Exchange Rate applicable as of the time when such Letter of Credit Disbursement is made) on the same terms and conditions as if Borrower had requested the amount thereof as an Advance and Agent shall promptly pay to Issuing Lender the amounts so received by it from the Lenders.  By the issuance of a Letter of Credit or a Reimbursement Undertaking (or an amendment to a Letter of Cred it increasing the amount thereof) and without any further action on the part of the Issuing Lender or the Lenders with Commitments, the Issuing Lender shall be deemed to have granted to each Lender with a Commitment, and each Lender with a Commitment shall be deemed to have purchased, a participation in each Letter of Credit issued by Issuing Lender and each Reimbursement Undertaking, in an amount equal to its Pro Rata Share of such Letter of Credit or Reimbursement Undertaking, and each such Lender agrees to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro Rata Share of the Dollar Equivalent of any Letter of Credit Disbursement (based on the Exchange Rate applicable as of the time when such Letter of Credit Disbursement is made) made by Issuing Lender or an Underlying Issuer under the applicable Letter of Credit.  In consideration and in furtherance of the foregoing, each Lender with a Commitment hereby absolutely and unconditionally agrees to pay to Agent, for the acco unt of the Issuing Lender, such Lender’s Pro Rata Share of the Dollar Equivalent each Letter of Credit Disbursement (based on the Exchange Rate applicable as of the time when such Letter of Credit Disbursement is made) made by Issuing Lender or an Underlying Issuer and not reimbursed by Borrower on the date due as provided in Section 2.11(a), or of any reimbursement payment required to be refunded to Borrower for any reason.  Each Lender with a Commitment acknowledges and agrees that its obligation to deliver to Agent, for the account of the Issuing Lender, an amount equal to its respective Pro Rata Share of the Dollar Equivalent of each Letter of Credit Disbursement (based on the Exchange Rate applicable as of the time when such Letter of Credit Disbursement is made) pursuant to this Section 2.11(b) shall be absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth in Section 3.  If any such Lender fails to make available to Agent the amount of such Lender’s Pro Rata Share of the Dollar Equivalent of a Letter of Credit Disbursement (based on the Exchange Rate applicable as of the time when such Letter of Credit Disbursement is made) as provided in this Section, such Lender shall be deemed to be a Defaulting Lender and Agent (for the account of the Issuing Lender) shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate until paid in full.

 

(c)           Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group and each Underlying Issuer harmless from any damage, loss, cost, expense, or liability (other than Taxes, which shall be governed by Section 16), and reasonable attorneys fees incurred by Issuing Lender, any other member of the Lender Group, or any Underlying Issuer arising out of or in connection with any Reimbursement Undertaking or Letter of Credit; provided, however, that Borrower shall not be obligated hereunder to indemnify for any loss, cost, expense, or liability to the extent that it is caus ed by the gross negligence or willful misconduct of the Issuing Lender, any other member of the Lender Group, or any Underlying Issuer.  Borrower agrees to be bound by the Underlying Issuer’s regulations and interpretations of any Letter of Credit or by Issuing Lender’s interpretations of any Reimbursement Undertaking even though this interpretation may be different from Borrower’s own, and Borrower understands and agrees that none of the Issuing Lender, the Lender Group, or any Underlying Issuer shall be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrower’s instructions or those contained in the Letter of Credit or any modifications, amendments, or supplements thereto.  Borrower understands that the Reimbursement Undertakings may require Issuing Lender to indemnify the Underlying Issuer for certain costs or liabilities arising out of claims by Borrower against such Underlying Issuer.  Borrower hereby agr ees to indemnify, save, defend, and hold Issuing Lender and the other members of the Lender Group harmless with respect to any loss, cost, expense (including reasonable attorneys fees), or liability (other than Taxes, which shall be governed by Section 16) incurred by them as a result of the Issuing Lender’s indemnification of an Underlying Issuer; provided, however, that Borrower shall not be obligated hereunder to indemnify for any such loss, cost, expense, or liability to the extent that it is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender Group.  Borrower hereby acknowledges and agrees that none of the Issuing Lender, any other member of the Lender Group, or any Underlying Issuer shall be responsible for delays, errors, or omissions res ulting from the malfunction of equipment in connection with any Letter of Credit.

 

(d)           Borrower hereby authorizes and directs any Underlying Issuer to deliver to the Issuing Lender all instruments, documents, and other writings and property received by such Underlying Issuer pursuant to such Underlying Letter of Credit and to accept and rely upon the Issuing Lender’s instructions with respect to all matters arising in connection with such Underlying Letter of Credit and the related application.

 

(e)           Any and all issuance charges, usage charges, commissions, fees, and costs incurred by the Issuing Lender relating to Underlying Letters of Credit shall be Lender Group Expenses for purposes of this Agreement and shall be reimbursable immediately by Borrower to Agent for the account of the Issuing Lender; it being acknowledged and agreed by Borrower that, as of the Closing Date, the usage charge imposed by the prospective Underlying Issuer is .825% per annum times the undrawn amount of each Underlying Letter of Credit, that such usage charge may be changed from time to time, and that the Underlying Issuer also imposes a schedule of charges for amendments, extensions, drawings, and renewals.

 

(f)           If by reason of (i) any change after the Closing Date in any applicable law, treaty, rule, or regulation or any change in the interpretation or application thereof by any Governmental Authority, or (ii) compliance by the Issuing Lender, any other member of the Lender Group, or Underlying Issuer with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Federal Reserve Board as from time to time in effect (and any successor thereto):

 

(i)           any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued or caused to be issued hereunder or hereby, or

 

(ii)           there shall be imposed on the Issuing Lender, any other member of the Lender Group, or Underlying Issuer any other condition regarding any Letter of Credit or Reimbursement Undertaking,

 

and the result of the foregoing is to increase, directly or indirectly, the cost to the Issuing Lender, any other member of the Lender Group, or an Underlying Issuer of issuing, making, guaranteeing, or maintaining any Reimbursement Undertaking or Letter of Credit or to reduce the amount receivable in respect thereof, then, and in any such case, Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify Borrower, and Borrower shall pay within 30 days after demand therefor, such amounts as Agent may specify to be necessary to compensate the Issuing Lender, any other member of the Lender Group, or an Underlying Issuer for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rat e then applicable to Base Rate Loans hereunder; provided, however, that Borrower shall not be required to provide any compensation pursuant to this Section 2.11(f) for any such amounts incurred more than 120 days prior to the date on which the demand for payment of such amounts is first made to Borrower; provided further, however, that if an event or circumstance giving rise to such amounts is retroactive, then the 120-day period referred to above shall be extended to include the period of retroactive effect thereof.  The determination by Agent of any amount due pursuant to this Section 2.11(f), as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, constitute prima facie evidence of the amount due.

 

(g)           Borrower and the Lender Group acknowledge and agree that the letter of credit in the face amount of AED 100,000, having an initial expiration date of August 31, 2009, issued by Underlying Issuer at the request of WFF for the account of Borrower and the benefit of Standard Chartered Bank Dubai shall, as of the Closing Date, be deemed a Letter of Credit for purposes of this Agreement and WFF’s reimbursement obligations to the Underlying Issuer shall be deemed to be a Reimbursement Undertaking hereunder, in each case, subject to all of the terms and conditions of this Agreement (including with respect to any fees or charges payable with respect to Letters of Credit) as if first issued or entered into on the Closing Date.”

 

(u) Section 4.13 of the Credit Agreement is amended and restated in its entirety as follows:

 

           “4.13           Intellectual Property.  Borrower and its Subsidiaries own, or hold licenses in, all trademarks, trade names, copyrights, patents, and licenses that are necessary to the conduct of its business as currently conducted, and attached hereto as Schedule 4.13 (as updated from time to time) is a true, correct, and complete listing as of the Closing Date and thereafter as of each date that is the most recent date on which a Compliance Certificate was required to be delivered pursuant to the terms of Section 5.1 with respect to a fiscal period ending on a day that is also the last day of a fiscal quarter of Borrower of all (a) material trademarks, trade names, copyrights, patents, and licenses as to which  Borrower or one of its Subsidiaries is the owner or is an exclusive licensee, and (b) all material licenses of intellectual property of any third party (including any affiliate) to which Borrower or one of its Subsidiaries is a party; provided, however, that Borrower may amend Schedule 4.13 to add additional intellectual property so long as such amendment occurs by written notice to Agent on or prior to the date that is first time that Borrower is required to provide its Compliance Certificate pursuant to Section 5.1 wit h respect to a fiscal period ending on a day that is also the last day of a fiscal quarter of Borrower following the date of acquisition or creation of such additional intellectual property.”

 

(v) Section 4.17 of the Credit Agreement is amended and restated in its entirety as follows:

 

“4.17           Material Contracts.  Set forth on Schedule 4.17 (as updated from time to time) is a list of the Material Contracts of Borrower and its Subsidiaries as of the Closing Date and thereafter as of each date that is the most recent date on which a Compliance Certificate was required to be delivered pursuant to the terms of Section 5.1 with respect to a fiscal period ending on a day that is also the last day of a fiscal quarter of Borrower; p rovided, however, that Borrower may amend Schedule 4.17 to add additional Material Contracts so long as such amendment occurs by written notice to Agent on the date that is first time that Borrower is required to provide its Compliance Certificate pursuant to Section 5.1 with respect to a fiscal period ending on a day that is also the last day of a fiscal quarter of Borrower following the date of entering into such new Material Contract.  Except for matters which, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change, each Material Contract (other than those that have expired at the end of their normal terms) (a) is in full force and effect and is binding upon and enforceable against Borrower or its Subsidiary and, to the best of BorrowerR 17;s knowledge, each other Person that is a party thereto in accordance with its terms, (b) has not been otherwise amended or modified (other than amendments or modifications permitted by Section 6.7(d)), and (c) is not in default due to the action or inaction of Borrower or its Subsidiary.”

 

(w) Section 4.27(b) of the Credit Agreement is amended and restated in its entirety as follows:

 

“(b)           The Indebtedness evidenced by this Agreement and the other Loan Documents constitutes Designated Senior Indebtedness under each of the 1.875% Convertible Notes Indenture, the 3.875% Convertible Notes Indenture, and each other Permitted Convertible Notes Refinancing Indenture.  No Designated Senior Indebtedness exists other than the Indebtedness evidenced by this Agreement and the other Loan Documents.”

 

(x) Section 5.15 of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

“5.15           Location of Inventory and Equipment.  Keep (a) Borrower’s and its Subsidiaries’ Inventory and Equipment (other than (i) vehicles or Equipment out for repair and (ii) test Equipment delivered to Borrower’s contract manufacturers in the ordinary course of business for use in the manufacture and repair of Borrower’s products) only at the locations identified in Schedule 4.25, and (b) Borrower’s and its Subsidiaries’ chief executive offices only at the locations identified on Schedule 4.6(b); provided, however, that (x) Borrower may amend Schedule 4.25 so long as such amendment occurs by written notice to Agent on or prior to the date that is first time that Borrower is required to provide its Compliance Certificate pursuant to Section 5.1 with respect to a fiscal period ending on a day that is also the last day of a fiscal quarter of Borrower following the date on which such Inventory or Equipment is moved to such new location, (y) Borrower may amend Schedule 4.6(b) to change its chief executive office location so long as such amendment occurs by written notice to Agent not less than 10 days prior to the date on which such chief executive offic e is relocated and so long as such new location is within the continental United States, and so long as, at the time of such written notification, Borrower provides Agent a Collateral Access Agreement with respect such location, and (z) Borrower may amend Schedule 4.6(b) to change the chief executive office location of any of its Subsidiaries so long as such amendment occurs by written notice to Agent on or prior to the date that is first time that Borrower is required to provide its Compliance Certificate pursuant to Section 5.1 with respect to a fiscal period ending on a day that is also the last day of a fiscal quarter of Borrower following the date on which such chief executive office is relocated.  If Borrower enters into a sale leaseback transaction as permitted hereunder with respect to its location at 1801 East St. Andrew Place, Santa Ana, CA 92705, then Borrower shall deliver to Agent a Collateral Access Agreement, in form and substance reasonably satisfactory to Agent, within 30 days of the date of consummation of such sale leaseback transaction.”

 

(y) Section 6.9(c) of the Credit Agreement is amended and restated in its entirety as follows:

 

“(c)           Borrower may pay cash dividends on its Permitted Preferred Stock so long as (i) no Event of Default has occurred and is continuing or would result therefrom, and (ii) Domestic Liquidity both before and after giving effect thereto is greater than $15,000,000 (of which there must be Availability of at least $10,000,000).”

 

(z) Section 7 of the Credit Agreement is amended and restated in its entirety as follows:

 

“7.           FINANCIAL COVENANTS.

 

Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, Borrower will comply with each of the following financial covenants:

 

(a)           Fixed Charge Coverage Ratio.  Have a Fixed Charge Coverage Ratio, measured on a trailing four fiscal quarter basis, as of the end of the fiscal quarter ended immediately preceding the Commencement Date and as of the end of each fiscal quarter ended during such Financial Covenant Period, of at least the required ratio set forth in the following table for the applicable period set forth opposite thereto:

 

Applicable Ratio	Applicable Period
1.1:1.0	For the 12 month period ending April 4, 2011 and for each 12 month period ended as of the end of each fiscal quarter thereafter

(aa) Section 9.1(a) of the Credit Agreement is hereby amended by amending and restating such section in its entirety as follows:

 

“declare the Obligations (other than the Bank Product Obligations), whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable, whereupon the same shall become and be immediately due and payable, without presentment, demand, protest, or further notice or other requirements of any kind, all of which are hereby expressly waived by Borrower; and”.

 

(bb) The last sentence of Section 9.1 of the Credit Agreement is hereby amended by amending and restating such sentence in its entirety as follows:

 

“The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Section 8.4 or Section 8.5, in addition to the remedies set forth above, without any notice to Borrower or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations (other than the Bank Product Obligations) inclusive of all accrued and unpaid interest thereon and all fees and all other amounts due under this Agreement and the other Loan Documents, shall automatically and immediately become due and payable, without presentment, demand, protest, or notice of any kind, all of which are expressly wa ived by Borrower.”

 

(cc) Section 14.1(a) of the Credit Agreement is hereby amended by (i) deleting the word “or” appearing at the end of clause (xi), (ii) renumbering clause (xii) as clause (xiii), and (iii) adding the following new clause (xii) immediately after clause (xi):

 

“(xii)           amend, modify, or eliminate Section 15.11, or”.

 

(dd) Section 14.1(e) of the Credit Agreement is hereby amended by amending and restating such section in its entirety as follows:

 

“Anything in this Section 14.1 to the contrary notwithstanding, (i) any amendment, modification, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of Borrower, shall not require consent by or the agreement of Borrower, and (ii) any amendment, waiver, modification, elimination, or consent of or with respect to any provision of this Agreement or any other Loan Document may be entered into without the consent of, or over the objection of, any Defaulting Lender.”

 

(ee) Section 14.2(b) of the Credit Agreement is hereby amended by amending and restating such section in its entirety as follows:

 

“(b)           Prior to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Holdout Lender being repaid its share of the outstanding Obligations without any premium or penalty of any kind whatsoever, but including (i) all interest, fees and other amounts that may be due and payable in respect thereof, and (ii) an assumption of its Pro Rata Share of the Letters of Credit).  If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed to have executed and delivered such Assignment and Acce ptance.  The replacement of any Holdout Lender shall be made in accordance with the terms of Section 13.1.  Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender shall remain obligated to make the Holdout Lender’s Pro Rata Share of Advances and to purchase a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of such Letters of Credit.”

 

(ff) Section 15.1 of the Credit Agreement is hereby amended by amending and restating such section in its entirety as follows:

 

           “15.1           Appointment and Authorization of Agent.  Each Lender hereby designates and appoints WFF as its agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to designate, appoint, and authorize) Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto.  Agent agrees to act as agent for and on behalf of the Lenders (and the Bank Product Providers) on the conditions contained in this Section 15.  The provisions of this Section 15 are solely for the benefit of Agent and the Lenders, and Borrower and its Subsidiaries shall have no rights as a third party beneficiary of any of the provisions contained herein.  Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender (or Bank Product Provider), and no imp lied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent.  Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement or the other Loan Documents with reference to Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only a representative relationship between independent contracting parties.  Each Lender hereby further authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Agent to act as the secured party under each of the Loan Documents that create a Lien on any item of Collateral.  Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents.  Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect:  (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the Collections of  Borrower and its Subsidiaries, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) mak e Advances, for itself or on behalf of Lenders, as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the Collections of  Borrower and its Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the Collections of  Borrower and its Subsidiaries, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to  Borrower or its Subsidiaries, the Obligations, the Collateral, the Collections of  Borrower and its Subsidiaries, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents.”< /div>