10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

T QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

Commission File Number:  1-9764

Harman International Industries, Incorporated

(Exact name of registrant as specified in its charter)

Delaware	11-2534306
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
400 Atlantic Street, Suite 1500
Stamford, CT	06901
(Address of principal executive offices)	(Zip code)

(203) 328-3500

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   T Yes   oNo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). oYes   oNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer T	Accelerated filer o
Non-accelerated filer o  (Do not check if a smaller reporting company)	Smaller reporting companyo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes   TNo

As of April 30, 2009, 58,659,278 shares of the registrant’s common stock, par value $.01, were outstanding.

Harman International Industries, Incorporated

FORM 10-Q

Table of Contents

		Page
	Forward-Looking Statements	i.
Part I	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets March 31, 2009 (unaudited) and June 30, 2008	1
	Condensed Consolidated Statements of Operations (unaudited) Three and nine months ended March 31, 2009 and 2008	2
	Condensed Consolidated Statements of Cash Flows (unaudited) Nine months ended March 31, 2009 and 2008	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43
Part II	OTHER INFORMATION
Item 1	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 5.	Other Information	46
Item 6.	Exhibits	47
	Signatures	48

References to “Harman International,” the “Company,” “we,” “us,” and “our” in this Form 10-Q refer to Harman International Industries, Incorporated and its subsidiaries unless the context requires otherwise.

Forward–Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). You should not place undue reliance on these statements. Forward-looking statements include information concerning possible or assumed future results of operations, capital expenditures, the outcome of pending legal proceedings and claims, goals and objectives for future operations, including descriptions of our business strategies and purchase commitments from customers. These statements are typically identified by words such as “believe,” “anticipate,” “expect,” “plan,” “intend,” “estimate,”  “should,” “will” and similar expressions. We base these statements on particular assumptions that we have made in light of our industry experience, as well as our perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. As you read and consider the information in this report, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions. In light of these risks and uncertainties, we cannot assure you that the results and events contemplated by the forward-looking statements contained in, or incorporated by reference into, this report will in fact transpire.

You should carefully consider the risks described below and the other information in this report.  Our operating results may fluctuate significantly and may not meet our expectations or those of securities analysts or investors.  The price of our stock would likely decline if this occurs.  Factors that may cause fluctuations in our operating results include, but are not limited to, the following:

· our ability to successfully implement our strategic initiatives, including our STEP Change cost reduction initiatives, and to achieve the intended benefits and anticipated savings of those initiatives;

· automobile industry sales and production rates and the willingness of automobile purchasers to pay for the option of a premium audio system and/or a multi-function infotainment system;

· our ability to maintain sufficient liquidity in light of recently announced extended production shutdowns by Chrysler LLC (Chrysler);

· the impact on our business of the Chrysler bankruptcy filing on April 30, 2009;

· changes in consumer confidence and spending and worsening economic conditions worldwide;

· the bankruptcy or financial deterioration of one or more of our customers or suppliers;

· the loss of one or more significant customers, including our automotive manufacturer customers, or the loss of a significant platform with an automotive customer;

· changes in interest rates and the availability of financing affecting corporate and consumer spending, including the effects of continued volatility and further deterioration in the financial and credit markets;

· fluctuations in currency exchange rates, including the increase of the U.S. dollar compared to the Euro, and other risks inherent in international trade and business transactions;

· warranty obligations for defects in our products;

· our ability to satisfy contract performance criteria, including our ability to meet technical specifications and due dates on our new automotive platforms;

· our ability to design, engineer and manufacture our products profitably under our long-term supply arrangements with automakers;

i

Forward–Looking Statements (continued)

· competition in the automotive, consumer or professional markets in which we operate, including pricing pressure in the market for personal navigation devices (“PNDs”);

· our ability to achieve cost reductions and other benefits in connection with the restructuring of our manufacturing, engineering and administrative organizations;

· model-year changeovers in the automotive industry;

· our ability to enforce or defend our ownership and use of intellectual property;

· our ability to maintain a competitive technological advantage within the systems, services and products we provide into the market place;

· our ability to effectively integrate acquisitions made by our Company or manage restructuring and cost migration initiatives;

· our ability to comply with the financial or other covenants in our credit agreements;

· limitations on our ability to borrow funds under our existing credit facilities;

· the valuation of certain assets, including goodwill, investments and deferred tax assets, considering recent market conditions;

· strikes, work stoppages and labor negotiations at our facilities, or at a facility of one of our significant customers; or work stoppages at a common carrier or a major shipping location;

· commodity price fluctuations;

· the outcome of pending or future litigation and other claims, including, but not limited to the current stockholder and ERISA lawsuits or any claims or litigation arising out of our business, labor disputes at our facilities and those of our customers or common carriers;

· changes in general economic conditions; and

· world political stability.

Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results and results of operations, and could cause actual results to differ materially from those expressed in the forward-looking statements. As a result, the foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this and other reports we file with the Securities and Exchange Commission, including the information in Item 1A, “Risk Factors” of Part I to our Annual Report on Form 10-K for the fiscal year ended June 30, 2008, Item 1A, “Risk Factors” of Part II of the Quarterly Report on Form 10-Q for the quarters ended September 30, 2008 and December 31, 2008 and Item 1A of Part II of this report.  We undertake no obligation to publicly update or revise any forward-looking statement.

ii

PART I  FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets

Harman International Industries, Incorporated and Subsidiaries

($000s omitted except share and per share amounts)

	March 31,			June 30,
	2009			2008
Assets	(Unaudited)
Current assets
Cash and cash equivalents	$	334,321			223,109
Receivables (less allowance for doubtful accounts of $16,536 at March 31, 2009 and $7,082 at June 30, 2008)		383,887			574,195
Inventories, net		384,090			390,638
Other current assets		234,741			251,139
Total current assets		1,337,039			1,439,081
Property, plant and equipment, net		515,099			640,042
Goodwill		79,790			436,447
Deferred income taxes		273,612			216,511
Other non-current assets		72,181			94,844
Total assets	$	2,277,721			2,826,925
Liabilities and Shareholders’ Equity
Current liabilities
Current portion of long-term debt	$	571			639
Accounts payable		201,858			343,780
Accrued liabilities		339,600			413,645
Accrued warranties		112,916			126,977
Income taxes payable		---			21,911
Total current liabilities		654,945			906,952
Borrowings under revolving credit facility		260,112			25,000
Convertible senior notes		400,000			400,000
Other senior debt		1,611			2,313
Minority interest		---			34
Other non-current liabilities		135,220			152,780
Total liabilities		1,451,888			1,487,079
Shareholders’ equity
Preferred stock, $.01 par value.  Authorized 5,000,000 shares; none issued and outstanding		---			---
Common stock, $.01 par value.  Authorized 200,000,000 shares; issued 84,259,095 at March 31, 2009 and 84,117,883 at June 30, 2008		842			841
Additional paid-in capital		633,113			628,324
Accumulated other comprehensive loss:
Unrealized loss on available-for-sale securities		(5,001	)		---
Unrealized income (loss) on hedging derivatives		2,115			(1,328	)
Pension benefits		(12,250	)		(11,947	)
Cumulative foreign currency translation adjustment		50,247			204,806
Retained earnings		1,204,337			1,566,720
Less common stock held in treasury (25,599,817 shares at March 31, 2009 and June 30, 2008)		(1,047,570	)		(1,047,570	)
Total shareholders’ equity		825,833			1,339,846
Total liabilities and shareholders’ equity	$	2,277,721			2,826,925

See accompanying Notes to Condensed Consolidated Financial Statements.

1

Condensed Consolidated Statements of Operations

Harman International Industries, Incorporated and Subsidiaries

($000s omitted except per share amounts)

(Unaudited)

	Three months ended						Nine months ended
	March 31,						March 31,
	2009			2008			2009			2008
Net sales	$	598,282			1,032,668			2,223,347			3,045,240
Cost of sales		484,987			771,535			1,691,265			2,218,408
Gross profit		113,295			261,133			532,082			826,832
Selling, general and administrative expenses		203,434			267,734			630,862			731,153
Goodwill impairment		2,341			---			327,786			---
Operating (loss) income		(92,480	)		(6,601	)		(426,566	)		95,679
Other expenses:
Interest expense, net		1,580			1,631			728			5,948
Miscellaneous, net		723			1,792			1,751			3,445
(Loss) income before income taxes and minority interest		(94,783	)		(10,024	)		(429,045	)		86,286
Income tax (benefit) expense, net		(28,224	)		(7,273	)		(68,824	)		10,980
Minority interest		---			598			(34	)		(754	)
Net (loss) income	$	(66,559	)		(3,349	)		(360,187	)		76,060
(Loss) earnings per share:
Basic	$	(1.14	)		(0.06	)		(6.15	)		1.22
Diluted	$	(1.14	)		(0.06	)		(6.15	)		1.20
Weighted average shares outstanding – basic		58,568			60,086			58,544			62,474
Weighted average shares outstanding – diluted		58,568			60,086			58,544			63,315

See accompanying Notes to Condensed Consolidated Financial Statements.

2

Condensed Consolidated Statements of Cash Flows

Harman International Industries, Incorporated and Subsidiaries

($000s omitted)

(Unaudited)

	Nine months ended
	March 31,
	2009			2008
Cash flows from operating activities:
Net (loss) income	$	(360,187	)		76,060
Reconcile net (loss) income to net cash provided by operating activities:
Goodwill impairment		327,786			---
Depreciation and amortization		108,297			109,483
Deferred income taxes		(59,794	)		---
Loss on disposition of assets		1,661			475
Share-based compensation expense		4,911			18,163
Excess tax benefits from share-based payment arrangements		---			(2,056	)
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables		135,519			(45,087	)
Inventories		(37,533	)		68,311
Other current assets		26,787			(15,777	)
Increase (decrease) in:
Accounts payable		(112,049	)		(90,711	)
Accrued warranty liabilities		(19,191	)		67,106
Accrued liabilities		(14,061	)		76,475
Income taxes payable		(19,155	)		(119,711	)
Other operating activities		2,094			250
Net cash (used in) provided by operating activities		(14,915	)		142,981
Cash flows from investing activities:
Contingent purchase price consideration		(8,228	)		(9,740	)
Proceeds from asset dispositions		1,204			609
Capital expenditures		(57,551	)		(89,949	)
Other investing activities		3,715			(260	)
Net cash used in investing activities		(60,860	)		(99,340	)
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings		1			(1,838	)
Net borrowings (repayments) under revolving credit facility		235,000			(3,940	)
Repayments of long-term debt		---			(16,486	)
Proceeds from issuance of convertible debt		---			400,000
Other decrease in long-term debt		(468	)		(2,183	)
Repurchase of common stock		---			(400,287	)
Dividends paid to shareholders		(2,196	)		(2,329	)
Share-based payment arrangements		101			3,682
Debt issuance costs		(9,458	)		(4,750	)
Excess tax benefits from share-based payment arrangements		---			2,056
Net cash provided by (used in) financing activities		222,980			(26,075	)
Effect of exchange rate changes on cash		(35,993	)		7,554
Net increase in cash and cash equivalents		111,212			25,120
Cash and cash equivalents at beginning of period		223,109			106,141
Cash and cash equivalents at end of period	$	334,321			131,261
Supplemental disclosure of cash flow information:
Interest (received) paid	$	(1,527	)		4,585
Income tax (received) paid	$	(21,498	)		133,907

See accompanying Notes to Condensed Consolidated Financial Statements.

3

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1.  Basis of Presentation

References to “we,” “us,” “our,” the “Company” and “Harman” refer to Harman International Industries, Incorporated and its consolidated subsidiaries unless the context specifically requires otherwise.

Our unaudited condensed consolidated financial statements at March 31, 2009 and June 30, 2008 and for the three and nine months ended March 31, 2009 and 2008, have been prepared pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”).  These unaudited condensed consolidated financial statements have been prepared in accordance with the accounting policies described in our Annual Report on Form 10-K and do not include all information and footnote disclosures included in our audited financial statements.  In the opinion of management, the accompanying unaudited, condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments and accruals, necessary to present fairly, in all material respects, the consolidated financial position, results of operations and cash flows for the periods presented.  Operating results for the three and nine months ended March 31, 2009 are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2009, due to seasonal, economic and other factors.

Where necessary, information for prior periods has been reclassified to conform to the consolidated financial statement presentation for the corresponding periods in the current fiscal year. During the three months ended September 30, 2008, we revised our business segments to align with our strategic approach to the markets and customers we serve.  We now report the financial information for our QNX business in our Other segment.  The QNX business was previously reported in our Automotive segment.  As a result, segment information for the prior period has been reclassified to reflect the new presentation.  See Note 13, Business Segment Data, for further discussion.

The methods, estimates and judgments we use in applying our accounting policies, in conformity with generally accepted accounting principles in the United States (“GAAP”), have a significant impact on the results we report in our financial statements.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.  The estimates affect the carrying values of assets and liabilities.  Actual results may differ from these estimates under different assumptions or conditions.

These unaudited, condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2008.

Note 2.  Inventories

Inventories consist of the following:

	March 31,		June 30,
($000s omitted)	2009		2008
Finished goods	$	169,279		150,634
Work in process		52,042		60,045
Raw materials		162,769		179,959
Total	$	384,090		390,638

Inventories are stated at the lower of cost or market. Cost is determined principally by the first-in, first-out method. The valuation of inventory requires us to make judgments and estimates regarding obsolete, damaged or excess inventory, as well as current and future demand for our products. The estimates of future demand and product pricing that we use in the valuation of inventory are the basis for our inventory reserves and have an effect on our results of operations. We calculate inventory reserves using a combination of lower of cost or market analysis, analysis of historical usage data, forecast demand data and historical disposal rates. Specific product valuation analysis is applied, if practicable, to those items of inventory representing a higher portion of the value of inventory on-hand.  At March 31, 2009 and June 30, 2008 our inventory reserves were $81.6 million and $91.8 million, respectively.

4

Note 3.  Property, Plant and Equipment

Property, plant and equipment are composed of the following:

	March 31,			June 30,
($000s omitted)	2009			2008
Land	$	12,982			14,659
Buildings and improvements		281,510			311,336
Machinery and equipment		939,999			1,082,359
Furniture and fixtures		42,602			46,749
		1,277,093			1,455,103
Less: accumulated depreciation and amortization		(761,994	)		(815,061	)
Property, plant and equipment, net	$	515,099			640,042

Note 4.  Warranty Liabilities

We warrant our products to be free from defects in materials and workmanship for periods ranging from six months to six years from the date of purchase, depending on the business segment and product. Our dealers and warranty service providers normally perform warranty service in field locations and regional service centers, using parts and replacement finished goods we supply on an exchange basis.  Our dealers and warranty service providers also install updates we provide to correct defects covered by our warranties.  Estimated warranty liabilities are based upon past experience with similar types of products, the technological complexity of certain products, replacement cost and other factors. If estimates of warranty provisions are no longer adequate based on our analysis of current activity, incremental provisions are recorded.  We take these factors into consideration when assessing the adequacy of our warranty provision for periods still open to claim.

Details of the estimated warranty liabilities are as follows:

	Nine months ended
	March 31,
($000s omitted)	2009			2008
Beginning balance at June 30,	$	126,977			48,148
Warranty provisions		49,040			99,666
Warranty payments (cash or in-kind)		(45,637	)		(26,834	)
Other(1)		(17,463	)		6,412
Ending balance	$	112,916			127,392

(1) Includes amounts representing adjustments to the liability for changes in foreign currency translation.

Note 5. Revenue Recognition

Revenue is generally recognized at the time of product shipment or delivery, depending on when the passage of title to goods transfers to unaffiliated customers, when all of the following have occurred: a firm sales agreement is in place, pricing is fixed or determinable and collection is reasonably assured.  We record estimated reductions to revenue for customer sales programs, returns and incentive offerings including: rebates, price protection, promotions and volume-based incentives.  The reductions to revenue are based on estimates and judgments using historical experience and expectation of future conditions.

5

Note 6.  Comprehensive (Loss) Income

The components of comprehensive (loss) income are as follows:

	Three months ended						Nine months ended
	March 31,						March 31,
($000s omitted)	2009			2008			2009			2008
Net (loss) income	$	(66,559	)		(3,349	)		(360,187	)		76,060
Other comprehensive (loss) income:
Foreign currency translation		(33,766	)		57,688			(154,559	)		106,856
Unrealized loss on available-for-sale-securities		(371	)		---			(5,001	)		---
Unrealized (loss) gain on hedging		(3,724	)		(2,023	)		3,443			(4,581	)
Change in pension benefits		(135	)		(17	)		(303	)		(30	)
Total comprehensive (loss) income	$	(104,555	)		52,299			(516,607	)		178,305

At March 31, 2009, we had $7.0 million of investments included in other current assets that have been classified as available-for-sale securities under the provisions of Statement of Financial Accounting Standards (“SFAS”) 115, Accounting for Certain Investments in Debt and Equity Securities.  Under the provisions of this statement, these securities are recorded at fair value with realized gains and losses recorded in income and unrealized gains and losses recorded in other comprehensive (loss) income, net of taxes.

Note 7.  (Loss) Earnings Per Share

The following table presents the calculation of basic and diluted (loss) earnings per common share outstanding:

	Three months ended March 31,
($000s omitted except per share amounts)	2009						2008
	Basic			Diluted			Basic			Diluted
Net (loss) income	$	(66,559	)		(66,559	)		(3,349	)		(3,349	)
Weighted average shares outstanding		58,568			58,568			60,086			60,086
Employee stock options		---			---			---			---
Total weighted average shares outstanding		58,568			58,568			60,086			60,086
(Loss) earnings per share	$	(1.14	)		(1.14	)		(0.06	)		(0.06	)

	Nine months ended March 31,
($000s omitted except per share amounts)	2009						2008
	Basic			Diluted			Basic		Diluted
Net (loss) income	$	(360,187	)		(360,187	)		76,060		76,060
Weighted average shares outstanding		58,544			58,544			62,474		62,474
Employee stock options		---			---			---		841
Total weighted average shares outstanding		58,544			58,544			62,474		63,315
(Loss) earnings per share	$	(6.15	)		(6.15	)		1.22		1.20

Options to purchase 2,709,042 shares of our common stock with exercise prices ranging from $11.72 to $126.94 per share during the three months ended March 31, 2009, and options to purchase 3,496,981 shares of our common stock at prices ranging from $11.72 to $126.94 per share during the three months ended March 31, 2008, were outstanding and not included in the computation of diluted earnings per share because they would have had an anti-dilutive effect.  For the three months ended March 31, 2009 and 2008, 598,429 and 106,708 restricted shares, respectively, were outstanding and not included in the computation of diluted earnings per share because they would have had an anti-dilutive effect.

6

Options to purchase 2,716,750 shares of our common stock with exercise prices ranging from $11.72 to $126.94 per share during the nine months ended March 31, 2009, and options to purchase 1,761,060 shares of common stock at prices ranging from $68.38 to $126.94 per share during the nine months ended March 31, 2008, were outstanding and not included in the computation of diluted earnings per share because they would have had an anti-dilutive effect.  For the nine months ended March 31, 2009 and 2008, 412,273 and 48,398 restricted shares, respectively, were outstanding and not included in the computation of diluted earnings per share because they would have had an anti-dilutive effect.

The conversion terms of our 1.25 percent Convertible Senior Notes due 2012 (the “Notes”) will affect the calculation of diluted earnings per share if the price of our common stock exceeds the conversion price of the Notes.  The initial conversion price of the Notes was approximately $104 per share, subject to adjustment in specified circumstances, as described in the indenture related to the Notes (the “Indenture”).  Upon conversion, a holder of Notes will receive an amount per Note in cash equal to the lesser of $1,000 or the conversion value of the Notes, determined in the manner set forth in the Indenture.  If the conversion value exceeds $1,000, we will deliver $1,000 in cash and at our option, cash, common stock or a combination of cash and common stock for the conversion price in excess of $1,000.  The conversion option is indexed to our common stock and therefore is classified as equity.  The conversion option will not result in an adjustment to net income in calculating diluted earnings per share.  The dilutive effect of the conversion option will be calculated using the treasury stock method.  Therefore, conversion settlement shares will be included in diluted shares outstanding if the price of our common stock exceeds the conversion price of the Notes.

Note 8. Debt

Borrowings Under Revolving Credit Facility:

On March 31, 2009 we and one of our wholly-owned subsidiaries, Harman Holding GmbH & Co. KG entered into a Second Amended and Restated Multi-Currency, Multi-Option Credit Agreement (the “Amended Credit Agreement”), amending and restating the Amended and Restated Multi-Currency, Multi-Option Credit Agreement dated June 22, 2006.  The Amended Credit Agreement, among other things, extended the maturity date from June 28, 2010 to December 31, 2011 and reduced the maximum amount of available credit under the revolving credit facility from $300 million to $270 million.  Interest rates for borrowings under the Amended Credit Agreement were increased to three percent above the applicable base rate for base rate loans and four percent over London Interbank Offered Rate (“LIBOR”) for Eurocurrency loans.  In addition, the annual facility fee rate payable under the Amended Credit Agreement has increased to one percent. The interest rate on our old revolving credit facility was based on LIBOR plus 37 to 90 basis points, plus a commitment fee of 8 to 22.5 basis points. The interest rate spread and commitment fee were determined based upon our interest coverage ratio and senior unsecured debt rating.

At March 31, 2009, we had $260 million in borrowings under the revolving credit facility and outstanding letters of credit of $8.0 million.  In accordance with the Amended Credit Agreement, we are required to maintain funds on deposit in a separate bank account in an aggregate amount equal to the outstanding letters of credit which are undrawn and unexpired.  At March 31, 2009, we had $8.0 million on deposit in a separate bank account to satisfy this requirement.  Unused available credit under the Amended Credit Agreement was $2.0 million at March 31, 2009.  In connection with the Amended Credit Agreement, we incurred $9.5 million in fees and other expenses which have been capitalized within other current assets and other assets in our Condensed Consolidated Balance Sheet at March 31, 2009.  These costs will be amortized over the term of the Amended Credit Agreement as interest expense.

The Amended Credit Agreement contains financial and other covenants that, among other things:

· Requires us to maintain the following levels and ratios:

o Consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) must be above specified amounts based on a schedule starting at $100 million for the four-quarter period ending June 30, 2010, and increasing on a quarterly basis until reaching $250 million for the four-quarter period ending December 31, 2011;

7

o Our minimum liquidity amount (“Liquidity Amount”) may not be less than: (a) $250 million for the fiscal quarter ending March 31, 2009; (b) $150 million for the fiscal quarter ending June 30, 2009; and (c) $100 million for the fiscal quarter ending September 30, 2009 and each fiscal quarter thereafter, subject to certain exceptions.  Liquidity Amount is defined as cash, subject to certain exceptions, plus availability on the Amended Credit Agreement; and

o The ratio of Consolidated Current Assets to Secured Funded Debt must be equal to or less than 1:00 to 1:00.  Consolidated Current Assets is defined as 70 percent of net book value of accounts receivable, plus 35 percent of net book value of inventory, plus up to $25 million of cash, subject to certain exceptions.  Secured Funded Debt is defined as the aggregate exposure under the Amended Credit Agreement plus the amount outstanding under certain other secured facilities;

· Limits our ability to pay dividends and make capital expenditures;

· Requires net proceeds from the sale of certain assets and issuances of debt and equity to be applied to prepayment of the revolving credit facility; and

· Imposes limitations on our ability to incur debt, place liens on our assets, make fundamental changes, sell assets, make investments, undertake transactions with affiliates, undertake sale and leaseback transactions, incur guarantee obligations, modify or prepay certain material debt (including the Notes), enter into hedging agreements and acquire certain types of collateral.

If we do not meet the forecast in our budgets, we could violate our debt covenants and, absent a waiver from our lenders or an amendment to our credit agreement, we could be in default under the Amended Credit Agreement and, as a result, our debt under the Amended Credit Agreement could become due which would have a material adverse effect on our financial position and results of operations and could also lead to an event of default under the Indenture and the acceleration of the Notes.  As of March 31, 2009, we were in compliance with all the financial covenants of the Amended Credit Agreement.  Based on our forecast, we believe we will be in compliance with these covenants for at least the next 12 months.

Guarantee and Collateral Agreement:

In connection with the Amended Credit Agreement, we and certain of our subsidiaries have entered into a guarantee and collateral agreement, (the “Guarantee and Collateral Agreement”) which provides, among other things, that the obligations under the Amended Credit Agreement are guaranteed by us and each of the subsidiary guarantors party thereto, and that the obligations generally are secured by liens on substantially all of our assets and certain of our subsidiary guarantors’ assets.

The term of the Guarantee and Collateral Agreement corresponds with the term of the Amended Credit Agreement which matures on December 31, 2011.  Under the terms of this Guarantee and Collateral Agreement, we have effectively guaranteed the payment of the full amount of borrowings under the Amended Credit Agreement, including outstanding letters of credit, upon maturity.  The potential amount of future payment that we would be required to pay under the Guarantee and Collateral Agreement is the amount that we have borrowed under the Amended Credit Agreement, including outstanding letters of credit.  At March 31, 2009, we had borrowed $260 million and had outstanding letters of credit of $8.0 million.

Convertible Senior Notes:

On October 23, 2007, we issued $400 million aggregate principal amount of the Notes.  The initial conversion rate is 9.6154 shares of our common stock per $1,000 principal amount of the Notes (which is equal to an initial conversion price of approximately $104 per share).  The conversion rate is subject to adjustment in specified circumstances described in the Indenture.

The Notes are convertible at the option of the holders:

· during any calendar quarter commencing after December 31, 2007, if the closing price of our common stock exceeds 130 percent of the conversion price for at least 20 trading days during any period of 30 consecutive trading days, ending on the last trading day of the preceding calendar quarter;

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· during the five business day period immediately after any five-day trading period in which the trading price per $1,000 principal amount of the Notes for each day of the trading period was less than 98 percent of the product of (1) the closing price of our common stock on such date and (2) the conversion rate on such date;

· upon the occurrence of specified corporate transactions that are described in the Indenture; or

· at any time after June 30, 2012 until the close of business on the business day immediately prior to October 15, 2012.

Upon conversion, a holder will receive in respect of each $1,000 of principal amount of Notes to be converted an amount in cash equal to the lesser of (a) $1,000 or (b) the conversion value, determined in the manner set forth in the Indenture.  If the conversion value per Note exceeds $1,000, we will also deliver, at our election, cash or common stock or a combination of cash and common stock for the conversion value in excess of $1,000.

Debt issuance costs of $4.8 million associated with this transaction were capitalized and are being amortized over the term of the Notes.  The unamortized balance at March 31, 2009 was $3.4 million.

On October 23, 2007, we entered into a Registration Rights Agreement requiring us to register the Notes and the shares contingently issuable upon conversion of the Notes.  On October 23, 2008, we filed an automatically effective registration statement with the SEC to meet this requirement.  We are required to keep the registration statement effective until the earlier of (a) such time as the Notes and the shares contingently issuable under the Notes (1) are sold under an effective registration statement or pursuant to Rule 144 of the Securities Act of 1933, (2) are freely transferable under Rule 144 more than one year following October 23, 2007, or (3) cease to be outstanding, and (b) five years and three months following October 23, 2007.  In the event that we fail to keep the registration statement effective as required under the Registration Rights Agreement, additional interest will accrue on the Notes at the rate of 0.25 percent per annum.  We do not believe it is probable that we will fail to comply with the Registration Rights Agreement.  Therefore, no liability for additional interest has been recorded.

The Indenture contains covenants, one of which requires us to calculate the ratio of Consolidated Total Debt to Consolidated EBITDA, as defined in the Indenture, for the most recently ended four quarter period, each time we incur additional indebtedness.  In April 2009, we have exceeded the minimum ratio for this covenant and, as a result, we will not be able to incur additional indebtedness without obtaining a waiver from the holders of a majority in principal amount of the Notes.  We do not intend to incur additional indebtedness unless we obtain a waiver or are able to satisfy this covenant.  If we were to incur additional indebtedness, at a time when we failed to meet the minimum ratio of Consolidated Total Debt to Consolidated EBITDA (unless we received a waiver), we would be in violation of our covenant under the Indenture.  If the violation is not remedied within 60 days, the Notes could become due, which would have a material adverse affect on our financial condition and our results of operations, and would also lead to an event of default under the Amended Credit Agreement and the acceleration of the loans thereunder.  Based on our forecast, we believe that we will be in compliance with these covenants for at least the next 12 months.  See Note 21, Subsequent Events.

Note 9.  Income Taxes

Our provision for income taxes is based on an estimated annual tax rate for the year applied to federal, state and foreign income.  Income tax benefit for the three months ended March 31, 2009 was $28.2 million, compared to income tax benefit of $7.3 million for the same period in the prior year.  The effective rate for the three months ended March 31, 2009 was a benefit of 29.8 percent, compared to a benefit of 72.6 percent in the prior year period. The income tax benefit resulted from a deferred tax benefit due to the goodwill impairment, operating losses and the federal research credit.   These increases were partially offset by an increase in our valuation allowance to reserve for certain foreign tax credits.  For the nine months ended March 31, 2009, income tax benefit was $68.8 million, compared to income tax expense of $11.0 million for the same period last year.  The effective tax rate for the nine months ended March 31, 2009 was a benefit of 16.0 percent compared to an expense of 12.7 percent in the same period in the prior year due to goodwill impairment, operating losses and the federal research credit.

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As of March 31, 2009, unrecognized tax benefits and the related interest were $9.0 million and $2.0 million, respectively, all of which would affect the tax rate if recognized.  During the three and nine months ended March 31, 2009, we recorded uncertain tax positions of a benefit of $0.7 million and an expense of $0.9 million, respectively.

Note 10.  Share-Based Compensation

On March 31, 2009, we had one share-based compensation plan with shares available for future grants, the Amended and Restated 2002 Stock Option and Incentive Plan (the “2002 Plan”).  The 2002 Plan permits the grant of stock options, stock appreciation rights, restricted stock and restricted stock units in an aggregate amount not to exceed 6,760,000 shares of our common stock.  During the nine months ended March 31, 2009, options to purchase 806,735 shares of our common stock, 20,000 shares of restricted stock and 503,184 restricted stock units were granted under the 2002 Plan.  In addition, 28,344 restricted stock units were granted outside the 2002 Plan during the same period.

Share-based compensation expense was $4.9 million and $6.9 million for the three months ended March 31, 2009 and 2008, respectively, and $4.9 million and $18.5 million for the nine months ended March 31, 2009 and 2008, respectively.  Share-based compensation expense for nine months ended March 31, 2009 was reduced by stock option forfeitures recorded in connection with the retirement of certain senior executives. The total income tax benefit recognized in the Condensed Consolidated Statements of Operations for share-based compensation arrangements was $1.2 million and $1.6 million for the three months ended March 31, 2009 and 2008, respectively, and $0.2 million and $4.4 million for the nine months ended March 31, 2009 and 2008, respectively.

Fair Value Determination

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model, which uses the assumptions noted in the following table:

	Nine months ended March 31,
	2009			2008
Expected volatility		42.0% - 58.6	%		35.1% - 50.0	%
Weighted-average volatility		50.1	%		39.0	%
Expected annual dividend	$	0.05		$	0.05
Expected term (in years)		1.90 - 6.51			1.69 – 6.71
Risk-free rate		1.3% - 3.6	%		2.1% - 5.0	%

Groups of option holders (directors, executives and non-executives) that have similar historical behavior are considered separately for valuation purposes. Expected volatilities are based on historical closing prices of our common stock over the expected option term. We use historical data to estimate option exercises and employee terminations within the valuation model. The expected term of options granted is derived using the option valuation model and represents the estimated period of time from the date of grant that the option is expected to remain outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

Stock Option Activity

A summary of option activity under our stock option plans as of March 31, 2009 and changes during the nine months ended March 31, 2009 is presented below:

	Shares			Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value ($000s)
Outstanding at June 30, 2008		2,636,627		$	73.40
Granted		806,735			30.74
Exercised		(47,220	)		11.19
Forfeited or expired		(693,860	)		75.42
Outstanding at March 31, 2009		2,702,282			61.23		7.82	$	108
Exercisable at March 31, 2009		792,290		$	64.75		5.49	$	108

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The weighted-average grant-date fair value of options granted during the three months ended March 31, 2009 and 2008 was $7.41 and $17.55, respectively. The weighted-average grant-date fair value of options granted during the nine months ended March 31, 2009 and 2008 was $11.19 and $31.56, respectively. The total intrinsic value of options exercised during the three months ended March 31, 2009 and 2008 was zero and $2.2 million, respectively.  The total intrinsic value of options exercised during the nine months March 31, 2009 and 2008 was $0.3 million and $6.7 million, respectively.

Modification of Certain Stock Option Awards

The award agreements under the 2002 Plan state that vested options not exercised are forfeited upon termination of employment for any reason other than death or disability.  However, the award agreements provide that the Compensation and Option Committee of our Board of Directors may extend the time period to exercise vested options 90 days beyond the employment termination date for certain employees.  During the three months ended March 31, 2008, the Compensation and Option Committee used this authority.  This action represented a modification of the terms or conditions of an equity award and therefore was accounted for as an exchange of the original award for a new award.  During the three months ended March 31, 2008, incremental share-based compensation cost of $1.2 million was recognized for the excess of the fair value of the new award over the fair value of the original award immediately before the terms were modified.

Grant of Stock Options with Market Conditions

We granted 330,470 stock options containing a market condition to employees on March 21, 2008.  The options vest three years from the date of grant based on a comparison of our total shareholder return (“TSR”) to the TSR of a selected peer group of publicly listed multinational companies.  TSR will be measured as the annualized increase in the aggregate value of our stock price plus the value of dividends, assumed to be reinvested into shares of the company’s stock at the time of dividend payment.  The base price to be used for the TSR calculation of $42.19 is the 20-day trading average from February 6, 2008 through March 6, 2008.  The ending price to be used for the TSR calculation will be the 20-day trading average prior to and through March 6, 2011.  The grant date fair value of $4.2 million was calculated using a combination of Monte Carlo simulation and lattice-based models.  Share-based compensation expense for these awards was $1.0 million for the nine months ended March 31, 2009.

Restricted Stock

A summary of the status of our nonvested restricted stock as of March 31, 2009 and changes during the nine months ended March 31, 2009, is presented below:

				Weighted average
				grant-date
	Shares			fair value
Non-vested at June 30, 2008		92,910		$	95.23
Granted		20,000			20.53
Vested		(25,918	)		84.98
Forfeited		---			---
Non-vested at March 31, 2009		86,992		$	81.11

As of March 31, 2009, there was $3.2 million of total unrecognized compensation cost related to nonvested restricted stock-based compensation arrangements. The weighted average recognition period was 1.73 years.

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Restricted Stock Units

In January and September 2008, we granted 34,608 and 28,344 cash-settled restricted stock units, respectively, outside the 2002 Plan.  These restricted stock units are accounted for as liability awards and are recorded at the fair value at the end of the reporting period in accordance with their vesting schedules.  In the three months ended March 31, 2009, 23,595 of these restricted stock units were settled at a cost of $0.4 million.  During the six months ended December 31, 2008, 1,608 of these restricted stock units were settled at a cost of approximately $0.1 million.

We granted 133,507 restricted stock units with performance conditions in the nine months ended March 31, 2009 under the 2002 Plan.  The restricted stock units vest three years from the date of grant based on attainment of certain performance targets in fiscal 2011.  Compensation expense is recognized ratably over the three-year vesting period based on grant date fair value and our assessment of the probability that the performance targets will be met. We have recognized compensation expense based on our estimate of the probability of achieving the targets.

For the nine months ended March 31, 2009, we also granted 369,677 restricted stock units under the 2002 Plan that vest three years from the date of grant.

A summary of equity classified restricted stock unit activity as of March 31, 2009 and changes during the nine months ended March 31, 2009 is presented below:

	Shares
Non-vested at June 30, 2008		25,000
Granted		503,184
Vested		---
Forfeited		(13,770	)
Non-vested at March 31, 2009		514,414

At March 31, 2009, the aggregate intrinsic value of equity classified restricted stock units was $7.0 million.  As of March 31, 2009, there was $11.6 million of total unrecognized compensation cost related to equity classified restricted stock unit compensation arrangements. The weighted average recognition period was 2.5 years.

Chief Executive Officer Special Enterprise Value Bonus

Our Chief Executive Officer was granted a special bonus award in November 2007.  The award will be settled in cash based on a comparison of our enterprise value at November 2012 to our enterprise value at the grant date in November 2007.  The award is classified as a liability and therefore, the fair value is required to be measured each quarter.  The fair value of this award at March 31, 2009 was $0.1 million, calculated using a Monte Carlo simulation.  During the nine months ended March 31, 2009 we recognized a benefit of $0.1 million due to the decrease in the award’s computed fair value since June 30, 2008.

Note 11.  Restructuring Program

We announced a restructuring program in June 2006 designed to increase efficiency in our manufacturing, engineering and administrative organizations.  During the three months ended March 31, 2008, we expanded our restructuring actions to improve our global footprint, cost structure, technology portfolio, human resources and internal processes.  These actions will reduce the number of our manufacturing, engineering and operating locations and are all included in our cost savings and productivity program called STEP Change.

In the prior fiscal year we announced plant closings in Northridge, California and Martinsville, Indiana and closed a plant in South Africa and a small facility in Massachusetts.  In fiscal year 2009, we completed the transition of our corporate headquarters from Washington D.C. to Stamford, Connecticut and have initiated numerous other actions to reduce cost and improve operating efficiency in our businesses.  Programs initiated in fiscal year 2009 include the announced closure of the Woodbury, New York facility and numerous headcount reductions across our business units to reduce excess capacity due to decreased sales.  The most significant of these programs were in Germany, the United Kingdom and various locations in the United States.

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For the nine months ended March 31, 2009, selling, general and administrative (“SG&A”) expenses included $44.6 million for our restructuring program, of which $37.5 million was recorded for employee termination benefits.  Cash paid for restructuring actions for the nine months ended March 31, 2009 totaled $31.7 million.  We also recorded $9.7 million primarily in cost of sales for accelerated depreciation and the reclassification of the Martinsville property from held and used to held for sale, both of which were recorded in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

Below is a rollforward of our restructuring accrual, accounted for in accordance with SFAS 88, Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, SFAS 112, Employers’ Accounting for Postemployment Benefits and SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities:   

	Three months ended March 31,						Nine months ended March 31,
($000s omitted)	2009			2008			2009			2008
Accrued liability, beginning balance	$	43,896			3,804			35,601			7,527
Expense		17,490			33,426			44,637			34,132
Utilization (1)		(14,357	)		(4,537	)		(33,209	)		(8,966	)
Accrued liability at March 31,	$	47,029			32,693			47,029			32,693

(1)  Includes amounts representing adjustments to the liability for changes in foreign currency exchange rates.

Restructuring expenses by reporting segment are as follows:

	Three months ended					Nine months ended
	March 31,					March 31,
($000s omitted)	2009			2008		2009		2008
Automotive	$	14,486			18,722		22,874		19,438
Consumer		131			6,164		5,559		6,090
Professional		3,054			5,901		8,695		5,965
Other		(181	)		2,639		7,509		2,639
Total employee-related expense		17,490			33,426		44,637		34,132
Accelerated depreciation (1)		994			---		9,651		---
Total restructuring expenses	$	18,484			33,426		54,288		34,132

(1)    The components of the accelerated depreciation for the three months ended March 31, 2009 were $0.5 million within Automotive, $0.1 million within Consumer and $0.4 million within Professional for the three months ended March 31, 2009.   The components of accelerated depreciation for the nine months ended March 31, 2009 included $8.4 million within Automotive, $0.1 million within Consumer, $1.1 million within Professional and $0.1 million within Other.

Note 12. Retirement Benefits

Retirement Savings Plan

We provide a Retirement Savings Plan for certain employees in the United States. Under the plan, employees may contribute up to 50 percent of their pretax compensation subject to certain limitations. Each business unit will make a safe harbor non-elective contribution in an amount equal to three percent of a participant's eligible contribution. Upon approval of the Board of Directors, each business unit may make a matching contribution of up to three percent (50 percent on the first six percent of an employees tax-deferred contribution) and a profit sharing contribution. Matching and profit sharing contributions vest at a rate of 25 percent for each year of service with the employer, beginning with the second year of service. Effective January 1, 2009, we suspended the matching and safe harbor non-elective contributions for these plans.

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Pension Benefits

We provide defined benefit pensions to certain eligible employees.  The measurement date used for determining pension benefits is the last day of our fiscal year, June 30. We have certain business units in Europe that maintain defined benefit pension plans for many of our current and former employees. The coverage provided and the extent to which the retirees’ share in the cost of the program vary by business unit. Generally, plan benefits are based on age, years of service and average compensation during the final years of service.  In the United States, we have a Supplemental Executive Retirement Plan (“SERP”) that provides retirement, death and termination benefits, as defined in the SERP, to certain key executives designated by our Board of Directors.

Our retirement benefits are more fully disclosed in Note 16, Retirement Benefits, to our consolidated financial statements included in Item 8 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2008.

The following tables present the components of net periodic benefit costs:

	Three months ended
	March 31,
($000s omitted)	2009		2008
Service cost	$	206		225
Interest cost		1,816		3,773
Amortization of prior service cost		401		1,678
Amortization of net loss		46		1,503
Net periodic benefit cost	$	2,469		7,179

	Nine months ended
	March 31,
($000s omitted)	2009		2008
Service cost	$	1,855		2,018
Interest cost		5,568		7,010
Amortization of prior service cost		1,358		2,108
Amortization of net loss		173		2,109
Net periodic benefit cost	$	8,954		13,245

During the nine months ended March 31, 2009, we made contributions of $5.5 million to the defined benefit pension plans which were paid to participants.  We expect to make approximately $3.5 million in contributions for the remainder of the fiscal year ending June 30, 2009.  

Note 13.  Business Segment Data

We design, manufacture and market high-quality, high fidelity audio products and electronic systems for the automotive, consumer and professional markets.  We organize our businesses into reporting segments by the end-user markets we serve.  Our chief operating decision makers evaluate performance and allocate resources primarily based on net sales, operating income and working capital in each of the reporting segments.  Our reportable segments are Automotive, Consumer and Professional.

During the three months ended September 30, 2008, we revised our business segments to align with our strategic approach to the markets and customers we serve.  We now report financial information for the QNX business in our Other segment.  The QNX business was previously reported in our Automotive segment.  Segment information for the prior period has been reclassified to reflect the new presentation.

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Our Automotive segment designs, manufactures and markets audio, electronic and infotainment systems for vehicle applications primarily to be installed as original equipment by automotive manufacturers.  Our Automotive products and systems are marketed worldwide under brand names including JBL, Infinity, Harman/Kardon, Becker, Logic 7 and Mark Levinson.  Our premium branded audio, video, navigation and infotainment systems are offered to automobile manufacturers through engineering and supply agreements.  See Note 14, Significant Customers.

Our Consumer segment designs, manufactures and markets loudspeaker, electronic systems and headphones for home, computer and multimedia applications and mobile applications.  Our Consumer home products and systems are marketed worldwide under brand names including JBL, Infinity, Harman/Kardon and AKG.  Our loudspeaker and electronic products are offered through audio specialty and retail chain stores.  Our branded products for computer and multimedia applications are focused on retail customers with products designed to enhance sound for computers, Apple’s iPodTM and similar devices.

Our Professional segment designs, manufactures and markets loudspeakers and electronic systems used by audio professionals in concert halls, stadiums, airports and other buildings and for recording, broadcast, cinema and music reproduction applications.  Our Professional products are marketed worldwide under brand names including JBL Professional, AKG, Crown, Soundcraft, Lexicon, Mark Levinson, Revel, DigiTech, dbx and Studer.  We provide high-quality products to the sound reinforcement, music instrument support and broadcast and recording segments of the professional audio market.  We offer complete systems solutions for professional installations and users around the world.

Our Other segment includes the operations of the QNX business, which offers embedded operating system software and related development tools and consulting services used in a variety of products and industries.  Our Other segment also includes compensation, benefit and occupancy costs for corporate employees.

The following table reports net sales and operating (loss) income by each reporting segment:

	Three months ended						Nine months ended
	March 31,						March 31,
($000s omitted)			2009		2008			2009		2008
Net sales:
Automotive		$	405,234		758,947			1,539,345		2,151,959
Consumer			71,781		112,635			297,657		415,825
Professional			111,718		150,333			357,428		447,179
Other			9,549		10,753			28,917		30,277
Total		$	598,282		1,032,668			2,223,347		3,045,240
Operating (loss) income:
Automotive		$	(83,834	)	4,929			(383,538	)	83,438
Consumer			(7,421	)	(13,344	)		(33,059	)	997
Professional			8,012		15,942			34,826		59,374
Other			(9,237	)	(14,128	)		(44,795	)	(48,130	)
Total		$	(92,480	)	(6,601	)		(426,566	)	95,679

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We recorded goodwill impairment charges of $292.3 million for Automotive, $22.7 million for Consumer and $12.8 million for QNX, reported in Other, in the nine months ended March 31, 2009.  All but $2.3 million of the impairment charges were recorded in the three months ended December 31, 2008.  An additional goodwill impairment charge of $2.3 million for Automotive was recorded in the three months ended March 31, 2009.  See Note 18, Goodwill Impairment.

Other operating loss also includes activity related to our corporate operations, net of reporting segment allocations.

Note 14.  Significant Customers

Presented below are the percentages of net sales to and gross accounts receivables due from customers who represent ten percent or more of our net sales or accounts receivable for the periods presented:

	Net Sales						Accounts Receivable
	Nine months ended March 31,						As of March 31,
	2009			2008			2009			2008
Audi/VW		15	%		10	%		16	%		10	%
BMW		14	%		9	%		11	%		7	%
Daimler AG		9	%		20	%		6	%		15	%
Chrysler		7	%		8	%		9	%		10	%
Other customers		55	%		53	%		58	%		58	%
Total		100	%		100	%		100	%		100	%

We anticipate that Daimler AG, Audi/VW and BMW will continue to account for a significant portion of our net sales and accounts receivable for the foreseeable future.  Our automotive customers are not obligated to any long-term purchase of our products.

On April 30, 2009, Chrysler and certain of its affiliates filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Southern District of New York to reorganize its business. See Note 21, Subsequent Events.

Note 15.  Commitments and Contingencies

At March 31, 2009, we were subject to legal claims and litigation arising in the ordinary course of business, including the matters described below.  The outcome of these legal actions cannot be predicted with certainty; however, management, based upon advice from legal counsel, believes such actions are either without merit or will not have a material adverse effect on our financial position or results of operations.

In re Harman International Industries, Inc. Securities Litigation

On October 1, 2007, a purported class action lawsuit was filed by Cheolan Kim (the “Kim Plaintiff”) against Harman and certain of our officers in the United States District Court for the District of Columbia (the “Court”) seeking compensatory damages and costs on behalf of all persons who purchased our common stock between April 26, 2007 and September 24, 2007 (the “Class Period”).  The original complaint alleged claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “1934 Act”) and Rule 10b-5 promulgated thereunder.

The complaint alleged that the defendants omitted to disclose material adverse facts about Harman’s financial condition and business prospects.  The complaint contended that had these facts not been concealed at the time the merger agreement with Kohlberg Kravis Roberts & Co. (“KKR”) and GS Capital Partners VI Fund, L.P. and its related funds (“GSCP”) was entered into, there would not have been a merger agreement, or it would have been at a much lower price, and the price of our common stock therefore would not have been artificially inflated during the Class Period.  The Kim Plaintiff alleged that, following the reports that the proposed merger was not going to be completed, the price of our common stock declined, causing the plaintiff class significant losses.

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On November 30, 2007, the Boca Raton General Employees’ Pension Plan (the “Boca Raton Plaintiff”) filed a purported class action lawsuit against Harman and certain of our officers in the Court seeking compensatory damages and costs on behalf of all persons who purchased our common stock between April 26, 2007 and September 24, 2007.  The allegations in the Boca Raton complaint are essentially identical to the allegations in the original Kim complaint, and like the original Kim complaint, the Boca Raton complaint alleges claims for violations of Sections 10(b) and 20(a) of the 1934 Act and Rule 10b-5 promulgated thereunder.

On January 16, 2008, the Kim Plaintiff filed an amended complaint.  The amended complaint, which extended the Class Period through January 11, 2008, contended that, in addition to the violations alleged in the original complaint, Harman also violated Sections 10(b) and 20(a) of the 1934 Act and Rule 10b-5 by knowingly failing to disclose “significant problems” relating to its portable navigation device (“PND”) sales forecasts, production, pricing, and inventory” prior to January 14, 2008.  The amended complaint claimed that when “Defendants revealed for the first time on January 14, 2008 that shifts in PND sales would adversely impact earnings per share by more than $1.00 per share in fiscal 2008,” that led to a further decline in our share value and additional losses to the plaintiff class.

On February 15, 2008, the Court ordered the consolidation of the Kim action with the Boca Raton action, the administrative closing of the Boca Raton action, and designated the short caption of the consolidated action as In re Harman International Industries, Inc. Securities Litigation, civil action no. 1:07-cv-01757 (RWR).  That same day, the Court appointed Arkansas Public Retirement System as lead plaintiff (“Lead Plaintiff”) and approved the law firm Cohen, Milstein, Hausfeld and Toll, P.L.L.C. to serve as lead counsel.

On March 24, 2008, the Court ordered, for pretrial management purposes only, the consolidation of Patrick Russell v. Harman International Industries, Incorporated, et al. with In re Harman International Industries, Inc. Securities Litigation.

On May 2, 2008, Lead Plaintiff filed a consolidated class action complaint (the “Consolidated Complaint”).  The Consolidated Complaint, which extends the Class Period through February 5, 2008, contends that Harman and certain of our officers and directors violated Sections 10(b) and 20(a) of the 1934 Act and Rule 10b-5 promulgated thereunder, by issuing false and misleading disclosures regarding our financial condition in fiscal year 2007 and fiscal year 2008.  In particular, the Consolidated Complaint alleges that defendants knowingly or recklessly failed to disclose material adverse facts about MyGIG radios, PNDs and our capital expenditures.  The Consolidated Complaint alleges that when Harman’s true financial condition became known to the market, the price of our common stock declined significantly, causing losses to the plaintiff class.

On July 3, 2008, defendants moved to dismiss the Consolidated Complaint in its entirety.  Lead Plaintiff opposed the defendants’ motion to dismiss on September 2, 2008, and defendants filed a reply in further support of their motion to dismiss on October 2, 2008.  The motion is now fully briefed.

Patrick Russell v. Harman International Industries, Incorporated, et al.

Patrick Russell (the “Russell Plaintiff”) filed a complaint on December 7, 2007 in the United States District Court for the District of Columbia and an amended purported putative class action complaint on June 2, 2008 against Harman and certain of our officers and directors alleging violations of the Employee Retirement Income Security Act of 1974 (“ERISA”) and seeking, on behalf of all participants in and beneficiaries of the Harman International Industries, Incorporated Retirement Savings Plan  (the “Plan”), compensatory damages for losses to the Plan as well as injunctive relief, imposition of a constructive trust, restitution, and other monetary relief.  The amended complaint alleges that from April 26, 2007 to the present, defendants failed to prudently and loyally manage the Plan’s assets, thereby breaching their fiduciary duties in violation of ERISA, by causing the Plan to invest in our common stock notwithstanding that the stock allegedly was “no longer a prudent investment for the Participants’ retirement savings.”  The amended complaint further claims that, during the Class Period, defendants failed to monitor the Plan fiduciaries, failed to provide the Plan fiduciaries with, and to disclose to Plan participants, adverse facts regarding Harman and our businesses and prospects.  The Russell Plaintiff also contends that defendants breached their duties to avoid conflicts of interest and to serve the interests of participants in and beneficiaries of the Plan with undivided loyalty.  As a result of these alleged fiduciary breaches, the amended complaint asserts that the Plan has “suffered substantial losses, resulting in the depletion of millions of dollars of the retirement savings and anticipated retirement income of the Plan’s Participants.”

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On March 24, 2008, the Court ordered, for pretrial management purposes only, the consolidation of Patrick Russell v. Harman International Industries, Incorporated, et al. with In re Harman International Industries, Inc. Securities Litigation.

Defendants moved to dismiss the complaint in its entirety on August 5, 2008.  The Russell Plaintiff opposed the defendants’ motion to dismiss on September 19, 2008, and defendants filed a reply in further support of their motion to dismiss on October 20, 2008.  The motion is now fully briefed.

Siemens vs. Harman Becker Automotive Systems GmbH.

In October 2006, Harman Becker Automotive Systems GmbH (“Harman Becker”) received notice of a complaint filed against it by Siemens AG with the Regional Court in Düsseldorf in August 2006 alleging that certain of Harman Becker’s infotainment products, including both radio receiver and Bluetooth hands free telephony functionality, infringe upon a patent owned by Siemens.  In November 2006, Harman Becker filed suit with the German Federal Patent Court in Munich to nullify the claims of this patent.

On August 14, 2007, the court of first instance in Düsseldorf ruled that the patent in question had been infringed and ordered Harman Becker to cease selling the products in question in Germany, and to compile and submit data to Siemens AG concerning its prior sales of such products.  Harman Becker has appealed that ruling.

Despite the pending appeal, Siemens AG provisionally enforced the ruling against Harman Becker.  Accordingly, in December 2007, Harman Becker ceased selling aftermarket products covered by the patent in Germany, and submitted the required data to Siemens AG.

On June 4, 2008, the German Federal Patent Court nullified all relevant claims of Siemens AG’s patent.  As a result, Harman Becker resumed selling the affected products, and Siemens AG suspended further attempts to enforce the patent.  Siemens AG also requested that Harman Becker suspend its appeal of the Düsseldorf court’s ruling of infringement until the German Federal Patent Court’s nullity ruling has become final.  Harman Becker has consented to this suspension.  Harman Becker received the written decision of the German Federal Patent Court on August 18, 2008, and Siemens AG has appealed the decision to the German Federal Supreme Court. We expect these appellate proceedings to take at least three years until a final decision is rendered.

Automotive Supply Arrangements

We have arrangements with our automotive customers to provide products that meet predetermined technical specifications and delivery dates.  In the event that we do not satisfy the performance obligations under these arrangements, we may be required to indemnify the customer.  We accrue for any loss that we expect to incur under these arrangements when that loss is probable and can be reasonably estimated. For the three months and nine months ended March 31, 2009, we incurred zero and $2.6 million, respectively, of costs relating to delayed delivery of product to an automotive customer.  An inability to meet performance obligations on automotive platforms to be delivered in future periods could adversely affect our results of operations and financial condition in future periods.

Note 16.  Fair Value Measurements

In the first quarter of fiscal year 2009, we adopted SFAS 157, Fair Value Measurements (“SFAS 157”).  The adoption of SFAS 157 did not have a material impact on our consolidated financial statements.

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SFAS 157 establishes a three-tier fair value hierarchy to prioritize the inputs used in measuring fair value.  The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3).  The three levels are defined as follows:

Level 1: Observable inputs, such as unadjusted quoted market prices in active markets for the identical asset or liability.

Level 2: Inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

Level 3: Unobservable inputs reflecting the entity’s own assumptions in measuring the asset or liability at fair value.

The following table provides the fair value hierarchy for financial assets and liabilities measured on a recurring basis:

($000s omitted)	Fair Value at March 31, 2009
Description	Level 1		Level 2			Level 3
Assets/(Liabilities):
Money market funds	$	34,110		---			---
Available-for-sale securities		7,005		---			---
Foreign currency forward contracts		---		(2,002	)		---
Interest rate swap contract		---		(1,563	)		---
Total	$	41,115		(3,565	)		---

Money market funds and available-for-sale-securities are classified as Level 1 as the fair value was determined from market quotes obtained from financial institutions in active markets.

We use foreign currency forward contracts and an interest rate swap contract to hedge market risks relating to possible adverse changes in foreign currency exchange rates and interest rates.  Our foreign currency forward contracts were measured at fair value using Level 2 inputs.  Such inputs include foreign currency spot and forward rates for similar transactions in actively quoted markets.

We have elected to use the income approach to value our interest rate swap contract, which uses observable Level 2 inputs at the measurement date and standard valuation techniques to convert future amounts to a single present amount (discounted).  Level 2 inputs for the swap contract valuation are limited to quoted prices for similar assets or liabilities in active markets (specifically futures contracts on) and inputs other than quoted prices that are observable for the asset or liability (specifically Euro Interbank Offered Rate (“EURIBOR”) cash and swap rates EURIBOR and six by three month basis swap rates) at commonly quoted intervals, and credit risk.  These key inputs, including the EURIBOR cash rates for very short-term, futures rates for up to two years, and EURIBOR swap rates beyond the derivative maturity are used to construct the swap yield curve and discount the future cash flows to present value at the measurement date.  As the interest rate swap contract is a derivative liability, we have used our spread over LIBOR of five percent, applied to all cash flows to calculate the credit adjusted fair market value. If the interest rate swap contract was determined to be a derivative asset, we would use the credit default swap basis for our counterparty collected from Bloomberg to further discount the asset.  See Note 17, Derivatives, for further discussion regarding our derivative financial instruments.

In February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115 (“SFAS 159”), which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement of certain financial assets and liabilities on an instrument-by-instrument basis.  Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings.  We did not elect fair value measurement for financial assets and liabilities.  Therefore, SFAS 159 did not impact our results of operations.

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In February 2008, the FASB issued FASB Staff Position (“FSP”) No. 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”) which delays the effective date of SFAS 157 by one year for nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis.  The provisions of SFAS 157 for nonfinancial assets and liabilities will be adopted by us in the first quarter of fiscal year 2010.

Note 17.  Derivatives

We are exposed to market risk from changes in foreign currency exchange rates and interest rates, which could affect our operating results, financial position and cash flows.  We manage our exposure to these risks through our regular operating and financial activities and when appropriate, through the use of derivative financial instruments.  These derivative instruments are utilized to hedge economic exposures, as well as to reduce earnings and cash flow volatility resulting from shifts in market rates.  We enter into limited types of derivative contracts, including foreign currency spot and forward contracts and an interest rate swap, to manage foreign currency and interest rate exposures.  Our primary foreign currency exposure is the Euro.  The fair market values of all our derivative contracts change with fluctuations in interest rates and/or currency rates and are designed so that any changes in their values are offset by changes in the values of the underlying exposures.  Derivative financial instruments are held solely as risk management tools and not for trading or speculative purposes.

We are required to recognize all derivative instruments as either assets or liabilities at fair value in our Condensed Consolidated Balance Sheets.  As permitted, certain of these derivative contracts have been designated for cash flow hedge accounting treatment, whereby gains and losses are reported within accumulated other comprehensive income, until the underlying transaction occurs.  Certain of our derivatives, for which hedge accounting is not applied, are effective as economic hedges.  These derivative contracts are required to be recognized each period at fair value, with gains and losses reported in earnings, and therefore do result in some level of earnings volatility.  The level of volatility will vary with the type and amount of derivative hedges outstanding, as well as, fluctuations in the currency and interest markets during the period.  The related cash flow impacts of all our derivative activities are reflected as cash flows from operating activities.

Derivatives, by their nature involve varying degrees of market and credit risk.  The market risk associated with these instruments resulting from currency exchange and interest rate movements is expected to offset the market risk of the underlying transactions, assets and liabilities being hedged.  We do not believe there is significant risk of loss in the event of non-performance by the counterparties associated with these instruments, because these transactions are executed with a diversified group of major financial institutions.  Furthermore, our policy is to deal with counterparties having a minimum investment grade or better credit rating.  Credit risk is managed through the continuous monitoring of exposures to such counterparties.

Foreign Exchange Risk Management

We use foreign currency forward contracts to hedge the price risk associated with foreign denominated forecasted purchases of materials used in our manufacturing process and to manage currency risk associated with operating costs in certain operating units.  These contracts generally mature in one year or less.  A portion of these contracts are designated as cash flow hedges.

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At March 31, 2009, we had outstanding foreign currency forward exchange contracts with gross notional values of $202.3 million, which are summarized below:

($000s omitted)	Gross Notional Value		Fair Value Asset/ (Liability) (1)
Currency Hedged (Buy/Sell):
US Dollar/Euro	$	141,255		(1,698	)
Canadian Dollar/US Dollar		15,372		126
Swiss Franc/US Dollar		13,332		(142	)
U.S. Dollar/Canadian Dollar		7,703		245
Swiss Franc/Euro		7,021		89
Japanese Yen/Euro		6,066		(358	)
Swedish Krona/Euro		5,093		(25	)
Other		6,445		(240	)
Total	$	202,287		(2,003	)

(1) Represents the net receivable/(payable) included in the Condensed Consolidated Balance Sheets.

Cash Flow Hedges

We designate a portion of our foreign currency derivative contracts as cash flow hedges of foreign currency denominated purchases.  These contracts are recorded at fair value in the accompanying Condensed Consolidated Balance Sheets. The changes in fair value for these contracts are reported in accumulated other comprehensive income and are reclassified to either cost of sales or SG&A expenses, in our Condensed Consolidated Statements of Operations, in the period or periods during which the underlying transaction occurs.  If it becomes apparent that an underlying forecasted transaction will not occur, the amount recorded in accumulated other comprehensive income related to the hedge is reclassified to other expenses, in our Condensed Consolidated Statements of Operations, in the then-current period.  Amounts relating to such reclassifications were immaterial for the three and nine month periods ended March 31, 2009 and 2008.

Changes in the fair value of the derivatives are highly effective in offsetting changes in the cash flows of the hedged items because the amounts and the maturities of the derivatives approximate those of the forecasted exposures.  Any ineffective portion of the derivative is recognized in the current period in our Condensed Consolidated Statements of Operations, on the same line item in which the foreign currency gain or loss on the underlying hedged transaction was recorded.  No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Operations relating to foreign currency forward contracts for the three and nine months ended March 31, 2009 and 2008, and all components of each derivative’s gain or loss, with the exception of forward points (see below), were included in the assessment of hedge ineffectiveness.  As of March 31, 2009, the net liability fair value of these contracts was $1.9 million.   The amount associated with these hedges that is expected to be reclassified from accumulated other comprehensive income to earnings within the next 12 months is a loss of $0.4 million.

We elected to exclude forward points from the effectiveness assessment.  At the end of the period we calculate the excluded amount, which is the fair value relating to the change in forward points that is recorded to current earnings as miscellaneous, net.  For the three months ended March 31, 2009 and 2008, we recognized $0.9 million and $0.3 million, respectively, in net gains related to the change in forward points.  For the nine months ended March 31, 2009 and 2008, we recognized $1.6 million and $0.9 million, respectively, in net gains related to the change in forward points.

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Economic Hedges

When hedge accounting is not applied to forward contracts, we recognize the gain or loss on the associated contracts directly in current period earnings in cost of sales, in our Condensed Consolidated Statements of Operations, as unrealized exchange gains/(losses).  At March 31, 2009, the net liability fair value of these contracts was $0.3 million.

As of March 31, 2009, we had forward contracts maturing through May 2009 to purchase and sell the equivalent of $41.8 million of various currencies to hedge foreign currency denominated inter-company loans.  At March 31, 2009, the fair value of these contracts was a liability of $0.2 million.  Adjustments to the carrying value of the foreign currency forward contracts offset the gains and losses on the underlying loans in other non-operating income.

Interest Rate Risk Management

We have one interest rate swap contract with a notional amount of $24.9 million to manage our interest rate exposure and effectively convert interest on an operating lease from a variable rate to a fixed rate.  The objective of the swap is to offset changes in rent expenses caused by interest rate fluctuations.  The interest rate swap contract is designated as a cash flow hedge.  At the end of each reporting period, the discounted fair value of the swap contract is calculated and recorded in accumulated other comprehensive income.  The accrued but unpaid net interest on the swap contract is recorded in rent expense, within SG&A expenses in our Condensed Consolidated Statements of Operations.  If the hedge is determined to be ineffective, the ineffective portion will be reclassified from other comprehensive income and recorded as rent expense, within SG&A expenses.  No amount of ineffectiveness was recognized in the three months and nine months ended March 31, 2009 and 2008 and all components of the derivative loss were included in the assessment of the hedged effectiveness.  The amount associated with the swap contract that is expected to be recorded as rent expense in the next 12 months is a gain of $0.3 million.

The following tables provide a summary of the fair value amounts of our derivative instruments, on a gross basis at March 31, 2009:

Fair Values of Derivative Instruments as of March 31, 2009:

($000s omitted)
Derivatives Designated as Hedging Instruments, Gross:	Balance Sheet Location	2009
Other Assets:
Foreign exchange contracts - forwards	Other assets	$	1,483
Other Liabilities:
Foreign exchange contracts - forwards	Other liabilities	$	3,397
Interest rate swap	Accrued liabilities		654
Interest rate swap	Other non-current liabilities		909
Total		$	4,960
Economic Hedges, Gross:
Other Assets:
Foreign exchange contracts - forwards	Other assets	$	1,088
Other Liabilities:
Foreign exchange contracts - forwards	Other liabilities		1,177
Net derivatives		$	(3,566	)

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Derivatives in Cash Flow Hedging Relationships:

The following tables show derivative activity for derivatives designated as cash flow hedges for the three and nine months ended March 31, 2009:

Derivatives Designated as Hedging Instruments For the Three Months Ended March 31, 2009:

($000s omitted
Derivative	Gain/(Loss) Recognized in OCI (Effective Portion)			Location of Derivative Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)			Location of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion)	Loss Recognized in Income on Derivatives (Ineffective Portion)			Location of Amount Excluded from Effectiveness Testing	Gain/(Loss) from Amounts Excluded from Effectiveness Testing
Foreign exchange contract - forwards	$	(1,691	)	Cost of sales		2,711				---		Other expense, net		(530	)
Foreign exchange contract - forwards		---		SG&A		5				---		SG&A		(14	)
Interest rate swap		(453	)	Rent expense		(22	)	Rent expense		(4	)			---
Total cash flow hedges	$	(2,144	)			2,694				(4	)			(544	)

Derivatives Designated as Hedging Instruments For the Nine Months Ended March 31, 2009:

($000s omitted
Derivative	Gain/(Loss) Recognized in OCI (Effective Portion)			Location of Derivative Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)	Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)		Location of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion)	Loss Recognized in Income on Derivatives (Ineffective Portion)			Location of Amount Excluded from Effectiveness Testing	Gain/(Loss) from Amounts Excluded from Effectiveness Testing
Foreign exchange contract - forwards	$	5,019		Cost of sales		4,054			---		Other expense, net		(1,153	)
Foreign exchange contract - forwards		---		SG&A		73			---		SG&A		(37	)
Interest rate swap		(2,543	)	Rent expense		83	Rent expense		(2	)			---
Total cash flow hedges	$	2,476				4,210			(2	)			(1,190	)

Economic Hedges

The following summarizes gains and losses from our derivative instruments that are not designated as hedging instruments for the three and nine months ended March 31, 2009:

($000s omitted)
Derivative	Location of Derivative Gain/(Loss)	For the Three Months Ended March 31,			For the Nine Months Ended March 31,
		2009			2009
Foreign exchange contracts - forwards	Other Expense, net	$	(56	)		2,869

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Note 18.  Goodwill Impairment

SFAS 142, Goodwill and Other Intangible Assets, (“SFAS 142”) requires that goodwill be tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. At June 30, 2008, our goodwill balance was $436.4 million.  We tested goodwill for impairment during the fourth quarter of fiscal year 2008.  At that time, we concluded that the fair value of each reporting unit was in excess of its carrying value.

Second Quarter 2009 Impairment:

During the three months ended December 31, 2008, we experienced a significant decline in our market capitalization as deteriorating economic conditions and negative industry trends adversely affected our business.  We concluded that events had occurred and circumstances had changed during the three months ended December 31, 2008, which required us to perform an interim period goodwill impairment test in accordance with SFAS 142.

The impairment test for goodwill is a two step process.  The first step involved comparing the fair value of each reporting unit to its carrying value. The fair value of each reporting unit was determined using established valuation techniques, specifically the market and income approaches.

During the three months ended December 31, 2008, the preliminary results of the first step indicated that the fair value of our Professional reporting unit was in excess of its carrying value, and thus, we concluded no impairment existed for this reporting unit.  However, the preliminary results of the first step for the Consumer, Automotive and QNX reporting units indicated fair value was less than carrying value, and thus, we proceeded to the second step of the goodwill impairment test for these units.

In the second step of the goodwill impairment test, we determined the amount of impairment by comparing the implied fair value of our goodwill to the recorded amount of goodwill for the Automotive, Consumer and QNX reporting units.  The implied fair value of goodwill is calculated as the excess of fair value of the reporting unit over the amounts assigned to its assets and liabilities.  Based on the preliminary results of the second step, we recognized a non-cash goodwill impairment charge of $325.4 million, $289.9 million, net of taxes, which represented the balance of goodwill for the Automotive and Consumer units and a portion of the goodwill for the QNX unit.  The impairment charge was recorded in goodwill impairment in our Condensed Consolidated Statement of Operations during the three months ended December 31, 2008.  This non-cash charge does not affect our debt covenant compliance, cash flows or ongoing results of operations.  We finalized the results of our preliminary analysis in the three months ended March 31, 2009.  No further adjustments were required.

Third Quarter 2009 Impairment:

During the three months ended March 31, 2009, we continued to experience declines in our market capitalization as deteriorating economic conditions and negative industry trends continued to adversely affect our business.  As such, we determined that an additional goodwill impairment test was required in accordance with SFAS 142.

The first step of the goodwill impairment test indicated that the fair value of our Automotive reporting unit was less than its carrying value, and thus, we proceeded to the second step of the goodwill impairment test for this unit.

As noted above in our discussion on the second quarter impairment test, 100% of the goodwill of the Automotive reporting unit was impaired at that time.  During the three months ended March 31, 2009, however, additional goodwill of $2.3 million was recorded related to contingent purchase price consideration associated with a prior acquisition.  After conducting a step two test on this unit following the same methodology as detailed in the second quarter discussion above, we determined that this goodwill was similarly impaired and, as such, recognized a non-cash goodwill impairment charge of $2.3 million.  There was no tax impact in connection with this charge, which represented the balance of goodwill for the Automotive unit.  The impairment charge was recorded in goodwill impairment in our Condensed Consolidated Statement of Operations for the three months ended March 31, 2009.  This non-cash charge does not affect our debt covenant compliance, cash flows or ongoing results of operations.  

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The changes in the carrying amount of goodwill for the nine months ended March 31, 2009 were as follows:

($000s omitted)	Automotive			Consumer			Professional			Other			Total
Balance at June 30, 2008	$	367,492			23,369			45,586			---			436,447
Realignment of business segments (Note 13)		(52,497	)		---			---			52,497			---
Contingent purchase price consideration associated with the acquisition of Innovative Systems GmbH		8,513			---			---			---			8,513
Impairment charge		(292,303	)		(22,663	)		---			(12,820	)		(327,786	)
Other adjustments(1)		(31,205	)		(706	)		(5,473	)		---			(37,384	)
Balance at March 31, 2009	$	---			---			40,113			39,677			79,790

(1) The other adjustments to goodwill primarily consist of foreign currency translation adjustments.

Note 19.  Investment in Joint Venture

In October 2005, we formed Harman Navis Inc., a joint venture located in Korea, to engage in the design and development of navigation systems for Asian markets.  We evaluated the joint venture agreement under FASB Interpretation No. 46R, Consolidation of Variable Interest Entities, and determined that the newly formed joint venture was a variable interest entity.  Because Harman contributed the majority of capital to the joint venture, we concluded that we were most likely to absorb the majority of losses incurred by the entity, thus requiring us to consolidate the joint venture.  We have consolidated the joint venture since inception.

We own a 50 percent equity interest in the joint venture.  We are not obligated to fund any joint venture losses beyond our investment, and we have not done so since inception of the joint venture.  At March 31, 2009, the net assets of the joint venture were $7.6 million.  Due to the effect of accumulated losses, there is no minority interest recorded in our Condensed Consolidated Balance Sheet as of March 31, 2009.

Subsequent to March 31, 2009, we entered into a restructuring agreement which amends the joint venture agreement and other related agreements.  Over time, we will sell our share of the joint venture to our 50 percent equity partner.  We will deconsolidate this entity when our ownership falls below 50 percent and the other partner gains control. See Note 21, Subsequent Events.

Note 20.  Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS 141R, Business Combinations (“SFAS 141R”), which requires the recognition of assets acquired, liabilities assumed and any non-controlling interests at the acquisition date fair value with limited exceptions.  SFAS 141R will change the accounting treatment for certain specific items and include a substantial number of new disclosure requirements.  These changes include (a) the “acquirer” recording all assets and liabilities of the acquired business, including goodwill, generally at their fair values, (b) contingent consideration arrangements being recorded at fair value on the date of acquisition, with changes in fair value recognized in earnings until settled, and (c) acquisition-related transaction and restructuring costs being expensed rather than treated as part of the cost of the acquisition and included in the amount recorded for assets acquired.  SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the first annual reporting period beginning on or after December 15, 2008.  SFAS 141R will apply to any acquisitions consummated by us on or after July 1, 2009.  We are currently evaluating the impact of the adoption of SFAS 141R on future acquisitions.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (“SFAS 160”), which establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective prospectively, except for certain retrospective disclosure requirements. SFAS 160 is effective for us beginning July 1, 2009.   We do not expect the adoption of SFAS 160 to have a material impact on our consolidated financial statements.

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In March 2008, the FASB issued SFAS 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133. The new standard requires additional disclosures regarding a company’s derivative instruments and hedging activities by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also requires disclosure of derivative features that are credit risk-related as well as cross-referencing within the notes to the financial statements to enable financial statement users to locate important information about derivative instruments, financial performance and cash flows. We adopted this standard effective as of January 1, 2009. The only impact from this standard was to require us to expand our disclosures regarding our derivative instruments. Refer to Note 17, Derivatives for additional information.

In May 2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (“FSP APB 14-1”).  FSP APB 14-1 requires the issuer of convertible debt instruments with cash settlement features to account separately for the liability and equity components of the instrument. The debt would be recognized at the present value of its cash flows discounted using the issuer’s nonconvertible debt borrowing rate at the time of issuance. The equity component would be recognized as the difference between the proceeds from the issuance of the note and the fair value of the liability. FSP APB 14-1 will also require an accretion of the resultant debt discount over the expected life of the debt. The proposed transition guidance requires retrospective application to all periods presented, and does not grandfather existing instruments. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008.  Early adoption is not permitted.  FSP APB 14-1 is effective for us beginning July 1, 2009.  We expect the implementation of FSP APB 14-1 to have a material impact on our consolidated financial statements and will result in higher non-cash interest expense from fiscal year 2008 through October 23, 2012 and will be dilutive to earnings per share.  We are currently evaluating our non convertible borrowing rate and the fair value of the conversion privilege with respect to the Notes and the related impact on our consolidated financial statements.

In June 2008, the FASB issued FSP Emerging Issues Task Force (“EITF”) 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”).  This FSP provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method.  This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years.  Upon adoption, a company is required to retrospectively adjust its earnings per share data (including any amounts related to interim periods, summaries of earnings and selected financial data) to conform to the provisions in this FSP.  Early application of this FSP is prohibited.  FSP EITF 03-6-1 is effective for us beginning July 1, 2009.  We are currently evaluating the impact of FSP EITF 03-6-1 on our consolidated financial statements.

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FSP FAS 157-4”).  FSP 157-4 provides additional guidance for estimating fair value in accordance with SFAS 157, when the volume and level of activity for the asset or liability have significantly decreased when compared with normal market activity for the asset or liability.  The new approach is designed to address whether a market is inactive, and if so whether a market should be considered distressed.  The objective of the FSP FAS 157-4 is to remain consistent with the principles of SFAS 157, yet provide additional guidance on how fair value measurements might be determined in an inactive market.  FSP 157-4 also requires additional disclosures relating to an entity’s valuation techniques and its major categories of investments in debt and equity securities.  FSP 157-4 is effective for interim and annual reporting periods ending after June 15, 2009.  Early adoption is permitted.  FSP FAS 157-4 is effective for us beginning July 1, 2009.  We are currently evaluating the impact that FSP FAS 157-4 will have on our consolidated financial statements.

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In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP FAS 107-1 & APB 28-1”).  FSP FAS 107-1 & APB 28-1 amends FASB Statement 107, Disclosures about Fair Value of Financial Instruments by requiring disclosures about fair value of financial instruments for interim reporting periods of publicly-held companies, as well as in annual financial statements.  FSP FAS 107-1 & APB 28-1 also amends APB No. 28, Interim Financial Reporting, by requiring these disclosures in summarized financial information at interim reporting periods.  This FSP is effective for interim reporting periods ending after June 15, 2009.  Early adoption is permitted.  FSP FAS 107-1 & APB 28-1 is effective for us beginning July 1, 2009.  We are currently evaluating the impact that FSP 107-1 & APB 28-1 will have on our consolidated financial statements.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (“FSP FAS 115-2 & FAS 124-2”).  FSP FAS 115-2 & FAS 124-2 amends the other-than-temporary impairment guidance for certain debt securities and requires an investor to assess the likelihood of selling the security, prior to recovering its cost basis.  If an investor is able to meet the criteria to assert that it will not have to sell a security before recovery, impairment charges related to credit losses would be recognized in earnings, while impairment charges related to non-credit losses would be reflected in other comprehensive income. It also amends the disclosure requirements by requiring entities to disclose information that will help users understand the types of investments held, including information about investments in an unrealized loss position for which an impairment has not been recognized.  This FSP is effective for interim and annual reporting periods ending after June 15, 2009.  Early adoption is permitted for periods ending after March 15, 2009.  FSP FAS 115-2 & FAS 124-2 is effective for us beginning July 1, 2009.  We are currently evaluating the impact that FSP FAS 115-2 & FAS 124-2 will have on our consolidated financial statements.

Note 21.  Subsequent Events

Investment in Joint Venture

Subsequent to March 31, 2009, we entered into a restructuring agreement which amends the Harman Navis Inc. joint venture agreement and other related agreements.  Over time, we will sell our share of this joint venture to our 50 percent equity partner.  We will deconsolidate this entity when our ownership decreases below 50 percent and the other partner gains control.

Senior Convertible Notes

The Indenture contains covenants, one of which requires us to calculate the ratio of Consolidated Total Debt to Consolidated EBITDA, as defined in the Indenture, for the most recently ended four quarter period, each time we incur additional indebtedness.  In April 2009, we have exceeded the minimum ratio for this covenant and, as a result, we will not be able to incur additional indebtedness without obtaining a waiver from the holders of a majority in principal amount of the Notes.  We do not intend to incur additional indebtedness unless we obtain a waiver or are able to satisfy this covenant.  If we were to incur additional indebtedness, at a time when we failed to meet the minimum ratio of Consolidated Total Debt to Consolidated EBITDA (unless we received a waiver), we would be in violation of our covenant under the Indenture.  If the violation is not remedied within 60 days, the Notes could become due, which would have a material adverse affect on our financial condition and our results of operations, and would also lead to an event of default under the Amended Credit Agreement and the acceleration of the loans thereunder.  Based on our forecast, we believe that we will be in compliance with these covenants for at least the next 12 months.

Sale of Assets

On May 1, 2009, our wholly-owned subsidiary, Harman Becker Automotive Systems GmbH, completed the sale of certain tangible and intangible assets pursuant to the terms of an asset purchase agreement.  The assets sold consisted of technology, software, software licenses, patents, trademarks, contracts and other intellectual property rights relating to our Automotive segment’s products for use in automated speech recognition, speech dialog management and acoustic speech enhancement.   At the closing of the transaction, we received gross proceeds of $20.2 million.  The agreement also provides for the transfer of approximately 80 of our employees to the acquiring third party.

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Chrysler Auto Supplier Support Program and Bankruptcy Filing

Subsequent to March 31, 2009, we have decided to participate in the U.S. government-backed auto supplier support program (the “Program”) with Chrysler LLC (“Chrysler”).  The Program covers a portion of our receivables pertaining to Chrysler shipments to U.S. assembly plants after March 19, 2009 for a fee of either two percent or three percent discount from the face value of eligible accounts receivable, depending on whether we opt for immediate payment or payment on normal trade terms.

On April 30, 2009, Chrysler and certain of its affiliates filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York to reorganize its business.  Our sales to Chrysler and its affiliates were approximately seven percent of our total net sales for the three and nine months ended March 31, 2009.  At the time of the bankruptcy filing, Chrysler owed us approximately $30.7 million for products shipped prior to the date of the filing, of which $34.1 million was outstanding as of March 31, 2009.  Our U.S. exposure for uncollected accounts receivable prior to March 19, 2009 is $3.7 million and we have fully reserved for this exposure at March 31, 2009.  We have exposure related to accounts receivable for non-U.S. Chrysler entities, which we have not reserved for, as these entities have not filed for bankruptcy in their respective countries and we believe collectibility is reasonably assured as they are current on their payments.  To the extent the Chrysler receivables are not paid through the Program, a portion of them still may be paid as an administrative claim in connection with the bankruptcy proceeding.  The timing and extent of such administrative priority payments, if any, will depend upon whether the Chrysler bankruptcy estate is administratively solvent and whether its reorganization plan is approved.  In addition, Chrysler has filed a motion in the bankruptcy court seeking approval to continue the Program on a post-petition basis and to pay pre-petition claims of its “essential suppliers.”  Some or all of our remaining pre-petition accounts receivable from Chrysler may be paid in the near term pursuant to that motion or later through the ordinary bankruptcy claims process.

In connection with its bankruptcy filing, Chrysler announced that most manufacturing operations will be temporarily idled until the proposed sale is complete.  Consequently, as of May 1, 2009, we have also temporarily idled our Chrysler-related manufacturing operations at our Washington, Missouri facility and expect that this will continue until Chrysler emerges from bankruptcy or recommences its manufacturing operations.

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Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the related notes included in Item 1 of this Quarterly Report on Form 10-Q, together with Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2008 (“2008 Form 10-K”).  This discussion contains forward-looking statements which are based on our current expectations and experience and our perception of historical trends, current market conditions, including customer acceptance of our new products, current economic data, expected future developments, including foreign currency exchange rates, and other factors that we believe are appropriate under the circumstances.  These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements.  Unless otherwise indicated, “Harman,” “the company,” “we,” “our,” and “us” are used interchangeably to refer to Harman International Industries, Incorporated and its consolidated subsidiaries.

We begin our discussion with an overview of our company to give you an understanding of our business and the markets we serve. We then discuss recent developments. This is followed by a discussion of our critical accounting policies, and then by a discussion of our results of operations for the three and nine months ended March 31, 2009 and 2008.  We include in this discussion an analysis of certain significant period-to-period variances in our Condensed Consolidated Statements of Operations and an analysis of our restructuring program.  We also provide specific information regarding our three reportable business segments: Automotive, Consumer and Professional.  We then discuss our financial condition at March 31, 2009 with a comparison to June 30, 2008.  This section contains information regarding our liquidity, capital resources and cash flows from operating, investing and financing activities.  We complete our discussion with an update on our outlook.

Overview

We design, manufacture and market high-quality, high-fidelity audio products and electronic systems for the automotive, consumer and professional markets. We have developed, both internally and through a series of strategic acquisitions, a broad range of product offerings sold under renowned brand names in our principal markets. These brand names have a heritage of technological leadership and product innovation.  Our reportable business segments, Automotive, Consumer and Professional, are based on the end-user markets we serve.

During the three months ended September 30, 2008, we revised our business segments to align our strategic approach to the markets and customers we serve.  We now report financial information for the QNX business in our Other segment.  The QNX business was previously reported in our Automotive segment.  The realignment reflects our focus to grow the QNX business in other, non-automotive industries, including networking, medical, instrumentation and industrial control.  Segment information for the prior period has been reclassified to conform to the new presentation.

Automotive designs, manufactures and markets audio, electronic and infotainment systems for vehicle applications. Our systems are generally shipped directly to our automotive customers for factory installation. Infotainment systems are a combination of information and entertainment components that may include or control GPS navigation, traffic information, voice-activated telephone and climate control, rear seat entertainment, wireless Internet access, hard disk recording, MP3 playback and a premium branded audio system.  We expect future infotainment systems to also provide driver safety capabilities such as lane guidance, pre-crash emergency braking, adaptive cruise control, and night vision. Automotive also provides aftermarket products such as personal navigation devices (“PNDs”) to customers primarily in Europe.

Consumer designs, manufactures and markets loudspeaker, electronic systems and headphones for multimedia, home and mobile applications. Multimedia applications include innovative accessories for portable electronic devices including music-enabled cell phones such as the iPhoneTM, and MP3 players including the iPodTM.  Our multimedia applications also include audio systems for personal computers.  Home applications include systems to provide high-quality audio throughout the home and to enhance home theatres.  Aftermarket mobile products include speakers and amplifiers that deliver audio entertainment in the vehicle.  Consumer products are primarily distributed through retail outlets.

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Professional designs, manufactures and markets loudspeakers and electronic systems installed by audio professionals in concert halls, stadiums, airports, houses of worship and other public spaces.  We also develop products for recording, broadcast, cinema, touring and music reproduction applications.  In addition, we have leading products in both the portable PA market and musician vertical markets serving small bands, DJs and other performers.  A growing number of our products are enabled by our proprietary HiQnet protocol which provides centralized monitoring and control of both complex and simple professional audio systems.

Our Other segment includes the operations of the QNX business, which offers embedded operating system software and related development tools and consulting services used in a variety of products and industries.  Our Other segment also includes compensation, benefit and occupancy costs for our corporate employees.

Our products are sold worldwide, with the largest markets located in the United States and Germany. In the United States, our primary manufacturing facilities are located in California, Kentucky, Missouri, Indiana and Utah. Outside of the United States, we have significant manufacturing facilities in Germany, Austria, the United Kingdom, Mexico, Hungary, France and China.  During fiscal year 2008, we announced an expansion of our restructuring program that will reduce our manufacturing footprint and resulted in the closure of our Automotive manufacturing facilities in California and Indiana.

Our sales and earnings may vary due to the production schedules of our automotive customers, customer acceptance of our products, the timing of new product introductions, product offerings by our competitors and general economic conditions.  Since our businesses operate using local currencies, our reported sales and earnings may also fluctuate due to foreign currency exchange rates, especially for the Euro.

Recent Events

Recent Borrowings Under Revolving Credit Facility

On March 31, 2009 we and one of our wholly-owned subsidiaries, Harman Holding GmbH & Co. KG entered into a Second Amended and Restated Multi-Currency, Multi-Option Credit Agreement (the “Amended Credit Agreement”), amending and restating the Amended and Restated Multi-Currency, Multi-Option Credit Agreement dated June 22, 2006.  The Amended Credit Agreement, among other things, extended the maturity date from June 28, 2010 to December 31, 2011 and reduced the maximum amount of available credit under the revolving credit facility from $300 million to $270 million.  Interest rates for borrowings under the Amended Credit Agreement were increased to three percent above the applicable base rate for base rate loans and four percent over London Interbank Offered Rate (“LIBOR”) for Eurocurrency loans.  In addition, the annual facility fee rate payable under the Amended Credit Agreement has increased to one percent.  We expect interest expense to increase due to both the increase in interest rates and the increase in borrowings under the Amended Credit Agreement.

The Amended Credit Agreement contains financial and other covenants that require us to maintain certain specified ratios and liquidity levels, and imposes certain limitations on us and certain of our subsidiaries, which are more fully described in the section entitled Financial Condition, within this Management’s Discussion and Analysis and in Note 8, Debt in our Notes to the Condensed Consolidated Financial Statements.

Guarantee and Collateral Agreement

In connection with the Amended Credit Agreement, we and certain of our subsidiaries also entered into a guarantee and collateral agreement (the “Guarantee and Collateral Agreement”), which provides, among other things that the obligations under the Amended Credit Agreement are guaranteed by us and each of the subsidiary guarantors and that the obligations are generally secured by liens on substantially all of our assets and certain of our subsidiary guarantors’ assets.

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Chrysler Auto Supplier Support Program and Bankruptcy Filing

Subsequent to March 31, 2009, we have decided to participate in the U.S. government-backed auto supplier support program (the “Program”) with Chrysler LLC (“Chrysler”).  The Program covers a portion of our receivables pertaining to Chrysler shipments to U.S. assembly plants after March 19, 2009 for a fee of either two percent or three percent discount from the face value of eligible accounts receivable, depending on whether we opt for immediate payment or payment on normal trade terms.

On April 30, 2009, Chrysler and certain of its affiliates filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York to reorganize its business.  Our sales to Chrysler were approximately seven percent of our total net sales for the three and nine months ended March 31, 2009.  At the time of the bankruptcy filing, Chrysler and its affiliates owed us approximately $30.7 million for products shipped prior to the date of the filing, of which $34.1 million was outstanding as of March 31, 2009.  Our U.S. exposure for uncollected accounts receivable prior to March 19, 2009 is $3.7 million and we have fully reserved for this exposure at March 31, 2009.  We have exposure related to accounts receivable from non-U.S. Chrysler entities which we have not reserved for, as these entities have not filed for bankruptcy in their respective countries and we believe collectibility is reasonably assured as they are current on their payments.  To the extent the Chrysler receivables are not paid through the Program, a portion of them still may be paid as an administrative claim in connection with the bankruptcy proceeding.  The timing and extent of such administrative priority payments, if any, will depend upon whether the Chrysler bankruptcy estate is administratively solvent and whether its reorganization plan is approved.  In addition, Chrysler has filed a motion in the bankruptcy court seeking approval to continue the Program on a post-petition basis and to pay pre-petition claims of its “essential suppliers.”  Some or all of our remaining pre-petition accounts receivable from Chrysler may be paid in the near term pursuant to that motion or later through the ordinary bankruptcy claims process.

In connection with its bankruptcy filing, Chrysler announced that most manufacturing operations will be temporarily idled until the propsed sale is complete.  Consequently, as of May 1, 2009, we have also temporarily idled our Chrysler-related manufacturing operations at our Washington, Missouri facility and expect that this will continue until Chrysler emerges from bankruptcy or recommences its manufacturing operations.

Critical Accounting Policies

For the three and nine months ended March 31, 2009, there were no significant changes to our critical accounting policies and estimates from those disclosed in the consolidated financial statements and the related notes included in our 2008 Form 10-K or our Quarterly Report on Form 10-Q for the three months ended September 30, 2008 and our Quarterly Report on Form 10-Q for the three and six months ended December 31, 2008.

Results of Operations

Net Sales

Our net sales for the three months ended March 31, 2009 were $598.3 million, compared to $1.033 billion in the same period last year, a decrease of 42 percent.  For the nine months ended March 31, 2009, net sales were $2.223 billion, compared to net sales of $3.045 billion in the same prior year period, a decrease of 27 percent.  Foreign currency translation had an unfavorable impact on net sales of $86.1 million and $104.5 million, respectively, when compared to the same three and nine month periods in the prior year.  For the three and nine months ended March 31, 2009, each of our reporting segments reported lower sales compared to the same period in the prior year.  The decline in overall net sales was attributable to continued weakness in the automotive market as automakers cut production in response to weak economic conditions.  Our Professional and Consumer segments were also negatively affected by the financial and economic crisis, where reductions in the availability of credit and lower consumer spending resulted in lower net sales.

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Presented below is a summary of our net sales by reporting segment:

($000s omitted)	Three months ended March 31,										Nine months ended March 31,
	2009		%			2008		%			2009		%			2008		%
Net sales:
Automotive	$	405,234		68	%		758,947		73	%	$	1,539,345		69	%		2,151,959		71	%
Consumer		71,781		12	%		112,635		11	%		297,657		13	%		415,825		14	%
Professional		111,718		19	%		150,333		15	%		357,428		16	%		447,179		15	%
Other		9,549		1	%		10,753		1	%		28,917		2	%		30,277		---	%
Total	$	598,282		100	%		1,032,668		100	%	$	2,223,347		100	%		3,045,240		100	%

Automotive - Net sales for the three months ended March 31, 2009 decreased $353.7 million, or 47 percent compared to the same period in the prior year.  Foreign currency translation adversely affected net sales by $72.6 million compared to the same three month period last year.  Net sales for the nine months ended March 31, 2009 decreased $612.6 million, or 28 percent compared to the same period in the prior year.  Foreign currency translation adversely affected sales by $83.8 million compared to the same period in the prior year.

For the three months ended March 31, 2009, the reduction in net sales versus the prior year was primarily attributable to Daimler’s strategic decision to move to dual sourcing on select Mercedes models, as well as reduced production by some of our major automotive customers, including Chrysler, Toyota, Porsche, and Hyundai and Audi.  For the nine months ended March 31, 2009, these reductions in net sales versus the prior year were also primarily attributable to Daimler’s strategic decision to move to dual sourcing on select Mercedes models, as well as reduced production by some of our major automotive customers, including Chrysler, Toyota, Porsche, partially offset by higher sales relating to the launch of our products in various new Audi, BMW, Hyundai and Subaru models.

Consumer - Net sales for the three months ended March 31, 2009 decreased $40.9 million, or 36 percent, compared to the same three month period in the prior year.  Foreign currency translation adversely affected sales by $7.4 million compared to the same three month period in the prior year.  Net sales for the nine months ended March 31, 2009 decreased $118.2 million, or 28 percent, compared to the same period in the prior year.  Foreign currency translation adversely affected sales by $11.0 million compared to the same period in the prior year.

During the three and nine months ended March 31, 2009, the consumer retail environment continued to be challenging, as consumer spending has slowed and resulted in lower sales.  Sales were also lower due to Consumer’s exit from the PND business and other unprofitable products.

Professional - Net sales for the three months ended March 31, 2009 decreased $38.6 million, or 26 percent compared to the same period in the prior year.  Foreign currency translation adversely affected sales by $6.1 million compared to the same period last year.  Net sales for the nine months ended March 31, 2009 decreased $89.8 million, or 20 percent, compared to the same period in the prior year.  Foreign currency translation adversely affected sales by $9.7 million when compared to the same period in the prior year.

The decrease in sales compared to the same periods last year was due to the effect of the weak economy on both our distributors’ liquidity and market demand.

Gross Profit

Gross profit as a percentage of net sales decreased 6.4 percentage points to 18.9 percent for the three months ended March 31, 2009 compared to 25.3 percent of net sales in the same prior year period.  Gross profit as a percentage of net sales decreased 3.3 percentage points to 23.9 percent for the nine months ended March 31, 2009 compared to 27.2 percent of net sales in the same prior year period.  Gross profit margins were lower than the same periods in the prior year due to decreased factory utilization associated with lower sales and increased restructuring costs and product mix.

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Presented below is a summary of our gross profit by reporting segment:

($000s omitted)	Three months ended March 31,										Nine months ended March 31,
	2009		Percent of net sales			2008		Percent of net sales			2009		Percent of net sales			2008		Percent of net sales
Gross Profit:
Automotive	$	52,096		12.9	%		171,465		22.6	%	$	306,978		19.9	%		531,205		24.7	%
Consumer		15,972		22.2	%		23,650		21.0	%		70,379		23.6	%		100,291		24.1	%
Professional		39,346		35.2	%		58,770		39.1	%		136,058		38.1	%		174,792		39.1	%
Other		5,881		61.6	%		7,248		67.4	%		18,667		64.6	%		20,544		67.9	%
Total	$	113,295		18.9	%		261,133		25.3	%	$	532,082		23.9	%		826,832		27.2	%

Automotive – Gross profit as a percentage of net sales decreased 9.7 percentage points to 12.9 percent for the three months ended March 31, 2009 compared to the same period in the prior year.  Gross profit as a percentage of net sales decreased 4.8 percentage points to 19.9 percent for the nine months ended March 31, 2009 compared to the same period in the prior year.  The gross profit margin declines for the three and nine months ended March 31, 2009 were due to changes in sales mix, lower factory utilization associated with the decrease in sales, and restructuring costs incurred in connection with the announced plant downsizings or closings in California, Indiana, France and Sweden and a warranty center in New Jersey, partially offset by one-time warranty charges incurred in the three and nine months ended March 31, 2008, relating to engineering changes for one of our products.  Restructuring costs recorded at these locations relate to accelerated depreciation on machinery and equipment and the reclassification of the Martinsville property as held for sale from held and used.

Consumer – Gross profit as a percentage of net sales increased 1.2 percentage points to 22.2 percent for the three months ended March 31, 2009 compared to the same period in the prior year.  Gross profit as a percentage of net sales decreased 0.5 percentage points to 23.6 percent for the nine months ended March 31, 2009 compared to the same prior year period.  Gross profit margins for the three months ended March 31, 2009 increased due to our favorable product mix as a result of our exit from unprofitable product lines of business.  Gross profit margins decreased for the nine months ended March 31, 2009 primarily due to under-absorption of fixed costs due to lower sales volumes, offset by higher product margins due to the exit of unprofitable lines of business.

Professional – Gross profit as a percentage of net sales decreased 3.9 percentage points to 35.2 percent for the three months ended March 31, 2009 compared to the same period in the prior year.  Gross profit as a percentage of net sales decreased 1.0 percentage point to 38.1 percent for the nine months ended March 31, 2009 compared to the same prior year period.  Lower factory utilization associated with the sales decline reduced gross margins for the three months and nine months ended March 31, 2009 compared to the same period in the prior year.  For the nine months ended March 31, 2009, favorable product mix and lower factory overhead costs partially offset the effect of the volume shortfall.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) were $203.4 million for the three months ended March 31, 2009 compared to $267.7 million in the same period in the prior year.  Despite the decline in the amount of SG&A expense, SG&A as a percentage of net sales for the three months ended March 31, 2009 increased 8.1 percentage points to 34.0 percent compared to the same prior year period due to the decrease in sales.  Foreign currency translation contributed $20.2 million to the decrease in SG&A expenses during the quarter.  Other factors contributing to the decrease in SG&A included $17.5 million of restructuring costs incurred in the three months ended March 31, 2009 compared with $33.4 million of restructuring in the same period in the prior year, and a $2.0 million decrease in share-based compensation expense compared to the same prior year period.  The decrease also reflects a reduction in research and development (“R&D”) costs.  R&D, a significant component of our SG&A expenses, decreased by $24.7 million to $79.4 million for the three months ended March 31, 2009 compared to $104.1 million in the same period last year.

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We continue to incur costs relating to our restructuring program, which is designed to address our global footprint, cost structure, technology portfolio, human resources and internal processes.  We recorded restructuring charges in SG&A of $17.5 million in the three months ended March 31, 2009.  Restructuring costs are further described under the caption Restructuring Programs later in this discussion.

For the nine months ended March 31, 2009, SG&A expenses were $630.9 million compared to $731.2 million in the same period in the prior year.  As a percentage of net sales, SG&A increased 4.4 percentage points to 28.4 percent for the nine months ended March 31, 2009 compared to the same prior year period due to the decrease in sales.  Foreign currency translation contributed $24.6 million to the decrease in SG&A expenses when compared to the prior year period.  Other factors contributing to the decrease in SG&A included a reduction in R&D costs of $41.9 million, $13.6 million lower share-based compensation and benefits expenses, primarily reflecting a benefit from stock option forfeitures due to executive retirements, a benefit from adjusting our profit sharing accrual as the fiscal 2008 contribution was not approved and reductions in advertising and promotion expenses.  These decreases were partially offset by $44.6 million of restructuring expenses compared with $34.1 million in the same period in the prior year.  SG&A expenses for the nine months ended March 31, 2008 included $13.8 million in merger costs.

Presented below is a summary of SG&A expenses by reporting segment:

($000s omitted)	Three months ended March 31,										Nine months ended March 31,
	2009		Percent of net sales			2008		Percent of net sales			2009		Percent of net sales			2008		Percent of net sales
SG&A Expenses:
Automotive	$	133,589		33.0	%		166,536		21.9	%	$	398,213		25.9	%		447,767		20.8	%
Consumer		23,394		32.6	%		36,994		32.8	%		80,775		27.1	%		99,294		23.9	%
Professional		31,334		28.0	%		42,828		28.5	%		101,232		28.3	%		115,418		25.8	%
Other		15,117		---			21,376		---			50,642		---			68,674		---
Total	$	203,434		34.0	%		267,734		25.9	%	$	630,862		28.4	%		731,153		24.0	%

Automotive – SG&A expenses were $133.6 million for the three months ended March 31, 2009, compared to $166.5 million for the same period in the prior year.  As a percentage of net sales, SG&A expenses increased 11.1 percentage points to 33.0 percent for the three months ended March 31, 2009 compared to the same period in the prior year.  Foreign currency translation contributed $15.8 million to the decrease in SG&A expenses during the quarter.  R&D expenses decreased to $66.0 million, or 16.3 percent of net sales, for the three months ended March 31, 2009 compared to $84.8 million, or 11.2 percent of net sales, in the same prior year period.  Approximately $9.6 million of the decrease in R&D expenses was due to changes in currency exchange rates.

SG&A expenses were $398.2 million for the nine months ended March 31, 2009 compared to $447.8 million for the same period in the prior year.  As a percentage of net sales, SG&A expenses increased 5.1 percentage points to 25.9 percent for the nine months ended March 31, 2009 compared to the same period in the prior year.  Foreign currency translation contributed $19.3 million to the decrease in SG&A expenses when compared to the prior year period.   R&D expenses decreased by $32.4 million to $203.7 million, or 13.2 percent of net sales, for the quarter ended March 31, 2009 compared to $236.1 million, or 11.0 percent of net sales, in the same prior year period.

Consumer – SG&A expenses were $23.4 million for the three months ended March 31, 2009 compared to $37.0 million for the same period in the prior year.  As a percentage of net sales, SG&A expenses decreased 0.2 percentage points to 32.6 percent for the three months ended March 31, 2009 compared to the same period in the prior year. Foreign currency translation contributed $2.4 million to the decrease in SG&A when compared to the prior year period.  R&D expenses were $5.1 million for the quarter ended March 31, 2009 compared to $8.6 million in the same period last year.  SG&A as a percent of sales decreased due to lower R&D expenses, partially offset by the decrease in net sales.

SG&A expenses were $80.8 million for the nine months ended March 31, 2009 compared to $99.3 million for the same period in the prior year.  As a percentage of net sales, SG&A expenses increased 3.2 percentage points to 27.1 percent for the nine months ended March 31, 2009 compared to the same period in the prior year.  Foreign currency translation contributed $2.3 million to the decrease in SG&A when compared to the prior year period.  The decrease in SG&A expenses was primarily due to lower R&D expenses, which decreased to $16.3 million compared to $26.1 million for the same period in the prior year.

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Professional – SG&A expenses were $31.3 million for the three months ended March 31, 2009, compared to $42.8 million for the same period in the prior year.  SG&A expenses as a percentage of net sales decreased 0.5 percentage points to 28.0 percent for the three months ended March 31, 2009 compared to the same period in the prior year.  Foreign currency translation contributed $1.9 million to the decrease in SG&A when compared to the prior year period. The decrease as a percentage of net sales resulted primarily from efforts to reduce SG&A expenses and lower sales results.  R&D expenses were $7.6 million for the quarter ended March 31, 2009 compared to $9.9 million in the same period last year.

SG&A expenses were $101.2 million for the nine months ended March 31, 2009 compared to $115.4 million in the same period last year.  As a percentage of net sales, SG&A expenses increased 2.5 percentage points to 28.3 percent for the nine months ended March 31, 2009 compared to the same period in the prior year, primarily due to the decrease in net sales.  Foreign currency translation contributed $3.0 million to the decrease in SG&A when compared to the prior year period. R&D expenses were $26.3 million for the nine months ended March 31, 2009 compared to $28.0 million for the same period last year.

Other – SG&A expenses were $15.1 million for the three months ended March 31, 2009 compared to $21.4 million in the prior year period primarily due to benefits realized by lower share-based compensation and bonus expense compared to the same period in the prior year.

SG&A expenses were $50.6 million for the nine months ended March 31, 2009 compared to $68.7 million in the same period last year, reflecting a $13.6 million reduction in share-based compensation expense primarily due to stock option forfeitures associated with executive retirements, as well as decreased bonus expense at Corporate and lower compensation expense at QNX.  These were partially offset by merger costs that were incurred in the prior year period of $13.8 million.

Restructuring Programs – Weannounced a restructuring program in June 2006 designed to increase efficiency in our manufacturing, engineering and administrative organizations.  During the three months ended March 31, 2008, we expanded our restructuring actions to improve our global footprint, cost structure, technology portfolio, human resources and internal processes.  These actions will reduce the number of our manufacturing, engineering and operating locations. We continued to expand these restructuring programs in fiscal year 2009.

In the prior fiscal year we announced plant closings in Northridge, California and Martinsville, Indiana and closed a plant in South Africa and a small facility in Massachusetts.  We have completed the transition of our corporate headquarters from Washington D.C. to Stamford, Connecticut and have initiated numerous other actions to reduce cost and improve operating efficiency in our businesses.  Programs initiated in fiscal year 2009 include the announced closure of the Woodbury, New York facility and numerous headcount reductions across our business units to reduce excess capacity due to decreased sales.  The most significant of these reductions were in Germany, the United Kingdom and various locations in the United States.

For the nine months ended March 31, 2009, SG&A expenses included $44.6 million for our restructuring program, of which $37.5 million was recorded for employee termination benefits.  Cash paid for restructuring actions for the nine months ended March 31, 2009 totaled $31.7 million.  We also recorded $9.7 million primarily in cost of sales for accelerated depreciation and the reclassification of the Indiana property from held and used to held for sale, both of which were recorded in accordance with Statement of Financial Accounting Standard 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

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Below is a rollforward of our restructuring accrual, accounted for in accordance with SFAS 88, Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, SFAS 112, Employers’ Accounting for Postemployment Benefits and SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities:

	Nine months ended March 31,
($000s omitted)	2009			2008
Beginning accrued liability, June 30,	$	35,601			7,527
Expense		44,637			34,132
Utilization(1)		(33,209	)		(8,966	)
Ending accrued liability	$	47,209			32,693

(1) Includes amounts representing adjustments to the liability for changes in foreign currency exchange rates.

See Note 11, Restructuring Program in the Notes to our Condensed Consolidated Financial Statements for additional information.

Goodwill Impairment

Presented below is a summary of goodwill impairment charges by reporting segment:

($000s omitted)	Three months ended March 31,										Nine months ended March 31,
	2009		%			2008		%			2009		%			2008		%
Goodwill Impairment Charges:
Automotive	$	2,341		100	%		---		---	%	$	292,303		89	%		---		---	%
Consumer		---		---	%		---		---	%		22,663		7	%		---		---	%
Professional		---		---	%		---		---	%		---		---	%		---		---	%
Other		---		---	%		---		---	%		12,820		4	%		---		---	%
Total	$	2,341		100	%		---		---	%	$	327,786		100	%		---		---	%

During the three months ended December 31, 2008, we performed an interim period goodwill impairment test.  Based on these preliminary results, we recognized a non-cash goodwill impairment charge of $325.4 million.  We finalized the results of our second quarter goodwill impairment test in the three months ended March 31, 2009 and performed an additional goodwill impairment test due to continued impairment triggers.  This second test resulted in our recording of an additional impairment charge in our Automotive reporting unit.  The total goodwill impairment charges were $327.8 million for the nine months ended March 31, 2009.  See Note 18, Goodwill Impairment in the Notes to our Condensed Consolidated Financial Statements for additional information.

Operating (Loss) Income

Operating loss for the three months ended March 31, 2009 was $92.5 million or 15.5 percent of net sales, compared to $6.6 million, or 0.6 percent of net sales, in the same period in the prior year.  Operating loss for the nine months ended March 31, 2009 was $426.6 million or 19.2 percent of net sales, compared to operating income of $95.7 million, or 3.1 percent of net sales, in the same prior year period.  The decrease in operating income was primarily due to the goodwill impairment charges and lower net sales due to weak economic conditions.

Interest Expense, Net

Interest expense, net, for the three and nine months ended March 31, 2009 was $1.6 million and $0.7 million, respectively, compared to interest expense, net of $1.6 million and $5.9 million for the three and nine month periods ended March 31, 2008.  For the three months ended March 31, 2009, interest expense, net included $3.1 million of interest expense and $1.5 million of interest income.  For the same three month period in the prior year, interest expense, net included $3.7 million of interest expense and $2.1 million of interest income.  For the nine months ended March 31, 2009, interest expense, net included $7.6 million of interest expense and $6.9 million of interest income.  For the same nine month period in the prior year, interest expense, net, included $11.3 million of interest expense and $5.4 million of interest income.

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Interest expense decreased primarily due to a decrease in the weighted average interest rate on our borrowings.  The weighted average interest rate on our borrowings was 2.4 percent for the three months ended March 31, 2009 compared to 2.7 percent in the same prior year period.  The weighted average interest rate for the nine months ended March 31, 2009 was 2.1 percent, compared to 4.3 percent in the same prior year period.  The decrease was due primarily to our October 2007 issuance of the 1.25 percent senior convertible notes due October 2012 (the “Notes”), which have an interest rate of 1.25 percent. Weighted average borrowings outstanding were $532.3 million for the three months ended March 31, 2009 and $575.9 million for the same period in the prior year.  Weighted average borrowings outstanding were $473.7 million for the nine months ended March 31, 2009 compared to $385.4 million for the same period in the prior year.

The interest rate on our old revolving credit facility was based on LIBOR plus 37 to 90 basis points, plus a commitment fee of 8 to 22.5 basis points. The interest rate spread and commitment fee were determined based upon our interest coverage ratio and senior unsecured debt rating. Interest rates for borrowings under the Amended Credit Agreement were increased to three percent above the applicable base rate and four percent over LIBOR for Eurocurrency loans.  We expect interest expense to increase due to both the increase in interest rates and the increase in borrowings under the Amended Credit Agreement.

Miscellaneous, Net

Net miscellaneous expenses were $0.7 million and $1.8 million for the three and nine months ended March 31, 2009, respectively, compared to $1.8 million and $3.4 million, respectively, in the same periods last year.  For each period presented, miscellaneous expenses primarily consisted of bank charges.

Income Tax (Benefit) Expense, Net

Our provision for income taxes is based on an estimated annual tax rate for the year applied to federal, state and foreign income.  Income tax benefit for the three months ended March 31, 2009 was $28.2 million, compared to income tax benefit of $7.3 million for the same period in the prior year.  The effective rate for the three months ended March 31, 2009 was a benefit of 29.8 percent, compared to a benefit of 72.6 percent in the prior year period. The income tax benefit resulted from a deferred tax benefit due to the goodwill impairment, operating losses and the federal research credit.   These increases were partially offset by an increase in our valuation allowance to reserve for certain foreign tax credits.  For the nine months ended March 31, 2009, income tax benefit was $68.8 million, compared to income tax expense of $11.0 million for the same period last year.  The effective tax rate for the nine months ended March 31, 2009 was a benefit of 16.0 percent compared to an expense of 12.7 percent in the same period in the prior year due to goodwill impairment, operating losses and the federal research credit.

We have deferred tax assets of $273.6 million, primarily consisting of deferred deductions, research and development credits and foreign tax credits.  We have evaluated all available evidence, both positive and negative, and based on the weight of all available evidence, we continue to believe that our deferred tax assets are fairly reflected in our Condensed Consolidated Balance Sheets. If the results of our operations do not meet our current expectations, our deferred tax assets may become impaired.

As of March 31, 2009, unrecognized tax benefits and the related interest were $9.0 million and $2.0 million, respectively, all of which would affect the tax rate if recognized.  During the three and nine months ended March 31, 2009, we recorded uncertain tax positions of a benefit of $0.7 million and an expense of $0.9 million, respectively.

Financial Condition

Liquidity and Capital Resources

We primarily finance our working capital requirements through cash generated by operations, borrowings under our revolving credit facility and trade credit.  Cash and cash equivalents were $334.3 million at March 31, 2009 compared to $223.1 million at June 30, 2008.  During the nine months ended March 31, 2009, cash was used to make investments in our manufacturing facilities, fund product development and restructuring programs, and meet the working capital needs of our business segments.

We will continue to have cash requirements to support seasonal working capital needs, investments in our manufacturing facilities, interest and principal payments and restructuring payments.  We intend to use cash on hand and cash generated by operations to meet these requirements. The credit markets have recently experienced adverse conditions.  Our existing cash and cash equivalents may decline and our financial condition may be adversely affected in the event of continued volatility in the credit markets or further economic deterioration.  We expect that credit market and industry conditions will continue to be weak in the near future.  However, we believe that in this difficult environment our cash on hand of $334.3 million as of March 31, 2009, and our operating cash flows will be adequate to meet our cash requirements for operations, restructuring and necessary capital expenditures over the next 12 months.  Below is a more detailed discussion of our cash flow activities during the nine months ended March 31, 2009.

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At March 31, 2009, we had $400 million Convertible Senior Notes outstanding (the “Notes”), which are more fully discussed below in the section Convertible Senior Notes. The Indenture to the Notes contain covenants, one of which requires us to calculate the ratio of Consolidated Total Debt to Consolidated EBITDA, as defined in the Indenture, for the most recently ended four quarter period, each time we incur additional indebtedness.  In April 2009, we have exceeded the minimum ratio for this covenant and, as a result, we will not be able to incur additional indebtedness without obtaining a waiver from the holders of a majority in principal amount of the Notes.  We do not intend to incur additional indebtedness unless we obtain a waiver or are able to satisfy this covenant.  If we were to incur additional indebtedness, at a time when we failed to meet the minimum ratio of Consolidated Total Debt to Consolidated EBITDA (unless we received a waiver), we would be in violation of our covenant under the Indenture.  If the violation is not remedied within 60 days, the Notes could become due, which would have a material adverse affect on our financial condition and our results of operations, and would also lead to an event of default under the Amended Credit Agreement and the acceleration of the loans thereunder.  Based on our forecast, we believe that we will be in compliance with these covenants for at least the next 12 months.

Operating Activities

For the nine months ended March 31, 2009, our net cash used by operations was $14.9 million compared to net cash provided by operations of $143.0 million in the same period last year.  Operating cash flows decreased due to higher inventories and reduction of accounts payable, offset by collections of receivables and a reduction in tax payments, primarily in Germany.  At March 31, 2009, working capital, excluding cash and short-term debt, was $348.3 million, compared with $309.7 million at June 30, 2008.  The increase was primarily due to lower accounts payable and accrued liabilities, partially offset by reductions in accounts receivable.

Investing Activities

Net cash used in investing activities was $60.9 million for the nine months ended March 31, 2009 compared to $99.3 million in the same period last year.  Capital expenditures for the nine months ended March 31, 2009 were $57.6 million compared to $89.9 million for the same period last year.  Capital spending was lower because the prior year included more significant expenditures relating to the launch of new automotive platforms and a new manufacturing facility in China.  We expect capital expenditures in fiscal year 2009 to be below fiscal year 2008 levels.  Contingent purchase price consideration of $8.2 million was recorded in connection with an acquisition we made in a prior year.

Financing Activities

Net cash flows provided by financing activities was $223.0 million for the nine months ended March 31, 2009 compared to $26.1 million used in the same period in the prior year.  The increase in cash flow for the nine months ended March 31, 2009 was primarily due to increased borrowings under our revolving credit facility.  During the nine months ended March 31, 2009, we paid $9.5 million in fees and other expenses which were incurred in connection with the Amended Credit Agreement, as well as $2.2 million in dividends paid to our stockholders.

Our total debt at March 31, 2009 was $661.7 million, primarily comprised of $260.0 million of borrowings under the Amended Credit Agreement that we entered into on March 31, 2009 and $400.0 million of the Notes issued in October 2007.  Unused available credit under the Amended Credit Agreement was $2.0 million at March 31, 2009 and we had outstanding letters of credit of $8.0 million.  Also included in total debt are capital leases and other borrowings of $1.6 million.

Recent Borrowings Under Revolving Credit Facility

On March 31, 2009 we and one of our wholly-owned subsidiaries, Harman Holding GmbH & Co. KG, entered into the Amended Credit Agreement, amending and restating the Amended and Restated Multi-Currency, Multi-Option Credit Agreement dated June 22, 2006.  The Amended Credit Agreement, among other things, extended the maturity date from June 28, 2010 to December 31, 2011 and reduced the maximum amount of available credit under the revolving credit facility from $300 million to $270 million.  Interest rates for borrowings under the Amended Credit Agreement were increased to three percent above the applicable base rate for base rate loans and four percent over LIBOR for Eurocurrency loans.  In addition, the annual facility fee rate payable under the Amended Credit Agreement has increased to one percent.  We expect interest expense to increase due to both the increase in interest rates and the increase in borrowings under the Amended Credit Agreement.

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The Amended Credit Agreement contains financial and other covenants that, among other things:

· Requires us to maintain the following levels and ratios:

o Consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) must be above specified amounts based on a schedule starting at $100 million for the four-quarter period ending June 30, 2010, and increasing on a quarterly basis until reaching $250 million for the four-quarter period ending December 31, 2011;

o Our minimum liquidity amount (“Liquidity Amount”) may not be less than: (a) $250 million for the fiscal quarter ending March 31, 2009; (b) $150 million for the fiscal quarter ending June 30, 2009; and (c) $100 million for the fiscal quarter ending September 30, 2009 and each fiscal quarter thereafter, subject to certain exceptions.  Liquidity Amount is defined as cash, subject to certain exceptions, plus availability on the revolving Amended Credit Agreement; and

o The ratio of Consolidated Current Assets to Secured Funded Debt must be equal to or less than 1:00 to 1:00.  Consolidated Current Assets is defined as 70 percent of net book value of accounts receivable, plus 35 percent of net book value of inventory, plus up to $25 million of cash, subject to certain exceptions.  Secured Funded Debt is defined as the aggregate exposure under the Amended Credit Agreement plus the amount outstanding under certain other secured facilities;

· Limits our ability to pay dividends and make capital expenditures;

· Requires net proceeds from the sale of certain assets and issuances of debt and equity to be applied to prepayment of the revolving credit facility; and

· Imposes limitations on our ability to incur debt, place liens on our assets, make fundamental changes, sell assets, make investments, undertake transactions with affiliates, undertake sale and leaseback transactions, incur guarantee obligations, modify or prepay certain material debt (including the Notes), enter into hedging agreements and acquire certain types of collateral.

If we do not meet the forecast in our budgets, we could violate our debt covenants and, absent a waiver from our lenders or an amendment to our credit agreement, we could be in default under the Amended Credit Agreement and, as a result, our debt under the Amended Credit Agreement could become due which would have a material adverse effect on our financial position and results of operations and could also lead to an event of default under the Indenture and the acceleration of the Notes.  As of March 31, 2009, we were in compliance with all the financial covenants of the Amended Credit Agreement.  Based on our forecast, we believe that we will be in compliance with these covenants for at least the next 12 months.

At March 31, 2009, we had $260.0 million in borrowings under the revolving credit facility and outstanding letters of credit of $8.0 million.  In accordance with the Amended Credit Agreement, we are required to maintain funds on deposit in a separate bank account in an aggregate amount equal to the outstanding letters of credit which are undrawn and unexpired.  At March 31, 2009, we had $8.0 million on deposit in a separate bank account to satisfy this requirement.  Unused available credit under the Amended Credit Agreement was $2.0 million at March 31, 2009.  In connection with the Amended Credit Agreement, we incurred $9.5 million in fees and other expenses which have been capitalized within other current assets and other assets in our Condensed Consolidated Balance Sheet at March 31, 2009.  These costs will be amortized over the term of the Amended Credit Agreement as interest expense.

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Guarantee and Collateral Agreement:

In connection with the Amended Credit Agreement, we and certain of our subsidiaries have entered into the Guarantee and Collateral Agreement which provides, among other things, that the obligations under the Amended Credit Agreement are guaranteed by us and each of the subsidiary guarantors party thereto, and that the obligations generally are secured by liens on substantially all of our assets and certain of our subsidiary guarantors’ assets.

The term of the Guarantee and Collateral Agreement corresponds with the term of the of Amended Credit Agreement which matures on December 31, 2011.  Under the terms of this Guarantee and Collateral Agreement, we have effectively guaranteed the payment of the full amount of borrowings under the Amended Credit Agreement, including outstanding letters of credit, upon maturity.  The potential amount of future payment that we would be required to pay under the Guarantee and Collateral Agreement is the amount that we have borrowed under the Amended Credit Agreement, including outstanding letters of credit.  At March 31, 2009, we had borrowed $260 million and had outstanding letters of credit of $8.0 million.

Convertible Senior Notes

On October 23, 2007, we issued $400 million of Notes.  The initial conversion rate is 9.6154 shares of common stock per $1,000 principal amount of Notes (which is equal to an initial conversion price of approximately $104 per share). The conversion rate is subject to adjustment in specified circumstances as described in the Indenture.  The Notes are convertible under the specified circumstances set forth in the Indenture.

Upon conversion, a Note holder will receive for each $1,000 of principal amount of Notes to be converted an amount in cash equal to the lesser of (1) $1,000 and (2) the conversion value, determined in the manner set forth in the Indenture.  If the conversion value per Note exceeds $1,000, we will also deliver, at our election, cash, common stock or a combination of cash and common stock for the conversion value in excess of $1,000.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (“FSP APB 14-1”).  FSP APB 14-1 requires the issuer of convertible debt instruments with cash settlement features to account separately for the liability and equity components of the instrument. The debt is recognized at the present value of its cash flows discounted using the issuer’s nonconvertible debt borrowing rate at the time of issuance. The equity component is recognized as the difference between the proceeds from the issuance of the note and the fair value of the liability. FSP APB 14-1 also requires an accretion of the resultant debt discount over the expected life of the debt. The proposed transition guidance requires retrospective application to all periods presented, and does not grandfather existing instruments. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008.  Early adoption is not permitted.  FSP APB 14-1 is effective for us beginning in the first quarter of fiscal year 2010.  We expect that the implementation of FSP APB 14-1 will have a material impact on our consolidated financial statements and will result in higher non-cash interest expense for fiscal year 2008 through the first half of fiscal year 2013 and a corresponding reduction in our reported net income.  We are currently evaluating our non-convertible borrowing rate and the fair value of the conversion privilege with respect to the Notes.

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Equity

Total shareholders’ equity at March 31, 2009 was $825.8 million compared with $1.340 billion at June 30, 2008.  The decrease is primarily due to the goodwill impairment charges totaling $327.8 million.  There were no shares of our common stock repurchased during the nine months ended March 31, 2009.

Business Outlook

With the current turmoil in the global credit and financial markets, investor and consumer confidence have been negatively affected.  We continued to see these effects on our results in the quarter ended March 31, 2009, and our future outlook may continue to be impacted by the contraction in consumer discretionary spending. Our outlook could also be affected by changes in foreign currency exchange rates (primarily the Euro compared to the U.S. dollar), potentially resulting in reduced sales.

To mitigate the potential impacts of the declining economic markets, we have accelerated many of the strategic initiatives implemented in the prior fiscal.  We also approved additional restructuring actions during the quarter ended March 31, 2009.  We continue to focus on improving our global footprint, cost structure, technology portfolio, human resources and internal processes.  We are continuing to proceed with our 24-month cost improvement and productivity program called STEP Change.  This program is designed to yield $400 million in sustainable savings by fiscal year 2011.  We have accelerated the timing of severance actions in order to help us improve our cost structure to enable us to remain competitive and mitigate the negative effects of this challenging environment.

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Item 3.   Quantitative and Qualitative Disclosures About Market Risk

We are required to include information about potential effects of changes in interest rates and currency exchange rates in our periodic reports filed with the SEC.  Since June 30, 2008, there have been no material changes in the quantitative or qualitative aspects of our market risk profile.  See Item 7A, Quantitative and Qualitative Disclosure About Market Risk included in our 2008 Form 10-K.

Interest Rate Sensitivity/Risk

At March 31, 2009, interest on approximately 60 percent of our borrowings was determined on a fixed rate basis.  The interest rates on the balance of our debt are subject to changes in U.S. and European short-term interest rates.  To assess exposure to interest rate changes, we have performed a sensitivity analysis assuming a hypothetical 100 basis point increase or decrease in interest rates across all outstanding debt and investments.  Our analysis indicates that the effect on net income for the nine months ended March 31, 2009 of such an increase or decrease in interest rates would be approximately $0.1 million.

Foreign Currency Risk

We maintain significant operations in Germany, the United Kingdom, France, Austria, Hungary, Mexico, China and Switzerland.  As a result, we are subject to market risks arising from changes in foreign currency exchange rates, principally changes in the value of the Euro versus the U.S. dollar.  Our subsidiaries purchase products and raw materials in various currencies.  As a result, we may be exposed to cost changes relative to local currencies in the markets to which we sell our products.  To mitigate these transactional risks, we enter into foreign currency forward contracts.  Also, foreign currency positions are partially offsetting and are netted against one another to reduce exposure.

Changes in currency exchange rates, principally the change in the value of the Euro compared to the U.S. dollar have an impact on our reported results when the financial statements of foreign subsidiaries are translated into U.S. dollars.

Over half of our sales are denominated in Euros.  The fluctuation in currency exchange rates, specifically the Euro versus the U.S. dollar, had a significant impact on earnings for the nine months ended March 31, 2009 compared to the same prior year period due to the strengthening of the Euro relative to the U.S. dollar.  The average exchange rate for the Euro versus the U.S. dollar for the nine months ended March 31, 2009 decreased 4.6 percent from the same period in the prior year.  In recent months, the U.S. dollar has strengthened against the Euro.  To the extent the U.S. dollar continues to strengthen against the Euro, our results of operations may be negatively affected.

To assess exposure to changes in currency exchange rates, we prepared an analysis assuming a hypothetical 10 percent change in currency exchange rates across all currencies used by our subsidiaries.  This analysis indicated that a 10 percent increase in exchange rates would have decreased income before income taxes by approximately $21 million and a 10 percent increase in exchange rates would have decreased income before income taxes by approximately $21 million for the nine months ended March 31, 2009.

Competitive conditions in the markets in which we operate may limit our ability to increase prices in the event of adverse changes in currency exchange rates.  For example, certain products made in Europe are sold in the U.S.  Sales of these products are affected by the value of the U.S. dollar relative to the Euro.  Any weakening of the U.S. dollar could depress the demand for these European manufactured products in the U.S. and reduce sales.  However, due to the multiple currencies involved in our business and the netting effect of various simultaneous transactions, our foreign currency positions are partially offsetting.  In addition, our foreign currency hedging program is designed to limit our exposure.  

Actual gains and losses in the future may differ materially from the hypothetical gains and losses discussed above based on changes in the timing and amount of interest rate and foreign currency exchange rate movements and our actual exposure and hedging transactions.

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Item 4.   Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated by the SEC under the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form 10-Q.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.  We note that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions.

Change in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) as promulgated by the SEC under the Securities Exchange Act of 1934) during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II.   OTHER INFORMATION

Item 1.   Legal Proceedings

For a discussion of our material pending legal proceedings, see Note 15, Commitments and Contingencies.

Other Legal Actions

At March 31, 2009, we were involved in several other legal actions.  The outcome of these legal actions cannot be predicted with certainty; however, management, based upon advice from legal counsel, believes such actions are either without merit or will not have a material adverse effect on our financial position or results of operations.

Item 1A.   Risk Factors

There have been no material changes with respect to Harman’s risk factors previously disclosed in the Annual Report on Form 10-K for the year ended June 30, 2008 except as described below.

The current economic environment may adversely affect the availability and cost of credit and consumer spending patterns.

Our ability to make scheduled payments or to refinance our obligations with respect to indebtedness will depend on our operating and financial performance, which in turn is subject to prevailing economic conditions.  The subprime mortgage crisis and disruptions in the financial markets, including the bankruptcy and restructuring of major financial institutions, may adversely impact the availability of credit already arranged, and the availability and cost of credit in the future.  The disruptions in the financial markets may also have an adverse effect on the United States and the world economy, which could negatively impact consumer spending patterns.  This could result in reductions in sales of our products, longer sales cycles, slower adoption of new technologies and increased price competition.  There can be no assurances that government responses to the disruptions in the financial markets will restore consumer confidence, stabilize the markets or increase liquidity and the availability of credit.

Decreased demand from our customers in the automotive industry may adversely affect our results of operations.

For the nine months ended March 31, 2009, approximately 65 percent of our sales were to automobile manufacturers.  As a result, our financial performance depends, in large part, on conditions in the automotive industry, which has recently experienced significant difficulty.   Certain of our customers have publicly announced their financial difficulties.  If one or more of our significant automotive customers experiences, or continues to experience, continued or increased financial difficulty, this may have an adverse effect on our business due to decreased demand, the potential inability of these companies to make full payment on amounts owed to us, or both.

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Chrysler, one of our significant customers, has filed for bankruptcy, which may adversely affect our results of operations.

On April 30, 2009, Chrysler filed a petition in bankruptcy court.  The nature of the negative impact could be a reduction in future sales, as well as losses associated with the potential inability to collect outstanding accounts receivables. We might also incur additional expenses related to the idling of one of our facilities. While we do not believe it would be material, the Chrysler bankruptcy may adversely affect our results of operations.

The financial distress of our suppliers could harm our results of operations.

Automotive industry conditions have adversely affected our supplier base.  Lower production levels for some of our key customers and increases in certain raw material, commodity and energy costs have resulted in severe financial distress among many companies within the automotive supply base.  Several large suppliers have filed for bankruptcy protection or ceased operations.  The continuation of financial distress within the supplier base may lead to increased commercial disputes and possible supply chain interruptions.  The continuation or worsening of these industry conditions may have a negative effect on our business.

Covenants in our existing debt agreements could restrict our operations.

Our recently amended revolving credit facility and the indenture for our convertible senior notes contain provisions that could restrict our operating and financing activities.  Together, they restrict our ability to, among other things:

· incur debt for working capital, capital expenditures, debt service requirements or other corporate purposes;

· use a substantial portion of proceeds from sales of debt, equity or assets to fund working capital, capital expenditures, product development and other corporate requirements;

· create or assume liens;

· enter into sale-leaseback transactions;

· engage in mergers or consolidations;

· make capital expenditures or investments;

· sell assets; and

· modify or prepay certain material debt.

Because of the restrictions in these debt agreements, we may have difficulty securing additional financing in the form of additional indebtedness.  In addition, our revolving credit facility contains other and more restrictive covenants, including financial covenants that will require us to achieve specified financial and operating results and maintain compliance with specified financial ratios.  We may have to curtail some of our operations to maintain compliance with these covenants.  A violation of any of these covenants could result in a default under these credit agreements, which could permit the lenders to accelerate the repayment of any borrowings outstanding at that time, and the lenders under the revolving credit facility could act on the collateral package granted in connection with the recently amended credit facility.  A default or acceleration under our credit agreements may result in increased capital costs and may adversely affect our ability to operate our business, our subsidiaries and guarantors’ ability to operate their business and our results of operations and financial condition.

44

We have deferred tax assets in our consolidated financial statements.

Our consolidated financial statements include deferred tax assets of $273.6 million, which relate to temporary differences (differences between the assets and liabilities in the consolidated financial statements and the assets and liabilities in the calculation of taxable income).  The valuation of deferred tax assets is based on various projections for future taxable income.  Thus, when actual taxable income differs from projections, it may become necessary to adjust the valuation of our deferred tax assets, which could impact our results of operations and financial condition.

45

Item 5. Other Information

On May 7, 2009, we entered into severance agreements with two of our executive officers, Sachin Lawande, our Chief Technology Officer, and David Slump, President of our Consumer Division and Vice President of Corporate Development. The agreements provide that if, during the six months prior to or within two years following a change in control of our company, the executive is terminated without cause or other certain circumstances terminate his own employment, he is entitled to receive a severance payment equal to one and one-half times his highest annual base salary during any period prior to his termination. The executive is also entitled to receive 18 months’ COBRA reimbursement on an after-tax basis and up to $50,000 for outplacement services. Each of the severance agreements expires on December 31, 2012. A form of the severance agreement is filed with this Quarterly Report on Form 10-Q and is hereby incorporated by this reference.

46

Item 6.  Exhibits

Exhibit No.	Exhibit Description
10.1	Second Amended and Restated Multi-Currency, Multi-Option Credit Agreement, dated March 31, 2009, among Harman International Industries, Incorporated, Harman Holding GmbH & Co. KG, and the several lenders and agents from time to time parties thereto.
10.2	Guarantee and Collateral Agreement, dated March 31, 2009, among Harman International Industries, Incorporated, Harman Holding GmbH & Co. KG, certain subsidiaries of the Company parties thereto, and JPMorgan Chase Bank, N.A., as administrative agent for the several lenders from time to time parties to the Second Amended and Restated Multi-Currency, Multi-Option Credit Agreement.
10.3	Form of Severance Agreement between Harman International Industries, Incorporated and Blake Augsburger, David Karch, Sachin Lawande, David Slump, John Stacey and Todd Suko(1)
31.1	Certification of Dinesh Paliwal pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Herbert Parker pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Dinesh Paliwal and Herbert Parker, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Form of Indemnification Letter Agreement with Directors and Executive Officers (incorporated herein by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on February 13, 2009).

(1) This form replaces the incorrect form previously filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2008, filed with the SEC on February 6, 2009.

47

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Harman International Industries, Incorporated has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Harman International Industries, Incorporated
Date:  May 8, 2009	By:/s/ Herbert Parker
	Herbert Parker Executive Vice President and Chief Financial Officer and a duly authorized signatory
	(Principal Financial Officer)

 48

EX-10.1

Exhibit 10.1

SECOND AMENDED AND RESTATED MULTI-CURRENCY,

MULTI-OPTION CREDIT AGREEMENT

among

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED,

HARMAN HOLDING GMBH & CO. KG,

The Several Lenders

from Time to Time Parties Hereto

J.P. MORGAN SECURITIES INC.,

as Arranger

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

HSBC BANK USA, NATIONAL ASSOCIATION,

BAYERISCHE HYPO – UND VEREINSBANK AG, NEW YORK BRANCH,

and

BANK OF TOKYO – MITSUBISHI UFJ TRUST COMPANY

as Syndication Agents

Dated as of March 31, 2009

TABLE OF CONTENTS

		Page
SECTION 1 DEFINITIONS		2
1.1.	Defined Terms	2
1.2.	Other Definitional Provisions	33
1.3.	Classification of Loans	33
1.4.	Restatement Effective Date Tranche Elections.	33
SECTION 2 THE COMMITTED RATE LOANS		34
2.1.	Committed Rate Loans	34
2.2.	Procedure for Committed Rate Loan Borrowing	35
2.3.	Repayment of Committed Rate Loans; Evidence of Debt	35
2.4.	Termination or Reduction of Commitments	36
2.5.	Prepayments	36
2.6.	Conversion and Continuation Options.	38
2.7.	Minimum Amounts of Tranches	39
2.8.	Interest Rates and Payment Dates for Committed Rate Loans	39
2.9.	Inability to Determine Interest Rate	39
2.10.	Substitution of Euro for National Currency	40
2.11.	Unavailability of Available Foreign Currency	40
2.12.	Separate Obligations	40
SECTION 3 THE COMPETITIVE ADVANCE LOANS		41
3.1.	Competitive Advance Loans	41
3.2.	Procedure for Competitive Advance Loan Borrowing	41
3.3.	Repayment of Competitive Advance Loans; Evidence of Debt	42
3.4.	Prepayments	42
SECTION 4 THE LETTERS OF CREDIT		42
4.1.	L/C Commitment	42
4.2.	Procedure for Issuance of Letters of Credit under this Agreement	43
4.3.	Fees, Commissions and Other Charges	43
4.4.	L/C Participations	44
4.5.	Reimbursement Obligation of the Company	45
4.6.	Obligations Absolute	46
4.7.	Letter of Credit Payments	46
4.8.	Application	46
4.9.	Issuance of Letters of Credit Priority for Acceptance of Time Drafts	46
4.10.	L/C Cash Accounts	47
SECTION 5 CERTAIN PROVISIONS APPLICABLE TO THE LOANS AND LETTERS OF CREDIT		47
5.1.	Facility Fee	47
5.2.	Computation of Interest and Fees	48

i

TABLE OF CONTENTS

(continued)

		Page
5.3.	Pro Rata Treatment and Payments	48
5.4.	Requirements of Law	49
5.5.	Taxes	51
5.6.	Indemnity	53
5.7.	Change of Lending Office	54
5.8.	Company Controls on Exposure; Calculation of Exposure; Prepayment if Exposure Exceeds Commitments	54
5.9.	Tax Confirmation	55
SECTION 6 REPRESENTATIONS AND WARRANTIES		57
6.1.	Financial Condition	57
6.2.	No Change	57
6.3.	Corporate Existence; Compliance with Law	57
6.4.	Corporate Power; Authorization; Enforceable Obligations	57
6.5.	No Legal Bar	58
6.6.	No Material Litigation	58
6.7.	No Default	58
6.8.	Ownership of Real Property; Liens	58
6.9.	Intellectual Property	58
6.10.	Taxes	59
6.11.	Federal Regulations	59
6.12.	ERISA.	59
6.13.	Investment Company Act; Other Regulations	60
6.14.	Subsidiaries	60
6.15.	Purpose of Loans and Letters of Credit	60
6.16.	Accuracy and Completeness of Information	60
6.17.	Environmental Matters	60
6.18.	Compliance with Convertible Notes Indenture	61
6.19.	Solvency	62
6.20.	Collateral Matters	62
SECTION 7 CONDITIONS PRECEDENT		63
7.1.	Conditions to Effectiveness	63
7.2.	Conditions to Each Extension of Credit	64
SECTION 8 AFFIRMATIVE COVENANTS		65
8.1.	Financial Statements	65
8.2.	Certificates; Other Information	66
8.3.	Payment of Obligations	66
8.4.	Conduct of Business and Maintenance of Existence	67
8.5.	Maintenance of Property; Insurance	67
8.6.	Inspection of Property; Books and Records; Discussions.	67
8.7.	Notices	67
8.8.	Environmental Laws	68
8.9.	Additional Borrower.	68

ii

TABLE OF CONTENTS

(continued)

		Page
8.10.	Information Regarding Collateral	69
8.11.	Collateral and Guarantee Requirement; Further Assurances	69
8.12.	Appraisals and Field Examinations	69
8.13.	Financial Consultant	70
8.14.	Depository Banks	70
SECTION 9 NEGATIVE COVENANTS		70
9.1.	Financial Condition Covenants.	70
9.2.	Limitation on Indebtedness	71
9.3.	Limitation on Liens	74
9.4.	Limitation on Fundamental Changes	77
9.5.	Limitation on Sale of Assets	78
9.6.	Limitation on Restricted Payments	79
9.7.	Limitation on Investments	79
9.8.	Limitation on Transactions with Affiliates	81
9.9.	Limitation on Sales and Leasebacks	81
9.10.	Limitation on Changes in Fiscal Year	81
9.11.	Limitation on Material Guarantee Obligations in respect of Indebtedness of Subsidiaries	81
9.12.	Limitation on Amendment of Material Documents	81
9.13.	Limitation on Prepayments of Indebtedness	81
9.14.	Hedging Agreements	82
9.15.	Limitation on Acquisition of Certain Collateral	82
9.16.	Maximum Capital Expenditures	82
SECTION 10 EVENTS OF DEFAULT		83
SECTION 11 THE ADMINISTRATIVE AGENT AND THE ARRANGER		85
11.1.	Appointment	85
11.2.	Delegation of Duties	86
11.3.	Exculpatory Provisions	86
11.4.	Reliance by Administrative Agent	86
11.5.	Notice of Default	86
11.6.	Non-Reliance on Administrative Agent and Other Lenders.	87
11.7.	Indemnification	87
11.8.	Administrative Agent in Its Individual Capacity	88
11.9.	Successor Administrative Agent	88
11.10.	The Arranger	88
SECTION 12 MISCELLANEOUS		88
12.1.	Amendments and Waivers Generally; Amendments to Schedule	88
12.2.	Notices	91
12.3.	No Waiver; Cumulative Remedies	93
12.4.	Survival of Representations and Warranties.	93
12.5.	Payment of Expenses and Taxes	93
12.6.	Successors and Assigns; Participations and Assignments	94

iii

TABLE OF CONTENTS

(continued)

		Page
12.7.	Adjustments; Set-off	97
12.8.	Judgment	98
12.9.	Counterparts	98
12.10.	Severability	98
12.11.	Integration	98
12.12.	GOVERNING LAW	98
12.13.	Submission to Jurisdiction; Waivers	99
12.14.	Acknowledgements	99
12.15.	WAIVERS OF JURY TRIAL	99
12.16.	Confidentiality	100
12.17.	Release of Liens and Guarantees	100
12.18.	Interest Rate Limitation	101
12.19.	Patriot Act	101

iv

SCHEDULES

Schedule I:	Lenders and Commitments
Schedule II:	Administrative Schedule
Schedule III:	Existing Letters of Credit
Schedule IV:	Issuing Banks
Schedule 6.14:	Subsidiaries
Schedule 9.2:	Existing Indebtedness
Schedule 9.7:	Existing Investments

EXHIBITS

Exhibit A:	Schedule Amendment
Exhibit B:	Form of Competitive Bid Notice
Exhibit C:	Form of Competitive Bid Request
Exhibit D:	Form of Notice of Borrowing
Exhibit E:	Form of Notice of Competitive Advance Loan
Exhibit F:	Form of Notice of Continuation/Conversion
Exhibit G:	Assignment and Acceptance
Exhibit H-1:	Opinion of Wachtell, Lipton, Rosen & Katz (NY Law Matters)
Exhibit H-2:	Opinion of Morris, Nichols, Arsht & Tunnell LLP (DE Law Matters)
Exhibit H-3:	Opinion of General Counsel
Exhibit H-4-i:	Opinion of Jones Day (German Law Matters)
Exhibit H-4-ii:	Opinion of Hengeler Mueller (German Law Matters)
Exhibit H-4-iii	Opinion of McMillan LLP (Canadian Law Matters)
Exhibit I:	Form of Exemption Certificate
Exhibit J:	Form of Tax Confirmation

v

SECOND AMENDED AND RESTATED MULTI-CURRENCY, MULTI-OPTION CREDIT AGREEMENT, dated as of March 31, 2009, among:

(i)             HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED, a Delaware corporation (the “Company”);

(ii)            HARMAN HOLDING GMBH & CO. KG, a company organized under the laws of Germany;

(iii)           the several banks and other financial institutions from time to time parties to this Agreement (each, a “Lender”; and collectively, the “Lenders”);

(iv)           HSBC BANK USA, NATIONAL ASSOCIATION, BAYERISCHE HYPO - UND VEREINSBANK AG, NEW YORK BRANCH, and BANK OF TOKYO - MITSUBISHI UFJ TRUST COMPANY, as the Syndication Agents (the “Syndication Agents”);

(v)            J.P. MORGAN SECURITIES INC., as Arranger (the “Arranger”); and

(vi)           JPMORGAN CHASE BANK, N.A., as administrative agent for the Lenders hereunder (and its successors in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Company is party to that certain Amended and Restated Multi-Currency, Multi-Option Credit Agreement, dated as of June 22, 2006 (the “Existing Credit Agreement”), among the Company, Harman Holding GmbH & Co. KG, as an additional borrower, the several banks and other financial institutions from time to time parties thereto, HSBC Bank USA, National Association, Bayerische Hypo - und Vereinsbank AG, New York Branch and Bank of Tokyo-Mitsubishi Trust Company, as syndication agents, J.P. Morgan Securities Inc., as arranger, and JPMorgan Chase Bank, N.A., as administrative agent;

WHEREAS, the parties hereto have agreed to amend and restate the Existing Credit Agreement as provided in this Agreement to, among other things, (x) permit each Lender to elect to become an Extended Tranche Lender and to convert its Commitment and its outstanding Loans (each as defined in the Existing Credit Agreement) to an Extended Tranche Commitment and Extended Tranche Loans and (y) provide for the Extended Tranche Obligations (as defined below) to be guaranteed and secured as provided herein and in the other Loan Documents; and

WHEREAS, it is the intent of the parties hereto, and the parties hereto agree, that (x) this Agreement shall not constitute a novation of the obligations and liabilities existing under the Existing Credit Agreement or evidence repayment of any of such obligations or liabilities and (y) this Agreement shall amend and restate in its entirety the Existing Credit Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto hereby agree that on the date hereof, subject to the satisfaction of the conditions precedent set forth in subsection 7.1 hereof, the Existing Credit Agreement shall be, and hereby is, amended and restated in its entirety as follows:

SECTION 1

DEFINITIONS

1.1.           Defined Terms.  As used in this Agreement, the following terms shall have the following meanings:

“ABR”:  for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1%, (c) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (d) the Adjusted Eurocurrency Rate for Dollars for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%; provided that, for the avoidance of doubt, the Adjusted Eurocurrency Rate for any day shall be based on the rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute page) at approximately 11:00 a.m. London time on such day (without any rounding).  Any change in the ABR due to a change in the Prime Rate, the Base CD Rate, the Federal Funds Effective Rate or the Adjusted Eurocurrency Rate shall be effective from and including the effective date of such change in the Prime Rate, the Base CD Rate, the Federal Funds Effective Rate or the Adjusted Eurocurrency Rate, respectively.

“ABR Loans”:  Loans in Dollars bearing interest based upon the ABR.

“Acquisition”:  means any transaction or series of related transactions for the purpose of, or resulting in, directly or indirectly, (a) the acquisition by the Company or any Subsidiary of all or substantially all of the assets of a Person or of any business or division of a Person or (b) the acquisition by the Company or any Subsidiary of more than 50% of any class of Voting Stock (or similar ownership interests) of any Person.

“Additional Borrower”:  Harman Holding GmbH & Co. KG, a company organized under the laws of Germany and a Wholly Owned Subsidiary of the Company.

“Additional Borrower Obligations”:  a collective reference to both the Original Tranche Additional Borrower Obligations and the Extended Tranche Additional Borrower Obligations.

“Additional Borrower Percentage”:  as of the Restatement Effective Date, with respect to the Additional Borrower, 66 2/3%; provided, that upon written notice by the Borrowers to the Administrative Agent, such percentage (a) may be increased and/or decreased from time to time and at any time by the Borrowers, and (b) as of the effective date for any such increase or decrease specified by the Borrowers in the applicable notice thereof, shall be the percentage so specified.

“Adjusted Eurocurrency Rate”:  with respect to any Eurocurrency Loan for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the Eurocurrency Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

2

“Administrative Schedule”:  Schedule II to this Agreement, which contains interest rate definitions and administrative information in respect of each Currency and each Class and Type of Loan.

“Affiliate”:  as to any Person, any other Person (other than a Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 20% or more of the securities having ordinary voting power for the election of directors of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

“Agreement”:  this Second Amended and Restated Multi-Currency, Multi-Option Credit Agreement, as amended, supplemented or otherwise modified from time to time.

“Agreement Currency”:  as defined in subsection 12.8(b).

“Applicable Margin”:  for each day during each Interest Period in respect of (a) any Original Tranche Eurocurrency Loan, the margin per annum set forth below opposite the applicable Ratings category in effect on such day:

Pricing Level (from highest to lowest)	Ratings (S&P/Moody’s)	Applicable Margin (basis points)
1	A- or A3 or higher	37.0
2	BBB+ or Baa1	40.0
3	BBB or Baa2	50.0
4	BBB- or Baa3	60.0
5	BB+ or Ba1	70.0
6	Lower than BB+ or Ba1	90.0

and (b) any Extended Tranche Loan, (i) in the case of an Extended Tranche Eurocurrency Loan, 4.00% per annum and (ii) in the case of an Extended Tranche ABR Loan, 3.00% per annum.

For purposes of clause (a) of the foregoing:  (i) if the Rating issued by Moody’s and the Rating issued by S&P shall fall within different Pricing Levels (but not more than one (1) Pricing Level apart), then the Applicable Margin shall be determined by reference to the higher Pricing Level (e.g., if the Rating issued by S&P is in Pricing Level 1 and the Rating issued by Moody’s is in Pricing Level 2, then the Applicable Margin shall be determined by reference to Pricing Level 1); (ii) if the Rating issued by Moody’s and the Rating issued by S&P shall fall within different Pricing Levels (and by more than one (1) Pricing Level apart), then the Applicable Margin shall be determined by reference to the Pricing Level that is one (1) Pricing Level higher than the lower Pricing Level (e.g., if the Rating issued by S&P is in Pricing Level 1 and the Rating issued by Moody’s is in Pricing Level 4, then the Applicable Margin shall be determined by reference to Pricing Level 3); (iii) if either Moody’s or S&P shall not have in effect a Rating (other than by reason of the circumstances referred to in the last sentence of this paragraph), then such rating agency shall be deemed to have established a rating in Pricing Level 6; and (iv) if either Moody’s or S&P no longer publishes ratings and the Company and the Administrative Agent cannot agree on another ratings agency to replace Moody’s or S&P, as the case may be, then the Rating issued by Moody’s or the Rating issued by S&P which is still being published, as the case may be, shall be deemed to be the Rating.  If the rating system of Moody’s or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations, the Company and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and pending the effectiveness of any such amendment, the Applicable Margin shall be determined by reference to the rating most recently in effect prior to such change or cessation.

3

“Applicable Percentage”:  an individual reference to, with respect to the Company, the Company Percentage or, with respect to the Additional Borrower, the Additional Borrower Percentage, but not a collective reference to both the Company Percentage and the Additional Borrower Percentage.

“Application”:  in respect of each Letter of Credit issued by an Issuing Bank, an application, in such form as such Issuing Bank may specify from time to time, requesting issuance of such Letter of Credit.

“Assessment Rate”:  for any day as applied to any ABR Loan, the annual assessment rate in effect on such day that is payable by a member of the Bank Insurance Fund maintained by the Federal Deposit Insurance Corporation (the “FDIC”) and classified as “well-capitalized” and within supervisory subgroup “A” (or a comparable successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any successor provision) to the FDIC (or any successor) for the FDIC’s (or such successor’s) insuring of time deposits made in dollars at the offices of such member in the United States; provided that if, as a result of any change in any law, rule or regulation, it is no longer possible to determine the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall be determined by the Administrative Agent to be representative of the cost of such insurance to the Lenders.

“Asset Prepayment Percentage”:  with respect to Net Cash Proceeds received after the Restatement Effective Date by or on behalf of the Company, the Additional Borrower or any other Subsidiary in respect of one or more Prepayment Events referred to in clause (a) or (b) of the definition of such term, (i) to the extent such Net Cash Proceeds are received on or prior to the date that is 180 days following the Restatement Effective Date, (x) for the first $20,000,000 of aggregate Net Cash Proceeds received during such period from all such Prepayment Events, 100%, (y) for the next $150,000,000 of aggregate Net Cash Proceeds received during such period from all such Prepayment Events in respect of Dispositions of assets that are determined by the Company in good faith not to be related to core businesses of the Company and its Subsidiaries as conducted on the Restatement Effective Date, 75%, and (z) for all other Net Cash Proceeds received during such period from all such Prepayments Events, 100%; and (ii) to the extent such Net Cash Proceeds are received after the date that is 180 days following the Restatement Effective Date, (x) for the first $50,000,000 of aggregate Net Cash Proceeds received after such date from all such Prepayment Events, 75% and (y) for all subsequent Net Cash Proceeds received after such date from all such Prepayment Events, 100%.

4

“Assignee”:  as defined in subsection 12.6(c).

“Assignment and Acceptance”:  such Assignment and Acceptance, substantially in the form of Exhibit G hereto, executed and delivered pursuant to subsection 12.6(c).

“Availability”:  as of any date, the aggregate Commitments as of such date minus Exposure outstanding as of such date; provided, however, that Availability as of any date shall be reduced to the extent that the condition to an Extension of Credit set forth in subsection 7.2(c) cannot be satisfied as of such date.

“Available Foreign Currencies”:  euro, Pounds Sterling, Danish Kroner, Japanese Yen, Swedish Krona, Swiss Francs, Hong Kong Dollars, Canadian Dollars, Singapore Dollars, and any other available and freely-convertible foreign currency selected by the Company and approved by the Administrative Agent in the manner described in subsection 12.1(b).

“Average Exchange Rate”:  for purposes of subsection 9.1(b) and the definition of “Liquidity Amount”, as of any date for any foreign currency, the arithmetic average of the rates at which such currency shall have been exchangeable into Dollars (determined in accordance with the immediately succeeding sentence) on the last Business Day of each of the 12 calendar months most recently ended on or prior to such date.  For purposes of this definition, the exchange rate for any foreign currency as of any date shall be determined by reference to the applicable Reuters currency page with respect to such currency at or about 11:00 A.M. London time on such date.  In the event that such rate does not appear on the applicable Reuters currency page, the exchange rate with respect to such foreign currency shall be determined by reference to such other publicly available service for displaying exchange rates as may be reasonably determined by the Company.

“Base CD Rate”:  the sum of (a) the Three-Month Secondary CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.

“Board”:  the Board of Governors of the Federal Reserve System of the United States (or any successor).

“Borrower”:  an individual reference to the Company or the Additional Borrower, but not a collective reference to both the Company and the Additional Borrower.

“Borrowers”: a collective reference to both the Company and the Additional Borrower.

“Borrowing Date”:  any Business Day on which a Loan is to be made at the request of a Borrower under this Agreement.

“Business”:  as defined in subsection 6.17.

“Business Day”:  (a) when such term is used in respect of any amounts denominated or to be denominated in (i) any Available Foreign Currency, a London Banking Day which is also a day on which banks are open for general banking business in (x) the city which is the principal financial center of the country of issuance of such Available Foreign Currency, (y) in the case of euro only, Frankfurt am Main, Germany (or such other principal financial center as the Administrative Agent may from time to time nominate for this purpose) and (z) New York City and (ii) Dollars, (x) in the case of a Eurocurrency Loan, any fundings, disbursements, payments and settlements in respect of any such Eurocurrency Loan, or any other dealings to be carried out pursuant to any Loan Document in respect of any such Eurocurrency Loan, a London Banking Day which is also a day other than a Saturday or Sunday on which banks are open for general banking business in New York City, and (y) in the case of an ABR Loan, any fundings, disbursements, payments and settlements in respect of any such Eurocurrency Loan, or any other dealings to be carried out pursuant to any Loan Document in respect of any such ABR Loan, a day other than a Saturday or Sunday on which banks are open for general banking business in New York City, (b) when such term is used for the purpose of determining the date on which the Eurocurrency Rate is determined under this Agreement for any Loan denominated in euro for any Interest Period therefor and for purposes of determining the first and last day of any Interest Period, references in this Agreement to Business Days shall be deemed to be references to Target Operating Days and (c) when such term is used to describe a day on which a request is to be made to an Issuing Bank for issuance of a Letter of Credit or on which a Letter of Credit is to be issued, such term shall mean a day other than a Saturday, Sunday or other day on which commercial banks in the city in which such Issuing Bank’s Issuing Office is located.

5

“Canadian Dollars”:  the lawful currency of Canada.

“Capital Expenditures”: for any period, the additions to property, plant and equipment and other capital expenditures of the Company and the Subsidiaries that are (or should be) set forth in a consolidated statement of cash flows of the Company for such period prepared in accordance with GAAP, but excluding in each case any such expenditure (i) constituting reinvestment of the Net Cash Proceeds of any event described in clause (a) or (b) of the definition of the term “Prepayment Event”, to the extent made in accordance with subsection 2.5(b), (ii) made by the Company or any Subsidiary as payment of the consideration for a Permitted Business Acquisition, (iii) accounted for as a capital expenditure of the Company or any Subsidiary to the extent that such expenses actually are paid for or have been reimbursed by a third party (excluding the Company or any Subsidiary) and for which neither the Company nor any Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such third party or any other Person (whether before, during or after such period) and (iv) constituting the purchase price of equipment purchased during such period to the extent the consideration therefor consists of any combination of (x) used or surplus equipment traded in at the time of such purchase and (y) the proceeds of a concurrent sale of used or surplus equipment, in each case in the ordinary course of business.

“Capital Lease Obligations”: the obligations of any Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

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“Capital Stock”:  any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing.

“Cash Collateral Account”: has the meaning set forth in the Collateral Agreement.

“Cash Equivalents”:  (a) marketable direct obligations with maturities of one year or less from the date of acquisition issued by or fully guaranteed or insured by (i) the United States Government or any agency or instrumentality thereof or (ii) any member state of the European Union; (b) marketable general obligations issued or fully guaranteed by any state, commonwealth or territory of the United States of America or any political subdivision, agency or taxing authority of any such state, commonwealth or territory or any public instrumentality thereof or any other foreign government or any agency or instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, which are rated at least A- by S&P or A-1 by Moody’s; (c) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits, bankers’ acceptances and repurchase agreements having maturities of one year or less from the date of acquisition issued, and money market deposit accounts issued or offered, by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or foreign commercial bank of recognized standing having combined capital and surplus of not less than $100,000,000 or any bank (or the parent company of any such bank) whose short-term commercial paper rating from S&P is at least A-1 or from Moody’s is at least P-2 or an equivalent rating from another rating agency; (d) commercial paper of an issuer rated at least A-1 by S&P or P-1 by Moody’s, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and, in either case, maturing within one year from the date of acquisition; (e) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (c) of this definition, having a term of not more than 30 days, with respect to notes or other securities described in clause (a) of this definition; (f) any notes or other debt securities or instruments issued by any Person, (i) the payment and performance of which is premised upon (A) securities issued by any state, commonwealth or territory of the United States of America or any political subdivision or taxing authority of such state, commonwealth or territory or any public instrumentality or agency thereof or any foreign government or (B) loans originated or acquired by any other Person pursuant to a plan or program established by any Governmental Authority that requires the payment of not less than 95% of the outstanding principal amount of such loans to be guaranteed by (1) a specified Governmental Authority or (2) any other Person (provided that all or substantially all of such guarantee payments made by such Person are contractually required to be reimbursed by any other Governmental Authority), (ii) that are rated at least AAA by S&P and Aaa by Moody’s and (iii) which are disposed of by the Company or any Subsidiary within one (1) year after the date of acquisition thereof; (g) shares of money market, mutual or similar funds that (i) invest in assets satisfying the requirements of clauses (a) through (f) (or any of such clauses) of this definition, and (ii) have portfolio assets of at least $1,000,000,000; (h) any other Investment which constitutes a “cash equivalent” under GAAP as in effect from time to time; and (i) any other notes, securities or other instruments or deposit-based products consented to in writing by the Administrative Agent.

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“Change of Control”:  (a) an event or series of related events by which (i) any “person” or “group” (as such terms are defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than the Permitted Investor, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have “beneficial ownership” of all shares that any such Person has the right to acquire without condition, other than passage of time, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the then outstanding Voting Stock of the Company or (ii) the Company consolidates with or merges into another corporation or conveys, transfers or leases all or substantially all of its properties and assets (determined on a consolidated basis for the Company and its Subsidiaries taken as a whole) to any Person; provided, however, that notwithstanding anything to the contrary in this definition, transfer of beneficial ownership of shares held by the Permitted Investor upon the death of the Permitted Investor to the heirs and devisees of the Permitted Investor shall not constitute a Change of Control; or (b) the occurrence of  a “Fundamental Change” (or similar event, however denominated) as defined in the Convertible Notes Documents or any “change of control” (or similar event, however denominated) with respect to the Company under and as defined in any indenture or other agreement or instrument evidencing, governing the rights of the holders of or otherwise relating to any Material Indebtedness of the Company or any Subsidiary, in each case which would enable the holders thereof to require the Company to prepay, repurchase, redeem or defease the Convertible Notes or such other Material Indebtedness prior to its scheduled maturity.

“Charges”: as defined in subsection 12.18.

“Class”: when used in reference to (a) any Loan, refers to whether such Loan is an Original Tranche Loan or Extended Tranche Loan and (b) any Commitment, refers to whether such Commitment is an Original Tranche Commitment or an Extended Tranche Commitment.

“Code”:  the Internal Revenue Code of 1986, as amended from time to time.

“Collateral”: any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the Collateral Documents as security for the Extended Obligations.

“Collateral Agreement”: the Guarantee and Collateral Agreement dated as of March 31, 2009, among the Company, the Additional Borrower, the other Loan Parties and the Administrative Agent, as amended from time to time and together with all supplements thereto.

“Collateral and Guarantee Requirement”: at any time, the requirement that:

(a) the Administrative Agent shall have received:

(i) from the Company and each Domestic Subsidiary that is not a Dormant Subsidiary,

(A) a counterpart of the Collateral Agreement, and, in the case of the Company, the Harman International Guarantee, duly executed and delivered on behalf of such Person or, in the case of any Person that becomes a Domestic Subsidiary that is not a Dormant Subsidiary after the Restatement Effective Date, a supplement to the Collateral Agreement, in the form specified therein, duly executed and delivered on behalf of such Person.

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(B) (I) counterparts of a Mortgage with respect to each Mortgaged Property owned by the Company or such Domestic Subsidiary, duly executed and delivered by the record owner of such Mortgaged Property, (II) a marked, signed commitment or pro forma followed by a signed policy of title insurance issued by a nationally recognized title insurance company insuring the Lien of each such Mortgage as a valid and enforceable first Lien on the Mortgaged Property described therein, free of any other Liens except as permitted by subsection 9.3, together with such endorsements, coinsurance and reinsurance as the Administrative Agent may reasonably request, (III) if any Mortgaged Property is located in an area determined by the Federal Emergency Management Agency to have special flood hazards, evidence of such flood insurance as may be required under applicable law, including Regulation H of the Board, and (IV) such surveys, abstracts, appraisals, legal opinions and other documents as the Administrative Agent may reasonably request with respect to any such Mortgage or Mortgaged Property, and

(C) with respect to (I) each deposit account maintained by the Company or such Domestic Subsidiary (other than an Excluded Deposit Account) and (II) each securities account maintained by the Company or such Domestic Subsidiary with any securities intermediary, a counterpart, duly executed and delivered by the Company or such Domestic Subsidiary and by the applicable depositary institution or securities intermediary, as the case may be, of a control agreement reasonably acceptable to the Administrative Agent; provided, that the requirements of this subclause (C) shall not be required to be met until the date that is 30 days after the date of this Agreement;

(ii) from each Designated Foreign Subsidiary that is not an Excluded Subsidiary, a counterpart of (A) the Collateral Agreement or, in the case of any Person that becomes a Designated Foreign Subsidiary that is not an Excluded Subsidiary after the Restatement Effective Date, a supplement to the Collateral Agreement in the form specified therein, in each case duly executed and delivered on behalf of such Person, and (B) one or more additional Collateral Documents reasonably acceptable to the Administrative Agent necessary under the laws of the jurisdiction of such Designated Foreign Subsidiary to create and perfect the security interests, and to secure the obligations required to be secured, in accordance with the Collateral Agreement, which additional Collateral Documents, in the case of Harman Becker Automotive Systems GmbH when it is required under Section 8.11(b) to meet the requirements of this definition and any future Designated Foreign Subsidiary organized in Germany that is not an Excluded Subsidiary, will be comparable to those entered into on the Restatement Effective Date by the other Designated Foreign Subsidiaries organized in Germany; and

(iii) documents and opinions of the type referred to in paragraphs (b) and (c) of subsection 7.1 with respect to each such Domestic Subsidiary and Designated Foreign Subsidiary, all in form and substance reasonably satisfactory to the Administrative Agent and addressing such other customary matters as the Administrative Agent may reasonably request;

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(b) the Administrative Agent shall have received, to the extent required by the Collateral Agreement or any other Collateral Document, certificates or other instruments representing all Capital Stock in any Subsidiary owned by or on behalf of any Loan Party, together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank;

(c) (i) all Indebtedness of the Company and each other Subsidiary owing to any Loan Party shall be evidenced by a promissory note (which may be a global intercompany note) and (ii) all such Indebtedness described under clause (i), and all Indebtedness of any other Person in a principal amount of $5,000,000 or more owing to any Loan Party that is evidenced by a promissory note of which a Responsible Officer is aware, shall have been pledged pursuant to the Collateral Documents to the Administrative Agent, and the Administrative Agent shall receive any promissory notes in respect thereof, together with undated instruments of transfer with respect thereto endorsed in blank, to the extent required by the Collateral Agreement or any other Collateral Document;

(d) all documents and instruments, including Uniform Commercial Code financing statements, as are necessary or appropriate, in the Administrative Agent’s reasonable discretion, to create or perfect the Liens intended to be created by the Collateral Documents shall have been filed, registered or recorded, to the extent the applicable Loan Party is required to do so, or delivered to the Administrative Agent for filing, registration or recording; and

(e) to the extent reasonably requested by the Administrative Agent, each Loan Party shall have used commercially reasonable efforts to obtain all consents and approvals required to be obtained by it in connection with the execution and delivery of the Collateral Agreement and all Collateral Documents to which it is a party, the performance of its obligations under the Collateral Agreement and such Collateral Documents and the granting by it of the Liens under such Collateral Documents.

The foregoing definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, particular assets of the Loan Parties if and for so long as the Administrative Agent, in consultation with the Company, determines that the cost of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets, shall be excessive in view of the benefits to be obtained by the Lenders therefrom.  The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of legal opinions or other deliverables with respect to particular assets or the provision of any guarantee by any Subsidiary (including extensions beyond the Restatement Effective Date) where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Collateral Documents.

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Notwithstanding the foregoing, after the Restatement Effective Date, the term “Collateral and Guarantee Requirement” shall not require the creation of any new security interest or the provision of any new guarantee that would violate Section 4.08 of the Convertible Notes Indenture.

“Collateral Documents”: the Collateral Agreement, the Foreign Pledge Agreements, the IP Security Agreements, the Mortgages, the Control Agreements and each other agreement, instrument or document executed and delivered by any Loan Party to guarantee or secure any of the Secured Obligations.

“Commercial Letter of Credit”:  as defined in subsection 4.1(b).

“Commitment”:  an Original Tranche Commitment or an Extended Tranche Commitment, as the context may require.

“Commitment Percentage”:  as to any Lender at any time, the percentage which such Lender’s Commitment then constitutes of the aggregate Commitments (or, at any time after the Commitments shall have expired or terminated, the percentage which the amount of such Lender’s Exposure then outstanding constitutes of the aggregate amount of the Exposure of all the Lenders then outstanding).

“Commitment Period”:  the Original Tranche Commitment Period or the Extended Tranche Commitment Period, as the context may require.

“Committed Rate Loan”:  a Loan made pursuant to subsection 2.1(a).

“Commonly Controlled Entity”:  any entity (whether or not incorporated) that, together with the Company is treated as a single employer under Section 414(b) or (c) of the Code or, for purposes of Section 412 of the Code and Section 302 of ERISA, Section 414 of the Code.

“Company Obligations”:  a collective reference to both the Original Tranche Company Obligations and the Extended Tranche Company Obligations.

“Company Percentage”:  as of the Restatement Effective Date, with respect to the Company, 33 1/3%; provided, that upon written notice by the Borrowers to the Administrative Agent, such percentage (a) may be increased and/or decreased from time to time and at any time by the Borrowers, and (b) as of the effective date for any such increase or decrease specified by the Borrowers in the applicable notice thereof, shall be the percentage so specified.

“Company Reinvestment Percentage”:  with respect to Net Cash Proceeds received after the Restatement Effective Date by or on behalf of the Company, the Additional Borrower or any other Subsidiary in respect of one or more Prepayment Events referred to in clause (a) or (b) of the definition of such term, (i) to the extent such Net Cash Proceeds are received on or prior to the date that is 180 days following the Restatement Effective Date, (x) for the first $20,000,000 of aggregate Net Cash Proceeds received during such period from all such Prepayment Events, 100%, (y) for the next $150,000,000 of aggregate Net Cash Proceeds received during such period from all such Prepayment Events during in respect of Dispositions of assets that are not core to the business of the Company and its Subsidiaries as conducted on the Restatement Effective Date, 25%, and (z) for all other Net Cash Proceeds received during such period from all such Prepayments Events, 0%; and (ii) to the extent such Net Cash Proceeds are received after the date that is 180 days following the Restatement Effective Date, (x) for the first $50,000,000 of aggregate Net Cash Proceeds received after such date from all such Prepayment Events, 25% and (y) for all subsequent Net Cash Proceeds received after such date from all such Prepayment Events, 0%.

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“Competitive Advance Loan”:  as defined in subsection 3.1.

“Competitive Bid Notice”:  a notice in substantially the form of Exhibit B hereto.

“Competitive Bid Request”:  a notice in substantially the form of Exhibit C hereto.

“Consolidated Current Assets”:  at any date, the sum of (i) 70% of the net book value of the accounts receivable of the Company and its Subsidiaries, plus (ii) 35% of the net book value of the inventory of the Company and its Subsidiaries, plus (iii) Unrestricted Cash, in an amount not to exceed $25,000,000, collectively held by the Company and its Subsidiaries in deposit accounts which are subject to perfected Liens securing the Secured Obligations and are maintained by the Company and its Subsidiaries with one or more Extended Tranche Lenders, in each case as shown on a consolidated balance sheet of the Company as of such date and determined in accordance with GAAP.

“Consolidated EBITDA”:  for any period, Consolidated Net Income for such period, plus, to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) taxes, (b) interest, (c) amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Loans), (d) depreciation and amortization, (e) amortization of intangibles (including but not limited to goodwill) and organization costs, (f) any extraordinary, unusual or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, non-cash losses on Dispositions outside the ordinary course of business), provided that cash expenses or losses added pursuant to this clause (f) shall be limited to restructuring charges in an aggregate amount not to exceed $100,000,000 for any period of four consecutive fiscal quarters, and (g) any other non-cash charges (excluding any non-cash charge that will result in a cash expenditure in a future period), and minus, to the extent included in determining Consolidated Net Income for such period, (i) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of Consolidated Net Income for such period, gains on Dispositions outside of the ordinary course of business) and (ii) any other non-cash items of income for such period (excluding any non-cash items of income in respect of which cash will be received in a future period).

“Consolidated Net Income”:  for any period, the net income of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

“Consolidated Total Debt”:  at any date, without duplication, the aggregate principal amount of all Indebtedness (including the current portion thereof) of the Company and its consolidated Subsidiaries at such date (but excluding (x) any Indebtedness owing by (A) the Company to any Subsidiary and (B) any Subsidiary to the Company or any other Subsidiary and (y) Guarantee Obligations (except to such extent any amounts are due and payable at such date)), determined on a consolidated basis in accordance with GAAP.

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

“Control Agreement”: with respect to any deposit account or securities account maintained by any Loan Party, a control agreement in form and substance reasonably satisfactory to the Administrative Agent, duly executed and delivered by such Loan Party and the depositary bank or the securities intermediary, as the case may be, with which such account is maintained, as amended, supplemented or otherwise modified from time to time.

“Convertible Notes”:  the 1.25% Convertible Senior Notes due 2012, issued by the Company on October 23, 2007, and the Indebtedness represented thereby.

“Convertible Notes Documents”:   the Convertible Notes Indenture and all other instruments, agreements and other documents evidencing or governing the Convertible Notes or providing for any Guarantee Obligations or other right in respect thereof.

“Convertible Notes Indenture”:  the Indenture dated as of October 23, 2007, between the Company, as issuer, and Wells Fargo Bank, National Association, as trustee, under which the Convertible Notes are issued, as amended, supplemented or otherwise modified from time to time in compliance with this Agreement.

“Currencies”:  the collective reference to Dollars and the Available Foreign Currencies.

“Danish Kroner”:  the lawful currency of Denmark.

“Default”:  any event or condition that upon notice, the lapse of time, or both, would constitute an Event of Default.

“Designated Foreign Subsidiary”: the Additional Borrower and each Subsidiary organized under the laws of Germany or Canada, provided that Harman Becker Automotive Systems GmbH shall not be a Designated Foreign Subsidiary until such time as it shall be required to meet the Collateral and Guarantee Requirement pursuant to subsection 8.11(b).

“Disposition”: as defined in subsection 9.5.

“Disqualified Stock”:  Capital Stock that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition: (a) requires the payment of any dividends or distributions (other than dividends or distributions payable solely in shares of Capital Stock that do not constitute Disqualified Stock) prior to the date that is 180 days after the Extended Tranche Termination Date, (b) matures or is mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase at the option of the holders thereof, in whole or in part and whether upon the occurrence of any event, pursuant to a sinking fund obligation, on a fixed date or otherwise, or is convertible or exchangeable at the option of the holder thereof for Indebtedness or Capital Stock (other than Capital Stock that does not constitute Disqualified Stock), in each case prior to the date that is 180 days after the Extended Tranche Termination Date; provided, however, that Capital Stock that would not constitute Disqualified Stock but for terms thereof giving holders thereof the right to require the issuer thereof to redeem or purchase such Capital Stock upon the occurrence of an “asset sale” or a “change of control” shall not constitute a Disqualified Stock if any such requirement becomes operative only after repayment in full of all the Obligations (other than contingent indemnification obligations for which no claim has been made), the cancellation or expiration of all Letters of Credit and the termination of the Commitments.

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“Dollar Equivalent Amount”:  with respect to the amount of any Available Foreign Currency on any date, the equivalent amount in Dollars of such amount of Available Foreign Currency, as determined by the Administrative Agent on such date using the Exchange Rate.

“Dollars” and “$”:  dollars in lawful currency of the United States of America.

“Domestic Exposure Cap”:  $180,000,000.

“Domestic Loan Party”: the Company or any other Loan Party that is a Domestic Subsidiary.

“Domestic Subsidiary”:  any Subsidiary that is not (x) a Foreign Subsidiary, (y) a Qualified CFC Holding Company (as defined in the Collateral Agreement), or (z) Harman KG Holding, LLC.

“Dormant Subsidiary”:  any Subsidiary that engages in no business or operations and owns substantially no assets.

“EMU”:  Economic and Monetary Union as contemplated in the Treaty on European Union.

“EMU Legislation”:  the legislative measures of the European Council (including European Council regulations) for the introduction of, changeover to or operation of a single or unified European currency (whether known as the euro or otherwise), being in part the implementation of the third stage of EMU.

“Environmental Laws”:  any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, judgments, orders, decrees, enforceable requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect, in each case that is applicable to the Company or any of its Subsidiaries.

“Equity Prepayment Percentage”:  50%; provided that, for any date on which the ratio of (a) Consolidated Total Debt as of such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Company then most recently ended for which financial statements have been delivered pursuant to subsection 8.1(a) or (b) is less than 2:00 to 1:00, the “Equity Prepayment Percentage” shall be 0%.

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“ERISA”:  the Employee Retirement Income Security Act of 1974, as amended from time to time.

“euro”:  the single currency of Participating Member States of the European Union in accordance with the EMU Legislation.

“Eurocurrency Borrowing”:  the collective reference to Committed Rate Eurocurrency Loans in any Currency the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).

“Eurocurrency Loan”:  any Loan bearing interest based upon a Eurocurrency Rate.

“Eurocurrency Rate”:  in respect of each Currency, the rate determined as the Eurocurrency Rate for such Currency in the manner set forth in the Administrative Schedule.

“Event of Default”:  any of the events specified in Section 10, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.

“Exchange Rate”:  with respect to any Available Foreign Currency on any date, the rate at which such Available Foreign Currency may be exchanged into Dollars, as set forth on such date on the applicable Reuters currency page with respect to such currency at or about 11:00 A.M. London time on such date.  In the event that such rate does not appear on the applicable Reuters currency page, the “Exchange Rate” with respect to such Available Foreign Currency shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Company or, in the absence of such agreement, such “Exchange Rate” shall instead be the Administrative Agent’s spot rate of exchange in the London interbank market or other market where its foreign currency exchange operations in respect of such Available Foreign Currency are then being conducted, at or about 10:00 A.M., local time, at such date for the purchase of Dollars with such Available Foreign Currency, for delivery two Business Days later; provided, that if at the time of any such determination, no such spot rate can reasonably be quoted, the Administrative Agent may in consultation with the Company use any reasonable method as it deems applicable to determine such rate, and such determination shall be conclusive absent manifest error.

“Excluded Deposit Account”:  (a) any deposit account the funds in which are used, in the ordinary course of business, primarily for, and do not at any time exceed amounts reasonably required for, the payment of salaries and wages, workers’ compensation and similar expenses, (b) local operating accounts of Foreign Subsidiaries the funds in which are used, in the ordinary course of business, primarily for, and do not at any time exceed amounts reasonably required for, the working capital requirements of such Subsidiaries and (c) other deposit accounts the daily balances in which do not at any time exceed $22,500,000 in aggregate funds for all such accounts).

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“Excluded Subsidiary”:  any Designated Foreign Subsidiary (a) that is prohibited by applicable law from guaranteeing the Extended Tranche Obligations, (b) that is an Immaterial Subsidiary or (c) with respect to which the Administrative Agent, in consultation with the Company, has determined that the cost of providing a guarantee shall be excessive in view of the benefits to be obtained by the Extended Tranche Lenders therefrom.

“Excluded Taxes”:  with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of a Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which a Borrower is located and (c) in the case of any Lender, any withholding tax that is imposed on amounts payable to such Lender at the time such Lender becomes a party hereto (or designates a new lending office) or is attributable to such Lender’s failure or inability to comply with subsection 5.5(b) except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from a Borrower with respect to such withholding tax pursuant to subsection 5.5(a), in the case of each of (a), (b) and (c), together with any interest, additions to tax and penalties applicable thereto.

“Existing Credit Agreement”: as defined in the recitals hereto.

“Exposure”:  at any date, the aggregate amount of the Original Tranche Exposure and the Extended Tranche Exposure.

“Extended Tranche Additional Borrower Obligations”:  the unpaid principal of and interest on the Extended Tranche Loans made to the Additional Borrower and all other financial liabilities of the Additional Borrower to the Administrative Agent (other than in respect of Original Tranche Loans) or any Extended Tranche Lender (including, without limitation, interest accruing after the maturity or earlier acceleration of the Extended Tranche Loans to the Additional Borrower and interest accruing on the Extended Tranche Loans at the then-applicable rate provided in this Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Additional Borrower, whether or not a claim for post-filing or post petition interest is allowed or allowable in such proceeding), whether direct or indirect, absolute or contingent, due or become due, now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, the Extended Tranche Loans made to the Additional Borrower, or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or any Original Tranche Lender) or otherwise.

“Extended Tranche Commitment”:  as to any Extended Tranche Lender, the obligation of such Extended Tranche Lender to make and/or acquire participating interests in Extended Tranche Loans and issue and/or acquire participating interests in Letters of Credit hereunder in an aggregate Dollar Equivalent Amount at any one time outstanding not to exceed the amount set forth opposite such Extended Tranche Lender’s name on Schedule I, as such amount may be changed from time to time in accordance with the provisions of this Agreement.

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“Extended Tranche Commitment Percentage”:  as to any Extended Tranche Lender at any time, the percentage which such Lender’s Extended Tranche Commitment then constitutes of the aggregate Extended Tranche Commitments (or, at any time after the Extended Tranche Commitments shall have expired or terminated, the percentage which the amount of such Lender’s Extended Tranche Exposure then outstanding constitutes of the aggregate amount of the Extended Tranche Exposure of all the Lenders then outstanding).

“Extended Tranche Commitment Period”:  the period from and including the Restatement Effective Date to but not including the Extended Tranche Termination Date or such earlier date on which the Extended Tranche Commitments shall terminate as provided herein.

“Extended Tranche Committed Rate Loan”:  a Committed Rate Loan that is an Extended Tranche Loan; an Extended Tranche Committed Rate Loan bearing interest based upon the ABR shall be an “Extended Tranche Committed Rate ABR Loan”, and an Extended Tranche Committed Rate Loan bearing interest based upon the Eurocurrency Rate shall be an “Extended Tranche Committed Rate Eurocurrency Loan”.

“Extended Tranche Company Obligations”:  the unpaid principal of and interest on the Extended Tranche Loans made to the Company, all Reimbursement Obligations in respect of Letters of Credit owing (x) to any Issuing Bank for which such Issuing Bank shall not have been reimbursed by Lenders or (y) to any Extended Tranche Lender in respect of participations acquired by such Extended Tranche Lender in such Reimbursement Obligations, and all other financial liabilities of the Company to the Administrative Agent (other than in respect of Original Tranche Loans), any Issuing Bank (other than in respect of Reimbursement Obligations reimbursed by Lenders) or any Extended Tranche Lender (including, without limitation, interest accruing at the then-applicable rate provided in this Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company, whether or not a claim for post-filing or post petition interest is allowed or allowable in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, the other Loan Documents, the Extended Tranche Loans made to the Company, the Letters of Credit, or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to the Administrative Agent, any Issuing Bank or any Extended Tranche Lender) or otherwise.

“Extended Tranche Exposure”: at any date, the aggregate Dollar Equivalent Amount of (a) all Extended Tranche Loans then outstanding and (b) the aggregate amount of each Extended Tranche Lender’s Commitment Percentage multiplied by the L/C Obligations then outstanding.

“Extended Tranche Lender”:  a Lender that has elected to become an Extended Tranche Lender and to convert its Commitment and its outstanding Loans (each as defined in the Existing Credit Agreement) to an Extended Tranche Commitment and Extended Tranche Loans pursuant to subsection 1.4.

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“Extended Tranche Loan”:  any Loan (a) outstanding on the Restatement Effective Date that has been converted into an Extended Tranche Loan pursuant to subsection 1.4 or (b) made by an Extended Tranche Lender after the Restatement Effective Date pursuant to this Agreement.

“Extended Tranche Obligations”: the Extended Tranche Company Obligations and the Extended Tranche Additional Borrower Obligations.

“Extended Tranche Termination Date”:  December 31, 2011.

“Extensions of Credit”:  the collective reference to Loans made and Letters of Credit issued under this Agreement.

“Facility Fee Rate”:  for each day during each fiscal quarter of the Company, (a) in respect of any Original Tranche Commitments, the rate per annum set forth below opposite the applicable Ratings category in effect during the immediately preceding fiscal quarter:

Pricing Level (from highest to lowest)	Ratings (S&P/Moody’s)	Facility Fee (basis points)
1	A- or A3 or higher	8.0
2	BBB+ or Baa1	10.0
3	BBB or Baa2	12.5
4	BBB- or Baa3	15.0
5	BB+ or Ba1	17.5
6	Lower than BB+ or Ba1	22.5

and (b) in respect of any Extended Tranche Commitments, 1.00% per annum.

For purposes of clause (a) of the foregoing:  (i) if the Rating issued by Moody’s and the Rating issued by S&P shall fall within different Pricing Levels (but not more than one (1) Pricing Level apart), then the Facility Fee shall be determined by reference to the higher Pricing Level (e.g., if the Rating issued by S&P is in Pricing Level 1 and the Rating issued by Moody’s is in Pricing Level 2, then the Facility Fee shall be determined by reference to Pricing Level 1); (ii) if the Rating issued by Moody’s and the Rating issued by S&P shall fall within different Pricing Levels (and by more than one (1) Pricing Level apart), then the Facility Fee shall be determined by reference to the Pricing Level that is one (1) Pricing Level higher than the lower Pricing Level (e.g., if the Rating issued by S&P is in Pricing Level 1 and the Rating issued by Moody’s is in Pricing Level 4, then the Facility Fee shall be determined by reference to Pricing Level 3); (iii) if either Moody’s or S&P shall not have in effect a Rating (other than by reason of the circumstances referred to in the last sentence of this paragraph), then such rating agency shall be deemed to have established a rating in Pricing Level 6; and (iv) if either Moody’s or S&P no longer publishes ratings and the Company and the Administrative Agent cannot agree on another ratings agency to replace Moody’s or S&P, as the case may be, then the Rating issued by Moody’s or the Rating issued by S&P which is still being published, as the case may be, shall be deemed to be the Rating.  If the rating system of Moody’s or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations, the Company and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and pending the effectiveness of any such amendment, the Facility Fee shall be determined by reference to the rating most recently in effect prior to such change or cessation.

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“Federal Funds Effective Rate”:  for any day, the rate of interest per annum (rounded upwards, if necessary, to the next 1/100 of 1%) of the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Fee Letter”:  the letter agreement, dated May 13, 2005, among the Company, J.P. Morgan Securities Inc. and JPMorgan Chase Bank, N.A., as amended by the letter agreement, dated June 22, 2006, among the Company, the Additional Borrower, J.P. Morgan Securities Inc. and JPMorgan Chase Bank, N.A.

“First Restatement Effective Date”:  June 22, 2006.

“Foreign Loan Party”: the Additional Borrower or any other Loan Party that is a Foreign Subsidiary.

“Foreign Pledge Agreement”: a pledge or charge agreement with respect to Capital Stock in a Foreign Subsidiary in form and substance reasonably satisfactory to the Administrative Agent, as amended, supplemented or otherwise modified from time to time.

“Foreign Subsidiary”: (i) any Subsidiary that is not incorporated, formed or organized under the laws of the United States of America, any State thereof, the District of Columbia or any of the territories or possessions of the United States of America or any political subdivision thereof and (ii) any Subsidiary of any Subsidiary described in the foregoing clause (i).

“Funding Office”:  for each Class and Type of Loan and each Currency, the Funding Office set forth in respect thereof in the Administrative Schedule.

“Funding Time”:  for each Class and Type of Loan and each Currency, the Funding Time set forth in respect thereof in the Administrative Schedule.

“GAAP”:  generally accepted accounting principles in the United States of America in effect from time to time.

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“Governmental Authority”:  any nation or government, any state or other political subdivision thereof and any entity exercising applicable executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Guarantee Obligation”:  as to any Person, any obligation, contingent or otherwise of such Person guaranteeing any Indebtedness of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, and including, without limitation, any obligation of the guaranteeing Person (i) to purchase any such Indebtedness or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such Indebtedness or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor so as to enable such primary obligor to pay such Indebtedness, (iii) to purchase property, securities or services for the purpose of assuring the owner of any such Indebtedness of the ability of the primary obligor to make payment of such Indebtedness or (iv) otherwise to protect the owner of any such Indebtedness against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include (x) any liability by endorsement of instruments for deposit or collection or similar transactions in the ordinary course of business, (y) indemnification obligations of the Company or any of its Subsidiaries entered into in the ordinary course of business or (z) obligations of the Company or any of its Subsidiaries under arrangements entered into in the ordinary course of business whereby the Company or such Subsidiary sells goods or inventory to other Persons under agreements obligating the Company or such Subsidiary to repurchase such goods or inventory, at a price not exceeding the original sale price, upon the occurrence of certain specified events.  The amount of any Guarantee Obligation of any guaranteeing Person at any time shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee Obligation is made at such time and (b) the maximum amount for which such guaranteeing Person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation at such time, unless such Indebtedness and such maximum amount for which such guaranteeing Person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing Person’s maximum reasonably anticipated liability in respect thereof as determined by the Company in good faith at such time; provided, however, that for purposes of this definition the liability of the guaranteeing Person with respect to any obligation as to which a third Person or Persons are jointly or jointly and severally liable as a guarantor or otherwise as contemplated hereby and have not defaulted on its or their portions thereof shall be only as to its pro rata portion of such obligation.

“Harman International Guarantee”:  the Guarantee, dated as of June 22, 2006, made by the Company in favor of the Administrative Agent, on behalf of the Lenders, as amended, modified or supplemented from time to time.

“Hedging Agreement”:  any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value, any similar transaction or any combination of the foregoing transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Company or the Subsidiaries shall be a Hedging Agreement.

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“Hong Kong Dollars”:  the lawful currency of Hong Kong.

“Immaterial Subsidiary”:  any Subsidiary for which (a) the consolidated total assets of such Subsidiary constitute less than or equal to $10,000,000 and, collectively with all Immaterial Subsidiaries, less than or equal to 5% of the consolidated total assets of the Company and (b) the consolidated revenues of such Subsidiary constitute less than or equal to 1% of the consolidated revenues of the Company and, collectively with all Immaterial Subsidiaries, less than or equal to 5% of the consolidated revenues of the Company, in each case as of the end of or for the most recent period of four consecutive fiscal quarters of the Company for which financial statements have been delivered pursuant to subsection 8.1(a) or (b).

“Indebtedness”:  of any Person at any date, without duplication, all indebtedness of such Person (other than current trade liabilities and indemnification obligations incurred in the ordinary course of business), as reflected on the balance sheet of such Person prepared in accordance with GAAP and all Guarantee Obligations of such Person, except that where such indebtedness or Guarantee Obligation of such Person is made jointly, or jointly and severally, with any third party or parties other than any consolidated Subsidiary of such Person, the amount thereof for the purpose of this definition only shall be the pro rata portion thereof payable by such Person, so long as such third party or parties have not defaulted on its or their joint and several portions thereof.

“Initial Closing Date”:  June 28, 2005.

“Insolvency”:  with respect to any Multiemployer Plan, the condition that such plan is insolvent within the meaning of Section 4245 of ERISA.

“Insolvent”:  pertaining to a condition of Insolvency.

“Intellectual Property”:  as defined in subsection 6.9.

“Interest Payment Date”:  (a) as to any ABR Loan, the last day of each March, June, September and December to occur while such Loan is outstanding, and (x) in the case of an Original Tranche ABR Loan, the Original Tranche Termination Date and (y) in the case of an Extended Tranche ABR Loan, the Extended Tranche Termination Date, (b) as to any Committed Rate Eurocurrency Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Committed Rate Eurocurrency Loan having an Interest Period longer than three months, each day which is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Competitive Advance Loan, the date or dates agreed upon by the Company and the Lender at the time the terms of such Competitive Advance Loan are determined as provided in Section 3.

“Interest Period”:  with respect to any Committed Rate Eurocurrency Loan:

(i)             initially, the period commencing on the borrowing, continuation or conversion date, as the case may be, with respect to such Eurocurrency Loan and ending one, two, three or six (or, if agreed to by all Lenders, nine or twelve) months thereafter, as selected by the applicable Borrower of such Loan in its Notice of Borrowing, Notice of Continuation or Notice of Conversion, as the case may be, given with respect thereto; and

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(ii)            thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurocurrency Loan and ending one, two, three or six (or, if agreed to by all Lenders, nine or twelve) months thereafter, as selected by the applicable Borrower of such Loan by a Notice of Continuation with respect thereto;

provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

(1)            if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day,

(2)            if any Original Tranche Committed Rate Loans shall be outstanding, any Interest Period (x) in respect of a Committed Rate Eurocurrency Loan that begins prior to the Original Tranche Termination Date and would otherwise extend beyond the Original Tranche Termination Date shall end on the Original Tranche Termination Date and (y) in respect of an Extended Tranche Committed Rate Eurocurrency Loan that would otherwise extend beyond the Extended Tranche Termination Date shall end on the Extended Tranche Termination Date; and

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

“Investments” has the meaning specified in subsection 9.7.

“IP Security Agreements”: has the meaning assigned to such term in the Collateral Agreement.

“ISP”:  the “International Standby Practices 1998” as published by the Institute of International Banking Law and Practice (or such later version thereof as may be in effect from time to time).

“Issuing Bank”:  each Lender listed as an Issuing Bank in Schedule IV.

“Issuing Office”:  in respect of each Issuing Bank, the Issuing Office set forth for such Issuing Bank in Schedule IV.

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“Japanese Yen”:  the lawful currency of Japan.

“JPMorgan Chase”:  JPMorgan Chase Bank, N.A.

“Judgment Currency”:  as defined in subsection 12.8(b).

“L/C Cash Account”:  a cash collateral account established at the office of an Issuing Bank specified by such Issuing Bank to the Company, in the name of such Issuing Bank, established for the purposes of subsection 4.10.

“L/C Obligations”:  at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit, (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to subsection 4.5(a) and (c) the face amount of each outstanding and accepted Time Draft.

“L/C Participant”:  in respect of each Letter of Credit, each Lender (other than the Issuing Bank in respect of such Letter of Credit) in its capacity as the holder of a participating interest in such Letter of Credit.

“Letter of Credit”:  as defined in subsection 4.1(b)(i).

“Lien”:  any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), title defect, charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement).

“Liquidity Amount”:  as of any date, the sum of (x) the aggregate Dollar amount of Unrestricted Cash collectively held by the Company and its Subsidiaries as of such date plus (y) Availability as of such date; provided that for purposes of calculating the Liquidity Amount as of any date,  the amount in Dollars of any foreign currency included in the Liquidity Amount shall be determined using the Average Exchange Rate as of such date for such foreign currency.

“Loan”:  any Committed Rate Loan or Competitive Advance Loan made by any Lender pursuant to this Agreement.

“Loan Documents”: this Agreement, each Application, the Harman International Guarantee, the Collateral Agreement and the other Collateral Documents.

“Loan Parties”:  the Company, the Additional Borrower and each Subsidiary Loan Party.

“London Banking Day”:  any day on which banks in London are open for general banking business, including dealings in foreign currency and exchange.

“Majority Extended Tranche Lenders”: as of any date of determination, Extended Tranche Lenders the Extended Tranche Commitments of which aggregate more than 50% of the aggregate Extended Tranche Commitments as of such date, or, if the Extended Tranche Commitments have expired or terminated, Extended Tranche Lenders the Extended Tranche Exposure of which aggregates more than 50% of the aggregate Extended Tranche Exposure as of such date.

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“Majority Lenders”:  at any time, Lenders the Commitment Percentages of which aggregate more than 50%.

“Material Adverse Effect”:  a material adverse effect on (a) the business, operations, property or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or (b) the validity or enforceability of this or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

“Material Indebtedness”:  Indebtedness (other than Indebtedness under the Loan Documents), or, solely for purposes of clause (e) of Section 10, obligations in respect of one or more Hedging Agreements, of any one or more of the Company and its Subsidiaries in an aggregate principal amount of $30,000,000 or more.  For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Company or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Company or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

“Materials of Environmental Concern”:  any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

“Maximum Rate”: as defined in subsection 12.18.

“Moody’s”:  means Moody’s Investors Services, Inc., or any successor or assignee of the business of such company in the business of rating debt.

“Mortgage”: a mortgage, deed of trust, assignment of leases and rents or other Collateral Document granting a Lien on any Mortgaged Property of any Domestic Loan Party to secure the Secured Obligations, as amended, supplemented or otherwise modified from time to time.  Each Mortgage shall be reasonably satisfactory in form and substance to the Administrative Agent.

“Mortgaged Property”: each parcel of real property owned in fee by a Loan Party, and the improvements thereto, that has a book or fair market value, as determined in good faith by the Company, of $5,000,000 (or $7,500,000 in the case of any real property located in Canada) or more.

“Multiemployer Plan”:  a plan which is a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA.

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“Net Cash Proceeds”:  with respect to any event (a) the cash proceeds (including, in the case of any casualty, condemnation or similar proceeding, insurance, condemnation or similar proceeds) received in respect of such event including any cash received in respect of any non-cash proceeds, but only as and when received, net of (b) the sum, without duplication, of (i) all reasonable fees and out-of-pocket expenses paid in connection with such event by the Company and the Subsidiaries to Persons that are not Affiliates of the Company or any Subsidiary, (ii) in the case of a Disposition (including pursuant to a Sale and Leaseback Transaction or a casualty or a condemnation or similar proceeding) of an asset, the amount of all payments required to be made by the Company and the Subsidiaries as a result of such event to repay Indebtedness (other than Loans) secured by such asset, (iii) the amount of all taxes paid (or reasonably estimated to be payable) by the Company and the Subsidiaries, and the amount of any reserves established by the Company and the Subsidiaries to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by a Responsible Officer of the Company) and (iv) in case of any such event occurring in a jurisdiction other than the United States or Germany, the amount of all taxes paid (or reasonably estimated to be payable) by the Company and the Subsidiaries that are directly attributable to the repatriation of such cash proceeds into the United States or Germany, but only to the extent the Company and the Subsidiaries have used commercially reasonable efforts to reduce or eliminate such taxes, including by electing to prepay Loans in such a manner that would result in the lowest possible amount of such taxes.

“New York UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.

“Non-Excluded Taxes”:  as defined in subsection 5.5(a).

“Non-U.S. Lender”:  as defined in subsection 5.5(b).

“Notice of Borrowing”:  with respect to a Loan of any Type in any Currency, a notice in substantially the form of Exhibit D hereto from the applicable Borrower of such Loan in respect of such Loan, containing the information in respect of such Loan and delivered to the Person, in the manner and by the time specified for a Notice of Borrowing in respect of such Currency and such Type of Loan in the Administrative Schedule.

“Notice of Competitive Advance Loan”:  with respect to each Competitive Advance Loan in any Currency, a notice from the Lender in respect of such Loan in substantially the form of Exhibit E hereto, containing the information in respect of such Loan and delivered to the Person, in the manner and by the time specified for a Notice of Competitive Advance Loan in the Administrative Schedule.

“Notice of Continuation”:  with respect to a Committed Rate Loan in any Currency, a notice in substantially the form of Exhibit F hereto from the applicable Borrower of such Loan in respect of such Loan, containing the information in respect of such Loan and delivered to the Person, in the manner and by the time specified for a Notice of Continuation in respect of such Currency in the Administrative Schedule.

“Notice of Conversion”:  with respect to a Committed Rate Loan in Dollars which the applicable Borrower of such Loan wishes to convert from a Eurocurrency Loan to an ABR Loan, or from an ABR Loan to a Eurocurrency Loan, as the case may be, a notice in substantially the form of Exhibit F hereto from the applicable Borrower of such Loan setting forth the amount of such Loan to be converted, the date of such conversion (which, in the case of conversions of Eurocurrency Loans to ABR Loans, shall be the last day of an Interest Period applicable to such Eurocurrency Loans) and, in the case of conversions of ABR Loans to Eurocurrency Loans, the length of the initial Interest Period applicable thereto.  Each Notice of Conversion shall be delivered to the Administrative Agent at its address set forth in subsection 12.2 and shall be delivered before 11:00 A.M., New York City time, one Business Day before the requested conversion in the case of conversions to ABR Loans, and before 11:00 A.M., New York City time, three Business Days before the requested conversion in the case of conversions to Eurocurrency Loans.

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“Obligations”:  the Extended Tranche Obligations and the Original Tranche Obligations.

“Original Tranche Additional Borrower Obligations”:  the unpaid principal of and interest on the Original Tranche Loans made to the Additional Borrower and all other financial liabilities of the Additional Borrower to the Administrative Agent in respect of Original Tranche Loans or any Original Tranche Lender (including, without limitation, interest accruing after the maturity or earlier acceleration of the Original Tranche Loans to the Additional Borrower and interest accruing on the Original Tranche Loans at the then-applicable rate provided in this Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Additional Borrower, whether or not a claim for post-filing or post petition interest is allowed or allowable in such proceeding), whether direct or indirect, absolute or contingent, due or become due, now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, the Original Tranche Loans made to the Additional Borrower, or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, indemnities, cost, expenses (including, without limitation, all fees and disbursements of counsel to any Original Tranche Lender) or otherwise.

“Original Tranche Commitment”:  as to any Original Tranche Lender, the obligation of such Original Tranche Lender to make and/or acquire participating interests in Original Tranche Loans and/or acquire participating interests in Letters of Credit hereunder in an aggregate Dollar Equivalent Amount at any one time outstanding not to exceed the amount set forth opposite such Original Tranche Lender’s name on Schedule I, as such amount may be changed from time to time in accordance with the provisions of this Agreement.

“Original Tranche Commitment Percentage”:  as to any Original Tranche Lender at any time, the percentage which such Lender’s Original Tranche Commitment then constitutes of the aggregate Original Tranche Commitments (or, at any time after the Original Tranche Commitments shall have expired or terminated, the percentage which the amount of such Lender’s Original Tranche Exposure then outstanding constitutes of the aggregate amount of the Original Tranche Exposure of all the Lenders then outstanding).

“Original Tranche Commitment Period”:  the period from and including the First Restatement Effective Date to but not including the Original Tranche Termination Date or such earlier date on which the Original Tranche Commitments shall terminate as provided herein.

“Original Tranche Committed Rate Loan”:  a Committed Rate Loan that is an Original Tranche Loan; an Original Tranche Committed Rate Loan bearing interest based upon the ABR shall be an “Original Tranche Committed Rate ABR Loan”, and an Original Tranche Committed Rate Loan bearing interest based upon the Eurocurrency Rate shall be an “Original Tranche Committed Rate Eurocurrency Loan”.

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“Original Tranche Company Obligations”:  the unpaid principal of and interest on the Original Tranche Loans made to the Company, all Reimbursement Obligations in respect of Letters of Credit or participations therein that do not constitute Extended Tranche Company Obligations and all other financial liabilities of the Company to the Administrative Agent, any Issuing Bank or any Original Tranche Lender that do not constitute Extended Tranche Company Obligations (including, without limitation, interest accruing at the then-applicable rate provided in this Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company, whether or not a claim for post-filing or post petition interest is allowed or allowable in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, the Original Tranche Loans made to the Company, the Letters of Credit or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, fees, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to any Original Tranche Lender) or otherwise.

“Original Tranche Exposure”: at any date, the aggregate Dollar Equivalent Amount of (a) all Original Tranche Loans then outstanding and (b) the aggregate amount of each Original Tranche Lender’s Commitment Percentage multiplied by the L/C Obligations then outstanding.

“Original Tranche Lender”: a Lender that has not elected to become an Extended Tranche Lender and to convert its Commitment and its outstanding Loans (each as defined in the Existing Credit Agreement) to an Extended Tranche Commitment and Extended Tranche Loans pursuant to subsection 1.4.

“Original Tranche Loan”:  any Loan (a) outstanding on the Restatement Effective Date that has not been converted into an Extended Tranche Loan pursuant to subsection 1.4 or (b) made by any Original Tranche Lender after the Restatement Effective Date pursuant to this Agreement.

“Original Tranche Obligations”: the Original Tranche Company Obligations and the Original Tranche Additional Borrower Obligations.

“Original Tranche Termination Date”:  June 28, 2010.

“Participant”:  as defined in subsection 12.6(b).

“Participating Member States”:  each country that adopts or has adopted the euro as its currency in accordance with EMU Legislation.

“Payment Office”:  for each Class and Type of Loan and each Currency, the Payment Office set forth in respect thereof in the Administrative Schedule.

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“Payment Time”:  for each Class and Type of Loan and each Currency, the Payment Time set forth in respect thereof in the Administrative Schedule.

“PBGC”:  the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.

“Perfection Certificate”:  as defined in the Collateral Agreement.

“Permitted Business Acquisitions”:  Acquisitions pursuant to which :  (i) no Default or Event of Default shall have occurred and be continuing after giving effect to such Acquisition, (ii) such Acquisition shall be consummated in accordance with applicable laws, (iii) 50% of the outstanding Capital Stock or other ownership interests of any acquired or newly formed Person must be owned directly by the Company or a Subsidiary and such Person shall become a Subsidiary hereunder, (iv) the consideration paid therefor consists solely of common stock of the Company (and shall not include any assumption of Indebtedness), and the aggregate consideration paid therefor, together with the aggregate consideration paid for any other such purchase or acquisition consummated after the Restatement Effective Date in reliance on subsection 9.7(d) (including, in each case, all obligations in respect of deferred purchase price (including obligations under any purchase price adjustment but excluding earnout or similar payments) and all other consideration payable in connection therewith (including payment obligations in respect of noncompetition agreements or other arrangements representing acquisition consideration)) shall not exceed $50,000,000, provided that the limitations of this clause (iv) shall not apply to any payment of consideration constituting reinvestment of the Net Cash Proceeds of any event described in clause (a) or (b) of the definition of the term “Prepayment Event” to the extent permitted by subsection 2.5(b), and (v) the Company shall be in compliance, on a pro forma basis, with the financial covenants contained in subsection 9.1 recomputed as at the last day of the most recently ended fiscal quarter of the Company, and the Company shall have delivered to the Administrative Agent an officers’ certificate to such effect.

“Permitted Investment Amount”:  (i) in the case of Investments in Foreign Subsidiaries which are not Loan Parties but the Capital Stock of which has been pledged to secure the applicable Secured Obligations, $50,000,000 at any time outstanding, and (ii) in the case of Investments in Subsidiaries which are not Loan Parties, $25,000,000 at any time outstanding.

“Permitted Investor”:  Sidney Harman, Executive Chairman and Chairman of the Board of Directors of the Company on the Initial Closing Date.

“Person”:  an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

“Plan”:  at a particular time, any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Company or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pounds Sterling”:  British Pounds Sterling, the lawful currency of the United Kingdom.

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“Prepayment Event”:

(a) Disposition (including by way of merger or consolidation) of any asset of the Company or any Subsidiary, including any issuance or sale to a Person other than the Company or any other Subsidiary of Capital Stock in any Subsidiary, pursuant to clause (e) or (l) of subsection 9.5, other than Dispositions resulting in aggregate Net Cash Proceeds not exceeding $5,000,000 during any fiscal year of the Company;

(b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any asset of the Company or any Subsidiary resulting in aggregate Net Cash Proceeds of $1,000,000 or more;

(c) any issuance by the Company of any Capital Stock, or the receipt by the Company of any capital contribution, other than (i) any issuance of directors’ qualifying shares or of nominal amounts of other Capital Stock that are required to be held by specified Persons under applicable law and (ii) any issuance of common stock in the Company to management or employees of the Company or any Subsidiary, under any employee stock option or stock purchase plan or employee benefit plan; or

(d) the incurrence by the Company or any Subsidiary of any Indebtedness, other than any Indebtedness permitted to be incurred by subsection 9.2 (other than subsection 9.2(i)).

“Prime Rate”:  the rate of interest per annum publicly announced from time to time by JPMorgan Chase as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

“Properties”:  as defined in subsection 6.17(a).

“Quotation Day”:  in respect of the determination of the Eurocurrency Rate for any Interest Period for loans in any Available Foreign Currency (other than the euro), the day which is (i) at least two London Banking Days prior to the first day of such Interest Period and (ii) a day on which banks are open for general banking business in the city which is the principal financial center of the country of such Available Foreign Currency; and the Quotation Day in respect of any Interest Period for the euro is the day which is two Target Operating Days prior to the first day of such Interest Period.

“Ratings”:  the actual senior long-term unsecured non-credit enhanced debt ratings of the Company in effect from time to time by Moody’s or S&P, as the case may be.

“Register”:  as defined in subsection 12.6(d).

“Regulation U”:  Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.

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“Reimbursement Obligation”:  in respect of each Letter of Credit, the obligation of the account party thereunder to reimburse the Issuing Bank for all drawings made thereunder in accordance with Section 5 and the Application related to such Letter of Credit.

“Reorganization”:  with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

“Reportable Event”:  any of the events set forth in Section 4043 of ERISA or in the regulations thereunder with regard to a Plan (excluding those events as to which the thirty (30) day notice period is waived).

“Requirement of Law”:  as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any material law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer”:  the chief executive officer, the president, or the chief financial officer of the Company or the Additional Borrower, as the context may require.

“Restatement Effective Date”:  the date on which the conditions precedent set forth in subsection 7.1 shall be satisfied, which date is March 31, 2009.

“Restricted Payments”:  has the meaning specified in subsection 9.6.

“S&P”:  Standard and Poor’s Ratings Group, a division of McGraw Hill, Inc. or any successor or assignee of the business of such division in the business of rating debt.

“Sale and Lease-Back Transaction”:  as defined in subsection 9.9.

“Schedule Amendment”:  each Schedule Amendment, substantially in the form of Exhibit A hereto, executed and delivered pursuant to subsection 12.1.

“Secured Funded Debt”:  as of any date, the sum of (i) the aggregate Exposure outstanding as of such date and (y) the aggregate principal amount of Secured Other Facility Obligations (as defined in the Collateral Agreement) outstanding as of such date.

“Secured Obligations”: has the meaning set forth in the Collateral Agreement.

“Secured Parties”: has the meaning set forth in the Collateral Agreement.

“Singapore Dollars”:  the lawful currency of Singapore.

“Standby Letter of Credit”:  as defined in subsection 4.1(b).

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“Statutory Reserve Rate”:  a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal time deposits in dollars of over $100,000 with maturities approximately equal to three months and (b) with respect to the Adjusted Eurocurrency Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those imposed pursuant to such Regulation D.  Eurocurrency Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Subordinated Debt”:  any unsecured Indebtedness of the Company or any other Loan Party (other than Indebtedness outstanding on the Restatement Effective Date and described on Schedule 9.2) no part of the principal of which is required to be paid (whether by way of mandatory sinking fund, mandatory redemption or mandatory prepayment or otherwise) prior to the 180th day following the Extended Tranche Termination Date and which is subordinated in right of payment to the Obligations on terms reasonably satisfactory to the Administrative Agent.

“Subsidiary”:  as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Company.

“Subsidiary Loan Party”: each Subsidiary that is, or is required under the terms of this Agreement to become, a party to any Collateral Document.  Unless the context requires otherwise, the term “Subsidiary Loan Party” shall include the Additional Borrower.

“Swedish Krona”:  the lawful currency of Sweden.

“Swiss Francs”:  the lawful currency of Switzerland.

“Target Operating Day”:  any day that is not (a) a Saturday or Sunday, (b) Christmas Day or New Year’s Day or (c) any other day on which the Trans-European Real-time Gross Settlement Operating System (or any successor settlement system) is not operating (as determined by the Administrative Agent).

“Tax Confirmation”:  as defined in subsection 5.9(a).

“Three-Month Secondary CD Rate”:  for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day is not a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day) or, if such rate is not so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 a.m., New York City time, on such day (or, if such day is not a Business Day, on the next preceding Business Day) by the Administrative Agent from three negotiable certificate of deposit dealers of recognized standing selected by it.

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“Time Draft”:  as defined in subsection 4.9.

“Transferee”:  as defined in subsection 12.6(f).

“Treaty on European Union”:  the Treaty of Rome of March 25, 1957, as amended by the Single European Act of 1986 and the Maastricht Treaty (which was signed at Maastricht on February 7, 1992 and came into effect on November 1, 1993), as amended from time to time.

“Type”:  in respect of any Loan, its character as a Committed Rate Loan or Competitive Advance Loan, as the case may be.

“Uniform Customs”:  the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be amended, supplemented or otherwise modified from time to time.

“Unrestricted Cash”: as of any date, unrestricted cash and Cash Equivalents owned by the Company or any Subsidiary and reflected on the consolidated balance sheet of the Company as of such date and not controlled by or subject to any Lien in favor of any creditor (other than Liens created under the Loan Documents and Liens permitted under clause (p) of subsection 9.3), provided that the term “Unrestricted Cash” shall not include cash and Cash Equivalents held in one or more Cash Collateral Accounts pending reinvestment pursuant to subsection 2.5(b); provided, further that the term “Unrestricted Cash” shall include all funds held in any L/C Cash Account.

“Value”:  with respect to any Sale and Lease-Back Transaction, as of any particular time, an amount equal to (a) the fair market value of such property at the time of entering into such Sale and Lease-Back Transaction, as determined in good faith by the Company, (b) divided first by the number of full years of the term of the lease relating to such Sale and Lease-Back Transaction, and (c) then multiplied by the number of full years of such term remaining at the time of determination, without regard to any renewal or extension options contained in the lease.

“Voting Stock”:  stock of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of the Company (irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

“Wholly Owned Subsidiary”:  with respect to any Person, a Subsidiary of such Person, all of the Capital Stock of which (other than directors’ qualifying shares or nominee or other similar shares that are required to be held by other Persons under applicable law) are owned, beneficially and of record, by such Person, another Wholly Owned Subsidiary of such Person or any combination thereof.

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1.2.           Other Definitional Provisions.  (a)  Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto.

(b)           As used herein and in any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Company and its Subsidiaries not defined in subsection 1.1 and accounting terms partly defined in subsection 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP(but without giving effect to any election under Statement of Financial Accounting Standards 159 to value any Indebtedness or other liabilities of the Company or any Subsidiary at “fair value”, as defined therein).

(c)           The words “hereof’, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified.  References to Schedules to this Agreement are references to such Schedules as the same may from time to time be amended or otherwise modified in accordance with the terms hereof.

(d)           The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

1.3.           Classification of Loans.  For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., an “Extended Tranche Loan”), by Type (e.g., a “Committed Rate Loan”), by applicable interest rate (e.g., a “Eurocurrency Loan”),  by Class and applicable interest rate (e.g., an “Extended Tranche Eurocurrency Loan”), by Type and applicable interest rate (e.g., a “Committed Rate Eurocurrency Loan”), by Class and Type (e.g., an “Extended Tranche Committed Rate Loan”) or by Class, Type and applicable interest rate (e.g., an “Extended Tranche Committed Rate Eurocurrency Loan”).

1.4.           Restatement Effective Date Tranche Elections.  Each Lender shall have the right, by notice delivered to the Administrative Agent on or prior to the Restatement Effective Date, to make an irrevocable election to become an Extended Tranche Lender and to convert its Commitment and its outstanding Loans (each as defined in the Existing Credit Agreement) to an Extended Tranche Commitment and Extended Tranche Loans.  By delivering a notice of such conversion, a Lender will be deemed for all purposes to agree that the provisions of this Agreement applicable to Extended Tranche Lenders will apply to such Lender and its successors and assigns, and that the provisions of this Agreement applicable to Extended Tranche Commitments and Extended Tranche Loans, including  the Extended Tranche Termination Date, will be applicable to its Commitment and its Loans.  Any Lender that shall not so elect on or prior to the Restatement Effective Date to become an Extended Tranche Lender shall for the remaining term of this Agreement be an Original Tranche Lender, with the result that the provisions of this Agreement applicable to Original Tranche Lenders will apply to such Lender and its successors and assigns and the provisions of this Agreement applicable to Original Tranche Commitments and Original Tranche Loans, including  the Original Tranche Termination Date, will be applicable to its Commitment and its Loans.

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SECTION 2

THE COMMITTED RATE LOANS

2.1.           Committed Rate Loans.  (a)  Subject to the terms and conditions hereof,

(i)           Each Original Tranche Lender severally agrees to make Original Tranche Committed Rate Loans on a revolving credit basis to each Borrower from time to time during the Original Tranche Commitment Period; provided, that no Original Tranche Committed Rate Loan shall be made if, after giving effect to the making of such Loan and the simultaneous application of the proceeds thereof, (x) the amount of the Original Tranche Exposure would exceed the aggregate amount of the Original Tranche Commitments or (y) the aggregate Exposure attributable to Loans made to Domestic Loan Parties and to L/C Obligations would exceed the Domestic Exposure Cap.  During the Original Tranche Commitment Period each Borrower may use the Original Tranche Commitments by borrowing, prepaying the Original Tranche Committed Rate Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof.

(ii)           Each Extended Tranche Lender severally agrees to make Extended Tranche Committed Rate Loans on a revolving credit basis to each Borrower from time to time during the Extended Tranche Commitment Period; provided, that no Extended Tranche Committed Rate Loan shall be made if, after giving effect to the making of such Loan and the simultaneous application of the proceeds thereof, (x) the amount of the Extended Tranche Exposure would exceed the aggregate amount of the Extended Tranche Commitments or (y) the aggregate Exposure attributable to Loans made to Domestic Loan Parties and to L/C Obligations would exceed the Domestic Exposure Cap.  During the Extended Tranche Commitment Period each Borrower may use the Extended Tranche Commitments by borrowing, prepaying the Extended Tranche Committed Rate Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof.

(iii)           Notwithstanding the foregoing, so long as any Original Tranche Commitments shall be in effect, neither Borrower shall borrow Committed Rate Loans of either Class unless it shall simultaneously borrow Committed Rate Loans of the other Class in the same Currency and, in the case of Eurocurrency Loans, with the same initial Interest Period in an aggregate amount such that the Loan made by each Lender on the occasion of such borrowing shall equal its Commitment Percentage of the aggregate amount borrowed.

(b)           The Committed Rate Loans may be made in Dollars or any Available Foreign Currency and may from time to time be (i) Committed Rate Eurocurrency Loans, (ii) in the case of Committed Rate Loans in Dollars only, Committed Rate ABR Loans or (iii) a combination thereof, as determined by the applicable Borrower thereof and set forth in the Notice of Borrowing or Notice of Conversion with respect thereto; provided, that (x) so long as any Original Tranche Commitments remain in effect, no Committed Rate Eurocurrency Loan shall be made during the period beginning on the date that is one month prior to the Original Tranche Termination Date and ending on the Original Tranche Termination Date and (y) no Extended Tranche Committed Rate Eurocurrency Loan shall be made after the day that is one month prior to the Extended Tranche Termination Date.

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2.2.           Procedure for Committed Rate Loan Borrowing.  Each Borrower may request the Lenders to make Committed Rate Loans to such Borrower on any Business Day during the applicable Commitment Period by delivering a Notice of Borrowing.  Each borrowing of Committed Rate Loans shall be in an amount equal to (a) in the case of ABR Loans, $1,000,000 or a whole multiple thereof (or, if the then aggregate undrawn amount of the Commitments is less than $1,000,000, such lesser amount) and (b) in the case of Eurocurrency Loans, (i) if in Dollars, $2,000,000 or increments of $500,000 thereafter, and (ii) if in any Available Foreign Currency, an amount in such Available Foreign Currency of which the Dollar Equivalent Amount is at least $2,000,000.  Upon receipt of any such Notice of Borrowing from a Borrower, the Administrative Agent shall promptly notify each Lender thereof.  Subject to the terms and conditions hereof, each Lender will make the amount of its pro rata share of each such borrowing available to the Administrative Agent for the account of the applicable Borrower requesting such Loan at the Funding Office, and at or prior to the Funding Time, for the Currency of such Loan in funds immediately available to the Administrative Agent; provided, that each Lender has the option of making any portion of each such borrowing available to the Administrative Agent through a branch or affiliate of such Lender.  Such borrowing will then be made available to the applicable Borrower requesting such Loan at the Funding Office, in like funds as received by the Administrative Agent.

2.3.           Repayment of Committed Rate Loans; Evidence of Debt.  (a)  Each Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Original Tranche Lender on the Original Tranche Termination Date (or such earlier date on which the Original Tranche Loans become due and payable pursuant to Section 10), the then unpaid principal amount of each Original Tranche Committed Rate Loan made by such Original Tranche Lender to such Borrower.  Each Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Extended Tranche Lender on the Extended Tranche Termination Date (or such earlier date on which the Extended Tranche Loans become due and payable pursuant to Section 10), the then unpaid principal amount of each Extended Tranche Committed Rate Loan made by such Extended Tranche Lender to such Borrower.  Except as provided above in this subsection, each repayment of Committed Rate Loans made by a Borrower pursuant to this subsection shall be made ratably between the two Classes of Committed Rate Loans (it being understood that nothing herein shall prohibit or limit the application of proceeds realized from the exercise of remedies under any Collateral Document solely to the Loans of and other obligations owed to the Extended Tranche Lenders).  Each Borrower hereby further agrees to pay interest on the unpaid principal amount of the Committed Rate Loans made to such Borrower from time to time outstanding from the Initial Closing Date (with respect to the Company) or the First Restatement Effective Date (with respect to the Additional Borrower), as applicable, until payment in full thereof at the rates per annum, and on the dates, set forth in subsection 2.8.

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

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(c)           The Administrative Agent shall maintain the Register pursuant to subsection 12.6(d), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Committed Rate Loan made hereunder, the Class of each such Committed Rate Loan and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the applicable Borrower to each Lender under the applicable Committed Rate Loans and (iii) the amount of any sum received by the Administrative Agent from each Borrower in respect of the applicable Committed Rate Loans made to such Borrower, and the amount of each Lender’s share thereof.

(d)           The entries made in the Register and the accounts of each Lender maintained pursuant to subsection 2.3(b) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the applicable Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the applicable Borrower to repay (with applicable interest) the Committed Rate Loans made to such Borrower by such Lender in accordance with the terms of this Agreement.

2.4.           Termination or Reduction of Commitments.  (a) The Borrowers shall have the right, upon not less than four Business Days’ notice to the Administrative Agent, to terminate the Commitments or, from time to time, to reduce the amount of the Commitments; provided, that so long as any Original Tranche Commitments shall be in effect, the Borrowers shall not terminate or reduce the Commitments of either Class unless they shall simultaneously ratably reduce the Commitments of the other Class.  Any such reduction shall be in an amount equal to $5,000,000 or a whole multiple thereof and shall reduce permanently the Commitments then in effect.

(b)           In the event and on each occasion that any Net Cash Proceeds received by or on behalf of the Company, the Additional Borrower or any other Subsidiary in respect of any Prepayment Event are required to be applied to prepay the Loans pursuant to subsection 2.5(b) or (c), the Commitments then in effect shall be reduced permanently, on the day such prepayment of the Loans is required pursuant to subsection 2.5(b) or (c), in an aggregate amount equal to the amount of such required prepayment.  Any such reduction of Commitments shall be made ratably between the Classes of Commitments.

(c)           On the Restatement Effective Date, the aggregate Extended Tranche Commitments of the Extended Tranche Lenders shall be reduced permanently in an aggregate amount equal to $30,000,000.  Such reduction of Extended Tranche Commitments shall be made ratably among the Extended Tranche Lenders according to the respective Extended Tranche Commitment Percentages of the Extended Tranche Lenders.

2.5.           Prepayments.  i)  Each Borrower may, at any time and from time to time, prepay the Committed Rate Loans made to such Borrower, in whole or in part, without premium or penalty, upon at least four Business Days’ irrevocable notice to the Administrative Agent.  Each notice pursuant to the preceding sentence shall specify the date and amount of the applicable prepayment, the Currency of the Committed Rate Loans to be prepaid and whether the prepayment is of Eurocurrency Loans, ABR Loans (in the case of Committed Rate Loans in Dollars) or a combination thereof, and, if of a combination thereof, the amount allocable to each.  Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof.  If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with any amounts payable pursuant to subsection 5.6.  Partial prepayments shall be in an aggregate principal amount of at least $1,000,000.

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(b)           In the event and on each occasion that any Net Cash Proceeds are received by or on behalf of the Company, the Additional Borrower or any other Subsidiary in respect of any Prepayment Event referred to in clause (a) or (b) of the definition of such term, the Company shall, within five Business Days of the day such Net Cash Proceeds are received, prepay Committed Rate Loans in an aggregate amount equal to the Asset Prepayment Percentage of such Net Cash Proceeds; provided that if the Company shall, prior to the date of the required prepayment, deliver to the Administrative Agent a certificate of a Responsible Officer to the effect that the Company intends to cause the Net Cash Proceeds from such event (or a portion thereof specified in such certificate) to be reinvested by the Company or any Subsidiary in assets or property useful to the business of the Company or any Subsidiary, or to consummate any Permitted Business Acquisition permitted hereunder, in each case within 180 days (or, in the case of any Prepayment Event referred to in clause (b) of the definition of such term and so long as the Company or any Subsidiary shall be diligently proceeding with the reparation, restoration or replacement of the asset in respect of which such Net Cash Proceeds shall have been received, 365 days or such longer period as the Administrative Agent may agree to be necessary to repair, restore or replace such asset) following receipt of such Net Cash Proceeds, and certifying that no Default has occurred and is continuing, then no prepayment shall be required pursuant to this paragraph in respect of the Net Cash Proceeds from such event (or the portion of such Net Cash Proceeds specified in such certificate, if applicable) except to the extent of any such Net Cash Proceeds that have not been so applied by the end of such 180 day period (or, in the case of any Prepayment Event referred to in clause (b) of the definition of such term, such longer period referred to above), at which time a prepayment shall be required in an amount equal to the Net Cash Proceeds that have not been so applied; provided further, however, that (A) the Company shall not be permitted to make elections pursuant to the immediately preceding proviso with respect to Net Cash Proceeds in excess of an aggregate amount equal to the Company Reinvestment Percentage of such Net Cash Proceeds, (B) to the extent any such Net Cash Proceeds shall be received in respect of assets owned by a Loan Party, such Net Cash Proceeds may be reinvested only in assets owned by a Loan Party, or, in the case of a Permitted Business Acquisition, any Person that shall become a Loan Party upon the consummation thereof, or in any other Subsidiary to the extent permitted by subsection 9.7(f), (C) to the extent any such Net Cash Proceeds shall be received in respect of assets owned by a Subsidiary that is not a Loan Party but the Capital Stock of which constitutes Collateral, such Net Cash Proceeds may be reinvested only in assets owned by a Loan Party (including Capital Stock) or assets owned by a Subsidiary the Capital Stock of which constitutes Collateral, or in any other Subsidiary to the extent permitted by subsection 9.7(f), and (D) pending the reinvestment of, or the prepayment of Loans with, any Net Cash Proceeds under this subsection, such Net Cash Proceeds shall be held in one or more Cash Collateral Accounts.

(c)           In the event and on each occasion that any Net Cash Proceeds are received by or on behalf of the Company, the Additional Borrower or any other Subsidiary in respect of any Prepayment Event referred to in clause (c) or (d) of the definition of such term, the Company shall, on the day such Net Cash Proceeds are received, prepay Committed Rate Loans in an aggregate amount equal to (x) in the case of any Prepayment Event referred to in clause (c) of the definition of such term, the Equity Prepayment Percentage of such Net Cash Proceeds and (y) in the case of any Prepayment Event referred to in clause (d) of the definition of such term, 100% of such Net Cash Proceeds.

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(d)           Notwithstanding the foregoing, so long as any Original Tranche Loans shall be outstanding, the Borrowers shall not prepay the Loans of either Class under this Section unless they shall simultaneously ratably prepay the corresponding Loans of the other Class.

2.6.           Conversion and Continuation Options.  (a)  By giving a Notice of Conversion, each Borrower may elect from time to time (i) to convert such Borrower’s Eurocurrency Loans in Dollars to ABR Loans or (ii) to convert such Borrower’s ABR Loans to Eurocurrency Loans in Dollars; provided, that any such conversion of Eurocurrency Loans may only be made on the last day of an Interest Period with respect thereto.  Upon receipt of any Notice of Conversion the Administrative Agent shall promptly notify each Lender thereof.  All or any part of Eurocurrency Loans outstanding in Dollars or ABR Loans may be converted as provided in herein, provided that (i) no ABR Loan may be converted into a Eurocurrency Loan when any Event of Default has occurred and is continuing and the Administrative Agent has or the Majority Lenders have determined that such a conversion is not appropriate, (ii) so long as any Original Tranche Loans remain outstanding, no Committed Rate ABR Loan may be converted into a Committed Rate Eurocurrency Loan during the period beginning on the date that is one month prior to the Original Tranche Termination Date and ending on the Original Tranche Termination Date and (iii) no Extended Tranche ABR Loan may be converted into an Extended Tranche Eurocurrency Loan after the date that is one month prior to the Extended Tranche Termination Date.

(b)           By giving a Notice of Continuation, each Borrower may continue any of its Eurocurrency Loans as Eurocurrency Loans in the same Currency for additional Interest Periods.

(c)           Each Borrower may convert Committed Rate Loans outstanding in one Currency to Committed Rate Loans of a different Currency by repaying such Loans in the first Currency and borrowing Loans of such different Currency in accordance with the applicable provisions of this Agreement.

(d)           If a Borrower shall fail to timely give a Notice of Continuation or a Notice of Conversion in respect of any of such Borrower’s Eurocurrency Loans with respect to which an Interest Period is expiring, such Eurocurrency Loans shall become due and payable on the last day of such expiring Interest Period; provided, that the Company may, in accordance with and subject to the terms and conditions of this Agreement, refinance such maturing Eurocurrency Loans on such maturity date with Competitive Advance Loans.

(e)           Notwithstanding the foregoing, so long as any Original Tranche Loans shall be outstanding, the Borrowers shall not convert Loans of either Class under this Section unless they shall simultaneously ratably convert the corresponding Loans of the other Class.

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2.7.           Minimum Amounts of Tranches.  All borrowings, conversions and continuations of Committed Rate Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Loans comprising (i) each Eurocurrency Borrowing in Dollars shall be not less than $2,000,000 and (ii) each Eurocurrency Borrowing in any Available Foreign Currency shall be not less than the Dollar Equivalent Amount in such Currency of $2,000,000.

2.8.           Interest Rates and Payment Dates for Committed Rate Loans.  (a)  Each Committed Rate Eurocurrency Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurocurrency Rate for such Interest Period plus the Applicable Margin.

(b)           (i) Each Original Tranche Committed Rate ABR Loan shall bear interest at a rate per annum equal to the ABR, and (ii) each Extended Tranche Committed Rate ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin.

(c)            If all or a portion of (i) the principal amount of any Committed Rate Loan or (ii) any interest payable thereon shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum which is (x) in the case of overdue principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this subsection plus 2% or (y) in the case of overdue interest, the rate described in paragraph (a) or (b) of this subsection, as applicable, plus 2%, in each case from the date of such non-payment until such amount is paid in full (as well after as before judgment).

(d)           Interest on Committed Rate Loans shall be payable in arrears on each Interest Payment Date; provided, that interest accruing pursuant to paragraph (c) of this subsection shall be payable from time to time on demand.

2.9.           Inability to Determine Interest Rate.  If on or prior to the Quotation Day for any Interest Period in respect of any Eurocurrency Loan in any Currency:

(a)           the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that, by reason of circumstances affecting the relevant market generally, the Administrative Agent cannot ascertain the Eurocurrency Rate in accordance with this Agreement for such affected Currency or such affected Interest Period, or

(b)           the Administrative Agent shall have received notice from the Majority Lenders that the Eurocurrency Rate determined or to be determined for such affected Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Committed Rate Loans during such affected Interest Period,

(c)           the Administrative Agent shall give telecopy or telephonic notice thereof to the Company and the Lenders as soon as practicable thereafter.  If such notice is given (x) any Eurocurrency Loans requested to be made in such affected Currency on the first day of such affected Interest Period shall be made as ABR Loans in Dollars in a Dollar Equivalent Amount, (y) any Committed Rate Loans that were to have been converted on the first day of such affected Interest Period from ABR Loans, to Eurocurrency Loans in such affected Currency, shall be continued as ABR Loans and (z) any Eurocurrency Loans in such affected Currency that were to have been continued as such shall be converted, on the first day of such Interest Period, to ABR Loans in Dollars in a Dollar Equivalent Amount.  Until such notice has been withdrawn by the Administrative Agent, no further Eurocurrency Loans in such affected Currency shall be made or continued as such.

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2.10.         Substitution of Euro for National Currency.  If any Available Foreign Currency is replaced by the euro, unless otherwise agreed by the Company, the Administrative Agent and the Lenders, the euro may be tendered in satisfaction of any obligation denominated in such Available Foreign Currency at the conversion rate specified in, or otherwise calculated in accordance with, the regulations adopted by the Council of the European Union relating to the euro. No replacement of an Available Foreign Currency by the euro shall discharge, excuse or otherwise affect the performance of any obligation of the Company under this Agreement.

2.11.         Unavailability of Available Foreign Currency.  If on any Quotation Day (a) a Lender notifies the Administrative Agent that the Available Foreign Currency requested is not readily available to it in the amount required or (b) a Lender notifies the Administrative Agent that compliance with its obligation to participate in a Loan in the proposed Available Foreign Currency would contravene a law or regulation applicable to it, the Administrative Agent will give notice to the relevant Borrower to that effect by 12:00 Noon, New York time, on that day.  In this event, any Lender that gives notice pursuant to this subsection will be required to participate in the Loan in Dollars (in an amount equal to the Dollar Equivalent Amount) and its participation will be treated as a separate Loan denominated in Dollars during that Interest Period.

2.12.         Separate Obligations.  Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon and after the First Restatement Effective Date, the parties hereto acknowledge and agree that (a) at no time and in no circumstances shall the Additional Borrower be liable for any Company Obligations or any other indebtedness, liabilities or obligations of the Company hereunder or under any other Loan Documents, whether incurred by the Company before, on or after the First Restatement Effective Date, and the Additional Borrower’s joinder hereto as a borrower does not constitute a guarantee by the Additional Borrower of any Company Obligations or any such other indebtedness, liabilities or obligations of the Company hereunder or under any other Loan Documents, and (b) with respect to any borrowing by either of the Company or the Additional Borrower of any Loans hereunder, such Loans are for the applicable requesting Borrower’s own account, and such Loans and such Borrower’s other obligations hereunder are obligations of such Borrower and do not constitute joint and several obligations of both Borrowers (it being understood, however, that the obligations of the Additional Borrower under the Loan Documents are guaranteed by, and secured by assets of, the Company and the other Loan Parties as and to the extent provided in the Collateral Documents).

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SECTION 3

THE COMPETITIVE ADVANCE LOANS

3.1.           Competitive Advance Loans.  (a)  Subject to the terms and conditions hereof, the Company may, at any time and from time to time during the applicable Commitment Period, request one or more Lenders to offer bids, and any such Lender may, in its sole discretion, offer such bids, to make competitive advance loans (“Competitive Advance Loans”) to the Company on the terms and conditions set forth in such bids.  Each Competitive Advance Loan shall bear interest at the rates, pay interest and principal on the dates, and shall mature on the date, agreed between the Company and Lender at the time such Competitive Advance Loan is made; provided, that (i) each Competitive Advance Loan shall mature not earlier than 1 day and not later than 180 days, after the date such Competitive Advance Loan is made, (ii) no Competitive Advance Loan made by an Original Tranche Lender shall mature after the Original Tranche Termination Date and (iii) no Competitive Advance Loan made by an Extended Tranche Lender shall mature after the Extended Tranche Termination Date.  During the applicable Commitment Period the Company may accept bids from Lenders from time to time for Competitive Advance Loans, and borrow and repay Competitive Advance Loans, all in accordance with the terms and conditions hereof; provided, that no Competitive Advance Loan shall be made if, after giving effect to the making of such Loan and the simultaneous application of the proceeds thereof, (x) the aggregate amount of the Original Tranche Exposure would exceed the aggregate amount of the Original Tranche Commitments or (y) the aggregate amount of the Extended Tranche Exposure would exceed the aggregate amount of the Extended Tranche Commitments; and provided further that the aggregate amount of Competitive Advance Loans of the Company at any time outstanding shall not exceed $25,000,000.  Subject to the foregoing, any Lender may, in its sole discretion, make Competitive Advance Loans in an aggregate outstanding amount exceeding the amount of such Lender’s Commitment.

(b)           The Competitive Advance Loans may be made in Dollars or any Available Foreign Currency, as agreed between the Company and Lender in respect thereof at the time such Competitive Advance Loan is made.

3.2.           Procedure for Competitive Advance Loan Borrowing.  i)  The Company may request one or more Lenders to make bids to make Committed Rate Loans in such manner and at such time as shall be agreed by the Company and such Lenders by delivering Competitive Bid Requests to such Lender or Lenders.  The proceeds of each Competitive Advance Loan will be made available to the Company in respect thereof in the manner agreed between the Company and the relevant Lender at the time such Competitive Advance Loan is made.  The Lender designated in any such Competitive Bid Request may (but shall have no obligation to) make one or more competitive bids to the Company in response to a Competitive Bid Request by delivering a Competitive Bid Notice to the Company.

(b)           Each Lender that makes a Competitive Advance Loan shall deliver a Notice of Competitive Advance Loan to the Administrative Agent on the Thursday (or, if such Thursday is not a Business Day, on the next Business Day following such Thursday) immediately following the making of such Competitive Advance Loan.

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3.3.           Repayment of Competitive Advance Loans; Evidence of Debt.  (a)  The Company hereby unconditionally promises to pay to the Lender that made such Competitive Advance Loan on the maturity date, as agreed by the Company and Lender at the time such Competitive Advance Loan is made (or such earlier date on which all the Loans become due and payable pursuant to Section 10), the then unpaid principal amount of such Competitive Advance Loan.  The Company hereby further agrees to pay interest on the unpaid principal amount of the Competitive Advance Loans made by any Lender from time to time outstanding from the date thereof until payment in full thereof at the rates, and on the dates, agreed by the Company and Lender at the time such Competitive Advance Loan is made.  All payments in respect of Competitive Advance Loans shall be made by the Company to its Competitive Advance Loan Lender at the address separately agreed to between the Company and such Competitive Advance Loan Lender.

(b)           Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Company to such Lender resulting from each Competitive Advance Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time in respect of Competitive Advance Loans.  The entries made in the accounts of each Lender maintained pursuant to this subsection 3.3(b) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Company therein recorded, absent manifest error; provided, however, that the failure of any Lender to maintain any such account, or any error therein, shall not in any manner affect the obligation of the Company to repay (with applicable interest) the Competitive Advance Loans made to the Company by such Lender in accordance with the terms of this Agreement.

3.4.           Prepayments.  Unless otherwise agreed by the Lender making a Competitive Advance Loan in any Notice of Competitive Advance Loan, such Competitive Advance Loan may not be optionally prepaid prior to the scheduled maturity date thereof.

SECTION 4

THE LETTERS OF CREDIT

4.1.           L/C Commitment.  i)  Subject to the terms and conditions hereof, each Issuing Bank agrees to issue or amend letters of credit (including Letters of Credit payable by acceptance of a Time Draft as described in subsection 4.9) (“Letters of Credit”, which shall include the existing letters of credit specified on Schedule III which shall be continued and be deemed Letters of Credit issued and outstanding hereunder) for the account of the Company on any Business Day during the Extended Tranche Commitment Period in such form as shall be reasonably acceptable to such Issuing Bank; provided, that no Letter of Credit shall be issued or amended if, after giving effect thereto (i) the aggregate amount of the Exposure would exceed the aggregate amount of the Commitments, (ii) the aggregate amount of the Original Tranche Exposure would exceed the aggregate amount of the Original Tranche Commitments, (iii) the aggregate amount of the Extended Tranche Exposure would exceed the aggregate amount of the Extended Tranche Commitments, (iv) the sum of the aggregate outstanding amount of the Extended Tranche Loans and the aggregate amount of L/C Obligations attributable to Letters of Credit expiring after the Original Tranche Termination Date would exceed the aggregate amount of the Extended Tranche Commitments, (v) the aggregate amount of the L/C Obligations would exceed $50,000,000 or (vi) the aggregate amount of L/C Obligations in respect of Standby Letters of Credit would exceed $10,000,000.

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(b)           Each Letter of Credit shall:

(i)           be denominated in Dollars or an Available Foreign Currency and shall be either (A) a standby letter of credit issued to support any obligations of the Company or any Subsidiary, contingent or otherwise (a “Standby Letter of Credit”) or (B) a commercial letter of credit issued in respect of the purchase of goods and services in the ordinary course of business of the Company and its Subsidiaries (a “Commercial Letter of Credit”; together with the Standby Letters of Credit, the “Letters of Credit”) and,

(ii)           expire no later than the earlier of (A) one year after its date of issuance and (B) five (5) Business Days prior to the Extended Tranche Termination Date; provided that any Letter of Credit with a one-year tenor may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (B) above).

(c)           No Issuing Bank shall at any time be obligated to issue any Letter of Credit hereunder if such issuance would cause such Issuing Bank or any Lender to violate any applicable Requirement of Law.

4.2.           Procedure for Issuance of Letters of Credit under this Agreement.  The Company may from time to time request that an Issuing Bank issue a Letter of Credit by delivering to such Issuing Bank at its Issuing Office an Application therefor, completed to the satisfaction of the Issuing Bank, and such other documents required in connection therewith as such Issuing Bank may reasonably request.  Upon receipt by an Issuing Bank of any Application, such Issuing Bank will process such Application and any other documents delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall any Issuing Bank be required to issue any Letter of Credit earlier than three (3) Business Days after its receipt of the Application therefor and all such other documents required in connection therewith by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by such Issuing Bank and the Company.  Such Issuing Bank shall promptly (and in no event later than the Business Day following its issuance of any Letter of Credit) advise the Administrative Agent of the terms of such Letter of Credit (or provide the Administrative Agent with a copy of such Letter of Credit), and each Lender shall be entitled to receive from the Administrative Agent, following such Lender’s request therefor, any documents so provided to the Administrative Agent.

4.3.           Fees, Commissions and Other Charges.  i)  The Company shall pay to the Administrative Agent, for the account of the Original Tranche Lenders and the Extended Tranche Lenders (including the Issuing Bank) in Dollars pro rata according to their Original Tranche Commitment Percentages or Extended Tranche Commitment Percentages, as the case may be, a letter of credit commission with respect to each Letter of Credit, computed at a rate equal to (i) in the case of each Original Tranche Lender, the then Applicable Margin for Original Tranche Eurocurrency Loans and (ii) in the case of each Extended Tranche Lender, the then Applicable Margin for Extended Tranche Eurocurrency Loans, in each case on the Lenders’ respective Commitment Percentages of the daily average amount available to be drawn under such Letter of Credit.  Such commissions shall be payable in arrears on the last Business Day of each March, June, September and December to occur after the date of issuance of such Letter of Credit and on the expiration date of such Letter of Credit and shall be nonrefundable.  In addition to the foregoing fees, the Company shall pay to each Issuing Bank for its own account in Dollars a fronting fee of 0.125% per annum on the aggregate undrawn and unexpired amount of all outstanding Letters of Credit issued by such Issuing Bank.  Such fronting fees shall be payable in arrears on the last Business Day of each March, June, September and December shall be nonrefundable.

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(b)           In addition to the foregoing fees and commissions, the Company shall pay or reimburse the relevant Issuing Bank for such normal and customary costs and expenses as are incurred or charged by such Issuing Bank in issuing, effecting payment under, amending or otherwise administering such Letter of Credit.

(c)           The Administrative Agent shall, promptly following its receipt thereof, distribute to the Issuing Bank and the Lenders all fees and commissions received by the Administrative Agent for their respective accounts pursuant to this subsection.

4.4.           L/C Participations.  (a)  Each Issuing Bank irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce each Issuing Bank to issue Letters of Credit hereunder, each L/C Participant unconditionally and irrevocably agrees to accept and purchase and hereby accepts and purchases from such Issuing Bank, on the terms and conditions hereinafter stated, for such L/C Participant’s own account and risk, an undivided interest in such Issuing Bank’s obligations and rights under each Letter of Credit issued by such Issuing Bank hereunder in an amount equal to the product of such L/C Participant’s Commitment Percentage times the amount of each draft paid by such Issuing Bank thereunder.  Each L/C Participant unconditionally and irrevocably agrees with each Issuing Bank that, if a draft is paid under any Letter of Credit issued by such Issuing Bank for which such Issuing Bank is not reimbursed in full by the Company in accordance with the terms of this Agreement, such L/C Participant shall pay to such Issuing Bank upon demand at such Issuing Bank’s Issuing Office an amount equal to such L/C Participant’s Commitment Percentage of the amount of such draft, or any part thereof, which is not so reimbursed.

(b)           If any amount required to be paid by any L/C Participant to any Issuing Bank pursuant to subsection 4.4(a) in respect of any unreimbursed portion of any payment made by such Issuing Bank under any Letter of Credit is not paid to such Issuing Bank on the date such payment is due from such L/C Participant, such L/C Participant shall pay to such Issuing Bank on demand an amount equal to the product of (i) such amount, times (ii) (A) in the case of any such payment obligation denominated in Dollars, the Federal Funds Effective Rate or (B) in the case of any such payment obligation denominated in an Available Foreign Currency, the rate customary in such Currency for settlement of similar inter-bank obligations, as quoted by such Issuing Bank, in each case during the period from and including the date such payment is required to the date on which such payment is immediately available to the Issuing Bank, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360.  If any such amount required to be paid by any L/C Participant pursuant to subsection 4.4(a) is not made available to such Issuing Bank by such L/C Participant within three (3) Business Days after the date such payment is due, such Issuing Bank shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to ABR Loans.  A certificate of an Issuing Bank submitted to any L/C Participant with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error.

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(c)           Whenever, at any time after an Issuing Bank has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with subsection 4.4(a), the Issuing Bank receives any payment related to such Letter of Credit (whether directly from the Company or otherwise), or any payment of interest on account thereof, such Issuing Bank will distribute to such L/C Participant its pro rata share thereof; provided, however, that in the event that any such payment received by such Issuing Bank shall be required to be returned by such Issuing Bank, such L/C Participant shall return to such Issuing Bank on demand the portion thereof previously distributed by such Issuing Bank to it.

(d)           Each L/C Participant’s obligation to purchase participating interests pursuant to subsection 4.4(a) shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such LC Participant or the Company may have against any Issuing Bank, the Company or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Article VII; (iii) any adverse change in the condition (financial or otherwise) of the Company or any Subsidiary; (iv) any breach of this Agreement or any other Loan Document by the Company or any other Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

4.5.           Reimbursement Obligation of the Company.  (a)  The Company agrees to reimburse each Issuing Bank in respect of any Letter of Credit issued by such Issuing Bank on the Business Day next succeeding the Business Day on which such Issuing Bank notifies the Company of the date and amount of a draft presented under such Letter of Credit and paid by such Issuing Bank for the amount of (i) such draft so paid and (ii) any taxes, fees, charges or other costs or expenses reasonably incurred by such Issuing Bank in connection with such payment.  Each such payment shall be made to such Issuing Bank at its Issuing Office in the Currency in which payment of such draft was made and in immediately available funds.

(b)           Interest shall be payable on any and all amounts remaining unpaid by the Company under this subsection from the date such amounts are required to be paid by the Issuing Bank until payment in full at the ABR then in effect plus (i) to the extent Original Tranche Lenders have purchased or could be required to purchase participating interests in such amounts pursuant to subsection 4.4, 0% and (ii) to the extent Extended Tranche Lenders have purchased or could be required to purchase participating interests in such amounts pursuant to subsection 4.4, the Applicable Margin for Extended Tranche ABR Loans then in effect, in each case until the third (3rd) Business Day next succeeding the date of the relevant notice and thereafter at the rates provided for above in this paragraph plus 2% per annum.

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4.6.           Obligations Absolute.  (a)  The obligations of the Company under this Section 4 shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Company may have or have had against any Issuing Bank or any beneficiary of a Letter of Credit.

(b)           The Company also agrees with each Issuing Bank in respect of each Letter of Credit issued by such Issuing Bank that such Issuing Bank shall not be responsible for, and the Company’s Reimbursement Obligations under subsection 4.5(a) shall not be affected by, among other things, (i) the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, provided, that reliance upon such documents by such Issuing Bank shall not have constituted gross negligence or willful misconduct of such Issuing Bank or (ii) any dispute between or among the Company and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or (iii) any claims whatsoever of the Company against any beneficiary of such Letter of Credit or any such transferee.

(c)           The Issuing Banks shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by such Issuing Bank’s gross negligence or willful misconduct.

(d)           The Company agrees that any action taken or omitted by any Issuing Bank under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Customs (with respect to any commercial Letter of Credit) or the ISP (with respect to any Standby Letter of Credit), shall be binding on the Company and shall not result in any liability of such Issuing Bank to the Company.

4.7.           Letter of Credit Payments.  If any draft shall be presented for payment to an Issuing Bank under any Letter of Credit, such Issuing Bank shall promptly notify the Company of the date and amount thereof.  The responsibility of the Issuing Bank to the Company in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in compliance with such Letter of Credit.

4.8.           Application.  To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 4, the provisions of this Section 4 shall apply.

4.9.           Issuance of Letters of Credit Priority for Acceptance of Time Drafts.  Notwithstanding anything to the contrary contained in this Section 4, at any time when the Convertible Notes Indenture shall have been amended to eliminate Section 4.08 thereof  or to modify such Section 4.08 to permit the incurrence of Indebtedness (as defined therein) under this Agreement in an amount at least equal to the aggregate Commitments, the Company may request that any Letter of Credit permit drawings thereunder to be by means of acceptance by the Issuing Bank of a time draft (a “Time Draft”) rather than by payment of a sight draft.  Each Time Draft shall (in addition to satisfying all of the provisions set forth in this Section 4, except to the extent such provisions conflict with the provisions in this subsection 4.9 (in which case this subsection 4.9 shall be controlling)) expire no later than the earliest of (i) 90 days following the acceptance of such Time Draft by the related Issuing Bank, (ii) 5 Business Days prior to the Extended Tranche Termination Date and (iii) 180 days after the issuance of the Commercial Letter of Credit pursuant to which such Time Draft is made.  Notwithstanding anything to the contrary in this Agreement:

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(a)           in calculating the outstanding amount of L/C Obligations for purpose of determining the amount of the Commitments available for usage as Letters of Credit under subsection 4.1(a), the face amount of each outstanding and accepted Time Draft shall be deemed to constitute L/C Obligations;

(b)           in calculating the undrawn face amount of any Letter of Credit for purposes of determining the amount of Letter of Credit commission payable pursuant to subsection 4.3(a), each Letter of Credit under which a Time Draft has been issued and accepted shall be deemed undrawn to the extent of the face amount of such Time Draft until such Time Draft has been paid; and

(c)           each L/C Participant shall be deemed to have an undivided interest equal to such L/C Participant’s Commitment Percentage in the Issuing Bank’s rights and obligations under any Time Draft accepted by such Issuing Bank under any Letter of Credit.

4.10.         L/C Cash Accounts.  Notwithstanding anything to the contrary in this Section 4, until the Convertible Notes Indenture shall have been amended to eliminate Section 4.08 thereof or to modify such Section 4.08 to permit the incurrence of Indebtedness (as defined therein) under this Agreement in an amount at least equal to the aggregate Commitments, regardless of whether the ratio test in such Section 4.08 is met, the Company will (a) arrange to have funds on deposit in an L/C Cash Account with each Issuing Bank in an aggregate amount at all times sufficient to pay (i) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit issued by such Issuing Bank and (ii) the face amount of each outstanding Time Draft accepted by such Issuing Bank and (b) provide irrevocable instructions to each Issuing Bank to make payments in respect of drawings under such Letters of Credit and Time Drafts from the funds on deposit in the applicable L/C Cash Account.

SECTION 5

CERTAIN PROVISIONS APPLICABLE TO THE LOANS AND LETTERS OF CREDIT

5.1.           Facility Fee.  (a)  Each Borrower agrees to pay to the Administrative Agent (i) for the account of each Original Tranche Lender such Borrower’s Applicable Percentage of a facility fee for the period from and including the First Restatement Effective Date to, but excluding, the Original Tranche Termination Date or such earlier date on which the Original Tranche Commitments shall terminate as provided herein, computed at the applicable Facility Fee Rate in effect from time to time on the average daily amount of the Original Tranche Commitment (used and unused) of such Original Tranche Lender during the period for which payment is made (or after the Original Tranche Termination Date on the average daily amount of the Exposure of such Original Tranche Lender), payable quarterly in arrears on the last day of each March, June, September and December and on the Original Tranche Termination Date or such earlier date on which the Original Tranche Commitments shall terminate as provided herein, commencing on the first of such dates to occur after the First Restatement Effective Date; and (ii) for the account of each Extended Tranche Lender such Borrower’s Applicable Percentage of a facility fee for the period from and including the Restatement Effective Date to, but excluding, the Extended Tranche Termination Date or such earlier date on which the Extended Tranche Commitments shall terminate as provided herein, computed at the applicable Facility Fee Rate in effect from time to time on the average daily amount of the Extended Tranche Commitment (used and unused) of such Extended Tranche Lender during the period for which payment is made (or after the Extended Tranche Termination Date on the average daily amount of the Exposure of such Extended Tranche Lender), payable quarterly in arrears on the last day of each March, June, September and December and on the Extended Tranche Termination Date or such earlier date on which the Extended Tranche Commitments shall terminate as provided herein, commencing on the first of such dates to occur after the Restatement Effective Date.

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(b)           Each Borrower agrees to pay to the Administrative Agent, for its own account and for the account of the Lenders, the fees specified in, and in the amounts and on the dates set forth in, the Fee Letter required to be paid by such Borrower thereunder.

5.2.           Computation of Interest and Fees.  (a)  Facility fees and, whenever it is calculated on the basis of the Prime Rate, interest on ABR Loans shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed; and, otherwise, interest and Letter of Credit commissions shall be calculated on the basis of a 360-day year for the actual days elapsed.  The Administrative Agent shall as soon as practicable notify the Company and the Lenders of each determination of a Eurocurrency Rate.  Any change in the ABR due to a change in the Prime Rate, the Three-Month Secondary CD Rate, the Federal Funds Effective Rate or the Adjusted Eurocurrency Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate, the Three-Month Secondary CD Rate, the Federal Funds Effective Rate or the Adjusted Eurocurrency Rate, respectively.  The Administrative Agent shall as soon as practicable notify the Company and the Lenders of the effective date and the amount of each such change in interest rate.

(b)           Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrowers and the Lenders in the absence of manifest error.  The Administrative Agent shall, at the request of the Company, deliver to the Company a statement showing the quotations used by the Administrative Agent in determining any Eurocurrency Rate.

5.3.           Pro Rata Treatment and Payments.  (a)  Each borrowing by a Borrower of Committed Rate Loans and, except as provided in subsection 2.4(c), any reduction of the Commitments of the Lenders shall be made pro rata according to the respective Commitment Percentages of the Lenders.  Each payment by a Borrower on account of its Applicable Percentage of (i) any facility fee hereunder payable to the Original Tranche Lenders shall be made pro rata among the Original Tranche Lenders according to the respective Original Tranche Commitment Percentages of the Original Tranche Lenders, and (ii) any facility fee hereunder payable to the Extended Tranche Lenders shall be made pro rata among the Extended Tranche Lenders according to the respective Extended Tranche Commitment Percentages of the Extended Tranche Lenders.  Except as provided in subsection 2.3(a) and for payments received by the Secured Parties out of proceeds realized from the exercise of remedies under the Collateral Documents, each payment (including each prepayment) by a Borrower on account of principal of and interest on any Committed Rate Loans shall be made pro rata according to the respective outstanding principal amounts of the Committed Rate Loans of such Borrower then due and owing to the Lenders.  All payments (including prepayments) to be made by a Borrower hereunder, whether on account of principal, interest, fees, Reimbursement Obligations or otherwise, shall be made without set off or counterclaim.  All payments in respect of Committed Rate Loans in any Currency shall be made in such Currency and in immediately available funds at the Payment Office, and at or prior to the Payment Time, for such Type of Loans and such Currency, on the due date thereof.  The Administrative Agent shall distribute to the Lenders any payments received by the Administrative Agent promptly upon receipt in like funds as received.  If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

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(b)           Unless the Administrative Agent shall have been notified in writing by any Lender prior to a Borrowing Date in respect of Committed Rate Loans that such Lender will not make the amount that would constitute its Commitment Percentage of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the applicable Borrower requesting such Loan a corresponding amount.  If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to (A) in the case of any such Committed Rate Loans denominated in Dollars, the daily average Federal funds rate, as quoted by the Administrative Agent, or (B) in the case of any Committed Rate Loans denominated in an Available Foreign Currency, the rate customary in such Currency for settlement of similar inter-bank obligations, as quoted by the Administrative Agent, in each case for the period until such Lender makes such amount immediately available to the Administrative Agent.  A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error.  If such Lender’s Commitment Percentage of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to the applicable Class of Committed Rate Loans in such Currency hereunder, on demand, from the applicable Borrower of such Loan.

5.4.           Requirements of Law.  (a)  If after the First Restatement Effective Date the adoption of or any change in any Requirement of Law or in the interpretation thereof by any Governmental Authority charged with the administration or interpretation thereof or compliance by any Lender with any request or directive (whether or not having the force of law) applicable generally in the jurisdiction of such Lender to banking institutions of the same type as such Lender

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(i)           shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Eurocurrency Loan made by it to a Borrower or any Extension of Credit to a Borrower, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by subsection 5.5 (whether or not any additional amount is payable by a Borrower thereunder) and the imposition of, or any change in the rate or other basis of, any Excluded Tax payable by such Lender);

(ii)           shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits with or for the account of, or advances, loans or other extensions of credit by, any office of such Lender which is not otherwise included in the determination of the Eurocurrency Rate; or

(iii)           shall impose on such Lender any other condition affecting Eurocurrency Loans made by such Lender to a Borrower, or Extensions of Credit by such Lender to a Borrower;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender reasonably deems to be material, of making, converting into, continuing or maintaining Eurocurrency Loans to a Borrower or issuing for or participating in Letters of Credit of the Company or to reduce any amount receivable hereunder in respect thereof, and such Lender has no reasonable means (as it shall determine in its sole discretion acting in good faith) to avoid such costs or reductions, then, in any such case, the applicable Borrower of such Loan or, in the case of the Company, with respect to such Letter of Credit shall promptly pay such Lender following receipt of a certificate of such Lender in accordance with subsection 5.4(c) such additional amount or amounts as will compensate such Lender for such increased cost or reduction suffered.

(b)           If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation thereof by any Governmental Authority charged with the administration or interpretation thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) made subsequent to the First Restatement Effective Date shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital, if any, as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, each Borrower shall promptly pay to such Lender following receipt of a certificate of such Lender in accordance with subsection 5.4(c) its Applicable Percentage of such additional amount or amounts as will compensate such Lender for any such reduction suffered.  Notwithstanding any other provision in this paragraph (b), no Lender shall be entitled to demand compensation pursuant to this paragraph (b) if it shall not then be the general practice of such Lender or such corporation to demand such compensation in similar circumstances under comparable provisions of other comparable credit agreements.

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(c)           A certificate of each Lender setting forth such amount or amounts as shall be necessary to compensate such Lender or such corporation as specified in paragraph (a) or (b) above, as the case may be, and setting forth in reasonable detail an explanation of the basis of requesting such compensation in accordance with paragraph (a) or (b) above, including calculations in detail comparable to the detail set forth in Certificates delivered to such Lender in similar circumstances under comparable provisions of other comparable credit agreements, shall be delivered to the Borrowers and shall be conclusive absent manifest error.  Each Borrower, as required by paragraph (a) or (b) above, shall pay each Lender the amount shown as due on any such certificate delivered to it within ten (10) days after its receipt of the same.

(d)           Failure on the part of any Lender to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital with respect to any period shall not constitute a waiver of such Lender’s right to demand compensation with respect to such period or any other period, except that no Lender shall be entitled to compensation under this subsection 5.4 for any such costs incurred or any such reduction suffered with respect to any date unless such Lender shall have notified the Borrowers that it will demand compensation for such costs or reductions under paragraph (c) above, not more than six months after the later of (i) such date and (ii) the date on which such Lender as applicable, shall have become aware of such costs or reductions.  The protection of this subsection 5.4 shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, guideline or other change or condition that shall have occurred or been imposed.

(e)           The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

5.5.           Taxes.  (a)  All payments made by the Borrowers under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority (other than Excluded Taxes).  If any such non-excluded taxes, levies, imposts, duties, charges, fees deductions or withholdings (together with any interest, additions to tax and penalties applicable thereto, “Non-Excluded Taxes”) are required to be withheld from any amounts payable by a Borrower to the Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement.  Whenever any Non-Excluded Taxes are payable by a Borrower, such Borrower shall timely pay such Non-Excluded Taxes and shall send to the Administrative Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by such Borrower showing payment thereof.  If the applicable Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, such Borrower shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure.  Notwithstanding the foregoing, each Borrower shall not be required to make any payments in respect of Non-Excluded Taxes to any Lender that has changed the Funding Office at which it maintains the Extensions of Credit to which such Non-Excluded Taxes relate (other than any such change in Funding Office made by such Lender pursuant to subsection 5.7 to avoid or minimize the application or effects of subsection 5.4 or 5.5) in an amount greater than such Borrower would have been required to pay pursuant to this subsection 5.5 if no such change in Funding Office had occurred.  The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

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(b)           Each Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which a Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Company and any other relevant Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Company, any other relevant Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding, provided that (except in the case of taxes imposed by the United States that are in effect as of the date hereof) such Lender has received written notice from a Borrower advising it of the availability of such exemption or reduction and supplying all applicable documentation.  In addition, any Lender, if requested by the Company, any other relevant Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Company, any other relevant Borrower or the Administrative Agent as will enable the Company, any other relevant Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements, provided such Lender is legally able to do so and provided that (except in the case of taxes imposed by the United States that are in effect as of the date hereof) such Lender has received written notice from a Borrower advising it of the availability of any exemption from such backup withholding or information reporting requirements and supplying all applicable documentation.

Without limiting the generality of the foregoing, each Lender that is not incorporated, created or organized under the laws of the United States of America or a state or political subdivision thereof (a “Non-U.S. Lender”) shall:

(i)           deliver to the Company and the Administrative Agent (A) two duly completed copies of either United States Internal Revenue Service Form W-8BEN (with respect to entitlement to treaty benefits) or W-8ECI, or successor applicable form, as applicable, (B) in the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholdings tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest,” a statement substantially in the form of Exhibit I hereto and a Form W-8BEN, and (C) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Company to determine the withholding or deduction required to be made; or applicable successor form, in each case, demonstrating such Non-U.S. Lender’s entitlement to a complete exemption from U.S. Federal withholding tax on all payments by the Company under this Agreement,

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(ii)           deliver to the Company and the Administrative Agent two further current copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company; and

(iii)           obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Company or the Administrative Agent;

unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender so advises the Company and the Administrative Agent of the legal basis therefor.  Each Person that shall become a Lender or a Participant pursuant to subsection 12.6 shall, upon the effectiveness of the related transfer, be required to provide all of the forms and statements required pursuant to this subsection, provided that in the case of a Participant such Participant shall furnish all such required forms and statements to the Lender from which the related participation shall have been purchased.

(c)           The parties hereto agree that (i) this Agreement, which amends and restates the Existing Credit Agreement, is a “significant modification” (within the meaning of Section 1.1001-3 of the U.S. Treasury Regulations) of the outstanding Committed Rate ABR Loans and the outstanding Committed Rate Eurocurrency Loans for such Lenders that elect to convert such outstanding Loans to the Extended Tranche Committed Rate ABR Loans and the Extended Tranche Committed Rate Eurocurrency Loans, and (ii) the “issue price” (as defined in Section 1273(b) of the Code) of the Extended Tranche Committed Rate ABR Loans and the Extended Tranche Committed Rate Eurocurrency Loans is, in each case, equal to such Loan’s “stated redemption price at maturity” (as defined in Section 1273(a)(2) of the Code).  The parties hereto agree not to take any position with a Governmental Authority that is inconsistent with the treatment described in the previous sentence unless required by a “determination” as defined in Section 1313(a) of the Code or otherwise determined by the U.S. Internal Revenue Service.

5.6.           Indemnity.  Each Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or reasonable expense which such Lender may sustain or incur as a consequence of (a) default by such Borrower in making a borrowing of, conversion into or continuation of a Loan after such Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by such Borrower in making any prepayment after such Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making by such Borrower of a prepayment of Eurocurrency Loans or Competitive Advance Loans on a day which is not the last day of an Interest Period or the maturity date, as the case may be, with respect thereto.  Such loss or reasonable expense shall be equal to the sum of (a) such Lender’s actual costs and expenses incurred (other than any lost profits) in connection with, or by reason of, any of the foregoing events and (b) an amount equal to the excess, if any, as reasonably determined by such Lender of (i) its cost of obtaining the funds for the Loan being paid, prepaid, converted or continued (assumed to be the Eurocurrency Rate applicable thereto) for the period from and including the date for such payment, prepayment, conversion or continuation to but excluding the last day of the Interest Period for such Loan over (ii) the amount of interest (as reasonably determined by such Lender) that would be realized by such Lender in reemploying the funds so paid, prepaid, converted or continued for such period or Interest Period, as the case maybe.  A certificate of any Lender setting forth any amount or amounts, including calculations in reasonable detail, that such Lender is entitled to receive pursuant to this subsection 5.6 shall be delivered to the applicable Borrower and shall be conclusive absent manifest error.  This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

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5.7.           Change of Lending Office.  (a)  Each Lender agrees that upon the occurrence of any event giving rise to the operation of subsection 5.4 or 5.5, it will use reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document requested by the Borrowers or designate a different lending office for Extensions of Credit affected by such event or to assign its rights and obligations hereunder to another of its offices, branches or affiliates with the object of avoiding or minimizing the consequences of such event; provided, that such filing, designation or assignment is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no material economic, legal or regulatory disadvantage; and, provided, further, that nothing in this subsection 5.7 shall affect or postpone any of the obligations of the Company or the rights of any Lender pursuant to subsection 5.4 or 5.5.

(b)           In the event that any Lender shall have delivered a notice or certificate pursuant to subsection 5.4 or 5.5, or if any Lender shall default in its obligations to fund any Loans hereunder, then the Company shall have the right, but not the obligation, at its expense, upon notice to such Lender and the Administrative Agent, to replace such Lender with an assignee (in accordance with and subject to the restrictions contained in subsection 12.6), and such Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in subsection 12.6) all its interests, rights and obligations under this Agreement to such assignee; provided, however, that no Lender shall be obligated to make any such assignment unless (i) such assignment shall not violate any Requirement of Law, (ii) such assignee shall pay to the affected Lender in immediately available funds on the date of such assignment the outstanding principal amount of the Loans made by such Lender hereunder and (iii) each Borrower shall pay to the affected Lender in immediately available funds on the date of such assignment the interest accrued to the date of payment on the Loans made by such Lender hereunder to such Borrower and all other amounts accrued for such Lender’s account or owed to it hereunder (including any amount that would be payable to such Lender pursuant to subsection 5.6 if such assignment were, instead, a prepayment).

5.8.           Company Controls on Exposure; Calculation of Exposure; Prepayment if Exposure Exceeds Commitments.  i)  The Company will monitor the borrowings and repayments of Loans by the Borrowers and the issuance of and drawings under Letters of Credit and Time Drafts, with the object of preventing any request for an Extension of Credit that would result in (i) the aggregate amount of the Exposure being in excess of the Commitments, (ii) the aggregate amount of the Original Tranche Exposure being in excess of the Original Tranche Commitments or (iii) the aggregate amount of the Extended Tranche Exposure being in excess of the Extended Tranche Commitments, and of promptly identifying and remedying any circumstance where, by reason of changes in exchange rates, (x) the aggregate amount of the Exposure does exceed the Commitments, (y) the aggregate amount of Original Tranche Exposure does exceed the Original Tranche Commitments or (z) the aggregate amount of the Extended Tranche Exposure does exceed the Extended Tranche Commitments.  In the event that at any time the Company determines that the aggregate amount of the Exposure, the Original Tranche Exposure or the Extended Tranche Exposure, as the case may be, exceeds the aggregate amount of the Commitments, the Original Tranche Commitments or the Extended Tranche Commitments, respectively, by more than 5%, each Borrower will, as soon as practicable but in any event within five (5) Business Days of making such determination, make such repayments or prepayments of Loans made to such Borrower as shall be necessary to cause the aggregate amount of the Exposure, the Original Tranche Exposure or the Extended Tranche Exposure, as the case may be, to no longer exceed the Commitments, the Original Tranche Commitments or the Extended Tranche Commitments, respectively.

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(b)           The Administrative Agent will calculate the aggregate amount of the Exposure, the Original Tranche Exposure and the Extended Tranche Exposure (including the aggregate amount of L/C Obligations) from time to time, and in any event not less frequently than once during each calendar week.  In making such calculations, the Administrative Agent will rely on the information most recently received by it from Lenders in respect of outstanding Competitive Advance Loans and from Issuing Banks in respect of outstanding Letters of Credit (including, with respect to such Issuing Banks, the conversion ratios in respect of the non-Dollar denominated Letters of Credit provided to the Administrative Agent by such Issuing Banks on the fifteenth day and the end of each month (or on the Business Day next succeeding such days)).  Upon making each such calculation, the Administrative Agent will inform the Company of the results thereof and, upon the request of any Lender, inform such Lender of the results thereof.

(c)           In the event that on any date the Administrative Agent calculates that the aggregate amount of the Exposure, the Original Tranche Exposure or the Extended Tranche Exposure, as the case may be, exceeds the aggregate amount of the Commitments, the Original Tranche Commitments or the Extended Tranche Commitments, respectively, by more than 5%, the Administrative Agent will give notice to such effect to the Company.  Within five Business Days after receipt of any such notice, each Borrower will, as soon as practicable but in any event within five Business Days of receipt of such notice, make such repayments or prepayments of Loans made to such Borrower as shall be necessary to cause the aggregate amount of the Exposure, the Original Tranche Exposure or the Extended Tranche Exposure, as the case may be, to no longer exceed the Commitments, the Original Tranche Commitments or the Extended Tranche Commitments, respectively.

(d)           Any prepayment required to be made pursuant to this subsection 5.8 shall be accompanied by payment of amounts payable, if any, pursuant to subsection 5.6 in respect of the amount so prepaid.

5.9.           Tax Confirmation.  (a)  Upon written request of the Additional Borrower, and additionally as provided in paragraph (f) below, the Lenders shall, as soon as reasonably practicable, issue confirmations (each a “Tax Confirmation”), but not more than once a year unless the Company demonstrates to the satisfaction of the Administrative Agent that more than one Tax Confirmation is required in a particular year, in order to enable the Additional Borrower to provide sufficient proof to the German tax authorities about absence of any back-to-back financing within the meaning of Section 8a of the German Corporate Income Tax Act (Körperschaftsteuergesetz).

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(b)           The Additional Borrower will forward to the Lenders such information which may be reasonably required by the Lenders (based on the then applicable practice of the German tax authorities) to enable the Lenders to issue the Tax Confirmation.

(c)           The Tax Confirmations shall not contain any statements that the Lenders are not permitted to issue by law, administrative rule or regulation of the jurisdiction the relevant Lender or any of its affiliates is subject to.

(d)           The Borrowers confirm to each Lender and to the Administrative Agent that the Tax Confirmations will be issued by the Lenders exclusively at the request of the Additional Borrower and solely for providing proof to the German tax authorities of the absence of any back-to-back-financing with respect to the Loan Documents and that neither the Lenders nor the Administrative Agent are responsible for examining the Borrowers’ tax position or for achieving any certain tax treatment of the Borrowers. Furthermore, each Borrower confirms to each Lender and to the Administrative Agent that a Tax Confirmation is not given for the Borrowers to rely on, but only for delivery to the competent tax authorities and that, therefore, no Borrower shall raise any claims against a Lender or the Administrative Agent based on, or in connection with, a (correct or incorrect) Tax Confirmation. No Lender will be, and the Administrative Agent will not be, liable for any loss, expense or any other cost whatsoever incurred or suffered by a Borrower as a consequence of any Tax Confirmation made by a Lender (or by the Administrative Agent on behalf of a Lender); provided, that the Borrowers shall have no obligation hereunder with respect to any loss, expense or other cost arising from the gross negligence or willful misconduct of a Lender (or by the Administrative Agent on behalf of a Lender).

(e)           The Lenders agree to issue the Tax Confirmations in each case substantially in the form attached hereto as Exhibit J (Form of Tax Confirmation).  Any costs and expenses reasonably incurred by any Lender in connection with the provision of the Tax Confirmations will be borne by the Additional Borrower.

(f)           The Lenders will issue an amended form of Tax Confirmation to be reasonably agreed upon in the event that the tax laws (or the official interpretation of them by the German tax administration) applicable as of the Restatement Effective Date are amended. Each Lender is permitted to issue an adjusted Tax Confirmation at any time, and, in particular, in respect of any amendment to the Loan Documents.

(g)           Each of the Company and the Additional Borrower will hold harmless the Lenders or any of them from any claims raised against them by third parties only on the grounds of having issued a Tax Confirmation; provided, that the Borrowers shall have no obligation hereunder with respect to liabilities arising from the gross negligence or willful misconduct of a Lender (or by the Administrative Agent on behalf of a Lender).

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SECTION 6

REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into this Agreement, to make the Loans and to issue and/or participate in the Letters of Credit, each of the Borrowers hereby represents and warrants to the Administrative Agent and each Lender that:

6.1.           Financial Condition.  The audited consolidated balance sheet of the Company and its consolidated Subsidiaries as at June 30, 2008 and the related consolidated statements of income and of cash flows for the fiscal year ended on such date, reported on by KPMG LLP and set forth in the Company’s annual report for the year ended June 30, 2008, as filed with the SEC on Form 10-K, copies of which have heretofore been furnished to each Lender, present fairly the consolidated financial condition of the Company and its consolidated Subsidiaries as at such date, and their consolidated results of operations and cash flows for such fiscal year.  The unaudited consolidated balance sheets of the Company and its consolidated Subsidiaries as of December 31, 2008 and the related unaudited consolidated statements of income and cash flows for the six-month period ended on such date, present fairly the consolidated financial condition of the Company and its consolidated Subsidiaries as of such date, and their consolidated results of operations and cash flows for the six-month period then ended (subject to normal year-end audit adjustments and the absence of footnotes).  All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer of the Company, as the case may be, and as disclosed therein).

6.2.           No Change.  Since December 31, 2008, there has been no development or event which has had or is reasonably expected to have a Material Adverse Effect.

6.3.           Corporate Existence; Compliance with Law.  Each of the Company and its Subsidiaries (a) is duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or other organization, except to the extent, with respect to a Subsidiary, where any failure to maintain existence or good standing would not have a Material Adverse Effect, (b) has the corporate or other organizational power and authority to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation or other entity under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification except to the extent that any failure to so qualify would not reasonably expected to have a Material Adverse Effect and (d) is in compliance with all applicable Requirements of Law except to the extent that any failure to so comply is not reasonably expected to have a Material Adverse Effect.

6.4.           Corporate Power; Authorization; Enforceable Obligations.  Each Loan Party has the corporate or organizational power, as applicable, and authority to make, deliver and perform the Loan Documents to which it is a party and, in the case of each Borrower, to borrow hereunder and has taken all necessary corporate or organizational action, as applicable, to authorize the borrowings on the terms and conditions of this Agreement and to authorize the execution, delivery and performance of the Loan Documents to which it is a party.  No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of the Loan Documents to which a Loan Party is a party, except for any failure to obtain any such consent or authorization or make any such filing in connection with the borrowings hereunder that would not reasonably be expected to have a Material Adverse Effect.  This Agreement has been, and each other Loan Document will be, duly executed and delivered on behalf of each Loan Party that is a party thereto.  This Agreement constitutes, and each other Loan Document when executed and delivered will constitute, a valid and binding obligation of each Loan Party that is a party thereto, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

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6.5.           No Legal Bar.  The execution, delivery and performance of the Loan Documents to which a Loan Party is a party, the borrowings hereunder and the use of the proceeds thereof will not (a) violate any Requirement of Law or Contractual Obligation of the Company or of any of its Subsidiaries except where any such violation would not reasonably expected to result in a Material Adverse Effect or (b) result in the creation or imposition of any Lien (except for Liens created under the Loan Documents) on any of its or their respective properties or revenues pursuant to any such Requirement of Law or Contractual Obligation except where any such creation or imposition of any such Lien would not reasonably be expected to have a Material Adverse Effect.

6.6.           No Material Litigation.  No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Company, threatened by or against the Company or any of its Subsidiaries or against any of its or their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby or (b) which is reasonably expected to have a Material Adverse Effect.

6.7.           No Default.  Neither the Company nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which would reasonably be expected to have a Material Adverse Effect.  No Default or Event of Default has occurred and is continuing.

6.8.           Ownership of Real Property; Liens.  Each of the Company and its Subsidiaries has good and marketable title to, or valid leasehold interests in, all of its material real property, except for minor defects in title and other Liens that do not interfere in any material respect with such Person’s ability to conduct its business as presently conducted.  All such material real properties are free and clear of all Liens, other than Liens permitted by subsection 9.3.

6.9.           Intellectual Property.  The Company and each of its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, technology, know-how and processes required for the conduct of its business as currently conducted except for any such failures to own or license which would not reasonably expected to have a Material Adverse Effect (the “Intellectual Property”).  No claim has been asserted against the Company or any Subsidiary and is pending by any Person challenging the use by the Company or any Subsidiary of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does the Company know of any valid basis for any such claim, except, in each case, for any claims that would not reasonably be expected to have a Material Adverse Effect.  To the knowledge of the Company, the use of such Intellectual Property by the Company and its Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, are not reasonably expected to have a Material Adverse Effect.

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6.10.         Taxes.  Each of the Company and its Subsidiaries has filed or caused to be filed all United States federal income tax returns and all material foreign income, excise and other tax returns which, to the knowledge of the Company, are required to be filed by the Company or any such Subsidiary and has paid or made for the provision of payment of all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property in respect thereof received by the Company or its Subsidiaries and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any amount the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Company or its Subsidiaries, as the case may be) except, in each case, (a) taxes that are being contested in good faith and for which adequate reserves have been provided and (b) other taxes where any such failure to file or any such failure to pay would not reasonably be expected to have a Material Adverse Effect; no tax Lien has been filed in respect of any material amount of unpaid taxes in respect of which, to the knowledge of the Company, any claim is being asserted, except where such claim is not reasonably expected to result in a Material Adverse Effect.

6.11.         Federal Regulations.  No part of the proceeds of any Loans will be used for “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board as now and from time to time hereafter in effect.  If requested by any Lender or the Administrative Agent, the Company will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of said Regulation U and any applicable forms required from time to time thereunder.

6.12.         ERISA.  Except as would not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect, (i) neither a Reportable Event which would reasonably be expected to result in the termination of a Plan nor a failure of any Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each instance whether or not waived, has occurred during the five-year period prior to the date on which this representation is made or deemed made on the date of any Extension of Credit with respect to any Plan; (ii) each Plan and Multiemployer Plan has complied in all material respects with the applicable provisions of ERISA and the Code; (iii) no termination of a Plan has occurred, and no Lien (other than Liens permitted under subsection 9.3) on assets of the Company or any Commonly Controlled Entity in favor of the PBGC or a Plan has arisen, during such five-year period; and (iv) the present value of all accrued benefits under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made on the date of any Extension of Credit, exceed the fair market value of the assets of such Plan allocable to such accrued benefits.  Except as would not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect, (i) neither the Company nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan; (ii) neither the Company nor any Commonly Controlled Entity would become subject to any liability under ERISA if (a) the Company or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made or (b) any such Multiemployer Plan is in Reorganization or Insolvent or is in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA).  The present value (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 106) of the liability of the Company and each Commonly Controlled Entity for accrued post-retirement benefits to be provided to their current and former employees under welfare benefit plans (as defined in Section 3(1) of ERISA) does not, in the aggregate, exceed the fair market value of the assets under all such plans allocable to such benefits by an amount in excess of $25,000,000.

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6.13.         Investment Company Act; Other Regulations.  No Loan Party is an “investment company”, or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.  No Loan Party is subject to regulation under any Federal or State statute or regulation (other than Regulation X of the Board) which limits its ability to incur Indebtedness under the Loan Documents.

6.14.         Subsidiaries.  As of the date of this Agreement, Schedule 6.14 lists all the Subsidiaries of the Company as of the Restatement Effective Date.

6.15.         Purpose of Loans and Letters of Credit.  The proceeds of the Loans and the Letters of Credit shall be used by the Company and its Subsidiaries for general corporate purposes including, without limitation, working capital, letters of credit, repayment, prepayment or purchase of long-term Indebtedness, Investments and Restricted Payments.

6.16.         Accuracy and Completeness of Information.  All written certificates, documents and written statements heretofore furnished by the Company to the Lenders for use in connection with this Agreement, and all such information hereafter furnished by the Company to any Lender for use in connection with this Agreement, will not, at the time delivered, taken as a whole with all other certificates, documents and written statements furnished substantially contemporaneously therewith, contain any untrue statement of a material fact or omit to state a material fact known to the Company and necessary in order to make the statements made or to be made, in the light of the circumstances under which they were or will be made, not misleading.

6.17.         Environmental Matters.  Except to the extent that any of the following are not reasonably expected to have a Material Adverse Effect:

(a)           The facilities and properties owned, leased or operated by the Company or any of its Subsidiaries (the “Properties”) do not to the knowledge of the Company after due inquiry contain and, to the knowledge of the Company during its period of ownership, lease or operation of the Properties, have not previously contained, any Materials of Environmental Concern in amounts or concentrations which (i) constitute a violation of, or (ii) are reasonably expected to give rise to liability on the part of the Company or any of its Subsidiaries under, any applicable Environmental Law.

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(b)           The Properties and all operations at the Properties are in compliance, and during the five-year period prior to the date on which this representation is made or deemed made on the date of any Extension of Credit have been in compliance, with all applicable Environmental Laws; and there is no (i) contamination by Materials of Environmental Concern at, under or about the Properties, or (ii) violation of any Environmental Law with respect to the Properties or the business operated by the Company or any of its Subsidiaries on such Properties (the “Business”), which could interfere with the continued operation of the Properties or impair the fair saleable value thereof.

(c)           Neither the Company nor any of its Subsidiaries has received any written notice of violation, alleged violation, non-compliance, liability or potential liability regarding or compliance or non-compliance with any applicable Environmental Laws with regard to any of the Properties or the Business, nor does the Company have knowledge that any such notice will be received or is being threatened.

(d)           Materials of Environmental Concern have not to the knowledge of the Company after due inquiry been transported or disposed of from the Properties in violation of, or in a manner that would reasonably be expected to give rise to liability on the part of the Company or any of its Subsidiaries under, any applicable Environmental Law, nor have any Materials of Environmental Concern to the knowledge of the Company after due inquiry been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that would reasonably be expected to give rise to liability on the part of the Company or its Subsidiaries under, any applicable Environmental Law.

(e)           No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Company, threatened, under any Environmental Law to which the Company or any Subsidiary is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business.

(f)            There has been no release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of the Company or any Subsidiary in connection with the Properties or otherwise in connection with the Business, in violation of any applicable Environmental Laws.

6.18.         Compliance with Convertible Notes Indenture.  On the Restatement Effective Date, the Company is in compliance with the provisions of the Convertible Notes Indenture, including, without limitation, Section 4.08 thereof and any other limitation on the incurrence of Indebtedness under the Convertible Notes Documents.

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6.19.         Solvency.  Immediately after the consummation of the transactions to occur on the Restatement Effective Date, including the making of each Loan to be made on the Restatement Effective Date and the application of the proceeds of such Loans, and after giving effect to the rights of subrogation and contribution under the Collateral Agreement, (a) the fair value of the assets of the Company and its Subsidiaries on a consolidated basis will exceed their debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the assets of the Company and its Subsidiaries on a consolidated basis will be greater than the amount that will be required to pay the probable liability on their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (c) the Company and its Subsidiaries on a consolidated basis will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured and (d) the Company and its Subsidiaries on a consolidated basis will not have unreasonably small capital with which to conduct the business in which they are engaged, as such business is now conducted and is proposed to be conducted following the Restatement Effective Date.

6.20.        Collateral Matters.  (a)  The Collateral Agreement, upon execution and delivery thereof by the parties thereto, will, to the extent required therein, create in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid and enforceable security interest under the New York UCC in the Collateral (as defined therein) and (i) when the Collateral (as defined therein) constituting certificated securities (as defined in the Uniform Commercial Code) is delivered to the Administrative Agent, together with instruments of transfer duly endorsed in blank, the security interest created under the Collateral Agreement will constitute a fully perfected security interest in all right, title and interest of the pledgors thereunder in such Collateral, prior and superior in right to any other Person, to the extent that such security interest can be perfected under the New York UCC, and (ii) when financing statements in appropriate form are filed in the applicable filing offices, the security interest created under the Collateral Agreement will constitute a fully perfected security interest in all right, title and interest of the Loan Parties in the remaining Collateral (as defined therein) to the extent perfection can be obtained by filing Uniform Commercial Code financing statements, prior and superior to the rights of any other Person, except for rights secured by Liens permitted by subsection 9.3.

(b)           Each Mortgage, upon execution and delivery thereof by the parties thereto, will create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in all the applicable mortgagor’s right, title and interest in and to the Mortgaged Properties subject thereto and the proceeds thereof, and when the Mortgages have been filed in the jurisdictions specified therein, the Mortgages will constitute a fully perfected security interest in all right, title and interest of the mortgagors in the Mortgaged Properties and the proceeds thereof, prior and superior in right to any other Person, but subject to Liens permitted by subsection 9.3.

(c)           Upon the recordation of the IP Security Agreements with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, and the filing of the financing statements referred to in paragraph (a) of this subsection, the security interest created under the Collateral Agreement will constitute a fully perfected security interest in all right, title and interest of the Loan Parties in the Intellectual Property (as defined in the Collateral Agreement) in which a security interest may be perfected by filing in the United States of America, in each case prior and superior in right to any other Person, but subject to Liens permitted by subsection 9.3 (it being understood that subsequent recordings in the United States Patent and Trademark Office or the United States Copyright Office may be necessary to perfect a security interest in such Intellectual Property acquired by the Loan Parties after the Restatement Effective Date).

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(d)           Each Collateral Document, other than any Collateral Document referred to in the preceding paragraphs of this subsection, upon execution and delivery thereof by the parties thereto and the making of the filings and taking of the other actions provided for therein, will, to the extent required therein, be effective under applicable law to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid and enforceable security interest in the Collateral subject thereto, which security interest will, to the extent required therein, constitute a fully perfected security interest in all right, title and interest of the Loan Parties in the Collateral subject thereto, prior and superior to the rights of any other Person, except for rights secured by Liens permitted by subsection 9.3.

SECTION 7

CONDITIONS PRECEDENT

7.1.           Conditions to Effectiveness.  The effectiveness of this Agreement shall be subject to the satisfaction, on or prior to March 31, 2009, of the following conditions precedent:

(a)           Agreement.  The Administrative Agent shall have received this Agreement, executed and delivered by the Majority Lenders, the Company and the Additional Borrower.

(b)           Evidence of Authority.  The Administrative Agent shall have received such documents and certificates as the Administrative Agent may reasonably request relating to the organization, existence and good standing of each Loan Party, the authorization of the transactions contemplated hereby and any other legal matters relating to the Loan Parties, the Loan Documents or such transactions, all in form and substance reasonably satisfactory to the Administrative Agent.

(c)           Legal Opinions.  The Administrative Agent shall have received, with a counterpart for each Lender, the following executed legal opinions:

(i)            the executed legal opinion of Wachtell, Lipton, Rosen & Katz, special New York counsel to the Loan Parties, substantially in the form of Exhibit H-l hereto;

(ii)           the executed legal opinion of Morris, Nichols, Arsht & Tunnell LLP, special Delaware counsel to the Loan Parties, substantially in the form of Exhibit H-2 hereto.

(iii)           the executed legal opinion of the general counsel of the Company, substantially in the form of Exhibit H-3 hereto; and

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(iv)           the executed legal opinions of Jones Day, Hengeler Mueller and McMillan LLP, substantially in the forms of Exhibits H-4-i through iii hereto.

Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.

(d)           Certificate.  The Administrative Agent shall have received a certificate signed by a Responsible Officer of the Company, dated as of the Restatement Effective Date, stating that, on a pro forma basis assuming the Borrowers had incurred Extensions of Credit equal to the aggregate Commitments on the Restatement Effective Date, the Company would be in compliance with the provisions of the Convertible Notes Documents, including, without limitation, Section 4.08 thereof and any other limitation on the incurrence of Indebtedness under the Convertible Notes Indenture.

(e)           The Collateral and Guarantee Requirement shall be satisfied.  The Administrative Agent shall have received a completed Perfection Certificate, dated the Restatement Effective Date and signed by a Responsible Officer of the Company, together with all attachments contemplated thereby, including the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to the Loan Parties in the jurisdictions contemplated by the Perfection Certificate and copies of the financing statements (or similar documents) disclosed by such search.

(f)            The aggregate Exposure shall not exceed the aggregate Commitments, the aggregate Exposure attributable to Loans made to Domestic Loan Parties and to L/C Obligations shall not exceed $180,000,000, and the aggregate Commitments of Lenders that have not elected to become Extended Tranche Lenders pursuant to subsection 1.4 shall not exceed $0.

7.2.           Conditions to Each Extension of Credit.  The agreement of each Lender to make any Extension of Credit requested to be made by it on any date is subject to the satisfaction of the following conditions precedent:

(a)           Representations and Warranties.  Each of the representations and warranties made by the Borrowers in or pursuant to this Agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date (except to the extent any such representations and warranties relate, by their terms, to a specific date, in which case such representations and warranties shall be true and correct in all material respects on and as of such specific date).

(b)           No Default.  No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Extensions of Credit requested to be made on such date.

(c)           At any time when the Convertible Notes Indenture shall not have been amended to eliminate Section 4.08 thereof or to modify such Section 4.08 to permit the incurrence of Indebtedness (as defined therein) under this Agreement in an amount of up to $320,000,000, and additional Indebtedness (as so defined) of the types and at least in the amounts permitted to be incurred under subsection 9.2, regardless of whether the ratio test in such Section 4.08 shall be met, the Administrative Agent shall have received a certificate of a senior financial officer of the Company demonstrating that the Company will be in compliance with such Section 4.08 on a pro forma basis after giving effect to such Extension of Credit and the application of the proceeds thereof.

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Each request by a Borrower for an Extension of Credit hereunder shall constitute a representation and warranty by the Borrowers as of the date on which such Extension of Credit is to be made that the conditions contained in paragraphs (a) and (b) of this subsection have been satisfied.

SECTION 8

AFFIRMATIVE COVENANTS

Each Borrower hereby agrees that, so long as the Commitments remain in effect or any amount is owing by a Borrower to any Lender or the Administrative Agent hereunder the Company shall and (except in the case of delivery of financial information, certifications, reports and notices) shall cause each of its Subsidiaries to:

8.1.           Financial Statements.  Furnish to each Lender:

(a)           within ten (10) Business Days of the availability thereof, but in any event within 90 days after the end of each fiscal year of the Company, a copy of the consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and cash flows for such year, setting forth in each case in comparative form the figures for the previous fiscal year, reported on without a “going concern” or like qualification or exception with respect to such audited consolidated financial statements, by KPMG LLP or other independent certified public accountants of nationally recognized standing (it being understood that the report referred to in this sentence is the report with respect to the Company’s audited consolidated financial statements and not any report with respect to the effectiveness of the Company’s internal controls over financial reporting);

(b)           within ten (10) Business Days of the availability thereof, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Company, commencing with the fiscal quarter ending March 31, 2009, the unaudited consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and cash flows of the Company and its consolidated Subsidiaries for such quarter and for the portion of the Company’s fiscal year ended at such quarter, setting forth in each case in comparative form the figures for the corresponding previous quarter and the corresponding portion of the Company’s previous fiscal year, certified by a Responsible Officer of the Company as being fairly stated in all material respects (subject to normal year-end audit adjustments and the absence of footnotes);

(c)           all such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein); and

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(d)           promptly after the same are sent, copies of all financial statements and reports which the Company sends to its stockholders generally, and promptly after the same are filed, copies of all financial statements and periodic reports which the Company may make to, or file with, the U.S. Securities and Exchange Commission (the “SEC”);

provided, that any documents required to be delivered pursuant to subsection 8.1(a), (b) or subsection 8.2(f) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Company posts such documents, or provides a link thereto, on the Company’s website on the internet at the following website address: www.harman.com; or (ii) on which such documents are posted on the Company’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party or SEC website or whether sponsored by the Administrative Agent); provided that the Company shall notify (which may be by facsimile or electronic mail) the Administrative Agent and each Lender of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents to the extent such Lender or the Administrative Agent reasonably demonstrates that it cannot access or obtain such documents.

8.2.           Certificates; Other Information.  Furnish to each Lender:

(a)           concurrently with the delivery of the financial statements referred to in subsection 8.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating whether to its knowledge there exists on the date of such certificate any Default or Event of Default, and, if any such Default or Event of Default exists, specifying such Default or Event of Default in such certificate;

(b)           concurrently with the delivery of the financial statements referred to in subsections 8.1(a) and (b), a certificate of a Responsible Officer of the Company stating that, to the best of such Officer’s knowledge, whether any Default or Event of Default exists on the date of such certificate and, if any such Default or Event of Default exists, specifying such Default or Event of Default in such certificate;

(c)           within 45 days after the end of each of the first three fiscal quarters in each fiscal year of the Company, and within 90 days after the end of each fiscal year of the Company, a certificate of the chief financial officer of the Company showing in reasonable detail the computations required to calculate the financial covenants set forth in subsection 9.1; and

(d)           promptly, such additional available information regarding the business or financial condition of the Company or any of its Subsidiaries (not otherwise required to be delivered to the Administrative Agent or any Lender under any Loan Document) as any Lender may from time to time reasonably request.

8.3.           Payment of Obligations.  Pay, discharge or otherwise satisfy (or renew or extend) at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except (a) where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Company or its Subsidiaries, as the case may be, or (b) to the extent that any such failure to so pay, discharge or satisfy would not be reasonably expected to have a Material Adverse Effect.

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8.4.           Conduct of Business and Maintenance of Existence.  (a)  Continue to engage in business of the same general type as now conducted by it and other businesses and activities related or incidental thereto and (b) preserve, renew and keep in full force and effect its corporate or other organizational existence and (c) take all reasonable action required to maintain all rights, privileges and franchises required in the conduct of its business, except (x) in the case of clause (b) above, as otherwise permitted pursuant to subsection 9.4 and subsection 9.5 and (y) in the case of clause (c) above, as otherwise permitted pursuant to subsection 9.5 and to the extent any other failure to do so would not reasonably be expected to have a Material Adverse Effect; and comply with all Contractual Obligations and Requirements of Law except to the extent that any failure to comply therewith would not be reasonably expected to have a Material Adverse Effect.

8.5.           Maintenance of Property; Insurance.  Keep all property useful and necessary in its business in good working order and condition (ordinary wear and tear excepted) except for any failures to so maintain such property that would not have a Material Adverse Effect; maintain with financially sound and reputable insurance companies insurance on all such property on an “all risk” basis in a manner reasonably comparable to other similarly situated companies; and furnish to each Lender, upon written request, certificates as to the insurance carried.

8.6.           Inspection of Property; Books and Records; Discussions.  Keep proper books of records and account in which entries which are full, true and correct in all material respects and in conformity with GAAP and all applicable material Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of the Lenders to visit and inspect any of its material properties and examine and make abstracts from any of its books and records at any reasonable time, upon reasonable prior written notice delivered to the Company and as often as may reasonably be desired and to discuss the business, operations, properties and financial condition of the Company and its Subsidiaries with officers and employees of the Company and its Subsidiaries and with its independent certified public accountants; provided that all such inspections shall be coordinated by the Lenders with the Administrative Agent, and by the Administrative Agent with the Company, in order to minimize disruption of the Company’s or any of its Subsidiaries’ business.

8.7.           Notices.  Promptly give notice to the Administrative Agent and each Lender of:

(a)           the occurrence of any Default or Event of Default upon any Responsible Officer obtaining knowledge thereof;

(b)           any (i) default or event of default under any Contractual Obligation of the Company or any of its Subsidiaries or (ii) litigation, investigation or proceeding which may exist at any time between the Company or any of its Subsidiaries and any Governmental Authority, which in any case under (A) clause (i) would reasonably be expected to have a Material Adverse Effect and (B) in respect of clause (ii) above in which there is a reasonable expectation of a determination adverse to the Company or such Subsidiary that would reasonably be expected to have a Material Adverse Effect;

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(c)           any litigation or proceeding against the Company or any of its Subsidiaries (other than as described under clause (b) above) in which there is a reasonable expectation of a determination adverse to the Company or such Subsidiary that would reasonably be expected to have a Material Adverse Effect;

(d)           any of the following events, as soon as possible, and in any event within 30 days after the Company knows thereof:  (i) the occurrence (or, with respect to any Reportable Event for which advance notice to the PBGC is required under ERISA, expected occurrence) of any Reportable Event with respect to any Plan or Multiemployer Plan, a failure of the Company or a Commonly Controlled Entity to make any required contribution to a Plan or Multiemployer Plan, the creation of any Lien (other than Liens permitted under subsection 9.3) on the assets of the Company or any Commonly Controlled Entity in favor of the PBGC or a Plan or Multiemployer Plan or any withdrawal of the Company or a Commonly Controlled Entity from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan, or the determination that such Multiemployer Plan is in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA) or (ii) the institution of proceedings or the notice of the intention to institute proceedings by the PBGC or the Company or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan or Multiemployer Plan, if in the case of any such event under clause (i) and clause (ii) above such event would have a Material Adverse Effect; and

(e)           any other development or event which would reasonably be expected to have a Material Adverse Effect.

Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer of the Company setting forth details of the occurrence referred to therein and stating what action the Company proposes to take with respect thereto.

8.8.           Environmental Laws.  (a)  Comply with all applicable Environmental Laws and obtain and comply with and maintain any and all licenses, approvals, notifications, registrations or permits required to be obtained and maintained by the Company or its Subsidiaries by applicable Environmental Laws, except to the extent that any failure to so obtain, comply or maintain would not be reasonably expected to have a Material Adverse Effect.

(b)           Conduct and complete all investigations and all remedial, removal and other actions in respect of any Materials of Environmental Concern required to be conducted or completed by the Company or its Subsidiaries under Environmental Laws and promptly comply with all lawful orders and directives of all Governmental Authorities applicable to the Company or its Subsidiaries regarding Environmental Laws except to the extent that (i) the same are being contested in good faith by appropriate proceedings and could not be reasonably expected to have a Material Adverse Effect or (ii) any failure to conduct, complete or comply would not be reasonably expected to have a Material Adverse Effect.

8.9.           Additional Borrower.  In the case of the Company, at all times while the Additional Borrower is a borrower hereunder, ensure that the Additional Borrower is a Wholly Owned Subsidiary of the Company.

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8.10.         Information Regarding Collateral.  The Company will furnish to the Administrative Agent prompt written notice of any change (i) in the legal name of any Loan Party, as set forth in its organizational documents, (ii) in the jurisdiction of organization or the form of organization of any Loan Party (including as a result of any merger or consolidation) or (iii) in the organizational identification number, if any, or, with respect to any Loan Party organized under the laws of a jurisdiction that requires such information to be set forth on the face of a Uniform Commercial Code financing statement, the Federal Taxpayer Identification Number of such Loan Party.  No later than 10 Business Days after any change referred to in the preceding sentence, the Company shall confirm to the Administrative Agent that all filings have been made under the Uniform Commercial Code (or that the Company has provided to the Administrative Agent all information required or reasonably requested by the Administrative Agent in order for it to make such filings), and all other actions have been taken, that are required so that such change will not at any time adversely affect the validity, perfection or priority of any Lien on any of the Collateral.

8.11.        Collateral and Guarantee Requirement; Further Assurances.  (a)  The Borrower, the Additional Borrower and each other Loan Party will execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements and other documents), that may be required under any applicable law, or that the Administrative Agent may reasonably request, to cause the Collateral and Guarantee Requirement to be and remain satisfied at all times or otherwise to effectuate the provisions of the Loan Documents, all at the expense of the Loan Parties.  The Borrower will provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Collateral Documents.

(b)           Within 30 days (or such longer period as may be agreed by the Administrative Agent) following the first date after the Restatement Effective Date on which the Convertible Notes Indenture shall have been amended to eliminate Section 4.08 thereof or to modify such Section 4.08 to permit (or otherwise permits) the incurrence of Indebtedness (as defined therein) under this Agreement in an amount at least equal to the aggregate Commitments, the Company shall cause Harman Becker Automotive Systems GmbH to satisfy the Collateral and Guarantee Requirement as a Designated Foreign Subsidiary.

8.12.        Appraisals and Field Examinations.  At the request of the Administrative Agent, the Loan Parties shall, in each case at the sole expense of the Loan Parties, (a) provide the Administrative Agent with appraisals or updates thereof of their material real property, inventory, equipment and other fixed assets from one or more appraisers reasonably selected and engaged by the Administrative Agent, and prepared on a basis reasonably satisfactory to the Administrative Agent, such appraisals and updates to include, without limitation, information required by applicable law and regulations, provided that, except during the continuance of an Event of Default, no Loan Party shall be the subject of an appraisal more than once per fiscal year, and (b) permit the Administrative Agent to conduct, or to engage a third party to conduct, field examinations of the Collateral and related reporting and control systems, provided that, except during the continuance of an Event of Default, such field examinations shall occur no more than once per fiscal year.

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8.13.        Financial Consultant.  At any time after 45 days after the date of this Agreement, upon the request of the Administrative Agent in its sole discretion, the Company shall promptly retain, at the sole expense of the Loan Parties, a financial consulting firm reasonably satisfactory to the Administrative Agent on terms and conditions reasonably satisfactory to the Administrative Agent to (i) review the business operations, financial condition, financial projections and financial statements of the Company and its Subsidiaries and such other matters as the Administrative Agent may reasonably request, (ii) prepare a written report for delivery to the Lenders in respect thereof, which report shall be in form and substance reasonably satisfactory to the Administrative Agent, and (iii) be available to advise on actions to be taken in response to recommendations included in such report.  The Company shall use commercially reasonable efforts to cause such financial consulting firm to deliver its report to the Lenders within 60 days following the date of its engagement.

8.14.        Depository Banks.  At all times after the date 30 days (or such longer period as the Administrative Agent may agree) following the Restatement Effective Date, all deposit accounts (other than Excluded Deposit Accounts) maintained by the Company or any Subsidiary will be maintained with one or more of the Extended Tranche Lenders, provided that if any deposit accounts (other than Excluded Deposit Accounts) are maintained with a bank that ceases to be an Extended Tranche Lender, the Company shall have 30 days (or such longer period as the Administrative Agent may agree) from the date such bank ceases to be an Extended Tranche Lender to replace such deposit accounts with deposit accounts maintained with an Extended Tranche Lender.

SECTION 9

NEGATIVE COVENANTS

Each Borrower hereby agrees that, so long as the Commitments remain in effect or any amount is owing to any Lender or the Administrative Agent hereunder or under any other Loan Document, the Company shall not, directly or indirectly:

9.1.           Financial Condition Covenants.

(a)           Minimum Consolidated EBITDA.  Permit Consolidated EBITDA for any period of four consecutive fiscal quarters of the Company ending on or after June 30, 2010, to be less than the amount set forth below opposite such period:

Period	Minimum Consolidated EBITDA
Four-quarter period ending June 30, 2010	$	100,000,000
Four-quarter period ending September 30, 2010	$	125,000,000
Four-quarter period ending December 31, 2010	$	150,000,000
Four-quarter period ending March 31, 2011	$	175,000,000
Four-quarter period ending June 30, 2011	$	200,000,000
Four-quarter period ending September 30, 2011	$	225,000,000
Four-quarter period ending December 31, 2011	$	250,000,000

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(b)           Minimum Liquidity.  (i) Permit, at any time during any fiscal quarter of the Company, the Liquidity Amount as of such time to be less than the amount set forth opposite such fiscal quarter below:

Fiscal Quarter	Minimum Liquidity Amount
Fiscal quarter ending March 31, 2009	$	250,000,000
Fiscal quarter ending June 30, 2009	$	150,000,000
Fiscal quarter ending September 30, 2009 and each fiscal quarter thereafter	$	100,000,000

(ii) Notwithstanding the foregoing, (x) for the fiscal quarter of the Company ending June 30, 2009, so long as the Liquidity Amount is at all times at least equal to $125,000,000 during such fiscal quarter, and (y) for any fiscal quarter of the Company ending on or after September 30, 2009, so long as the Liquidity Amount is at all times at least equal to $75,000,000, no Event of Default shall arise under this Agreement as a result of the failure of the Company to satisfy the requirements of clause (i) with respect to such fiscal quarter unless such failure shall continue for ten Business Days.

(c)           Minimum Current Assets Coverage Ratio.  Permit, as of the last day of any fiscal quarter of the Company, the ratio of (i) Consolidated Current Assets as of such date to (ii) Secured Funded Debt outstanding as of such date to be equal to or less than 1:00 to 1:00.

9.2.           Limitation on Indebtedness.  Create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any Indebtedness, except:

(a)           Indebtedness created under the Loan Documents;

(b)           Indebtedness of the Company or any Subsidiary to the Company or any other Subsidiary; provided that (A) such Indebtedness shall not have been transferred to any other Person, (B) any such Indebtedness owing by any Loan Party shall be subordinated to the Obligations on terms customary for intercompany subordinated Indebtedness, as reasonably determined by the Administrative Agent, (C) any such Indebtedness owing to any Loan Party shall be evidenced by a promissory note that shall have been pledged pursuant to the Collateral Agreement or other Collateral Document and (D) any such Indebtedness of any Subsidiary that is not a Loan Party to any Loan Party shall be incurred in compliance with subsection 9.7;

(c)           Indebtedness outstanding on the Restatement Effective Date and listed on Schedule 9.2 and any extension, renewal, refinancing, refunding, replacement or restructuring of any such Indebtedness from time to time (in whole or in part), provided that the outstanding principal amount of any such Indebtedness may not be increased, except to the extent such increase is incurred under subsection 9.2(s) to the extent permitted thereunder;

(d)           Indebtedness of any Person which becomes a Subsidiary after the Initial Closing Date, provided that (i) such Indebtedness existed at the time such Person became a Subsidiary and was not created in anticipation thereof and (ii) immediately after such Person becomes a Subsidiary no Event of Default shall have occurred and be continuing; and any extension, renewal, refinancing, refunding, replacement or restructuring of any such Indebtedness from time to time (in whole or in part), provided that the outstanding principal amount of any such Indebtedness may not be increased, except to the extent such increase is incurred under subsection 9.2(s) to the extent permitted thereunder;

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(e)           Indebtedness secured by any Lien permitted by subsection 9.3(g) and any extension, renewal, refinancing, refunding, replacement or restructuring of any such Indebtedness from time to time (in whole or in part), provided that the aggregate principal amount of Indebtedness permitted by this clause (e) shall not exceed $15,000,000 at any time outstanding;

(f)            Guarantee Obligations (other than Guarantee Obligations in respect of the Convertible Notes) arising in respect of guarantees of any Indebtedness permitted under this subsection 9.2 and incurred in compliance with subsection 9.7;

(g)           Indebtedness constituting Investments permitted under subsection 9.7;

(h)           Indebtedness arising in respect of transactions constituting Sale and Lease-Back Transactions permitted under subsection 9.9, provided that the aggregate principal amount of Indebtedness permitted by this clause (h) shall not exceed $10,000,000 at any time outstanding;

(i)            Subordinated Debt, provided that the aggregate principal amount of Indebtedness permitted by this clause (i) shall not exceed $75,000,000 at any time outstanding;

(j)            Indebtedness incurred or arising from or in connection with any bid, performance, surety, statutory, completion, return-of-money or appeal bonds or similar obligations issued, existing or incurred in the ordinary course of business;

(k)           Indebtedness owed to any officers or employees of the Company or any Subsidiary incurred in connection with any Permitted Business Acquisition, provided that the aggregate principal amount of all such Indebtedness shall not exceed $5,000,000 at any time outstanding;

(l)            Indebtedness secured by a Lien on any asset or property at the time of acquisition of such asset or property by the Company or any Subsidiary pursuant to a transaction not prohibited by this Agreement, and any extension, renewal, refinancing, refunding, restructuring or replacement thereof, provided that (i) such Indebtedness (other than any extension, renewal, refinancing, refunding, restructuring or replacement thereof) existed at the time the asset or property was so acquired and was not created in contemplation of the acquisition thereof and (ii) the aggregate principal amount of Indebtedness permitted by this clause (l) shall not exceed $10,000,000 at any time outstanding;

(m)           Indebtedness arising or incurred as a result of or from the adjudication or settlement of any litigation or from any arbitration or mediation award or settlement, in any case involving the Company or any Subsidiary, provided that the judgment, award(s) and/or settlements to which such Indebtedness relates would not constitute an Event of Default under subsection 10(h) of this Agreement;

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(n)           Indebtedness incurred or arising from or as a result of agreements providing for indemnification, deferred payment obligations, purchase price adjustments, earn-out payments or similar obligations;

(o)           Indebtedness arising from or in connection with accounts payable (for the deferred purchase price of property or services) in the ordinary course of business greater than 90 days past the invoice or billing date which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been established by the Company or any Subsidiary in conformity with GAAP;

(p)           (i) Indebtedness of the Company in respect of the Convertible Notes in an aggregate principal amount not to exceed $400,000,000, (ii) Guarantee Obligations of Domestic Subsidiaries incurred after the Restatement Effective Date in respect of the Indebtedness permitted under clause (p)(i), provided that no such Guarantee Obligations shall be permitted to be incurred unless (x) the Convertible Notes Indenture shall have been amended to eliminate Section 4.08 thereof or to modify such Section 4.08 to permit the incurrence of Indebtedness (as defined therein) under this Agreement in an amount of up to $320,000,000 and additional Indebtedness (as so defined) of the types and at least in the amounts permitted to be incurred under this subsection 9.2, regardless of whether the ratio test in such Section 4.08 is met, (y) the Domestic Subsidiaries incurring such Guarantee Obligations are Loan Parties and (z) any agreement evidencing or governing such Guarantee Obligations shall provide for the automatic release of the Guarantee Obligations thereunder of any Domestic Subsidiary upon the Disposition of such Domestic Subsidiary in connection with the enforcement or exercise of any rights or remedies of the Secured Parties and (iii) any Indebtedness of the Company and any Guarantee Obligations of any Domestic Subsidiary that is a Loan Party incurred to refinance the Indebtedness described under clause (p)(i) or (p)(ii), or Indebtedness and Guarantee Obligations previously incurred under this clause (p)(iii), so long as (A) the principal amount of the refinancing Indebtedness is not greater than the Indebtedness being refinanced, together with any premium paid, and accrued interest and reasonable fees in connection therewith thereon and reasonable costs and expenses incurred in connection therewith, (B) none of the refinancing Indebtedness has a scheduled maturity prior to, or weighted average life to maturity shorter than, that of the Indebtedness being refinanced, (C) any agreement evidencing or governing such refinancing Indebtedness and Guarantee Obligations shall provide for the automatic release of any Guarantee Obligations thereunder of any Domestic Subsidiary upon the Disposition of such Domestic Subsidiary in connection with the enforcement or exercise of any rights or remedies of the Secured Parties, (D) the material terms (other than as to interest rate that is not required to be cash pay prior to the date that is 180 days after the Extended Tranche Termination Date) of the refinancing Indebtedness and related Guarantee Obligations, taken as a whole, are at least as favorable to the Company and the Subsidiaries, taken as a whole, and the Lenders as those under the Indebtedness and Guarantee Obligations being refinanced and (E) any agreement evidencing or governing such refinancing Indebtedness and Guarantee Obligations shall (x) permit the incurrence of Indebtedness by the Company and its Subsidiaries under the Loan Documents in an aggregate principal amount of at least $320,000,000 and additional Indebtedness of the types and at least in the amounts permitted to be incurred under this subsection 9.2, regardless of whether any ratio test is met, and (y) not restrict the granting of Liens by the Company or any Subsidiary to secure the Secured Obligations;

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(q)           Indebtedness under Hedging Agreements permitted by subsection 9.14;

(r)            Indebtedness of Foreign Subsidiaries that are not Loan Parties in an aggregate principal amount not to exceed $10,000,000 at any time outstanding, provided that such Indebtedness may not by guaranteed by or otherwise have recourse to any Loan Party; and

(s)           any other Indebtedness (not otherwise permitted under this Agreement), provided that the aggregate principal amount of Indebtedness permitted by this clause (s) shall not exceed $15,000,000 at any time outstanding.

9.3.           Limitation on Liens.  Create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for:

(a)           Liens for taxes, assessments or other charges of any Governmental Authority for claims not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Company or its Subsidiaries, as the case may be, in conformity with GAAP (or, in the case of Foreign Subsidiaries, generally accepted accounting principles in effect from time to time in their respective jurisdictions of incorporation);

(b)           Liens of carriers, shippers, suppliers, vendors, warehousemen, mechanics, materialmen, repairmen and other like Liens arising in the ordinary course of business which are not overdue for a period of more than 90 days or which are being contested in good faith by appropriate proceedings;

(c)           Liens arising in connection with workers’ compensation, unemployment insurance, pension plans or systems or other types of social security or other governmental requirements, Liens securing liability to insurance carriers under insurance or self-insurance arrangements and Liens arising under ERISA to secure contingent liabilities not prohibited under this Agreement;

(d)           Liens securing the payment or performance of bids, tenders, trade contracts (other than for borrowed money), leases, regulatory and statutory obligations, indemnification obligations, surety bonds, tender performance bonds, completion bonds, return-of-money bonds and other obligations of a like nature (including Liens to secure health, safety and environmental obligations) incurred in the ordinary course of business;

(e)           easements, rights-of-way, restrictions, servitudes, encroachments, covenants, reservations, permits, zoning and building ordinances, municipal and local regulations, easement agreements, and similar charges, licenses, concessions, restrictions, conditions or encumbrances on, over or in respect of any property and other similar encumbrances and defects in title which, in the aggregate, are not substantial in amount and which do not materially detract from the value of the properties subject thereto or materially interfere with the conduct of the business of the Company or such Subsidiary;

(f)             Liens in existence on the Restatement Effective Date and any extension, renewal, refinancing, restructuring or replacement from time to time of any such Lien, provided that (i) no such Lien may be extended to cover any additional property, except to the extent such extended Lien is incurred pursuant to subsection 9.3(x) to the extent permitted thereunder, and (ii) that the principal amount of Indebtedness secured thereby is not increased after the Restatement Effective Date (except to the extent any such increase is otherwise permitted under this Agreement);

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(g)           Liens securing Indebtedness permitted by subsection 9.2(e), or other obligations of the Company or any Subsidiaries, incurred to finance the acquisition, construction, development, improvement or leasing of fixed or capital assets or other property, provided that (i) such Liens shall be created substantially simultaneously with the acquisition, construction, development, improvement or leasing of such fixed or capital assets, (ii) such Liens are not extended at any time to encumber any property other than the property financed by such Indebtedness or other obligations (and the proceeds thereof and contract rights, subleases and other rights related thereto), except to the extent such extended Lien is incurred pursuant to subsection 9.3(x) to the extent permitted thereunder, and (iii) the aggregate principal amount of Indebtedness and other obligations secured thereby does not exceed $15,000,000 at any time outstanding (except to the extent any such increase is otherwise permitted under this Agreement);

(h)           Liens consisting of (i) landlord’s Liens under leases to which the Company or any of its Subsidiaries is a party or other Liens on leased property reserved in leases thereof for rent or for compliance with the terms of such leases, (ii) rights reserved to or vested in any Governmental Authority to control or regulate any property of the Company or any of its Subsidiaries, or to use such property in any manner which does not materially impair the use of such property for the purposes for which it is held by the Company or any such Subsidiary, (iii) obligations or duties to any Governmental Authority with respect to any franchise, grant, license, lease or permit and the rights reserved or vested in any Governmental Authority or public utility to terminate any such franchise, grant, license, lease or permit or to condemn or expropriate any property, and (iv) zoning laws and ordinances and municipal regulations;

(i)             Liens in favor of customs and revenue authorities arising by operation of law and arising from or in connection with the payment of customs duties in connection with the importation of goods;

(j)             Liens on the property or assets of, or on the Capital Stock in, any Person which becomes a Subsidiary after the Initial Closing Date securing Indebtedness permitted by subsection 9.2(d) in existence at the time such Person became a Subsidiary, provided that (i) such Liens existed at the time such Person became a Subsidiary and were not created in anticipation thereof, (ii) any such Lien is not extended to cover any property or assets of such Person after the time such Person becomes a Subsidiary, except to the extent such extended Lien is incurred pursuant to subsection 9.3(x) to the extent permitted thereunder, and (iii) the principal amount of Indebtedness secured thereby is not increased (except to the extent any such increase is otherwise permitted under this Agreement);

(k)           Liens on the property or assets of any Person existing at the time such Person is merged or consolidated with or into, the Company or any Subsidiary or at the time of a sale of the properties and assets of such Person as an entirety or substantially as an entirety to the Company or any Subsidiary, and Liens on any property or assets first acquired by the Company or any Subsidiary after the Initial Closing Date, provided that (i) no such Lien shall be extended to cover any property other than the property initially subject thereto and improvements thereto, except to the extent such extended Lien is incurred pursuant to subsection 9.3(x) to the extent permitted thereunder, and (ii) the principal amount of Indebtedness secured by any such Lien is then permitted by this Agreement;

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(l)            Liens on goods and inventory acquired by the Company or any Subsidiary in the ordinary course of business securing the payment to the seller of such goods or inventory of the purchase price therefor, provided, that such Liens are not extended to encumber any goods and inventory other than goods and inventory to which such purchase price relates, except to the extent such extended Lien is incurred pursuant to subsection 9.3(x) to the extent permitted thereunder;

(m)          Liens arising in connection with letters of credit issued for the account of the Company or a Subsidiary securing the indemnification or reimbursement obligations in respect of such letters of credit, provided, that such Liens are not extended to encumber any property other than the property being acquired through payments made under such letters of credit or the documents of title and shipping and insurance documents relating to such property, except to the extent such extended Lien is incurred pursuant to subsection 9.3(x) to the extent permitted thereunder;

(n)           Liens on intellectual property acquired by the Company or a Subsidiary (such as software) securing the obligation of the Company or such Subsidiary to make royalty or similar payments to the seller of such intellectual property, provided, that such Liens are not extended to encumber any intellectual property other than the intellectual property to which such payments relate, except to the extent such extended Lien is incurred pursuant to subsection 9.3(x) to the extent permitted thereunder;

(o)           Liens consisting of judgment or judicial attachment Liens and Liens securing contingent obligations on appeal or other bonds posted in connection with court proceedings or judgments, awards or settlements that do not constitute an Event of Default under subsection 10(h) of this Agreement;

(p)           Liens arising under or with respect to banker’s liens, rights of set-off or similar rights with respect to deposit accounts and securities accounts;

(q)           Liens constituting rights of first refusal, options or other contractual rights to sell, assign or otherwise Dispose of any assets or property, or any interest therein;

(r)            Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any of its Subsidiaries in the ordinary course of business of the Company or any of its Subsidiaries;

(s)           Liens on the products and proceeds (including, without limitation, insurance condemnation and eminent domain proceeds) of and accessions to, and contract or other rights (including rights under insurance policies and product warranties) derivative of or relating to, property subject to Liens under any of the paragraphs of this subsection 9.3;

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(t)            any extension, renewal, refinancing, restructuring or replacement (or successive extensions, renewals, refinancings, restructurings or replacements), as a whole or in part, of any Lien referred to in the foregoing clauses (d), (f), (g), (h), (j), (k), (l), (m) and (n), inclusive; provided that (i) no such extension, renewal, refinancing, restructuring or replacement shall result in an increase in the liabilities secured thereby (except to the extent such increase would otherwise be permitted under this Agreement) and (ii) such extension, renewal, refinancing, restructuring or replacement Lien shall not be extended to cover any property other than the same property that secured the Lien so extended, renewed, refinanced, restructured or replaced (plus additions, accessions, replacements and improvements to such property), except to the extent such extended Lien is incurred pursuant to subsection 9.3(x) to the extent permitted thereunder;

(u)           Liens created under the Loan Documents;

(v)           Liens on assets of the Company and Domestic Subsidiaries securing Indebtedness permitted under subsection 9.2(p), provided that no such Liens shall be permitted to be incurred unless (x) the Convertible Notes Indenture shall have been amended to eliminate Section 4.08 thereof or to modify such Section 4.08 to permit the incurrence of Indebtedness (as defined therein) under this Agreement in an amount of up to $320,000,000 and additional Indebtedness (as so defined) of the types and at least in the amounts permitted to be incurred under subsection 9.2, regardless of whether the ratio test in such Section 4.08 is met, (y) such Liens do not extend to assets that are not subject to Liens securing the Secured Obligations and (z) such Liens are subordinated on a second priority basis to the Liens securing the Secured Obligations pursuant to an intercreditor agreement approved by the Majority Extended Tranche Lenders;

(w)           Liens on assets of Foreign Subsidiaries that are not Loan Parties securing Indebtedness permitted under subsection 9.2(r); and

(x)            any other Liens (not otherwise permitted under this Agreement) which secure obligations not exceeding, in the aggregate $10,000,000 at any time outstanding.

9.4.           Limitation on Fundamental Changes.  Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all of its property as an entirety, business or assets, or permit any Subsidiary to do any of the foregoing, except:

(a)           any direct or indirect Subsidiary of the Company (other than the Additional Borrower) may be merged or consolidated with or into the Company (provided that the Company shall be the continuing or surviving corporation);

(b)           any direct or indirect Subsidiary of the Company may be merged with or into any one or more Subsidiaries of the Company (provided that (i) if any party to such merger is a Subsidiary Loan Party, one or more Subsidiary Loan Parties shall be the continuing or surviving Person or Persons (as applicable), (ii) if the merger involves a Wholly Owned Subsidiary, a Wholly Owned Subsidiary shall be the continuing or surviving Person and (iii) if the merger involves the Additional Borrower, the Additional Borrower shall be the continuing or surviving Person);

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(c)           any Subsidiary (other than the Additional Borrower) may sell, lease, transfer or otherwise dispose of any, all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Company or any other Subsidiary (provided that a Subsidiary Loan Party may only sell, lease, transfer or otherwise dispose of any, all or substantially all of its assets to a Loan Party);

(d)           the Company and any Subsidiary may consummate (i) any transactions permitted by subsection 9.5 and (ii) any transactions permitted by subsection 9.7; and

(e)           any Subsidiary may wind-up, liquidate or dissolve so long as (i) the total value of the assets of such Subsidiary are less than $2,000,000 and (ii) no Default or Event of Default shall then exist.

9.5.           Limitation on Sale of Assets.  Convey, sell, lease, assign, transfer or otherwise dispose of (each a “Disposition”), or permit any Subsidiary to make a Disposition of, any of its respective property, business or assets (including, without limitation, receivables and leasehold interests but excluding Capital Stock of the Company), whether now owned or hereafter acquired, or permit any Subsidiary to issue or sell any shares of such Subsidiary’s Capital Stock to any Person, except:

(a)           Dispositions of assets and property that are (i) obsolete, worn, damaged, uneconomic or otherwise deemed by the Company or any Subsidiary to no longer be necessary or useful in the operation of the Company’s or such Subsidiary’s current or anticipated business or (ii) replaced by other assets or property of similar suitability and value;

(b)           Dispositions of cash and Cash Equivalents;

(c)           Dispositions of goods and inventory in the ordinary course of business;

(d)           Dispositions of accounts receivable (i) in the ordinary course of business in connection with the compromise or collection thereof, (ii) deemed doubtful or uncollectible in the reasonable discretion of the Company or any Subsidiary, (iii) obtained by the Company or any Subsidiary in the ordinary course of business or the settlement of joint interest billing accounts in the ordinary course of business, or (iv) granted to settle collection of accounts receivable or the sale of defaulted accounts arising in the ordinary course of business in connection with the compromise or collection thereof and not in connection with any financing transaction;

(e)           any other Disposition (not otherwise permitted under this Agreement) of any assets or property, provided that all Dispositions made in reliance on this clause shall be made for fair value and at least 75% cash consideration;

(f)            Dispositions, and issuances or sales of shares of Capital Stock of any Subsidiary, to the Company or any Subsidiary, provided that any such Dispositions or issuances or sales of shares of Capital Stock involving a Subsidiary that is not a Loan Party shall be made in compliance with subsections 9.7 and 9.8;

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(g)           [Reserved];

(h)           licenses and sublicenses by the Company and the Subsidiaries of intellectual property in the ordinary course of business;

(i)             [Reserved];

(j)             Dispositions arising as a result of (i) the granting or incurrence of Liens permitted under subsection 9.3, (ii) transactions permitted under subsection 9.4, (iii) transactions constituting Investments permitted under subsection 9.7, or (iv) transactions constituting the declaration and making of Restricted Payments permitted under subsection 9.6 of this Agreement;

(k)            Dispositions constituting terminations or expirations of leases, licenses and other agreements in the ordinary course of business; and

(l)             Dispositions arising from or in connection with any Sale and Lease-Back Transactions permitted under subsection 9.9 that is consummated substantially contemporaneously with any such Disposition by the Person acquiring such assets or property.

9.6.           Limitation on Restricted Payments.  Declare or pay any dividend, or permit any Subsidiary to declare or pay any dividend, (other than dividends payable solely in Capital Stock (other than Disqualified Stock) of the Company (or in stock options or warrants convertible into Capital Stock (other than Disqualified Stock) of the Company)) on, or make, or permit any Subsidiary to make, any payment as consideration for the purchase, redemption, defeasance, retirement or other acquisition for value of, any shares of any class of Capital Stock of the Company or any Subsidiary or any warrants or options to purchase any such Capital Stock, whether now or hereafter outstanding, or make, or permit any Subsidiary to make, any other distribution in respect of any such Capital Stock, either directly or indirectly, whether in cash or property or in obligations of the Company or any Subsidiary (collectively, “Restricted Payments”), provided that, notwithstanding the foregoing, (a) any Subsidiary may make Restricted Payments on a pro rata basis to the holders of its Capital Stock (or on terms more favorable to the Company or any other Loan Party or, if neither the Company nor any other Loan Party is a shareholder of such Subsidiary, on terms more favorable to any other Subsidiary) and (b) the Company may declare and pay cash dividends not exceeding $5,000,000 in the aggregate.

9.7.           Limitation on Investments.  Make any advance (other than demand deposits), loan, extension of credit or capital contribution to, or incur any Guarantee Obligations in respect of obligations of, or purchase for value any Capital Stock, bonds, notes, debentures or other securities of, any Person (collectively, “Investments”), or permit any Subsidiary to do any of the foregoing, except:

(a)           Investments constituting advances and extensions of trade credit in the ordinary course of business;

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(b)           Investments in cash and Cash Equivalents;

(c)           Investments existing on the Restatement Effective Date and described on Schedule 9.7 and any renewals, refinancings or restructurings thereof, provided that the original amount of any such Investment is not increased (except to the extent any such increase would be permitted under another provision of this subsection 9.7);

(d)           Permitted Business Acquisitions;

(e)            Investments constituting loans, advances and other extensions of credit to directors, officers and employees of the Company or any of its Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business in an aggregate amount for the Company and its Subsidiaries not to exceed $1,000,000 at any one time outstanding;

(f)             Investments by (i) the Company or any Subsidiary in the Company or any other Loan Party, (ii) any Subsidiary that is not a Loan Party in any other Subsidiary that is not a Loan Party, and (iii) any Loan Party in any Subsidiary that is not a Loan Party, provided that Investments made pursuant to this clause (iii) shall be in cash and the aggregate amount thereof shall be not exceed the Permitted Investment Amount at any time outstanding;

(g)           Investments made as a result of the receipt of non-cash consideration (including Indebtedness) received in connection with any Disposition permitted under subsection 9.5;

(h)           Investments arising from the repurchase or redemption of Capital Stock or Indebtedness or the conversion of Indebtedness to Capital Stock in any transaction or manner not otherwise prohibited under this Agreement;

(i)             Investments made with respect to any Plan;

(j)             Investments (i) arising from or in connection with transactions by the Company or any Subsidiary with customers, suppliers, vendors or other account debtors in the ordinary course of business, including endorsements of negotiable instruments and debt obligations and (ii) made or received in connection with the bankruptcy, reorganization or liquidation of, or the settlement of delinquent obligations or disputes with, any customers, suppliers, vendors or other account debtors;

(k)            Investments in joint ventures entered into in the ordinary course of business (including Investments by the Company or any Subsidiary in any joint venture or similar arrangement with Navis Co., Ltd.);

(l)             Investments arising as a result of Guarantee Obligations created under the Loan Documents and Guarantee Obligations permitted by subsection 9.2 (other than subsection 9.2(b), (f) or (g)); and

(m)           Any other Investments by the Company or any Subsidiary in any other Person in an amount not to exceed $5,000,000 at any time outstanding.

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9.8.           Limitation on Transactions with Affiliates.  Enter into, or permit any Subsidiary to enter into, any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service (other than any transaction (i) otherwise permitted under this Agreement, (ii) solely involving Loan Parties, (iii) solely involving Subsidiaries that are not Loan Parties and (iv) among the Company and its Subsidiaries entered into in the ordinary course of business), with any Affiliate, unless such transaction is (a) in the ordinary course of the Company’s or such Subsidiary’s business and (b) upon fair and reasonable terms no less favorable to the Company or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person which is not an Affiliate.

9.9.           Limitation on Sales and Leasebacks.  Enter into, or permit any Subsidiary to enter into, any arrangement with any Person (other than the Company or another Subsidiary) providing for the leasing by the Company or such Subsidiary of real or personal property which is to be sold or transferred by the Company or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Company or such Subsidiary (a “Sale and Lease-Back Transaction”), except for (i) Sale and Lease-Back Transactions having an aggregate Value not exceeding $10,00,000 for all such Sale and Lease-Back Transactions, or (ii) Sale and Lease-Back Transactions between the Loan Parties or between Subsidiaries that are not Loan Parties.

9.10.        Limitation on Changes in Fiscal Year.  Permit the fiscal year of the Company to end on a day other than June 30.

9.11.        Limitation on Material Guarantee Obligations in respect of Indebtedness of Subsidiaries.  Create, incur or permit to exist, or permit any Subsidiary to create, incur or permit to exist, any material Guarantee Obligation in respect of any Indebtedness of any Subsidiary, except to the extent any such material Guarantee Obligation would not violate subsection 9.2 or subsection 9.7.

9.12.        Limitation on Amendment of Material Documents.  Amend, modify or waive, or permit any Subsidiary to amend, modify or waive, any provision of (a) any Convertible Notes Document or (b) any agreement or instrument governing or evidencing any other Material Indebtedness, in each case in any manner that shortens the maturity or weighted average life to maturity of such Indebtedness or imposes additional covenant restrictions on the Borrower or any Subsidiary that could otherwise reasonably be expected to be adverse in any material respect to the Borrower, any Subsidiary or the Lenders; provided, that the foregoing shall not prohibit amendments, modifications or waivers in respect of any Convertible Notes Document to give effect to the provisions set forth in subsections 9.2(p) and 9.3(v).

9.13.        Limitation on Prepayments of Indebtedness.  Make or agree to pay or make, or permit any Subsidiary to make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on the Convertible Notes or any other Material Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of the Convertible Notes or any other Material Indebtedness, except:

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(a)           regularly scheduled interest and principal payments as and when due in respect of such Indebtedness, other than payments in respect of Subordinated Indebtedness prohibited by the subordination provisions thereof;

(b)           refinancings of Indebtedness to the extent permitted by subsection 9.2;

(c)           payments of secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the assets securing such Indebtedness in transactions permitted hereunder; and

(d)           payments of or in respect of Indebtedness made solely with Capital Stock (other than Disqualified Stock) of the Company (or stock options or warrants convertible into Capital Stock (other than Disqualified Stock) of the Company).

9.14.        Hedging Agreements.  Enter into, or permit any Subsidiary to enter in, any Hedging Agreement, except (a) Hedging Agreements entered into to hedge or mitigate risks to which the Company or any Subsidiary has actual exposure (other than in respect of Capital Stock or Indebtedness of the Company or any Subsidiary) and (b) Hedging Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Company or any Subsidiary.

9.15.        Limitation on Acquisition of Certain Collateral.  Form or otherwise acquire any Subsidiary, or purchase or otherwise acquire any Capital Stock, indebtedness, bonds, notes, debentures or other securities of, any Person, or permit any Loan Party to do any of the foregoing, in each case that would, but for the last sentence of the definition of the term “Collateral and Guarantee Requirement”, require the creation of any security interest or the provision of any guarantee pursuant to the Collateral and Guarantee Requirement that would violate Section 4.08 of the Convertible Notes Indenture.

9.16.        Maximum Capital Expenditures.  ii) Allow the aggregate amount of Capital Expenditures made by the Company and the Subsidiaries in any period of four consecutive fiscal quarters of the Company to be more than the amount set forth below opposite such period:

Period	Amount
Four-quarter period ending March 31, 2009	$	125,000,000
Four-quarter period ending June 30, 2009 and each four-quarter period thereafter	$	95,000,000

(b)           The amount of Capital Expenditures set forth in subsection 9.16(a) in respect of any period of four consecutive fiscal quarters of the Company shall be increased (but not decreased) by (i) 50% of the amount of unused Capital Expenditures for the immediately preceding period of four consecutive fiscal quarters less (ii) the amount of unused Capital Expenditures carried forward to such immediately preceding period of four consecutive fiscal quarters pursuant to this paragraph; provided that notwithstanding the foregoing, the amount of Capital Expenditures permitted in respect of any period of four consecutive fiscal quarters of the Company shall in no event exceed $125,000,000.

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SECTION 10

EVENTS OF DEFAULT

If any of the following events shall occur and be continuing:

(a)           A Borrower shall fail to pay any principal of any Loan or any Reimbursement Obligation when due in accordance with the terms thereof or hereof; or a Borrower shall fail to pay any interest on any Loan, or any other amount payable hereunder, within five days after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or

(b)           Any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or which is contained in any certificate, document or financial or other written statement furnished by it at any time under or in connection with this Agreement shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or

(c)           The Company shall default in the observance or performance of any agreement contained in subsection 8.7(a), 8.9, 8.11(b) or 8.14 or Section 9; or

(d)           Any Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this subsection), and such default shall continue unremedied for a period of 30 days after receipt of written notice from the Administrative Agent thereof; or

(e)            (i)  The Company or any of its Subsidiaries shall fail to make any payment (whether of principal, interest, termination payment or other payment obligation and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable (giving effect to any period of grace); or (ii) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf, or, in the case of any Hedging Agreement, the applicable counterparty, to cause such Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or, in the case of any Hedging Agreement, to cause the termination thereof; provided that this clause (e)(ii) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the assets securing such Indebtedness;

(f)            (i) The Company or any of its Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts generally, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or substantially all of its assets, or the Company or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Company or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Company or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) a Borrower shall take any written action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) a Borrower shall generally not, or shall admit in writing its inability to, pay its debts as they become due; or

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(g)            (i) The occurrence of any non-exempt “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan or Multiemployer Plan with respect to which the Company or any Commonly Controlled Entity is a “disqualified person” (within the meaning of Section 4975 of the Code) or a “party in interest” (within the meaning of Section 3(14) of ERISA) or could otherwise reasonably be expected to be liable, (ii) any failure of a Plan to meet the minimum funding standards (as defined in Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each instance, whether or not waived, or any Lien (other than any Lien permitted under subsection 9.3) in favor of the PBGC or a Plan shall arise on the assets of the Company or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings under Title IV of ERISA shall commence to have a trustee appointed, or a trustee shall be appointed under Title IV of ERISA, to administer or to terminate, any Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Majority Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Plan shall terminate for purposes of Title IV of ERISA, or (v) the Company or any Commonly Controlled Entity shall incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan, or the determination that such plan is in “critical” or “endangered” status (as defined in Section 432 of the Code or Section 305 of ERISA); and in each case in clauses (i) through (v) above, the occurrence of any such event or condition, together with all other such events or conditions existing at the time of such occurrence, if any, would reasonably be expected to have a Material Adverse Effect; or

(h)           One or more final judgments or decrees of a court shall be entered against the Company or any of its Subsidiaries for the payment of money in an aggregate amount (to the extent not adequately covered by insurance) of the Dollar Equivalent Amount of $30,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof;

(i)            Any Change of Control shall occur;

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(j)             Any Guarantee Obligation purported to be created under any Loan Document shall cease to be, or shall be asserted by any Loan Party not to be, in full force and effect, except (i) as permitted under the Loan Documents or (ii) pursuant to the terms of the Loan Documents; or

(k)            Any Lien purported to be created under any Collateral Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any material Collateral, with the priority required by the applicable Collateral Document, except (i) as permitted under, or pursuant to the terms of, the Loan Documents or (ii) as a result of the Administrative Agent’s failure to maintain possession of any stock certificate, promissory note or other instrument delivered to it under the Collateral Agreement.

then, and in any such event, subject to the provisions of subsection 2.12, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) of this subsection with respect to a Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable by the applicable Borrower as provided herein, and (B) if such event is any other Event of Default, either or both of the following actions may be taken:  (i) with the consent of the Majority Lenders, the Administrative Agent may, or upon the request of the Majority Lenders, the Administrative Agent shall, by notice to each Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Majority Lenders, the Administrative Agent may, or upon the request of the Majority Lenders, the Administrative Agent shall, by notice to each Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable by the applicable Borrower as provided herein forthwith, whereupon the same shall immediately become due and payable by the applicable Borrower as provided herein.

Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived.

SECTION 11

THE ADMINISTRATIVE AGENT AND THE ARRANGER

11.1.         Appointment.  Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

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11.2.         Delegation of Duties.  The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents, advisors (of the type contemplated by any Loan Document to be engaged by the Administrative Agent) or attorneys-in-fact appointed as such by the Administrative Agent and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  The exculpatory provisions of this Section 11 shall apply to any such agent, advisor and attorney-in-fact of the Administrative Agent.

11.3.         Exculpatory Provisions.  Neither the Administrative Agent nor any of its officers, directors, employees, agents, advisors (of the type contemplated by any Loan Document to be engaged by the Administrative Agent), attorneys in fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document with the consent of or at the request of the Majority Lenders or in the absence of its or such Person’s gross negligence or willful misconduct or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrowers or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of a Borrower to perform its obligations hereunder or thereunder.  The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Borrowers.

11.4.         Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent or otherwise authenticated by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Company), independent accountants and other experts selected by the Administrative Agent.  The Administrative Agent may deem and treat the payee of any note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent.  The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with the written request of the Majority Lenders (to the extent that the Majority Lenders make any such request in accordance with the Loan Documents), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.

11.5.           Notice of Default.  The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders.  The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Majority Lenders; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

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11.6.         Non-Reliance on Administrative Agent and Other Lenders.  Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, advisors, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Borrowers, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender.  Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrowers and made its own decision to make its Loans hereunder and enter into this Agreement.  Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrowers.  Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrowers which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, advisors, attorneys-in-fact or Affiliates.

11.7.         Indemnification.  The Lenders agree to indemnify the Administrative Agent and the Arranger in their capacity as such (to the extent not reimbursed by the Borrowers and without limiting the obligation of the Borrowers to do so), ratably according to their respective Commitment Percentages in effect on the date on which indemnification is sought (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with their Commitment Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, claims, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, claims, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the Administrative Agent’s gross negligence or willful misconduct.  The agreements in this subsection shall survive the payment of the Loans and all other amounts payable hereunder.

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11.8.        Administrative Agent in Its Individual Capacity.  The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrowers as though the Administrative Agent were not the Administrative Agent hereunder and under the other Loan Documents.  With respect to the Loans made by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms “Lender” and “Lenders” shall include the Administrative Agent in its individual capacity.

11.9.         Successor Administrative Agent.  The Administrative Agent may at any time give notice of its resignation to the Lenders, each Issuing Bank and the Company.  The Majority Lenders shall, within ten (10) days after receipt of any such notice of resignation, in consultation with the Company, appoint from among the Lenders a successor agent for the Lenders, which successor agent shall, unless an Event of Default shall then be continuing, be subject to approval by the Company (such approval not to be unreasonably withheld), whereupon such successor agent shall succeed to and become vested with all of the rights, powers and duties of the retiring Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon the date of such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent under the Loan Documents shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans.  The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable by the Borrowers to the retiring Administrative Agent unless otherwise agreed between the Borrowers and such successor.  After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

11.10.       The Arranger.  The Arranger, in such capacity, shall have no duties or responsibilities, and shall incur no obligations or liabilities, under this Agreement or the other Loan Documents.

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SECTION 12

MISCELLANEOUS

12.1.         Amendments and Waivers Generally; Amendments to Schedule.  (a)  Neither this Agreement nor any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this subsection.  The Majority Lenders and the Borrowers may, or, with the written consent of the Majority Lenders, the Administrative Agent and the Borrowers may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for any purpose or (ii) waive, on such terms and conditions as the Majority Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (A) reduce the principal amount or extend the final scheduled date of maturity of any Loan or of any installment thereof, or reduce the stated rate of any interest or fee payable hereunder (except (x) in connection with any waiver of applicability of any increase in interest rates during the continuance of an Event of Default (which waiver shall be effective with the consent of the Majority Lenders) and (y) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or fees for purposes of this clause (A)) or extend the scheduled date of any payment thereof or increase the amount or extend the expiration date of any Lender’s Commitments, in each case without the consent of each Lender directly affected thereby (except for adjustments from time to time in accordance with this Agreement), (B) amend, modify or waive the voting rights of any Lender under this subsection without the written consent of such Lender, (C) reduce the percentage specified in the definition of Majority Lenders (or in any provision providing for a vote by any Class of Lenders) without the written consent of all the Lenders (or all Lenders of such Class, as the case may be), (D) consent to the assignment or transfer by a Borrower of any of its rights and obligations under this Agreement and the other Loan Documents without the written consent of all the Lenders, (E) change any provision of this Agreement or any other Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders with Commitments, Company Obligations or Additional Borrower Obligations of any Class differently than those with Commitments, Company Obligations or Additional Borrower Obligations of any other Class, without the written consent of Lenders holding a majority in interest of the Commitments and outstanding Loans of the adversely affected Class, or (F) amend, modify or waive any provision of Section 11 without the written consent of the then Administrative Agent.  Notwithstanding any of the foregoing, (i) the portions of the Fee Letter pertaining solely to any fees payable by the Borrowers to the Administrative Agent may be amended, modified, supplemented or waived in a written instrument signed only by the Borrowers and the Administrative Agent; (ii) only the consent of the applicable Lender shall be required to reduce the principal amount of, or the rate of interest on, any Competitive Advance Loan of such Lender, or any fees or other amounts payable with respect thereto or change the maturity date or repayment schedule thereof; (iii) no Lender in default of its obligations under this Agreement shall have any right to approve or disapprove of any amendment, modification, waiver or consent hereunder, except that the Commitment of such defaulting Lender may not be increased or extended without the consent of such defaulting Lender; (iv) the terms and provisions of any Letter of Credit and any Time Draft may be amended, modified, supplemented or waived in a written instrument signed only by the Issuing Bank that issued such Letter of Credit or Time Draft (as applicable) and the Company (except to the extent provided in subsection 4.1(a)(proviso) and 4.1(b)(ii)); (v) the percentages contained in the definitions of “Company Percentage” and “Additional Borrower Percentage” may be amended in accordance with the definitions thereof without any consent of the Administrative Agent or any Lender so long as at all times the percentages in both such definitions shall equal 100% in the aggregate; and (vi) any amendment, modification, waiver or consent of this Agreement or any other Loan Document that by its terms affects the rights or duties under this Agreement or such other Loan Document of one Class of Commitments and Loans (but not all Classes of Commitments and Loans) may be effected by a written instrument signed only by the Borrowers and the requisite percentage in interest of the affected Lenders under the applicable Class.

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(b)           Schedules II and IV may be amended as follows:

(i)             Schedule II will be amended to change administrative information contained therein (other than any interest rate definition, Funding Time, Payment Time or notice time contained therein), upon execution and delivery by the Company and the Administrative Agent of a Schedule Amendment providing for such amendment.

(ii)            Schedule II will be amended to amend or modify any Funding Time, Payment Time or notice time contained therein, upon execution and delivery by the Company, the Majority Lenders and the Administrative Agent of a Schedule Amendment providing for such amendment.

(iii)           Schedule II will be amended to change any interest rate definition contained therein or to add additional Available Foreign Currencies (and related interest rate definitions and administrative information), upon execution and delivery by the Company, all the Lenders and the Administrative Agent of a Schedule Amendment providing for such amendment.

(iv)           Schedule IV will be amended to designate other Lenders as additional Issuing Banks, and add administrative information with respect thereto, upon execution and delivery by the Company, the Administrative Agent and such additional Issuing Bank of a Schedule Amendment providing for such amendment.

(v)            Schedule IV will be amended to change administrative information with respect to Issuing Banks, upon execution and delivery by the Company, the Administrative Agent and such Issuing Bank, as the case may be, of a Schedule Amendment providing for such amendment.

(c)           Any waiver and any amendment, supplement or modification obtained or made in accordance with subsection 12.1(a) or (b) shall apply equally to each of the Lenders and shall be binding upon the Borrowers, the Lenders, the Issuing Banks, the Administrative Agent and all future holders of the Loans.  In the case of any waiver, the Borrowers, the Lenders, the Issuing Banks, and the Administrative Agent shall be restored to their former positions and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

(d)           Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent is hereby irrevocably authorized by each Lender (without any notice to or consent of any Lender unless expressly required by subsection 12.1) to take any action reasonably requested by the Borrowers to the extent necessary to permit the consummation of any transaction permitted by the Loan Documents or that has been consented to in accordance with subsection 12.1.

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(e)           Notwithstanding anything to the contrary contained herein or in any other Loan Document, in the event all the Lenders shall have elected pursuant to subsection 1.4 to become Extended Tranche Lenders, the Administrative Agent and the Company may, during the period of 60 days following the Restatement Effective Date, upon notice to the Lenders (but without the consent of any Lender or other Person), amend and restate this Agreement and the other Loan Documents (i) to  eliminate provisions relating solely to Original Tranche Commitments and Original Tranche Loans, (ii) to eliminate terminology distinguishing the Extended Tranche Commitments and Extended Tranche Loans from the Original Tranche Commitments and Original Tranche Loans and (c) to make other conforming changes that have no adverse effect on the substantive rights or responsibilities of the Lenders or on the benefits to which they are entitled under the Loan Documents.  A draft of any amendment and restatement of  this Agreement or any other Loan Document shall be distributed to the Lenders not fewer than five Business Days prior to its execution by the Administrative Agent and the Company.

12.1A.     Amendments Relating to the Collateral and Guarantee Requirement and Intercreditor Agreement.  (a)  Notwithstanding the provisions of subsection 12.1, no amendment, waiver or consent of this Agreement or of any other Loan Document shall (a) release any Subsidiary Loan Party from its obligations under the Collateral Agreement (except as expressly provided in subsection 12.17 or in accordance with the terms of the Collateral Agreement), without the written consent of all the Extended Tranche Lenders; or (b) release all or substantially all the Collateral from the Liens of the Collateral Documents (except as expressly provided in section 12.17 or in accordance with their respective terms), without the written consent of all the Extended Tranche Lenders.

(b)           Notwithstanding anything to the contrary contained herein or in any other Loan Document, each Extended Tranche Lender irrevocably authorizes the Administrative Agent to execute and deliver, on behalf of itself and the other Secured Parties, any intercreditor agreement approved by the Majority Extended Tranche Lenders that effects the subordination of the Liens permitted by subsection 9.3(v) to the Liens securing the Secured Obligations, and hereby agrees to observe the terms of and be bound by any intercreditor agreement so executed and delivered.

12.2.        Notices.  (a)  All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission) and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, and in each case shall be deemed to have been duly given or made when received in the case of registered or certified mail, postage prepaid (except that, if not received during normal business hours of the recipient, shall be deemed to have been received at the opening of business on the next Business Day for the recipient), addressed as follows in the case of the Borrowers and the Administrative Agent, and as set forth in Schedule I in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto:

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The Borrowers:	Harman International
	Industries, Incorporated
	400 Atlantic Street
	15th Floor
	Stamford, CT 06901
	Attention:  Herbert Parker, Chief Financial Officer and Executive Vice President
	Fax:  203-328-3953
	Attention:  Todd Suko, Vice President and General Counsel
	Fax:  203-328-3978
The Administrative Agent:	For notices regarding Loans denominated in Dollars:
	JPMorgan Chase Bank, N.A.
	Loan and Agency Services
	10 South Dearborn, Floor 07
	Chicago, IL 60603-2003
	Attention:  April Yebd
	Fax:  312-385-7096
	For notices regarding Loans denominated in Available Foreign Currencies:
	J.P. Morgan Europe Limited
	125 London Wall
	London, England EC2Y 5AJ
	Attention:  Loan Agency - Maxine O’Hara
	Fax:  44-(0)-207-777-2360

provided that any Notice of Borrowing, Notice of Competitive Advance Loan, Notice of Continuation, Notice of Conversion, or any notice pursuant to subsections 2.4, 2.5 or 4.2 shall not be effective until received.  Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b)           Notices and other communications to the Administrative Agent, the Lenders and the Issuing Banks hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures prescribed or approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Section 2 if such Lender has notified the Administrative Agent and the Company that it is incapable of receiving such notices under such Section by electronic communication.  The Administrative Agent or the Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

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(c)           Any party hereto may change its address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.

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

12.4.        Survival of Representations and Warranties.  All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder.

12.5.        Payment of Expenses and Taxes.  Each Borrower agrees (a) to pay or reimburse the Administrative Agent for such Borrower’s Applicable Percentage of all the Administrative Agent’s reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent, (b) to pay or reimburse each Lender and the Administrative Agent for such Borrower’s Applicable Percentage of all such Lender’s and the Administrative Agent’s costs and expenses reasonably incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including, without limitation, the fees and disbursements of counsel to each Lender and of counsel to the Administrative Agent and any advisor (of the type contemplated by any Loan Document to be engaged by the Administrative Agent) retained by the Administrative Agent, (c) to pay, indemnify, and hold each Lender and the Administrative Agent harmless from, such Borrower’s Applicable Percentage of any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to indemnify and hold the Administrative Agent, the Arranger and each Lender, their respective affiliates, and their respective officers, directors, trustees, advisors and controlling persons, (each, an “indemnified person”) harmless from and against such Borrower’s Applicable Percentage of any and all liabilities, obligations, losses, damages, judgments, claims, penalties, costs, expenses or disbursements of any kind or nature whatsoever arising out of (i) claims, actions, suits or proceedings brought by third parties with respect to the execution, delivery, enforcement, performance and administration of this Agreement or the use of the proceeds of the Extensions of Credit or (ii) any actual or alleged presence or release of Materials of Environmental Concern on or from any property currently or formerly owned or operated by the Borrower or any of its Subsidiaries, or any violation of or liability under Environmental Laws related in any way to the Borrower or any of its Subsidiaries (all the foregoing, collectively, the “indemnified liabilities”), provided, that the Borrowers shall have no obligation hereunder to any indemnified person with respect to indemnified liabilities arising from (i) the gross negligence or willful misconduct of such indemnified person or any other indemnified person, or (ii) any claim brought by a Borrower against an Indemnitee for such Indemnitee’s bad faith breach of its obligations under any Loan Document or (iii) legal proceedings commenced against such indemnified person by any security holder or creditor thereof arising out of and based upon rights afforded any such security holder or creditor solely in its capacity as such.  The agreements in this subsection shall survive repayment of the Loans and all other amounts payable hereunder.

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12.6.        Successors and Assigns; Participations and Assignments.  (a)  This Agreement shall be binding upon and inure to the benefit of the Borrowers, the Lenders, the Administrative Agent and their respective successors and assigns, except that the Borrowers may not assign or transfer any of their rights or obligations under this Agreement without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Assignee in accordance with the provisions of clause (c) of this subsection, (ii) by way of participation in accordance with the provisions of clause (b) of this subsection, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection 12.6(f) (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection 12.6(f) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)           Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to one or more banks or other entities (“Participants”) participating interests in any Loan owing to such Lender, any Commitment of such Lender or any other interest of such Lender hereunder and under the other Loan Documents.  In the event of any such sale by a Lender of a participating interest to a Participant, such Lender’s obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance of such obligations, such Lender shall remain the holder of any such Extension of Credit for all purposes under this Agreement and the other Loan Documents, and the Borrowers, the other Lenders, the Issuing Banks and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Loan Documents.  Any agreement or instrument pursuant to which a Lender sells any such participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by the Borrowers therefrom, except that such agreement or instrument may provide that the Lender will not, without the consent of the Participant, agree to any such amendment, waiver or consent that would (i) reduce the principal of, or interest on (except in connection with any waiver of applicability of any increase in interest rates during the continuance of an Event of Default), the Loans or any fees payable to all of the Lenders hereunder, or postpone the date of the final maturity of the Loans, in each case solely to the extent such amendment, waiver or consent directly affects the Loan or Loans in which the Participant is participating (provided that any waiver of any Default or Event of Default shall not constitute any amendment to the terms of any such participation, and that any increase in any Commitment or in the principal amount of any Loan or any interest thereon shall be permitted without the consent of any Participant if the Participant’s participation in any Loan is not increased as a result thereof).  The Borrowers agree that if amounts outstanding under this Agreement are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, to the maximum extent permitted by applicable law, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement, provided that, in purchasing such participating interest, such Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as provided in subsection 12.7(a) as fully as if it were a Lender hereunder.  In the case of any such participation, the Participant shall not have any rights under this Agreement or any of the other Loan Documents (the Participant’s rights against such Lender in respect of such participation being limited solely to those set forth in the agreement executed by such Lender in favor of the Participant relating thereto) and all amounts payable by the Borrowers hereunder shall be determined as if such Lender had not sold such participation to such Participant; provided that each Participant shall be entitled to the benefits of subsections 5.4, 5.5 and 5.6 with respect to its participation in the Commitments and the Loans outstanding from time to time as if it were a Lender; and provided, further, that no Participant shall be entitled to receive any greater amount pursuant to any such subsection than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred.  A Participant shall not be entitled to the benefits of subsection 5.5 unless each Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of each Borrower, to comply with subsection 5.5 as though it were a Lender.

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(c)           Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time and from time to time assign to any Lender or any Affiliate thereof or, with the consent of the Company and the Administrative Agent (which in each case shall not be unreasonably withheld), to an additional bank or financial institution (an “Assignee”) all or any part of its rights and obligations under this Agreement and the other Loan Documents pursuant to an Assignment and Acceptance executed by such Assignee, such assigning Lender (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Company and the Administrative Agent) and delivered to the Administrative Agent for its acceptance and recording in the Register, provided that, in the case of any such assignment to an additional bank or financial institution, the aggregate amount of the Commitment being assigned and, if such assignment is of less than all of the rights and obligations of the assigning Lender, the aggregate amount of the Commitment remaining with the assigning Lender are each not less than $5,000,000 (or such lesser amount as may be agreed to by the Company and the Administrative Agent).  Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a Commitment of the applicable Class as set forth therein, and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto).  Notwithstanding any provision of this paragraph (c) and paragraph (e) of this subsection, the consent of the Company shall not be required for any assignment which occurs at any time when any of the events described in subsection 10(f)(i) or (ii) shall have occurred and be continuing.

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(d)           The Administrative Agent shall, on behalf of the Borrowers, maintain at the address of the Administrative Agent referred to in subsection 12.2 a copy of each Assignment and Acceptance delivered to it and a register (the “Register”) for the recordation of the names and addresses of the Lenders and the Commitments of, and principal amounts of the Loans owing by each Borrower to, each Lender, and the applicable Class thereof, from time to time.  The entries in the Register shall be conclusive, in the absence of manifest error, and each Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register as the owner of a Loan or other obligation hereunder as the owner thereof for all purposes of this Agreement and the other Loan Documents, notwithstanding any notice to the contrary.  Any assignment of any Loan or other obligation hereunder shall be effective only upon appropriate entries with respect thereto being made in the Register.  The Register shall be available for inspection by each Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.

(e)           Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an Assignee (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Company and the Administrative Agent) together with payment to the Administrative Agent of a registration and processing fee of $3,500, the Administrative Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Company.

(f)            Each Borrower authorizes each Lender to disclose to any Participant or Assignee (each, a “Transferee”) and any prospective Transferee, subject to the provisions of subsection 12.16, any and all financial information in such Lender’s possession concerning the Company and its Affiliates which has been delivered to such Lender by or on behalf of such Borrower pursuant to this Agreement or which has been delivered to such Lender by or on behalf of such Borrower in connection with such Lender’s credit evaluation of such Borrower and its Affiliates prior to becoming a party to this Agreement, provided, that the Lenders shall take such steps as reasonably necessary to ensure that confidential information will be treated in a confidential manner as required by subsection 12.16.

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(g)           For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this subsection concerning assignments of Loans relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests, including, without limitation, any pledge or assignment by a Lender of any Loan to any Federal Reserve Bank in accordance with applicable law.

12.7.        Adjustments; Set-off.  (a)  Except as otherwise expressly provided herein, and subject to the provisions of subsection 2.12, the provisions of the Collateral Documents and the right of the Secured Parties to receive payments out of proceeds realized from the exercise of remedies in respect of the Collateral, if any Lender (a “Benefited Lender”) shall at any time receive any payment of all or part of its Loans to a Borrower or other Company Obligations or Additional Borrower Obligations, as applicable, then due and owing, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in subsection 10(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender’s Loans to such Borrower or other Company Obligations or Additional Borrower Obligations, as applicable, then due and owing, or interest thereon, such Benefited Lender shall notify the Administrative Agent and purchase (for cash at face value) from the other Lenders a participating interest in such portion of each such other Lender’s Loans to such Borrower or other Company Obligations or Additional Borrower Obligations, as applicable, or shall make such other adjustments as shall be equitable, as shall be necessary to cause such Benefited Lender to share the excess payment ratably by the Lenders in accordance with the aggregate amount of principal of and accrued interest on their respective Loans to such Borrower and other Company Obligations or Additional Borrower Obligations, as applicable, owing to them; provided, however, that if any such participations are purchased and all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest; and the provisions of this subsection shall not be construed to apply to (x) any payment made by such Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to such Borrower or other Company Obligations or Additional Borrower Obligations, as applicable, to any Transferee, other than to the applicable Borrower (as to which the provisions of this subsection shall apply).

(b)           Subject to the provisions of subsection 2.12, if an Event of Default shall have occurred and be continuing, each Lender shall have the right, without prior notice to a Borrower, any such notice being expressly waived by the Borrowers to the extent permitted by applicable law, upon any amount becoming due and payable by a Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims (other than Hedging Agreements entered into by such Borrower and such Lender), in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of such Borrower.  Each Lender agrees promptly to notify the Borrowers and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application.

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12.8.        Judgment.  (a)  If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder in one currency into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding the day on which final judgment is given.

(b)           The obligation of a Borrower in respect of any sum due to any Lender or the Administrative Agent hereunder shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by such Lender or the Administrative Agent (as the case may be) of any sum adjudged to be so due in the Judgment Currency such Lender or the Administrative Agent (as the case may be) may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency.  If the amount of the Agreement Currency so purchased is less than the sum originally due to such Lender or the Administrative Agent (as the case may be) in the Agreement Currency, the applicable Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Administrative Agent (as the case may be) against such loss, and if the amount of the Agreement Currency so purchased exceeds the sum originally due to any Lender or the Administrative Agent (as the case may be), such Lender or the Administrative Agent (as the case may be) agrees to remit to such Borrower such excess.

12.9.        Counterparts.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  A set of the copies of this Agreement signed by all the parties shall be lodged with the Company and the Administrative Agent.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

12.10.       Severability.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

12.11.      Integration.  This Agreement and the other Loan Documents represent the agreement of the Borrowers, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

12.12.      GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

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12.13.      Submission to Jurisdiction; Waivers.  Each Borrower hereby irrevocably and unconditionally:

(a)           submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;

(b)           consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(c)           agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Borrower at its address set forth in subsection 12.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

(d)           agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

(e)           waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages.

12.14.      Acknowledgements.  Each Borrower hereby acknowledges that:

(a)           it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

(b)           neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Borrowers arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the Borrowers, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(c)            no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrowers and the Lenders.

12.15.      WAIVERS OF JURY TRIAL.  THE BORROWERS, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

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12.16.       Confidentiality.  (a)  Each of the Administrative Agent, each other Agent, each Issuing Bank and each Lender agrees to keep confidential all information provided to it by the Company or any of its Subsidiaries pursuant to or in connection with this Agreement, other than any information that is available to such Person on a non-confidential basis prior to disclosure by the Company or any of its Subsidiaries (collectively, the “Information”); provided that nothing herein shall prevent any Lender from disclosing any such Information (i) to the Administrative Agent or any other Lender, (ii) to any Transferee or prospective Transferee which agrees to be bound by the provisions of this subsection 12.16 or substantially equivalent provision, (iii) to its employees, directors, agents, attorneys, accountants and other professional advisors (it being understood that all such Persons to whom disclosure is made shall be informed of the confidential nature of such Information and shall be instructed to and agree to keep such information strictly confidential), (iv) upon the request or demand of any Governmental Authority having jurisdiction over it, (v) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (vi) which has been publicly disclosed by the Company, or (vii) in connection with the exercise of any remedy hereunder.

(b)           Notwithstanding anything herein to the contrary, “Information” shall not include, and the Company, the Administrative Agent, each Lender and the respective Affiliates of each of the foregoing (and the respective partners, directors, officers, employees, agents, advisors and other representatives of each of the foregoing and their Affiliates), and any other party, may disclose to any and all Persons, without limitation of any kind, (a) any information with respect to the U.S. federal and state income tax treatment of the transactions contemplated hereby and any facts that may be required to understand such tax treatment, which facts shall not include for this purpose the names of the parties or any other Person named herein, or information that would permit identification of the parties or such other Persons, or any pricing terms or other nonpublic business or financial information that is unrelated to such tax treatment or facts, and (b) all materials of any kind (including opinions or other tax analyses) that are provided to any of the Persons referred to above relating to such tax treatment or facts

12.17.      Release of Liens and Guarantees.  A Subsidiary Loan Party (other than the Additional Borrower) shall automatically be released from its obligations under the Loan Documents, and all security interests created by the Collateral Documents in Collateral owned by such Subsidiary Loan Party (other than the Additional Borrower) shall be automatically released (i) in accordance with the terms of the Collateral Agreement and (ii) upon the consummation of any transaction permitted by this Agreement as a result of which such Subsidiary Loan Party ceases to be a Subsidiary; provided that, if so required by this Agreement, the Majority Extended Tranche Lenders shall have consented to such transaction and the terms of such consent shall not have provided otherwise.  Upon any sale or other transfer by any Loan Party (other than to a Borrower or any other Subsidiary) of any Collateral in a transaction permitted under this Agreement, or upon the effectiveness of any written consent to the release of the security interest created under any Collateral Document in any Collateral pursuant to Section 12.1A, the security interests in such Collateral created by the Collateral Documents shall be automatically released.  In connection with any termination or release pursuant to this Section, the Administrative Agent shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents and take all such actions that such Loan Party shall reasonably request to evidence such termination or release.  Any execution and delivery of documents pursuant to this Section shall be without recourse to or warranty by the Administrative Agent.

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

12.19.      Patriot Act.  Each Lender that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56) hereby notifies each Borrower that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies such Borrower, which information includes the name and address of such Borrower and other information that is required to enable such Lender to identify such Borrower in accordance with the USA Patriot Act.  Each Borrower will provide such information to such Lender at its written request.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in New York, New York by their proper and duly authorized officers as of the day and year first above written.

HARMAN INTERNATIONAL INDUSTRIES,
INCORPORATED
By:	/s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP General Counsel & Secretary

HARMAN HOLDING GMBH & CO. KG
By:	/s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

JPMORGAN CHASE BANK, N.A., as
Administrative Agent and Lender
By:	/s/ Jules Panno
	Name: Jules Panno
	Title:   Vice President

MULTI-CURRENCY, MULTI-OPTION CREDIT

AGREEMENT dated as of March 31, 2009

Bank of Tokyo-Mitsubishi UFJ Trust Company

LENDER

By:	/s/ M. Iarriccio
	Name: M. Iarriccio
	Title:   Vice President

MULTI-CURRENCY, MULTI-OPTION CREDIT

AGREEMENT dated as of March 31, 2009

Bayerische Hypo

und Vereinsbank AG New York Branch

LENDER

By:	/s/ Ken Hamilton
	Name: Ken Hamilton
	Title:   Director

Bayerische Hypo

und Vereinsbank AG New York Branch

LENDER

By:	/s/ Richard Cordover
	Name: Richard Cordover
	Title:   Director

MULTI-CURRENCY, MULTI-OPTION CREDIT

AGREEMENT dated as of March 31, 2009

Danske Bank

LENDER

By:	/s/ Dorte Sørensen
	Name: Dorte Sørensen
	Title:   Director

Danske Bank

LENDER

By:	/s/ Christel Heckmann
	Name: Christel Heckmann
	Title:   Director

MULTI-CURRENCY, MULTI-OPTION CREDIT

AGREEMENT dated as of March 31, 2009

Citibank, N.A.

LENDER

By:	/s/ Paul L. Burroughs Jr.
	Name: Paul L. Burroughs Jr.
	Title:   Director

MULTI-CURRENCY, MULTI-OPTION CREDIT

AGREEMENT dated as of March 31, 2009

HSBC Bank USA, National Association

LENDER

By:	/s/ Christopher J. Heusler
	Name:	Christopher J. Heusler
	Title:	Managing Director
		Regional Head of Multinations, N.A.

MULTI-CURRENCY, MULTI-OPTION CREDIT

AGREEMENT dated as of March 31, 2009

The Bank of Nova Scotia

LENDER

By:	/s/ Todd S. Meller
	Name: Todd S. Meller
	Title:   Managing Director

MULTI-CURRENCY, MULTI-OPTION CREDIT

AGREEMENT dated as of March 31, 2009

The Governor & Company of the Bank of Ireland

LENDER

By:	/s/ Elaine Crowley
	Name: Elaine Crowley
	Title:   Authorised Signatory

By:	/s/ Mary Gaffney
	Name: Mary Gaffney
	Title:   Authorised Signatory

EX-10.2

Exhibit 10.2

GUARANTEE AND COLLATERAL AGREEMENT

dated as of

March 31, 2009,

among

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED

HARMAN HOLDING GMBH & CO. KG

THE SUBSIDIARIES OF HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED

IDENTIFIED HEREIN

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

TABLE OF CONTENTS

ARTICLE I
Definitions
SECTION 1.01.	Defined Terms	1
SECTION 1.02.	Other Defined Terms	1
SECTION 1.03.	Inconsistencies with Foreign Agreements or Foreign Law	8
ARTICLE II
Guarantees
SECTION 2.01.	Guarantees	8
SECTION 2.02.	Guarantee of Payment; Continuing Guarantee	8
SECTION 2.03.	No Limitations	9
SECTION 2.04.	German Guarantee Limitations	10
SECTION 2.05.	Reinstatement	13
SECTION 2.06.	Agreement to Pay; Subrogation	13
SECTION 2.07.	Information	13
ARTICLE III
Pledge of Certain Securities
SECTION 3.01.	Pledge	13
SECTION 3.02.	Delivery of the Pledged Collateral	14
SECTION 3.03.	Representations, Warranties and Covenants	15
SECTION 3.04.	Certification of Limited Liability Company and Limited Partnership Interests	17
SECTION 3.05.	Unlimited Liability Companies	17
SECTION 3.06.	Registration in Nominee Name; Denominations	17
SECTION 3.07.	Voting Rights; Dividends and Interest	18
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01.	Security Interest	20
SECTION 4.02.	Representations and Warranties	22
SECTION 4.03.	Covenants	25
SECTION 4.04.	Other Actions	27
SECTION 4.05.	Covenants Regarding Intellectual Property Collateral	29
SECTION 4.06.	Cash Collateral Accounts	31

ARTICLE V
Remedies
SECTION 5.01.	Remedies Upon Default	31
SECTION 5.02.	Application of Proceeds	33
SECTION 5.03.	Grant of License to Use Intellectual Property	34
SECTION 5.04.	Securities Act	34
ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01.	Indemnity and Subrogation	35
SECTION 6.02.	Contribution and Subrogation	35
SECTION 6.03.	Limitations, Subordination	36
ARTICLE VII
Miscellaneous
SECTION 7.01.	Notices	36
SECTION 7.02.	Waivers; Amendment	36
SECTION 7.03.	Administrative Agent’s Fees and Expenses; Indemnification	37
SECTION 7.04.	Successors and Assigns	38
SECTION 7.05.	Survival of Agreement	38
SECTION 7.06.	Counterparts; Effectiveness; Several Agreement	38
SECTION 7.07.	Severability; Limitation by Law	38
SECTION 7.08.	Right of Set-Off	39
SECTION 7.09	Governing Law; Jurisdiction; Consent to Service of Process	39
SECTION 7.10.	WAIVER OF JURY TRIAL	40
SECTION 7.11.	Headings	40
SECTION 7.12.	Security Interest Absolute	40
SECTION 7.13.	Attachment of Security Interest	41
SECTION 7.14.	Copy of Agreement; Verification Statement	41
SECTION 7.15.	No Subordination	41
SECTION 7.16.	Termination or Release	41
SECTION 7.17.	Additional Subsidiaries	42
SECTION 7.18.	Administrative Agent Appointed Attorney-in-Fact	42
SECTION 7.19.	Harman International Guarantee	43

Schedules

Schedule I Subsidiary Loan Parties

Schedule II Pledged Stock; Pledged Debt Securities

Schedule III Intellectual Property

Schedule IV Commercial Tort Claims

Exhibits

Exhibit I Form of Supplement

Exhibit II Form of Perfection Certificate

Exhibit III Form of Patent and Trademark Security Agreement

Exhibit IV Form of Copyright Security Agreement

GUARANTEE AND COLLATERAL AGREEMENT dated as of March 31, 2009 (this “Agreement”), among HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED, HARMAN HOLDING GMBH & CO. KG, the Subsidiaries from time to time party hereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

Reference is made to the Second Amended and Restated Multi-Currency, Multi-Option Credit Agreement dated as of March 31, 2009 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Harman International Industries, Incorporated, a Delaware corporation (the “Company”), Harman Holding GmbH & Co. KG, a company organized under the laws of Germany (the “Additional Borrower”), the Lenders party thereto, the other parties thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, and to the Guarantee Agreement (the “Harman International Guarantee”) dated as of June 22, 2006, made by the Company in favor of JPMorgan Chase Bank, N.A., as administrative agent for the several banks and other financial institutions or entities party to the Existing Credit Agreement.

The Extended Tranche Lenders have agreed to make certain accommodations under the Credit Agreement and to continue to extend credit to the Borrowers subject to the terms and conditions set forth in the Credit Agreement.  The obligations of the Extended Tranche Lenders to make such accommodations and to continue to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement.  The Subsidiary Loan Parties are Affiliates of the Borrowers, will derive substantial benefits from such accommodations under the Credit Agreement and the continued extension of credit to the Borrowers pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in order to induce the Extended Tranche Lenders to make such accommodations under the Credit Agreement and to continue to extend such credit.  Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01.  Defined Terms.  i)Each capitalized term used but not defined herein shall have the meaning specified in the Credit Agreement.  Each term defined in the New York UCC and not defined in this Agreement shall have the meaning specified therein.  The term “instrument” shall have the meaning specified in Article 9 of the New York UCC.

(b)  The rules of construction specified in subsections 1.2 and 1.3 of the Credit Agreement also apply to this Agreement, mutatis mutandis.

SECTION 1.02.  Other Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:

1

“Account Debtor” means any Person that is or may become obligated to any Grantor under, with respect to or on account of an Account.

“Additional Borrower” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Article 9 Collateral” has the meaning assigned to such term in Section 4.01.

“Auditor’s Determination” has the meaning assigned to such term in Section 2.04(d).

“Capital Impairment” has the meaning assigned to such term in Section 2.04.

“Capital Stock” means, when used in this Agreement, the Capital Stock of any Subsidiary.

“Cash Collateral Account” means a cash collateral account established at the office of JPMORGAN CHASE BANK, N.A. located at 270 Park Avenue, New York, NY 10017, in the name of the Administrative Agent, for purposes of this Agreement.

“Collateral” means Article 9 Collateral and Pledged Collateral.

“Company” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Contributing Party” has the meaning assigned to such term in Section 6.02.

“Copyright License” means any written agreement, now or hereafter in effect, granting to any third party any right now or hereafter under any Copyright now or hereafter owned by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any Copyright now or hereafter owned by any third party, or that a third party now or hereafter otherwise has the right to license and all rights of such Grantor under any such agreement.

“Copyrights” means, with respect to any Grantor, all of the following now owned or hereafter acquired by such Grantor:  (a) all copyright rights including any economic or moral rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office (or any similar office in any other country), including, in the case of clauses (a) and (b), those listed on Schedule III.

2

“Credit Agreement” has the meaning assigned to such term in the introductory paragraph of this Agreement.

“Deposit Account” means any deposit account, not including any Excluded Deposit Accounts.

“Domestic Secured Obligations” means all the Secured Obligations of the Company and any Domestic Subsidiary, in each case, other than in respect of any guarantee of the obligations of any Foreign Subsidiary.

 “Enforcement Notice” has the meaning assigned to such term in Section 2.04(d).

“Extended Tranche Obligations” means the due and punctual payment and performance (i) by the Company of the Extended Tranche Company Obligations and (ii) by the Additional Borrower of the Extended Tranche Additional Borrower Obligations (including, in each case, monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).

“Federal Securities Laws” has the meaning assigned to such term in Section 5.04.

“First-Tier Subsidiary” means any Subsidiary the Capital Stock of which is directly owned by the Company or any other US Guarantor.

“Foreign Guarantors” means the Additional Borrower (except with respect to the obligations of the Additional Borrower) and each Subsidiary Loan Party that is a Foreign Subsidiary.

“Foreign Secured Obligations” means all the Secured Obligations of the Additional Borrower and any Foreign Guarantor.

“German GmbH & Co. KG Guarantor” means a Foreign Guarantor incorporated or formed under the laws of Germany and constituted in the form of a limited partnership with a limited liability company as general partner (GmbH & Co. KG).

“German GmbH Guarantor” means a Foreign Guarantor incorporated or formed under the laws of Germany and constituted in the form of a limited liability company (GmbH).

“German Guarantors” means the German GmbH Guarantors and the German GmbH & Co. KG Guarantors.

3

“Grantor” means the Company, the Additional Borrower, the other US Guarantors and the Foreign Guarantors.

“Guaranteed Obligations” means:

(i) in the case of the Additional Borrower, the obligations of the Designated Foreign Subsidiaries in respect of all the Secured Hedging Agreement Obligations, all the Secured Cash Management Obligations and all the Secured Other Facility Obligations;

(ii) in the case of the Foreign Guarantors (other than the Additional Borrower), (A) the Extended Tranche Obligations of the Additional Borrower and (B) the obligations of the Additional Borrower and the Designated Foreign Subsidiaries in respect of all the Secured Hedging Agreement Obligations, all the Secured Cash Management Obligations and all the Secured Other Facility Obligations;

(iii)  in the case of the Company, (A) the Extended Tranche Obligations of the Additional Borrower and (B) the obligations of the other Loan Parties and the other Subsidiaries in respect of all the Secured Hedging Agreement Obligations, all the Secured Cash Management Obligations and all the Secured Other Facility Obligations;

(iv) in the case of the US Guarantors (other than the Company), (A) the Extended Tranche Obligations of the Borrowers and (B) the obligations of the Loan Parties and the other Subsidiaries in respect of all the Secured Hedging Agreement Obligations, all the Secured Cash Management Obligations and all the Secured Other Facility Obligations.

“Guarantors” means the US Guarantors and the Foreign Guarantors.

“Harman International Guarantee” has the meaning assigned to such term in the introductory paragraph to this agreement.

“Harman LLC Agreement” means the Limited Liability Company Agreement of Harman KG Holding,LLC, dated as of March 31, 2009 (as amended, supplemented or replaced from time to time).

“Harman Trust Agreement” means the Trust Agreement between Harman International Industries, Incorporated, as Trustor, and Harman KG Holding,LLC, as Trustee, dated as of March 31, 2009 (as amended, supplemented or replaced from time to time).

“IP Security Agreements” has the meaning assigned to such term in Section 4.02(b).

“Intellectual Property” means all intellectual and similar property of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, domain names, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions.

4

“License” means any Intellectual Property license or sublicense agreement to which any Grantor is a party.

“Management Determination” has the meaning assigned to such term in Section 2.04(d).

“New York UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.

“Patent License” means any written agreement, now or hereafter in effect, granting to any third party any right to make, use, sell, offer for sale or import any invention on which a Patent, now or hereafter owned by any Grantor or that any Grantor now or hereafter otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use, sell, offer for sale or import any invention on which a patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement.

“Patents” means all of the following now owned or hereafter acquired by such Grantor:  (a) all pending patent applications or issued patents of the United States or any foreign country, all registrations and recordings thereof, including those listed on Schedule III, and (b) all continuation applications, divisional applications, continuation-in-part applications, those issued patents that are subject to reissue or reexamination certificates, and the inventions disclosed or claimed therein, including the right to make, use sell, offer for sale or import the inventions.

“Payment Obligation” has the meaning assigned to such term in Section 2.04(a).

“Perfection Certificate” means a certificate substantially in the form of Exhibit II, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by a Responsible Officer and the chief legal officer of the Company.

“Permitted Liens” has the meaning assigned to such term in Section 3.03.

“Pledged Collateral” has the meaning assigned to such term in Section 3.01.

“Pledged Debt Securities” has the meaning assigned to such term in Section 3.01.

“Pledged Securities” means any promissory notes, stock certificates, or other certificated securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral.

5

“Pledged Stock” has the meaning assigned to such term in Section 3.01.

“PPSA” means the Personal Property Security Act (Ontario), including the regulations thereto, provided that, if perfection or the effect of perfection or non-perfection or the priority of any Lien created hereunder on the Collateral is governed by the personal property security legislation or other applicable legislation with respect to personal property security as in effect in a jurisdiction other than Ontario, “PPSA” means the Personal Property Security Act or such other applicable legislation as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

“Qualified CFC Holding Company” means any Wholly Owned Subsidiary of the Company or any Subsidiary Loan Party that is treated as a disregarded entity for U.S. federal income tax purposes, that (a) is in compliance with Qualified CFC Holding Company Limitation and (b) the primary asset of which consists of Capital Stock in either (i) a Foreign Subsidiary or (ii) a Delaware limited liability company that is in compliance with the Qualified CFC Holding Company Limitation and the primary asset of which consists of Capital Stock in a Foreign Subsidiary.

“Qualified CFC Holding Company Limitation” means that any Person (a) shall not have created, incurred or assumed any Indebtedness or created, incurred, assumed or suffered to exist any Lien on any of its assets except for Liens or Indebtedness created under the Loan Documents and (b) does not engage in any business or activity or acquire or hold any assets other than the Capital Stock of one or more Foreign Subsidiaries of the Company and/or one or more other Qualified CFC Holding Companies and the receipt and distribution of dividends and distributions in respect thereof.

“Secured Cash Management Obligations” means any obligations of any Loan Party in respect of overdrafts or other liabilities owed to an Extended Tranche Lender or an Affiliate of an Extended Tranche Lender arising from treasury, depository or cash management services.

“Secured Hedging Agreement Obligations” means all obligations of each Loan Party under each Hedging Agreement that is (i) in effect on the Restatement Effective Date with a counterparty that is an Extended Tranche Lender or an Affiliate of an Extended Tranche Lender as of the Restatement Effective Date or (ii) entered into after the Restatement Effective Date with any counterparty that is an Extended Tranche Lender or an Affiliate of an Extended Tranche Lender at the time such Hedging Agreement is entered into.

“Secured Obligations” means, with respect to any Grantor, its Extended Tranche Obligations, its Secured Cash Management Obligations, its Secured Hedging Agreement Obligations, its Secured Other Facility Obligations and its Guaranteed Obligations, as applicable.

6

“Secured Other Facility Obligations” means any Indebtedness or other financial obligations owed to any Extended Tranche Lender or Affiliate of an Extended Tranche Lender under any line of credit or other bilateral credit facility extended by such Extended Tranche Lender or Affiliate to the Company or a Subsidiary, but only to the extent such Indebtedness shall have been incurred in compliance with the provisions of the Credit Agreement.

“Secured Parties” means (a) the Extended Tranche Lenders, (b) the Administrative Agent, (c) the Issuing Bank, (d) each provider of treasury, depository or cash management services the liabilities in respect of which constitute Secured Obligations, (e) each counterparty to any Hedging Agreement with a Loan Party the obligations under which constitute Secured Hedging Agreement Obligations, (f) each provider of any line of credit or other bilateral credit facility the obligations under which constitute Secured Other Facility Obligations, (g) each other person to which any Secured Obligation is owed and (h) the successors and assigns of each of the foregoing.

“Security Interest” has the meaning assigned to such term in Section 4.01(a).

“Subsidiary Loan Party” means each Subsidiary that is a party hereto on the date hereof and each Subsidiary that becomes a party hereto pursuant to Section 7.17.

“Trademark License” means any written agreement, now or hereafter in effect, granting to any Grantor any right to use any Trademark now or hereafter owned by any third party (including, without limitation, any such rights that such Grantor has the right to license).

“Trademarks” means all of the following now owned or hereafter acquired by any Grantor: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, including all common law rights, applications or registrations filed in the United States Patent and Trademark Office, any similar offices in any State of the United States, any other country or any political subdivision (except for “intent-to-use” applications for trademark or service mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and until an Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of Lanham Act has been filed, to the extent, if any, that any assignment of an “intent-to-use” application prior to such filing would violate the Lanham Act), and all related extensions or renewals, including those listed on Schedule III, (b) all associated goodwill and (c) all other intangible assets, rights and interests that uniquely reflect or embody such goodwill.

7

“US Guarantors” means the Company (except with respect to the obligations of the Company) and each Subsidiary Loan Party that is not a Foreign Subsidiary.

SECTION 1.03.  Inconsistencies with Foreign Agreements or Foreign Law.  Notwithstanding any other provision contained herein, in the event that any agreement made by any Grantor in this Agreement, or any right of the Administrative Agent under this Agreement, (a) shall be inconsistent with the provisions of any Foreign Pledge Agreement covering Pledged Stock of such Grantor or the provisions of any Collateral Document governed by foreign law with respect to the grant of a security interest in the Collateral owned by such Grantor, the provisions of such Foreign Pledge Agreement or such Collateral Document will control and, to the extent of such inconsistency, no Default or Event of Default will be deemed to occur as a result of any Grantor’s non-compliance with the applicable agreement contained herein; or (b) shall be contrary to the laws of the jurisdiction of organization of any Foreign Subsidiary that is the issuer of any Pledged Stock or owner of any Collateral, such agreement or right will, insofar as it relates to the Pledged Stock issued by such Foreign Subsidiary or any Collateral owned by such Foreign Subsidiary and to the extent of such contrariety, be of no force or effect.  Notwithstanding anything herein or in any Loan Document to the contrary, no Borrower nor any other Loan Party makes any representation or warranty as to the effects of perfection or non-perfection, the priority or enforceability of any pledge of or security interest in any assets (including Capital Stock) of any Foreign Subsidiary, or as to the rights and remedies of the Administrative Agent or any Lender with respect thereto, in each case under any foreign law (other than, in the case of any other Loan Document, the laws of the jurisdiction by which such Loan Document is governed).

ARTICLE II

Guarantees

SECTION 2.01.  Guarantees.  Each Guarantor unconditionally and irrevocably guarantees, jointly with the other Guarantors and severally, to the Administrative Agent, for the ratable benefit of the Secured Parties, as a primary obligor and not merely as a surety, the due and punctual payment and performance of its Guaranteed Obligations.  Each Guarantor further agrees that its Guaranteed Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Guaranteed Obligation.  Each Guarantor waives presentment to, demand of payment from and protest to any Borrower or any other Loan Party of any of the Guaranteed Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.

SECTION 2.02.  Guarantee of Payment; Continuing Guarantee.  i)Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due (whether or not any bankruptcy or similar proceeding shall have stayed the accrual of collection of any of the Guaranteed Obligations or operated as a discharge thereof) and not merely of collection, and waives any right to require that any resort be had by the Administrative Agent or any other Secured Party to any security held for the payment of the Guaranteed Obligations or to any balance of any deposit account or credit on the books of the Administrative Agent or any other Secured Party in favor of the Borrowers, any other party, or any other Person.  Each Guarantor agrees that its guarantee hereunder is continuing in nature and applies to all of its Guaranteed Obligations, whether currently existing or hereafter incurred.

8

(b)  As an original and independent obligation under this guarantee, each Guarantor shall:

(i) indemnify the Administrative Agent and each other Secured Party and its successors, endorsees, transferees and assigns and keep the Administrative Agent and each other Secured Party indemnified against all costs, losses, expenses and liabilities of whatever kind resulting from the failure of such Guarantor’s Secured Obligation to be paid when due or resulting from any of such Secured Obligations being or becoming void, voidable, unenforceable or ineffective against any Loan Party liable therefor (including, but without limitation, all legal and other costs, charges and expenses incurred by each Secured Party, or any of them, in connection with preserving or enforcing, or attempting to preserve or enforce, its rights under this guarantee); and

(ii) pay on demand the amount of such costs, losses, expenses and liabilities whether or not the Administrative Agent or any of the other Secured Parties has attempted to enforce any rights against any Loan Party or any other Person or otherwise.

SECTION 2.03.  No Limitations.  i)Subject to Section 2.04 and except for termination of a Guarantor’s obligations hereunder as expressly provided in Section 7.16, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations, any impossibility in the performance of the Guaranteed Obligations, or otherwise.  Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by (i) the failure of the Administrative Agent or any other Secured Party to assert any claim or demand or to enforce any right or remedy under the provisions of any Loan Document or otherwise; (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, any Loan Document or any other agreement, including with respect to any other Guarantor under this Agreement; (iii) the release of any security held by the Administrative Agent or any other Secured Party for the Guaranteed Obligations or any of them; (iv) any default, failure or delay, wilful or otherwise, in the performance of the Guaranteed Obligations; or (v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Guaranteed Obligations).  Each Guarantor expressly authorizes the Secured Parties to take and hold security for the payment and performance of the Guaranteed Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Guaranteed Obligations, all without affecting the obligations of any Guarantor hereunder.

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(b)  To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out of any defense of any Borrower or any other Loan Party or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any Borrower or any other Loan Party, other than the indefeasible payment in full in cash of all the Guaranteed Obligations.  The Administrative Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with any Borrower or any other Loan Party or exercise any other right or remedy available to them against any Borrower or any other Loan Party, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the applicable Guaranteed Obligations in respect of which such Guarantor is liable have been fully and indefeasibly paid in full in cash or immediately available funds or the guarantee of such Guarantor has been terminated and released pursuant to Section 7.16. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against any Borrower or any other Loan Party, as the case may be, or any security.

SECTION 2.04.  German Guarantee Limitations.  i)Each Secured Party agrees not to enforce against a German Guarantor any payment obligation arising out of the guarantee contained in Section 2.01 (the “Payment Obligation”) (i) if and to the extent such Payment Obligation secures obligations of an affiliated company (verbundenes Unternehmen) of such German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the German Guarantor's Subsidiaries) and (ii) if and to the extent the enforcement of such Payment Obligation would cause the German Guarantor's or, in the case of a German GmbH & Co. KG Guarantor, its general partner's net assets (Reinvermögen), i.e., assets (the calculation of which shall include all items set forth in Section 266(2) A., B. and C. of the German Commercial Code (Handelsgesetzbuch)) minus liabilities and liability reserves (the calculation of which shall include all items set forth in Section 266(3) B., C. and D. of the German Commercial Code (Handelsgesetzbuch)) to fall below its stated share capital (Stammkapital) (Begründung einer Unterbilanz) or, if such net assets are already less than its stated share capital (Stammkapital), would cause such amount to be further reduced (Vertiefung einer Unterbilanz) (such event a “Capital Impairment”) and such enforcement would result in a violation of Section 30 of the German Act on Limited Liability Companies (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – “GmbHG”) provided that for the purposes of calculating the amount to be enforced (if any) the following balance sheet items shall be adjusted as follows:

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(i)  the amount of any increase of stated share capital (Stammkapital) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner that has been effected without the prior written consent of the Administrative Agent shall be deducted from the stated share capital (Stammkapital);

(ii)  liabilities arising from loans provided to the relevant German Guarantor by the Company or any of its Subsidiaries shall be disregarded if such loans are subordinated within the meaning of Section 39(2) of the German Insolvency Code (Insolvenzordnung); and

(iii)  any loans and other contractual liabilities incurred by the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner in violation of the provisions of any of the Loan Documents shall be disregarded.

(b)  Upon delivery of an Enforcement Notice (as defined below) and upon request of the Administrative Agent, the German Guarantor shall as soon as reasonably practicable and in any event within three months after such notice realize any asset that is shown in the balance sheet with a book value (Buchwert) that is significantly lower than the market value of such asset, which is not necessary for the German Guarantor's business (betriebsnotwendig). After the expiry of such three months period the German Guarantor shall notify the Administrative Agent of the amount of the proceeds from the sale and submit an accompanying statement to the Administrative Agent stating the amount of the net assets (Reinvermögen) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner, and the amount by which such net assets (Reinvermögen) exceed its respective registered share capital, each recalculated (as of the date of delivery of an Enforcement Notice) for the purposes of paragraph (a) hereof to take into account such proceeds.

(c)  The limitations set out in paragraph (a) hereof shall not apply:

(i) in relation to and to the extent the proceeds of any borrowings under the Credit Agreement have been on-lent, or otherwise passed on, to such German Guarantor or any of its Subsidiaries and have not been repaid; and

(ii) to a German Guarantor which is a party to a domination agree­ment (Beherrschungsvertrag) as dominated entity (beherr­schtes Unternehmen) or obliged to transfer its profits pursuant to a profit and loss transfer agreement (Gewinnabführungs­vertrag), provided that in such case the Secured Parties shall in any event be entitled to enforce the Payment Obligation up to the amount enforceable pursuant to paragraph (a) above but may enforce the Payment Obligation in a higher amount only to the extent that such enforcement would not result in a personal liability of any officer of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner.

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(d)  The limitations set out in paragraph (a) hereof only apply if and to the extent that:

(i) within ten (10) Business Days following the notification by any Secured Party of its intention to enforce the Payment Obligation (the “Enforcement Notice”), the managing director(s) on behalf of the relevant German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner has/have confirmed in writing to the Administrative Agent to what extent the Payment Obligation cannot be enforced as it would cause a Capital Impairment within the meaning of paragraph (a) above (taking into account the adjustments set out in paragraph (a)(i) to (iii) above) and such confirmation is supported by evidence reasonably satisfactory to the Administrative Agent (the “Management Determination”) and the Administrative Agent (acting on behalf of the relevant Secured Party) has not contested this; or

(ii) within twenty (20) Business Days from the date the Administrative Agent has contested the Management Determination, the Administrative Agent receives a determination by the German Guarantor's auditors of the amount that could have been enforced on the date the Enforcement Notice without causing a Capital Impairment within the meaning of paragraph (a) above (the “Auditor's Determination”). The amount determined in the Auditor's Determination shall (except for manifest error) be binding for the Loan Parties and the Secured Parties. The costs of the Auditor's Determination shall be borne by the relevant German Guarantor.

(e)  If the Administrative Agent disagrees with the Auditor's Determination, the Secured Parties shall be entitled to enforce the Payment Obligation up to the amount which is undisputed between themselves and the German Guarantor. In relation to the amount which is disputed, the Secured Parties shall be entitled to further pursue their claims (if any) and the German Guarantor shall be entitled to prove that this amount is necessary for maintaining its or, in the case of a German GmbH & Co. KG Guarantor, its general partner's stated share capital (Stammkapital) without violation of Section 30 GmbHG (calculated as of the date that the Enforcement Notice was given).

(f)  If the Payment Obligation was enforced without limitation because the Management Determination and/or the Auditor's Determination (as the case may be) was not delivered within the relevant time or for any other reason, the Secured Parties shall promptly upon demand by the relevant German Guarantor repay to such German Guarantor any amount which is necessary pursuant to Section 30 GmbHG to maintain the stated share capital (Stammkapital) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner, calculated as of the date that the Enforcement Notice was given provided the relevant Secured Party has received a corresponding amount by the relevant German Guarantor as a consequence of enforcement of the relevant Payment Obligation.

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(g)  No reduction of the amount enforceable under this guarantee in accordance with the above limitations will prejudice the rights of the Secured Parties to continue enforcing the guarantee (subject always to the operation of the limitation set out above at the time of such enforcement) until full satisfaction of the guaranteed claims. For the avoidance of doubt, nothing in this Section 2.04 shall affect the right of the Secured Parties (or any of them) to accelerate the Loans pursuant to Section 10 of the Credit Agreement or to enforce the security granted under any Collateral Document.

SECTION 2.05.  Reinstatement.  Each of the Guarantors agrees that its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of its Guaranteed Obligation is rescinded or must otherwise be restored by the Administrative Agent or any other Secured Party upon the bankruptcy or reorganization of any Borrower, any other Loan Party or otherwise.

SECTION 2.06.  Agreement to Pay; Subrogation.  In furtherance of the foregoing and not in limitation of any other right that the Administrative Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of any Borrower or any other Loan Party to pay its Guaranteed Obligation as expressly contemplated by Section 2.01 when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Administrative Agent for distribution to the applicable Secured Parties in cash the amount of its unpaid Guaranteed Obligation owed.  Upon payment by any Guarantor of any sums to the Administrative Agent as provided above, all rights of such Guarantor against any Borrower or any other Loan Party arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Article VI.

SECTION 2.07.  Information.  Each Guarantor (a) assumes all responsibility for being and keeping itself informed of each of the Borrower’s and each other Loan Party’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and (b) agrees that none of the Administrative Agent or the other Secured Parties will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.

ARTICLE III

Pledge of Certain Securities

SECTION 3.01.  Pledge.  As security for the payment or performance, as the case may be, in full of its Secured Obligations, each Grantor hereby assigns and pledges to the Administrative Agent, its successors and assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest in, all of such Grantor’s right, title and interest in, to and under the following:

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(a)  (i) the shares of Capital Stock directly owned by such Grantor on the date hereof (including those listed opposite the name of such Grantor on Schedule II), (ii) any other Capital Stock obtained in the future by such Grantor and (iii) the certificates representing all such Capital Stock (collectively, the “Pledged Stock”); provided that with respect to any Domestic Secured Obligations, the Pledged Stock shall not include (A) more than 66% of the issued and outstanding voting Capital Stock of any Foreign Subsidiary that is a First-Tier Subsidiary, (B) more than 66% of the issued and outstanding voting Capital Stock of any Qualified CFC Holding Company that is a First Tier Subsidiary, (C) any issued and outstanding Capital Stock of any Foreign Subsidiary that is not a First Tier Subsidiary, or (D) any issued and outstanding Capital Stock of any Qualified CFC Holding Company that is not a First Tier Subsidiary; provided further, that it is the intent of this Agreement that not more than 66% of the issued and outstanding voting Capital Stock of the Additional Borrower directly or indirectly owned by the Company shall be pledged hereunder with respect to any Domestic Secured Obligations, and to give effect to such intent, 100% of the limited partnership interests issued by the Additional Borrower that are owned by the Company shall be pledged hereunder and none of the voting Capital Stock of Harman KG Holding, LLC that is owned by the Company (and, for the avoidance of doubt, none of the general partner interests issued by the Additional Borrower) shall be pledged hereunder, in each case to secure Domestic Secured Obligations, (b)(i) the debt securities and inter-company loans or advances owned by such Grantor (including those listed opposite the name of such Grantor on Schedule II), (ii) any debt securities or inter-company loans or advances in the future held by or owed to such Grantor and (iii) all promissory notes and any other instruments evidencing any such debt securities or inter-company loans or advances (collectively, the “Pledged Debt Securities”); (c) subject to the provisos in clause (a) above, all other property that may be delivered to and held by the Administrative Agent pursuant to the terms of this Section 3.01; (d) subject to Section 3.07, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the securities or instruments referred to in clauses (a) and (b) above; (e) subject to Section 3.07, all rights and privileges of such Grantor with respect to the securities, instruments and other property referred to in clauses (a), (b), (c) and (d) above; and (f) all Proceeds of any and all of the foregoing (the items referred to in the foregoing clauses (a) through (f) above being collectively referred to as the “Pledged Collateral”).Notwithstanding anything to the contrary, no pledge or security interest is created hereby, and the Pledged Collateral, Pledged Stock and Pledged Debt Securities shall not include, any property that would be excluded pursuant to Section 4.01(d) of this Agreement.

SECTION 3.02.  Delivery of the Pledged Collateral.  i)Each Grantor agrees promptly to deliver or cause to be delivered to the Administrative Agent, for the ratable benefit of the Secured Parties, any and all Pledged Securities to the extent that such Pledged Securities are either (i) certificated Capital Stock or (ii) in the case of promissory notes, required to be delivered pursuant to paragraph (b) of this Section 3.02.

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(b)  (i) All Indebtedness of the Company and each Subsidiary owing to any Loan Party shall be evidenced by a promissory note (which may be a global intercompany note) and (ii) all such Indebtedness described under clause (i), and all Indebtedness of any other Person (other than any such Indebtedness that, individually, has a principal amount of less than $5,000,000) owing to any Loan Party that is evidenced by a promissory note of which a Responsible Officer is aware shall be pledged and delivered to the Administrative Agent, for the ratable benefit of the Secured Parties, pursuant to the terms hereof.

(c)  Upon delivery to the Administrative Agent, (i) any Pledged Securities required to be delivered pursuant to the foregoing paragraphs (a) and (b) shall be accompanied by undated stock powers duly executed by the applicable Grantor in blank or other instruments of transfer satisfactory to the Administrative Agent and by such other instruments and documents as the Administrative Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral delivered pursuant to the terms of this Agreement shall be accompanied by undated proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the Administrative Agent may reasonably request.  Each delivery of Pledged Securities shall be accompanied by a schedule describing the securities so delivered, which schedule shall be attached hereto as Schedule II and made a part hereof, provided that failure to attach any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities.  Each schedule so delivered shall supplement any prior schedules so delivered.

SECTION 3.03.  Representations, Warranties and Covenants.  The Grantors jointly and severally represent, warrant and covenant to and with the Administrative Agent, for the ratable benefit of the Secured Parties, that:

(a) Schedule II sets forth, as of the date hereof, a true and complete list, with respect to each Grantor, of (i) all the Capital Stock owned by such Grantor and the percentage of the issued and outstanding units of each class of the Capital Stock of the issuer thereof represented by the Pledged Stock owned by such Grantor and (ii) all Pledged Debt Securities required to be delivered to the Administrative Agent pursuant to Section 3.02;

(b) the Pledged Stock and Pledged Debt Securities (solely with respect to Pledged Debt Securities issued by a person that is not a Subsidiary or Affiliate of such Subsidiary, to the best of each Grantor’s knowledge) have been duly and validly authorized and issued by the issuers thereof and (i) in the case of Pledged Stock, are fully paid and nonassessable and (ii) in the case of Pledged Debt Securities (solely with respect to Pledged Debt Securities issued by a person that is not a Subsidiary or Affiliate of such Subsidiary, to the best of each Grantor’s knowledge), are legal, valid and binding obligations of the issuers thereof, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding at law or in equity) and an implied covenant of good faith and fair dealing;

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(c) except for the security interests granted hereunder, each of the Grantors (i) is and, subject to any transfers made in compliance with the Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities indicated on Schedule II as owned by such Grantor, (ii) holds the same free and clear of all Liens, other than Liens created by this Agreement, Liens permitted under subsection 9.3 of the Credit Agreement (“Permitted Liens”), and transfers made in compliance with the Credit Agreement, (iii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than Liens created by this Agreement, Permitted Liens, and transfers made in compliance with, the Credit Agreement, and (iv) subject to the rights of such Grantor under the Loan Documents to dispose of Pledged Collateral, will use commercially reasonable efforts to defend its title or interest thereto or therein against any and all Liens (other than the Liens created by this Agreement and Permitted Liens), however arising, of all Persons whomsoever;

(d) except for restrictions and limitations imposed by the Loan Documents, the Harman LLC Agreement or securities laws generally, the Pledged Stock and, to the extent issued by the Company or any of its Subsidiaries, the Pledged Debt Securities are and will continue to be freely transferable and assignable, and none of the Pledged Stock or, to the extent issued by the Company or any of its Subsidiaries, the Pledged Debt Securities is or will be subject to any option, right of first refusal, shareholders agreement, charter or by-law provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Administrative Agent of rights and remedies hereunder;

(e) each of the Grantors has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated;

(f) no consent or approval of any Governmental Authority, any securities exchange or, solely in the case of Pledged Debt Securities issued by any other Person other than the Company or any of its Subsidiaries was or is necessary to the validity of the pledge effected hereby (other than such as have been obtained and are in full force and effect);

(g) by virtue of the execution and delivery by the Grantors of this Agreement, when any Pledged Securities are delivered to the Administrative Agent, for the ratable benefit of the Secured Parties, in accordance with this Agreement, the Administrative Agent will obtain, for the ratable benefit of the Secured Parties, a legal, valid and perfected lien upon and security interest in such Pledged Securities under New York UCC to the extent such lien and security interest may be created and perfected under the New York UCC, subject only to Permitted Liens, as security for the payment and performance of the Secured Obligations; and

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(h) subject to applicable local law in the case of any Foreign Guarantor and any Capital Stock issued by any Foreign Subsidiary, this Agreement is effective to vest in the Administrative Agent, for the ratable benefit of the Secured Parties, the rights of the Administrative Agent in the Pledged Collateral as set forth herein.

SECTION 3.04.  Certification of Limited Liability Company and Limited Partnership Interests.  To the extent any interest in a limited liability company or limited partnership that is a Domestic Subsidiary and that is controlled by any Grantor is represented by a certificate and is pledged hereunder, each such interest shall be a “security” within the meaning of Article 8 of the New York UCC.  

SECTION 3.05.  Unlimited Liability Companies.  Notwithstanding the grant of security interest made by the Grantors in favor of the Administrative Agent, its successor and assigns, for the ratable benefit of the Secured Parties, of all of its Pledged Stock, any Grantor that controls any interest (for the purposes of this Section 3.05, “ULC Interests”) in any unlimited liability company (for the purposes of this Section 3.05, a “ULC”) pledged hereunder shall remain registered as the sole registered and beneficial owner of such ULC Interests and will remain as registered and beneficial owner until such time as such ULC Interests are effectively transferred into the name of the Administrative Agent or any other person on the books and records of such ULC.  Nothing in this Agreement is intended to or shall constitute the Administrative Agent or any person as a shareholder or member of any ULC until such time as notice is given to such ULC and further steps are taken thereunder so as to register the Administrative Agent or any other person as the holder of the ULC Interests of such ULC.  To the extent any provision hereof would have the effect of constituting the Administrative Agent or any other person as a shareholder or member of a ULC prior to such time, such provision shall be severed therefrom and ineffective with respect to the ULC Interests of such ULC without otherwise invalidating or rendering unenforceable this Agreement or invalidating or rendering unenforceable such provision insofar as it relates to Pledged Stock which are not ULC Interests.  Except upon the exercise of rights to sell or otherwise dispose of ULC Interests following the occurrence and during the continuance of an Event of Default hereunder, no Grantor shall cause or permit, or enable any ULC in which it holds ULC Interests to cause or permit, the Administrative Agent to: (a) be registered as shareholders or members of such ULC; (b) have any notation entered in its favor in the share register of such ULC; (c) be held out as a shareholder or member of such ULC; (d) receive, directly or indirectly, any dividends, property or other distributions from such ULC by reason of the Administrative Agent holding a security interest in such ULC; or (e) act as a shareholder or member of such ULC, or exercise any rights of a shareholder or member of such ULC including the right to attend a meeting of, or to vote the shares of, such ULC.

SECTION 3.06.  Registration in Nominee Name; Denominations.  The Administrative Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, in its own name as pledgee or in the name of its nominees (as pledgee or as sub-agent).  Each Grantor will promptly give to the Administrative Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Grantor.  The Administrative Agent shall at all reasonable times have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any reasonable purpose consistent with this Agreement.  Each Grantor shall use its commercially reasonable efforts to cause any Loan Party that is not a party to this Agreement to comply with a request by the Administrative Agent, pursuant to this Section 3.06, to exchange certificates representing Pledged Securities of such Loan Party for certificates of smaller or larger denominations.

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SECTION 3.07.  Voting Rights; Dividends and Interest.  i)Unless and until an Event of Default shall have occurred and be continuing and the Administrative Agent shall have notified the Grantors that their rights under this Section 3.07 are being suspended:

(i) each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Collateral or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents, provided that such rights and powers shall not be exercised in any manner that could reasonably be expected to materially and adversely affect the rights inuring to a holder of any Pledged Collateral or the rights and remedies of the Administrative Agent or any other of the Secured Parties under this Agreement or the Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same;

(ii) the Administrative Agent shall execute and deliver to each Grantor, or cause to be executed and delivered to such Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above; and

(iii) each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Collateral to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable laws, provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Stock or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Capital Stock of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, amalgamation, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral and, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Administrative Agent and shall be forthwith delivered to the Administrative Agent in the same form as so received (with any necessary endorsement).

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(b)  Upon the occurrence and during the continuance of an Event of Default, after the Administrative Agent shall have notified the Grantors of the suspension of their rights under paragraph (a)(iii) of this Section 3.07, all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 3.07 shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions.  All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 3.07 shall be held in trust for the benefit of the Administrative Agent, shall be segregated from other property or funds of such Grantor and shall be forthwith delivered to the Administrative Agent upon demand in the form in which so received (with any necessary endorsement).  Any and all money and other property paid over to or received by the Administrative Agent pursuant to the provisions of this paragraph (b) shall be retained by the Administrative Agent in an account to be established by the Administrative Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 5.02.  After all Events of Default have been cured or waived and the Company has delivered to the Administrative Agent a certificate to that effect, the Administrative Agent shall promptly repay to each Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 3.07 and that remain in such account.

(c)  Upon the occurrence and during the continuance of an Event of Default, after the Administrative Agent shall have notified the Grantors of the suspension of their rights under paragraph (a)(i) of this Section 3.07, all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.07, and the obligations of the Administrative Agent under paragraph (a)(ii) of this Section 3.07, shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers, provided that, unless otherwise directed by the Majority Extended Tranche Lenders, the Administrative Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights.

(d)  Any notice given by the Administrative Agent to the Grantors suspending their rights under paragraph (a) of this Section 3.07 (i) may be given by telephone if promptly confirmed in writing, (ii) may be given to one or more of the Grantors at the same or different times and (iii) may suspend the rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part without suspending all such rights (as specified by the Administrative Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Administrative Agent’s right to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.

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(e)  After all Events of Default have been cured or waived and the Company has delivered to the Administrative Agent a certificate to that effect, each Grantor shall have the right to exercise the voting and/or consensual rights and powers that such Grantor would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) above and the obligations of the Administrative Agent under paragraph (a)(ii) shall be in effect.

ARTICLE IV

Security Interests in Personal Property

SECTION 4.01.  Security Interest.  i)As security for the payment or performance, as the case may be, in full of its Secured Obligations, each Grantor hereby grants to the Administrative Agent, its successors and assigns, for the ratable benefit of the Secured Parties, a security interest (the “Security Interest”) in all right, title and interest in and to any and all personal property and other assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “Article 9 Collateral”), which Article 9 Collateral includes but is not limited to:

(i)  all Accounts;

(ii)  all Chattel Paper;

(iii)  all cash, Cash Collateral Accounts and Deposit Accounts;

(iv)  all Documents;

(v)  all Equipment;

(vi)  all General Intangibles (including all Intellectual Property);

(vii)  all Instruments;

(viii)  all Inventory;

(ix)  all Investment Property;

(x)  all Letter-of-Credit rights;

(xi)  all Commercial Tort Claims described on Schedule IV;

(xii)  all books and records pertaining to the Article 9 Collateral; and

(xiii)  to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing;

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(b)  Each Grantor hereby irrevocably authorizes the Administrative Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements (including fixture filings) and financing change statements with respect to the Article 9 Collateral or any part thereof and amendments thereto that (i) identify the applicable Collateral (including, in the case of any Grantor, by indicating the Collateral to be “all assets” of such Grantor or words of similar effect as being of an equal or lesser scope or with greater detail) and (ii) contain the information required by Article 9 of the Uniform Commercial Code or other applicable law of each applicable jurisdiction for the filing of any financing statement, financing change statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor and (B) in the case of a financing statement filed as a fixture filing or covering Article 9 Collateral constituting minerals or the like to be extracted or timber to be cut, a sufficient description of the real property to which such Article 9 Collateral relates.  Each Grantor agrees to provide such information to the Administrative Agent promptly upon request.

Each Grantor also ratifies its authorization for the Administrative Agent to file in any relevant jurisdiction any initial financing statements and financing change statements or amendments thereto if filed prior to the date hereof.

The Administrative Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office (or any successor office or any similar office in any other country) such documents as may be reasonably necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Administrative Agent as secured party.

(c)  The Security Interest and the security interest granted pursuant to Article III are granted as security only and shall not subject the Administrative Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.

(d)  Notwithstanding anything herein to the contrary, this Agreement shall not constitute a grant of a security interest in and the “Article 9 Collateral” and the “Pledged Collateral” shall not include, (i) any assets (including Capital Stock) hereafter acquired with respect to which the Collateral and Guarantee Requirement would not be required to be satisfied by reason of the definition of “Collateral and Guarantee Requirement” in the Credit Agreement, (ii) any property excluded from the definition of Pledged Collateral pursuant to Section 3.01, (iii) any Letter of Credit rights to the extent any Grantor is required by applicable law to apply the proceeds of a drawing of such Letter of Credit for a specified purpose, (iv) any Grantor’s right, title or interest in any license, contract or agreement to which such Grantor is a party or any of its right, title or interest thereunder to the extent, but only to the extent, that such a grant would, under the terms of such license, contract or agreement, result in a breach of the terms of, or constitute a default under, or result in the abandonment, invalidation or unenforceability of, any license, contract or agreement to which such Grantor is a party (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the New York UCC or any other applicable law (including, without limitation, Title 11 of the United States Code) or principles of equity); provided, that immediately upon the ineffectiveness, lapse or termination of any such provision, the Collateral shall include, and such Grantor shall be deemed to have granted a security interest in, all such rights and interests as if such provision had never been in effect, (v) any Equipment owned by any Grantor that is subject to a purchase money lien or a Capital Lease Obligation if the contract or other agreement in which such Lien is granted (or the documentation providing for such Capital Lease Obligation) prohibits or requires the consent of any person other than the Grantors as a condition to the creation of any other security interest on such Equipment, (vi) to the extent applicable law requires that a subsidiary of such Grantor issue directors’ qualifying shares, such shares or nominee or similar shares, (vii) any right, title or interest of any Grantor in respect of the Harman Trust Agreement, (viii) any of the Capital Stock issued by the Additional Borrower owned by Harman KG Holding, LLC or (ix) any assets (including Capital Stock) to the extent that such grant of a security interest is prohibited by any applicable law, treaty, rule or regulation.

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(e)  The Article 9 Collateral shall not include the last day of the term of any lease or agreement therefor but upon the enforcement of the Security Interest granted hereby in the Article 9 Collateral, the Grantors or any of them shall stand possessed of such last day in trust to assign the same to any person acquiring such term.

(f)  Notwithstanding Section 4.01(a), the Article 9 Collateral shall not include “consumer goods” of any Grantor organized under the laws of Canada or any Province thereof as that term is defined in the PPSA.

(g)  Notwithstanding Section 4.01(a), the grant by any Grantor organized under the laws of Canada or any Province thereof of security in Trade-marks (as defined in the Trade-marks Act (Canada)) under this Agreement shall be limited to a grant by such Grantor of a security interest in all of such Grantor’s right, title and interest in such Trade-marks.

(h)  Each Grantor and the Administrative Agent hereby acknowledge that (a) value has been given in respect of the security interests granted herein; (b) such Grantor has rights in the Collateral in which it has granted a security interest; and (c) this Agreement constitutes a security agreement as that term is defined in the PPSA.

(i)  If the Collateral is realized upon and the security interest in the Collateral is not sufficient to satisfy all the Secured Obligations, each Grantor acknowledges and agrees that, subject to the provisions of the PPSA, such Grantor shall continue to be liable for its Secured Obligations remaining outstanding and the Administrative Agent shall be entitled to pursue full payment thereof.

SECTION 4.02.  Representations and Warranties.  The Grantors jointly and severally represent and warrant to the Administrative Agent, for the ratable benefit of the Secured Parties, that:

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(a)  Each Grantor has good and valid rights in and title to the Article 9 Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Administrative Agent the Security Interest in such Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained.

(b)  (i) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein, including, without limitation, the legal name of each Loan Party, is correct and complete in all material respects as of the Restatement Effective Date, (ii) the Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations prepared by the Administrative Agent based upon the information provided to the Administrative Agent in the Perfection Certificate for filing in each governmental, municipal or other office specified in Schedule 2 to the Perfection Certificate (or specified by notice from the Company to the Administrative Agent after the Restatement Effective Date in the case of filings, recordings or registrations required by subsection 8.11 of the Credit Agreement), are all the filings, recordings and registrations (other than filings required to be made in the United States Patent and Trademark Office, the United States Copyright Office and the Canadian Intellectual Property Office in order to perfect the Security Interest in Article 9 Collateral consisting of Intellectual Property) that are necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Administrative Agent (for the ratable benefit of the Secured Parties) in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States, Canada (or any political subdivision thereof) and their provinces, territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of renewals or continuation statements; (iii) each Grantor shall ensure that a Patent and Trademark Security Agreement, in substantially the form of Exhibit III hereto, and a Copyright Security Agreement in substantially the form of Exhibit IV hereto (such agreements being collectively referred to as the “IP Security Agreements”), in each case containing a description of the Article 9 Collateral consisting of the material pending and issued United States registered Patents, pending and registered United States Trademarks and pending and registered United States Copyrights, as applicable, and executed by each Grantor owning any such Article 9 Collateral, shall be delivered to the Administrative Agent, for registration thereof with the United States Patent and Trademark Office or the United States Copyright Office pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the regulations thereunder, as applicable to protect the validity of and to establish a legal, valid and perfected security interest in favor of the Administrative Agent (for the ratable benefit of the Secured Parties) in respect of all Article 9 Collateral consisting of such material Intellectual Property in which a security interest may be perfected by filing, recording or registration in the United States, Canada (or any political subdivision thereof) and their provinces, territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of Intellectual Property (or registration or application for registration thereof) acquired or developed after the date hereof).

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(c)  The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Secured Obligations, (ii) subject to the filings described in Section 4.02(b), a perfected security interest in all Article 9 Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States or Canada (or any political subdivision thereof) and their provinces, territories and possessions pursuant to the Uniform Commercial Code or the PPSAand (iii) a security interest that shall be perfected in all Article 9 Collateral in which a security interest may be perfected upon the receipt and recording of the IP Security Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, within the three-month period (commencing as of the date hereof) pursuant to 35 U.S.C. § 261 or 15 U.S.C. § 1060 or the one month period (commencing as of the date hereof) pursuant to 17 U.S.C. § 205.  The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than Permitted Liens.

(d)  The Article 9 Collateral is owned by the Grantors free and clear of any Lien, except for Permitted Liens. None of the Grantors has filed or consented to the filing of (i) any financing statement, financing change statement or analogous document under the Uniform Commercial Code, the PPSA or any other applicable laws covering any Article 9 Collateral, (ii) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Article 9 Collateral with the United States Patent and Trademark Office or the United States Copyright Office or (iii) any assignment in which any Grantor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or other office, which financing statement, financing change statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Permitted Liens.

(e)  Schedule III hereto sets forth, to the best of each Grantor’s knowledge,  as of the date hereof, (i) all of each Grantor’s material pending and issued United States Patents, including the name of the registered owner, type, registration or application serial number, issue number and expiration date (if already registered) of each such Patent application and issued Patent application owned by any Grantor, (ii) all of each Grantor’s material pending and registered United States Trademarks, including the name of the registered owner and the registration or application serial number of each such Trademark application and registered Trademark owned by any Grantor, and (iii) all of each Grantor’s material pending and registered United States Copyrights, if any, including the name of the registered owner, title and, if applicable, the registration number of each such registered Copyright owned by any Grantor.

(f)  Schedule IV hereto sets forth, as of the date hereof, each Commercial Tort Claim in respect of which a complaint or a counterclaim has been filed by any Grantor seeking damages in an amount of $5,000,000 or more.

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SECTION 4.03.  Covenants.  i)Each Grantor agrees to promptly provide the Administrative Agent with certified organizational documents reflecting any of the changes described in subsection 8.10 of the Credit Agreement.  Each Grantor agrees promptly to notify the Administrative Agent if any material portion of the Article 9 Collateral owned or held by such Grantor is damaged, destroyed, or subject to condemnation.

(b)  Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to subsection 8.1(a) of the Credit Agreement, the Company shall deliver to the Administrative Agent a certificate executed by a Responsible Officer and the chief legal officer of the Company (i) setting forth the information required pursuant to the Perfection Certificate with respect to all Collateral owned as of such date or confirming that there has been no change in such information since the date of such certificate or the date of the most recent certificate delivered pursuant to this Section 4.03(b) and (ii) certifying based on the Collateral owned and the applicable law in effect as of the date of such certificate that all Uniform Commercial Code and PPSA financing statements and financing change statements (including fixture filings, as applicable) or other appropriate filings recordings or registrations, including all refilings, rerecordings and registrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified in the Perfection Certificate to the extent necessary to protect and perfect the Security Interest for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period).

(c)  Subject to the rights of such Grantor under the Loan Documents to dispose of Collateral, each Grantor shall, at its own expense, use commercially reasonable efforts to defend title to the Article 9 Collateral against all Persons and to defend the Security Interest of the Administrative Agent, for the ratable benefit of the Secured Parties, in the Article 9 Collateral and the priority thereof against any Lien that is not a Permitted Lien.

(d)  Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Administrative Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements or financing change statements (including fixture filings) or other documents in connection herewith or therewith.

Without limiting the generality of the foregoing, each Grantor hereby authorizes the Administrative Agent, with prompt notice thereof to the Grantors, to supplement this Agreement by supplementing Schedule III or adding additional schedules hereto to identify specifically any asset or item that may constitute material Intellectual Property, provided that any Grantor shall have the right, exercisable within 30 days after the Company has been notified by the Administrative Agent of the specific identification of such Collateral, to advise the Administrative Agent in writing of any inaccuracy of the representations and warranties made by such Grantor hereunder with respect to such Collateral.  Each Grantor agrees that it will use its commercially reasonable efforts to take such action as shall be necessary in order that all representations and warranties hereunder shall be true and correct with respect to such Collateral within 30 days after the date it has been notified by the Administrative Agent of the specific identification of such Collateral.

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(e)  At its option, the Administrative Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and not a Permitted Lien, and may pay for the maintenance and preservation of the Article 9 Collateral to the extent any Grantor fails to do so as required by the Credit Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Administrative Agent on demand for any reasonable payment made or any reasonable expense incurred by the Administrative Agent pursuant to the foregoing authorization, provided that nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Administrative Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance of properties as set forth herein or in the other Loan Documents.

(f)  Each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Article 9 Collateral, and each Grantor jointly and severally agrees to indemnify and hold harmless the Administrative Agent and the Secured Parties from and against any and all liability for such performance.

(g)  None of the Grantors shall make or permit to be made an assignment, pledge or hypothecation of the Article 9 Collateral or shall grant any other Lien in respect of the Article 9 Collateral, except as permitted by the Credit Agreement.  None of the Grantors shall make or permit to be made any transfer of the Article 9 Collateral and each Grantor shall remain at all times in possession of the Article 9 Collateral owned by it, except as permitted by the Credit Agreement.

(h)  None of the Grantors will, without the Administrative Agent’s prior written consent, grant any extension of the time of payment of any Accounts included in the Article 9 Collateral, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any Person liable for the payment thereof or allow any credit or discount whatsoever thereon, other than extensions, compromises, settlements, releases, credits or discounts granted or made in the ordinary course of business.

(i)  The Grantors, at their own expense, shall maintain or cause to be maintained insurance covering physical loss or damage to the Inventory and Equipment in accordance with the requirements set forth in subsection 8.5 of the Credit Agreement.  Each Grantor irrevocably makes, constitutes and appoints the Administrative Agent (and all officers, employees or agents designated by the Administrative Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) for the purpose, during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Article 9 Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto.  In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required hereby or to pay any premium in whole or part relating thereto, the Administrative Agent may, without waiving or releasing any obligation or liability of the Grantors hereunder or any Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Administrative Agent deems advisable.  All sums disbursed by the Administrative Agent in connection with this paragraph, including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Grantors to the Administrative Agent and shall be additional Secured Obligations secured hereby.

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(j)  Each Grantor shall maintain, in form and manner reasonably satisfactory to the Administrative Agent, records of its Chattel Paper, if any, and its books, records and documents evidencing or pertaining thereto.

(k)  The Company shall use commercially reasonable efforts to obtain an estoppel letter, in a form reasonably satisfactory to the Administrative Agent, from the secured parties under those certain PPSA registrations of QNX Software Systems Co. confirming that such PPSA registrations relate only to the interests in a specific escrow account and any and all proceeds thereof.

(l)  Harman KG Holding, LLC shall not (i) engage in any business or activity other than ownership of the interests in the Additional Borrower owned by it as of the Restatement Effective Date, (ii) own any assets other than its interests in the Additional Borrower owned as of the Restatement Effective Date, (iii) create, incur, assume or suffer to exist any Indebtedness or any Liens on any of its assets whether now or hereafter acquired or (iv) create, incur, assume or suffer to exist any liabilities (other than liabilities imposed by law, including tax liability or liabilities relating to its existence).

SECTION 4.04.  Other Actions.  In order to further ensure the attachment, perfection and priority of, and the ability of the Administrative Agent to enforce, for the ratable benefit of the Secured Parties, the Security Interest, each Grantor agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Article 9 Collateral:

(a) Instruments and Tangible Chattel Paper.  If any Grantor shall at any time hold or acquire any Instruments (other than any instrument received and processed in the ordinary course of business) or Tangible Chattel Paper evidencing an amount in excess of $5,000,000, such Grantor shall forthwith endorse, assign and deliver the same to the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time reasonably request.

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(b) Deposit Accounts.  For each Deposit Account that any Grantor at any time opens or maintains, such Grantor shall either (i) cause the depositary bank to agree to comply with instructions from the Administrative Agent to such depositary bank directing the disposition of funds from time to time credited to such deposit account, without further consent of such Grantor or any other Person, pursuant to an agreement reasonably satisfactory to the Administrative Agent, or (ii) arrange for the Administrative Agent to become the customer of the depositary bank with respect to such Deposit Account, with the Grantor being permitted, only with the consent of the Administrative Agent, to exercise rights to withdraw funds from such deposit account.  The Administrative Agent agrees with each Grantor that the Administrative Agent shall not give any such instructions or withhold any withdrawal rights from any Grantor unless an Event of Default has occurred and is continuing or, after giving effect to any withdrawal, would occur. The provisions of this paragraph shall not apply to (A) any Deposit Account for which any Grantor, the depositary bank and the Administrative Agent have entered into a cash collateral agreement specially negotiated among such Grantor, the depositary bank and the Administrative Agent for the specific purpose set forth therein and (B) Deposit Accounts for which the Administrative Agent is the depositary.

(c) Investment Property.  Except to the extent otherwise provided in Article III, if any Grantor shall at any time hold or acquire any certificated securities subject to the Security Interest, such Grantor shall forthwith endorse, assign and deliver the same to the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time reasonably specify.  If any securities now or hereafter acquired by any Grantor and subject to the Security Interest are uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof, such Grantor shall promptly notify the Administrative Agent thereof and, at the Administrative Agent’s reasonable request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, either (i) cause the issuer to agree to comply with instructions from the Administrative Agent as to such securities, without further consent of any Grantor or such nominee, or (ii) arrange for the Administrative Agent to become the registered owner of the securities.  If any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by any Grantor and subject to the Security Interest are held by such Grantor or its nominee through a securities intermediary or commodity intermediary, such Grantor shall immediately notify the Administrative Agent thereof and, at the Administrative Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, either (i) cause such securities intermediary or commodity intermediary, as the case may be, to agree to comply with entitlement orders or other instructions from the Administrative Agent to such securities intermediary as to such security entitlements or to apply any value distributed on account of any commodity contract as directed by the Administrative Agent to such commodity intermediary, as the case may be, in each case without further consent of any Grantor, such nominee, or any other Person, or (ii) in the case of Financial Assets or other Investment Property held through a securities intermediary, arrange for the Administrative Agent to become the entitlement holder with respect to such Investment Property, with the Grantor being permitted, only with the consent of the Administrative Agent, to exercise rights to withdraw or otherwise deal with such Investment Property.  The Administrative Agent agrees with each of the Grantors that the Administrative Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Grantor, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights, would occur.  The provisions of this paragraph shall not apply to any Financial Assets credited to a securities account for which the Administrative Agent is the securities intermediary.

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(d) Commercial Tort Claims.  If any Grantor shall at any time hold or acquire a Commercial Tort Claim in an amount reasonably estimated to exceed $5,000,000, the Grantor shall promptly notify the Administrative Agent thereof in a writing signed by such Grantor, including a summary description of such claim, and grant to the Administrative Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Administrative Agent.

SECTION 4.05.  Covenants Regarding Intellectual Property Collateral.  i)Each Grantor agrees that it will not do any act or omit to do any act (and will exercise commercially reasonable efforts to prevent its licensees from doing any act omitting to do any act) whereby any Patent may become invalidated or dedicated to the public, and agrees that it shall use commercially reasonable efforts to continue to mark any products covered by a Patent that is material to the conduct of such Grantor’s business with the relevant patent number as necessary and sufficient to establish and preserve its maximum rights under applicable patent laws.

(b)  Each Grantor will, and will use its commercially reasonable efforts to cause its licensees or its sublicensees to, for each Trademark material to the conduct of such Grantor’s business, (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trademark, (iii) display such Trademark with notice of Federal or foreign registration to the extent necessary and sufficient to establish and preserve its maximum rights as required under applicable law and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights.

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(c)  Each Grantor will, and will use its commercially reasonable efforts to cause its licensees or its sublicensees to, for each work covered by a Copyright material to the conduct of such Grantor’s business that it publishes, displays and distributes, use copyright notice as required under applicable copyright laws.

(d)  Each Grantor shall notify the Administrative Agent promptly if it knows or has reason to know that any Patent, Trademark or Copyright material to the conduct of such Grantor’s business may imminently become abandoned, lapsed or dedicated to the public, or of any materially adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, United States Copyright Office or any court or similar office of any country) regarding such Grantor’s ownership of any Intellectual Property material to the conduct of its business, its right to register the same, or its right to keep and maintain the same.

(e)  Each Grantor, either itself or through any agent, employee, licensee or designee, shall (i) inform the Administrative Agent on an annual basis of each application by itself, or through any agent, employee, licensee or designee, for any Patent with the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof during the preceding twelve-month period, in each case to the extent such application or registration relates to Intellectual Property material to the normal course of such Grantor’s business and (ii) execute and deliver any and all agreements, instruments, documents and papers as the Administrative Agent may otherwise reasonably request to evidence the Administrative Agent’s security interest in such Intellectual Property and each Grantor hereby appoints the Administrative Agent as its attorney in fact to execute and file such writing for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power being coupled with an interest is irrevocable.

(f)  Each Grantor shall exercise its reasonable business judgment with the practice in any proceeding before the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof, to maintain and pursue each material application relating to the Intellectual Property (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks and Copyrights that is material to the conduct of any Grantor’s business, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancelation proceedings against third parties.

(g)  In the event that any Grantor knows or has reason to believe that any Article 9 Collateral consisting of Patent, Trademark or Copyright material to the conduct of any Grantor’s business has been or is about to be materially infringed, misappropriated or diluted by a third party, such Grantor promptly shall notify the Administrative Agent and shall, if the Grantor deems it necessary in its reasonable business judgment, promptly sue and recover any and all damages and take such other actions as are reasonably appropriate under the circumstances.

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(h)  Upon and during the continuance of an Event of Default, each Grantor shall use its commercially reasonable efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License under which such Grantor is a licensee to effect the assignment of all such Grantor’s right, title and interest thereunder to the Administrative Agent or its designee.

SECTION 4.06.  Cash Collateral Accounts.  The Grantors shall establish and maintain the Cash Collateral Account as and when required by the provisions of the Credit Agreement and any funds on deposit in the Cash Collateral Account shall continue to be collateral security for all of the Secured Obligations.  Upon the occurrence and during the continuance of an Event of Default, at the Administrative Agent’s election, any funds on deposit in any Cash Collateral Account may be applied as provided in Section 5.02.

ARTICLE V

Remedies

SECTION 5.01.  Remedies Upon Default.  Upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of Collateral to the Administrative Agent on demand, and it is agreed that the Administrative Agent shall have the right to take any of or all the following actions at the same or different times:  (a) to the extent permitted under applicable law, with respect to any Article 9 Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by the applicable Grantors to the Administrative Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Administrative Agent shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers cannot be obtained), and (b) to the extent permitted under applicable law, with or without legal process and with or without prior notice or demand for performance, to take possession of the Article 9 Collateral and without liability for trespass to enter any premises where the Article 9 Collateral may be located for the purpose of taking possession of or removing the Article 9 Collateral and, generally, to exercise any and all rights afforded to a secured party under the Uniform Commercial Code or other applicable law.  Without limiting the generality of the foregoing, each Grantor agrees that the Administrative Agent shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Administrative Agent shall deem appropriate.  The Administrative Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Administrative Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold.  Each such purchaser at any sale of Collateral shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal that such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

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The Administrative Agent shall give the applicable Grantors 10 days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Administrative Agent’s intention to make any sale of Collateral.  Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange.  Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Administrative Agent may fix and state in the notice (if any) of such sale.  At any such sale, the Collateral , or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Administrative Agent may (in its sole and absolute discretion) determine.  The Administrative Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given.  The Administrative Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned.  In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Administrative Agent until the sale price is paid by the purchaser or purchasers thereof, but the Administrative Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice.  At any public (or, to the extent permitted by law, private) sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor.  For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Administrative Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Administrative Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Secured Obligations paid in full.  As an alternative to exercising the power of sale herein conferred upon it, the Administrative Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver.  Any sale pursuant to the provisions of this Section 5.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions.

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Upon the occurrence and during the continuance of an Event of Default, theAdministrative Agent may appoint, remove or reappoint by instrument in writing, any Person or Persons, whether an officer or officers or an employee or employees of any Grantor or not, to be an interim receiver, receiver or receivers (hereinafter called a “Receiver”, which term when used herein shall include a receiver and manager) of Collateral (including any interest, income or profits therefrom) located in Canada.  Any such Receiver shall, to the extent permitted by applicable law, be deemed the agent of such Grantor and not of the Administrative Agent, and the exculpatory provisions of Section 11 of the Credit Agreement shall apply to such Receiver and its servants, agents or employees.  Subject to the provisions of the instrument appointing it, any such Receiver shall (i) have such powers as have been granted to the Administrative Agent under this Article V and (ii) shall be entitled to exercise such powers at any time that such powers would otherwise be exercisable by the Administrative Agent under this Article V, which powers shall include, but are not limited to, the power to take possession of the Collateral, to preserve the Collateral or its value, to carry on or concur in carrying on all or any part of the business of such Grantor and to sell, lease, license or otherwise dispose of or concur in selling, leasing, licensing or otherwise disposing of the Collateral.  To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others, including any Grantor, enter upon, use and occupy all premises owned or occupied by such Grantor wherein the Collateral may be situate, maintain the Collateral upon such premises, borrow money on a secured or unsecured basis and use the Collateral directly in carrying on such Grantor’s business or as security for loans or advances to enable the Receiver to carry on such Grantor’s business or otherwise, as such Receiver shall, in its reasonable discretion, determine.  Except as may be otherwise directed by the Administrative Agent, all money received from time to time by such Receiver in carrying out his/her/its appointment shall be received in trust for and be paid over to the Administrative Agent and any surplus shall be applied in accordance with applicable law.  Every such Receiver may, in the discretion of the Administrative Agent, be vested with, in addition to the rights set out herein, all or any of the rights and powers of the Administrative Agent described in the Credit Agreement, the PPSA or the Bankruptcy and Insolvency Act (Canada).

SECTION 5.02.  Application of Proceeds.  Subject to applicable law, the Administrative Agent shall apply the proceeds of any collection or sale of Collateral, including any Collateral consisting of cash, as follows:

FIRST, to the payment of all costs and expenses incurred by the Administrative Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Loan Document or any of the Secured Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Administrative Agent hereunder or under any other Loan Document on behalf of any Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document in its capacity as such;

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SECOND, to the payment in full of the Secured Obligations secured by such Collateral (the amounts so applied to be distributed among the applicable Secured Parties pro rata in accordance with the amounts of the applicable Secured Obligations owed to them on the date of any such distribution); and

THIRD, to the Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Administrative Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement.  Upon any sale of Collateral by the Administrative Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Administrative Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Administrative Agent or such officer or be answerable in any way for the misapplication thereof.  Notwithstanding the foregoing, no Proceeds of Collateral securing solely the Foreign Secured Obligations shall be applied to Domestic Secured Obligations.

SECTION 5.03.  Grant of License to Use Intellectual Property.  For the purpose of enabling the Administrative Agent to exercise rights and remedies under this Agreement at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Administrative Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantor) to use, license or sublicense any of the Article 9 Collateral consisting of Intellectual Property now owned or hereafter acquired by such Grantor, in each case wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.  The use of such license by the Administrative Agent may be exercised, at the option of the Administrative Agent, upon the occurrence and during the continuation of an Event of Default, provided that any license, sublicense or other transaction entered into by the Administrative Agent in accordance herewith shall be binding upon the Grantors notwithstanding any subsequent cure of an Event of Default.

SECTION 5.04.  Securities Act.  In view of the position of the Grantors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted in any jurisdiction analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the “Federal Securities Laws”) with respect to any disposition of the Pledged Collateral permitted hereunder.  Each Grantor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Administrative Agent if the Administrative Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same.  Similarly, there may be other legal restrictions or limitations affecting the Administrative Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in purpose or effect in the United States, Canada or any other country.  Each Grantor recognizes that in light of such restrictions and limitations the Administrative Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof.  Each Grantor acknowledges and agrees that in light of such restrictions and limitations, the Administrative Agent, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws and (b) may approach and negotiate with a single potential purchaser to effect such sale.  Each Grantor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions.  In the event of any such sale, the Administrative Agent shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Administrative Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a single purchaser were approached.  The provisions of this Section 5.04 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Administrative Agent sells.

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ARTICLE VI

Indemnity, Subrogation and Subordination

SECTION 6.01.  Indemnity and Subrogation.  In addition to all such rights of indemnity and subrogation as the Guarantors and Grantors may have under applicable law (but subject to Section 6.03), each Borrower agrees that (a) in the event a payment in respect of any obligation shall be made by any Guarantor under this Agreement, the Company shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the Person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of any Grantor shall be sold pursuant to this Agreement or any other Security Document to satisfy in whole or in part a Secured Obligation owed to any Secured Party, the Company shall indemnify such Grantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.

SECTION 6.02.  Contribution and Subrogation.  Each Guarantor and Grantor (a “Contributing Party”) agrees (subject to Section 6.03) that, in the event a payment shall be made by any other Guarantor hereunder in respect of any Secured Obligation in respect of which the Contributing Party is liable hereunder or assets of any other Grantor (other than the Company) shall be sold pursuant to any Security Document to satisfy any Secured Obligation in respect of which the Contributing Party is liable hereunder and such other Guarantor or Grantor (the “Claiming Party”) shall not have been fully indemnified by the Company as provided in Section 6.01, the Contributing Party shall indemnify the Claiming Party in an amount equal to the amount of such payment or the greater of the book value or the fair market value of such assets, as the case may be, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Party on the date hereof and the denominator shall be the aggregate net worth of all the Guarantors and Grantors liable for such Secured Obligation, or that have granted Liens to secure such Secured Obligation, on the date hereof (or, in the case of any Guarantor or Grantor becoming a party hereto pursuant to Section 7.17, the date of the supplement hereto executed and delivered by such Guarantor or Grantor).  Any Contributing Party making any payment to a Claiming Party pursuant to this Section 6.02 shall (subject to Section 6.03) be subrogated to the rights of such Claiming Party under Section 6.01 to the extent of such payment.

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SECTION 6.03.  Limitations, Subordination.  Notwithstanding any provision of this Agreement to the contrary, to the extent permitted by law and to the extent to do so would not constitute unlawful financial assistance, the Guarantors and Grantors shall have no rights under Sections 6.01 and 6.02 and shall not exercise any other rights of indemnity, contribution or subrogation under applicable law or otherwise until all of the payment in full in cash of the Secured Obligations owed by the Loan Party against whom the Guarantor or Grantor would otherwise have rights under Section 6.01 or 6.02.  No failure on the part of the Company or any Guarantor or Grantor to make the payments required by Sections 6.01 and 6.02 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor or Grantor with respect to its obligations hereunder, and each Guarantor and Grantor shall remain liable for the full amount of the obligations of such Guarantor or Grantor hereunder.

ARTICLE VII

Miscellaneous

SECTION 7.01.  Notices.  All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in subsection 12.2 of the Credit Agreement.  All communications and notices hereunder to any Subsidiary Loan Party shall be given to it in care of the Company as provided in subsection 12.2 of the Credit Agreement.

SECTION 7.02.  Waivers; Amendment.  i)No failure or delay by the Administrative Agent, the Issuing Bank or any Secured Party in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative Agent, the Issuing Bank and the Secured Parties hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 7.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Extended Tranche Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.  No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.

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(b)  Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with subsections 12.1 and 12.1A of the Credit Agreement.

SECTION 7.03.  Administrative Agent’s Fees and Expenses; Indemnification.  i)The parties hereto agree that the Administrative Agent shall be entitled to reimbursement of its expenses incurred hereunder as provided in subsection 12.5 of the Credit Agreement.

(b)  Without limitation of its indemnification obligations under the other Loan Documents, each Grantor and each Guarantor jointly and severally agrees to indemnify the Administrative Agent and the other Indemnitees against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee by any third party or by any Guarantor or Grantor arising out of, in connection with, or as a result of, the execution, delivery or performance of this Agreement or any claim, litigation, investigation or proceeding relating to any of the foregoing agreement or instrument contemplated hereby, or to the Collateral, whether or not any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee.

(c)  Any such amounts payable as provided hereunder shall be additional Secured Obligations secured hereby and by the other Security Documents.  The provisions of this Section 7.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document or any investigation made by or on behalf of the Administrative Agent or any other Secured Party.  All amounts due under this Section 7.03 shall be payable on written demand therefor.

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SECTION 7.04.  Successors and Assigns.  Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Guarantor, Grantor or the Administrative Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

SECTION 7.05.  Survival of Agreement.  All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any Secured Party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Secured Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement, and shall continue in full force and effect as long as the principal of or any accrued interest on any Extended Tranche Loan or any fee or any other amount payable under any Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Extended Tranche Commitments have not expired or terminated.

SECTION 7.06.  Counterparts; Effectiveness; Several Agreement.  This Agreement may be executed in counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract.  Delivery of an executed signature page to this Agreement by facsimile or electronic transmission shall be effective as delivery of a manually signed counterpart of this Agreement.  This Agreement shall become effective as to any Loan Party when a counterpart hereof executed on behalf of such Loan Party shall have been delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter shall be binding upon such Loan Party and the Administrative Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Loan Party, the Administrative Agent and the other Secured Parties and their respective successors and assigns, except that no Loan Party shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly provided in this Agreement or the Credit Agreement.  This Agreement shall be construed as a separate agreement with respect to each Loan Party and may be amended, modified, supplemented, waived or released with respect to any Loan Party without the approval of any other Loan Party and without affecting the obligations of any other Loan Party hereunder.

SECTION 7.07.  Severability; Limitation by Law.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.  The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.  All rights, remedies and powers provided in this Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not render this Agreement invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

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SECTION 7.08.  Right of Set-Off.  If an Event of Default shall have occurred and be continuing, each Secured Party is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Secured Party to or for the credit or the account of any Guarantor against any of and all the obligations of such Guarantor now or hereafter existing under this Agreement owed to such Secured Party, irrespective of whether or not such Secured Party shall have made any demand under this Agreement and although such obligations may be unmatured.  The rights of each Secured Party under this Section 7.08 are in addition to other rights and remedies (including other rights of set-off) that such Secured Party may have.

SECTION 7.09.  Governing Law; Jurisdiction; Consent to Service of Process.  i)This Agreement shall be construed in accordance with and governed by the law of the State of New York, provided that the provisions set forth in Section 2.04 shall be construed in accordance with and governed by the laws of the Federal Republic of Germany.

(b)  Each of the Loan Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the Loan Parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Extended Tranche Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Grantor, Guarantor, or their respective properties in the courts of any jurisdiction.

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(c)  Each of the Loan Parties hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section 7.09.  Each of the Loan Parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 7.01.  Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 7.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.

SECTION 7.11.  Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 7.12.  Security Interest Absolute.  To the extent permitted by law, all rights of the Administrative Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of each Grantor and Guarantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Secured Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor or Guarantor in respect of the Secured Obligations or this Agreement.

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SECTION 7.13.  Attachment of Security Interest.  For purposes of the PPSA, the security interest created hereby is intended to attach, in respect of Collateral in which any Grantor has rights at the time this Agreement is signed by such Grantor and delivered to the Administrative Agent, at the time this Agreement is signed by such Grantor and delivered to the Administrative Agent and, in respect of Collateral in which any Grantor subsequently acquires rights, at the time such Grantor subsequently acquires such rights.  The Grantors acknowledge and confirm that value has been given by the Administrative Agent and the Secured Parties to the Grantors.

SECTION 7.14.  Copy of Agreement; Verification Statement.  The Grantors hereby acknowledge receipt of a signed copy of this Agreement and hereby waive the requirement to be provided with a copy of any verification statement issued in respect of a financing statement or financing change statement filed under the PPSA in connection with this Agreement to perfect the security interest created herein.

SECTION 7.15.  No Subordination.  Notwithstanding anything to the contrary contained in this Agreement, the Credit Agreement or any other Loan Document (including any provision for, reference to, or acknowledgement of, any Lien or Permitted Lien), nothing herein and no approval by the Administrative Agent or any Secured Party of any Lien or Permitted Lien (whether such approval is oral or in writing) shall be construed as or deemed to constitute a subordination by the Administrative Agent or any Secured Party of any security interest or other right, interest or Lien in or to the Collateral or any part thereof in favor of any Lien or Permitted Lien or any holder of any Lien or Permitted Lien.

SECTION 7.16.  Termination or Release.  i)This Agreement, the guarantees made herein, the Security Interest and all other security interests granted hereby shall terminate when all the Extended Tranche Obligations have been paid in full and the Extended Tranche Lenders have no further commitment to lend under the Credit Agreement, the L/C Obligations have been reduced to zero and the Issuing Bank has no further obligations to issue Letters of Credit under the Credit Agreement.

(b)  A Subsidiary Loan Party (other than the Additional Borrower) shall automatically be released from its obligations hereunder and the Security Interest in the Collateral of such Subsidiary Loan Party shall be automatically released upon the consummation of any transaction permitted by the Credit Agreement as a result of which such Subsidiary Loan Party ceases to be a Subsidiary, provided that the Majority Extended Tranche Lenders shall have consented to such transaction (to the extent required by the Credit Agreement) and the terms of such consent did not provide otherwise.

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(c)  Upon any sale or other transfer by any Grantor of any Collateral that is permitted under the Credit Agreement (other than a sale or other transfer to a Borrower or any Subsidiary), or upon the effectiveness of any written consent to the release of the security interest granted hereby in any Collateral pursuant to subsection 12.1A of the Credit Agreement, the security interest in such Collateral shall be automatically released.

(d)  In connection with any termination or release pursuant to paragraph (a), (b) or (c) of this Section 7.16, the Administrative Agent shall execute and deliver to any Grantor, at such Grantor’s expense, all documents that such Grantor shall reasonably request to evidence such termination or release.  Any execution and delivery of documents pursuant to this Section 7.16 shall be without recourse to or warranty by the Administrative Agent.

SECTION 7.17.  Additional Subsidiaries.  Upon execution and delivery by the Administrative Agent and a Subsidiary of an instrument in the form of Exhibit I hereto, such Subsidiary shall become a Subsidiary Loan Party and a Guarantor and a Grantor hereunder with the same force and effect as if originally named as a Subsidiary Loan Party and a Guarantor and a Grantor herein.  The execution and delivery of any such instrument shall not require the consent of any other Loan Party hereunder.  The rights and obligations of each Loan Party hereunder shall remain in full force and effect notwithstanding the addition of any new Loan Party as a party to this Agreement.

SECTION 7.18.  Administrative Agent Appointed Attorney-in-Fact.  Each Grantor hereby appoints the Administrative Agent the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Administrative Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest.  Without limiting the generality of the foregoing, the Administrative Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Administrative Agent’s name or in the name of such Grantor (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (d) to send verifications of Accounts Receivable to any Account Debtor; (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Administrative Agent; and (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Administrative Agent were the absolute owner of the Collateral for all purposes, provided that nothing herein contained shall be construed as requiring or obligating the Administrative Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Administrative Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby.  The Administrative Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or wilful misconduct.

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SECTION 7.19.  Harman International Guarantee.   This Agreement does not supersede or replace the Harman International Guarantee, which shall remain in full force and effect.

[Signature Pages Follow]

43

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED,
By  /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP, General Counsel & Secretary

HARMAN HOLDING GMBH & CO. KG,
By:
Harman Management GmbH, as General Partner
By: /s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

CROWN AUDIO, INC.,
By: /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP & Secretary

HARMAN BECKER AUTOMOTIVE SYSTEMS, INC.,
By  /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP & Secretary

HARMAN BECKER AUTOMOTIVE SYSTEMS (MICHIGAN), INC.,
By:  /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP & Secretary

44

HARMAN CONSUMER GROUP, INC.,
By:  /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP & Secretary

HARMAN FINANCIAL GROUP LLC,
By:  /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP & Secretary

HARMAN MUSIC GROUP, INCORPORATED,
By:  /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP & Secretary

HBAS MANUFACTURING, INC.,
By:  /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP & Secretary

JBL INCORPORATED,
By:  /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP & Secretary

LEXICON, INCORPORATED,
By:  /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP & Secretary

45

MARGI SYSTEMS, INC.,
By:  /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP & Secretary

QNX SOFTWARE SYSTEMS, INC.,
By:  /s/ Todd A. Suko
	Name: Todd A. Suko
	Title:   VP & Secretary

BECKER SERVICE UND VERWALTUNG GMBH,
By:  /s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

INNOVATIVE SYSTEMS GMBH NAVIGATION-MULTIMEDIA,
By:  /s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

HARMAN DEUTSCHLAND GMBH,
By:  /s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

HARMAN BECKER AUTOMOTIVE SYSTEMS HOLDING GMBH,
By:  /s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

46

XS EMBEDDED GMBH,
By:  /s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

HARMAN SOFTWARE TECHNOLOGY INTERNATIONAL BETEILIGUNGS GMBH,
By:  /s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

HBAS INTERNATIONAL GMBH,
By:  /s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

HARMAN SOFTWARE TECHNOLOGY MANAGEMENT GMBH,
By:  /s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

QNX SOFTWARE SYSTEMS GMBH & CO. KG,
By:
Harman Software Technology Management GmbH, as General Partner
By:  /s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

47

QNX SOFTWARE SYSTEMS GMBH,
By:  /s/ Edwin Summers
	Name: Edwin Summers
	Title:   Managing Director

QNX SOFTWARE SYSTEMS CO.,
By:  /s/ Dan Dodge
	Name: Dan Dodge
	Title:   Chief Executive Officer and Chief Technology Officer

QNX SOFTWARE SYSTEMS INTERNATIONAL CORPORATION,
By:  /s/ Dan Dodge
	Name: Dan Dodge
	Title:   President

QNX SOFTWARE SYSTEMS (WAVEMAKERS), INC.,
By:  /s/ Dan Dodge
	Name: Dan Dodge
	Title:   President

QNX SOFTWARE SYSTEMS CANADA CORPORATION,
By:  /s/ Dan Dodge
	Name: Dan Dodge
	Title:   President

48

JPMORGAN CHASE BANK, N.A., as Administrative Agent,
By:  /s/ Jules Panno
	Name: Jules Panno
	Title:   Vice President

49

Schedule I to

the Guarantee and

Collateral Agreement

SUBSIDIARY PARTIES

Schedule II to

the Guarantee and

Collateral Agreement

CAPITAL STOCK

Issuer Number of Certificate Registered Owner Number and Class of Equity Interest Percentage of Capital Stock

DEBT SECURITIES

Issuer Principal Amount Date of Note Maturity Date

Schedule III to

the Guarantee and

Collateral Agreement

U.S. COPYRIGHTS OWNED BY [NAME OF GRANTOR]

U.S. Copyright Registrations

Registered Owner Title Reg. No. Author

Pending U.S. Copyright Applications for Registration

Registered Owner Title Author Class Date Filed

Schedule VI to

the Guarantee and

Collateral Agreement

Commercial Tort Claims

Claim Description

Exhibit I to the

Guarantee and

Collateral Agreement

SUPPLEMENT NO. __ dated as of [  ] (this “Supplement”), to the Guarantee and Collateral Agreement  dated as of March 31, 2009 (the “Collateral Agreement”), among HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED, a Delaware corporation (the “Company”), HARMAN HOLDING GMBH & CO. KG, a company organized under German law (the “Additional Borrower”), each subsidiary of the Company listed on Schedule I thereto (each such subsidiary individually a “Subsidiary Guarantor” and, collectively, the “Subsidiary Guarantors”; the Subsidiary Guarantors, and the Company are referred to collectively herein as the “Grantors”) and JPMORGAN CHASE BANK, N.A., a national banking association (“JPMCB”), as Administrative Agent (in such capacity, the “Administrative Agent”).

A.  Reference is made to the Second Amended and Restated Multi-Currency, Multi-Option Credit Agreement dated as of March 31, 2009 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Company, the Additional Borrower, the Lenders party thereto, the other parties thereto and JPMCB, as Administrative Agent.

B.  Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement and the Collateral Agreement.

C.  The Grantors have entered into the Collateral Agreement in order to induce the Extended Tranche Lenders to make certain accommodations under the Credit Agreement and to continue to make Extended Tranche Loans.  Section 7.17 of the Collateral Agreement provides that additional Subsidiaries of the Borrower may become Subsidiary Loan Parties, Guarantors and Grantors under the Collateral Agreement by execution and delivery of an instrument in the form of this Supplement.  The undersigned Subsidiary (the “New Subsidiary”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Subsidiary Loan Party and Guarantor and a Grantor, under the Collateral Agreement in order to induce the Extended Tranche Lenders to make additional Extended Tranche Loans and as consideration for Extended Tranche Loans previously made and Letters of Credit previously issued.

Accordingly, the Administrative Agent and the New Subsidiary agree as follows:

SECTION 1.  In accordance with Section 7.17 of the Collateral Agreement, the New Subsidiary by its signature below becomes a Subsidiary Loan Party and a Guarantor and a Grantor, under the Collateral Agreement with the same force and effect as if originally named therein as a Subsidiary Loan Party, and Guarantor and Grantor, and the New Subsidiary hereby (a) agrees to all the terms and provisions of the Collateral Agreement applicable to it as a Subsidiary Loan Party, Guarantor and Grantor, thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor and Guarantor thereunder are true and correct on and as of the date hereof.  In furtherance of the foregoing, the New Subsidiary, as security for the payment and performance in full of the [Secured Obligations][Foreign Secured Obligations] (as defined in the Collateral Agreement), does hereby create and grant to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of the New Subsidiary’s right, title and interest in and to the Collateral (as defined in the Collateral Agreement) of the New Subsidiary.  Each reference to a “Guarantor” or “Grantor” in the Collateral Agreement shall be deemed to include the New Subsidiary.  The Collateral Agreement is hereby incorporated herein by reference.

SECTION 2.  The New Subsidiary represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 3.  This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received a counterpart of this Supplement that bears the signature of the New Subsidiary and the Administrative Agent has executed a counterpart hereof.  Delivery of an executed signature page to this Supplement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4.  The New Subsidiary hereby represents and warrants that (a) set forth on Schedule I attached hereto is a schedule with the true and correct legal name of the New Subsidiary, its jurisdiction of formation and the location of its chief executive office, (b) set forth on Schedule II attached hereto is a true and correct schedule of all the Pledged Securities of the New Subsidiary and (c) if applicable, set forth on Schedule III attached hereto is a true and correct schedule of Intellectual Property consisting of Copyrights, Patents and Trademarks of the New Subsidiary.

SECTION 5.  Except as expressly supplemented hereby, the Collateral Agreement shall remain in full force and effect.

SECTION 6.  THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 7.  In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Collateral Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

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SECTION 8.  All communications and notices hereunder shall be in writing and given as provided in Section 7.01 of the Collateral Agreement.

SECTION 9.  The New Subsidiary agrees to reimburse the Administrative Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Administrative Agent.

IN WITNESS WHEREOF, the New Subsidiary and the Administrative Agent have duly executed this Supplement to the Collateral Agreement as of the day and year first above written.

[NAME OF NEW SUBSIDIARY],
by
	Name:
	Title:
	Legal Name:
	Jurisdiction of Formation:
	Location of Chief Executive office:

JPMORGAN CHASE BANK, N.A., as Administrative Agent
by
	Name:
	Title:

3

Schedule I

to Supplement No. __ to the

Guarantee and

Collateral Agreement

NEW SUBSIDIARY INFORMATION

Name Jurisdiction of Formation Chief Executive Office

Schedule II

to Supplement No. __ to the

Guarantee and

Collateral Agreement

PLEDGED SECURITIES

Capital Stock

Issuer Number of Certificate Registered Owner Number and Class of Capital Stock Percentage of Capital Stock

Debt Securities

Issuer Principal Amount Date of Note Maturity Date

Schedule III

to Supplement No. __ to the

Guarantee and

Collateral Agreement

INTELLECTUAL PROPERTY

Schedule IV

to Supplement No. __ to the

Guarantee and

Collateral Agreement

COMMERCIAL TORT CLAIMS

EX-10.3

Exhibit 10.3

FORM OF

SEVERANCE AGREEMENT

THIS SEVERANCE AGREEMENT (the “Agreement”), dated as of _________, 2009, is made and entered by and between Harman International Industries, Incorporated (“Harman” or, including any successor thereto, the “Company”), a Delaware corporation, and _____________ (the “Executive”).

WHEREAS, the Executive is a senior executive of Harman and is expected to make major contributions to the Company’s short and long-term profitability, growth and financial strength;

WHEREAS, Harman recognizes that: (a) top-quality executives may seek more secure career opportunities if a Change in Control, as defined below, occurs in the future; and (b) the Company may encounter difficulties in recruiting qualified senior executives unless it offers an employment security arrangement, applicable in Change in Control situations;

WHEREAS, Harman desires to assure itself of both present and future continuity of management and desires to establish certain minimum severance benefits for certain of its senior executives, including the Executive, applicable in the event of a Change in Control;

WHEREAS, Harman wishes to ensure that its senior executives are not practically disabled from discharging their duties in respect of a proposed or actual transaction involving a Change in Control; and

WHEREAS, Harman desires to provide additional inducement for the Executive to continue to remain in the Company’s employ.

NOW, THEREFORE, Harman and the Executive agree as follows:

1.              Certain Defined Terms.  In addition to terms defined elsewhere in this Agreement, the following terms have the following meanings:

(a)            “Base Pay” means the Executive’s annual base salary rate as in effect from time to time;

(b)            “Board” means Harman’s Board of Directors;

(c)            “Cause” means that, prior to any termination pursuant to Section 3(b), the Executive shall have:

(i)             been convicted of a criminal violation involving fraud, embezzlement or theft in connection with his duties or in the course of his employment with the Company or any Subsidiary;

(ii)            committed intentional wrongful damage to property of Harman or any Harman subsidiary;

(iii)           committed intentional wrongful disclosure of secret processes or confidential information of Harman or any Subsidiary; or

(iv)           committed intentional wrongful engagement in any Competitive Activity;

and any such act shall have been demonstrably and materially harmful to Harman.  For purposes of this Agreement, no act or failure to act on the part of the Executive shall be deemed “intentional” if it was due primarily to an error in judgment or negligence, but shall be deemed “intentional” only if done or omitted to be done by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interest of Harman.  Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for “Cause” hereunder unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of a majority of the Committee then in office at a meeting of the Committee called and held for such purpose, after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel (if the Executive chooses to have counsel present at such meeting), to be heard before the Committee, finding that, in the good faith opinion of the Committee, the Executive had committed an act constituting “Cause” as defined in this Agreement and specifying the particulars thereof in detail.  Nothing in this Agreement will limit the right of the Executive or his beneficiaries to contest the validity or propriety of any such determination;

(d)            “Change in Control” means the occurrence during the Term of any of the following events:

(i)             The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the combined voting power of the then outstanding Voting Stock of the Company; provided, however, that for purposes of this Section 1(d)(i), the following acquisitions shall not constitute a Change in Control:  (A) any issuance of Voting Stock of the Company directly from the Company that is approved by the Incumbent Board (as defined in Section 1(d)(ii), below), (B) any acquisition by the Company or a Subsidiary of Voting Stock of the Company, (C) any acquisition of Voting Stock of the Company by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, or (D) any acquisition of Voting Stock of the Company by any Person pursuant to a Business Combination (as defined in Section 1(d)(iii) below) that complies with clauses (A), (B) and (C) of Section 1(d)(iii), below; or

(ii)            individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a Director after the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the Directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be deemed to have been a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

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(iii)           consummation of a reorganization, merger or consolidation, a sale or other disposition of all or substantially all of the assets of the Company, or other transaction (each, a “Business Combination”), unless, in each case, immediately following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners of Voting Stock of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), (B) no Person (other than the Company, such entity resulting from such Business Combination, or any employee benefit plan (or related trust) sponsored or maintained by the Company, any Subsidiary or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 25% or more of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Combination, and (C) at least a majority of the members of the Board of Directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(iv)           approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that complies with clauses (A), (B) and (C) of Section 1(d)(iii).

(e)            “Committee” means the Compensation and Option Committee of the Board or such similar committee of the Board comprised of non-officer directors and responsible for executive compensation matters of the Company generally;

(f)             “Competitive Activity” means the Executive’s participation, without the Company’s written consent, in the management of any business enterprise if such enterprise engages in substantial and direct competition with the Company or a Subsidiary and the enterprise’s sales of any product or service under the Executive’s supervision competitive with any product or service of the Company or a Subsidiary amounted to 10% of the enterprise’s net sales for its most recently completed fiscal year and if the Company’s and its Subsidiary’s net sales of said product or service amounted to 10% of the Company’s net sales for its most recently completed fiscal year.  “Competitive Activity” will not include (i) the mere ownership of securities in any such enterprise and the exercise of rights appurtenant thereto or (ii) participation in the management of any such enterprise other than in connection with the competitive operations of such enterprise;

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(g)            “Employee Benefits” means the perquisites, benefits and service credit for benefits as provided under any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which Executive is entitled to participate, including without limitation any stock option, performance share, performance unit, stock purchase, stock appreciation, savings, pension, supplemental executive retirement, or other retirement income or welfare benefit, deferred compensation, incentive compensation, group or other life, health, medical/hospital or other insurance (whether funded by actual insurance or self-insured by the Company or a Subsidiary), disability, salary continuation, expense reimbursement and other employee benefit policies, plans, programs or arrangements that may now exist or any equivalent successor policies, plans, programs or arrangements that may be adopted by the Company or a Subsidiary, providing perquisites, benefits and service credit for benefits at least as great in the aggregate as are payable thereunder prior to a Change in Control;

(h)            “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time;

(i)             “Incentive Pay” means an annual bonus, incentive or other payment of compensation, in addition to Base Pay, made or to be made in regard to services rendered in any year or other period pursuant to any bonus, incentive, profit-sharing, performance, discretionary pay or similar agreement, policy, plan, program or arrangement (whether or not funded) of the Company or a Subsidiary, or any successor thereto;

(j)             “Retirement Plans” means the retirement income, supplemental executive retirement, excess benefits and retiree medical, life and similar benefit plans providing retirement perquisites, benefits and service credit for benefits at least as great in the aggregate as are payable thereunder prior to a Change in Control;

(k)            “Severance Period” means the period of time commencing six months prior to the date of the first occurrence of a Change in Control and continuing until the earlier of (i) the second anniversary of the occurrence of the Change in Control, or (ii) the Executive’s death; provided, however, that commencing on each anniversary of the Change in Control, the Severance Period will automatically be extended for an additional year unless, not later than 90 calendar days before the anniversary date, either the Company or the Executive shall have given written notice to the other that the Severance Period is not to be so extended;

(l)             “Subsidiary” means an entity in which the Company, directly or indirectly, beneficially owns 50% or more of the outstanding Voting Stock;

(m)           “Term” means the period commencing as of the date hereof and expiring as of the later of (i) the close of business on December 31, 2012, or (ii) the expiration of the Severance Period.  However, commencing on January 1, 2012 and each January 1 thereafter, the term of this Agreement will automatically be extended for an additional year unless, not later than September 30 of the immediately preceding year, the Company or the Executive shall have given notice that it or the Executive, as the case may be, does not wish to have the Term extended.  Furthermore, if prior to the date which is six months prior to a Change in Control, the Executive ceases for any reason to be an officer of the Company or any Subsidiary, thereupon without further action the Term shall be deemed to have expired and this Agreement will immediately terminate and be of no further effect.  For purposes of this Section, the Executive shall not be deemed to have ceased to be an officer of the Company and any Subsidiary by reason of the transfer of Executive’s employment between the Company and any Subsidiary, or among any Subsidiaries;

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(n)            “Termination Date” means the date on which the Executive’s employment is terminated (the effective date of which shall be the date of termination, or such other date that may be specified by the Executive if the termination is pursuant to Section 3(b)); provided, however, that if the Termination Date precedes the Change in Control, then any additional payments and benefits that are due upon a Change in Control and that are deferred compensation within the meaning of Section 409A shall be subject to the Section 409A Delay, as defined below, and payable upon the Change in Control; and

(o)            “Voting Stock” means securities entitled to vote generally in the election of directors.

2.              Operation of Agreement.  This Agreement will be effective and binding immediately upon its execution, but anything in this Agreement to the contrary notwithstanding, this Agreement will not be operative unless and until the date which is six months prior to a Change in Control.  If a Change in Control occurs at any time during the Term, this Agreement shall become operative immediately and retroactively, including without limitation, notwithstanding that the Term may have since expired.

3.              Termination Following a Change in Control.  (a) In the event of the occurrence of a Change in Control, the Executive’s employment may be terminated by the Company or a Subsidiary during the Severance Period and the Executive shall be entitled to the benefits provided by Section 4 as a result thereof or of any termination within six months prior to a Change in Control unless such termination is the result of the occurrence of one or more of the following events:

(i)             The Executive’s death;

(ii)            The Executive becoming permanently disabled within the meaning of, and begins actually receiving disability benefits pursuant to, the long-term disability plan in effect for, or applicable to, Executive immediately prior to the Change in Control; or

(iii)           Cause.

If, during the Severance Period, the Executive’s employment is terminated by the Company or any Subsidiary other than pursuant to Section 3(a)(i), 3(a)(ii) or 3(a)(iii), the Executive will be entitled to the benefits provided by Section 4 hereof.

(b)            In the event of the occurrence of a Change in Control, the Executive may terminate employment with the Company and any Subsidiary during the Severance Period with the right to severance compensation as provided in Section 4 upon the occurrence of one or more of the following events (regardless of whether any other reason, other than Cause, for such termination exists or has occurred, including without limitation other employment) and shall also have such severance compensation in the event he had terminated employment upon the occurrence of one or more of the following events within six months prior to the Change in Control:

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(i)             Failure to elect or reelect or otherwise to maintain the Executive in the office or the position, or a substantially equivalent office or position, of or with the Company and/or a Subsidiary (or any successor thereto by operation of law or otherwise), as the case may be, which the Executive held immediately prior to a Change in Control, or the removal of the Executive as a Director of the Company and/or a Subsidiary (or any successor thereto) if the Executive shall have been a Director of the Company and/or a Subsidiary immediately prior to the Change in Control;

(ii)            (A) A significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position with the Company and any Subsidiary which the Executive held immediately prior to the Change in Control, (B) a reduction in the aggregate of the Executive’s Base Pay and Incentive Pay received from the Company and any Subsidiary, or (C) the termination or denial of the Executive’s rights to Employee Benefits or a reduction in the scope or value thereof, any of which is not remedied by the Company within 10 calendar days after receipt by the Company of written notice from the Executive of such change, reduction or termination, as the case may be;

(iii)           A determination by the Executive (which determination will be conclusive and binding upon the parties to this Agreement, provided that the determination has been made in good faith and in all events will be presumed to have been made in good faith unless otherwise shown by the Company by clear and convincing evidence) that a change in circumstances has occurred following a Change in Control, including, without limitation, a change in the scope of the business or other activities for which the Executive was responsible immediately prior to the Change in Control, which has rendered the Executive substantially unable to carry out, has substantially hindered Executive’s performance of, or has caused Executive to suffer a substantial reduction in, any of the authorities, powers, functions, responsibilities or duties attached to the position held by the Executive immediately prior to the Change in Control, which situation is not remedied within 10 calendar days after the Company receives written notice from the Executive of such determination;

(iv)           The liquidation, dissolution, merger, consolidation or reorganization of the Company or transfer of all or substantially all of its business and/or assets, unless the successor or successors (by liquidation, merger, consolidation, reorganization, transfer or otherwise) to which all or substantially all of its business and/or assets have been transferred (by operation of law or otherwise) assumed all duties and obligations of the Company under this Agreement pursuant to Section 11(a);

(v)            The Company relocates its principal executive offices (if such offices are the principal location of Executive’s work), or requires the Executive to have his principal location of work changed, to any location that, in either case, is in excess of 50 miles from the principal executive office’s location immediately prior to the Change in Control, or requires the Executive to travel away from his office in the course of discharging his responsibilities or duties at least 20% more (in terms of aggregate days in any calendar year or in any calendar quarter when annualized for purposes of comparison to any prior year) than was required of Executive in any of the three full years immediately prior to the Change in Control without, in either case, his prior written consent; or

6

(vi)           Without limiting the generality or effect of the foregoing, any material breach of this Agreement by the Company or any successor thereto which is not remedied by the Company within 10 calendar days after receipt by the Company of written notice from the Executive of such breach.

(c)            A termination by the Company pursuant to Section 3(a) or by the Executive pursuant to Section 3(b) will not affect any rights that the Executive may have pursuant to any agreement, policy, plan, program or arrangement of the Company or any Subsidiary providing Employee Benefits, which rights shall be governed by the terms thereof; provided that the Executive shall not be entitled to a severance payment or benefit under any other agreement with the Company, including, without limitation, any employment agreement, if the Executive is entitled to a comparable payment or benefit hereunder.

4.              Severance Compensation.  a) If the Company or Subsidiary terminates the Executive’s employment during the Severance Period other than pursuant to Section 3(a)(i), 3(a)(ii) or 3(a)(iii), or if the Executive terminates his employment pursuant to Section 3(b), the Company will pay to the Executive, subject to Section 18 hereof as to the Section 409A Delay, the amount described in Paragraph (a) of Annex A within five business days after the Termination Date and will continue to provide to the Executive the benefits described in Paragraphs (b) and (c) of Annex A for the periods described therein; provided, however, that no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment that is deferred compensation for purposes of Section 409A shall be made or provided, as the case may be, unless and until such termination of employment also constitutes a separation from service (within the meaning of Section 409A).

(b)            Without limiting the rights of the Executive at law or in equity, if the Company fails to make any payment or provide any benefit required to be made or provided under this Agreement on a timely basis, the Company will pay interest on the amount or value thereof at an annualized rate of interest equal to the so-called composite “prime rate” as quoted from time to time during the relevant period in The Wall Street Journal , plus 2%.  Such interest will be payable as it accrues on demand.  Any change in such prime rate will be effective on and as of the date of such change.

(c)            Notwithstanding any provision of this Agreement to the contrary, the parties’ respective rights and obligations under this Section 4 and under Sections 5, 7 and 8 will survive any termination or expiration of this Agreement or the termination of the Executive’s employment following a Change in Control for any reason whatsoever.

5.              Limitation on Payments and Benefits.  Notwithstanding any provision of this Agreement to the contrary, if any amount or benefit to be paid or provided under this Agreement would be an “excess parachute payment,” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (“Code”), or any successor provision thereto, but for the application of this sentence, then the payments and benefits identified in the last sentence of this Section 5 to be paid or provided under this Agreement will be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an excess parachute payment; provided, however, that no such reduction shall be made if it is not thereby possible to eliminate all excess parachute payments under this Agreement; and provided, further, that the foregoing reduction will be made only if and to the extent that such reduction would result in an increase in the aggregate payment and benefits to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income and employment taxes).  Whether requested by the Executive or the Company, the determination of whether any reduction in such payments or benefits to be provided under this Agreement or otherwise is required pursuant to the preceding sentence will be made at the expense of the Company by the Company’s independent accountants.  The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 5 will not of itself limit or otherwise affect any other rights of the Executive other than pursuant to this Agreement.  In the event that any payment or benefit intended to be provided under this Agreement or otherwise is required to be reduced pursuant to this Section 5, the Company will reduce the Executive’s payment and/or benefits, to the extent required, in the following order:  (i) the lump sum payment described in Paragraph (1) of Annex A; (ii) the lump sum payment described in Paragraph (3) of Annex A; and (iii) the benefits described in Paragraph (2) of Annex A.

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6.              No Mitigation Obligation.  The Company hereby acknowledges that it will be difficult and may be impossible for the Executive to find reasonably comparable employment following the Termination Date and that the non-competition covenant contained in Section 8 will further limit the employment opportunities for the Executive.  In addition, the Company acknowledges that its severance pay plans applicable in general to its salaried employees do not provide for mitigation, offset or reduction of any severance payment received thereunder.  Accordingly, the payment of the severance compensation by the Company to the Executive in accordance with the terms of this Agreement is hereby acknowledged by the Company to be reasonable, and the Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor will any profits, income, earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of the Executive under this Agreement or otherwise.

7.              Legal Fees and Expenses.  b) The Executive shall not be required to incur legal fees and the related expenses associated with the interpretation, enforcement or defense of Executive’s rights under this Agreement by litigation or otherwise because such costs substantially would detract from the Executive’s benefits under this Agreement.  Accordingly, if it should appear to the Executive that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, the Executive the benefits provided or intended to be provided to the Executive hereunder, the Company irrevocably authorizes the Executive from time to time to retain counsel of Executive’s choice, at the expense of the Company as hereafter provided, to advise and represent the Executive in connection with any such interpretation, enforcement or defense, including without limitation the initiation or defense of any litigation or other legal action, whether by or against the Company or any Director, officer, stockholder or other person affiliated with the Company, in any jurisdiction.  Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to the Executive’s entering into an attorney-client relationship with such counsel, and in that connection the Company and the Executive agree that a confidential relationship shall exist between the Executive and such counsel.  Without respect to whether the Executive prevails, in whole or in part, in connection with any of the foregoing, the Company will pay and be solely financially responsible for any and all attorneys’ and related fees and expenses incurred by the Executive in connection with any of the foregoing.  However, if the Executive brings an action in bad faith, or with no colorable claim of success, the Company shall not pay for any of Executive’s attorneys’ fees or related expenses.

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(b)            Without limiting the obligations of the Company under Section 7(a) of this Agreement, in the event a Change in Control occurs, the performance of the Company’s obligations under this Section 7 shall be secured by amounts deposited or to be deposited in trust pursuant to certain trust agreements to which the Company shall be a party, which amounts deposited shall in the aggregate be not less than $1,000,000,providing that the fees and expenses of counsel selected from time to time by the Executive pursuant to Section 7(a) shall be paid, or reimbursed to the Executive if paid by the Executive, either in accordance with the terms of such trust agreements, or, if not so provided, on a regular, periodic basis upon presentation by the Executive to the trustee of a statement or statements prepared by such counsel in accordance with its customary practices.  Any failure by the Company to satisfy any of its obligations under this Section 7(b) shall not limit the rights of the Executive hereunder.  Subject to the foregoing, the Executive shall have the status of a general unsecured creditor of the Company and shall have no right to, or security interest in, any assets of the Company or any Subsidiary.

(c)            The reimbursement obligations of the Company under Section 7(a) and Section 7(b) shall be paid no later than December 31 of the calendar year following the calendar year in which the related expense is incurred; provided that in no event shall the reimbursement provided by the Company in one taxable year affect the amount of reimbursement provided in any other taxable year nor shall Executive’s right to reimbursement be subject to liquidation or exchange for another benefit.

8.              Competitive Activity; Confidentiality; Nonsolicitation.  c) For a period ending one year following the Termination Date, if the Executive shall have received or shall be receiving benefits under Section 4, the Executive shall not, without the prior written consent of the Company, which consent shall not be unreasonably withheld, engage in any Competitive Activity; provided that the foregoing shall not apply if the Termination Date was prior to the Change in Control and Executive had already commenced such activity.

(b)            During the Term, the Company agrees that it will disclose to Executive its confidential or proprietary information (as defined in this Section 8(b)) to the extent necessary for Executive to carry out his obligations to the Company.  The Executive hereby covenants and agrees that he will not, without the prior written consent of the Company, during the Term or thereafter disclose to any person not employed by the Company, or use in connection with engaging in competition with the Company, any confidential or proprietary information of the Company.  For purposes of this Agreement, the term “confidential or proprietary information” will include all information of any nature and in any form that is owned by the Company and that is not publicly available (other than by Executive’s breach of this Section 8(b)) or generally known to persons engaged in businesses similar or related to those of the Company.  Confidential or proprietary information will include, without limitation, the Company’s financial matters, customers, employees, industry contracts, strategic business plans, product development (or other proprietary product data), marketing plans, and all other secrets and all other information of a confidential or proprietary nature.  For purposes of the preceding two sentences, the term “Company” will also include any Subsidiary (collectively, the “Restricted Group”).  The foregoing obligations imposed by this Section 8(b) will not apply (i) during the Term, in the course of the business of and for the benefit of the Company, (ii) if such confidential or proprietary information will have become, through no fault of the Executive, generally known to the public or (iii) if the Executive is required by law to make disclosure (after giving the Company notice and, to the extent feasible, an opportunity to contest such requirement).

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(c)            The Executive hereby covenants and agrees that during the Term and for one year thereafter Executive will not, without the prior written consent of the Company, which consent shall not unreasonably be withheld,on behalf of Executive or on behalf of any person, firm or company, directly or indirectly, attempt to influence, persuade or induce, or assist any other person in so persuading or inducing, any management employee of the Restricted Group to give up employment with the Restricted Group, provided the foregoing shall not be violated by advertising or searches not specifically targeted at the management employees of the Restricted Group, or serving as a reference.

(d)            Executive and the Company agree that the covenants contained in this Section 8 are reasonable under the circumstances, and further agree that if in the opinion of any court of competent jurisdiction any such covenant is not reasonable in any respect, such court will have the right, power and authority to excise or modify any provision or provisions of such covenants as to the court will appear not reasonable and to enforce the remainder of the covenants as so amended.  Executive acknowledges and agrees that the remedy at law available to the Company for breach of any of his obligations under this Section 8 would be inadequate and that damages flowing from such a breach may not readily be susceptible to being measured in monetary terms.  Accordingly, Executive acknowledges, consents and agrees that, in addition to any other rights or remedies that the Company may have at law, in equity or under this Agreement, upon adequate proof of his violation of any such provision of this Agreement, the Company will be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach, without the necessity of proof of actual damage.

9.              Employment Rights.  Nothing expressed or implied in this Agreement will create any right or duty on the part of the Company or the Executive to have the Executive remain in the employment of the Company or any Subsidiary prior to or following any Change in Control.

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10.            Withholding of Taxes.  The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant to any applicable law, regulation or ruling.

11.            Successors and Binding Agreement.

(a)            The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place.  This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company.

(b)            This Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees.

(c)            This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 11(a) and 11(b).  Without limiting the generality or effect of the foregoing, the Executive’s right to receive payments hereunder will not be assignable, transferable or delegable, whether by pledge, creation of a security interest, or otherwise, other than by a transfer by Executive’s will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this Section 11(c), the Company shall have no liability to pay any amount so attempted to be assigned, transferred or delegated.

12.            Notices.  For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three business days after having been sent by a nationally recognized overnight courier service such as FedEx, UPS, or Purolator, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at his address on the books of the Company, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

13.            Governing Law.  The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

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14.            Consent to Jurisdiction.  Any disputes, litigation, proceedings or other legal actions by any party to this Agreement in connection with or relating to this Agreement or any matters described or contemplated in this Agreement may be instituted in the courts of the State of Delaware or of the United States sitting in the State of Delaware.  Each party to this Agreement irrevocably submits to the jurisdiction of the courts of the State of Delaware and of the United States sitting in the State of Delaware in connection with any such dispute, litigation, proceeding or other legal action arising out of or relating to this Agreement.

15.            Validity.  If any provision of this Agreement or the application of any provision hereof to any person or circumstance is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of  such provision to any other person or circumstance will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal.

16.            Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and the Company.  No waiver by either party to this Agreement at any time of any breach by the other contracting party or compliance with any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.  References to Sections are to references to Sections of this Agreement.

17.            Code Section 409A.  The intent of the parties hereto is that payments and benefits under this Agreement comply with or be exempt from Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted and administered to be in compliance therewith.  To the extent that there is a material risk that any payments under this Agreement may result in the imposition of an additional tax to the Executive under Section 409A, the Company will reasonably cooperate with the Executive to amend this Agreement such that payments hereunder comply with Section 409A without materially changing the economic value of this Agreement to either party.  The Company shall use its best efforts to ensure ongoing compliance with Section 409A.  Notwithstanding any provision in this Agreement to the contrary, no payment or benefit that is deferred compensation for purposes of Section 409A and that is due upon the Executive’s termination of employment will be paid or provided unless such termination is also a separation from service (within the meaning of Section 409A).  For purposes of Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within 30 days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

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18.            Section 409A Delay.  If the Executive is at the time of the Executive’s separation from service (as defined in Section 409A) with the Company (other than as a result of the Executive’s death) a “Specified Employee,” as such term is defined under Section 409A and using the identification methodology selected by the Company from time to time, then with regard to any payment or the provision of any benefit that is considered deferred compensation under Section 409A and that is payable on account of a separation from service shall be delayed until the earlier of the Executive’s death or six months after the Executive’s separation from service (the “Section 409A Delay”) and shall then be promptly paid to the Executive in a lump sum, together with interest for the period of delay, compounded annually, equal to the prime rate (as published in The Wall Street Journal) and in effect as of the date the payment should otherwise have been provided, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

19.            Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

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

HARMAN INTERNATIONAL

INDUSTRIES, INCORPORATED

By:

14

Annex A

Severance Compensation

(1)            A lump sum payment in an amount equal to 1.5 times the Base Pay (at the highest rate in effect for any period prior to the Termination Date).

(2)            For a period of 18 months following the Termination Date (the “Continuation Period”), the Company will arrange to provide the Executive (and his dependents) with coverage under the Company’s medical, dental or other health plan, but only to the extent that the Executive makes a payment to the Company in an amount equal to the monthly COBRA premium payments on a timely basis required to maintain such coverage commencing with the first calendar month following the Termination Date and the Company shall reimburse the Executive on an after-tax basis for the amount of such premiums, if any, in excess of any employee contributions necessary to maintain such coverage for the Continuation Period (the “COBRA Reimbursement”).  The COBRA Reimbursement shall be subject to Section 18 and shall be made within 30 days following the date on which Executive incurs the expense but no later than December 31 of the year following the year in which Executive incurs the related expense; provided, that in no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit.

(3)            Outplacement services for one year after the Termination Date by a firm selected by the Executive, at the expense of the Company in an amount up to $50,000.

A-1

EX-31.1

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dinesh C. Paliwal, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Harman International Industries, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act  Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   May 8, 2009	/s/  Dinesh C. Paliwal
	Dinesh C. Paliwal
	Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Herbert K. Parker, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Harman International Industries, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act  Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   May 8, 2009	/s/  Herbert K. Parker
	Herbert K. Parker
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Harman International Industries, Incorporated (the "Company") for the period ended March 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date:  May 8, 2009

/s/ Dinesh C. Paliwal

Name:  Dinesh C. Paliwal

  Title:  Chairman and Chief Executive Officer

(Principal Executive Officer)

 /s/ Herbert K. Parker

Name:  Herbert K. Parker

  Title:  Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.