Exhibit 10.1

LOAN AGREEMENT

by and among

MASTECH HOLDINGS, INC.

MASTECH, INC.

RPOWORLDWIDE, INC.

GLOBAL FINANCIAL SERVICES OF NEVADA

MASTECH TRADEMARK SYSTEMS, INC.

and

PNC BANK, NATIONAL ASSOCIATION

DATED OCTOBER 15, 2008

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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

   1        1.01    Certain Definitions.    1        1.02    Construction and
Interpretation.    18

ARTICLE II THE CREDIT FACILITIES

   19        2.01    The Revolving Credit Facility Commitment.    19        2.02
   Interest Rates.    22        2.03    Fees.    24        2.04    Payments.   
24        2.05    Agreement to Issue Letters of Credit.    24        2.06   
Letter of Credit Fees.    25        2.07    Payments and Nature of Borrowers'
Obligations Under Letters of Credit.    25        2.08    Period of Issuance and
Term of Letters of Credit.    27        2.09    Booking of Libor Rate Loans.   
27        2.10    Assumptions Concerning Funding of Libor Rate Loans.    27   
    2.11    Additional Costs.    27        2.12    Illegality; Impracticability.
   29        2.13    Loan Account.    29        2.14    Security.    29   
    2.15    Financing Statements.    29        2.16    Working Cash®
Subfacility.    30

ARTICLE III REPRESENTATIONS AND WARRANTIES

   30        3.01    Organization and Qualification.    30        3.02   
Authority; Power to Carry on Business; Licenses.    30        3.03    Execution
and Binding Effect.    31        3.04    Absence of Conflicts.    31        3.05
   Authorizations and Filings.    31        3.06    Officers and Directors;
Business.    31        3.07    Title to Property.    32        3.08    Financial
Information.    32        3.09    Taxes.    32        3.10    Contracts.    32
       3.11    Litigation.    32        3.12    Laws.    32        3.13   
ERISA.    33        3.14    Patents, Licenses, Franchises.    33        3.15   
Environmental Matters.    33        3.16    Use of Proceeds.    35        3.17
   Margin Stock.    35        3.18    No Event of Default; Compliance with
Agreements.    35        3.19    No Material Adverse Change.    35        3.20
   Security Interest.    35        3.21    Receivables Warranties.    36

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       3.22    Labor Controversies.    37        3.23    Solvency.    37   
    3.24    Subsidiaries.    37        3.25    Governmental Regulation.    37   
    3.26    Accurate and Complete Disclosure; Continuing Representations and
Warranties.    37        3.27    Anti-Terrorism Laws.    38

ARTICLE IV CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT

   39        4.01    Representations and Warranties; Events of Default and
Potential Defaults.    39        4.02    Loan Documents.    39        4.03   
UCC Financing Statements.    39        4.04    Other Documents and Conditions.
   39        4.05    Details, Proceedings and Documents.    41        4.06   
Fees and Expenses.    41

ARTICLE V AFFIRMATIVE COVENANTS

   42        5.01    Reporting and Information Requirements.    42        5.02
   Preservation of Existence and Franchises.    44        5.03    Insurance.   
44        5.04    Maintenance of Properties.    45        5.05    Payment of
Liabilities.    45        5.06    Financial Accounting Practices.    46   
    5.07    Compliance with Laws.    46        5.08    Pension Plans.    46   
    5.09    Continuation of and Change in Business.    46        5.10    Use of
Proceeds.    46        5.11    Lien Searches.    46        5.12    Further
Assurances.    47        5.13    Amendment to Schedules and Representations and
Warranties.    47        5.14    Operating and Depository Accounts.    47   
    5.15    Guaranty Agreements.    47        5.16    Amendment to Stock Pledge
Agreements.    47        5.17    Acquisitions.    48        5.18    Financial
Covenants.    48        5.19    Subsidiary Joinder.    48

ARTICLE VI NEGATIVE COVENANTS

   49        6.01    Liens.    49        6.02    Indebtedness.    50        6.03
   Guarantees and Contingent Liabilities.    51        6.04    Loans and
Investments.    51        6.05    Distributions.    51        6.06    Leases.   
52        6.07    Self-Dealing.    52        6.08    Disposition of Assets.   
53        6.09    Continuation of or Change in Business.    53

 

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       6.10    Margin Stock.    53        6.11    Merger; Consolidation.    54
       6.12    Acquisitions.    54        6.13    Change of Control.    55   
    6.14    Double Negative Pledge.    55        6.15    Sale/Leaseback.    55
       6.16    Modifications to Material Documents.    55        6.17   
Anti-Terrorism Laws.    55

ARTICLE VII DEFAULTS

   56        7.01    Events of Default.    56        7.02    Consequences of an
Event of Default.    58        7.03    Set-Off.    58        7.04    Other
Remedies.    59

ARTICLE VIII MISCELLANEOUS

   59        8.01    Business Days.    59        8.02    Amendments and Waivers.
   59        8.03    No Implied Waiver; Cumulative Remedies.    59        8.04
   Notices.    60        8.05    Expenses; Taxes; Attorneys Fees.    60   
    8.06    Severability.    61        8.07    Governing Law; Consent to
Jurisdiction.    61        8.08    Prior Understandings.    61        8.09   
Duration; Survival.    61        8.10    Counterparts.    62        8.11   
Successors and Assigns; Termination.    62        8.12    No Third Party
Beneficiaries.    62        8.13    Participation and Assignment.    63   
    8.14    Exhibits.    63        8.15    Headings.    63        8.16   
Indemnity.    63        8.17    Limitation of Liability.    64        8.18   
Confidentiality.    64        8.19    Payment of Debt; Joint and Several
Obligations.    65        8.20    Additional Waivers of the Borrowers.    65   
    8.21    Relative Priority of Security Interests; Limitation of Certain
Liabilities.    66        8.22    Certifications From Bank and Participants.   
66        8.23    WAIVER OF TRIAL BY JURY.    68

 

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LIST OF SCHEDULES AND EXHIBITS

Rider to the Loan Agreement:

Working Cash®, Line of Credit, Investment Sweep Rider

All Schedules to the Loan Agreement:

 

Schedule 3.06    -    Officers and Directors; Business Schedule 3.09    -   
Taxes Schedule 3.11    -    Litigation Schedule 3.13    -    ERISA Schedule 3.14
   -    Patents, Licenses Franchises Schedule 3.15    -    Environmental Matters
Schedule 3.24    -    Subsidiaries Schedule 6.01    -    Liens Schedule 6.02   
-    Indebtedness Schedule 6.04    -    Loans and Investments Schedule 6.06    -
   Leases

All Exhibits to the Loan Agreement:

 

Exhibit 2.01(b)    -    Form of Revolving Credit Note Exhibit 2.01(d)    -   
Form of Borrowing Base Certificate Exhibit 5.01(c)    -    Form of Compliance
Certificate Exhibit 1.01(G)    -    Form of Guaranty and Suretyship Agreement
Exhibit 1.01(S)(1)    -    Form of Security Agreement Exhibit 1.01(S)(2)    -   
Form of Stock Pledge Agreement Exhibit 1.01(P)    -    Form of Patent and
Trademark Security Agreement Exhibit 1.01(W)    -    Form of Landlord’s Waiver

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LOAN AGREEMENT

This Loan Agreement (“Agreement”), dated October 15, 2008, by and among Mastech
Holdings, Inc., a Pennsylvania corporation (“MHI”), Mastech, Inc., a
Pennsylvania corporation (“MI”), RPOworldwide, Inc., a Pennsylvania corporation
(“RPOWI”), Global Financial Services of Nevada, a Nevada corporation (“GFSN”),
Mastech Trademark Systems, Inc., a Delaware corporation (“MTSI”) (MHI, MI,
RPOWI, GFSN, and MTSI are each, a “Borrower” and collectively, the “Borrowers”),
and PNC Bank, National Association (the “Bank”) (the “Agreement”).

WITNESSETH:

WHEREAS, the Borrowers have requested that the Bank extend credit to the
Borrowers in an aggregate principal amount of up to Ten Million and 00/100
Dollars ($10,000,000.00), the proceeds of which will be used, among other
things, (i) for working capital and general corporate purposes, (ii) for the
issuance of standby letters of credit, and (iii) to facilitate Acquisitions (as
hereinafter defined) and Stock Repurchases (as hereinafter defined); and

WHEREAS, the Bank is willing to extend such credit to the Borrowers pursuant to
the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants
contained in this Agreement, the receipt, adequacy and legal sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.01 Certain Definitions.

In addition to other words and terms defined elsewhere in this Agreement, the
following words and terms have the following meanings, respectively, unless the
context otherwise clearly requires:

“Acquisition” shall mean any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of any Person, or any business or
division of any Person, (b) the acquisition of in excess of fifty percent
(50%) of the capital stock (or other equity interest) of any Person or (c) the
acquisition of another Person by a merger or consolidation or any other
combination with such Person.

“Affiliate” shall mean any Person (i) which directly or indirectly controls, is
controlled by, or is under common control with, any other Person, (ii) which
beneficially owns or holds ten percent (10%) or more of any class of the voting
interests or other equity interest of any other Person, or (iii) which is
beneficially owned or held by ten percent (10%) or more of any class of voting
interests or other equity interests of any other Person. The term “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

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“Agreement” shall mean this Loan Agreement, as amended, modified or supplemented
from time to time, including all schedules and exhibits.

“Anti-Terrorism Laws” shall mean any laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot Act, the laws
comprising or implementing the Bank Secrecy Act, and the laws administered by
the United States Treasury Department’s Office of Foreign Asset Control (as any
of the foregoing laws may from time to time be amended, renewed, extended, or
replaced).

“Applicable L/C Fee Percentage” shall mean that as set forth in Section 2.06
hereof.

“Applicable Margin” shall mean that as set forth in Section 2.02(a) hereof.

“Applicable Rate” shall mean a rate per annum equal to (i) the Base Rate plus
the Applicable Margin, or (ii) the Libor Rate plus the Applicable Margin, as the
case may be.

“Authorized Representative” shall mean John Cronin, David Amoroso, Jennifer Ford
Lacey and each other Person designated from time to time, as appropriate, in
writing by the Borrowers to the Bank for the purpose of giving notices of
borrowing, renewal or conversion of Loans, which designation shall continue in
full force and effect until terminated in writing by the Borrowers to the Bank.

“Bank” shall mean PNC Bank, National Association, with an office at One PNC
Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222.

“Base Net Worth” shall mean the sum of ninety percent (90%) of Tangible Net
Worth as of October 1, 2008, the calculation of which shall be in form and
substance satisfactory to the Bank plus fifty percent (50%) of the sum of
(i) Net Income and (ii) non-cash share issuance and share option related expense
items (SFAS 123, 148 and APB 25 and each of their respective successors), in
each case of MHI and its Subsidiaries determined and Consolidated in accordance
with GAAP, for each fiscal quarter in which net income was earned (as opposed to
a net loss) during the period from October 1, 2008 through the date of
determination.

“Base Rate” shall mean the greater of (i) the interest rate per annum announced
from time to time by the Bank at its Office as its then prime rate, which rate
may not be the lowest rate then being charged commercial borrowers by the Bank,
or (ii) the Federal Funds Open Rate plus one-half of one percent (.50%) per
annum.

“Blocked Person” shall mean that as set forth in Section 3.27 hereof.

“Borrower” or “Borrowers” shall mean, singularly or collectively, as the context
may require, MHI, MI, RPOWI, GFSN and MTSI.

“Borrowing Base” shall mean that as set forth in Section 2.01(c) hereof.

 

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“Business Day” shall mean a day of the year on which banks are not required or
authorized to close in Pittsburgh, Pennsylvania and, if the applicable Business
Day relates to a Libor Rate Loan, on which dealings are carried on in the London
interbank eurodollar market.

“Capital Expenditure” shall mean any expenditure made or liability incurred
which is, in accordance with GAAP, treated as a capital expenditure and not as
an expense item for the year in which it was made or incurred, as the case may
be.

“Capital Lease” shall mean any lease of any tangible or intangible property
(whether real, personal or mixed), however denoted, which is required by GAAP to
be reflected as a liability on the balance sheet of the lessee.

“Capitalized Lease Obligation” shall mean, with respect to each Capital Lease,
the amount of the liability reflecting the aggregate discounted amount of future
payments under such Capital Lease calculated in accordance with GAAP and
Statement of Financial Accounting Standards No. 13 (as supplemented and modified
from time to time), and any corresponding future interpretations by the
Financial Accounting Standards Board or any successor thereto.

“Cash Equivalents” shall mean (a) securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof, (b) time deposits, certificates of deposit and
eurodollar time deposits, bankers’ acceptances and overnight bank deposits, in
each case with the Bank or with any domestic commercial bank having capital and
surplus in excess of Five Hundred Million and 00/100 Dollars ($500,000,000.00),
(c) notes and bonds issued by domestic corporations, (d) tax exempt money market
securities, (e) notes and bonds issued by state and municipal governments, and
(f) money market mutual funds; provided, however, that (x) at least one third of
the value of the Cash Equivalents shall have a maximum weighted average to
maturity of not more than six (6) months and the remaining value of the Cash
Equivalents shall have a maximum weighted average to maturity of not more than
eighteen (18) months, and (y) the Cash Equivalents which are of a type
customarily rated by S&P and Moody’s, must have a rating of at least A-1 by S&P
or P-1/VMG-1 by Moody’s, if short term, or double “A” or higher by S&P and
Moody’s, if long term.

“Change of Control” shall mean that (a) Ashok K. Trivedi and Sunil Wadhwani
shall fail to collectively own greater than fifty percent (50%) of the voting
capital stock of MHI, (b) any “person” or “group” (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) other than
Ashok K. Trivedi or Sunil Wadhwani becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of fifty percent (50%) or more of the voting power of the then outstanding
capital stock of MHI entitled to vote generally in the election of directors of
MHI. For purposes of calculating ownership percentages of shares owned by Ashok
K. Trivedi and Sunil Wadhwani, shares beneficially owned by members of their
immediate family in trust or family partnerships for the benefit of Messrs.
Trivedi and Wadhwani or members of their immediate family shall be deemed to be
beneficially owned by Messrs. Trivedi and Wadhwani, respectively.

“Closing” shall mean the closing of the transactions provided for in this
Agreement on the Closing Date.

 

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“Closing Date” shall mean October 15, 2008 or such other date upon which the
parties may agree.

“Code” shall mean the Internal Revenue Code of 1986 as amended along with the
rules, regulations, decisions and other official interpretations in connection
therewith.

“Collateral” shall mean that as set forth in Section 3.20 hereof.

“Commitment Fee” shall mean that as set forth in Section 2.03(a) hereof.

“Consolidated” shall mean the resulting consolidation of the financial
statements of MHI and its Subsidiaries in accordance with GAAP, including
principles of consolidation consistent with those applied in preparation of the
Consolidated financial statements referred to in Section 3.08 hereof.

“Contamination” shall mean the presence or release or threat of release of
Regulated Substances in, on, under or emanating to or from the Property which
pursuant to Environmental Laws requires notification or reporting to an Official
Body, or which pursuant to Environmental Laws requires the investigation,
cleanup, removal, remediation, containment, abatement of or other response
action or which otherwise constitutes a violation of Environmental Laws.

“Contras” shall mean that as set forth in the definition of Eligible Receivables
contained in Section 1.01.

“Debt” shall mean, collectively, (A) all Indebtedness, whether of principal,
interest, fees, expenses or otherwise, of the Borrowers to the Bank, whether now
existing or hereafter incurred, including, but not limited to, future loans and
advances, if any, under this Agreement, the Notes and the other Loan Documents,
as the same may be amended from time to time, together with any and all
extensions, renewals, refinancings or refundings thereof in whole or in part;
(B) all other obligations for the repayment of borrowed money, whether of
principal, interest, fees, expenses or otherwise, of the Borrowers to the Bank,
whether now existing or hereafter incurred, whether under letters or advices of
credit, lines of credit, other financing arrangements or otherwise (including,
but not limited to, any obligations arising as a result of any overdrafts),
whether or not related to this Agreement or to the Notes, whether or not
contemplated by the Bank or the Borrowers at the date hereof and whether direct,
indirect, matured or contingent, joint or several, or otherwise, together with
any and all extensions, renewals, refinancings or refundings thereof in whole or
in part; (C) all costs and expenses including, without limitation, to the extent
permitted by Law, reasonable attorneys’ fees and legal expenses, incurred by the
Bank in the collection of any of the indebtedness referred to in clauses (A) or
(B) above in amounts due and owing to the Bank under this Agreement or the other
Loan Documents; and (D) any advances made by the Bank for the maintenance,
preservation, protection or enforcement of, or realization upon, any property or
assets now or hereafter made subject to a Lien granted pursuant to this
Agreement, the other Loan Documents or pursuant to any agreement, instrument or
note relating to any of the amounts referred to in clauses (A), (B) or
(C) above, including, without limitation, advances for taxes, insurance, repairs
and the like.

“Distributions” shall mean, for the period of determination, (i) all
distributions of cash, securities or other property (other than capital stock)
on or in respect of any shares of any class of capital stock of a Borrower and
(ii) all Stock Repurchases, in each case determined in accordance with GAAP.

 

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“Domestic Subsidiary” shall mean a Subsidiary organized under the laws of any
state of the United States of America or the District of Columbia.

“EBIT” shall mean for any period of determination the sum of (i) net income (or
loss) (excluding extraordinary gains or losses including, without limitation,
those items created by mandated changes in accounting treatment), plus
(ii) Interest Expense, plus (iii) all charges against or minus credits to income
for federal, state and local income taxes paid, plus (iv) non-cash share
issuance and share option related compensation expense items (SFAS 123, 148 and
APB 25 and each of their respective successors), in each case of MHI and its
Subsidiaries determined and Consolidated in accordance with GAAP.

“EBITDA” shall mean for any period of determination the sum of (i) EBIT, plus
(ii) depreciation, plus (iii) amortization, in each case of MHI and its
Subsidiaries determined and Consolidated in accordance with GAAP.

“Eligible Receivables” shall mean and include with respect to each Borrower, an
account receivable of any Borrower arising in the ordinary course of such
Borrower’s business and which the Bank, in its sole and reasonable credit
judgment, shall deem to be an Eligible Receivable, based on such considerations
as the Bank may from time to time deem appropriate. A Receivable shall not be
deemed eligible unless such Receivable is subject to the Bank’s first priority
perfected security interest and no other Lien (other than Permitted
Encumbrances), and is evidenced by an invoice or other documentary evidence
satisfactory to the Bank. In addition, a Receivable of a Borrower shall be an
Eligible Receivable only if:

(a) It is not more than ninety (90) days from the date of the invoice therefore;

(b) It arose from the performance of services or an outright sale of goods by a
Borrower in the ordinary course of such Borrower’s business and such goods have
been shipped, or services provided or will be provided, to the account debtor
and such Borrower has possession of, or has delivered to the Bank, in the case
of goods, shipping and delivery receipts evidencing such shipment and, in the
case of services, receipts or other evidence satisfactory to the Bank that such
services have been provided or will be provided;

(c) It is not subject to any prior assignment, claim or Lien, and the Borrowers
will not make any further assignment of the Receivable or create any further
Lien on the Receivable, or permit its rights in the Receivable to be reached by
attachment, levy, garnishment or other judicial process;

(d) It is not subject to set-off, credit allowance or adjustment by the account
debtor, except discounts allowed for prompt payment, and the account debtor has
not complained as to its liability on the Receivable and has not returned, or
retained the right to return, any of the goods from the sale of which the
Receivable arose;

(e) It does not arise from a sale of goods that are delivered or to be delivered
outside the United States of America or from a sale of goods to an account
debtor domiciled

 

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outside of the United States of America, unless the sale is (i) on a letter of
credit, which is in form and substance and issued by a financial institution
satisfactory to the Bank and which has been issued or confirmed by a bank that
is organized under the Laws of the United States of America or a state thereof
and which has been transferred or assigned to the Bank as additional security or
(ii) insured by credit insurance, with an insurance company acceptable to the
Bank that names the Bank as an additional insured and lender/loss payee with
respect thereto;

(f) It arose in the ordinary course of a Borrower’s business and did not arise
from the performance of services or a sale of goods to a supplier, an employee,
member, officer, relative of an officer or any other Affiliate of a Borrower;

(g) It does not arise with respect to an account debtor from whom fifty percent
(50%) or more of the total amount owed by such account debtor to any Borrower
(i) is more than ninety (90) days from the date of the invoice therefore or
(ii) is otherwise ineligible under this definition;

(h) It does not arise with respect to an account debtor whose Receivables
constitute twenty percent (20%) or more of the aggregate amount of all
outstanding Receivables of any Borrower; provided, however, that to the extent
that any one account debtor’s Receivables exceed the percentage set forth above
in this Paragraph (h), such Receivables shall be ineligible solely to the extent
that such Receivables exceed the percentage set forth above in this Paragraph
(h), unless otherwise ineligible under this definition;

(i) It does not arise out of contracts with the United States, any state or any
department, agency, or instrumentality thereof, unless the applicable Borrower
has executed all instruments and taken all steps required by the Bank including
but not limited to, steps to ensure that all monies due and to become due under
such contracts shall be assigned to the Bank and notice thereof given to the
government under the Federal Assignment of Claims Act or other applicable Law
and an agreement by such account debtor to make payment directly to the Bank;

(j) It does not constitute a finance charge;

(k) No notice of bankruptcy, insolvency or material adverse change of the
account debtor has been received by or is known to the Borrowers;

(l) It is not a Receivable with respect to which there is an unresolved dispute
with respect to the account debtor’s obligation thereunder; provided, however,
that to the extent that there is an unresolved dispute with respect to the
account debtor’s obligations under such Receivable, such Receivable shall be
ineligible solely to the extent of the disputed amount thereof, unless otherwise
ineligible under this definition;

(m) It is not a Receivable evidenced by an “instrument” or “chattel paper” (each
as defined in the UCC) not in the possession of the Bank;

(n) The Bank has not notified the Borrowers that, despite the fact that the
account debtor meets other specifications established by the Bank in accordance
with this Agreement, the Bank has determined, in its reasonable discretion, that
the Receivable or account debtor is unsatisfactory;

 

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(o) It is payable in freely transferable United States Dollars; and

(p) It is not a Receivable with respect to which the account debtor is located
in New Jersey, Minnesota, West Virginia or any other state denying creditors
access to its courts in the absence of a Notice of Business Activities Report or
other similar filing unless the applicable Borrower has either qualified as a
foreign corporation authorized to transact business in such state or has filed a
Notice of Business Activities Report or similar filing with the applicable state
agency for the current year.

In addition to the foregoing requirements, Receivables of any account debtor
that are otherwise Eligible Receivables shall be reduced to the extent of any
accounts payable (including, without limitation, the Bank’s reasonable estimate
of any contingent or accrued liabilities) by the applicable Borrower to such
account debtor (collectively, “Contras”); provided that the Bank, in its
reasonable discretion, may determine that none of the accounts with respect to
such account debtor shall be Eligible Receivables in the event that there exists
an unreasonably large amount of payables owing to such account debtor.

“Eligible Unbilled Receivables” shall mean and refer to those certain
Receivables relating to which a Borrower has not yet billed for the completed
service or the completed sale giving rise thereto, and that otherwise would be
deemed Eligible Receivables in accordance with the provisions of the definition
thereof (other than for their unbilled status as described above).

“Environmental Complaint” shall mean any written complaint by any Person or
Official Body setting forth a cause of action for personal injury or property
damage, natural resource damage, contribution or indemnity for response costs,
civil or administrative penalties, criminal fines or penalties, or declaratory
or equitable relief arising under any Environmental Laws or any order, notice of
violation, citation, subpoena, request for information or other written notice
or demand of any type issued by an Official Body pursuant to any Environmental
Laws.

“Environmental Laws” shall mean all federal, state, local and foreign Laws and
any rules, regulations, consent decrees, settlement agreements, judgments,
orders, directives, policies or programs issued by or entered into with an
Official Body pertaining or relating to: (i) pollution or pollution control;
(ii) protection of human health or the environment; (iii) employee safety in the
workplace; (iv) the presence, use, management, generation, manufacture,
processing, extraction, treatment, recycling, refining, reclamation, labeling,
transport, storage, collection, distribution, disposal or release or threat of
release of Regulated Substances; (v) the presence of Contamination; (vi) the
protection of endangered or threatened species; and (vii) the protection of
Environmentally Sensitive Areas.

“Environmental Permits” shall mean all permits, licenses, bonds or other forms
of financial assurances, consents, registrations, identification numbers,
approvals or authorizations required under Environmental Laws (i) to own, occupy
or maintain any Property; (ii) for the operations and business activities of the
Borrowers; or (iii) for the performance of a Remedial Action.

“Environmental Records” shall mean all notices, reports, records, plans,
applications, forms or other filings relating or pertaining to any Property,
Contamination, the performance of a Remedial Action and the operations and
business activities of the Borrowers which pursuant to

 

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Environmental Laws, Environmental Permits or at the request or direction of an
Official Body responsible for the administration of Environmental Laws and/or
the issuance and administration of Environmental Permits either must be
submitted to an Official Body or otherwise must be maintained.

“Environmentally Sensitive Area” shall mean (i) any wetland as defined by
applicable Environmental Laws; (ii) any area designated as a coastal zone
pursuant to applicable Laws, including Environmental Laws; (iii) any area of
historic or archeological significance or scenic area as defined or designated
by applicable Laws, including Environmental Laws; (iv) habitats of endangered
species or threatened species as designated by applicable Laws, including
Environmental Laws; or (v) a floodplain or other flood hazard area as defined
pursuant to any applicable Laws.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as in
effect as of the date of this Agreement and as amended from time to time in the
future, and any successor statute of similar impact, and the rules and
regulations thereunder, or from time to time in effect.

“ERISA Affiliate” shall mean a Person which is under common control with a
Borrower within the meaning of Section 414(b) of the Code including, but not
limited to, a Subsidiary of a Borrower.

“Event of Default” shall mean any of the Events of Default described in
Section 7.01 of this Agreement.

“Excess Amount” shall mean that as set forth in Section 2.01(e) hereof.

“Excess Interest” shall mean that as set forth in Section 2.02(d) hereof.

“Executive Order No. 13224” shall mean the Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, as the same has been, or
shall hereafter be, renewed, extended, amended or replaced.

“Expiration Date” shall mean October 15, 2011.

“Federal Funds Open Rate” shall mean the rate per annum determined by the Bank
in accordance with its usual procedures (which determination shall be conclusive
absent manifest error) to be the “open” rate for federal funds transactions as
of the opening of business for federal funds transactions among members of the
Federal Reserve System arranged by federal funds brokers on such day, as quoted
by Garvin Guybutler, any successor entity thereto, or any other broker selected
by the Bank, as set forth on the applicable Telerate display page; provided,
however, that if such day is not a Business Day, the Federal Funds Open Rate for
such day shall be the “open” rate on the immediately preceding Business Day, or
if no such rate shall be quoted by a Federal funds broker at such time, such
other rate as determined by the Bank in accordance with its usual procedures.

“Fiscal Quarter(s)” shall mean the period(s) of January 1 through
March 31, April 1 through June 30, July 1 through September 30 and October 1
through December 31 of each calendar year.

 

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“Foreign Subsidiary” of any Person, shall mean any Subsidiary of such Person
that is not organized or incorporated in the United States or any State or
territory thereof.

“GAAP” shall mean generally accepted accounting principles (as such principles
may change from time to time) which shall include the official interpretations
thereof by the Financial Accounting Standards Board applied on a consistent
basis (except for changes in application in which the Borrowers’ independent
certified public accountants concur).

“GFSN” shall Global Financial Services of Nevada, a Nevada corporation, having
its principal place of business at 212 South Tryon Street, Suite 1055,
Charlotte, North Carolina 28281.

“Guarantor” or “Guarantors” shall mean, singularly or collectively, as the
context may require, any Person that executes and delivers to the Bank a
Guaranty Agreement on or after the date hereof.

“Guaranty Agreement” or “Guaranty Agreements” shall mean, singularly or
collectively, as the context may require, any Guaranty and Suretyship Agreement
executed and delivered to the Bank on or after the date hereof in connection
with this Agreement substantially in the form of Exhibit 1.01(G) attached hereto
and made a part hereof, as each may be amended, modified or supplemented from
time to time.

“Indebtedness” shall mean, (i) all obligations for borrowed money, direct or
indirect, incurred, assumed or guaranteed (including, without limitation, all
notes payable and drafts accepted representing loans, extensions of credit, all
obligations evidenced by bonds, debentures, notes or similar instruments, all
obligations on which interest charges are customarily paid, all obligations
under conditional sale or other title retention agreements, all obligations for
the deferred purchase price of capital assets and all obligations issued or
assumed as full or partial payment for property), (ii) all obligations secured
by any Lien existing on property owned or acquired subject thereto, whether or
not the obligations secured thereby shall have been assumed, (iii) all
reimbursement obligations (contingent or otherwise), (iv) all Indebtedness
represented by obligations under a Capital Lease and the amount of such
Indebtedness shall be the aggregate amount of Capitalized Lease Obligations with
respect to such Capital Lease, (v) all obligations (contingent or otherwise)
under any letter of credit, banker’s acceptance, guaranty or indemnification
agreement, (vi) all obligations to advance funds to, or to purchase assets,
property or services from, any other Person in order to maintain the financial
condition of such Person and (vii) any other transaction (including forward sale
or purchase agreements) having the commercial effect of a borrowing of money
entered into by any Loan Party to finance its operations or capital
requirements.

“Indemnified Liabilities” shall mean that as set forth in Section 8.16 hereof.

“Indemnitees” shall mean that as set forth in Section 8.16 hereof.

“Interest Coverage Ratio” shall mean for the period of determination, the ratio
of (i) EBIT to (ii) Interest Expense.

“Interest Expense” shall mean, for the period of determination, all interest
paid during such period on Indebtedness, in each case of MHI and its
Subsidiaries determined and Consolidated in accordance with GAAP.

 

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“Interest Period” shall mean, with respect to any Libor Rate Loan, the period
commencing on the date such Loan is made as, renewed as or converted into a
Libor Rate Loan and ending on the last day of such period as selected by the
Borrowers pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of such period as selected by the Borrowers pursuant
to the provisions below. The duration of each Interest Period for any Libor Rate
Loan shall be for any number of Months selected by the Borrowers upon notice as
set forth in Section 2.01(d); provided that:

(i) the Interest Period for any Libor Rate Loan shall be one (1), two (2), three
(3) or six (6) Months or such other period as may be agreed upon by the
Borrowers and the Bank;

(ii) whenever the last day of any Interest Period would otherwise occur on a day
other than a Business Day, the last day of such Interest Period shall occur on
the next succeeding Business Day; provided that if such extension of time would
cause the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the last
Business Day immediately preceding what would otherwise be the last day of such
Interest Period;

(iii) if the Borrowers renew any Libor Rate Loan for an additional Interest
Period, the first day of the new Interest Period shall be the last day of the
preceding Interest Period; however, interest shall only be charged once for such
day at the rate applicable to the Libor Rate Loan for the new Interest Period;

(iv) if the Borrowers fail to select the duration of any Interest Period for any
Libor Rate Loan, the duration of such Interest Period shall be one (1) Month;
and

(v) the last day of any Interest Period shall not occur after the Expiration
Date.

“Law” shall mean any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
Official Body.

“Lease Obligation” shall mean an obligation of a lessee under a lease of any
tangible or intangible property (whether real, personal or mixed) including,
without limitation, with respect to any period under any such lease, the
aggregate amounts payable by such lessee to or on behalf of the lessor for such
period, including, without limitation, property taxes, insurance, interest and
amortized charges which such lessee is required to pay pursuant to such lease.
Whenever it is necessary to determine the amount of Lease Obligations for any
period with respect to which any of the rentals under the relevant lease are not
definitely determinable by the terms of the lease, all such rentals will be
estimated in a reasonable amount for such period.

“Letter of Credit” or “Letters of Credit” shall mean, singularly or
collectively, as the context may require, the letters of credit issued in
accordance with Section 2.05 hereof.

“Letter of Credit Commission” shall mean as set forth in Section 2.06 hereof.

 

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“Letter of Credit Face Amount” shall mean, for each Letter of Credit, the face
amount of such Letter of Credit.

“Letters of Credit Outstanding” shall mean, at any time, the maximum amount
available to be drawn at such time under all then outstanding Letters of Credit
including any amounts drawn thereunder and not reimbursed, regardless of the
existence or satisfaction of any conditions or limitations on drawing.

“Letter of Credit Related Documents” shall mean any agreements or instruments
relating to a Letter of Credit.

“Letter of Credit Reserve” shall mean, at any time, an amount equal to (i) the
aggregate Letters of Credit Outstanding at such time plus, without duplication,
(ii) the aggregate amount theretofore paid by the issuer under the Letters of
Credit and not debited to the Borrowers’ account or otherwise reimbursed by the
Borrowers.

“Leverage Ratio” shall mean, as of the date of determination, the ratio of
(i) Total Indebtedness to (ii) EBITDA.

“LIBOR Rate” shall mean, for any Interest Period, a fixed interest rate per
annum determined by the Bank by dividing (the resulting quotient rounded
upwards, if necessary, to the nearest 1/100th of one percent (1%) per annum)
(i) the rate which appears on the Bloomberg Page BBAM1 (or on such other
substitute Bloomberg page that displays rates at which US dollar deposits are
offered by leading banks in the London interbank deposit market), or the rate
which is quoted by another source selected by the Administrative Agent which has
been approved by the British Bankers’ Association as an authorized information
vendor for the purpose of displaying rates at which US dollar deposits are
offered by leading banks in the London interbank deposit market (an “Alternate
Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior
to the commencement of such Interest Period as the London interbank offered rate
for U.S. Dollars for an amount comparable to such Libor Rate Loan and having a
borrowing date and a maturity comparable to such Interest Period (or if there
shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or
any substitute page) or any Alternate Source, a comparable replacement rate
determined by the Administrative Agent at such time (which determination shall
be conclusive absent manifest error)), by (ii) a number equal to 1.00 minus the
Libor Rate Reserve Percentage. The Libor Rate may also be expressed by the
following formula:

 

Libor Rate =

  

Average of London interbank offered rates quoted by BBA or appropriate successor
as shown on Dow Jones Markets Service display page 3750

   1.00 – Libor Rate Reserve Percentage

The Libor Rate shall be adjusted with respect to any Libor Rate Loan that is
outstanding on the effective date of any change in the Libor Rate Reserve
Percentage as of such effective date. The Bank shall give prompt notice to the
Borrowers of the Libor Rate as determined or adjusted in accordance herewith,
which determination shall be conclusive absent manifest error.

“Libor Rate Loan” shall mean any Loan that bears interest with reference to the
Libor Rate.

 

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“Libor Rate Reserve Percentage” shall mean as of any day the maximum percentage
in effect on such day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including supplemental, marginal and emergency reserve requirements) with
respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).

“Lien” shall mean any mortgage, deed of trust, pledge, lien, security interest,
charge or other encumbrance or security arrangement of any nature including, but
not limited to, any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the effect of,
security for Indebtedness.

“Loan” or “Loans” shall mean, singularly or collectively, as the context may
require, the Revolving Credit Loans and/or any other credit extended to the
Borrowers by the Bank under this Agreement.

“Loan Account” shall mean that as set forth in Section 2.13 hereof.

“Loan Document” or “Loan Documents” shall mean, singularly or collectively as
the context may require, (i) this Agreement, (ii) the Notes, (iii) the Letter of
Credit Related Documents, (iv) the Security Agreement, (v) the Patent and
Trademark Security Agreement, (vi) the Guaranty Agreements, (vii) the Stock
Pledge Agreements, (ix) the Working Cash® Sweep Rider, (x) the Waivers, (xi) the
UCC financing statements filed in accordance with the Security Agreement and the
Stock Pledge Agreements, (xii) the Special Power of Attorney given in connection
with the Patent and Trademark Security Agreement, and (xiii) any and all other
documents, instruments, certificates and agreements executed and delivered in
connection with this Agreement, as any of them may be amended, modified,
extended or supplemented from time to time.

“Loan Party” or “Loan Parties” shall mean, singularly or collectively as the
context may require, the Borrowers and the Guarantors.

“Material Adverse Change” shall mean a material adverse change in (a) the
business, operations or condition (financial or otherwise) or prospects of any
Loan Party and their Subsidiaries taken as a whole; (b) the ability of any
Borrower or any Subsidiary of a Borrower to perform any of its payment or other
obligations under this Agreement or the ability of Loan Party to perform any of
its obligations under any other Loan Document to which it is a party; (c) the
legality, validity or enforceability of the obligations of any Borrower or any
Subsidiary of a Borrower under this Agreement or any Loan Party under any other
Loan Document to which it is a party; or (d) the ability of the Bank to exercise
its rights and remedies with respect to, or otherwise realize upon, the
Collateral or any other security for the Debt.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, operations or condition (financial or otherwise) or prospects of any
Loan Party and their Subsidiaries taken as a whole; (b) the ability of a
Borrower or any Subsidiary of a Borrower to perform any of its payment or other
obligations under this Agreement or the ability of any Loan Party to perform any
of its obligations under any other Loan Document to which it is a party; (c) the
legality, validity or enforceability of the obligations of any Borrower or any
Subsidiary of any Borrower under this Agreement or any Loan Party under any
other Loan Document to which it is a party; or (d) the ability of the Bank to
exercise its rights and remedies with respect to, or otherwise realize upon, any
of the Collateral or any other security for the Debt.

 

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“Maximum Rate” shall mean that as set forth in Section 2.02(d) hereof.

“Measurement Month” shall mean that as set forth in Section 2.02(a)(ii) hereof.

“MHI” shall mean Mastech Holdings, Inc., a Pennsylvania corporation, having its
principal place of business at 1000 Commerce Drive, Suite 500, Pittsburgh,
Pennsylvania 15275.

“MI” shall mean Mastech, Inc., a Pennsylvania corporation, having its principal
place of business at 1000 Commerce Drive, Suite 500, Pittsburgh, Pennsylvania
15275.

“Month” shall mean with respect to an Interest Period, the interval between the
days in consecutive calendar months numerically corresponding to the first
(1st) day of such Interest Period. If any Interest Period begins on a day of a
calendar month for which there is no numerically corresponding day in the month
in which such Interest Period is to end, the final month of such Interest Period
shall be deemed to end on the last Business Day of such final month.

“Moody’s” shall mean Moody’s Investor Service, Inc.

“MTSI” shall mean Mastech Trademark Systems, Inc., a Delaware corporation,
having its principal place of business at 1000 Commerce Drive, Suite 500,
Pittsburgh, Pennsylvania 15275.

“Net Income” shall mean, for the period of determination, net income (after
taxes) excluding, however, extraordinary gains, in each case of MHI and its
Subsidiaries determined and Consolidated in accordance with GAAP.

“Note” or “Notes” shall mean singularly or collectively as the context may
require, the Revolving Credit Note and any other note or notes of the Borrowers
executed and delivered pursuant to this Agreement, together with all extensions,
renewals, refinancings or refundings in whole or in part, as amended, modified
or supplemented from time to time.

“Notices” shall mean that as set forth in Section 8.04 hereof.

“Office”, when used in connection with the Bank, shall mean its designated
office located at One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania
15222 or such other office of the Bank as the Bank may designate in writing from
time to time.

“Official Body” shall mean any government or political subdivision or any
agency, authority, bureau, central bank, board, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.

“Operating Lease” shall mean any lease other than a Capital Lease.

“Organizational Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation, as the case may be, and the bylaws (or
equivalent or comparable constitutive documents with respect to any non-U.S.
jurisdiction); (b) with respect to any limited

 

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liability company, the certificate or articles of formation or organization, as
the case may be, and operating agreement; (c) with respect to any partnership,
joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any
agreement, instrument, filing or notice with respect thereto filed in connection
with its formation or organization with the applicable Official Body in the
jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.

“Patent and Trademark Security Agreement” shall mean the Patent, Trademark and
Copyright Security Agreement, dated of even date herewith, made by the Borrowers
for the benefit of the Bank, in substantially the form as Exhibit 1.01(P) as
amended, modified or supplemented from time to time.

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Title IV of ERISA.

“Person” shall mean an individual, corporation, limited liability company,
partnership, joint venture, trust, or unincorporated organization or government
or agency or political subdivision thereof.

“Pricing Effective Date” shall mean that as set forth in Section 2.02(a)(ii)
hereof.

“Plan” shall mean any deferred compensation program, including both single and
multi-employer plans, subject to Title IV of ERISA and established and
maintained for employees, officers or directors of a Borrower or any Subsidiary
or any ERISA Affiliate.

“Potential Default” shall mean any event or condition which with notice, passage
of time or determination by the Bank, or any combination of the foregoing, would
constitute an Event of Default.

“Prohibited Transaction” shall mean any transaction which is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA.

“Property” shall mean all real property both owned and leased by Borrowers.

“Purchase Money Security Interest” shall mean Liens upon tangible personal
property securing Indebtedness of a Borrower or deferred payments by a Borrower
for the purchase of such tangible personal property.

“Receivables” shall mean and include, as to each Borrower, all of such
Borrowers’ accounts, contract rights, instruments (including those evidencing
indebtedness owed to a Borrower by its Affiliates), documents, chattel paper
(including electronic chattel paper), general intangibles relating to accounts,
drafts and acceptances, credit card receivables, royalties and all other forms
of obligations owing to such Borrower in each case arising out of or in
connection with the sale or lease of Inventory or the rendition of services, all
supporting obligations, guarantees and other security therefor, whether secured
or unsecured, now existing or hereafter created, and whether or not specifically
sold or assigned to the Bank hereunder.

 

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“Regulated Substances” shall mean, without limitation, any substance, material
or waste, regardless of its form or nature, defined under Environmental Laws as
a “hazardous substance,” “pollutant,” “pollution,” “contaminant,” “hazardous or
toxic substance,” “extremely hazardous substance,” “toxic chemical,” “toxic
substance,” “toxic waste,” “hazardous waste,” “special handling waste,”
“industrial waste,” “residual waste,” “solid waste,” “municipal waste,” “mixed
waste,” “infectious waste,” “chemotherapeutic waste,” “medical waste,” or
“regulated substance” or any other material, substance or waste, regardless of
its form or nature, which otherwise is regulated by Environmental Laws.

“Remedial Action” shall mean any investigation, identification, preliminary
assessment, characterization, delineation, feasibility study, cleanup,
corrective action, removal, remediation, risk assessment, fate and transport
analysis, in situ treatment, containment, operation and maintenance or
management in-place, control or abatement of or other response actions to
Regulated Substances and any closure or post-closure measures associated
therewith.

“Reportable Event” shall mean any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, except any such event as to which the
provision for thirty (30) days notice to the PBGC is waived under applicable
regulations.

“Required Deductions” shall mean that as set forth in Section 2.04 hereof.

“Required Pledge Amount” shall mean sixty-five percent (65%); provided that if
the pledging of all of the equity interests in the applicable Foreign Subsidiary
shall not cause any adverse tax consequences to any Borrower (which adverse
consequences shall have been demonstrated to the reasonable satisfaction of the
Bank), then the Required Pledge Amount shall mean one hundred percent (100%) of
the equity interests.

“Revolving Credit Facility Commitment” shall mean that as set forth in
Section 2.01(a) hereof.

“Revolving Credit Facility Commitment Amount” shall mean that as set forth in
Section 2.01(a) hereof.

“Revolving Credit Facility Fee” shall mean that as set forth in Section 2.03(b)
hereof.

“Revolving Credit Loan” or “Revolving Credit Loans” shall mean, singularly or
collectively as the context may require, that as set forth in Section 2.01(a)
hereof.

“Revolving Credit Note” shall mean the Revolving Credit Note of the Borrowers
dated of even date herewith, executed and delivered pursuant to Section 2.01(b)
of this Agreement, together with all extensions, renewals, refinancings or
refundings, in whole or in part, as such Revolving Credit Note may be amended,
modified or supplemented from time to time.

“Revolving Facility Usage” shall mean at any time the sum of the Revolving
Credit Loans outstanding and the Letters of Credit Outstanding.

“RPOWI” shall mean RPOworldwide, Inc., a Pennsylvania corporation, having its
principal place of business at 1000 Commerce Drive, Suite 500, Pittsburgh,
Pennsylvania 15275.

 

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“RPOWIPL” shall mean RPO Worldwide (India) Private Limited, an India private
limited company, having its principal place of business at 208 Phoenix House, A
Wing, 2nd Floor, 462 Senapati Bapat MG Lower Parel, Mumbai 400013, Maharashtra,
India.

“S&P” shall mean Standard & Poor’s Corporation.

“Safety Complaints” shall mean any (i) notice of non-compliance or violation,
citation or order relating in any way to any Safety Law; (ii) civil, criminal,
administrative or regulatory investigation instituted by an Official Body
relating in any way to any Safety Law; (iii) administrative, regulatory or
judicial action, suit, claim or proceeding instituted by any Person or Official
Body or any written notice of liability or potential liability from any Person
or Official Body, in either instance, setting forth allegations relating to or a
cause of action for civil or administrative penalties, criminal fines or
penalties, or declaratory or equitable relief arising under any Safety Laws; or
(iv) subpoena, request for information or other written notice or demand of any
type issued by an Official Body pursuant to any Safety Laws.

“Safety Filings and Records” shall mean all notices, reports, records, plans,
applications, forms, logs, programs, manuals or other filings or documents
relating or pertaining to compliance with Safety Laws, including employee safety
in the workplace, employee injuries or fatalities, employee training, or the
protection of employees from exposure to Regulated Substances which pursuant to
Safety Laws or at the direction or order of any Official Body or the Borrowers
either must submit to an Official Body or otherwise must maintain in their
records.

“Safety Laws” shall mean the Occupational Safety and Health Act, 29 U.S.C. § 651
et seq., as amended, and any regulations promulgated thereunder or any
equivalent federal, state or local Law, each as amended, and any regulations
promulgated thereunder or any other federal, state or local Law, each as
amended, and any regulations promulgated thereunder, pertaining or relating to
the protection of employees from exposure to Regulated Substances in the
workplace (but excluding workers compensation and wage and hour laws).

“Security Agreement” shall mean the Security Agreement, dated of even date
herewith, made by the Borrowers for the benefit of the Bank, in substantially
the form as Exhibit 1.01(S)(1), as amended, modified or supplemented from time
to time.

“Stock Pledge Agreement” or “Stock Pledge Agreements” shall mean, singularly or
collectively, as the context may require, (i) that certain Stock Pledge
Agreement, dated of even date herewith, made by MHI for the benefit of the Bank
with respect to all of the issued and outstanding capital stock of MI, RPOWI,
GFSN, and MTSI, (ii) that certain Stock Pledge Agreement, dated of even date
herewith, made by MI for the benefit of the Bank with respect to sixty-five
percent (65%) of the outstanding equity interests of RPOWIPL and (iii) any other
Stock Pledge Agreement executed and delivered to the Bank on or after the date
hereof in connection with this Agreement which shall be substantially in the
form of Exhibit 1.01(S)(2) attached hereto and made a part hereof, as each may
be amended, modified or supplemented from time to time.

“Stock Repurchase” or “Stock Repurchases” shall mean, from the period of
determination, all purchases, redemptions or other acquisitions by MHI of any
shares of any class of capital stock of MHI.

 

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“Subsidiary” or “Subsidiaries” of a Person shall mean (i) any corporation or
trust of which 50% or more (by number of shares or number of votes) of the
outstanding capital stock or shares of beneficial interest normally entitled to
vote for the election of one or more directors or trustees (regardless of any
contingency which does or may suspend or dilute the voting rights) is at such
time owned directly or indirectly by such Person or one or more of such Person’s
Subsidiaries, (ii) any partnership of which such Person is a general partner or
of which 50% or more of the partnership interests is at the time directly or
indirectly owned by such Person or one or more of such Person’s Subsidiaries,
(iii) any limited liability company of which such Person is a member or of which
50% or more of the limited liability company interests is at the time directly
or indirectly owned by such Person or one or more of such Person’s Subsidiaries
or (iv) any corporation, trust, partnership, limited liability company or other
entity which is controlled or capable of being controlled by such Person or one
or more of such Person’s Subsidiaries.

“Suretyship Portion” shall mean that as set forth in Section 8.21 hereof.

“Tangible Net Worth” shall mean, as of the date of determination,
(a) stockholders’ equity; provided, however, that in the event of any Stock
Repurchase permitted pursuant to Section 2.01(f) hereof, the impact on
stockholders’ equity resulting from such Stock Repurchase shall be disregarded
for purposes of this calculation, minus (b) the sum of (i) any advances to third
parties, and (ii) any and all intangible assets, plus (c) any FAS 123 non-cash
compensation expense, in each case of MHI and its Subsidiaries determined and
Consolidated in accordance with GAAP.

“Termination Event” shall mean (i) a Reportable Event, (ii) the termination of a
single employer Plan or the treatment of a single employer Plan amendment as the
termination of such Plan under Section 4041 of ERISA, or the filing of a notice
of intent to terminate a single employer Plan, or (iii) the institution of
proceedings to terminate a single employer Plan by the PBGC under Section 4042
of ERISA, or (iv) the appointment of a trustee to administer any single employer
Plan.

“Total Indebtedness” shall mean, as of any date of determination, the sum of all
Indebtedness representing borrowed money, including both current and long term
portion thereof, Capitalized Lease Obligations, reimbursement obligations under
letters of credit, and contingent and guaranty obligations, in each case of MHI
and its Subsidiaries determined and Consolidated in accordance with GAAP.

“Total Liabilities” shall mean, as of the date of determination, total
liabilities of MHI and its Subsidiaries determined and Consolidated in
accordance with GAAP.

“UCC” shall mean the Uniform Commercial Code or other similar Law as in effect
on the date of this Agreement in the Commonwealth of Pennsylvania and as amended
from time to time.

“Undrawn Availability” shall mean, at a particular date, an amount equal to the
Revolving Credit Facility Commitment Amount minus Revolving Facility Usage.

“USA Patriot Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.

 

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“Waiver” or “Waivers” shall, singularly or collectively, as the context may
require, mean the Landlord’s Waiver executed and delivered in connection with
this Agreement, substantially in the form of Exhibit 1.01(W) attached hereto and
made a part hereof, as amended, modified or supplemented from time to time.

“Working Cash® Subfacility” shall mean that as set forth in Section 2.16 hereof.

“Working Cash® Subfacility Commitment” shall mean that as set forth in
Section 2.16 hereof.

“Working Cash® Sweep Rider” shall mean the Working Cash®, Line of Credit,
Investment Sweep Rider, dated of even date herewith, by and among the Borrowers
and the Bank, as amended, modified or supplemented from time to time, which is
attached hereto and made a part hereof.

1.02 Construction and Interpretation.

(a) References to Borrowers. Each and every obligation of the Borrowers
contained in this Agreement or any Loan Document, whether or not expressly
stated, shall be the joint and several obligations of the Borrowers. Any and all
references to the Borrowers contained in any representation or covenant of the
Borrowers hereunder shall be a representation or covenant with respect to each
Borrower, both individually and collectively.

(b) Construction. Unless the context of this Agreement otherwise clearly
requires, references to the plural include the singular, the singular the
plural, the part the whole and “or” has the inclusive meaning represented by the
phrase “and/or”. References in this Agreement to “judgments” of the Bank include
good faith estimates by the Bank (in the case of quantitative judgments) and
good faith beliefs by the Bank (in the case of qualitative judgments). The
definition of any document or instrument includes all schedules, attachments and
exhibits thereto and all renewals, extensions, supplements, restatements and
amendments thereof. “Hereunder”, “herein”, “hereto”, “hereof”, “this Agreement”
and words of similar import refer to this entire document; “including” is used
by way of illustration and not by way of limitation unless the context clearly
indicates to the contrary; and any action required to be taken by the Borrowers
is to be taken promptly, unless the context clearly indicates to the contrary.

(c) Bank’s Discretion and Consent. Whenever the Bank is granted the right herein
to act in its sole discretion or to grant or withhold consent, such right shall
be exercised in good faith.

(d) Accounting Principles. Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters and all
financial statements to be delivered pursuant to this Agreement shall be made
and prepared in accordance with GAAP (including principles of consolidation,
where appropriate), and all accounting or financial terms shall have the
meanings ascribed to such terms by GAAP; provided, however, that all accounting
terms used in Section 5.18 (and all defined terms used in the definition of any
accounting terms used in Section 5.18) shall have the meaning given to such
terms (and defined terms) under GAAP as in effect on the date hereof applied on
a basis consistent with those used in preparing the annual Consolidated
financial statements of MHI and its Subsidiaries referred to in Section 3.08. In
the event of any change after the date hereof in

 

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GAAP, and if such change would result in the inability to determine compliance
with the financial covenants set forth in Section 5.18 based upon MHI’s
regularly prepared financial statements by reason of the preceding sentence,
then the parties hereto agree to endeavor, in good faith, to agree upon an
amendment to this Agreement that would adjust such financial covenants in a
manner that would not affect the substance thereof, but would allow compliance
therewith to be determined in accordance with MHI’s financial statements at that
time.

ARTICLE II

THE CREDIT FACILITIES

2.01 The Revolving Credit Facility Commitment.

(a) Revolving Credit Loans. Subject to the terms and conditions and relying upon
the representations and warranties set forth in this Agreement, the Notes and
the other Loan Documents, the Bank agrees (the “Revolving Credit Facility
Commitment”) to make loans (a “Revolving Credit Loan” or the “Revolving Credit
Loans”) to the Borrowers at any time or from time to time on or after the
Closing Date and to and including the Business Day immediately preceding the
Expiration Date in an aggregate principal amount which, when combined with the
aggregate Letters of Credit Outstanding, shall not exceed at any one time
outstanding exceed the lesser of (i) Ten Million and 00/100 Dollars
($10,000,000.00) or (ii) the Borrowing Base (the “Revolving Credit Facility
Commitment Amount”). Within the limits of time and amounts set forth in this
Section 2.01, and subject to the other provisions of this Agreement including,
without limitation, the Bank’s right to demand repayment of the Revolving Credit
Loans upon the occurrence of an Event of Default, the Borrowers may borrow,
repay and reborrow under this Section 2.01; provided, however, that if the
Borrowers prepay any Libor Rate Loan on a day other than the last day of the
applicable Interest Period for such Libor Rate Loan, then the Borrowers shall
comply with the terms and conditions of Section 2.11(c) with respect to such
prepayment.

(b) Revolving Credit Note. The obligations of the Borrowers to repay the unpaid
principal amount of the Revolving Credit Loans made to the Borrowers by the Bank
and to pay interest on the unpaid principal amount thereof will be evidenced in
part by the Revolving Credit Note of the Borrowers, dated the Closing Date, in
substantially the form of Exhibit 2.01(b) attached hereto and made a part
hereof, with the blanks appropriately filled. The executed Revolving Credit Note
shall be delivered by the Borrowers to the Bank on the Closing Date.

(c) Borrowing Base. The “Borrowing Base” equals the sum of (i) eighty-five
percent (85%) of Eligible Receivables plus (ii) fifty percent (50%) of Eligible
Unbilled Receivables. Notwithstanding anything to the contrary herein, the Bank
may, in its sole but reasonable discretion, at any time hereafter, decrease the
advance percentage for Eligible Receivables and Eligible Unbilled Receivables or
increase the level of reserves or ineligibles, or define or maintain such other
reserves or ineligibles, as the Bank may deem necessary or appropriate. Any such
change shall become effective three (3) Business Days from the date of written
notice from the Bank to the Borrowers for the purpose of calculating the
Borrowing Base hereunder; provided, however, upon the occurrence of an Event of
Default hereunder, such change shall become effective immediately for the
purpose of calculating the Borrowing Base hereunder.

 

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(d) Making, Renewing or Converting of Revolving Credit Loans. Subject to the
terms and conditions set forth in this Agreement and the other Loan Documents,
and provided that the Borrowers have satisfied all applicable conditions
specified in Article IV hereof, and the Bank has received, reviewed and approved
the most recent borrowing base certificate due pursuant to Section 5.01(e) of
this Agreement in the form of Exhibit 2.01(d) attached hereto and made a part
hereof (the “Borrowing Base Certificate”) properly completed, setting forth the
Borrowing Base calculations for the Borrowers together with the appropriate
backup documentation and evidence, the Bank shall make the proceeds of the
Revolving Credit Loans available to the Borrowers which, as selected by the
Borrowers pursuant to this Section 2.01(d), shall be Base Rate Loans or Libor
Rate Loans. In addition, subject to the terms and conditions set forth herein,
the Bank shall make the proceeds of the Revolving Credit Loans available to the
Borrowers under the Working Cash® Subfacility pursuant to Section 2.16 hereof.
In addition, subject to the terms and conditions set forth below, the Borrowers
shall have the opportunity (x) to convert Base Rate Loans into Libor Rate Loans,
(y) to convert Libor Rate Loans into Base Rate Loans or (z) to renew Libor Rate
Loans as Libor Rate Loans for additional Interest Periods.

(i) Each Revolving Credit Loan that is made as or converted (from a Libor Rate
Loan) into a Base Rate Loan shall be made or converted on such Business Day and
in such amount as an Authorized Representative shall request by written notice
received by the Bank no later than 10:00 a.m. (Pittsburgh, Pennsylvania time) on
the Business Day prior to the date of requested disbursement of or conversion
into the requested Base Rate Loan. Subject to the terms and conditions of this
Agreement, the Bank shall make the proceeds of the Base Rate Loan available to
the Borrowers at the Bank’s Office in immediately available funds not later than
2:00 p.m. (Pittsburgh, Pennsylvania time) on the date of requested disbursement.
Unless an Authorized Representative shall provide the Bank with the required
written notice to convert a Base Rate Loan into a Libor Rate Loan on the third
(3rd) Business Day prior to the date of requested conversion, such Base Rate
Loan shall automatically renew as a Base Rate Loan.

(ii) Each Revolving Credit Loan that is made as, renewed as or converted (from a
Base Rate Loan) into a Libor Rate Loan shall be made, renewed or converted on
such Business Day, in such amount (greater than or equal to Two Hundred Fifty
Thousand and 00/100 Dollars ($250,000.00); provided, however, that any amount in
excess of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) may only
be in increments of One Hundred Thousand and 00/100 Dollars ($100,000.00), and
with such an Interest Period as an Authorized Representative shall request by
written notice received by the Bank no later than 10:00 a.m. (Pittsburgh,
Pennsylvania time) on the third (3rd) Business Day prior to the requested date
of disbursement of, renewal of or conversion into the requested Libor Rate Loan.
Subject to the terms and conditions of this Agreement, the Bank shall make the
proceeds of the Libor Rate Loan available to the Borrowers at the Bank’s Office
in immediately available funds, no later than 2:00 p.m. (Pittsburgh,
Pennsylvania time) on such borrowing date. In addition, in the event

 

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that the Borrowers desire to renew a Libor Rate Loan for an additional Interest
Period, an Authorized Representative shall provide the Bank with written notice
thereof on the third (3rd) Business Day prior to the expiration of the
applicable Interest Period. In the event that an Authorized Representative fails
to provide the Bank with the required written notice on the third (3rd) Business
Day prior to the expiration of the applicable Interest Period for a Libor Rate
Loan, unless repaid, the Borrowers shall be deemed to have given written notice
that such Libor Rate Loan shall be converted into a Base Rate Loan on the last
day of the applicable Interest Period. Notwithstanding anything contained herein
to the contrary, there shall not be more than eight (8) Revolving Credit Loans
outstanding at any time (excluding Revolving Credit Loans made under the Working
Cash® Subfacility Commitment). Each written notice of any Libor Rate Loan shall
be irrevocable and binding on the Borrowers and the Borrowers shall indemnify
the Bank against any loss or expense incurred by the Bank as a result of any
failure by the Borrowers to consummate such transaction calculated as set forth
in Section 2.11(c) hereof.

(e) Maximum Principal Balance of Revolving Credit Loans, and Letters of Credit
Outstanding. The sum of the aggregate principal amount of all Revolving Credit
Loans outstanding and the Letters of Credit Outstanding shall not exceed the
Revolving Credit Facility Commitment Amount. The Borrowers agree that if at any
time the sum of the aggregate principal amount of all Revolving Credit Loans
outstanding, and the Letters of Credit Outstanding exceeds the Revolving Credit
Facility Commitment Amount (the “Excess Amount”), the Borrowers shall promptly
pay to the Bank such Excess Amount. If not sooner paid, the entire principal
balance of all outstanding Revolving Credit Loans, together with all unpaid
accrued interest thereon, and all other sums and costs owed to the Bank by the
Borrowers with respect to the Revolving Credit Loans shall be immediately due
and payable on the Expiration Date, without notice, presentment or demand of any
kind.

(f) Maximum Principal Balance of Revolving Credit Loans Available to Fund Stock
Repurchases and Acquisitions. Subject to the terms and conditions of this
Agreement, from time to time, the Bank may make Revolving Credit Loans for Stock
Repurchases and Acquisitions in the principal amount of up to Five Million and
00/100 Dollars ($5,000,000.00), in the aggregate, as a subfacility of the
Revolving Credit Facility Commitment; provided, that at least three (3) Business
Days prior to any such Revolving Credit Loans being made, the Borrowers shall
have delivered to the Bank pro forma financial information and a certificate
from the President or Chief Financial Officer of MHI which certifies that
immediately after giving effect to such Revolving Credit Loans for Stock
Repurchases and Acquisitions (1) MHI and its Subsidiaries are, and shall
continue to be, in compliance with all financial covenants set forth in
Section 5.18(b) and Section 5.18(c) of this Agreement, and (2) Undrawn
Availability shall not be less than Five Million and 00/100 Dollars
($5,000,000.00). The Borrowers agree that if at any time the sum of the
aggregate principal amount of all such Revolving Credit Loans for Stock
Repurchases and Acquisitions outstanding exceeds the lesser of (1) Five Million
and 00/100 Dollars ($5,000,000.00) or (2) the Revolving Credit Facility
Commitment Amount, the Borrowers shall promptly pay to the Bank such excess
amount. If not sooner paid, the entire principal balance of all such outstanding
Revolving Credit Loans, together with all unpaid accrued interest thereon, and
all other sums and costs owed to the Bank by the Borrowers with respect to such
Revolving Credit Loans shall be immediately due and payable on the Expiration
Date, without notice, presentment or demand of any kind.

 

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2.02 Interest Rates.

(a) Interest on Revolving Credit Loans.

(i) Subject to the terms and conditions of this Agreement, on the Closing Date
through the day immediately preceding the first Pricing Effective Date, (A) the
Base Rate Loans shall bear interest for each day at a rate per annum equal to
the Base Rate plus the applicable margin determined by reference to the
Borrowers’ Revolving Facility Usage (the “Applicable Margin”) corresponding to
Level I as set forth below and (B) Libor Rate Loans shall bear interest for each
day during each applicable Interest Period at a rate per annum equal to the
Libor Rate plus the Applicable Margin corresponding to Level I as set forth
below as set forth below.

(ii) Subject to the terms and conditions of this Agreement, during each calendar
month, the Bank will calculate the Borrowers’ monthly average Revolving Facility
Usage (the calendar month with respect to which such monthly average Revolving
Facility Usage is calculated is the “Measurement Month”). The Borrowers’ monthly
average Revolving Facility Usage shall be calculated as of the Measurement Month
ending October 31, 2008 and as of the last day of each Measurement Month ending
thereafter. From the first (1st) day of the first (1st) calendar month following
the Measurement Month (the “Pricing Effective Date”) until the next Pricing
Effective Date, (A) Base Rate Loans shall bear interest for each day at a rate
per annum equal to the Base Rate plus the Applicable Margin set forth below and
(B) Libor Rate Loans shall bear interest during each applicable Interest Period
at a rate equal to the Libor Rate plus the Applicable Margin set forth below
(depending on the Borrowers’ monthly average Revolving Facility Usage as
calculated by the Bank):

 

Level

   Revolving Credit
Usage    Applicable
Margin    

Applicable L/C

Fee
Percentage

I

   < $ 3,333,333.00    1.25 %   1.25%

II

   > $

< $

3,333,333.00

6,666,667.00

   1.50 %   1.50%

III

   > $ 6,666,667.00    1.75 %   1.75%

(b) Interest Payments. The Borrowers shall pay to the Bank interest on the
aggregate outstanding balance of the Revolving Credit Loans that are Base Rate
Loans, in arrears, on November 1, 2008 and on the first (1st) day of each
successive calendar month thereafter through and including the Expiration Date.
The Borrowers shall pay to the Bank interest on the unpaid principal balance of
the Revolving Credit Loans that are Libor Rate Loans on the earlier of (i) the
last day of the applicable Interest Period for such Loan or (ii) for such

 

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Loans with an applicable Interest Period exceeding three (3) Months, on the
three (3) Month anniversary of each Loan during the period from the Closing Date
through and including the Expiration Date. After maturity of any part of the
Loans (whether upon the occurrence of an Event of Default, by acceleration or
otherwise), interest on such part of the Loans shall be immediately due and
payable without notice, presentment or demand. If not sooner paid, the entire
principal balance of all outstanding Loans, all unpaid accrued interest thereon
and all other sums and costs owed to the Bank by the Borrowers pursuant to the
Loans shall be immediately due and payable on the Expiration Date, without
notice, presentment or demand of any kind.

(c) Adjustment to Base Rate; Calculation of Interest and Fees. In the event of
any change in the Base Rate, the rate of interest applicable to each Base Rate
Loan shall be adjusted to immediately correspond with such change; except any
interest rate charged hereunder shall not exceed the Maximum Rate. Interest on
Loans, unpaid fees and other sums payable hereunder shall be computed on the
basis of a year of three hundred sixty (360) days and paid for the actual number
of days elapsed.

(d) Interest After Maturity or Default; Interest Laws. Upon the occurrence and
during the continuance of an Event of Default, (i) the unpaid principal amount
of the Loans or any portion thereof, accrued interest thereon, any fees or any
other sums payable hereunder shall thereafter until paid in full bear interest
at a rate per annum equal to the Applicable Rate plus three percent (3.00%);
(ii) each Libor Rate Loan shall automatically convert into a Base Rate Loan at
the end of the applicable Interest Period; and (iii) no Loans may be made as,
renewed as or converted into a Libor Rate Loan. Notwithstanding any provisions
to the contrary contained in this Agreement or any other Loan Document, the
Borrowers shall not be required to pay, and the Bank shall not be permitted to
collect, any amount of interest in excess of the maximum amount of interest
permitted by applicable Law (“Excess Interest”). If any Excess Interest is
provided for or determined by a court of competent jurisdiction to have been
provided for in this Agreement or in any other Loan Document, then, in such
event: (1) the provisions of this subsection shall govern and control; (2) the
Borrowers shall not be obligated to pay any Excess Interest; (3) any Excess
Interest that the Bank may have received hereunder shall be, at the Bank’s
option, (a) applied as a credit against the outstanding principal balance of the
Debt or accrued and unpaid interest (not to exceed the maximum amount permitted
by Law), (b) refunded to the payor thereof, or (c) any combination of the
foregoing; (4) the interest rate(s) provided for herein shall be automatically
reduced to the maximum lawful rate allowed from time to time under applicable
Law (the “Maximum Rate”), and this Agreement and the other Loan Documents shall
be deemed to have been and shall be, reformed and modified to reflect such
reduction; and (5) the Borrowers shall have no action against the Bank for any
damages arising out of the payment or collection of any Excess Interest.
Notwithstanding the foregoing, if for any period of time interest on any Debt is
calculated at the Maximum Rate rather than the Applicable Rate, and thereafter
such Applicable Rate becomes less than the Maximum Rate, the rate of interest
payable on such Debt shall remain at the Maximum Rate until the Bank shall have
received the amount of interest which the Bank would have received during such
period on such Debt had the rate of interest not been limited to the Maximum
Rate during such period.

 

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2.03 Fees.

The Borrowers shall pay to the Bank:

(a) A non-refundable commitment fee, on or before the Closing Date, in the
amount of Thirty Seven Thousand Five Hundred and 00/100 Dollars ($37,500.00)
(the “Commitment Fee”);

(b) A facility fee on the unused portion of the Revolving Credit Facility
Commitment Amount during the period from the date of this Agreement to the
Expiration Date, payable monthly in arrears, beginning on November 1, 2008 and
continuing on the first (1st) day of each calendar month and on the Expiration
Date (the “Revolving Credit Facility Fee”). The Revolving Credit Facility Fee
shall be equal to the amount by which the Revolving Credit Facility Commitment
Amount has exceeded the average daily closing principal balance of the sum of
the Revolving Credit Loans on each such day during the preceding calendar month,
multiplied by on-fifth of one percent (0.20%), multiplied by a fraction, the
numerated of which is the actual number of days in such month and the
denominator of which s three hundred sixty (360); and

(c) The Letter of Credit Commission pursuant to Section 2.06 hereof.

2.04 Payments.

All payments to be made in respect of principal, interest, fees or other amounts
due from the Borrowers under this Agreement or under the Notes are payable by
12:00 noon (Pittsburgh, Pennsylvania time), on the day when due, without
presentment, demand, protest or notice of any kind, all of which are expressly
waived, and an action for the payments will accrue immediately. All such
payments must be made to the Bank at its Office in U.S. Dollars and in funds
immediately available at such Office, without setoff, counterclaim or other
deduction of any nature. The Bank may in its discretion deduct such payments
from the Borrowers ‘ demand or deposit accounts with the Bank on the due date.
All such payments shall be applied at the option of the Bank to accrued and
unpaid interest, outstanding principal and other sums due under this Agreement
in such order as the Bank, in its sole discretion, shall elect. All such
payments shall be made absolutely net of, without deduction or offset, and
altogether free and clear of any and all present and future taxes, levies,
deductions, charges and withholdings and all liabilities with respect thereto,
excluding income and franchise taxes imposed on the Bank under the Laws of the
United States or any state or political subdivision thereof. If the Borrowers
are compelled by Law to deduct any such taxes or levies (other than such
excluded taxes) or to make any such other deductions, charges, or withholdings
(collectively, the “Required Deductions”), the Borrowers will pay to the Bank an
additional amount equal to the sum of (i) the aggregate amount of all Required
Deductions and (ii) the aggregate amount of United States, federal or state
income taxes required to be paid by the Bank in respect of the Required
Deductions.

2.05 Agreement to Issue Letters of Credit.

From time to time during the period from the Closing Date to the thirtieth
(30th) day preceding the Expiration Date, subject to the further terms and
conditions hereof, including those required in connection with the making of
Revolving Credit Loans, the Bank shall issue letters of

 

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credit (collectively, the “Letters of Credit”) for the account of the Borrowers
in an amount not to exceed One Million and 00/100 Dollars ($1,000,000.00) in the
aggregate, as a subfacility of the Revolving Credit Facility Commitment;
provided, however, that on any date that the Borrowers request a Letter of
Credit, and after giving effect to the Letter of Credit Face Amount of such
Letter of Credit, the sum of the outstanding Revolving Credit Loans and Letters
of Credit Outstanding shall not exceed the Revolving Credit Facility Commitment.

Each request for a Letter of Credit shall be delivered to the Bank no later than
10:00 a.m. (Pittsburgh, Pennsylvania time) on the third (3rd) Business Day, or
such shorter period as may be agreed to by the Bank, prior to the proposed date
of issuance. Each such request shall be in a form acceptable to the Bank and
shall specify the Letter of Credit Face Amount thereof, the account party, the
beneficiary, the intended date of issuance, the expiry date thereof, and the
nature of the transaction to be supported thereby. All such Letters of Credit
shall be issued by the Bank in accordance with its then current practice
relating to the issuance of Letters of Credit including, but not limited to, the
execution and delivery to the Bank of applications and agreements required by
the Bank and the payment by the Borrowers of all applicable fees required by
Section 2.06 hereof.

2.06 Letter of Credit Fees.

The Borrowers shall pay to the Bank (i) the Bank’s customary issuance fee with
respect to each Letter of Credit issued hereunder, such fee to be paid on the
date of issuance of each Letter of Credit, (ii) the Bank’s standard amendment
fees for each amendment of any Letter of Credit issued hereunder, such fee to be
paid on the date of the amendment of such Letter of Credit, and (iii) any
out-of-pocket expenses and costs incurred by the Bank for the issuance of any
Letter of Credit issued hereunder, such costs and expenses to be paid on demand.
The Borrowers shall also pay to the Bank a fee (the “Letter of Credit
Commission”), based on a daily calculation equal to the amount of the Letters of
Credit Outstanding on each day multiplied by the applicable percentage
determined by reference to the Revolving Facility Usage as set forth in
Section 2.02(a) hereof (the “Applicable LC Fee Percentage”). Such Letter of
Credit Commission shall be payable quarterly in arrears beginning on January 1,
2009 and continuing on the first (1st) day of each April, July, October and
January thereafter and on the Expiration Date. Notwithstanding the foregoing,
after the occurrence and during the continuance of an Event of Default, the
Letter of Credit Commission, as calculated above, shall be increased by three
percent (3.0%) per annum.

2.07 Payments and Nature of Borrowers’ Obligations Under Letters of Credit.

(a) Upon a draw under any Letter of Credit, the Borrowers shall immediately
reimburse the Bank for such drawing under a Letter of Credit. If (i) the
Borrowers shall not have immediately reimbursed the Bank for such drawing under
such Letter of Credit, (ii) the Bank must for any reason return or disgorge such
reimbursement or (iii) the Borrowers are required to make a payment under
Section 7.02(a) hereof and fail to make such payment, then the amount of each
unreimbursed drawing under such Letter of Credit and payment required to be made
under Section 7.02(a) hereof shall automatically be converted into a Revolving
Credit Loan which shall be a Base Rate Loan made on the date of such drawing for
all purposes of this Agreement.

 

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(b) The Borrowers’ obligations to the Bank under any Letter of Credit or Letter
of Credit Related Documents are absolute, unconditional and irrevocable, and
shall be paid and performed in accordance with the terms hereof and thereof
irrespective of any act, omission, event or condition, including, without
limitation (i) the form of, any lack of power or authority of any signer of, or
the lack of validity, sufficiency, accuracy, enforceability or genuineness of
(or any defect in or forgery of any signature or endorsement on) any draft,
demand, document, certificate or instrument presented in connection with any
Letter of Credit, or any fraud or alleged fraud in connection with any Letter of
Credit or any obligation underlying any Letter of Credit, in each case, even if
the Bank or any of its correspondents have been notified thereof; (ii) any claim
of breach of warranty that might be made by a Borrower or the Bank against any
beneficiary of a Letter of Credit, or the existence of any claim, set off,
recoupment, counterclaim, cross-claim, defense, or other right that a Borrower
may at any time have against any beneficiary, any successor beneficiary, any
transferee or assignee of the proceeds of a Letter of Credit, the Bank or any
correspondent or agent of the Bank, or any other person, however arising;
(iii) any acts or omissions by, or the solvency of, any beneficiary of any
Letter of Credit, or any other person having a role in any transaction or
obligation relating to a Letter of Credit; (iv) any failure by the Bank to issue
any Letter of Credit in the form requested by a Borrower, unless the Bank
receives written notice from the Borrower of such failure within three
(3) Business Days after the Bank shall have furnished a Borrower (by facsimile
transmission or otherwise) a copy of such Letter of Credit and such error is
material; and (v) any action or omission (including failure or compulsion to
honor a presentation under any Letter of Credit) by the Bank or any of its
correspondents in connection with a Letter of Credit, draft or other demand for
payment, document, or any property relating to a Letter of Credit, and resulting
from any censorship, Law, regulation, order, control, restriction, or the like,
rightfully or wrongly exercised by any Official Body, or from any other cause
beyond the reasonable control of the Bank or any of its correspondents, or for
any loss or damage to a Borrower or to anyone else, or to any property of a
Borrower or anyone else, resulting from any such action or omission.

(c) The Bank is authorized to honor any presentation under a Letter of Credit
without regard to, and without any duty on the Bank’s part to inquire into, any
transaction or obligation underlying such Letter of Credit, or any disputes or
controversies between a Borrower and any beneficiary of a Letter of Credit, or
any other person, notwithstanding that the Bank may have assisted a Borrower in
the preparation of the wording of any Letter of Credit or any Letter of Credit
Documents related thereto required to be presented thereunder or that the Bank
may be aware of any underlying transaction or obligation or be familiar with any
of the parties thereto.

(d) Each Borrower agrees that any action or omission by the Bank or any of its
correspondents in connection with any Letter of Credit or presentation
thereunder shall be binding on such Borrower and shall not result in any
liability of the Bank or any of its correspondents to such Borrower in the
absence of the gross negligence or willful misconduct of the Bank. Without
limiting the generality of the foregoing, the Bank and each of its
correspondents (i) may rely on any oral or other communication believed in good
faith by the Bank or such correspondent to have been authorized or given by or
on behalf of a Borrower; (ii) may honor any presentation if the documents
presented appear on their face substantially to comply with the terms and
conditions of the relevant Letter of Credit; (iii) may honor a previously
dishonored presentation under a Letter of Credit, whether such dishonor was
pursuant

 

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to a court order, to settle or compromise any claim of wrongful dishonor, or
otherwise, and shall be entitled to reimbursement to the same extent as if such
presentation had initially been honored, together with any interest paid by the
Bank; (iv) may honor any drawing that is payable upon presentation of a
statement advising negotiation or payment, upon receipt of such statement (even
if such statement indicates that a draft or other document is being separately
delivered), and shall not be liable for any failure of any such draft or other
document to arrive, or to conform in any way with the relevant Letter of Credit;
and (v) may pay any paying or negotiating bank claiming that it rightfully
honored under the Laws or practices of the place where such bank is located. In
no event shall the Bank be liable to any Borrower for any indirect,
consequential, incidental, punitive, exemplary or special damages or expenses
(including without limitation attorneys’ fees), or for any damages resulting
from any change in the value of any property relating to a Letter of Credit.

(e) If a Borrower or any other person seeks to delay or enjoin the honor by the
Bank of a presentation under a Letter of Credit, the Bank shall have no
obligation to delay or refuse to honor the presentation until validly so ordered
by a court of competent jurisdiction.

2.08 Period of Issuance and Term of Letters of Credit.

The term of any Letter of Credit issued, renewed or extended by the Bank for the
account of the Borrowers hereunder shall expire not less than thirty (30) days
prior to the Expiration Date.

2.09 Booking of Libor Rate Loans.

The Bank may make, carry or transfer Libor Rate Loans at, to or for the account
of, any of its branch offices or the office of an affiliate of the Bank;
provided, however, that no such action shall result in increased liability or
cost to the Borrowers, including any liability or cost pursuant to Section 2.11
or 2.12 hereof.

2.10 Assumptions Concerning Funding of Libor Rate Loans.

Calculation of all amounts payable to the Bank under Section 2.11(c) shall be
made as though the Bank had actually funded its relevant Libor Rate Loan through
the purchase of a Libor deposit bearing interest at the Libor Rate in an amount
equal to the amount of that Libor Rate Loan and having maturity comparable to
the relevant Interest Period and through the transfer of such Libor deposit from
an offshore office to a domestic office in the United States of America;
provided, however, that the Bank may fund each of its Libor Rate Loans in any
manner it sees fit and the foregoing assumption shall be utilized only for the
calculation of amounts payable under Section 2.11(c).

2.11 Additional Costs.

(a) If, due to either (i) the introduction of, or any change in, or in the
interpretation of, any Law or (ii) the compliance with any guideline or request
from any central bank or other Official Body (whether or not having the force of
Law), there shall be any increase in the cost to, or reduction in income
receivable by, the Bank of making, funding or maintaining Loans (or commitments
to make the Loans), then the Borrowers shall from time to time, upon demand by
the Bank, pay to the Bank additional amounts sufficient to reimburse the Bank
for

 

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any such additional costs or reduction in income. A certificate of the Bank
submitted to the Borrowers in good faith as to the amount of such additional
costs shall be conclusive and binding for all purposes, absent manifest error.
Within five (5) Business Days after the Bank notifies the Borrowers of any such
additional costs pursuant to this Section 2.11(a), the Borrowers may either
(A) prepay in full all Loans of any types so affected then outstanding, together
with interest accrued thereon to the date of such prepayment or (B) convert all
Loans of any type so affected then outstanding into Loans of any other type not
so affected upon not less than four (4) Business Days’ notice to the Bank. If
any such prepayment or conversion of any Libor Rate Loan occurs on any day other
than the last day of the applicable Interest Period for such Loan, the Borrowers
also shall pay to the Bank such additional amounts as set forth in
Section 2.11(c).

(b) If either (i) the introduction of, or any change in, or in the
interpretation of, any Law or (ii) the compliance with any guideline or request
from any central bank or other Official Body (whether or not having the force of
Law), affects or would affect the amount of capital required or expected to be
maintained by the Bank or any corporation controlling the Bank and the Bank
determines that the amount of such capital is increased by or based upon the
existence of the Loans (or commitment to make the Loans) and other extensions of
credit (or commitments to extend credit) of similar type, then, upon demand by
the Bank, the Borrowers shall pay to the Bank from time to time as specified by
the Bank, additional amounts sufficient to compensate the Bank in the light of
such circumstances, to the extent that the Bank reasonably determines such
increase in capital to be allocable to the existence of the Bank’s Loans (or
commitment to make the Loans). A certificate of the Bank in good faith submitted
to the Borrowers as to such amounts shall be conclusive and binding for all
purposes, absent manifest error. Within five (5) Business Days after the Bank
provides such certificate to the Borrowers of any such additional costs pursuant
to this Section 2.11(b), the Borrowers may either (A) prepay in full all Loans
of any types so affected then outstanding, together with interest accrued
thereon to the date of such prepayment or (B) convert all Loans of any type so
affected then outstanding into Loans of any other type not so affected upon not
less than four (4) Business Days’ notice to the Bank. If any such prepayment or
conversion of any Libor Rate Loan occurs on any day other than the last day of
the applicable Interest Period for such Loan, the Borrowers also shall pay to
the Bank such additional amounts as set forth in Section 2.11(c).

(c) If the Borrowers shall prepay any Libor Rate Loan on a day other than the
last day of the applicable Interest Period for such Loan (whether such
prepayment is permitted by (i) this Section 2.11 or Section 2.12, (ii) as a
result of the failure by the Borrowers to consummate a transaction after
providing notice as set forth in Section 2.01(d), (iii) otherwise permitted by
the Bank or (iv) otherwise permitted or required under the terms of this
Agreement), the Borrowers shall pay to the Bank on demand such additional
amounts as are sufficient to indemnify the Bank against any reasonable loss,
cost or expense incurred by the Bank as a result of such prepayment including,
without limitation, any loss (including loss of anticipated profits), costs or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Bank to fund such Loan, and a certificate as to the
amount of any such loss, cost or expense submitted by the Bank to the Borrowers
in good faith shall be conclusive and binding for all purposes, absent manifest
error.

 

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2.12 Illegality; Impracticability.

Notwithstanding any other provision contained in this Agreement, if: (a) it is
unlawful, or any central bank or other Official Body shall determine that it is
unlawful, for the Bank to perform its obligations hereunder to make or continue
Loans hereunder; or (b) on any date on which a Libor Rate would otherwise be
set, the Bank shall have in good faith determined (which determination shall be
conclusive absent manifest error) that (i) adequate and reasonable means do not
exist for ascertaining a Libor Rate, (ii) a contingency has occurred which
materially and adversely affects the interbank markets, or (iii) the effective
cost to the Bank of funding a proposed Libor Rate Loan exceeds the Libor Rate
then (y) upon notice thereof by the Bank to the Borrowers, the obligation of the
Bank to make or continue a Loan of a type so affected shall thereafter be an
obligation to make Base Rate Loans whenever any written notice requests any type
of Loans so affected and (z) within five (5) Business Days after demand therefor
by the Bank to the Borrowers, the Borrowers shall (i) forthwith prepay in full
all Loans of the type so affected then outstanding, together with interest
accrued thereon or (ii) request that the Bank, upon five (5) Business Days’
notice, convert all Loans of the type so affected then outstanding into Loans of
a type not so affected. If any such prepayment or conversion of any Libor Rate
Loan occurs on any day other than the last day of the applicable Interest Period
for such Libor Rate Loan, the Borrowers also shall pay to the Bank such
additional amounts as set forth in Section 2.11(c).

2.13 Loan Account.

The Bank shall open and maintain in its books and records, including computer
records, in accordance with its customary procedures, a loan account (the “Loan
Account”) in the Borrowers’ names in which shall be recorded the date and amount
of each Loan made by the Bank and the date and amount of each payment and
prepayment in respect thereof. The Bank shall record in the Loan Account the
principal amount of the Loans owing to the Bank from time to time. Except in the
case of manifest error in computation, the Loan Account will be conclusive and
binding on the Borrowers as to the accuracy of the information contained
therein. Failure by the Bank to make any such notation or record shall not
affect the obligations of the Borrowers to the Bank with respect to the Loans.

2.14 Security.

The Loans shall be secured by the Security Agreement, the Patent and Trademark
Security Agreement, the Stock Pledge Agreements, and all UCC-1 financing
statements and other similar instruments executed and recorded with respect to
each of the foregoing.

2.15 Financing Statements.

Promptly upon request by the Bank, the Borrowers agree to execute, if
applicable, and deliver and file and record and refile and rerecord all
financing statements, assignments, notices of security interest, certificates of
title, certificates of documentation and such other documents, in such manner,
at such time or times and in such place or places as may be required by Law or
as may be requested by the Bank in order to cause the Liens granted under the
Security Agreement or any other Loan Document to be, at all times valid,
perfected and enforceable against such Borrower and all third parties. Each
Borrower irrevocably appoints the Bank as its agent and attorney to execute

 

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any such financing statements or other instruments described above in its name
or, if applicable, to file any such financing statements or other instruments
described above without such Borrower’s signature. Each Borrower further agrees
that a carbon, photographic or other reproduction of a financing statement or
the Security Agreement are sufficient as a financing statement and may be filed
as such.

2.16 Working Cash® Subfacility.

Notwithstanding anything contained in Section 2.01 to the contrary, the
Revolving Credit Facility Commitment shall include a subfacility (the “Working
Cash® Subfacility”) in an aggregate amount not to exceed the Revolving Credit
Facility Commitment Amount (the “Working Cash® Subfacility Commitment”), which
shall contain an investment and borrowing sweep feature pursuant to the terms
and conditions of the Working Cash® Sweep Rider, the terms of which are hereby
incorporated in this Agreement, until such Working Cash® Sweep Rider is
terminated in accordance with its terms. Therefore, so long as the Working Cash®
Sweep Rider is in effect, the Borrowers may request that the Bank make Revolving
Credit Loans subject to the Working Cash® Sweep Rider in an aggregate amount not
to exceed the Working Cash® Subfacility Commitment. The terms and conditions of
the Working Cash® Sweep Rider shall supersede the terms and conditions of this
Agreement for all Revolving Credit Loans requested under the Working Cash®
Subfacility, as such terms and conditions relate to, among other things, making
Revolving Credit Loans, the interest rate (but not the interest rate margin)
applicable to such Revolving Credit Loans and the repayment of principal and
interest on such Revolving Credit Loans.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Borrowers, on behalf of themselves and each of their Subsidiaries and all
other Loan Parties and their Subsidiaries, represents and warrants to the Bank
that:

3.01 Organization and Qualification.

Each Borrower is a corporation duly organized, validly existing and in good
standing under the Laws of its jurisdiction of incorporation. Each Borrower is
duly qualified or licensed to do business as a foreign corporation and is in
good standing in all jurisdictions in which the ownership of its properties or
the nature of its activities or both makes such qualification or licensing
necessary except to the extent that the failure to be so qualified or licensed
would not have a Material Adverse Effect. Each Subsidiary of a Borrower is duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation or organization, as the case may be, and is duly
qualified or licensed to do business as a foreign entity and is in good standing
in all jurisdictions in which the ownership of its properties or the nature of
its activities or both makes such qualification or licensing necessary except to
the extent that the failure to be so qualified or licensed would not have a
Material Adverse Effect.

3.02 Authority; Power to Carry on Business; Licenses.

Each Borrower has the power and authority to make the borrowings provided for
herein, to execute and deliver the Notes in evidence of such borrowings and to
grant and convey the security

 

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interests contemplated under the Security Agreement, the Stock Pledge
Agreements, the Patent and Trademark Security Agreement, and the other Loan
Documents and all such action has been duly and validly authorized by all
necessary proceedings on such Borrowers’ part. Each Loan Party and its
Subsidiaries have all requisite power and authority to own and operate their
properties and to carry on their businesses as now conducted. Each Loan Party
and its Subsidiaries have all licenses, permits, consents and governmental
approvals or authorizations necessary to carry on their businesses as now
conducted.

3.03 Execution and Binding Effect.

Each of the Loan Documents has been duly and validly executed and delivered by
the Borrowers and each Loan Party a party thereto and each such document or
agreement constitutes a legal, valid and binding obligation of such Loan Party,
enforceable in accordance with its terms except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
Laws of general applicability affecting the enforcement of creditors’ rights and
(ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at Law).

3.04 Absence of Conflicts.

Neither the execution and delivery of this Agreement, the Notes, the Security
Agreement, the Stock Pledge Agreements, the Patent and Trademark Security
Agreement, or the other Loan Documents, the consummation of the transactions
contemplated in any of them, nor the performance of or compliance with the terms
and conditions thereof will (a) violate applicable material Law, (b) conflict
with or result in a breach of or a default under the Organizational Documents of
any Loan Party or any material agreement or instrument to which any Loan Party
or any Subsidiary of a Loan Party is a party or by which it or any of its
properties (now owned or acquired in the future) may be subject or bound or
(c) result in the creation or imposition of any Lien upon any property (owned or
leased) of any Loan Party or any Subsidiary of a Loan Party (other than the
Liens created by the Security Agreement, the Stock Pledge Agreements, the Patent
and Trademark Security Agreement, or the other Loan Documents).

3.05 Authorizations and Filings.

No authorization, consent, approval, license, exemption or other action by, and
no registration, qualification, designation, declaration or filing with, any
Official Body is or will be necessary or advisable in connection with the
execution and delivery of this Agreement or the other Loan Documents, the
consummation of the transactions contemplated herein or therein, or the
performance of or compliance with the terms and conditions hereof or thereof.

3.06 Officers and Directors; Business.

Schedule 3.06 to this Agreement sets forth, as of the Closing Date, (i) the
officers and directors of each Loan Party, and (ii) a description of the
business of each Loan Party as presently conducted and as presently planned to
be conducted.

 

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3.07 Title to Property.

Each Loan Party and each Subsidiary of a Loan Party has good and marketable
title in fee simple to all real property purported to be owned by it and good
and marketable title to all other property (whether personal, intangible, mixed
or otherwise) purported to be owned by it, including that reflected in the most
recent financial information referred to in Section 3.08 hereof or submitted to
the Bank pursuant to Section 5.01 of this Agreement (except as sold or otherwise
disposed of in the ordinary course of business), subject only to Liens permitted
by Section 6.01 of this Agreement.

3.08 Financial Information.

The financial information provided by the Loan Parties to the Bank as of the
Closing Date is accurate and complete and has been prepared in accordance with
GAAP consistently applied. The Loan Parties have made full and true disclosure
of all pertinent financial and other material information in connection with the
transactions contemplated hereby.

3.09 Taxes.

All tax returns required to be filed by the Loan Parties and their Subsidiaries
have been properly prepared, executed and filed. Except as described in
Schedule 3.09 to this Agreement, all taxes, assessments, fees and other
governmental charges upon the Loan Parties and their Subsidiaries or upon any of
their properties, income, sales or franchises which are due and payable have
been paid. The reserves and provisions for taxes on the books of the Loan
Parties and their Subsidiaries are adequate for all open years and for their
current fiscal period. Except as described in Schedule 3.09 to this Agreement,
no Loan Party knows of any proposed additional assessment or basis for any
assessment for additional taxes (whether or not reserved against).

3.10 Contracts.

No Loan Party or any Subsidiary of a Loan Party is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any material contractual obligation of such Loan Party
or any Subsidiary of such Loan Party, and no condition exists which, with the
giving of notice or the lapse of time or both, would constitute such a default.

3.11 Litigation.

Except as described in Schedule 3.11 to this Agreement, there is no pending,
contemplated or, to any Loan Party’s knowledge, threatened action, suit or
proceeding by or before any Official Body against or affecting a Loan Party or
its Subsidiaries.

3.12 Laws.

No Loan Party or any Subsidiary of a Loan Party in violation of any Law, which
violation could have a Material Adverse Effect.

 

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3.13 ERISA.

Except as described in Schedule 3.13 to this Agreement, each Plan has been and
will be maintained and funded in all material respects in accordance with its
terms and with all provisions of ERISA and other applicable Laws; (b) no
Reportable Event has occurred and is continuing with respect to any Plan; (c) no
liability to the PBGC has been incurred with respect to any Plan, other than for
premiums due and payable; (d) no Plan has been terminated, no proceedings have
been instituted to terminate any Plan, and there exists no intent to terminate
or institute proceedings to terminate any Plan; (e) no withdrawal, either
complete or partial, has occurred or commenced with respect to any
multi-employer Plan, and there exists no intent to withdraw either completely or
partially from any multi-employer Plan; and (f) there has been no cessation of,
and there is no intent to cease, operations at a facility or facilities where
such cessation could reasonably be expected to result in a separation from
employment of more than twenty percent (20%) of the total number of employees
who are participants under a Plan.

3.14 Patents, Licenses, Franchises.

The Loan Parties and their Subsidiaries own or possess the legal right to use
all of the patents, trademarks, service marks, trade names, copyrights,
licenses, franchises and permits and rights with respect to the foregoing
necessary to own and operate its properties and to carry on its business as
presently conducted without conflict with the rights of others. Schedule 3.14 to
this Agreement sets forth a true and correct list and description of each such
patent, trademark, service marks, trade name, copyright, license, franchise and
permit and right with respect to the foregoing. Except as described in
Schedule 3.14 to this Agreement, no patent, trademark, service mark, trade name,
copyrights, license, franchise or permit or right with respect to any of the
foregoing is of material importance to the assets, business, operations or
financial condition of any Loan Party or any Subsidiary of a Loan Party and
there is no reason to anticipate any material liability to any Loan Party or any
Subsidiary of a Loan Party in respect to any claim of infringement of any of the
foregoing.

3.15 Environmental Matters.

Except as set forth in Schedule 3.15 attached hereto and made a part hereof:

(a) No Loan Party or any Subsidiary of a Loan Party is in violation of any
Environmental Laws or any rule or regulation promulgated pursuant thereto;

(b) No activity of a Loan Party or a Subsidiary of a Loan Party at the Property
is being or has been conducted in violation of any Environmental Law and, to
each Loan Party’s knowledge, no activity of any prior owner, operator or
occupant of the Property was conducted in violation of any Environmental Law
that in either case would reasonably be expected to have a Material Adverse
Effect;

(c) There are no Regulated Substances present on, in, under, or emanating from,
or emanating to, the Property or any portion thereof in violation of any
Environmental Law which would reasonably be expected to have a Material Adverse
Effect;

 

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(d) Each Loan Party and each Subsidiary of a Loan Party has all Environmental
Permits except for any such Environmental Permits the absence of which whether
individually or in the aggregate is not reasonably likely to have a Material
Adverse Effect and all such Environmental Permits are in full force and effect
and such Loan Party’s or such Subsidiary’s operations at the Property are
conducted in compliance with the terms and conditions of such Environmental
Permits and no Loan Party nor any Subsidiary of a Loan Party has received any
written notice from an Official Body that such Official Body has or intends to
suspend, revoke or adversely alter, whether in whole or in part, any such
Environmental Permit;

(e) Each Loan Party and each Subsidiary of a Loan Party has submitted to an
Official Body and/or maintains, as required, all Environmental Records;

(f) No structures, improvements, equipment, fixtures, impoundments, pits,
lagoons or aboveground or underground storage tanks located on any Property
contain or use, except in compliance in all material respects with Environmental
Laws and Environmental Permits, Regulated Substances or otherwise are operated
or maintained except in compliance with Environmental Laws and Environmental
Permits. To the knowledge of each Loan Party, no structures, improvements,
equipment, fixtures, impoundments, pits, lagoons or aboveground or underground
storage tanks of prior owners, operators or occupants of any Property contained
or used Regulated Substances, except in compliance in all material respects with
Environmental Laws, Regulated Substances or otherwise were operated or
maintained by any such prior owner, operator or occupant of any Property except
in compliance with Environmental Laws;

(g) No facility or site to which a Loan Party or a Subsidiary of a Loan Party,
either directly or indirectly by a third party, has sent Regulated Substances
for storage, treatment, disposal or other management has been or is being
operated in violation of Environmental Laws or pursuant to Environmental Laws is
identified or proposed to be identified on any list of contaminated properties
or other properties which pursuant to Environmental Laws are the subject of an
investigation, cleanup, removal, remediation or other response action by an
Official Body;

(h) No portion of the Property is identified or proposed to be identified on any
list of contaminated properties or other properties which pursuant to
Environmental Laws are the subject of an investigation or remediation action by
an Official Body, nor is any property adjoining or in the proximity of the
Property identified or proposed to be identified on any such list;

(i) To the knowledge of each Loan Party, no portion of any Property constitutes
an Environmentally Sensitive Area;

(j) No Lien or other encumbrance authorized by Environmental Laws exists against
any Property and no Loan Party has any reason to believe that such a Lien or
encumbrance may be imposed;

(k) Neither the transaction contemplated by the Loan Documents nor any other
transaction involving the sale, transfer or exchange of any Property will
trigger or has triggered any obligation under any applicable Environmental Laws
to make a filing, provide a

 

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notice, provide other disclosure or take any other action, or in the event that
any such transaction-triggered obligation does arise or has arisen under any
applicable Environmental Laws, all such action required thereby has been taken
in compliance with applicable Environmental Laws;

(l) The activities and operations of each Loan Party and each Subsidiary of a
Loan Party is being conducted in material compliance with applicable Safety
Laws;

(m) No Loan Party or any Subsidiary of a Loan Party has received any Safety
Complaints and, to the knowledge of Loan Parties, no Safety Complaints are being
threatened and no Loan Party has any reason to believe that a Safety Complaint
might be received or instituted; and

(n) Each Loan Party and each Subsidiary of a Loan Party has submitted to an
Official Body and/or maintains in its files, as applicable, all Safety Filings
and Records.

3.16 Use of Proceeds.

The Borrowers (or MHI with respect to subsection (iv) hereof) shall use the
proceeds of the Loans (i) for working capital and general corporate purposes,
(ii) for issuance of standby letters of credit, (iii) to facilitate
Acquisitions, and (iv) to facilitate Stock Repurchases.

3.17 Margin Stock.

The Borrowers will not borrow under this Agreement for the purpose of buying or
carrying any “margin stock”, as such term is used in Regulation U and related
regulations of the Board of Governors of the Federal Reserve System, as amended
from time to time. No Borrower owns any “margin stock”. No Borrower is engaged
in the business of extending credit to others for such purpose, and no part of
the proceeds of any borrowing under this Agreement will be used to purchase or
carry any “margin stock” or to extend credit to others for the purpose of
purchasing or carrying any “margin stock”.

3.18 No Event of Default; Compliance with Agreements.

No event has occurred and is continuing and no condition exists which
constitutes an Event of Default or Potential Default. No Loan Party is (i) in
violation of any term of its Organizational Documents, or (ii) in default under
any agreement, lease or instrument to which it is a party or by which it or any
of its properties (owned or leased) may be subject or bound.

3.19 No Material Adverse Change.

Since the date of the most recent financial information referred to in
Section 3.08 hereof, there has been no Material Adverse Change.

3.20 Security Interest.

The security interests in the personal property collateral granted to the Bank
pursuant to the Security Agreement, the Stock Pledge Agreements, and the Patent
and Trademark Security

 

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Agreement (collectively, the “Collateral”) (i) constitute and will continue to
constitute perfected security interests under the UCC (or other applicable Law)
entitled to all of the rights, benefits and priorities provided by the UCC (or
other applicable Law) and (ii) except as otherwise permitted under Section 6.01
of this Agreement, are and will continue to be superior and prior to the rights
of all third parties existing on the date of this Agreement or arising after the
date of this Agreement whether by Lien or otherwise, to the full extent provided
by Law. All such action as is necessary or advisable to establish such rights of
the Bank has been taken or will be taken at or prior to the time required for
such purpose and there will be upon execution and delivery of the Loan Documents
no necessity of any further action in order to preserve, protect and continue
such rights except the filing of continuation statements with respect to such
financing statements within six (6) months prior to each five (5) year
anniversary of the filing of such financing statements and continued possession
or control by the Bank of the Collateral delivered to it as required by the UCC
(or other applicable Law). All filing fees and other expenses in connection with
each such action shall be paid by the Borrowers and the Bank shall be reimbursed
by the Borrowers for any such fees and expenses incurred by the Bank.

3.21 Receivables Warranties.

With respect to all Eligible Receivables and Eligible Unbilled Receivables from
time to time scheduled, listed or referred to in any certificate, statement or
report delivered to the Bank, each Borrower warrants and represents to the Bank
that (a) the Eligible Receivables and Eligible Unbilled Receivables are genuine,
are in all respects what they purport to be, and are not evidenced by a note,
instrument or judgment; (b) the Eligible Receivables and Eligible Unbilled
Receivables represent undisputed, bona fide transactions completed in accordance
with the terms and provisions contained in the documents delivered to the Bank
with respect to the Eligible Receivables and Eligible Unbilled Receivables;
(c) no payments have been or will be made on the Eligible Receivables and
Eligible Unbilled Receivables except payments immediately delivered to the Bank
pursuant to this Agreement; (d) there are no material setoffs, counterclaims or
disputes existing or asserted with respect to the Eligible Receivables and
Eligible Unbilled Receivables and no Borrower has made any agreement with any
account debtor for any deduction from any Eligible Receivables and Eligible
Unbilled Receivables; (e) there are no facts, events or occurrences which in any
way impair the validity or enforcement of any Eligible Receivable and Unbilled
Receivable or tend to reduce the amount payable under any Eligible Receivable
and any Unbilled Receivable as shown on the respective certificates and
statements, the Borrowers’ books and records and all invoices and statements
delivered to the Bank with respect to any Eligible Receivable and any Unbilled
Receivable; (f) all account debtors with respect to an Eligible Receivable and
an Unbilled Receivable have the capacity to contract, and to the Borrowers’
knowledge, are solvent; (g) the services furnished and/or goods sold giving rise
to any Eligible Receivable and any Unbilled Receivable are not subject to any
Lien except that of the Bank; (h) to the Borrowers’ knowledge, there are no
proceedings or actions which are threatened or pending against any account
debtor with respect to an Eligible Receivable and an Unbilled Receivable which
might result in any material adverse change in such account debtor’s financial
condition; (i) no Eligible Receivable and Unbilled Receivable is an account with
respect to which the account debtor is an Affiliate or a director, officer or
employee of any Borrower or an Affiliate; (j) as to the Eligible Receivables,
none of the Eligible Receivables arise with respect to goods which have not been
shipped or arise with respect to services which have not been fully performed
and to the Borrowers’ knowledge accepted as satisfactory by the account debtor;
(k) the Eligible Receivable and Unbilled Receivable is an

 

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account with respect to which the account debtor’s obligation to pay the account
is conditional upon the account debtor’s approval or is otherwise subject to any
repurchase obligation or return right, as with sales made on a bill-and-hold,
guaranteed sale, sale-and-return, or sale on approval basis; and (l) the amounts
shown on the applicable certificates, statements, the applicable Borrower’s
books and records and all invoices and statements which may be delivered to the
Bank with respect to such Eligible Receivables and such Eligible Unbilled
Receivables are actually and absolutely owing to the applicable Borrower and are
not in any way contingent. The Borrowers shall immediately notify the Bank in
the event that any such Eligible Receivable and such Unbilled Receivable ceases
to satisfy the above representations and warranties.

3.22 Labor Controversies.

There are no labor controversies pending or, to the best knowledge of the Loan
Parties, threatened, against any Loan Party or any Subsidiary of a Loan Party
which, if adversely determined, would have a Material Adverse Effect.

3.23 Solvency.

After the making of the Loans, each Loan Party (i) will be able to pay its debts
as they become due, (ii) will have funds and capital sufficient to carry on its
business and all businesses in which it is about to engage, and (iii) will own
property having a value at both fair valuation and at fair saleable value in the
ordinary course of its business greater than the amount required to pay its
debts as they become due. No Loan Party was insolvent immediately prior to the
date of this Agreement and no Loan Party will be rendered insolvent by the
execution and delivery of this Agreement, the borrowing hereunder and/or the
consummation of any transactions contemplated by this Agreement or any of the
other Loan Documents.

3.24 Subsidiaries.

Schedule 3.24 to this Agreement sets forth each Subsidiary of the Loan Parties,
the authorized and outstanding capital stock (or other equity interests) of such
Subsidiary and the outstanding capital stock (or other equity interests) of such
Subsidiary which is owned by a Loan Party or any Subsidiary of a Loan Party.

3.25 Governmental Regulation.

No Loan Party is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act or the Investment Company Act of 1940 or to
any federal or state statute or regulation limiting its ability to incur
Indebtedness for borrowed money.

3.26 Accurate and Complete Disclosure; Continuing Representations and
Warranties.

No representation or warranty made by the Borrowers under this Agreement or by
the Borrowers or any other Loan Party under the other Loan Documents and no
statement made by any Loan Party or a Subsidiary of a Loan Party in any
financial statement (furnished pursuant to Sections 3.08 or 5.01 or otherwise),
certificate, report, exhibit or document furnished by a Loan Party to the Bank
pursuant to or in connection with this Agreement is false or misleading in any

 

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material respect (including by omission of material information necessary to
make such representation, warranty or statement not misleading). No Loan Party
is aware of any facts which have not been disclosed to the Bank in writing by or
on behalf of a Loan Party which would have a Material Adverse Effect. The
representations and warranties set forth herein are to survive the delivery of
the Loan Documents, the making of the Loans and the issuance of the Letters of
Credit hereunder.

3.27 Anti-Terrorism Laws.

(a) To the best of the Borrowers’ knowledge, no Loan Party nor to the Borrowers’
knowledge any Affiliate of a Loan Party, is in violation of any Anti-Terrorism
Law or engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in any Anti-Terrorism Law.

(b) To the best of the Borrowers’ knowledge, no Loan Party, nor to the
Borrowers’ knowledge any Affiliate of a Loan Party, or its respective agents
acting or benefiting in any capacity in connection with the Loans or other
transactions hereunder, is any of the following (each a “Blocked Person”):

(i) a Person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order No. 13224;

(ii) a Person owned or controlled by, or acting for or on behalf of, any Person
that is listed in the annex to, or is otherwise subject to the provisions of,
the Executive Order No. 13224;

(iii) a Person with which the Bank is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;

(iv) a Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order No. 13224;

(v) a Person that is named as a “specially designated national” on the most
current list published by the U.S. Treasury Department Office of Foreign Asset
Control at its official website or any replacement website or other replacement
official publication of such list; or

(vi) a Person who is affiliated or associated with a person or entity listed
above.

(c) To the best of the Borrowers’ knowledge, no Loan Party nor, to the knowledge
of any Loan Party, any of its agents acting in any capacity in connection with
the Loans or other transactions hereunder (i) conducts any business or engages
in making or receiving any contribution of funds, goods or services to or for
the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Order No. 13224.

 

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ARTICLE IV

CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT

The obligation of the Bank to make any Loan or issue any Letter of Credit is
subject to the satisfaction of the following conditions:

4.01 Representations and Warranties; Events of Default and Potential Defaults.

The representations and warranties contained in Article III shall be true and
correct in all respects (in the case of any representation or warranty
containing a materiality modification) or in all material respects (in the case
of any representation or warranty not containing a materiality modification) on
and as of the date of each Loan and the issuance of each Letter of Credit with
the same effect as though made on and as of each such date. On the date of any
Loan and the issuance of each Letter of Credit, no Event of Default and no
Potential Default shall have occurred and be continuing or exist or shall occur
or exist after giving effect to the Loan to be made or Letter of Credit to be
issued on such date. Each request by the Borrowers for any Loan or the issuance
of any Letter of Credit shall constitute a representation and warranty by the
Borrowers that the conditions set forth in this Section 4.01 have been satisfied
as of the date of such request. The failure of the Bank to receive notice from
the Borrowers to the contrary before such Loan is made or such Letter of Credit
is issued shall constitute a further representation and warranty by the
Borrowers that the conditions referred to in this Section 4.01 have been
satisfied as of the date such Loan is made or such Letter of Credit is issued.

4.02 Loan Documents.

On the Closing Date, the Loan Documents, satisfactory in terms, form and
substance to the Bank, shall have been executed and delivered to the Bank and
shall be in effect and all filings contemplated thereby shall have been prepared
for filing. The Borrowers shall also deliver such other instruments, documents
and certificates as the Bank or its counsel shall reasonably require.

4.03 UCC Financing Statements.

On or before the Closing Date, each UCC-1 financing statement and notice of
security interest (or other similar required filings) to be filed pursuant to
the Security Agreement, the Stock Pledge Agreements, and the Patent and
Trademark Security Agreement, shall have been duly executed (if necessary) and
shall be prepared for filing thereof.

4.04 Other Documents and Conditions.

On or before the Closing Date, the following documents and conditions shall have
been delivered to the Bank or satisfied by or on behalf of the Borrowers:

(a) Certified Copies of Organizational Documents. Copies of the Organizational
Documents of each Borrower certified by the Secretary of State of such
Borrower’s jurisdiction of organization.

 

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(b) Good Standing Certificates and Tax Lien Certificates. For each Borrower, a
good standing certificate from the Secretary of State of each such Borrower’s
jurisdiction of organization, certifying as to the good standing and status of
each Borrower as a corporation and a good standing certificate from each other
jurisdiction in which each Borrower is registered to do business as a foreign
corporation. For each Borrower, if issued by such jurisdiction, a tax lien
certificate from each such Borrower’s jurisdiction of organization.

(c) Proceedings and Incumbency. Certificates in form and substance satisfactory
to the Bank, dated the Closing Date and signed by the Secretary of each
Borrower, certifying as to (i) true copies of the Organizational Documents of
such Borrower and no amendments thereto, (ii) the resolutions of the board of
directors of such Borrower authorizing the execution and delivery of this
Agreement and the other Loan Documents, (iii) the names, true signatures and
incumbency of the officers of such Borrower authorized to execute and deliver
the Loan Documents, (iv) the exact legal name of such Borrower, (v) a list of
all fictitious or trade names of such Borrower, (vi) the tax identification
number of such Borrower, and (vii) the organizational identification number of
such Borrower. The Bank may conclusively rely on such certification unless and
until a later certificate revising the prior certificate has been furnished to
the Bank.

(d) Financial Information. Financial information in form and substance
satisfactory to the Bank, as described in Section 3.08 of this Agreement.

(e) Audit. A three (3) year consolidated audit of the Borrowers, in form and
substance satisfactory to the Bank.

(f) Insurance. Evidence, in form and substance satisfactory to the Bank, that
the business and all assets of the Borrowers are adequately insured and the Bank
has been named as additional insured and lender’s loss payee, as its interests
may appear, entitled to thirty (30) days prior notice of cancellation on all
such policies of insurance covering the Collateral.

(g) No Material Adverse Change. No Material Adverse Change shall have occurred
since the date of the most recent financial statements delivered to the Bank.

(h) Lien Searches. Copies of record searches (including UCC searches, judgments,
suits, bankruptcy, taxes and other lien searches conducted in the Borrowers’
names at the state and county level in the Borrowers’ locations and in the
jurisdictions of incorporation) evidencing that no Liens exist against the
Borrowers except those Liens permitted pursuant to Section 6.01 hereof or those
Liens that are or will be released or terminated in connection herewith as set
forth in Section 4.04(i) hereof.

(i) Termination Statements, and Release Statements. Evidence satisfactory to the
Bank that all necessary termination statements, release statements and any other
types of releases in connection with any and all Liens disclosed by the lien
searches described above with respect to the Borrowers that are not permitted
pursuant to Section 6.01 of this Agreement have been filed or satisfactory
arrangements have been made for such filing (including payoff letters in form
and substance satisfactory to the Bank).

 

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(j) Leases. Copies of all (i) leases of real property to which any Borrower is a
party and (ii) those leases of personal property to which a Borrower is a party
with respect to which Liens are identified on the lien searches to include
assets other than specific equipment and the proceeds thereof.

(k) Borrowing Base Certificate. The Borrowing Base Certificate of the Borrowers
dated as of the Closing Date.

(l) Field Audits. A field audit of the Borrowers conducted by the Bank with
results satisfactory to the Bank.

(m) Accounts. Evidence that the Borrowers have established their primary
operating and depository accounts with the Bank.

(n) Depository. The Borrowers will establish and maintain at the Bank the
Borrowers’ primary depository accounts.

(o) Opinion of Counsel. An opinion of counsel on behalf of the Loan Parties,
dated the Closing Date, in form and substance satisfactory to the Bank in its
sole and absolute discretion.

(p) Waivers. On or before the Closing Date, all Waivers, satisfactory in form
and substance to the Bank, shall have been executed and delivered to the Bank by
the appropriate parties thereto.

(q) Other Documents and Conditions. Such other documents and conditions as may
be required to be submitted to the Bank by the terms of this Agreement or of any
Loan Document or set forth on the Closing Checklist with respect to the
transactions contemplated by this Agreement.

4.05 Details, Proceedings and Documents.

All legal details and proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory to the Bank and the Bank
shall have received all such counterpart originals or certified or other copies
of such documents and proceedings in connection with such transactions, in form
and substance satisfactory to the Bank, as the Bank may request from time to
time.

4.06 Fees and Expenses.

The Borrowers shall have paid all fees and charges as required for the Closing
and relating to the Closing, including legal fees, closing costs, filing and
notary fees and any other similar matters pertinent to the Closing.

 

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ARTICLE V

AFFIRMATIVE COVENANTS

The Borrowers covenant and agree with the Bank, on behalf of themselves and on
behalf of each of their Subsidiaries and all other Loan Parties and their
Subsidiaries, as follows:

5.01 Reporting and Information Requirements.

The Borrowers shall deliver or shall cause to be delivered the following
documents to the Bank in such detail as reasonably requested by the Bank:

(a) Annual Audited Reports. As soon as practicable, and in any event within one
hundred twenty (120) days after the close of each fiscal year of the Borrowers,
the Borrowers shall furnish to the Bank Consolidated audited and consolidating
statements of income, retained earnings and cash flow of MHI and its
Subsidiaries for such fiscal year and a Consolidated audited and consolidating
balance sheet of MHI and its Subsidiaries as of the close of such fiscal year,
and notes to each, all in reasonable detail, setting forth in comparative form
the corresponding figures for the preceding fiscal year, prepared in accordance
with GAAP applied on a basis consistent with that of the preceding fiscal year
(except for the changes in application in which such accountants concur), with
such statements and balance sheet to be certified by an independent certified
public accounting firm selected by MHI and acceptable to the Bank, together with
any management letters of such accountants addressed to MHI. The report of such
accountants shall be free of exception or qualifications not acceptable to the
Bank and shall in any event contain a written statement of such accountants
substantially to the effect that such accountants examined such statements and
balance sheet in accordance with generally accepted auditing standards.

(b) Quarterly Financial Reports. As soon as practicable, and in any event within
forty-five (45) days after the close of each of the first three (3) Fiscal
Quarters of each fiscal year of, the Borrowers shall furnish to the Bank
Consolidated and consolidating statements of income, retained earnings and cash
flow for MHI and its Subsidiaries for such Fiscal Quarter and for the portion of
the fiscal year to the end of such Fiscal Quarter, and a Consolidated and
consolidating balance sheet of MHI and its Subsidiaries as of the close of such
Fiscal Quarter, all in reasonable detail. All such income statements and balance
sheets shall be prepared by MHI and certified by the Chief Executive Officer,
President, Chief Financial Officer or Chief Accounting Officer of MHI as
presenting fairly the financial position of MHI and its Subsidiaries as of the
end of such Fiscal Quarter and the results of their operations for such periods
and in conformity with GAAP applied in a manner consistent with that of the most
recent Consolidated audited financial statements furnished to the Bank.

(c) Annual and Quarterly Compliance Certificate. The statements and balance
sheets of MHI and its Subsidiaries delivered pursuant to Section 5.01(a) hereof
and the statements and balance sheets of MHI for and as of each Fiscal Quarter
delivered pursuant to Section 5.01(b) of this Agreement shall be accompanied by
a compliance certificate, substantially in the form of Exhibit 5.01(c) attached
hereto and made a part hereof, executed by the Chief Executive Officer,
President, Chief Financial Officer or Chief Accounting Officer of

 

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MHI, stating that no Event of Default or Potential Default exists and that the
Loan Parties are in compliance with all applicable covenants contained in this
Agreement. Such certificate shall include all figures necessary to calculate the
Borrowers’ compliance with all financial covenants set forth in this Agreement.
If an Event of Default or Potential Default has occurred and is continuing or
exists, such certificate shall specify in detail the nature and period of
existence of the Event of Default or Potential Default and any action taken or
contemplated to be taken by the Borrowers with respect thereto.

(d) Monthly Accounts Receivable Statements, Accounts Payable Statements and
Other Reports. Promptly upon the request of the Bank, the Borrowers shall
deliver to the Bank a schedule of the Borrowers’ Receivables identifying all
accounts, and the aging thereof, by open invoice of each customer of a Borrower,
and such other reports concerning the accounts as the Bank shall require, all
certified as to accuracy by the appropriate officer of each Loan Party, and all
in such form as the Bank shall require. The Borrowers shall also deliver to the
Bank all information requested by the Bank with respect to any account debtor.
In addition, promptly upon the request of the Bank, the Borrowers shall deliver
to the Bank a schedule of the Borrowers’ accounts payable aging along with such
other reports concerning the accounts payable of the Borrowers as the Bank shall
request, all certified as to accuracy by the appropriate officer of the
Borrowers and all in such form as the Bank shall require.

(e) Monthly Borrowing Base Certificate. As soon as practicable and in any even
within thirty (30) days after the end of each calendar month, the Borrowers
shall furnish to the Bank a Borrowing Base Certificate signed by the appropriate
officers of the Borrowers.

(f) SEC Reports, Shareholder Communications. Reports, including Forms 10-K, 10-Q
and 8-K, registration statements and prospectuses and other shareholder
communications, filed by MHI with the Securities and Exchange Commission and not
posted to the EDGAR website.

(g) Audit Reports. Promptly upon receipt thereof, the Borrowers will deliver to
the Bank a copy of each other report submitted to MHI by independent
accountants, including comment or management letters, in connection with any
annual, interim or special audit report made by them of the books of MHI.

(h) Visitation; Audits. The Borrowers shall permit or shall cause to be
permitted such Persons as the Bank may designate to visit and inspect any of the
properties of any Loan Party, to examine, and to make copies and extracts from,
the books and records of any Loan Party and to discuss its affairs with its
officers, employees and independent accountants during normal business hours and
upon reasonable prior notice; provided, however, that no such notice shall be
required if an Event of Default has occurred. Each Loan Party shall and shall
cause its Subsidiaries to authorize its officers, employees and independent
accountants to discuss with the Bank the affairs of such Loan Party. So long as
no Event of Default has occurred, the Bank may conduct one (1) audit per fiscal
year of the Borrowers and such additional audits as it reasonably deems
necessary. The Borrowers shall pay all reasonable costs incurred in connection
with conducting such audits. Upon the occurrence of an Event of Default, the
Bank may conduct any and all audits it deems necessary at the cost and expense
of the Borrowers.

 

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(i) Notice of Event of Default. Promptly upon becoming aware of an Event of
Default or Potential Default, the Borrowers will give the Bank notice of the
Event of Default or Potential Default, together with a written statement signed
on behalf of the Borrowers setting forth the details of the Event of Default or
Potential Default and any action taken or contemplated to be taken by the
Borrowers with respect thereto.

(j) Notice of Material Adverse Change. Promptly upon becoming aware thereof, the
Borrowers will give the Bank written notice with respect to any Material Adverse
Change or any development or occurrence which could have a Material Adverse
Effect.

(k) Reports to Governmental Agencies and Other Creditors. Upon the written
request of the Bank, the Borrowers will promptly deliver to the Bank copies of
all such financial reports, statements and returns which any Loan Party has
filed with any federal or state department, commission, board, bureau, agency or
instrumentality and any report, statement or return delivered by any Loan Party
to any supplier or other creditor.

(l) Notice of Proceedings. Promptly upon becoming aware thereof, the Borrowers
will give the Bank notice of the commencement, existence or threat of all
proceedings by or before any Official Body against or affecting any Loan Party
which, if adversely decided, would have a Material Adverse Effect.

(m) Further Information. The Borrowers will promptly furnish to the Bank such
other information, and in such form, as the Bank may reasonably request from
time to time.

5.02 Preservation of Existence and Franchises.

Each Loan Party and each Subsidiary of each Loan Party will maintain its
existence as a corporation and its rights and franchises in full force and
effect in its jurisdiction of incorporation. No Loan Party or any of Subsidiary
of a Loan Party shall change its jurisdiction of incorporation without the prior
written consent of the Bank and each Loan Party and each of Subsidiary of each
Loan Party will qualify and remain qualified as a foreign corporation in each
jurisdiction in which the failure to receive or retain such qualification would
have a Material Adverse Effect.

5.03 Insurance.

The Loan Parties and their Subsidiaries will maintain with financially sound and
reputable insurers, insurance with respect to its properties including, but not
limited to, the Collateral and against such liabilities, casualties and
contingencies and of such types and in such amounts as is satisfactory to the
Bank and as is customary in the case of Persons engaged in the same or similar
businesses or having similar properties in the same geographic area (including,
if required by the Bank, flood insurance). The Borrowers agree to provide the
Bank with thirty (30) days advance notice of the modification or termination of
any such policy of insurance. The Borrowers shall maintain business interruption
insurance and shall keep their properties that are insurable insured against
loss or damage by fire, theft, burglary, pilferage, flood, loss in transit and
such other hazards as the Bank shall specify, in amounts and under policies
issued by insurers acceptable to the Bank, all premiums thereon to be paid by
the Borrowers and, upon request of the Bank, such policies and copies thereof
shall be delivered to the Bank.

 

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Each insurance policy required by this Section shall name the Bank, its
successors and assigns, as additional insured and lender’s loss payee, as
applicable, and shall provide (i) that, with respect to the insurance on the
Collateral, all proceeds thereunder shall be payable to the Bank, (ii) that such
insurance shall not be affected by any act or neglect of the insured or owner of
the property described in such policy, and (iii) that such policy and
endorsements may not be cancelled or terminated unless at least thirty (30) days
prior written notice thereof has been given to the Bank by the insurance
carrier.

5.04 Maintenance of Properties.

Each Loan Party and each Subsidiary of a Loan Party will maintain or cause to be
maintained in good repair, working order and condition, the properties now or in
the future owned, leased or otherwise possessed by each Loan Party and each
Subsidiary of a Loan Party and shall make or cause to be made all needful and
proper repairs, renewals, replacements and improvements to the properties so
that the business carried on in connection with the properties may be properly
and advantageously conducted at all times. The Borrowers shall notify the Bank
prior to any change in the permanent location of any of the properties or
businesses of any Loan Party.

5.05 Payment of Liabilities.

The Loan Parties will, and will cause their Subsidiaries to, pay or discharge:

(a) on or prior to the date on which penalties attach, all taxes, assessments
and other governmental charges or levies imposed upon it or any of its
properties or income, sales or franchises other than those contested with due
diligence, in good faith, without the incurrence of any Lien which would have a
Material Adverse Effect and for which the Loan Parties and their Subsidiaries
have established sufficient reserves on their books;

(b) on or prior to the date when due, all lawful claims of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons which, if
unpaid, might result in the creation of a Lien upon any of their properties
other than those contested with due diligence, in good faith, and for which the
Loan Parties and their Subsidiaries have established adequate reserves on their
books and for which the Loan Parties and their Subsidiaries have put in place
adequate bonds or other security to cover the amount of any such Lien;

(c) on or prior to the date when due, all other lawful claims which, if unpaid,
might result in the creation of a Lien upon any of their properties other than
those contested with due diligence, in good faith, without the incurrence of any
Lien which would have a Material Adverse Effect and for which the Loan Parties
and their Subsidiaries have established sufficient reserves on their books; and

(d) all other current liabilities so that none is due more than sixty (60) days
after the due date for each liability on or prior to the date when due for each
liability, except current liabilities which are subject to good faith dispute
and as to which the Loan Parties and their Subsidiaries have created adequate
reserves on their books.

 

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5.06 Financial Accounting Practices.

Each Loan Party will make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect its transactions and
dispositions of its assets and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (a) transactions are executed
in accordance with management’s general or specific authorization,
(b) transactions are recorded as necessary (i) to permit preparation of
financial statements in conformity with GAAP and (ii) to maintain accountability
for assets, (c) access to assets is permitted only in accordance with
management’s general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

5.07 Compliance with Laws.

Each Loan Party and each Subsidiary of a Loan Party shall comply in all material
respects with all applicable Laws.

5.08 Pension Plans.

The Loan Parties shall (a) keep in full force and effect any and all Plans which
are presently in existence or may, from time to time, come into existence under
ERISA, unless such Plans can be terminated without material liability to the
Loan Parties in connection with such termination; (b) make contributions to all
of the Loan Parties’ Plans in a timely manner and in a sufficient amount to
comply with the requirements of ERISA; (c) comply with all material requirements
of ERISA which relate to such Plans so as to preclude the occurrence of any
Reportable Event, Prohibited Transaction (other than a Prohibited Transaction
subject to an exemption under ERISA) or material accumulated funding deficiency
as such term is defined in ERISA; and (d) notify the Bank immediately upon
receipt by the Loan Parties of any notice of the institution of any proceeding
or other action which may result in the termination of any Plan. The Loan
Parties shall deliver to the Bank, promptly after the filing or receipt thereof,
copies of all material reports or notices that such Loan Parties file or receive
under ERISA with or from the Internal Revenue Service, the PBGC, or the U.S.
Department of Labor.

5.09 Continuation of and Change in Business.

The Loan Parties will continue to engage in the business and activities
described in Schedule 3.07 to this Agreement and the Loan Parties will not
engage in any other businesses or activities without the prior written consent
of the Bank.

5.10 Use of Proceeds.

The Borrowers will use the proceeds of the Loans for the purposes stated in
Section 3.16 hereof.

5.11 Lien Searches.

The Bank may, but shall not be obligated to, conduct lien searches of the
Borrowers, their Subsidiaries and their assets and properties on an annual basis
and at such other times as the Bank, in its sole discretion, may determine to be
necessary. The Borrowers shall reimburse the Bank for the Bank’s out-of-pocket
costs in connection with such lien searches.

 

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5.12 Further Assurances.

The Borrowers, at their own cost and expense, will cause to be promptly and duly
taken, executed, acknowledged and delivered all such further acts, documents and
assurances as the Bank may request from time to time in order to carry out the
intent and purposes of this Agreement more effectively and the transactions
contemplated by this Agreement and to cause the Liens granted under the Security
Agreement, the Stock Pledge Agreements, the Patent and Trademark Security
Agreement, or any other Loan Document to be, at all times, valid, perfected and
enforceable against each Loan Party a party thereto and all third parties. All
expenses of such filings and recordings, and refilings and rerecordings, shall
be borne by the Borrowers.

5.13 Amendment to Schedules and Representations and Warranties.

Should any of the information or disclosures provided on any of the schedules
attached hereto and made a part hereof become incorrect in any material respect,
the Borrowers shall promptly provide the Bank in writing with such revisions to
such schedule as may be necessary or appropriate to correct the same; provided,
however, that no schedule shall be deemed to have been amended, modified or
superseded by any such correction relating to or resulting from an act, omission
or event that is not otherwise permitted under this Agreement, nor shall any
breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such schedule be deemed to have been cured thereby, unless
and until the Bank, in its sole and absolute discretion, shall have accepted in
writing such revisions to such schedule.

5.14 Operating and Depository Accounts.

The Borrowers shall maintain its principal operating and depository accounts
with the Bank during the term of this Agreement.

5.15 Guaranty Agreements.

Each Subsidiary of any Borrower created or acquired subsequent to the Closing
Date shall execute and deliver to the Bank a Guaranty Agreement in the form of
Exhibit 1.01(G) attached hereto and made a part hereof and any Organizational
Documents or other instruments as may be deemed reasonably necessary or
advisable by the Bank, all in form and substance acceptable by the Bank. The
Guarantors shall execute and deliver such Guaranty Agreement and related
documents to the Bank within eight (8) Business Days after the date of the
acquisition of such Subsidiary or the filing of such Subsidiary’s articles of
incorporation, certificate of limited partnership, certificate of organization
or other applicable organizational or formation instrument.

5.16 Amendment to Stock Pledge Agreements.

In the event that any Loan Party creates or acquires a Domestic Subsidiary
subsequent to the Closing Date, such Loan Party shall execute and deliver to the
Bank an amendment to the Stock Pledge Agreement in form and substance
satisfactory to the Bank and deliver to the Bank the share certificates,
collectively representing such stock pledged, together with a stock transfer
power with

 

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respect to each such share certificate, duly signed in blank by such Loan Party
as transferor. Such Loan Party shall execute and deliver such amendment to the
Stock Pledge Agreement and related documents to the Bank within eight
(8) Business Days after the date of the acquisition of such Subsidiary or the
filing of such Subsidiary’s articles of incorporation, certificate of limited
partnership, certificate of organization or other applicable organizational or
formation instrument.

5.17 Acquisitions.

On or prior to the date of any Acquisition by any Loan Party or any Subsidiary
of any Loan Party, such Loan Party or Subsidiary of such Loan Party shall
deliver to the Bank (i) at least thirty (30) days advance written notice of any
such Acquisition, (ii) historical financial information with respect to such
Acquisition, (iii) summary documentation in form substantially similar to that
provided to the Loan Party’s board of directors with respect to such
Acquisition, (iv) at least three (3) Business Days prior to any such
Acquisition, pro forma financial information and a certificate from the
President or Chief Financial Officer of such Loan Party which certifies that
immediately after giving effect to such Acquisition, (A) such Loan Party and its
Subsidiaries are, and shall continue to be, on a pro forma basis, in compliance
with all financial covenants set forth in Section 5.18 of this Agreement, and
(B) Undrawn Availability shall not be less than Five Million and 00/100 Dollars
($5,000,000.00), and (v) such other information reasonably requested by the Bank
with respect to the Acquisition.

5.18 Financial Covenants.

The following financial covenants with respect to the Borrowers and their
Subsidiaries on a Consolidated basis shall apply:

(a) Minimum Tangible Net Worth. The Borrowers shall at all times maintain
Tangible Net Worth in an amount greater than or equal to Base Net Worth.

(b) Leverage Ratio. The Borrowers shall at all times maintain a Leverage Ratio
of less than 2.0 to 1.0 for the period equal to the twelve (12) consecutive
calendar months then ending.

(c) Interest Coverage Ratio. The Borrowers shall maintain an Interest Coverage
Ratio of not less than 3.0 to 1.0 as of December 31, 2008 for the period equal
to the twelve (12) consecutive calendar months then ending and as of the end of
each calendar month thereafter for the period equal to the twelve
(12) consecutive calendar months then ending.

5.19 Subsidiary Joinder.

Each Subsidiary of a Borrower that subsequent to the Closing Date generates
gross revenue for any fiscal year in a dollar amount equal to or greater than
ten percent (10%) of the Consolidated gross revenue of the Borrowers and their
Subsidiaries as reflected in the Borrowers’ and their Subsidiaries’ Consolidated
financial statements delivered pursuant to Section 5.01(a) shall execute and
deliver to the Bank (a) a Joinder in form and content satisfactory to the Bank,
pursuant to which it shall join as a Loan Party this Agreement and any other
applicable Loan Document (other than the Note) to which the Borrower is a party,
(b) an amended and restated Note including such Subsidiary as a party, (c) such
corporate governance and authorization documents as may be deemed

 

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reasonably necessary or advisable by the Bank, and (d) any other documents and
instruments as may be deemed reasonably necessary or advisable by the Bank, all
in form and substance acceptable to the Bank. Such Borrower shall execute and
deliver such Joinder and related documents to the Bank within ten (10) Business
Days after the delivery of the Consolidated financial statements pursuant to
Section 5.01(a). Notwithstanding the foregoing, any Subsidiary of a Borrower
which is a Foreign Subsidiary that subsequent to the Closing Date generates
gross revenue for any fiscal year in a dollar amount equal to or greater than
ten percent (10%) of the Consolidated gross revenue of the Borrowers and their
Subsidiaries as reflected in the Borrowers’ and their Subsidiaries’ Consolidated
financial statements delivered pursuant to Section 5.01(a) shall not be required
to execute a Joinder, if the execution of a Joinder would cause material adverse
tax consequences to the applicable Borrower under Section 956 of the Internal
Revenue Code as demonstrated to the reasonable satisfaction of the Bank;
provided, however the Required Pledge Amount of the ownership interests in such
Foreign Subsidiary held by any Borrower shall be pledged to the Bank pursuant to
a Stock Pledge Agreement.

ARTICLE VI

NEGATIVE COVENANTS

The Borrowers covenant to Bank, on behalf of themselves and each of their
Subsidiaries, as follows:

6.01 Liens.

No Borrower or any Subsidiary of a Borrower shall at any time create, incur,
assume or suffer to exist any Lien on any of its assets or property, tangible or
intangible (including capital stock or other equity interests of a Borrower or
any Subsidiary of a Borrower), now owned or hereafter acquired, or agree to
become liable to do so, except:

(a) Liens existing on the Closing Date and described in Schedule 6.01 to this
Agreement;

(b) Liens in favor of the Bank;

(c) Liens securing Indebtedness permitted under Section 6.02(b) of this
Agreement;

(d) Liens arising from taxes, assessments, charges, levies or claims described
in Section 5.05 of this Agreement that are not yet due;

(e) pledges or deposits under worker’s compensation, unemployment insurance and
social security laws, or in connection with or to secure the performance of
bids, tenders, contracts (other than for the repayment of borrowed money) or
leases or to secure statutory obligations, surety or appeal bonds or other
pledges or deposits of like nature used in the ordinary course of business;

(f) any unfiled materialmen’s, mechanic’s, workmen’s, and repairmen’s Liens
arising in the ordinary course of business in respect of obligations that are
not overdue (provided, that if such a Lien shall be perfected, it shall be
discharged of record immediately by payment, bond or otherwise);

 

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(g) Capitalized Lease Obligations or Purchase Money Security Interests to secure
Indebtedness permitted under Section 6.02(d); provided, however, that such Liens
shall be limited solely to the equipment purchased with the proceeds of such
Indebtedness;

(h) (A) Encumbrances consisting of zoning restrictions, easements,
rights-of-way, or other restrictions on the use of real property, (B) defects in
title to real property, and (C) Liens, encumbrances and title defects affecting
real property not known by the Loan Parties or any Subsidiary of a Loan Party,
as applicable, and not discoverable by a search of the public records, none of
which materially impairs the use of such property;

(i) (A) Liens on assets of a Person which is merged into or acquired by a
Borrower or a Subsidiary of a Borrower on or after the date of this Agreement,
and (B) Liens on assets acquired after the date of this Agreement; provided that
(x) such Liens existed at the time of such merger or acquisition and were not
created in anticipation thereof, (y) no such Lien spreads to cover any property
or assets of the Borrowers or any Subsidiary of the Borrowers; and (z) the
principal amount of Indebtedness secured thereby is not increased from the
amount outstanding immediately prior to such merger or acquisition;

(j) Liens created by or resulting from any litigation or legal proceedings which
are currently being contested in good faith by appropriate and lawful
proceedings diligently conducted and for which such reserves or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made and Liens arising out of judgments or orders for the payment of money which
do not constitute an Event of Default hereunder;

(k) Other Liens incidental to the conduct of the Borrowers’ or any Subsidiary’s
business or the ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or credit,
and which do not in the aggregate materially detract from the value of the
Borrowers’ or any Subsidiaries’ property or assets or which do not materially
impair the use thereof in the operation of the Borrowers’ business;

(l) Leases or subleases not otherwise prohibited by this Agreement; provided,
however, except as set forth in items (a) through (j) of this Section 6.01 no
Borrower shall permit or authorize Liens on any of the Borrowers’ or any of its
Subsidiaries’ properties, except in favor of the Bank for the benefit of the
Bank; and

(m) Liens securing Indebtedness of a non-domestic Subsidiary which Indebtedness
is permitted hereunder; provided that such Lien encumbers only the assets of the
Subsidiary incurring such Indebtedness.

6.02 Indebtedness.

No Borrower or any Subsidiary of a Borrower shall at any time, create, incur,
assume or suffer to exist any Indebtedness, except:

(a) Indebtedness under this Agreement, the Notes or any other Loan Document or
any other document, instrument or agreement between a Loan Party and the Bank;

 

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(b) Indebtedness existing on the Closing Date and described in Schedule 6.02 to
this Agreement (including any extensions or renewals thereof; provided that
there is no increase in the amount thereof or other significant adverse change
in the terms thereof);

(c) Current accounts payable, accrued expenses and other expenses arising out of
transactions (other than borrowing) in the ordinary course of business;

(d) Capitalized Lease Obligations or Indebtedness secured by Purchase Money
Security Interests arising after the date of this Agreement for purchases or
leases of equipment in the ordinary course of business and in amounts which
shall not exceed One Million and 00/100 Dollars ($1,000,000.00) in the aggregate
at any time; and

(e) Indebtedness incurred in connection with Sections 6.01(i) and 6.01(m) above.

6.03 Guarantees and Contingent Liabilities.

Except for the Guaranty Agreements and except as otherwise set forth in
Section 6.02 hereof, no Loan Party nor any Subsidiary of a Loan Party shall at
any time directly or indirectly become or be liable in respect of any Guaranty,
or assume, guarantee, become surety for, endorse or otherwise agree, become or
remain directly or contingently liable upon or with respect to any obligation or
liability of any other Person.

6.04 Loans and Investments.

No Loan Party nor any Subsidiary of a Loan Party shall at any time make or
suffer to remain outstanding any loan or advance to, or purchase, acquire, or
own any stock, bonds, notes or securities of, or any partnership interest
(whether general or limited) or limited liability company interest in, or any
other investment or interest in, or make any capital contribution or loan to,
any other Person (other than a Subsidiary), or agree, become or remain liable to
do any of the foregoing, except (a) loans and investments existing on the
Closing Date and set forth on Schedule 6.04 attached to this Agreement;
(b) investments in Cash Equivalents; (c) trade credit extended on usual and
customary terms in the ordinary course of business; (d) loans and advances to
employees, officers, managers, directors, members or shareholders of a Loan
Party in the ordinary course of business to meet expenses incurred by such
Persons in the ordinary course of business (including, without limitation,
relocation expenses) which shall not exceed Fifty Thousand and 00/100 Dollars
($50,000.00) in the aggregate for all such loans at any one time outstanding;
(e) loans, advances and investments in other Borrowers; (f) mergers and
consolidations permitted under Section 6.11 hereof; and (g) Acquisitions
permitted under Section 6.12 hereof.

6.05 Distributions.

Except for Stock Repurchases and Acquisitions permitted pursuant to Section 6.12
hereof, no Borrower or any Subsidiary of a Borrower will declare, make, pay or
agree, become or remain

 

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liable to make or pay, any Distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of any shares of
capital stock of any Borrower or any Subsidiary of a Borrower or on account of
the purchase, redemption, retirement or acquisition of any shares of capital
stock (or warrants, options or rights for any such share) of any Borrower or any
Subsidiary of a Borrower. No Subsidiary of a Borrower shall enter into any
agreement with any Person (other than the Bank) which prohibits or limits the
ability of such Subsidiary to make any Distribution to a Borrower that is a
shareholder of such Subsidiary.

6.06 Leases.

No Borrower or any Subsidiary of a Borrower will at any time enter into or
suffer to remain in effect any agreement to lease, as lessee, any real or
personal property, except:

(a) Lease Obligations with respect to Operating Leases of real property entered
into in the ordinary course of business of the Borrowers in monthly aggregate
amounts that do not exceed Seventy-Five Thousand and 00/100 Dollars ($75,000.00)
per month;

(b) leases existing on the Closing Date and described on Schedule 6.06 to this
Agreement;

(c) Lease Obligations with respect to Operating Leases of personal property
entered into in the ordinary course of business of the Borrowers in monthly
aggregate amounts that do not exceed Twenty-Five Thousand and 00/100 Dollars
($25,000.00) per month; and

(d) Capitalized Lease Obligations permitted pursuant to Section 6.02(d) hereof.

6.07 Self-Dealing.

No Borrower or any Subsidiary of a Borrower shall enter into or carry out any
transaction (including, without limitation, purchasing property or services from
or selling property or services to) with any Affiliate except:

(a) officers, directors, shareholders and employees of a Borrower or a
Subsidiary of a Borrower may render services to a Borrower or such Subsidiary of
a Borrower, as the case may be, for compensation at substantially the same or
better rates generally paid by third parties engaged in the same or similar
businesses for the same or similar services; and

(b) subject to the terms of this Agreement, the Borrowers and their Subsidiaries
may enter into and carry out other transactions with Affiliates if in the
ordinary course of such Borrower’s or such Subsidiary’s business, as the case
may be, pursuant to the reasonable requirements of such Borrower’s or
Subsidiary’s business, as the case may be, upon terms that are fair and
reasonable and no less favorable to such Borrower or such Subsidiary than such
Borrower or such Subsidiary would obtain in a comparable arm’s length
transaction.

 

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6.08 Disposition of Assets.

No Borrower or any Subsidiary of a Borrower shall sell, convey, pledge, assign,
lease (except for leases entered into in the ordinary course of business),
abandon or otherwise transfer or dispose of, voluntarily or involuntarily (any
of the foregoing being referred to in this Section 6.08 as a transaction and any
set of related transactions constituting but a single transaction) any of its
properties or assets whether tangible or intangible (including, but not limited
to, shares of capital stock or other equity interest, as the case may be, of a
Borrower or Subsidiary of a Borrower or the Collateral or any portion thereof),
except:

(a) any sale, transfer or disposition of surplus, obsolete or worn out equipment
by any Borrower or a Subsidiary of any Borrower;

(b) any sale, transfer or lease of inventory by any Borrower or any Subsidiary
of any Borrower in the ordinary course of business;

(c) any sale, transfer or lease of assets by any Subsidiary of the Borrowers to
a Borrower or any other Subsidiary of the Borrowers or by any Borrower to any
Subsidiary of any Borrower; or

(d) any sale, transfer or lease of assets, other than those specifically
excepted pursuant to clauses (a) through (c) above; provided that (i) the
aggregate value of all assets sold by the Borrowers and their Subsidiaries shall
not exceed, in any fiscal year, ten percent (10%) of the reported Consolidated
total assets of the Borrowers and their Subsidiaries as of the end of the
immediately preceding fiscal year, (ii) such sale, transfer or lease of assets
is preceded by delivery to the Bank at least three (3) Business Days before such
sale, transfer or lease, of a certificate which (1) states such sale, transfer
or lease will not violate any covenant of this Agreement, and (2) establishes
that, on a pro forma basis after taking into account such sale, transfer or
lease, the Borrowers are in compliance with the financial covenants set forth in
Section 5.18.

6.09 Continuation of or Change in Business.

Each Borrower and each Subsidiary of each Borrower will continue to engage in
its business substantially in the manner conducted as of the Closing Date and
shall not engage in any other business without the prior written consent of the
Bank, which consent shall not be unreasonably withheld.

6.10 Margin Stock.

No Borrower or Subsidiary of a Borrower will use the proceeds of any Loan,
directly or indirectly, to purchase any “margin stock” (within the meaning of
Regulations U, G, T or X of the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of purchasing or carrying,
directly or indirectly, any margin stock.

 

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6.11 Merger; Consolidation.

The Borrowers shall not, and shall not permit any Subsidiary of a Borrower to,
merge, dissolve, liquidate or wind-up its affairs, or become a party to any
merger, consolidation or other business combination regardless of whether the
value of the consideration paid or received is comprised of cash, common or
preferred stock or other equity interests, or other assets, or sell, lease,
transfer, or otherwise dispose of all or substantially all of its assets;
provided, however, that:

(a) any Subsidiary of a Borrower may consolidate or merge into any Borrower if
such Borrower is the surviving Person;

(b) any Subsidiary of a Borrower may consolidate or merge into another
Subsidiary of a Borrower;

(c) any Subsidiary of a Borrower may sell, lease, transfer or otherwise dispose
of all or substantially all of its assets (upon voluntary liquidation or
otherwise) to any Borrower or another Subsidiary of a Borrower; and

(d) any Borrower or any Subsidiary of a Borrower may consolidate or merge with
any Person; provided that (i) if a Borrower is a party to such merger or
consolidation, such Borrower is the surviving Person, (ii) no Event of Default
or Potential Default shall exist prior to such consolidation or merger and no
Event of Default or Potential Default shall occur or exist as a result of such
consolidation or merger, (iii) at least three (3) Business Days prior to any
such consolidation or merger, the Borrowers shall deliver to the Bank pro forma
financial information and a certificate from the President or Chief Financial
Officer of MHI certifying that, immediately after giving effect to such
consolidation or merger, (A) the Borrowers are, and shall continue to be, on a
pro forma basis, in compliance with all financial covenants set forth in
Section 5.18 of this Agreement, and (B) Undrawn Availability shall not be less
than Five Million and 00/100 Dollars ($5,000,000.00), and (iv) the consolidation
or merger shall not be contested by such Person and shall be approved by such
Person’s board of directors or other governing body.

6.12 Acquisitions.

No Borrower or any Subsidiary of a Borrower shall make an Acquisition unless
each of the following conditions are satisfied: (a) no Event of Default or
Potential Default shall exist prior to such Acquisition and no Event of Default
or Potential Default shall occur or exist as a result of such Acquisition,
(b) the Acquisition shall not be contested by such Person and shall be approved
by such Person’s board of directors or other governing body, (c) the purchase
price for such Acquisition does not exceed Ten Million and 00/100 Dollars
($10,000,000.00), and (d) at least three (3) Business Days prior to any
Acquisition, the Borrowers shall deliver to the Bank pro forma financial
information and a certificate from the President or Chief Financial Officer of
MHI certifying that immediately after giving effect to such Acquisition, (i) the
Borrowers and their Subsidiaries are, and shall continue to be, on a pro forma
basis, in compliance with all financial covenants set forth in Section 5.18 of
this Agreement, and (ii) Undrawn Availability shall not be less than Five
Million and 00/100 Dollars ($5,000,000.00).

 

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6.13 Change of Control.

MHI shall not experience a Change of Control.

6.14 Double Negative Pledge.

No Borrower or any Subsidiary of a Borrower shall enter into or suffer to exist
any agreement with any Person, other than in connection with this Agreement,
which prohibits or limits the ability of a Borrower or a Subsidiary of a
Borrower to create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind, real or personal, tangible or
intangible (including, but not limited to, the capital stock or other equity
interest, as the case may be) of such Borrower or Subsidiary of a Borrower.

6.15 Sale/Leaseback.

No Borrower or any Subsidiary of a Borrower shall enter into any agreement with
any party (“Lender”) to provide for the leasing by such Borrower or such
Subsidiary of a Borrower of real or personal property which has been or is to be
sold or transferred by a Borrower to such Lender, or to any Person to whom funds
have been or will be advanced by such Lender on the security of such property or
the rental obligations of such Borrower or Subsidiary of a Borrower with respect
to such property.

6.16 Modifications to Material Documents.

No Loan Party shall amend in any manner materially adverse to the Bank, (a) its
Organizational Documents or (b) the terms of any contracts, in either case
without the prior written consent of the Bank, which consent shall not be
unreasonably withheld.

6.17 Anti-Terrorism Laws.

No Loan Party or any of its Affiliates or agents shall conduct any business or
engage in any transaction or dealing with any Blocked Person, including making
or receiving any contribution of funds, goods or services to or for the benefit
of any Blocked Person, (ii) deal in, or otherwise engage in any transaction
relating to, any property or interests in property blocked pursuant to Executive
Order No. 13224; or (iii) engage in or conspire to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in Executive Order No. 13224, the USA
Patriot Act or any other Anti-Terrorism Law. The Loan Parties shall deliver to
the Bank any certification or other evidence requested from time to time by the
Bank in its sole discretion, confirming to the Loan Parties’ knowledge the Loan
Parties’ compliance with this Section 6.17.

 

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ARTICLE VII

DEFAULTS

7.01 Events of Default.

An Event of Default means the occurrence or existence of one or more of the
following events or conditions (whatever the reason for such Event of Default
and whether voluntary, involuntary or effected by operation of Law):

(a) The Borrowers shall fail to pay principal or interest on any of the Loans or
any fee or amount payable pursuant to this Agreement, the Notes or any of the
other Loan Documents on the due date thereof; or

(b) Any representation or warranty made by a Borrower under this Agreement or
any of the other Loan Documents or any statement made by any Loan Party or any
Subsidiary of any Loan Party in any financial statement, certificate, report,
exhibit or document furnished by the Loan Parties to the Bank pursuant to this
Agreement or the other Loan Documents shall prove to have been false or
misleading in any material respect as of the time made; or

(c) Any Loan Party shall default in the performance or observance of any
covenant, agreement or duty under this Agreement, any Note or any other Loan
Document or any agreement between the Bank (including any affiliate of the Bank)
and such Loan Party; or

(d) The Bank’s security interests and Liens under the Security Agreement, the
Patent and Trademark Security Agreement, the Stock Pledge Agreements, or any of
the other Loan Documents is or shall become unperfected; or

(e) Any Loan Party or any Subsidiary of a Loan Party shall (i) default (as
principal or guarantor or other surety) in any payment of principal of or
interest on any obligation (or set of related obligations) for borrowed money in
excess of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) beyond any
period of grace with respect to the payment or, if any obligation (or set of
related obligations) for borrowed money in excess of Two Hundred Fifty Thousand
and 00/100 Dollars ($250,000.00) is or are payable or repayable on demand, fail
to pay or repay such obligation or obligations when demanded, or (ii) default in
the observance of any other covenant, term or condition contained in any
agreement or instrument by which an obligation (or set of related obligations)
is or are created, secured or evidenced, if the effect of such default is to
cause, or commit the holder or holders of such obligation or obligations (or a
trustee or agent on behalf of such holder or holders) to cause, all or part of
such obligation or obligations to become due before its or their otherwise
stated maturity; or

(f) One or more judgments for the payment of money in an aggregate uninsured
amount in excess of Five Hundred Thousand and 00/100 Dollars ($500,000.00) shall
have been entered against any Loan Party or any Subsidiary of a Loan Party or
any of their respective properties, which shall have remained undischarged or
unstayed for a period of thirty (30) consecutive days; or

 

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(g) A writ or warrant of attachment, garnishment, execution, distraint or
similar process involving an aggregate amount of money in excess of Two Hundred
Fifty Thousand and 00/100 Dollars ($250,000.00) shall have been issued against
any Loan Party, any Subsidiary of a Loan Party or any of their properties, which
shall have remained undischarged or unstayed for a period of thirty
(30) consecutive days; or

(h) The indictment or threatened indictment of any Loan Party or any Subsidiary
of a Loan Party under any criminal statute, or commencement or threatened
commencement of criminal or civil proceedings against any Loan Party or any
Subsidiary of a Loan Party pursuant to which statute or proceedings the
penalties or remedies sought include forfeiture of any of the property of such
Loan Party or Subsidiary of any Loan Party; or

(i) The Bank shall have determined in good faith (which determination shall be
conclusive) that a Material Adverse Change has occurred or that the prospect of
payment or performance of any covenant, agreement or duty under this Agreement,
the Notes or the other Loan Documents is impaired or that the Bank is insecure;
or

(j) (i) A Termination Event with respect to a Plan shall occur, (ii) any Person
shall engage in any Prohibited Transaction or Reportable Event involving any
Plan, (iii) an accumulated funding deficiency, whether or not waived, shall
exist with respect to any Plan, (iv) the Borrowers or any ERISA Affiliate shall
be in “Default” (as defined in Section 4219(c)(5) of ERISA) with respect to
payments due to a multi-employer Plan resulting from the Borrower’s or any ERISA
Affiliate’s complete or partial withdrawal (as described in Section 4203 or 4205
of ERISA) from such Plan or (v) any other event or condition shall occur or
exist with respect to a single employer Plan, except that no such event or
condition shall constitute an Event of Default if it, together with all other
events or conditions at the time existing, would not subject the Borrowers or
any of their Subsidiaries to any tax, penalty, debt or liability which, alone or
in the aggregate, would have a Material Adverse Effect; or

(k) A proceeding shall be instituted and shall remain undismissed or unstayed
and in effect for a period of sixty (60) consecutive days in respect of any Loan
Party or any Subsidiary of a Loan Party;

(i) seeking to have an order for relief entered in respect of such Loan Party or
such Subsidiary, or seeking a declaration or entailing a finding that the such
Loan Party or such Subsidiary is insolvent or a similar declaration or finding,
or seeking dissolution, winding-up, charter revocation or forfeiture,
liquidation, reorganization, arrangement, adjustment, composition or other
similar relief with respect to such Loan Party or such Subsidiary, its assets or
debts under any Law relating to bankruptcy, insolvency, relief of debtors or
protection of creditors, termination of legal entities or any other similar Law
now or hereinafter in effect; or

(ii) seeking appointment of a receiver, trustee, custodian, liquidator,
assignee, sequestrator or other similar official for any Loan Party or any
Subsidiary of a Loan Party or for all or any substantial part of its property;
or

 

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(l) Any Loan Party or any Subsidiary of a Loan Party shall become insolvent;
shall become generally unable to pay its debts as they become due; shall
voluntarily suspend transaction of its business; shall make a general assignment
for the benefit of creditors; shall institute a proceeding described in
Section 7.01(k)(i) of this Agreement or shall consent to any order for relief,
declaration, finding or relief described in Section 7.01(k)(i) of this
Agreement; shall institute a proceeding described in Section 7.01(k)(ii) of this
Agreement or shall consent to the appointment or to the taking of possession by
any such official of all or any substantial part of its property whether or not
any proceeding is instituted; shall dissolve, wind-up or liquidate itself or any
substantial part of its property (unless otherwise permitted hereunder); or
shall take any action in furtherance of any of the foregoing.

7.02 Consequences of an Event of Default.

(a) If an Event of Default specified in subsections (b) through (j) of
Section 7.01 of this Agreement occurs and continues or exists, the Bank will be
under no further obligation to make Loans or issue Letters of Credit and may at
its option (i) demand the unpaid principal amount of the Notes, interest accrued
on the unpaid principal amount thereof and all other amounts owing by the
Borrowers under this Agreement, the Notes and the other Loan Documents to be
immediately due and payable without presentment, protest or further demand or
notice of any kind, all of which are expressly waived, and an action for any
amounts due shall accrue immediately; and (ii) require the Borrowers to, and the
Borrowers shall thereupon, deposit in a non-interest bearing account with the
Bank, as cash collateral for its obligations under the Loan Documents, an amount
equal to one hundred five percent (105%) of the Letter of Credit Reserve, and
the Borrowers hereby pledge to the Bank, and grant to the Bank a security
interest in, all such cash as security for such obligations of the Borrowers.

(b) If an Event of Default specified in subsections (a), (l) or (m) of
Section 7.01 of this Agreement occurs and continues or exists, the Bank will be
under no further obligation to make Loans or issue Letters of Credit and the
unpaid principal amount of the Notes, interest accrued thereon and all other
amounts owing by the Borrowers under this Agreement, the Notes and the other
Loan Documents shall automatically become immediately due and payable without
presentment, demand, protest or notice of any kind, all of which are expressly
waived, and an action for any amounts due shall accrue immediately.

7.03 Set-Off.

If the unpaid principal amount of the Notes, interest accrued on the unpaid
principal amount thereof or other amount owing by the Borrowers under this
Agreement, the Notes or the other Loan Documents shall have become due and
payable (at maturity, by acceleration or otherwise), the Bank, any assignee of
the Bank and the holder of any participation in any Loan will each have the
right, in addition to all other rights and remedies available to it, without
notice to the Borrowers, to set-off against and to appropriate and apply to such
due and payable amounts any Debt owing to, and any other funds held in any
manner for the account of, any Borrower by the Bank or by such holder including,
without limitation, all funds in all deposit accounts (whether time or demand,
general or special, provisionally credited or finally credited, or otherwise)
now or in the future maintained by any Borrower with the Bank or such holder.
Each Borrower consents to and confirms the foregoing arrangements and confirms
the Bank’s rights, such assignee’s rights and such

 

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holder’s rights of banker’s lien and set-off. Nothing in this Agreement will be
deemed a waiver or prohibition of or restriction on the Bank’s rights, such
assignee’s rights or any such holder’s rights of banker’s lien or set-off.

7.04 Other Remedies.

The remedies in this Article VII are in addition to, not in limitation of, any
other right, power, privilege or remedy, either at law, in equity or otherwise,
to which the Bank may be entitled.

ARTICLE VIII

MISCELLANEOUS

8.01 Business Days.

Except as otherwise provided in this Agreement, whenever any payment or action
to be made or taken under this Agreement, or under any Note or under any of the
other Loan Documents is stated to be due on a day which is not a Business Day,
such payment or action will be made or taken on the next following Business Day
and such extension of time will be included in computing interest or fees, if
any, in connection with such payment or action.

8.02 Amendments and Waivers.

The Bank and the Borrowers may from time to time enter into agreements amending,
modifying or supplementing this Agreement, the Notes or any other Loan Document
or changing the rights of the Bank or of the Borrowers under this Agreement,
under the Notes or under any other Loan Document and the Bank may from time to
time grant waivers or consent to a departure from the due performance of the
obligations of the Borrowers under this Agreement, under the Notes or under any
other Loan Document. Any such agreement, waiver or consent must be in writing
and will be effective only to the extent specifically set forth in such writing.
In the case of any such waiver or consent relating to any provision of this
Agreement, any Event of Default or Potential Default so waived or consented to
will be deemed to be cured and not continuing, but no such waiver or consent
will extend to any other or subsequent Event of Default or Potential Default or
impair any right consequent thereto.

8.03 No Implied Waiver; Cumulative Remedies.

No course of dealing and no delay or failure of the Bank in exercising any
right, power or privilege under this Agreement, the Notes or any other Loan
Document will affect any other or future exercise of any such right, power or
privilege or exercise of any other right, power or privilege except as and to
the extent that the assertion of any such right, power or privilege shall be
barred by an applicable statute of limitations; nor shall any single or partial
exercise of any such right, power or privilege or any abandonment or
discontinuance of steps to enforce such a right, power or privilege preclude any
further exercise of such right, power or privilege or of any other right, power
or privilege. The rights and remedies of the Bank under this Agreement, the
Notes or any other Loan Document are cumulative and not exclusive of any rights
or remedies that the Bank would otherwise have.

 

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8.04 Notices.

All notices, requests, demands, directions and other communications
(collectively “Notices”) under the provisions of this Agreement or the Notes
must be in writing (including facsimile communication) unless otherwise
expressly permitted under this Agreement and must be sent by first-class or
first-class express mail, private overnight or next Business Day courier or by
facsimile with confirmation in writing mailed first class, in all cases with
charges prepaid, and any such properly given Notice will be effective when
received, except that notices received by facsimile after 4:00 p.m. on a
Business Day shall be deemed to be received on the next succeeding Business Day.
All Notices will be sent to the applicable party at the addresses stated below
or in accordance with the last unrevoked written direction from such party to
the other parties.

 

If to the Loan Parties:   Jack Cronin   Chief Financial Officer   Mastech
Holdings, Inc.   Suite 500   1000 Commerce Drive   Pittsburgh, Pennsylvania
15275   Fax: 412-774-2412 and copy to:   Joel P. Dennison, Esquire   Reed Smith
LLP   435 Sixth Avenue   Pittsburgh, Pennsylvania 15219   Fax: 412-288-3063 If
to Bank:   Scott D. Colcombe   Vice President   PNC Bank, National Association  
One PNC Plaza   249 Fifth Avenue   Pittsburgh, Pennsylvania 15222   Fax:
412-705-3232 and copy to:   Sean M. Girdwood, Esquire   Thorp Reed & Armstrong,
LLP   One Oxford Centre   301 Grant Street, 14th Floor   Pittsburgh,
Pennsylvania 15219-1425   Fax: 412-394-2555

8.05 Expenses; Taxes; Attorneys Fees.

The Borrowers agree to pay or cause to be paid and to save the Bank harmless
against liability for the payment of all reasonable out-of-pocket expenses
including, but not limited to, reasonable fees and expenses of both internal and
external counsel and paralegals for the Bank, incurred by the Bank from time to
time (i) arising in connection with the preparation, execution,

 

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delivery and performance of this Agreement, the Notes and the other Loan
Documents, (ii) relating to any requested amendments, waivers or consents to
this Agreement, the Notes or any of the other Loan Documents and (iii) arising
in connection with the Bank’s enforcement or preservation of rights under this
Agreement, the Notes or any of the other Loan Documents including, but not
limited to, such expenses as may be incurred by the Bank in the collection of
the outstanding principal amount of the Loans. The Borrowers agree to pay all
stamp, document, transfer, recording or filing taxes or fees and similar
impositions now or in the future determined in good faith by the Bank to be
payable in connection with this Agreement, the Notes or any other Loan Document.
The Borrowers agree to save the Bank harmless from and against any and all
present or future claims, liabilities or losses with respect to or resulting
from any omission to pay or delay in paying any such taxes, fees or impositions.
In the event of a determination adverse to the Borrowers of any action at Law or
suit in equity in relation to this Agreement, the Notes or the other Loan
Documents, the Borrowers will pay, in addition to all other sums which the
Borrowers may be required to pay, a reasonable sum for attorneys’ and
paralegals’ fees incurred by the Bank or the holder of any Note in connection
with such action or suit. All payments due from the Borrowers under this Section
will be added to and become part of the Debt until paid in full.

8.06 Severability.

The provisions of this Agreement are intended to be severable. If any provision
of this Agreement is held invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without in any manner
affecting the validity or enforceability of the provision in any other
jurisdiction or the remaining provisions of this Agreement in any jurisdiction.

8.07 Governing Law; Consent to Jurisdiction.

This Agreement will be deemed to be a contract under the Laws of the
Commonwealth of Pennsylvania and for all purposes shall be governed by and
construed and enforced in accordance with the substantive Laws, and not the Laws
of conflicts, of said Commonwealth. The Borrowers consent to the exclusive
jurisdiction and venue of the federal and state courts located in Allegheny
County, Pennsylvania, in any action on, relating to or mentioning this
Agreement, the Notes, the other Loan Documents or any one or more of them.

8.08 Prior Understandings.

This Agreement, the Notes and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, among the parties
relating to the transactions provided for in this Agreement, the Notes and the
other Loan Documents.

8.09 Duration; Survival.

All representations and warranties of the Borrowers contained in this Agreement
or made in connection with this Agreement or any of the other Loan Documents
shall survive the making of and will not be waived by the execution and delivery
of this Agreement, the Notes or the other Loan Documents, by any investigation
by the Bank, or the making of any Loan or issuance of any Letter of Credit.
Notwithstanding termination of this Agreement or the occurrence of an Event of
Default, all covenants and agreements of the Borrowers will continue in full
force and effect from and after

 

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the date of this Agreement so long as the Borrowers may borrow under this
Agreement and until payment in full of the Notes, interest thereon, and all fees
and other obligations of the Borrowers under this Agreement or the Notes.
Without limitation, it is understood that all obligations of the Borrowers to
make payments to or indemnify the Bank will survive the payment in full of the
Notes and of all other obligations of the Borrowers under this Agreement, the
Notes and the other Loan Documents.

8.10 Counterparts.

This Agreement may be executed in any number of counterparts and by the
different parties to this Agreement on separate counterparts each of which, when
so executed, will be deemed an original, but all such counterparts will
constitute but one and the same instrument.

8.11 Successors and Assigns; Termination.

(a) This Agreement will be binding upon and inure to the benefit of the Bank,
the Borrowers and their respective successors and assigns, except that no
Borrower may assign or transfer any of its rights under this Agreement without
the prior written consent of the Bank. The Borrowers may terminate this
Agreement at any time upon ten (10) Business Days’ prior written notice and the
final, unconditional payment in full in cash or other immediately available
funds of the Debt (other than inchoate indemnification obligations).

(b) The termination of this Agreement shall not affect any Borrower’s or the
Bank’s rights, or any of the Debt having its inception prior to the effective
date of such termination, and the provisions hereof shall continue to be fully
operative until all transactions entered into, rights or interests created or
Debt have/has been fully and indefeasibly paid, disposed of, concluded or
liquidated. The security interests, Liens and rights granted to the Bank
hereunder and under the other Loan Documents and the financing statements filed
in connection with this Agreement and the other Loan Documents shall continue in
full force and effect, notwithstanding the termination of this Agreement or the
fact that Borrowers’ Loan Account may from time to time be temporarily in a zero
(0) or credit position, until all of the Debt (other than inchoate
indemnification obligations) of each Loan Party shall have been indefeasibly
paid and performed in full after the termination of this Agreement or each Loan
Party has furnished the Bank with an indemnification satisfactory to the Bank
with respect thereto. Accordingly, each Loan Party waives any rights which it
may have under the Uniform Commercial Code to demand the filing of termination
statements with respect to the Collateral, and the Bank shall not be required to
send such termination statements to each Loan Party, or to file them with any
filing office, unless and until this Agreement shall have been terminated in
accordance with its terms and all Debt shall have been indefeasibly paid in full
in immediately available funds. All representations, warranties, covenants,
waivers and agreements contained herein shall survive termination hereof until
all Debt is indefeasibly paid and performed in full (other than inchoate
indemnification obligations).

8.12 No Third Party Beneficiaries.

The rights and benefits of this Agreement and the other Loan Documents are not
intended to, and shall not, inure to the benefit of any third party.

 

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8.13 Participation and Assignment.

The Bank may from time to time participate, sell or assign all or any part of
the Loans made by the Bank or which may be made by the Bank, or its right, title
and interest in the Loans or in or to this Agreement, to another lending office,
lender or financial institution. Except to the extent otherwise required by the
context of this Agreement, the word “Bank” where used in this Agreement means
and includes any holder of a Note originally issued to the Bank and each such
holder of a Note will be bound by and have the benefits of this Agreement, the
same as if such holder had been a signatory to this Agreement. In connection
with any such sale, assignment or grant of participation, the Bank may make
available to any prospective purchaser, assignee or participant any information
relative to the Borrowers in the Bank’s possession; provided such prospective
purchaser, assignee, or participant agrees to hold such information in
confidence.

8.14 Exhibits.

All exhibits and schedules attached to this Agreement are incorporated and made
a part of this Agreement.

8.15 Headings.

The section headings contained in this Agreement are for convenience only and do
not limit or define or affect the construction or interpretation of this
Agreement in any respect.

8.16 Indemnity.

In addition to the payment of expenses pursuant to Section 8.05 hereof, whether
or not the transactions contemplated hereby shall be consummated, the Borrowers
agree to indemnify, pay and hold the Bank and the officers, directors,
employees, agents, consultants, auditors, affiliates and attorneys of the Bank
(collectively called the “Indemnitees”), harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for such Indemnitees
in connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that is imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Agreement or the
other Loan Documents, the consummation of the transactions contemplated by this
Agreement, the statements contained in the commitment letters, if any, delivered
by the Bank, the Bank’s agreement to make the Loans or issue Letters of Credit
hereunder, the use or intended use of the proceeds of any of the Loans or the
exercise of any right or remedy hereunder or under any of the other Loan
Documents, any error, failure or delay in the performance of any of the Bank’s
obligations under this Agreement caused by natural disaster, fire, war, strike,
civil unrest, error or inoperability of communication equipment or lines or any
other circumstances beyond the control of the Bank or actions taken by the Bank
which were reasonably believed by the Bank to be taken pursuant to this
Agreement including, but not limited to, actions taken by the Bank to amend or
cancel any funds transfer instructions or any decision by the Bank to effect or
not to effect the transfer as provided in this Agreement, or any other such
action taken by the Bank in good faith pursuant to its responsibilities under
this Agreement (the “Indemnified Liabilities”); provided, however, that the
Borrowers shall have no

 

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obligation to an Indemnitee hereunder with respect to Indemnified Liabilities
arising from the gross negligence, bad faith or willful misconduct of that or
another Indemnitee as finally determined by a court of competent jurisdiction.

8.17 Limitation of Liability.

To the fullest extent permitted by Law, no claim may be made by any Loan Party
against the Bank or any affiliate, director, officer, employee, attorney or
agent of the Bank for any special, incidental, consequential or punitive damages
in respect of any claim arising from or relating to this Agreement or any other
Loan Document or any statement, course of conduct, act, omission or event
occurring in connection herewith or therewith (whether for breach of contract,
tort or any other theory of liability). Each Loan Party hereby waives, releases
and agrees not to sue upon any claim for any such damages, whether such claim
presently exists or arises hereafter and whether or not such claim is known or
is suspected to exist in its favor. This Section 8.17 shall not limit any rights
of the Loan Parties arising solely out of gross negligence, bad faith or willful
misconduct of the Bank Indemnities as finally determined by a court of competent
jurisdiction.

8.18 Confidentiality.

(a) General. The Bank agrees to keep confidential all information obtained from
a Loan Party which is nonpublic and confidential or proprietary in nature
(including any information such Loan Party specifically designates as
confidential), except as provided below, and to use such information only in
connection with this Agreement and for the purposes contemplated hereby. The
Bank shall be permitted to disclose such information (i) to outside legal
counsel, accountants and other professional advisors who need to know such
information in connection with the administration and enforcement of this
Agreement, subject to agreement of such Persons to maintain the confidentiality,
(ii) to assignees and participants as contemplated by Section 8.13, and
prospective assignees and participants, (iii) to the extent requested by any
bank regulatory authority or, with notice to the Loan Parties, as otherwise
required by applicable Law or by any subpoena or similar legal process, or in
connection with any investigation or proceeding arising out of the transactions
contemplated by this Agreement or the other Loan Documents, (iv) if it becomes
publicly available other than as a result of a breach of this Agreement or
becomes available from a source not known to be subject to confidentiality
restrictions, or (v) if the Loan Parties shall have consented to such
disclosure.

(b) Sharing Information With Affiliates of the Bank. The Borrowers acknowledge
that from time to time financial advisory, investment banking and other services
may be offered or provided to the Borrowers or one or more of their Affiliates
(in connection with this Agreement or otherwise) by the Bank or by one or more
Subsidiaries or Affiliates of the Bank and the Borrowers hereby authorize the
Bank to share any information delivered to the Bank by the Borrowers pursuant to
this Agreement, or in connection with the decision of the Bank to enter into
this Agreement, to any such Subsidiary or Affiliate of the Bank, it being
understood that any such Subsidiary or Affiliate of the Bank receiving such
information shall be bound by the provisions of this Section 8.18 as if it were
a Bank hereunder. Such authorization shall survive the repayment of the Loans.

 

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8.19 Payment of Debt; Joint and Several Obligations.

The Borrowers shall be jointly and severally liable for the Debt with respect to
the Loans under this Agreement and each of the other Loan Documents. Without
limiting the generality of the foregoing, each of the Borrowers hereby
acknowledges and agrees that any and all actions, inactions or omissions by any
one or more, or all, of the Borrowers in connection with, related to or
otherwise affecting this Agreement or any of the other Loan Documents with
respect to the Loans are the obligations of, and inure to and are binding upon,
each and all of the Borrowers, jointly and severally.

8.20 Additional Waivers of the Borrowers.

(a) Each Borrower hereby waives to the full extent permitted by Law any defense
it may otherwise have to the payment and performance of the Debt with respect to
the Loans based on any contention that its liability hereunder and under the
other Loan Documents with respect to the Loans is limited and not joint and
several. Each Borrower acknowledges and agrees that the foregoing waivers and
those set forth below serve as a material inducement to the agreement of the
Bank to make the Loans, and that the Bank is relying on each specific waiver and
all such waivers in entering into this Agreement. The undertakings of each
Borrower hereunder secure the Debt of itself and the other Borrowers with
respect to the Loans.

(b) Each Borrower further agrees that the Bank may do any of the following
without notice to such Borrower and without adversely affecting the validity or
enforceability of this Agreement or the Debt with respect to the Loans (or any
portion thereof): (i) release, surrender, exchange, compromise or settle the
Debt with respect to the Loans or any portion thereof, with respect to any other
Borrower; (ii) change, renew or waive the terms of the Debt, or any part thereof
with respect to the Loans with respect to any other Borrower; (iii) change,
renew or waive the terms of any of the Loan Documents or any other agreements
relating to the Debt with respect to the Loans, or any portion thereof, with
respect to any other Borrower; (iv) grant any extension or indulgence with
respect to the payment or performance of the Debt, or any portion thereof, with
respect to the Loans with respect to any other Borrower; (v) enter into any
agreement of forbearance with respect to the Debt, or any portion thereof, with
respect to the Loans with respect to any other Borrower; and (vi) release,
surrender, exchange, impair or compromise any security of any other Borrower
held by the Bank for the Debt or any portion thereof with respect to the Loans.
Each Borrower agrees that the Bank may do any of the above as the Bank deems
necessary or advisable, in the Bank’s sole discretion, without giving notice to
any other Borrower, and that such Borrower will remain liable for full payment
and performance of the Debt with respect to the Loans.

(c) Each Borrower waives and agrees not to enforce any of the rights of the Bank
against any other Borrower or any other obligor of the Debt, or any portion
thereof, with respect to the Loans, or any collateral securing the same unless
and until all of the Debt with respect to the Loans hall have been indefeasibly
paid in full and the Borrowers’ rights to borrower hereunder with respect to the
Loans have terminated, including but not limited to any right of such Borrower
to be subrogated in whole or in part to any right or claim of the Bank with
respect to the Debt or any portion thereof with respect to the Loans. Each
Borrower hereby irrevocably agrees that following the occurrence of any Event of
Default which has not been

 

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waived by the Bank, such Borrower shall not enforce any rights of contribution,
indemnity or reimbursement from any other Borrower on account of such Borrower’s
payment of the Debt, or any portion thereof, with respect to the Loans unless
and until all of the Debt with respect to the Loans shall have been indefeasibly
paid in full and the Borrowers’ rights to borrow hereunder have terminated. Each
of the Borrowers hereby waives any defenses based on suretyship or impairment of
the collateral securing the Loans with respect to the Loans or the like.

8.21 Relative Priority of Security Interests; Limitation of Certain Liabilities.

To the extent any portion of the Debt of a Borrower with respect to the Loans
may be determined by final order of a court of competent jurisdiction to be in
the nature of the obligations of a surety (the “Suretyship Portion”), any
security interests in the assets of such Borrower securing the Suretyship
Portion shall be subordinate to the security interests in the assets securing
the remaining portion of the Debt with respect to the Loans. If the Suretyship
Portion would otherwise be held or determined to be void, invalid or
unenforceable on account of its amount, notwithstanding any other provision of
this Agreement to the contrary, the aggregate amount of such liability shall,
without any further action by the Bank, the Borrower or any other Persons, be
automatically limited and reduced to the highest amount which is valid and
enforceable as determined in such action or proceeding.

8.22 Certifications From Bank and Participants.

(a) Tax Withholding. Any assignee or participant of the Bank that is not
incorporated under the Laws of the United States of America or a state thereof
(and, upon the written request of the Bank or assignee or participant of the
Bank) agrees that it will deliver to the Borrowers and the Bank two (2) duly
completed appropriate valid Withholding Certificates (as defined under
§1.1441-1(c)(16) of the Income Tax Regulations (the “Regulations)) certifying
its status (i.e., U.S. or foreign person) and, if appropriate, making a claim of
reduced, or exemption from, U.S. withholding tax on the basis of an income tax
treaty or an exemption provided by the Internal Revenue Code. The term
“Withholding Certificate” means a Form W-9; a Form W-8ECI; a Form W-8IMY and the
related statements and certifications as required under §1.1441-1(c)(2) and/or
(3) of the Regulations; a statement described in §1.871-14(c)(2)(v) of the
Regulations; or any other certificates under the Internal Revenue Code or
Regulations that certify or establish the status of a payee or beneficial owner
as a U.S. or foreign person. Any assignee or participant required to deliver to
the Borrowers and the Bank a Withholding Certificate pursuant to the preceding
sentence shall deliver such valid Withholding Certificate at least five
(5) Business Days before the effective date of such assignment or participation
(unless the Bank in its sole discretion shall permit such assignee or
participant to deliver such valid Withholding Certificate less than five
(5) Business Days before such date in which case it shall be due on the date
specified by the Bank). Any assignee or participant which so delivers a valid
Withholding Certificate further undertakes to deliver to the Borrowers and the
Bank two (2) additional copies of such Withholding Certificate (or a successor
form) on or before the date that such Withholding Certificate expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent Withholding Certificate so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the
Borrowers or the Bank. Notwithstanding the submission of a Withholding
Certificate claiming a reduced rate of or exemption from U.S. withholding tax,
the Bank shall be entitled to withhold

 

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United States federal income taxes at the full 30% withholding rate if in its
reasonable judgment it is required to do so under the due diligence requirements
imposed upon a withholding agent under § 1.1441-7(b) of the Regulations.
Further, the Bank is indemnified under § 1.1461-1(e) of the Regulations against
any claims and demands of any assignee or participant of the Bank for the amount
of any tax it deducts and withholds in accordance with regulations under § 1441
of the Internal Revenue Code.

(b) USA Patriot Act. Any assignee or participant of the Bank that is not
incorporated under the Laws of the United States of America or a state thereof
(and is not excepted from the certification requirement contained in Section 313
of the USA Patriot Act and the applicable regulations because it is both (i) an
affiliate of a depository institution or foreign bank that maintains a physical
presence in the United States or foreign county, and (ii) subject to supervision
by a banking authority regulating such affiliated depository institution or
foreign bank) shall deliver to the Bank the certification, or, if applicable,
recertification, certifying that the Bank is not a “shell” and certifying to
other matters as required by Section 313 of the USA Patriot Act and the
applicable regulations: (1) within ten (10) days after the Closing Date, and
(2) at such other times as are required under the USA Patriot Act.

[INTENTIONALLY LEFT BLANK]

 

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8.23 WAIVER OF TRIAL BY JURY. THE BORROWERS AND THE BANK EXPRESSLY, KNOWINGLY
AND VOLUNTARILY WAIVE ALL BENEFIT AND ADVANTAGE OF ANY RIGHT TO A TRIAL BY JURY,
AND NO SUCH PARTY WILL AT ANY TIME INSIST UPON, OR PLEAD OR IN ANY MANNER
WHATSOEVER CLAIM OR TAKE THE BENEFIT OR ADVANTAGE OF A TRIAL BY JURY IN ANY
ACTION ARISING IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER
LOAN DOCUMENTS.

  

INITIALS:

__________

      MHI

__________

        MI

__________

    RPOWI

__________

     GFSN

__________

     MTSI

__________

      Bank

[INTENTIONALLY LEFT BLANK]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed and delivered this Agreement on the date set forth at the beginning of
this Agreement.

 

WITNESS:     MASTECH, HOLDINGS, INC., a Pennsylvania corporation  

/s/ Jennifer F. Lacey

    By:  

/s/ Steven J. Shangold

  (SEAL)     Name:   Steven J. Shangold       Title:   President and CEO  
WITNESS:     MASTECH, INC., a Pennsylvania corporation  

/s/ Jennifer F. Lacey

    By:  

/s/ Steven J. Shangold

  (SEAL)     Name:   Steven J. Shangold       Title:   President and CEO  
WITNESS:     RPOWORLDWIDE, INC., a Pennsylvania corporation  

/s/ Jennifer F. Lacey

    By:  

/s/ Steven J. Shangold

  (SEAL)     Name:   Steven J. Shangold       Title:   President and CEO  
WITNESS:     GLOBAL FINANCIAL SERVICES OF NEVADA, a Nevada corporation  

/s/ Jennifer F. Lacey

    By:  

/s/ Steven J. Shangold

  (SEAL)     Name:   Steven J. Shangold       Title:   Vice President   WITNESS:
    MASTECH TRADEMARK SYSTEMS, INC., a Delaware corporation  

/s/ Jennifer F. Lacey

    By:  

/s/ Steven J. Shangold

  (SEAL)     Name:   Steven J. Shangold       Title:   President and CEO  

--------------------------------------------------------------------------------

    PNC BANK, NATIONAL ASSOCIATION     By:  

/s/ Scott D. Colcombe

  (SEAL)     Name:   Scott D. Colcombe       Title:   Vice President