Exhibit 10.41

 

 

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SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

by and among

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Administrative Agent, Sole Lead Arranger, and Sole Book Runner,

 

THE LENDERS THAT ARE PARTIES HERETO,

 

as the Lenders,

 

and

 

ALION SCIENCE AND TECHNOLOGY CORPORATION,

 

as Borrower

 

Dated as of May 2, 2014

 

 

 

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

1.

DEFINITIONS AND CONSTRUCTION

 

1

 

 

 

 

 

1.01.

Definitions

 

1

 

1.02.

Construction

 

1

 

1.03.

Accounting Terms

 

2

 

1.04.

Code

 

2

 

1.05.

Time References

 

3

 

1.06.

Schedules and Exhibits

 

3

 

 

 

 

 

2.

LOANS AND TERMS OF PAYMENT

 

3

 

 

 

 

 

2.01.

Revolving Loans

 

3

 

2.02.

[Intentionally Omitted]

 

3

 

2.03.

Borrowing Procedures and Settlements

 

3

 

2.04.

Payments; Reductions of Revolver Credit Limits; Prepayments

 

9

 

2.05.

Promise to Pay

 

11

 

2.06.

Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations

 

12

 

2.07.

Crediting Payments

 

13

 

2.08.

Designated Account

 

13

 

2.09.

Maintenance of Loan Account; Statements of Bank Obligations

 

14

 

2.10.

Fees

 

14

 

2.11.

Letters of Credit

 

14

 

2.12.

[Intentionally Omitted]

 

19

 

2.13.

Capital Requirements

 

20

 

 

 

 

 

3.

CONDITIONS; TERM OF AGREEMENT

 

21

 

 

 

 

 

3.01.

Conditions Precedent to the Initial Extension of Credit

 

21

 

3.02.

Conditions Precedent to all Extensions of Credit

 

21

 

3.03.

Maturity

 

21

 

3.04.

Effect of Maturity

 

21

 

3.05.

Early Termination by Borrower

 

22

 

3.06.

Conditions Subsequent

 

22

 

3.07.

Replacement Loan Documents

 

22

 

 

 

 

 

4.

REPRESENTATIONS AND WARRANTIES

 

23

 

 

 

 

 

4.01.

Due Organization and Qualification; Subsidiaries

 

23

 

4.02.

Due Authorization; No Conflict

 

23

 

4.03.

Governmental Consents

 

24

 

4.04.

Binding Obligations; Perfected Liens

 

24

 

4.05.

Title to Assets; No Encumbrances

 

24

 

4.06.

Litigation

 

24

 

4.07.

Compliance with Laws

 

25

 

4.08.

No Material Adverse Effect

 

25

 

4.09.

Solvency

 

25

 

4.10.

Employee Benefits

 

25

 

4.11.

Environmental Condition

 

26

 

4.12.

Complete Disclosure

 

26

 

4.13.

Patriot Act and Foreign Corrupt Practices Act

 

26

 

4.14.

Indebtedness

 

27

 

4.15.

Payment of Taxes

 

27

 

4.16.

Margin Stock

 

27

 

4.17.

Governmental Regulation

 

27

 

4.18.

OFAC

 

27

 

4.19.

Employee and Labor Matters

 

27

 

4.20.

Borrower’s Liabilities, Assets and Operations

 

28

 

ii

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TABLE OF CONTENTS

(continued)

 

 

 

 

 

Page

 

 

 

 

 

 

4.21.

Leases

 

28

 

4.22.

Eligible Accounts; Eligible Government Accounts

 

28

 

4.23.

[Intentionally Omitted]

 

29

 

4.24.

Inventory

 

29

 

4.25.

[Intentionally Omitted]

 

30

 

4.26.

[Intentionally Omitted]

 

30

 

4.27.

Other Documents

 

30

 

4.28.

Hedge Agreements

 

30

 

4.29.

ESOP

 

30

 

 

 

 

 

5.

AFFIRMATIVE COVENANTS

 

31

 

 

 

 

 

5.01.

Financial Statements, Reports, Certificates

 

31

 

5.02.

Reporting

 

32

 

5.03.

Existence

 

32

 

5.04.

Maintenance of Properties

 

32

 

5.05.

Taxes

 

32

 

5.06.

Insurance

 

32

 

5.07.

Inspection

 

33

 

5.08.

Compliance with Laws

 

33

 

5.09.

Environmental

 

33

 

5.10.

Disclosure Updates

 

33

 

5.11.

Formation of Subsidiaries

 

34

 

5.12.

Further Assurances

 

35

 

5.13.

Lender Meetings

 

35

 

5.14.

[Intentionally Omitted]

 

35

 

5.15.

Bank Products

 

35

 

5.16.

Designated Accounts; Lockbox; Required Blockage/Collections Period; Controlled
Investments

 

35

 

5.17.

Compliance with ERISA and the IRC; Notices

 

36

 

5.18.

Notice of Certain Events With Respect To Government Contracts

 

37

 

5.19.

Control Agreements

 

38

 

5.20.

Verification

 

38

 

5.21.

Delivery of Terms for Proposed Permitted Bond Refinancing

 

38

 

5.22.

Notice of Default or Event of Default

 

38

 

 

 

 

 

6.

NEGATIVE COVENANTS

 

38

 

 

 

 

 

6.01.

Indebtedness

 

38

 

6.02.

Liens

 

38

 

6.03.

Restrictions on Fundamental Changes

 

38

 

6.04.

Disposal of Assets

 

39

 

6.05.

Nature of Business

 

39

 

6.06.

Prepayments and Amendments

 

39

 

6.07.

Restricted Payments

 

40

 

6.08.

Accounting Methods

 

40

 

6.09.

Investments

 

40

 

6.10.

Transactions with Affiliates

 

40

 

6.11.

Use of Proceeds

 

40

 

6.12.

Limitation on Issuance of Equity Interests

 

41

 

6.13.

Assignment of Claims

 

41

 

6.14.

[Intentionally Omitted]

 

41

 

6.15.

Maximum Capital Expenditures

 

41

 

6.16.

Employee Benefits

 

41

 

 

 

 

 

7.

FINANCIAL COVENANTS

 

42

 

iii

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

8.

EVENTS OF DEFAULT

 

42

 

 

 

 

 

8.01.

Payments

 

42

 

8.02.

Covenants

 

42

 

8.03.

Judgments

 

43

 

8.04.

Voluntary Bankruptcy, etc

 

43

 

8.05.

Involuntary Bankruptcy, etc

 

43

 

8.06.

Default Under Other Agreements

 

43

 

8.07.

Representations, etc

 

43

 

8.08.

Guaranty

 

43

 

8.09.

Security Documents

 

43

 

8.10.

Loan Documents

 

43

 

8.11.

Change of Control

 

44

 

8.12.

ERISA

 

44

 

8.13.

Intercreditor Agreement

 

44

 

8.14.

Government Contracts

 

44

 

 

 

 

 

9.

RIGHTS AND REMEDIES

 

44

 

 

 

 

 

9.01.

Rights and Remedies

 

44

 

9.02.

Remedies Cumulative

 

45

 

 

 

 

 

10.

WAIVERS; INDEMNIFICATION

 

45

 

 

 

 

 

10.01.

Demand; Protest; etc

 

45

 

10.02.

The Lender Group’s Liability for Collateral

 

45

 

10.03.

Indemnification

 

45

 

 

 

 

 

11.

NOTICES

 

46

 

 

 

 

12.

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION

 

47

 

 

 

 

13.

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

 

50

 

 

 

 

 

13.01.

Assignments and Participations

 

50

 

13.02.

Successors

 

52

 

 

 

 

 

14.

AMENDMENTS; WAIVERS

 

52

 

 

 

 

 

14.01.

Amendments and Waivers

 

52

 

14.02.

Replacement of Certain Lenders

 

54

 

14.03.

No Waivers; Cumulative Remedies

 

54

 

 

 

 

 

15.

AGENT; THE LENDER GROUP

 

55

 

 

 

 

 

15.01.

Appointment and Authorization of Agent

 

55

 

15.02.

Delegation of Duties

 

55

 

15.03.

Liability of Agent

 

55

 

15.04.

Reliance by Agent

 

56

 

15.05.

Notice of Default or Event of Default

 

56

 

15.06.

Credit Decision

 

56

 

15.07.

Costs and Expenses; Indemnification

 

57

 

15.08.

Agent in Individual Capacity

 

57

 

15.09.

Successor Agent

 

58

 

15.10.

Lender in Individual Capacity

 

58

 

15.11.

Collateral Matters

 

58

 

15.12.

Restrictions on Actions by Lenders; Sharing of Payments

 

60

 

15.13.

Agency for Perfection

 

60

 

15.14.

Payments by Agent to the Lenders

 

60

 

15.15.

Concerning the Collateral and Related Loan Documents

 

60

 

iv

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TABLE OF CONTENTS

(continued)

 

 

 

 

 

Page

 

 

 

 

 

 

15.16.

Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information

 

60

 

15.17.

Several Obligations; No Liability

 

61

 

15.18.

Sole Lead Arranger and Sole Book Runner

 

61

 

 

 

 

 

16.

WITHHOLDING TAXES

 

62

 

 

 

 

 

16.01.

Payments

 

62

 

16.02.

Exemptions

 

62

 

16.03.

Reductions

 

63

 

16.04.

Refunds

 

63

 

 

 

 

 

17.

GENERAL PROVISIONS

 

64

 

 

 

 

 

17.01.

Effectiveness

 

64

 

17.02.

Section Headings

 

64

 

17.03.

Interpretation

 

64

 

17.04.

Severability of Provisions

 

64

 

17.05.

Bank Product Providers

 

64

 

17.06.

Debtor-Creditor Relationship

 

65

 

17.07.

Counterparts; Electronic Execution

 

65

 

17.08.

Revival and Reinstatement of Obligations; Certain Waivers

 

65

 

17.09.

Confidentiality

 

65

 

17.10.

Survival

 

67

 

17.11.

Patriot Act

 

67

 

17.12.

Integration

 

67

 

17.13.

Transitional Arrangements

 

67

 

v

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SCHEDULES AND EXHIBITS

 

Schedule 1.1

 

Definitions

Schedule 3.1

 

Conditions Precedent

Schedule 3.6

 

Conditions Subsequent

Schedule 4.1(b)

 

Capitalization of Borrower

Schedule 4.1(c)

 

Capitalization of Borrower’s Subsidiaries

Schedule 4.1(d)

 

Subscriptions, Options, Warrants, Calls

Schedule 4.2(b)(i)

 

Approvals

Schedule 4.6

 

Litigation

Schedule 4.11

 

Environmental Matters

Schedule 4.14

 

Permitted Indebtedness

Schedule 4.29

 

Certain ESOP Plan Documents Exceptions

Schedule 5.1

 

Financial Statements, Reports, Certificates

Schedule 5.2

 

Collateral Reporting

Schedule 5.16

 

Blocked Account Bank

Schedule 6.5

 

Nature of Business

Schedule A-1

 

Agent’s Account

Schedule A-2

 

Authorized Persons

Schedule C-1

 

Revolver Credit Limits

Schedule D-1

 

Designated Account

Schedule E-2

 

Existing Letters of Credit

Schedule P-1

 

Permitted Investments

Schedule P-2

 

Permitted Liens

Schedule R-1

 

Real Property Collateral

 

 

 

Exhibit A-1

 

Form of Assignment and Acceptance

Exhibit B-1

 

Form of Borrowing Base Certificate

Exhibit C-1

 

Form of Compliance Certificate

Exhibit P-1

 

Form of Perfection Certificate

Exhibit R

 

Form of Replacement Intercreditor Agreement

 

vi

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SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is entered
into as of May 2, 2014 by and among the lenders identified on the signature
pages hereof (each of such lenders, together with its successors and permitted
assigns, is referred to hereinafter as a “Lender”, as that term is hereinafter
further defined), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, “Agent”), as sole lead
arranger (in such capacity, together with its successors and assigns in such
capacity, the “Sole Lead Arranger”), and as sole book runner (in such capacity,
together with its successors and assigns in such capacity, the “Sole Book
Runner”), and ALION SCIENCE AND TECHNOLOGY CORPORATION, a Delaware corporation
(“Borrower”).

 

PRELIMINARY STATEMENT

 

The Borrower, the certain lenders original party (the “Original Lenders”), and
Credit Suisse AG, Cayman Islands Branch, as administrative agent (in such
capacity, the “Former Administrative Agent”) and as collateral agent for the
Original Lenders to that Credit Agreement dated as of March 22, 2010 (the
“Former Credit Agreement”), as amended pursuant to that certain Amendment No. 1
dated as of June 11, 2010, that certain Incremental Assumption Agreement and
Amendment No. 2 dated as of March 11, 2011 which amended and restated the Former
Credit Agreement by that certain Amended and Restated Credit Agreement dated as
of March 11, 2011, and as subsequently amended by that certain Amendment No. 3
dated as of August 2, 2011, that certain Waiver and Amendment No. 4 dated as of
December 3, 2012, and that certain Amendment No. 5 and Waiver dated as of
December 12, 2013, as amended by that certain Amendment No. 1 to Amendment No. 5
and Waiver, dated December 21, 2013 and by that certain Amendment No. 2 to
Amendment No. 5 and Waiver dated February 21, 2014 (as amended, modified,
supplemented or restated, collectively, the “Existing Credit Agreement”), have
previously entered into said Existing Credit Agreement.  Under the Existing
Credit Agreement, (a) the Original Lenders agreed to extend credit in the form
of Revolving Loans at any time and from time to time prior to the Maturity Date,
in an aggregate principal amount at any time outstanding not to exceed
$35,000,000, (b) the Swingline Lender agreed to extend credit, at any time and
from time to time prior to the Maturity Date, in the form of Swingline Loans, in
an aggregate principal amount at any time outstanding not to exceed $5,000,000,
and (c) Credit Suisse AG, as issuing Bank, agreed to issue Letters of Credit, in
an aggregate face amount at any time outstanding not to exceed $35,000,000 (all
as such terms were defined under the Existing Credit Agreement).

 

The Borrower desires to refinance the Existing Credit Agreement in its entirety,
and, subject to the terms and conditions of this Agreement, the Lenders party to
this Agreement desire to refinance all existing Obligations under the Existing
Credit Agreement, replace in the entirety all Original Lenders party to the
Existing Credit Agreement and to discharge the Original Lenders from their
obligations under the Existing Credit Agreement.

 

The Borrower, the Agent and the Lenders desire to replace, amend and restate the
Existing Credit Agreement in its entirety pursuant to this Agreement.  The
Borrower, the Agent and the Lenders hereby agree that the Existing Credit
Agreement is replaced, amended and restated in its entirety as follows:

 

1.                                      DEFINITIONS AND CONSTRUCTION.

 

1.01.                     Definitions.  Capitalized terms used in this Agreement
shall have the meanings specified therefor on Schedule 1.1.

 

1.02.                     Construction.  Unless the context of this Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms
“includes” and  “including” are not limiting, and the term “or” has, except
where otherwise indicated, the inclusive meaning represented by the phrase
“and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar
terms in this Agreement or any other Loan Document refer to this Agreement or
such other Loan Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such other Loan Document, as the case
may be.  Section, subsection, clause, schedule, and exhibit references herein
are to this Agreement unless otherwise specified.  Any reference in this
Agreement or in any other Loan Document to any agreement,

 

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instrument, or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein).  The
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties.  Any reference herein or in any other Loan Document to the
satisfaction, repayment, or payment in full of the Bank Obligations shall mean
(a) the payment or repayment in full in immediately available funds of (i) the
principal amount of, and interest accrued and unpaid with respect to, all
outstanding Loans, together with the payment of any premium applicable to the
repayment of the Loans, (ii) all Lender Group Expenses that have accrued and are
unpaid regardless of whether demand has been made therefor, (iii) all fees or
charges that have accrued hereunder or under any other Loan Document (including
the Letter of Credit Fee and the Unused Line Fee) and are unpaid, (b) in the
case of contingent reimbursement obligations with respect to Letters of Credit,
providing Letter of Credit Collateralization, (c) in the case of obligations
with respect to Bank Products (other than Hedge Obligations), providing Bank
Product Collateralization, (d) the receipt by Agent of cash collateral in order
to secure any other contingent Bank Obligations for which a claim or demand for
payment has been made on or prior to such time or in respect of matters or
circumstances known to Agent or a Lender at such time that are reasonably
expected to result in any loss, cost, damage, or expense (including attorneys
fees and legal expenses), such cash collateral to be in such amount as Agent
reasonably determines is appropriate to secure such contingent Bank Obligations,
(e) the payment or repayment in full in immediately available funds of all other
outstanding Bank Obligations (including the payment of any termination amount
then applicable (or which would or could become applicable as a result of the
repayment of the other Bank Obligations) under Hedge Agreements provided by
Hedge Providers) other than (i) unasserted contingent indemnification Bank
Obligations, (ii) any Bank Product Obligations (other than Hedge Obligations)
that, at such time, are allowed by the applicable Bank Product Provider to
remain outstanding without being required to be repaid or cash collateralized,
and (iii) any Hedge Obligations that, at such time, are allowed by the
applicable Hedge Provider to remain outstanding without being required to be
repaid, and (f) the termination of the Credit Facility.  Any reference herein to
any Person shall be construed to include such Person’s successors and assigns. 
Any requirement of a writing contained herein or in any other Loan Document
shall be satisfied by the transmission of a Record.

 

1.03.                     Accounting Terms.  All accounting terms not
specifically defined herein shall be construed in accordance with GAAP;
provided, that if Borrower notifies Agent that Borrower requests an amendment to
any provision hereof to eliminate the effect of any Accounting Change occurring
after the Closing Date or in the application thereof on the operation of such
provision (or if Agent notifies Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such Accounting Change or in the
application thereof, then Agent and Borrower agree that they will negotiate in
good faith amendments to the provisions of this Agreement that are directly
affected by such Accounting Change with the intent of having the respective
positions of the Lenders and Borrower after such Accounting Change conform as
nearly as possible to their respective positions as of the date of this
Agreement and, until any such amendments have been agreed upon and agreed to by
the Required Lenders, the provisions in this Agreement shall be calculated as if
no such Accounting Change had occurred.  When used herein, the term “financial
statements” shall include the notes and schedules thereto.  Whenever the term
“Borrower” is used in respect of a financial covenant or a related definition,
it shall be understood to mean Borrower and its Subsidiaries on a consolidated
basis, unless the context clearly requires otherwise.  Notwithstanding anything
to the contrary contained herein, (a) all financial statements delivered
hereunder shall be prepared, and all financial covenants contained herein shall
be calculated, without giving effect to any election under the Statement of
Financial Accounting Standards No. 159 (or any similar accounting principle)
permitting a Person to value its financial liabilities or Indebtedness at the
fair value thereof, and (b) the term “unqualified opinion” as used herein to
refer to opinions or reports provided by accountants shall mean an opinion or
report that is (i) unqualified, and (ii) does not include any explanation,
supplemental comment, or other comment concerning the ability of the applicable
Person to continue as a going concern or concerning the scope of the audit.

 

1.04.                     Code.  Any terms used in this Agreement that are
defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein; provided, that to the extent that the Code is
used to

 

2

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define any term herein and such term is defined differently in different
Articles of the Code, the definition of such term contained in Article 9 of the
Code shall govern.

 

1.05.                     Time References.  Unless the context of this Agreement
or any other Loan Document clearly requires otherwise, all references to time of
day refer to Eastern Standard Time or Eastern daylight saving time, as in effect
on such day.  For purposes of the computation of a period of time from a
specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each means “to and including”;
provided that, with respect to a computation of fees or interest payable to
Agent or any Lender, such period shall in any event consist of at least one full
day.

 

1.06.                     Schedules and Exhibits.  All of the schedules and
exhibits attached to this Agreement shall be deemed incorporated herein by
reference.

 

2.                                      LOANS AND TERMS OF PAYMENT.

 

2.01.                     Revolving Loans.

 

(a)                                 Subject to the terms and conditions of this
Agreement, and provided that all of the conditions set forth in Sections 3.01
and 3.02 are satisfied to the Termination Date, each Revolving Lender shall
(severally, not jointly or jointly and severally) make revolving loans
(“Revolving Loans”) to Borrower in an amount at any one time outstanding not to
exceed the lesser of:

 

(i)                                     such Lender’s Revolver Credit Limit, or

 

(ii)                                  such Lender’s Pro Rata Share of an amount
equal to the lesser of:

 

(A)                               the amount equal to (1) the Maximum Revolver
Credit Limit less (2) the Letter of Credit Usage at such time, and

 

(B)                               the amount equal to (1) the Borrowing Base as
of such date (based upon the most recent Borrowing Base Certificate delivered by
Borrower to Agent) less (2) the Letter of Credit Usage at such time.

 

(b)                                 Amounts borrowed pursuant to this
Section 2.01 may be repaid and, subject to the terms and conditions of this
Agreement, reborrowed at any time during the term of this Agreement.  The
outstanding principal amount of the Revolving Loans, together with interest
accrued and unpaid thereon, shall constitute Bank Obligations and shall be due
and payable on the Maturity Date or, if earlier, on the date on which they are
declared due and payable pursuant to the terms of this Agreement.

 

(c)                                  Anything to the contrary in this
Section 2.01 notwithstanding, Agent shall have the right (but not the
obligation), in the exercise of its Permitted Discretion, to establish and
increase or decrease Receivable Reserves, Bank Product Reserves, and other
Reserves against the Borrowing Base or the Maximum Revolver Credit Limit.  The
amount of any Receivable Reserve, Bank Product Reserve, or other Reserve
established by Agent, in its Permitted Discretion, shall have a reasonable
relationship to the event, condition, other circumstance, or fact that is the
basis for such reserve and shall not be duplicative of any other reserve
established and currently maintained.

 

2.02.                     [Intentionally Omitted].

 

2.03.                     Borrowing Procedures and Settlements.

 

(a)                                 Procedure for Borrowing Revolving Loans. 
Subject to the terms and conditions of Section 2.01, each Borrowing shall be
made by a written request by an Authorized Person delivered to Agent and
received by Agent no later than 10:00 a.m. on the same Business Day that is the
requested Funding Date, specifying

 

3

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(A) the amount of such Borrowing, and (B) the requested Funding Date (which
shall be a Business Day); provided, that Agent may, in its sole discretion,
elect to accept as timely requests that are received later than 10:00 a.m. on
the applicable Business Day.  At Agent’s election, in lieu of delivering the
above-described written request, any Authorized Person may give Agent telephonic
notice of such request by the required time.  In such circumstances, Borrower
agrees that any such telephonic notice will be confirmed in writing within 24
hours of the giving of such telephonic notice, but the failure to provide such
written confirmation shall not affect the validity of the request.  For each
Borrowing, Agent may rely on information set forth in or provided with the
Borrowing Base Certificate most recently delivered to Agent pursuant to Schedule
5.2.

 

(b)                                 [Intentionally Omitted].

 

(c)                                  Making of Revolving Loans.

 

(i)                                     After receipt of a request for a
Borrowing pursuant to Section 2.03(a), Agent shall notify the Lenders by
telecopy, telephone, email, or other electronic form of transmission, of the
requested Borrowing; such notification to be sent on the same Business Day of
the requested Funding Date.  If Agent has notified the Lenders of a requested
Borrowing on the same Business Day of the Funding Date, then each Lender shall
make the amount of such Lender’s Pro Rata Share of the requested Borrowing
available to Agent in immediately available funds, to Agent’s Account, not later
than 1:00 p.m. on the Business Day that is the requested Funding Date.  After
Agent’s receipt of the proceeds of such Revolving Loans from the Lenders, Agent
shall make the proceeds thereof available to Borrower on the applicable Funding
Date by transferring immediately available funds equal to such proceeds received
by Agent to the Designated Account; provided, that, subject to the provisions of
Section 2.03(d)(ii), no Lender shall have an obligation to make any Revolving
Loan, if (1) one or more of the applicable conditions precedent set forth in
Section 3 will not be satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.

 

(ii)                                  Unless Agent receives notice from a Lender
prior to 12:30 p.m. on the Business Day that is the requested Funding Date
relative to a requested Borrowing as to which Agent has notified the Lenders of
a requested Borrowing that such Lender will not make available to Agent for the
account of Borrower the amount of that Lender’s Pro Rata Share of the Borrowing,
Lenders hereby agree that Agent may assume that each Lender has made or will
make such amount available to Agent in immediately available funds on the
Funding Date and Agent may (but shall not be so required), in reliance upon such
assumption, make available to Borrower a corresponding amount.  If, on the
requested Funding Date, any Lender shall not have remitted the full amount that
it has agreed to make available to Agent in immediately available funds and if
Agent has made available to Borrower such amount on the requested Funding Date,
then such Lender shall make the amount of such Lender’s Pro Rata Share of the
requested Borrowing available to Agent in immediately available funds, to
Agent’s Account, no later than 1:00 p.m. on the Business Day that is the first
Business Day after the requested Funding Date (in which case, the interest
accrued on such Lender’s portion of such Borrowing for the Funding Date shall be
for Agent’s separate account).  If any Lender shall not remit the full amount
that it has agreed to make available to Agent in immediately available funds as
and when required hereby and if Agent has made available to Borrower such
amount, then that Lender shall be obligated to immediately remit such amount to
Agent, together with interest at the Defaulting Lender Rate for each day until
the date on which such amount is so remitted.  A notice submitted by Agent to
any Lender with respect to amounts owing under this Section 2.03(c)(ii) shall be
conclusive, absent manifest error.  If the amount that a Lender has agreed to
remit is made available to Agent, then such payment to Agent shall constitute
such Lender’s Revolving Loan for all purposes of this Agreement.  If such amount
is not made available to Agent on the Business Day following the Funding Date,
Agent will notify Borrower of such failure to fund and, upon demand by Agent,
Borrower shall pay such amount to Agent for Agent’s account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the
Revolving Loans composing such Borrowing.

 

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(d)                                 Protective Advances and Optional
Overadvances.

 

(i)                                     Any contrary provision of this Agreement
or any other Loan Document notwithstanding, but subject to Section 2.03(d)(iv),
at any time (A) after the occurrence and during the continuance of a Default or
an Event of Default, or (B) that any of the other applicable conditions
precedent set forth in Section 3 are not satisfied, Agent hereby is authorized
by Borrower and the Lenders, from time to time, in Agent’s sole discretion, to
make Revolving Loans to, or for the benefit of, Borrower, on behalf of the
Revolving Lenders, that Agent, in its sole and absolute discretion, deems
necessary or desirable (1) to preserve or protect the Collateral, or any portion
thereof, or (2) to enhance the likelihood of repayment of the Bank Obligations
(other than the Bank Product Obligations) (the Revolving Loans described in this
Section 2.03(d)(i) shall be referred to as “Protective Advances”). 
Notwithstanding the foregoing, the aggregate amount of all Protective Advances
outstanding at any one time shall not exceed the amount which is equal to the
Maximum Revolver Credit Limit less the aggregate outstanding Revolver Usage.

 

(ii)                                  Any contrary provision of this Agreement
or any other Loan Document notwithstanding, but subject to Section 2.03(d)(iv),
the Lenders hereby authorize Agent, and Agent may, but is not obligated to,
knowingly and intentionally, continue to make Revolving Loans to Borrower
notwithstanding that an Overadvance exists or would be created thereby, so long
as after giving effect to such Revolving Loans, the outstanding Revolver Usage
does not exceed the Maximum Revolver Credit Limit.  In the event Agent obtains
actual knowledge that the Revolver Usage exceeds the amount permitted by the
immediately foregoing provision, regardless of the amount of, or reason for,
such excess, Agent shall notify the Lenders as soon as practicable (and prior to
making any (or any additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) unless Agent determines that prior notice would result in
imminent harm to the Collateral or its value, in which case Agent may make such
Overadvances and provide notice as promptly as practicable thereafter), and the
Lenders lending under the Credit Facility thereupon shall, together with Agent,
jointly determine the terms of arrangements that shall be implemented with
Borrower intended to reduce, within a reasonable time, the outstanding principal
amount of the Revolving Loans to Borrower to an amount permitted by the
preceding sentence.  In such circumstances, if any Revolving Lender objects to
the proposed terms of reduction or repayment of any Overadvance, the terms of
reduction or repayment thereof shall be implemented according to the
determination of the Required Lenders.  The foregoing provisions are meant for
the benefit of the Lenders and Agent and are not meant for the benefit of
Borrower, which shall continue to be bound by the provisions of
Section 2.04(e).  Each Revolving Lender shall be obligated to settle with Agent
as provided in Section 2.03(e) (or Section 2.03(g), as applicable) for the
amount of such Lender’s Pro Rata Share of any unintentional Overadvances by
Agent reported to such Lender, any intentional Overadvances made as permitted
under this Section 2.03(d)(ii), and any Overadvances resulting from the charging
to the Loan Account of interest, fees, or Lender Group Expenses.

 

(iii)                               Each Protective Advance and each Overadvance
(each, an “Extraordinary Advance”) shall be deemed to be a Revolving Loan
hereunder, except that prior to Settlement therefor, all payments on the
Extraordinary Advances shall be payable to Agent solely for its own account. 
The Extraordinary Advances shall be repayable on demand, secured by Collateral
Agent’s Liens, constitute Bank Obligations hereunder, and bear interest at the
rate applicable from time to time to Revolving Loans.  The provisions of this
Section 2.03(d) are for the exclusive benefit of Agent and the Lenders and are
not intended to benefit Borrower (or any other Loan Party) in any way.

 

(iv)                              Notwithstanding anything contained in this
Agreement or any other Loan Document to the contrary:  (A) no Extraordinary
Advance may be made by Agent if such Extraordinary Advance would cause the
aggregate principal amount of Extraordinary Advances outstanding to exceed an
amount equal to the Maximum Revolver Credit Limit less the aggregate outstanding
Revolver Usage; and (B) to the extent that the making of any Extraordinary
Advance causes the aggregate Revolver Usage to exceed the Maximum Revolver
Credit Limit, such portion of such Extraordinary Advance shall be for Agent’s
sole and separate account and not for the account of any Lender and shall be
entitled to priority in repayment in accordance with Section 2.04(b).

 

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(e)                                  Settlement.  It is agreed that each
Lender’s funded portion of the Revolving Loans is intended by the Lenders to
equal, at all times, such Lender’s Pro Rata Share of the outstanding Revolving
Loans.  Such agreement notwithstanding, Agent and the other Lenders agree (which
agreement shall not be for the benefit of Borrower) that in order to facilitate
the administration of this Agreement and the other Loan Documents, settlement
among the Lenders as to the Revolving Loans, and the Extraordinary Advances
shall take place on a periodic basis in accordance with the following
provisions:

 

(i)                                     Agent shall request settlement
(“Settlement”) with the Lenders on a weekly basis, or on a more frequent basis
if so determined by Agent in its sole discretion (i) for itself, with respect to
the outstanding Extraordinary Advances, and (2) with respect to Borrower’s or
its Subsidiaries’ payments or other amounts received, as to each by notifying
the Lenders by telecopy, telephone, or other similar form of transmission, of
such requested Settlement, no later than 2:00 p.m. on the Business Day
immediately prior to the date of such requested Settlement (the date of such
requested Settlement being the “Settlement Date”).  Such notice of a Settlement
Date shall include a summary statement of the amount of outstanding Revolving
Loans and Extraordinary Advances for the period since the prior Settlement
Date.  Subject to the terms and conditions contained herein (including
Section 2.03(g)):  (y) if the amount of the Revolving Loans (including
Extraordinary Advances) made by a Lender that is not a Defaulting Lender exceeds
such Lender’s Pro Rata Share of the Revolving Loans (including Extraordinary
Advances) as of a Settlement Date, then Agent shall, by no later than 1:00 p.m.
on the Settlement Date, transfer in immediately available funds to a Deposit
Account of such Lender (as such Lender may designate), an amount such that each
such Lender shall, upon receipt of such amount, have as of the Settlement Date,
its Pro Rata Share of the Revolving Loans (including Extraordinary Advances),
and (z) if the amount of the Revolving Loans (including Extraordinary Advances)
made by a Lender is less than such Lender’s Pro Rata Share of the Revolving
Loans (including Extraordinary Advances) as of a Settlement Date, such Lender
shall no later than 1:00 p.m. on the Settlement Date transfer in immediately
available funds to Agent’s Account, an amount such that each such Lender shall,
upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share
of the Revolving Loans (including Extraordinary Advances).  Such amounts made
available to Agent under clause (z) of the immediately preceding sentence shall
be applied against the amounts of the applicable Extraordinary Advances and
shall constitute Revolving Loans of such Lenders.  If any such amount is not
made available to Agent by any Lender on the Settlement Date applicable thereto
to the extent required by the terms hereof, Agent shall be entitled to recover
for its account such amount on demand from such Lender together with interest
thereon at the Defaulting Lender Rate.

 

(ii)                                  In determining whether a Lender’s balance
of the Revolving Loans and Extraordinary Advances is less than, equal to, or
greater than such Lender’s Pro Rata Share of the Revolving Loans and
Extraordinary Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments actually
received in good funds by Agent with respect to principal, interest, fees
payable by Borrower and allocable to the Lenders hereunder, and proceeds of
Collateral.

 

(iii)                               Between Settlement Dates, Agent, to the
extent Extraordinary Advances are outstanding, may pay over to Agent, any
payments or other amounts received by Agent, that in accordance with the terms
of this Agreement would be applied to the reduction of the Revolving Loans, for
application to the Extraordinary Advances.  During the period between Settlement
Dates, Agent with respect to Extraordinary Advances, and each Lender with
respect to the Revolving Loans other than Extraordinary Advances, shall be
entitled to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Agent, or the Lenders, as
applicable.

 

(iv)                              Anything in this Section 2.03(e) to the
contrary notwithstanding, in the event that a Lender is a Defaulting Lender,
Agent shall be entitled to refrain from remitting settlement amounts to the
Defaulting Lender and, instead, shall be entitled to elect to implement the
provisions set forth in Section 2.03(g).

 

(f)                                   Notation.  Agent, as a non-fiduciary agent
for Borrower, shall maintain a register showing the principal amount of the
Revolving Loans, owing to each Lender, including the Extraordinary Advances
owing to Agent, and the interests therein of each Lender, from time to time and
such register shall, absent manifest error, conclusively be presumed to be
correct and accurate.

 

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(g)                                  Defaulting Lenders.

 

(i)                                     Notwithstanding the provisions of
Section 2.04(b)(ii), Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrower to Agent for the Defaulting Lender’s
benefit or any proceeds of Collateral that would otherwise be remitted hereunder
to the Defaulting Lender, and, in the absence of such transfer to the Defaulting
Lender, Agent shall transfer any such payments (A) first, to Issuing Lender, to
the extent of the portion of a Letter of Credit Disbursement that was required
to be, but was not, paid by the Defaulting Lender, (B) second, to each
Non-Defaulting Lender ratably in accordance with their Revolver Credit Limits
(but, in each case, only to the extent that such Defaulting Lender’s portion of
a Revolving Loan was funded by such other Non-Defaulting Lender), (C) to a
suspense account maintained by Agent, the proceeds of which shall be retained by
Agent and may be made available to be re-advanced to or for the benefit of
Borrower (upon the request of Borrower and subject to the conditions set forth
in Section 3.02) as if such Defaulting Lender had made its portion of Revolving
Loans (or other funding obligations) hereunder, and (D) from and after the date
on which all other Bank Obligations have been paid in full, to such Defaulting
Lender in accordance with tier (J) of Section 2.04(b)(ii).  Subject to the
foregoing, Agent may hold and, in its discretion, re-lend to Borrower for the
account of such Defaulting Lender the amount of all such payments received and
retained by Agent for the account of such Defaulting Lender.  Solely for the
purposes of voting or consenting to matters with respect to the Loan Documents
(including the calculation of Pro Rata Share in connection therewith) and for
the purpose of calculating the fee payable under Section 2.10(b), such
Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s
Revolver Credit Limit shall be deemed to be zero; provided, that the foregoing
shall not apply to any of the matters governed by Section 14.01(a)(i) through
(iii).  The provisions of this Section 2.03(g) shall remain effective with
respect to such Defaulting Lender until the earlier of (y) the date on which all
of the Non-Defaulting Lenders, Agent, Issuing Lender, and Borrower shall have
waived, in writing, the application of this Section 2.03(g) to such Defaulting
Lender, or (z) the date on which such Defaulting Lender makes payment of all
amounts that it was obligated to fund hereunder, pays to Agent all amounts owing
by Defaulting Lender in respect of the amounts that it was obligated to fund
hereunder, and, if requested by Agent, provides adequate assurance of its
ability to perform its future obligations hereunder (on which earlier date, so
long as no Event of Default has occurred and is continuing, any remaining cash
collateral held by Agent pursuant to Section 2.03(g)(ii) shall be released to
Borrower).  The operation of this Section 2.03(g) shall not be construed to
increase or otherwise affect the Revolver Credit Limit of any Lender, to relieve
or excuse the performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder, or to relieve or excuse the performance by
Borrower of its duties and obligations hereunder to Agent, Issuing Lender, or to
the Lenders other than such Defaulting Lender.  Any failure by a Defaulting
Lender to fund amounts that it was obligated to fund hereunder shall constitute
a material breach by such Defaulting Lender of this Agreement and shall entitle
Borrower, at its option, upon written notice to Agent, to arrange for a
substitute Lender to assume the Revolver Credit Limit of such Defaulting Lender,
such substitute Lender to be reasonably acceptable to Agent.  In connection with
the arrangement of such a substitute Lender, the Defaulting Lender shall have no
right to refuse to be replaced hereunder, and agrees to execute and deliver a
completed form of Assignment and Acceptance in favor of the substitute Lender
(and agrees that it shall be deemed to have executed and delivered such document
if it fails to do so) subject only to being paid its share of the outstanding
Bank Obligations (other than Bank Product Obligations, but including (1) all
interest, fees, and other amounts that may be due and payable in respect
thereof, and (2) an assumption of its Pro Rata Share of its participation in the
Letters of Credit); provided, that any such assumption of the Revolver Credit
Limit of such Defaulting Lender shall not be deemed to constitute a waiver of
any of the Lender Groups’ or Borrower’s rights or remedies against any such
Defaulting Lender arising out of or in relation to such failure to fund.  In the
event of a direct conflict between the priority provisions of this
Section 2.03(g) and any other provision contained in this Agreement or any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in concert
with each other.  In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of this
Section 2.03(g) shall control and govern.

 

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(ii)                                  If any Letter of Credit is outstanding at
the time that a Lender becomes a Defaulting Lender then:

 

(A)                                                  such Defaulting Lender’s
Letter of Credit Exposure shall be reallocated among the Non-Defaulting Lenders
in accordance with their respective Pro Rata Shares but only to the extent
(x) the sum of all Non-Defaulting Lenders’ Revolving Loan Exposures plus such
Defaulting Lender’s Letter of Credit Exposure does not exceed the total of all
Non-Defaulting Lenders’ Revolver Credit Limits and (y) the conditions set forth
in Section 3.02 are satisfied at such time;

 

(B)                                                  if the reallocation
described in clause (A) above cannot, or can only partially, be effected,
Borrower shall within one Business Day following notice by the Agent, cash
collateralize such Defaulting Lender’s Letter of Credit Exposure (after giving
effect to any partial reallocation pursuant to clause (A) above), pursuant to a
cash collateral agreement to be entered into in form and substance reasonably
satisfactory to the Agent, for so long as such Letter of Credit Exposure is
outstanding; provided, that Borrower shall not be obligated to cash
collateralize any Defaulting Lender’s Letter of Credit Exposure if such
Defaulting Lender is also the Issuing Lender;

 

(C)                                                  if Borrower cash
collateralizes any portion of such Defaulting Lender’s Letter of Credit Exposure
pursuant to this Section 2.03(g)(ii), Borrower shall not be required to pay any
Letter of Credit Fees to Agent for the account of such Defaulting Lender
pursuant to Section 2.06(b) with respect to such cash collateralized portion of
such Defaulting Lender’s Letter of Credit Exposure during the period such Letter
of Credit Exposure is cash collateralized;

 

(D)                                                  to the extent the Letter of
Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant to this
Section 2.03(g)(ii), then the Letter of Credit Fees payable to the
Non-Defaulting Lenders pursuant to Section 2.06(b) shall be adjusted in
accordance with such Non-Defaulting Lenders’ Letter of Credit Exposure;

 

(E)                                                   to the extent any
Defaulting Lender’s Letter of Credit Exposure is neither cash collateralized nor
reallocated pursuant to this Section 2.03(g)(ii), then, without prejudice to any
rights or remedies of the Issuing Lender or any Lender hereunder, all Letter of
Credit Fees that would have otherwise been payable to such Defaulting Lender
under Section 2.06(b) with respect to such portion of such Letter of Credit
Exposure shall instead be payable to the Issuing Lender until such portion of
such Defaulting Lender’s Letter of Credit Exposure is cash collateralized or
reallocated;

 

(F)                                                    so long as any Lender is
a Defaulting Lender, the Issuing Lender shall not be required to issue, amend,
or increase any Letter of Credit, in each case, to the extent (x) the Defaulting
Lender’s Pro Rata Share of such Letter of Credit cannot be reallocated pursuant
to this Section 2.03(g)(ii) or (y) the Issuing Lender has not otherwise entered
into arrangements reasonably satisfactory to the Issuing Lender and Borrower to
eliminate the Issuing Lender’s risk with respect to the Defaulting Lender’s
participation in Letters of Credit; and

 

(G)                                                  Agent may release any cash
collateral provided by Borrower pursuant to this Section 2.03(g)(ii) to the
Issuing Lender and the Issuing Lender may apply any such cash collateral to the
payment of such Defaulting Lender’s Pro Rata Share of any Letter of Credit
Disbursement that is not reimbursed by Borrower pursuant to Section 2.11(e).

 

(h)                                 Independent Obligations.  All Revolving
Loans (other than Extraordinary Advances) advanced to Borrower shall be made by
the Lenders contemporaneously and in accordance with their Pro Rata Shares.  It
is understood that (i) no Lender shall be responsible for any failure by any
other Lender to perform its obligation to make any Revolving Loan (or other
extension of credit) hereunder, nor shall any Revolver Credit Limit of any
Lender be increased or decreased as a result of any failure by any other Lender
to perform its obligations hereunder, and (i) no failure by any Lender to
perform its obligations hereunder shall excuse any other Lender from its
obligations hereunder.

 

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2.04.                     Payments; Reductions of Revolver Credit Limits;
Prepayments.

 

(a)                                 Payments by Borrower.

 

(i)                                     Except as otherwise expressly provided
herein, all payments by Borrower shall be made to Agent’s Account for the
account of the Lender Group and shall be made in immediately available funds, no
later than 2:00 p.m. on the date specified herein.  Borrower shall immediately
notify Agent via electronic mail (at such email addresses as Agent may designate
in accordance with this Agreement) at the time any payment is made by Borrower. 
Any payment received by Agent later than 2:00 p.m. shall be deemed to have been
received (unless Agent, in its sole discretion, elects to credit it on the date
received) on the following Business Day and any applicable interest or fee shall
continue to accrue until such following Business Day.  All payments made by
Borrower hereunder or under any note or other Loan Document will be made without
setoff, counterclaim, or other defense.

 

(ii)                                  Unless Agent receives notice from Borrower
prior to the date on which any payment is due to the Lenders that Borrower will
not make such payment in full as and when required, Agent may assume that
Borrower has made (or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender.  If and to the extent Borrower
does not make such payment in full to Agent on the date when due, each Lender
severally shall repay to Agent on demand such amount distributed to such Lender,
together with interest thereon at the Defaulting Lender Rate for each day from
the date such amount is distributed to such Lender until the date repaid.

 

(b)                                 Apportionment and Application.

 

(i)                                     So long as no Application Event has
occurred and is continuing and except as otherwise provided herein with respect
to Defaulting Lenders, all principal and interest payments received by Agent
shall be apportioned ratably among the Lenders (according to the unpaid
principal balance of the Bank Obligations to which such payments relate held by
each Lender) and all payments of fees and expenses received by Agent (other than
fees or expenses that are for Agent’s separate account or for the separate
account of Issuing Lender) shall be apportioned ratably among the Lenders having
a Pro Rata Share of the type of Revolver Credit Limit or Bank Obligation to
which a particular fee or expense relates.  Subject to Section 2.04(b)(iv),
Section 2.04(d), and Section 2.04(e), all payments to be made hereunder by
Borrower shall be remitted to Agent and all such payments, and all proceeds of
Collateral received by Agent, shall be applied, so long as no Application Event
has occurred and is continuing and except as otherwise provided herein with
respect to Defaulting Lenders, to reduce the balance of the Revolving Loans
outstanding and, thereafter, to Borrower (to be wired to the Designated Account)
or such other Person entitled thereto under applicable law.

 

(ii)                                  At any time that an Application Event has
occurred and is continuing and except as otherwise provided herein with respect
to Defaulting Lenders, all payments remitted to Agent and all proceeds of
Collateral received by Agent shall be applied as follows:

 

(A)                                                  first, to pay any Lender
Group Expenses (including cost or expense reimbursements) or indemnities then
due to Agent under the Loan Documents, until paid in full,

 

(B)                                                  second, to pay any fees or
premiums then due to Agent under the Loan Documents until paid in full,

 

(C)                                                  third, to pay interest due
in respect of all Protective Advances until paid in full,

 

(D)                                                  fourth, to pay the
principal of all Protective Advances until paid in full,

 

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(E)                                                   fifth, ratably, to pay any
Lender Group Expenses (including cost or expense reimbursements) or indemnities
then due to any of the Lenders under the Loan Documents, until paid in full,

 

(F)                                                    sixth, ratably, to pay
any fees or premiums then due to any of the Lenders under the Loan Documents
until paid in full,

 

(G)                                                  seventh, ratably, to pay
interest accrued in respect of the Revolving Loans (other than Protective
Advances) until paid in full,

 

(H)                                                 eighth, ratably

 

i.                                          to pay the principal of all
Revolving Loans, until paid in full,

 

ii.                                       to Agent, to be held by Agent, for the
benefit of Issuing Lender (and for the ratable benefit of each of the Lenders
that have an obligation to pay to Agent, for the account of Issuing Lender, a
share of each Letter of Credit Disbursement), as cash collateral in an amount up
to 103% of the Letter of Credit Usage (to the extent permitted by applicable
law, such cash collateral shall be applied to the reimbursement of any Letter of
Credit Disbursement as and when such disbursement occurs and, if a Letter of
Credit expires undrawn, the cash collateral held by Agent in respect of such
Letter of Credit shall, to the extent permitted by applicable law, be reapplied
pursuant to this Section 2.04(b)(ii), beginning with tier (A) hereof),

 

iii.                                    up to the amount (after taking into
account any amounts previously paid pursuant to this clause iii. during the
continuation of the applicable Application Event) of the most recently
established Bank Product Reserve, which amount was established prior to the
occurrence of, and not in contemplation of, the subject Application Event, to
(y) the Bank Product Providers based upon amounts then certified by the
applicable Bank Product Provider to Agent (in form and substance satisfactory to
Agent) to be due and payable to such Bank Product Providers on account of Bank
Product Obligations, and (z) with any balance to be paid to Agent, to be held by
Agent, for the ratable benefit of the Bank Product Providers, as cash collateral
(which cash collateral may be released by Agent to the applicable Bank Product
Provider and applied by such Bank Product Provider to the payment or
reimbursement of any amounts due and payable with respect to Bank Product
Obligations owed to the applicable Bank Product Provider as and when such
amounts first become due and payable and, if and at such time as all such Bank
Product Obligations are paid or otherwise satisfied in full, the cash collateral
held by Agent in respect of such Bank Product Obligations shall be reapplied
pursuant to this Section 2.04(b)(ii), beginning with tier (A) hereof,

 

(I)                                                      eleventh, to pay any
other Bank Obligations other than Bank Obligations owed to Defaulting Lenders
(including being paid, ratably, to the Bank Product Providers on account of all
amounts then due and payable in respect of Bank Product Obligations, with any
balance to be paid to Agent, to be held by Agent, for the ratable benefit of the
Bank Product Providers, as cash collateral (which cash collateral may be
released by Agent to the applicable Bank Product Provider and applied by such
Bank Product Provider to the payment or reimbursement of any amounts due and
payable with respect to Bank Product Obligations owed to the applicable Bank
Product Provider as and when such amounts first become due and payable and, if
and at such time as all such Bank Product Obligations are paid or otherwise
satisfied in full, the cash collateral held by Agent in respect of such Bank
Product Obligations shall be reapplied pursuant to this Section 2.04(b)(ii),
beginning with tier (A) hereof),

 

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

 

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

 

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(iii)                               Agent promptly shall distribute to each
Lender, pursuant to the applicable wire instructions received from each Lender
in writing, such funds as it may be entitled to receive, subject to a Settlement
delay as provided in Section 2.03(e).

 

(iv)                              In each instance, so long as no Application
Event has occurred and is continuing, Section 2.04(b)(i) shall not apply to any
payment made by Borrower to Agent and specified by Borrower to be for the
payment of specific Bank Obligations then due and payable (or prepayable) under
any provision of this Agreement or any other Loan Document.

 

(v)                                 For purposes of Section 2.04(b)(ii), “paid
in full” of a type of Bank Obligation means payment in cash or immediately
available funds of all amounts owing on account of such type of Bank Obligation,
including interest accrued after the commencement of any Insolvency Proceeding,
default interest, interest on interest, and expense reimbursements, irrespective
of whether any of the foregoing would be or is allowed or disallowed in whole or
in part in any Insolvency Proceeding.

 

(vi)                              In the event of a direct conflict between the
priority provisions of this Section 2.04 and any other provision contained in
this Agreement or any other Loan Document, it is the intention of the parties
hereto that such provisions be read together and construed, to the fullest
extent possible, to be in concert with each other.  In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, if the conflict
relates to the provisions of Section 2.03(g) and this Section 2.04, then the
provisions of Section 2.03(g) shall control and govern, and if otherwise, then
the terms and provisions of this Section 2.04 shall control and govern.

 

(c)                                  Reduction of Revolver Credit Limits.  The
Revolver Credit Limits shall terminate on the Maturity Date.  Borrower may
reduce the Revolver Credit Limits to an amount (not less than $30,000,000) that
is not less than the sum of (A) the Revolver Usage as of such date, plus (B) the
principal amount of all Revolving Loans not yet made as to which a request has
been given by Borrower under Section 2.3(a), plus (C) the amount of all Letters
of Credit not yet issued as to which a request has been given by Borrower
pursuant to Section 2.11(a).  Each such reduction shall be in an amount which is
not less than $5,000,000, shall be made by providing not less than 10 Business
Days prior written notice to Agent, and shall be irrevocable.  Once reduced, the
Revolver Credit Limits may not be increased.  Each such reduction of the
Revolver Credit Limits shall reduce the Revolver Credit Limits of each Lender
proportionately in accordance with its ratable share thereof.  If Borrower has
sent a notice of reduction of the Revolver Credit Limits pursuant to the
provisions of this Section 2.04(c), then on the date set forth as the date of
reduction in such notice, Borrower shall pay to Agent, in cash, the Applicable
Revolver Reduction Premium determined as of such date.

 

(d)                                 Optional Prepayments.  Borrower may prepay
the principal of any Revolving Loan at any time in whole or in part, without
premium or penalty (unless Borrower is required to pay the Applicable Prepayment
Premium subject to the terms and conditions set forth in Sections 3.03).

 

(e)                                  Mandatory Prepayments.  If, at any time,
(A) the Revolver Usage on such date exceeds (B) the Borrowing Base reflected in
the Borrowing Base Certificate most recently delivered by Borrower to Agent,
then Borrower shall immediately prepay the Bank Obligations in accordance with
Section 2.04(f) in an aggregate amount equal to the amount of such excess.

 

(f)                                   Application of Payments.  Each prepayment
pursuant to Section 2.04(e) shall, (A) so long as no Application Event shall
have occurred and be continuing, be applied, first, to accrued and unpaid
interest, and second, to the outstanding principal amount of the Revolving Loans
until paid in full, and (B) if an Application Event shall have occurred and be
continuing, be applied in the manner set forth in Section 2.04(b)(ii).

 

2.05.                     Promise to Pay.  Borrower promises to pay all of the
Bank Obligations (including principal, interest, premiums, if any, fees, costs,
and expenses (including Lender Group Expenses)) in full on the Maturity Date or,
if earlier, on the date on which the Bank Obligations (other than the Bank
Product Obligations) become due and payable pursuant to the terms of this
Agreement.  BORROWER AGREES THAT THE BANK OBLIGATIONS CONTAINED IN THE FIRST
SENTENCE OF THIS SECTION 2.05 SHALL SURVIVE

 

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PAYMENT OR SATISFACTION IN FULL OF ALL OTHER BANK OBLIGATIONS, NOTES
OBLIGATIONS, AND ADDITIONAL OBLIGATIONS AS EACH SUCH TERM IS DEFINED IN THE
INTERCREDITOR AGREEMENT.

 

2.06.                     Interest Rates and Letter of Credit Fee:  Rates,
Payments, and Calculations.

 

(a)                                 Interest Rates.  Except as provided in
Section 2.06(c), all Bank Obligations (except for undrawn Letters of Credit)
that have been charged to the Loan Account pursuant to the terms hereof shall
bear interest at a per annum rate equal to Daily One Month LIBOR plus the
Applicable Margin.

 

(b)                                 Letter of Credit Fee.  Borrower shall pay
Agent (for the ratable benefit of the Revolving Lenders), a Letter of Credit fee
(the “Letter of Credit Fee”) (which fee shall be in addition to the fronting
fees and commissions, other fees, charges and expenses set forth in
Section 2.11(l)) that shall accrue at a per annum rate equal to (i) for each
Letter of Credit that is cash collateralized by Borrower or the other Loan
Parties and not included in the calculation for Letter of Credit Usage (each, a
“Non-Formula Letter of Credit”), 1.75% of the face amount thereof, payable upon
the issuance of such Non-Formula Letter of Credit, each anniversary of the
issuance during the term of such Non-Formula Letter of Credit, and upon the
renewal of such Non-Formula Letter of Credit, and (ii) for all other Letters of
Credit, the Applicable Margin times the undrawn amount of all outstanding
Letters of Credit, payable on the last day of each month.

 

(c)                                  Default Rate.  Upon the occurrence and
during the continuation of an Event of Default and at the election of Agent or
the Required Lenders,

 

(i)                                     all Bank Obligations (except for undrawn
Letters of Credit) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest at a per annum rate equal to 2 percentage
points above the per annum rate otherwise applicable thereunder, and

 

(ii)                                  the Letter of Credit Fee shall be
increased to 2 percentage points above the per annum rate otherwise applicable
hereunder.

 

(d)                                 Payment of Interest Fees and Expenses. 
Except to the extent provided to the contrary in Section 2.06(b), Section 2.10
and Section 5.16, (i) all interest, all Letter of Credit Fees, and all other
fees payable hereunder or under any of the other Loan Documents shall be due and
payable, in arrears, on the last day of each month and (ii) all costs and
expenses payable hereunder or under any of the other Loan Documents, and all
Lender Group Expenses shall be due and payable on the earlier of (x) THE FIRST
DAY OF THE MONTH FOLLOWING THE DATE ON WHICH THE APPLICABLE COSTS, EXPENSES, OR
LENDER GROUP EXPENSES WERE FIRST INCURRED OR (Y) THE DATE ON WHICH DEMAND
THEREFOR IS MADE BY AGENT (IT BEING ACKNOWLEDGED AND AGREED THAT ANY CHARGING OF
SUCH COSTS, EXPENSES OR LENDER GROUP EXPENSES TO THE LOAN ACCOUNT PURSUANT TO
THE PROVISIONS OF THE FOLLOWING SENTENCE SHALL BE DEEMED TO CONSTITUTE A DEMAND
FOR PAYMENT THEREOF FOR THE PURPOSES OF THIS SUBCLAUSE (Y)).  Borrower hereby
authorizes Agent, from time to time without prior notice to Borrower, to charge
to the Loan Account (A) on the first day of each month, all interest accrued
during the prior month on the Revolving Loans hereunder, (B) on the first day of
each month, all Letter of Credit Fees accrued or chargeable hereunder during the
prior month, (C) as and when incurred or accrued, all fees and costs provided
for in Section 2.10(a) or (c), (D) on the first day of each month, the Unused
Line Fee accrued during the prior month pursuant to Section 2.10(b), (E) as and
when due and payable, all other fees payable hereunder or under any of the other
Loan Documents, (F) as and when incurred or accrued, the fronting fees and all
commissions, other fees, charges and expenses provided for in Section 2.11(l),
(G) as and when incurred or accrued, all other Lender Group Expenses, and (H) as
and when due and payable all other payment obligations payable under any Loan
Document or any Bank Product Agreement (including any amounts due and payable to
the Bank Product Providers in respect of Bank Products).  All amounts (including
interest, fees, costs, expenses, Lender Group Expenses, or other amounts payable
hereunder or under any other Loan Document or under any Bank Product Agreement)
charged to the Loan Account shall thereupon constitute Revolving Loans

 

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hereunder, shall constitute Bank Obligations hereunder, and shall initially
accrue interest at the rate then applicable to Revolving Loans.

 

(e)                                  Computation.  All interest and fees
chargeable under the Loan Documents shall be computed on the basis of a 360-day
year, in each case, for the actual number of days elapsed in the period during
which the interest or fees accrue; provided, however, subject to the terms of
Section 5.16, accrued interest shall be applied by Agent on account of the Bank
Obligations on the same Business Day of Agent’s receipt of such interest
payment.

 

(f)                                   Intent to Limit Charges to Maximum Lawful
Rate.  In no event shall the interest rate or rates payable under this
Agreement, plus any other amounts paid in connection herewith, exceed the
highest rate permissible under any law that a court of competent jurisdiction
shall, in a final determination, deem applicable.  Borrower and the Lender
Group, in executing and delivering this Agreement, intend legally to agree upon
the rate or rates of interest and manner of payment stated within it; provided,
that, anything contained herein to the contrary notwithstanding, if such rate or
rates of interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto, as of the date of this Agreement, Borrower is
and shall be liable only for the payment of such maximum amount as is allowed by
law, and payment received from Borrower in excess of such legal maximum,
whenever received, shall be applied to reduce the principal balance of the Bank
Obligations to the extent of such excess, and any surplus remaining after
satisfaction of all Bank Obligations shall be promptly paid to the Designated
Account.

 

(g)                                  Minimum Interest.  In the event the
aggregate amount of interest earned by the Revolving Lenders in connection with
the Revolving Loans in any month (such period, the “Minimum Interest Period”,
which period shall begin on the Closing Date and continue with each month
thereafter until the earlier of the Maturity Date or the date this Agreement is
terminated) is less than $75,000 (exclusive of any collateral monitoring fees,
Unused Line Fees, or any other fees and charges hereunder) (“Minimum Interest”),
Borrower shall pay to Agent, for the ratable account of the Revolving Lenders,
upon demand by Agent, an amount equal to the (A) Minimum Interest minus (B) the
aggregate amount of all interest earned by Revolving Lenders (exclusive of any
collateral monitoring fees, Unused Line Fees, or any other fees and charges
hereunder) in such Minimum Interest Period.  The amount of Minimum Interest
charged shall be prorated for any partial Minimum Interest Period.  Borrower
shall not be entitled to any credit, rebate, or repayment of any Minimum
Interest pursuant to this Section 2.06(g) notwithstanding any termination of
this Agreement or the suspension or termination of any Lenders obligation to
make loans and advances hereunder.  Agent may deduct amounts owing by Borrower
under this Section 2.06(g) by debiting the Designated Account.  Agent shall
provide Borrower written notice of deductions made from the Designated Account
pursuant to the terms of this Section 2.06(g).

 

2.07.                     Crediting Payments.  Subject to the terms of
Section 5.16, the receipt of any payment item by Agent shall not be required to
be considered a payment on account unless such payment item is a wire transfer
of immediately available federal funds made to Agent’s Account or unless and
until such payment item is honored when presented for payment.  Should any
payment item not be honored when presented for payment, then Borrower shall be
deemed not to have made such payment and interest shall be calculated
accordingly.  Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into
Agent’s Account on a Business Day on or before 2:00 p.m.  If any payment item is
received into Agent’s Account on a non-Business Day or after 2:00 p.m. on a
Business Day (unless Agent, in its sole discretion, elects to credit it on the
date received), it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.

 

2.08.                     Designated Account.  Agent is authorized to make the
Revolving Loans, and Issuing Lender is authorized to issue the Letters of
Credit, under this Agreement based upon telephonic or other instructions
received from an Authorized Person or, without instructions, if pursuant to
Section 2.06(d).  Borrower agrees to establish and maintain the Designated
Account with the Designated Account Bank for the purpose of receiving the
proceeds of the Revolving Loans requested by Borrower and made by Agent or the
Lenders hereunder.  Unless otherwise agreed by Agent and Borrower, any Revolving
Loan requested by Borrower and made by Agent or the Lenders hereunder shall be
made to the Designated Account.

 

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2.09.                     Maintenance of Loan Account; Statements of Bank
Obligations.  Agent shall maintain an account on its books in the name of
Borrower (the “Loan Account”) on which Borrower will be charged with all
Revolving Loans (including Extraordinary Advances) made by Agent, or the Lenders
to Borrower or for Borrower’s account, the Letters of Credit issued or arranged
by Issuing Lender for Borrower’s account, and with all other Bank Obligations
hereunder or under the other Loan Documents, including, accrued interest, fees
and expenses, and Lender Group Expenses.  In accordance with Section 2.07, the
Loan Account will be credited with all payments received by Agent from Borrower
or from any Person made for Borrower’s account.  Agent shall make available to
Borrower monthly statements regarding the Loan Account, including the principal
amount of the Revolving Loans, interest accrued hereunder, fees accrued or
charged hereunder or under the other Loan Documents, and a summary itemization
of all charges and expenses constituting Lender Group Expenses accrued hereunder
or under the other Loan Documents, and each such statement, absent manifest
error, shall be conclusively presumed to be correct and accurate and constitute
an account stated between Borrower and the Lender Group unless, within 30 days
after Agent first makes such a statement available to Borrower, Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in such statement.

 

2.10.                     Fees.

 

(a)                                 Origination Fee.  Borrower shall pay to
Agent, a fully earned, non-refundable facility fee of $225,000, on the Closing
Date.

 

(b)                                 Unused Line Fee.  Borrower shall pay to
Agent, for the ratable account of the Revolving Lenders, on the last day of each
month from and after     the Closing Date up to the last day of the month prior
to the date on which the Bank Obligations are paid in full and on the date on
which the Bank Obligations are paid in full, an unused line fee (the “Unused
Line Fee”) in an amount equal to 0.25% per annum times the result of (i) the
aggregate amount of the Revolver Credit Limits, less (ii) the average amount of
the Revolver Usage during the immediately preceding month (or portion thereof).

 

(c)                                  Field Examination and Other Fees.  Borrower
shall pay to Agent, field examination fees and charges, as and when incurred or
chargeable, as follows (i) a fee of $1,000 per day, per examiner, plus
reasonable out-of-pocket expenses (including travel, meals, and lodging) for
each field examination of Borrower performed by personnel employed by Agent, and
(ii) the reasonable fees or charges paid or incurred by Agent (but, in any
event, no less than a charge of $1,000 per day, per Person, plus reasonable
out-of-pocket expenses (including travel, meals, and lodging)) if it elects to
employ the services of one or more third Persons to perform field examinations
of Borrower or its Subsidiaries or to establish electronic collateral reporting
systems; provided that so long as no Event of Default shall have occurred and be
continuing, Borrower shall not be obliged to reimburse Agent for more than 2
field examinations during any calendar year.

 

2.11.                     Letters of Credit.

 

(a)                                 Subject to the terms and conditions of this
Agreement and provided that all of the conditions set forth in Sections 3.01 and
3.02 are satisfied to the Termination Date, upon the request of Borrower made in
accordance herewith, Agent will cause Issuing Lender (severally, not jointly or
jointly and severally) to issue, or to cause an Underlying Issuer (including, as
Issuing Lender’s agent) to issue, a requested Letter of Credit for the account
of Borrower.  Borrower shall provide the Issuing Lender with the form of backup
letters of credit (in connection with clause (ii) below) prior to the Closing
Date which such form shall be subject to the approval of the Issuing Lender.  On
the Closing Date, the Issuing Lender will issue (i) one or more Letters of
Credit for the benefit of the beneficiaries named on Schedule E-2 (the
“Replacement Letters of Credit”) to replace the outstanding Letters of Credit
more fully described on Schedule E-2 (the “Existing Letters of Credit”) and
(ii) backup Letters of Credit for the benefit of Credit Suisse AG in an amount
equal to not less than the face amount of the Existing Letters of Credit,
provided Borrower has provided Agent with cash collateral (the “LC Cash
Collateral”) in an amount equal to 103% of the face amount of all such Existing
Letters of Credit.  Upon the receipt by the beneficiaries of the Replacement
Letters of Credit, the Borrower shall obtain the originals of each of the
Existing Letters of Credit and deliver them to Credit Suisse AG and cause Credit
Suisse AG to return the original backup Letters of Credit

 

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referred to in clause (ii) above to the Agent.  Promptly upon Agent receiving
all of such original backup Letters of Credit, Agent will release the LC Cash
Collateral to Borrower.

 

(b)           Issuing Lender agrees that it will enter into arrangements
relative to the reimbursement of the applicable Underlying Issuer (which may
include, among other means, by becoming an applicant with respect to such Letter
of Credit or entering into undertakings or other arrangements that provide for
reimbursement of such Underlying Issuer with respect to such drawings under
Letter of Credit; each such obligation or undertaking, irrespective of whether
in writing, a “Reimbursement Undertaking”) with respect to Letters of Credit
issued by such Underlying Issuer for the account of Borrower.  By submitting a
request to Agent for the issuance of a Letter of Credit, Borrower shall be
deemed to have requested that (i) Agent cause the Issuing Lender issue or
(ii) Agent cause an Underlying Issuer issue the requested Letter of Credit (and,
in such case, to have requested Issuing Lender to issue a Reimbursement
Undertaking with respect to such requested Letter of Credit).  Borrower
acknowledges and agrees that Borrower is and shall be deemed to be an applicant
(within the meaning of Section 5-102(a)(2) of the Code) with respect to each
Underlying Letter of Credit.  Each request for the issuance of a Letter of
Credit, or the amendment, renewal, or extension of any outstanding Letter of
Credit, shall be made in writing by an Authorized Person and delivered to Agent
(on behalf of Issuing Lender) via hand delivery, telefacsimile, or other
electronic method of transmission reasonably in advance of the requested date of
issuance, amendment, renewal, or extension.  Each such request shall be in form
and substance reasonably satisfactory to Agent and (i) shall specify (A) the
amount of such Letter of Credit, (B) the date of issuance, amendment, renewal,
or extension of such Letter of Credit, (C) the proposed expiration date of such
Letter of Credit, (D) the name and address of the beneficiary of the Letter of
Credit, and (E) such other information (including, the conditions to drawing,
and, in the case of an amendment, renewal, or extension, identification of the
Letter of Credit to be so amended, renewed, or extended) as shall be necessary
to prepare, amend, renew, or extend such Letter of Credit, and (ii) shall be
accompanied by such Issuer Documents as Agent, Issuing Lender or Underlying
Issuer may request or require, to the extent that such requests or requirements
are consistent with the Issuer Documents that Agent, Issuing Lender or
Underlying Issuer generally requests for Letters of Credit in similar
circumstances.  Anything contained herein to the contrary notwithstanding, Agent
may, but shall not be obligated to, require Issuing Lender to issue or cause the
issuance of a Letter of Credit, or issue a Reimbursement Undertaking in respect
of an Underlying Letter of Credit.

 

(c)           Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the requested
issuance:

 

(i)            the Letter of Credit Usage would exceed $10,000,000; or

 

(ii)           the Letter of Credit Usage would exceed the Maximum Revolver
Credit Limit less the outstanding amount of Revolving Loans, or

 

(iii)          the Letter of Credit Usage would exceed the Borrowing Base at
such time less the outstanding principal balance of the Revolving Loans at such
time.

 

(d)           In the event there is a Defaulting Lender as of the date of any
request for the issuance of a Letter of Credit, the Issuing Lender shall not be
required to issue or arrange for such Letter of Credit to the extent (i) the
Defaulting Lender’s Letter of Credit Exposure with respect to such Letter of
Credit may not be reallocated pursuant to Section 2.03(g)(ii), or (ii) the
Issuing Lender has not otherwise entered into arrangements reasonably
satisfactory to it and Borrower to eliminate the Issuing Lender’s risk with
respect to the participation in such Letter of Credit of the Defaulting Lender,
which arrangements may include Borrower cash collateralizing such Defaulting
Lender’s Letter of Credit Exposure in accordance with Section 2.03(g)(ii). 
Additionally, Issuing Lender shall have no obligation to issue a Letter of
Credit if (A) any order, judgment, or decree of any Governmental Authority or
arbitrator shall, by its terms, purport to enjoin or restrain Issuing Lender
from issuing such Letter of Credit, or any law applicable to Issuing Lender or
any request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over Issuing Lender shall prohibit or
request that Issuing Lender refrain from the issuance of letters of credit
generally or such Letter of Credit in particular, (B) the issuance of such
Letter of Credit would violate one or more policies of Issuing Lender applicable
to letters of credit generally, or (C) if amounts demanded to be paid under any
Letter of Credit will or may not be in United States Dollars.

 

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(e)           Any Issuing Lender (other than Wells Fargo or any of its
Affiliates) shall notify Agent in writing no later than the Business Day
immediately following the Business Day on which such Issuing Lender issued any
Letter of Credit; provided that (i) until Agent advises any such Issuing Lender
that the provisions of Section 3.02 are not satisfied, or (ii) unless the
aggregate amount of the Letters of Credit issued in any such week exceeds such
amount as shall be agreed by Agent and such Issuing Lender, such Issuing Lender
shall be required to so notify Agent in writing only once each week of the
Letters of Credit issued by such Issuing Lender during the immediately preceding
week as well as the daily amounts outstanding for the prior week, such notice to
be furnished on such day of the week as Agent and such Issuing Lender may
agree.  Borrower and the Lender Group hereby acknowledge and agree that all
Existing Letters of Credit (if any) shall constitute Letters of Credit under
this Agreement on and after the Closing Date with the same effect as if such
Existing Letters of Credit were issued by Issuing Lender at the request of
Borrower on the Closing Date.  Each Letter of Credit shall be in form and
substance reasonably acceptable to Issuing Lender, including the requirement
that the amounts payable thereunder must be payable in Dollars.  If Issuing
Lender makes a payment under a Letter of Credit, Borrower shall pay to Agent an
amount equal to the applicable Letter of Credit Disbursement on the Business Day
such Letter of Credit Disbursement is made and, in the absence of such payment,
the amount of the Letter of Credit Disbursement immediately and automatically
shall be deemed to be a Revolving Loan hereunder (notwithstanding any failure to
satisfy any condition precedent set forth in Section 3) and, initially, shall
bear interest at the rate then applicable to Revolving Loans.  If a Letter of
Credit Disbursement is deemed to be a Revolving Loan hereunder, Borrower’s
obligation to pay the amount of such Letter of Credit Disbursement to Issuing
Lender shall be automatically converted into an obligation to pay the resulting
Revolving Loan.  Promptly following receipt by Agent of any payment from
Borrower pursuant to this paragraph, Agent shall distribute such payment to
Issuing Lender or, to the extent that Revolving Lenders have made payments
pursuant to Section 2.11(f) to reimburse Issuing Lender, then to such Revolving
Lenders and Issuing Lender as their interests may appear.

 

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

 

(g)           Borrower agrees to indemnify, defend and hold harmless each member
of the Lender Group (including Issuing Lender and its branches, Affiliates, and
correspondents) and each such Person’s respective directors, officers,
employees, attorneys and agents (each, including Issuing Lender, a “Letter of
Credit Related Person”) (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and

 

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disbursements of attorneys, experts, or consultants and all other costs and
expenses actually incurred in connection therewith or in connection with the
enforcement of this indemnification (as and when they are incurred and
irrespective of whether suit is brought), which may be incurred by or awarded
against any Letter of Credit Related Person (other than Taxes, which shall be
governed by Section 16) (the “Letter of Credit Indemnified Costs”), and which
arise out of or in connection with, or as a result of this Agreement, any Letter
of Credit, any Issuer Document, or any Drawing Document referred to in or
related to any Letter of Credit, or any action or proceeding arising out of any
of the foregoing (whether administrative, judicial or in connection with
arbitration); in each case, including that resulting from the Letter of Credit
Related Person’s own negligence; provided, however,  that such indemnity shall
not be available to any Letter of Credit Related Person claiming indemnification
to the extent that such Letter of Credit Indemnified Costs may be finally
determined in a final, non-appealable judgment of a court of competent
jurisdiction to have resulted directly from the gross negligence, or willful
misconduct of the Letter of Credit Related Person claiming indemnity.  This
indemnification provision shall survive termination of this Agreement and all
Letters of Credit.

 

(h)           The liability of Issuing Lender (or any other Letter of Credit
Related Person) under, in connection with or arising out of any Letter of Credit
(or pre-advice), regardless of the form or legal grounds of the action or
proceeding, shall be limited to direct damages suffered by Borrower that are
caused directly by Issuing Lender’s gross negligence or willful misconduct in
(i) honoring a presentation under a Letter of Credit that on its face does not
at least substantially comply with the terms and conditions of such Letter of
Credit, (ii) failing to honor a presentation under a Letter of Credit that
strictly complies with the terms and conditions of such Letter of Credit or
(iii) retaining Drawing Documents presented under a Letter of Credit.  Issuing
Lender shall be deemed to have acted with due diligence and reasonable care if
Issuing Lender’s conduct is in accordance with Standard Letter of Credit
Practice or in accordance with this Agreement.  Borrower’s aggregate remedies
against Issuing Lender and any Letter of Credit Related Person for wrongfully
honoring a presentation under any Letter of Credit or wrongfully retaining
honored Drawing Documents shall in no event exceed the aggregate amount paid by
Borrower to Issuing Lender in respect of the honored presentation in connection
with such Letter of Credit under Section 2.11(e), plus interest at the rate then
applicable to the Revolving Loans hereunder.  Borrower shall take action to
avoid and mitigate the amount of any damages claimed against Issuing Lender or
any other Letter of Credit Related Person, including by enforcing its rights
against the beneficiaries of the Letters of Credit.  Any claim by Borrower under
or in connection with any Letter of Credit shall be reduced by an amount equal
to the sum of (x) the amount (if any) saved by Borrower as a result of the
breach or alleged wrongful conduct complained of; and (y) the amount (if any) of
the loss that would have been avoided had Borrower taken all reasonable steps to
mitigate any loss, and in case of a claim of wrongful dishonor, by specifically
and timely authorizing Issuing Lender to effect a cure.

 

(i)            Borrower is responsible for preparing or approving the final text
of the Letter of Credit as issued by Issuing Lender, irrespective of any
assistance Issuing Lender may provide such as drafting or recommending text or
by Issuing Lender’s use or refusal to use text submitted by Borrower.  Borrower
is solely responsible for the suitability of the Letter of Credit for Borrower’s
purposes.  With respect to any Letter of Credit containing an “automatic
amendment” to extend the expiration date of such Letter of Credit, Agent (on
behalf of Issuing Lender), in its sole and absolute discretion, may give notice
of nonrenewal of such Letter of Credit and, if Borrower does not at any time
want such Letter of Credit to be renewed, Borrower will so notify Agent and
Issuing Lender at least 15 calendar days before Issuing Lender is required to
notify the beneficiary of such Letter of Credit or any advising bank of such
nonrenewal pursuant to the terms of such Letter of Credit.

 

(j)            Borrower’s reimbursement and payment obligations under this
Section 2.11 are absolute, unconditional and irrevocable and shall be performed
strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever, provided, however, that subject to
Section 2.11(h) above, the foregoing shall not release Issuing Lender from such
liability to Borrower as may be finally determined in a final, non-appealable
judgment of a court of competent jurisdiction against Issuing Lender following
reimbursement or payment of the obligations and liabilities, including
reimbursement and other payment obligations, of Borrower to Issuing Lender
arising under, or in connection with, this Section 2.11 or any Letter of Credit.

 

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(k)           Without limiting any other provision of this Agreement, Issuing
Lender and each other Letter of Credit Related Person (if applicable) shall not
be responsible to Borrower for, and Issuing Lender’s rights and remedies against
Borrower and the obligation of Borrower to reimburse Issuing Lender for each
drawing under each Letter of Credit shall not be impaired by:

 

(i)            honor of a presentation under any Letter of Credit that on its
face substantially complies with the terms and conditions of such Letter of
Credit, even if the Letter of Credit requires strict compliance by the
beneficiary;

 

(ii)           honor of a presentation of any Drawing Document that appears on
its face to have been signed, presented or issued (A) by any purported successor
or transferee of any beneficiary or other Person required to sign, present or
issue such Drawing Document or (B) under a new name of the beneficiary;

 

(iii)          acceptance as a draft of any written or electronic demand or
request for payment under a Letter of Credit, even if nonnegotiable or not in
the form of a draft or notwithstanding any requirement that such draft, demand
or request bear any or adequate reference to the Letter of Credit;

 

(iv)          the identity or authority of any presenter or signer of any
Drawing Document or the form, accuracy, genuineness or legal effect of any
Drawing Document (other than Issuing Lender’s determination that such Drawing
Document appears on its face substantially to comply with the terms and
conditions of the Letter of Credit);

 

(v)           acting upon any instruction or request relative to a Letter of
Credit or requested Letter of Credit that Issuing Lender in good faith believes
to have been given by a Person authorized to give such instruction or request;

 

(vi)          any errors, omissions, interruptions or delays in transmission or
delivery of any message, advice or document (regardless of how sent or
transmitted) or for errors in interpretation of technical terms or in
translation or any delay in giving or failing to give notice to Borrower;

 

(vii)         any acts, omissions or fraud by, or the insolvency of, any
beneficiary, any nominated person or entity or any other Person or any breach of
contract between the beneficiary and Borrower or any of the parties to the
underlying transaction to which the Letter of Credit relates;

 

(viii)        assertion or waiver of any provision of the ISP or UCP that
primarily benefits an issuer of a letter of credit, including any requirement
that any Drawing Document be presented to it at a particular hour or place;

 

(ix)          payment to any paying or negotiating bank (designated or permitted
by the terms of the applicable Letter of Credit) claiming that it rightfully
honored or is entitled to reimbursement or indemnity under Standard Letter of
Credit Practice applicable to it;

 

(x)           acting or failing to act as required or permitted under Standard
Letter of Credit Practice applicable to where Issuing Lender has issued,
confirmed, advised or negotiated such Letter of Credit, as the case may be;

 

(xi)          honor of a presentation after the expiration date of any Letter of
Credit notwithstanding that a presentation was made prior to such expiration
date and dishonored by Issuing Lender if subsequently Issuing Lender or any
court or other finder of fact determines such presentation should have been
honored;

 

(xii)         dishonor of any presentation that does not strictly comply or that
is fraudulent, forged or otherwise not entitled to honor; or

 

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(xiii)        honor of a presentation that is subsequently determined by Issuing
Lender to have been made in violation of international, federal, state or local
restrictions on the transaction of business with certain prohibited Persons.

 

(l)            Borrower shall pay immediately upon demand to Agent for the
account of Issuing Lender as non-refundable fees, commissions, and charges (it
being acknowledged and agreed that any charging of such fees, commissions and
charges to the Loan Account pursuant to the provisions of Section 2.06(d) shall
be deemed to constitute a demand for payment thereof for the purposes of this
Section 2.11(l)):  (i) for each Letter of Credit that is not a Non-Formula
Letter of Credit, a fronting fee which shall be imposed by Issuing Lender upon
the issuance of each such Letter of Credit equal to 0.125% per annum of the face
amount thereof, plus (ii) any and all other customary commissions, fees and
charges then in effect imposed by, and any and all expenses incurred by, Issuing
Lender, or by any adviser, confirming institution or entity or other nominated
person, relating to Letters of Credit, at the time of issuance of any Letter of
Credit and upon the occurrence of any other activity with respect to any Letter
of Credit (including transfers, assignments of proceeds, amendments, drawings,
renewals or cancellations).

 

(m)          If by reason of (x) any Change in Law, or (y) compliance by Issuing
Lender or any other member of the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Board of Governors as from time to time in effect (and any successor thereto):

 

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

 

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

 

and the result of the foregoing is to increase, directly or indirectly, the cost
to Issuing Lender or any other member of the Lender Group of issuing, making,
participating in, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof, then, and in any such case, Agent may, at any
time within a reasonable period after the additional cost is incurred or the
amount received is reduced, notify Borrower, and Borrower shall pay within 30
days after demand therefor, such amounts as Agent may specify to be necessary to
compensate Issuing Lender or any other member of the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Revolving Loans hereunder; provided, that (A) Borrower shall not
be required to provide any compensation pursuant to this Section 2.11(m) for any
such amounts incurred more than 180 days prior to the date on which the demand
for payment of such amounts is first made to Borrower, and (B) if an event or
circumstance giving rise to such amounts is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof.  The determination by Agent of any amount due pursuant to this
Section 2.11(m), as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest or demonstrable
error, be final and conclusive and binding on all of the parties hereto.

 

(n)           Unless otherwise expressly agreed by Issuing Lender and Borrower
when a Letter of Credit is issued (including any such agreement applicable to an
Existing Letter of Credit), (i) the rules of the ISP and the UCP shall apply to
each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each
commercial Letter of Credit.

 

(o)           In the event of a direct conflict between the provisions of this
Section 2.11 and any provision contained in any Issuer Document, it is the
intention of the parties hereto that such provisions be read together and
construed, to the fullest extent possible, to be in concert with each other.  In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.11 shall control and
govern.

 

2.12.       [Intentionally Omitted].

 

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2.13.       Capital Requirements.

 

(a)           If, after the date hereof, any Lender determines that (i) any
Change in Law regarding capital or reserve requirements for banks or bank
holding companies, or (ii) compliance by such Lender, or their respective parent
bank holding companies, with any guideline, request or directive of any
Governmental Authority regarding capital adequacy (whether or not having the
force of law), has the effect of reducing the return on such Lender’s or such
holding companies’ capital as a consequence of such Lender’s Loans hereunder to
a level below that which such Lender or such holding companies could have
achieved but for such Change in Law or compliance (taking into consideration
such Lender’s or such holding companies’ then existing policies with respect to
capital adequacy and assuming the full utilization of such entity’s capital) by
any amount deemed by such Lender to be material, then such Lender may notify
Borrower and Agent thereof.  Following receipt of such notice, Borrower agrees
to pay such Lender on demand the amount of such reduction of return of capital
as and when such reduction is determined, payable within 30 days after
presentation by such Lender of a statement in the amount and setting forth in
reasonable detail such Lender’s calculation thereof and the assumptions upon
which such calculation was based (which statement shall be deemed true and
correct absent manifest error).  In determining such amount, such Lender may use
any reasonable averaging and attribution methods.  Failure or delay on the part
of any Lender to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender’s right to demand such compensation; provided
that Borrower shall not be required to compensate a Lender pursuant to this
Section for any reductions in return incurred more than 180 days prior to the
date that such Lender notifies Borrower of such Change in Law giving rise to
such reductions and of such Lender’s intention to claim compensation therefor;
provided further that if such claim arises by reason of the Change in Law that
is retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

 

(b)           If any Lender requests additional or increased costs referred to
in Section 2.11(m) or amounts under Section 2.13(a) (any such Lender, an
“Affected Lender”), then such Affected Lender shall use reasonable efforts to
promptly designate a different one of its lending offices or to assign its
rights and obligations hereunder to another of its offices or branches, if
(i) in the reasonable judgment of such Affected Lender, such designation or
assignment would eliminate or reduce amounts payable pursuant to
Section 2.11(m) or Section 2.13(a), as applicable, and (ii) in the reasonable
judgment of such Affected Lender, such designation or assignment would not
subject it to any material unreimbursed cost or expense and would not otherwise
be materially disadvantageous to it.  Borrower agrees to pay all reasonable
out-of-pocket costs and expenses incurred by such Affected Lender in connection
with any such designation or assignment.  If, after such reasonable efforts,
such Affected Lender does not so designate a different one of its lending
offices or assign its rights to another of its offices or branches so as to
eliminate Borrower’s obligation to pay any future amounts to such Affected
Lender pursuant to Section 2.11(m), or Section 2.13(a), as applicable, then
Borrower (without prejudice to any amounts then due to such Affected Lender
under Section 2.11(m) or Section 2.13(a), as applicable) may, unless prior to
the effective date of any such assignment the Affected Lender withdraws its
request for such additional amounts under Section 2.11(m), or Section 2.13(a),
as applicable, seek a substitute a Lender, in each case, reasonably acceptable
to Agent to purchase the Bank Obligations owed to such Affected Lender and such
Affected Lender’s Loans hereunder (a “Replacement Lender”), and if such
Replacement Lender agrees to such purchase, such Affected Lender shall assign to
the Replacement Lender its Bank Obligations and Loans, and upon such purchase by
the Replacement Lender, such Replacement Lender shall be deemed to be a “Lender”
for purposes of this Agreement and such Affected Lender shall cease to be a
“Lender” for purposes of this Agreement.

 

(c)           Notwithstanding anything herein to the contrary, the protection of
Sections 2.11(m) and 2.13 shall be available to each Lender regardless of any
possible contention of the invalidity or inapplicability of the law, rule,
regulation, judicial ruling, judgment, guideline, treaty or other change or
condition which shall have occurred or been imposed, so long as it shall be
customary for issuing banks or lenders affected thereby to comply therewith. 
Notwithstanding any other provision herein, no Lender or Issuing Lender shall
demand compensation pursuant to this Section 2.13 if it shall not at the time be
the general policy or practice of such Lender or Issuing Lender or such Lender
(as the case may be) to demand such compensation in similar circumstances under
comparable provisions of other credit agreements, if any.

 

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3.             CONDITIONS; TERM OF AGREEMENT.

 

3.01.       Conditions Precedent to the Initial Extension of Credit.  The
obligation of each Lender to make the initial extensions of credit provided for
hereunder is subject to the fulfillment, to the satisfaction of Agent and each
Lender, of each of the conditions precedent set forth on Schedule 3.1 (the
making of such initial extensions of credit by a Lender being conclusively
deemed to be its satisfaction or waiver of the conditions precedent ).

 

3.02.       Conditions Precedent to all Extensions of Credit.  The obligation of
the Lender Group (or any member thereof) to make any Revolving Loans hereunder
(or to extend any other credit hereunder) at any time shall be subject to the
following conditions precedent:

 

(a)           the representations and warranties of Borrower or its Subsidiaries
contained in this Agreement or in the other Loan Documents shall be true and
correct in all material respects (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) on and as of the date
of such extension of credit, as though made on and as of such date (except to
the extent that such representations and warranties relate solely to an earlier
date, in which case such representations and warranties shall be true and
correct in all material respects (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) as of such earlier
date);

 

(b)           no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof; and

 

(c)           Agent determines to its satisfaction that there has not been any
material adverse change in the business, operations, results of operations,
assets, liabilities or financial condition of Borrower and the other Loan
Parties, taken as a whole, since the most recent financial statements delivered
to Agent pursuant to Section 5.01.

 

3.03.       Maturity.  This Agreement shall continue in full force and effect
for a term ending on the Maturity Date.  In the event the Revolving Loans are
not refinanced on or before the Maturity Date by Wells Fargo or in the event of
a Prepayment for any reason, including (a) acceleration of the Bank Obligations
as a result of the occurrence of an Event of Default, (b) foreclosure and sale
of, or collection of, the Collateral, (c) sale of the Collateral in any
Insolvency Proceeding, or (d) the restructure, reorganization, or compromise of
the Bank Obligations by the confirmation of a plan of reorganization or any
other plan of compromise, restructure, or arrangement in any Insolvency
Proceeding, then, in view of the impracticability and extreme difficulty of
ascertaining the actual amount of damages to the Lender Group or profits lost by
the Lender Group as a result of such Prepayment, and by mutual agreement of the
parties as to a reasonable estimation and calculation of the lost profits or
damages of the Lender Group, Borrower shall pay to Agent, in cash, the
Applicable Prepayment Premium, measured as of the date of such Prepayment.

 

3.04.       Effect of Maturity.  On the Termination Date, all of the Bank
Obligations immediately shall become due and payable without notice or demand
and Borrower shall be required to repay all of the Bank Obligations in full
(including, without limitation, cash collateral in an amount equal to 103% of
the then existing Letter of Credit Usage (if applicable) plus all interest,
fees, and costs due or to become due in connection therewith (in such amounts as
estimated by Agent), to secure all of the Obligations relating to the applicable
Letters of Credit).  No termination of any obligations of the Lender Group
(other than payment in full of the Bank Obligations and termination of the
Credit Facility) shall relieve or discharge any Loan Party of its duties,
obligations, or covenants hereunder or under any other Loan Document and
Collateral Agent’s Liens in the Collateral shall continue to secure the Bank
Obligations and shall remain in effect until all Bank Obligations have been paid
in full and the Credit Facility has been terminated.  When all of the Bank
Obligations have been paid in full and the Credit Facility has been terminated
irrevocably, Agent will, at Borrower’s sole expense, execute and deliver any
termination statements, lien releases, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, and

 

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Collateral Agent’s Liens and all notices of security interests and liens
previously filed by Collateral Agent (on behalf of Agent and the Lenders).

 

3.05.       Early Termination by Borrower.  Borrower has the option, at any time
upon 10 Business Days prior written notice to Agent, to terminate this Agreement
and terminate the Credit Facility hereunder by repaying to Agent all of the Bank
Obligations in full.  The foregoing notwithstanding, (a) Borrower may rescind
termination notices relative to proposed payments in full of the Bank
Obligations with the proceeds of third party Indebtedness if the closing for
such issuance or incurrence does not happen on or before the date of the
proposed termination (in which case, a new notice shall be required to be sent
in connection with any subsequent termination), and (b) Borrower may extend the
date of termination at any time with the consent of Agent (which consent shall
not be unreasonably withheld or delayed).  If Borrower has sent a notice of
termination pursuant to this Section 3.05, then on the date set forth as the
date of termination of the Second Amended and Restated Credit Agreement in such
notice, Borrower shall pay to Agent, in cash, for the benefit of the Lenders in
accordance with their Pro Rata Shares, the Applicable Prepayment Premium. 
Notwithstanding anything to the contrary in this Agreement, Agent and Lender
Group agree that if, after the Closing Date, Borrower obtains financing from
Wells Fargo or one or more of its Affiliates and such financing is utilized to
pay and satisfy in full all Bank Obligations, the Applicable Prepayment Premium
shall be waived.

 

3.06.       Conditions Subsequent.  The obligation of the Lender Group (or any
member thereof) to continue to make Revolving Loans (or otherwise extend credit
hereunder) is subject to the fulfillment, on or before the date applicable
thereto, of the conditions subsequent set forth on Schedule 3.6 (the failure by
Borrower to so perform or cause to be performed such conditions subsequent as
and when required by the terms thereof (unless such date is extended, in
writing, by Agent, which Agent may do without obtaining the consent of the other
members of the Lender Group), shall constitute an Event of Default).

 

3.07.       Replacement Loan Documents.  Notwithstanding anything to the
contrary herein, contemporaneously with the consummation of the Permitted Bond
Refinancing, the Loan Documents will be restated and replaced, and the Loan
Parties will execute and deliver, among other things, a replacement credit
agreement to restate and replace this Agreement (the “Replacement Credit
Agreement”), a replacement security agreement to restate and replace the
Security Agreement, and such other documents, notes, instruments, guaranties,
control agreements and opinions as Agent may request in its sole and absolute
discretion but subject to certain agreements which may be required by the
Collateral Agent with respect to any Refinancing Indebtedness in connection with
the refinancing of the Senior Secured Notes and the Senior Unsecured Notes
(collectively, the “Replacement Loan Documents”).  Such Replacement Loan
Documents shall provide for a line of credit in the maximum principal amount of
$45,000,000 and shall be satisfactory in all respects to Agent, each Lender,
each Loan Party, and, as applicable, the parties to the Replacement
Intercreditor Agreement (as defined below) and security agreement with respect
to such Refinancing Indebtedness, all in such parties’ sole and absolute
discretion.  In furtherance of the immediately preceding sentence, the
Replacement Credit Agreement will be in form and substance substantially similar
to this Agreement, containing terms that are no less favorable to the Agent as
those provided to the lenders that are party to the loan documents evidencing
the Permitted Bond Refinancing, and Agent may, but shall not be required to, in
the sole and absolute discretion of the Agent, (i) include an accordion feature
which will permit the aggregate principal amount of the Credit Facility to
increase to an aggregate principal amount not to exceed $65,000,000, (ii) allow
Borrower to request advances against a portion of its unbilled accounts subject
to Agent’s approval, which may or may not be provided, in Agent’s sole and
absolute discretion, and (iii) include provisions to address the new First Lien
Debt, Second Lien Debt and Third Lien Debt (such terms being defined in the
Exchange Offer) which will then be in place.  Provisions (i) and (ii) in the
preceding sentence have not received credit approval from the Agent or any
Lender as of the Closing Date, and Borrower understands and agrees that such
provisions may not be approved by the Agent and the Lender and the Replacement
Credit Agreement therefore may not include either one or both of these
provisions.  Each Loan Party hereby understands and agrees that the Replacement
Loan Documents may or may not provide for a collateral agent for the Collateral,
and in the event that a collateral agent is provided for, such collateral agent
shall be acceptable to the Agent and may, in the Agent’s sole discretion, be the
Agent (such collateral agent, if applicable, being called, the “Replacement
Collateral Agent”).

 

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4.             REPRESENTATIONS AND WARRANTIES.

 

In order to induce the Lender Group to enter into this Agreement, Borrower makes
the following representations and warranties to the Lender Group which shall be
true, correct, and complete, in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof), as of the Closing Date, and shall be true, correct, and complete, in
all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof), as of the date of the making of
each Revolving Loan (or other extension of credit) made thereafter, as though
made on and as of the date of such Revolving Loan (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date, in which case such representations and warranties shall be true
and correct in all material respects (except that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) as of such earlier
date) and such representations and warranties shall survive the execution and
delivery, but not the termination, of this Agreement:

 

4.01.       Due Organization and Qualification; Subsidiaries.

 

(a)           Each Loan Party (i) is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization, (ii) is
qualified to do business in any state where the failure to be so qualified could
reasonably be expected to result in a Material Adverse Effect, and (iii) has all
requisite power and authority to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to enter into the
Loan Documents to which it is a party and to carry out the transactions
contemplated thereby.

 

(b)           Set forth on Schedule 4.1(b) (as such Schedule may be updated from
time to time to reflect changes resulting from transactions permitted under this
Agreement) is a complete and accurate description of the authorized Equity
Interests of Borrower, by class, and, as of the Closing Date, a description of
the number of shares of each such class that are issued and outstanding.  Except
as set forth in the ESOP Plan Documents, Borrower is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its Equity Interests or any security convertible into or
exchangeable for any of its Equity Interests.

 

(c)           Set forth on Schedule 4.1(c) (as such Schedule may be updated from
time to time to reflect changes resulting from transactions permitted under this
Agreement), is a complete and accurate list of the Loan Parties’ direct and
indirect Subsidiaries, showing:  (i) the number of shares of each class of
common and preferred Equity Interests authorized for each of such Subsidiaries,
and (ii) the number and the percentage of the outstanding shares of each such
class owned directly or indirectly by Borrower.  All of the outstanding Equity
Interests of each such Subsidiary has been validly issued and is fully paid and
non-assessable.

 

(d)           Except as set forth on Schedule 4.1(d), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower’s
or its Subsidiaries’ Equity Interests, including any right of conversion or
exchange under any outstanding security or other instrument.

 

4.02.       Due Authorization; No Conflict.

 

(a)           As to each Loan Party, the execution, delivery, and performance by
such Loan Party of the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Loan Party.

 

(b)           As to each Loan Party, the execution, delivery, and performance by
such Loan Party of the Loan Documents to which it is a party do not and will not
(i) result in a violation of any provision of federal, state, or local law or
regulation applicable to any Loan Party or its Subsidiaries, the Governing
Documents of any Loan Party or its Subsidiaries, or any order, judgment, or
decree of any court or other Governmental Authority binding on any Loan Party or
its Subsidiaries reasonably expected to have a Material Adverse Effect,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material agreement

 

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of any Loan Party or its Subsidiaries where any such conflict, breach or default
could individually or in the aggregate reasonably be expected to have a Material
Adverse Effect, (iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any assets of any Loan Party, other than
Permitted Liens, or (iv) except as set forth on Schedule 4.2(b)(iv), require any
approval of any holder of Equity Interests of a Loan Party or any approval or
consent of any Person under any material agreement of any Loan Party, other than
consents or approvals that have been obtained and that are still in force and
effect and except, in the case of material agreements, for consents or
approvals, the failure to obtain could not individually or in the aggregate
reasonably be expected to cause a Material Adverse Effect.

 

4.03.       Governmental Consents.  The execution, delivery, and performance by
each Loan Party of the Loan Documents to which such Loan Party is a party and
the consummation of the transactions contemplated by the Loan Documents do not
and will not require any registration with, consent, or approval of, or notice
to, or other action with or by, any Governmental Authority, other than
registrations, consents, approvals, notices, or other actions that have been
obtained and that are still in force and effect and except for (i) filings and
recordings with respect to the Collateral to be made, or otherwise delivered to
Agent for filing or recordation, as of the Closing Date and, with respect to
performance, thereafter, and (ii) those registrations, consents, approvals,
notices, or other actions as to which the failure to obtain could not reasonably
be expected to result in a Material Adverse Effect.

 

4.04.       Binding Obligations; Perfected Liens.

 

(a)           Each Loan Document has been duly executed and delivered by each
Loan Party that is a party thereto and is the legally valid and binding
obligation of such Loan Party, enforceable against such Loan Party in accordance
with its respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors’ rights generally and by general
principles of equity whether applied by a court of law or a court of equity.

 

(b)           Collateral Agent’s Liens are validly created.  Each Loan Party has
authorized the filing of financing statements and the filing of the Copyright
Security Agreement, the Patent Security Agreement and the Trademark Security
Agreement.  When such financing statements and the Copyright Security Agreement,
the Patent Security Agreement and the Trademark Security Agreement are filed in
the appropriate filing offices, the Collateral Agent, on behalf of the Lenders,
will have a valid and perfected security interest in all Collateral that is
capable of being perfected by the filing of financing statements, the Copyright
Security Agreement, the Patent Security Agreement and the Trademark Security
Agreement.

 

4.05.       Title to Assets; No Encumbrances.  Each of the Loan Parties and its
Subsidiaries has (a) good, sufficient and legal title to (in the case of fee
interests in Real Property), (b) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (c) good and marketable
title to (in the case of all other personal property), all of their respective
assets reflected in their most recent financial statements delivered pursuant to
Section 5.01, in each case except for assets disposed of since the date of such
financial statements to the extent permitted hereby and except for those assets,
the failure of which to have such interests or title therein, could not
reasonably be expected to have a Material Adverse Effect.  All of such assets
are free and clear of Liens except for Permitted Liens.

 

4.06.       Litigation.

 

(a)           Except as set forth on Schedule 4.6(b), there are no actions,
suits, or proceedings pending or, to the knowledge of Borrower, threatened in
writing against a Loan Party or any of its Subsidiaries that either individually
or in the aggregate could reasonably be expected to result in a Material Adverse
Effect.

 

(b)           Schedule 4.6(b) sets forth a complete and accurate description,
with respect to each of the actions, suits, or proceedings with asserted
liabilities in excess of, or that could reasonably be expected to result in
liabilities in excess of, $150,000 that, as of the Closing Date, is pending or,
to the knowledge of Borrower threatened against a Loan Party or any of its
Subsidiaries, of (i) the parties to such actions, suits, or proceedings,
(ii) the nature of the dispute that is the subject of such actions, suits, or
proceedings, (iii) the procedural status, as of

 

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the Closing Date, with respect to such actions, suits, or proceedings, and
(iv) whether any liability of the Loan Parties’ and their Subsidiaries in
connection with such actions, suits, or proceedings is covered by insurance.

 

4.07.       Compliance with Laws.  No Loan Party nor any of its Subsidiaries
(a) is in violation of any applicable laws, rules, regulations, executive
orders, or codes (including Environmental Laws) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
or (b) is subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect.  To the
Borrower’s knowledge, neither the ESOP Fiduciary nor the ESOT Trustee has made
any assertion with respect to the ESOP or the ESOT contrary to or inconsistent
with the accuracy of any representation or warranty set forth herein that could
reasonably be expected to result in a Material Adverse Effect.

 

4.08.       No Material Adverse Effect.  All historical financial statements
relating to the Loan Parties and their Subsidiaries that have been delivered by
Borrower to Agent have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, for the lack of footnotes and being
subject to year-end audit adjustments) and present fairly in all material
respects, the Loan Parties’ and their Subsidiaries’ consolidated financial
condition as of the date thereof and results of operations for the period then
ended.  Since September 30, 2013, no event, circumstance, or change has occurred
that has or could reasonably be expected to result in a Material Adverse Effect
with respect to the Loan Parties and their Subsidiaries.

 

4.09.       Solvency.

 

(a)           Borrower is Solvent and Borrower and the Loan Parties, on a
consolidated basis, are Solvent.

 

(b)           No transfer of property is being made by any Loan Party and no
obligation is being incurred by any Loan Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of such
Loan Party.

 

4.10.       Employee Benefits.  Except as set forth on Schedule 4.10:

 

(a)           No Loan Party, none of its Subsidiaries, nor any of their
respective ERISA Affiliates maintains or contributes to any Benefit Plan.

 

(b)           Each Loan Party and each of the ERISA Affiliates has complied in
all material respects with ERISA, the IRC and all applicable laws regarding each
Employee Benefit Plan.

 

(c)           Each Employee Benefit Plan is, and has been, maintained in
substantial compliance with ERISA, the IRC, all applicable laws and the terms of
each such Employee Benefit Plan.

 

(d)           Each Employee Benefit Plan that is intended to qualify under
Section 401(a) of the IRC has received a favorable determination letter from the
Internal Revenue Service or an application for such letter is currently being
processed by the Internal Revenue Service.  To the knowledge of each Loan Party
and the ERISA Affiliates, nothing has occurred which would prevent, or cause the
loss of, such qualification.

 

(e)           No liability to the PBGC (other than for the payment of current
premiums which are not past due) by any Loan Party or ERISA Affiliate has been
incurred or is expected by any Loan Party or ERISA Affiliate to be incurred with
respect to any Pension Plan which could reasonably be expected to result in a
Material Adverse Effect.

 

(f)            No Notification Event has occurred or is reasonably expected to
occur that, when taken together with all other such Notification Events, could
reasonably be expected to result in a Material Adverse Effect or a material
liability of an ERISA Affiliate.

 

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(g)           No Loan Party or ERISA Affiliate sponsors, maintains, or
contributes to any Employee Benefit Plan, including, without limitation, any
such plan maintained to provide benefits to former employees of such entities
that may not be terminated by any Loan Party or ERISA Affiliate in its sole
discretion at any time without material liability other than contributions
accrued but not yet due.

 

(h)           No Loan Party or ERISA Affiliate has provided any security under
Section 436 of the IRC.

 

(i)            The present value of all benefit liabilities under each Pension
Plan (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87 or any successor thereto, including pursuant to the
Accounting Standards Codification) did not, as of the last annual valuation date
applicable thereto, exceed by more than $150,000 the fair market value of the
assets of such Pension Plan, and the present value of all benefit liabilities of
all underfunded Pension Plans (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the last
annual valuation dates applicable thereto, exceed by more than $150,000 the fair
market value of the assets of all such underfunded Pension Plans.

 

4.11.       Environmental Condition.  Except as set forth on Schedule 4.11,
(a) to Borrower’s knowledge, no Loan Party’s nor any of its Subsidiaries’
properties or assets has ever been used by a Loan Party, its Subsidiaries, or by
previous owners or operators in the disposal of, or to produce, store, handle,
treat, release, or transport, any Hazardous Materials, where such disposal,
production, storage, handling, treatment, release or transport was in violation,
in any material respect, of any applicable Environmental Law, (b) to Borrower’s
knowledge, no Loan Party’s nor any of its Subsidiaries’ properties or assets has
ever been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, (c) no Loan Party nor
any of its Subsidiaries has received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by a Loan Party or its Subsidiaries, and (d) no Loan Party nor any of
its Subsidiaries nor any of their respective facilities or operations is subject
to any outstanding written order, consent decree, or settlement agreement with
any Person relating to any Environmental Law or Environmental Liability that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.

 

4.12.       Complete Disclosure.  All factual information taken as a whole
(other than forward-looking information and projections and information of a
general economic nature and general information about Borrower’s industry)
furnished by or on behalf of a Loan Party or its Subsidiaries in writing to
Agent or any Lender (including all information contained in the Schedules hereto
or in the other Loan Documents) for purposes of or in connection with this
Agreement or the other Loan Documents, and all other such factual information
taken as a whole (other than forward-looking information and projections and
information of a general economic nature and general information about
Borrower’s industry) hereafter furnished by or on behalf of a Loan Party or its
Subsidiaries in writing to Agent or any Lender will be, true and accurate, in
all material respects, on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided.  The Projections delivered to Agent on April 15, 2014 represent, and
as of the date on which any other Projections are delivered to Agent, such
additional Projections represent, Borrower’s good faith estimate, on the date
such Projections are delivered, of the Loan Parties’ and their Subsidiaries’
future performance for the periods covered thereby based upon assumptions
believed by Borrower to be reasonable at the time of the delivery thereof to
Agent (it being understood that such Projections are subject to significant
uncertainties and contingencies, many of which are beyond the control of the
Loan Parties and their Subsidiaries, and no assurances can be given that such
Projections will be realized, and although reflecting Borrower’s good faith
estimate, projections or forecasts based on methods and assumptions which
Borrower believed to be reasonable at the time such Projections were prepared,
are not to be viewed as facts, and that actual results during the period or
periods covered by the Projections may differ materially from projected or
estimated results).

 

4.13.       Patriot Act and Foreign Corrupt Practices Act.  To the extent
applicable, each Loan Party is in compliance, in all material respects, with the
(a) Trading with the Enemy Act, as amended, and each of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) and any other enabling legislation or executive order
relating thereto, and (b) Uniting and Strengthening America

 

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by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
Patriot Act of 2001) (the “Patriot Act”).  No part of the proceeds of the loans
made hereunder will be used by any Loan Party or any of their Affiliates,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.  No Loan
Party and, to Borrower’s knowledge, none of any Loan Party’s employees,
officers, or agents has committed (or taken any action to promote or conceal)
any violation of the Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-1, -2.

 

4.14.       Indebtedness.  Set forth on Schedule 4.14 is a true and complete
list of all Indebtedness of each Loan Party and each of its Subsidiaries
outstanding immediately prior to the Closing Date that is to remain outstanding
immediately after giving effect to the closing hereunder on the Closing Date and
such Schedule accurately sets forth the aggregate principal amount of such
Indebtedness as of the Closing Date.

 

4.15.       Payment of Taxes.  Except as otherwise permitted under Section 5.05,
all tax returns and reports of each Loan Party and its Subsidiaries required to
be filed by any of them have been timely filed, and all taxes shown on such tax
returns to be due and payable and all assessments, fees and other governmental
charges upon a Loan Party and its Subsidiaries and upon their respective assets,
income, businesses and franchises that are due and payable have been paid when
due and payable.  Each Loan Party and each of its Subsidiaries have made
adequate provision in accordance with GAAP for all taxes not yet due and
payable.  Borrower knows of no proposed tax assessment against a Loan Party or
any of its Subsidiaries that is not being actively contested by such Loan Party
or such Subsidiary diligently, in good faith, and by appropriate proceedings;
provided such reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or provided therefor.

 

4.16.       Margin Stock.  No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock.  No part of
the proceeds of the loans made to Borrower 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 or for any purpose that violates the provisions of
Regulation T, U or X of the Board of Governors.

 

4.17.       Governmental Regulation.  No Loan Party nor any of its Subsidiaries
is subject to regulation under the Federal Power Act or the Investment Company
Act of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Bank Obligations unenforceable.  No Loan Party nor any of its
Subsidiaries is a “registered investment company” or a company “controlled” by a
“registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of
1940.

 

4.18.       OFAC.  No Loan Party nor any of its Subsidiaries is in violation of
any of the country or list based economic and trade sanctions administered and
enforced by OFAC.  No Loan Party nor any of its Subsidiaries (a) is a Sanctioned
Person or a Sanctioned Entity, (b) has its assets located in Sanctioned
Entities, or (c) derives revenues from investments in, or transactions with
Sanctioned Persons or Sanctioned Entities.  No proceeds of any loan made
hereunder will be used to fund any operations in, finance any investments or
activities in, or make any payments to, a Sanctioned Person or a Sanctioned
Entity.

 

4.19.       Employee and Labor Matters.  There is (i) no unfair labor practice
complaint pending or, to the knowledge of Borrower, threatened against Borrower
or its Subsidiaries before any Governmental Authority and no grievance or
arbitration proceeding pending or, to the knowledge of Borrower, threatened
against Borrower or its Subsidiaries which arises out of or under any collective
bargaining agreement and that could reasonably be expected to result in a
material liability, (ii) no strike, labor dispute, slowdown, stoppage or similar
action or grievance pending or, to the knowledge of Borrower, threatened in
writing against Borrower or its Subsidiaries that could reasonably be expected
to result in a material liability, or (iii) to the knowledge of Borrower, no
union representation question existing with respect to the employees of Borrower
or its Subsidiaries and no union organizing activity taking place with respect
to any of the employees of Borrower or its Subsidiaries.  None of

 

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Borrower or its Subsidiaries has incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state law, which
remains unpaid or unsatisfied.  The hours worked and payments made to employees
of Borrower or its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable legal requirements, except to the extent
such violations could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.  All material payments due from
Borrower or its Subsidiaries on account of wages and employee health and welfare
insurance and other benefits have been paid or accrued as a liability on the
books of Borrower, except where the failure to do so could not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

4.20.       Borrower’s Liabilities, Assets and Operations.  Borrower does not
have any material liabilities (other than liabilities arising under the Loan
Documents, the Senior Unsecured Notes Documents and the Senior Secured Notes
Documents, Permitted Indebtedness, the Refinancing Support Agreement,
liabilities for taxes and in connection with Employee Benefit Plans and
guarantees of Subsidiary obligations and fees payable in connection with
transactions contemplated by the Refinancing Support Agreement), own any
material assets (other than the Equity Interests of its Subsidiaries and other
minority interests, and its marketable securities portfolio) or engage in any
material operations or business (other than the ownership of its Subsidiaries
and provision of shared administration services).  Borrower’s liabilities
arising under the Loan Documents, the Senior Unsecured Notes Documents and the
Senior Secured Notes Documents have been and are being incurred, among other
things, for the benefit of those Subsidiaries that are Loan Parties.

 

4.21.       Leases.  Each Loan Party and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating, and, subject to Permitted
Protests, all of such material leases are valid and subsisting and no material
default by the applicable Loan Party or its Subsidiaries exists under any of
them.

 

4.22.       Eligible Accounts; Eligible Government Accounts.

 

(a)           As to each Account that is identified by Borrower as an Eligible
Account or Eligible Government Account in a Borrowing Base Certificate submitted
to Agent, such Account is (i) a bona fide existing payment obligation of the
applicable Account Debtor created by the sale and delivery of Inventory or the
rendition of services to such Account Debtor in the ordinary course of the
applicable Loan Party’s business, (ii) owed to such Loan Party without any known
defenses, disputes, offsets, counterclaims, or rights of return or cancellation,
and (iii) not excluded as ineligible by virtue of one or more of the excluding
criteria (other than any Agent-discretionary criteria) set forth in the
definition of Eligible Accounts or Eligible Government Accounts, as applicable.

 

(b)           Except as set forth on Schedule 4.22, no event has occurred and,
to the knowledge of Borrower, no condition exists that is reasonably likely to
result in the debarment of any Loan Party or suspension of any Loan Party (which
suspension has occurred and remains in place for a period in excess of 10
Business Days) from any contracting with a Governmental Authority, and no Loan
Party has been subject to any such debarment or a suspension from contracting
with a Governmental Authority prior to the date of this Agreement.  There is no
investigation by a Governmental Authority or inquiry pending or, to Borrower’s
knowledge, threatened against any Loan Party involving fraud, deception or
willful misconduct in connection with any Government Contract of any Loan Party
or any activities of any Loan Party that (i) is reasonably likely to result in
debarment or suspension of any Loan Party from any contracting with a
Governmental Authority and (ii) has had, or could reasonably be expected to
have, a Material Adverse Effect.

 

(c)           (i) Except as set forth on Schedule 4.22, no Loan Party has
received written notification of deficiency in performance on a Government
Contract due to cost schedule, technical or quality problems that have resulted
in one or more fault-based claims against such Loan Party (or a successor in
interest) by any Governmental Authority in excess of $500,000; and (ii) except
awarded Government Contracts being protested or otherwise challenged by a third
party in writing, all current Government Contracts have been legally awarded,
are binding on the applicable Loan Party, and to Borrower’s knowledge, are
binding on the other parties thereto and are in full force and effect.

 

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(d)           Except as set forth on Schedule 4.22, and except where such event
could not reasonably be expected to have a Material Adverse Effect (i) each Loan
Party has complied in all material respects with all statutory and regulatory
requirements, including the Service Contract Act, the Contract Disputes Act, the
Procurement Integrity Act, the Federal Procurement and Administrative Services
Act, the Federal Acquisition Regulations (“FAR”) and related cost principles and
the cost accounting standards, where and as relevant and applicable to each of
the Government Contracts; (ii) to Borrower’s knowledge, no termination for
default, cure notice or show cause notice has been issued and remains unresolved
with respect to any Government Contract; and to the Borrower’s knowledge, no
event, condition or omission has occurred or exists that would constitute
grounds for such action; and (iii) other than retainage of a portion of the
money due under any Government Contract in the ordinary course, no money due to
any Loan Party pertaining to any Government Contract has been withheld or
set-off as a result of any claim(s) made against any Loan Party involving
amounts in excess of $500,000 individually or in the aggregate.

 

(e)           No Loan Party is a party to any litigation that could reasonably
be expected to give rise to (i) liability under the False Claims Act or (ii) a
claim for price adjustment under the Truth in Negotiations Act that would have a
Material Adverse Effect on any Eligible Government Account.

 

(f)            Except where such event did have a Material Adverse Effect, no
Government Contract to which any Loan Party has been a party has been terminated
by a Governmental Authority for default in the past two years.

 

(g)           [Intentionally Omitted].

 

(h)           Except as set forth on Schedule 4.22, and except where such event
could not reasonably be expected to have a Material Adverse Effect (i) no Loan
Party has undergone, and no Loan Party is undergoing, any audit, inspection,
survey or examination of records by any Governmental Authority relating to any
Government Contract with respect to which Borrower has been advised that fraud,
deception, dishonesty, willful misconduct or criminal activity has been alleged,
(ii) no Loan Party has received written notice of, and no Loan Party has
undergone, any investigation relating to any Government Contract that has
resulted in a finding of fraud, deception, dishonesty, willful misconduct,
criminal activity, and (iii) no Loan Party has received any official written
notice that it is or was being specifically investigated by any state or federal
agency Inspector General or the Department of Justice (including any United
States Attorney) with respect to any Government Contract.

 

(i)            Each Loan Party maintains systems of internal controls (including
cost accounting systems, estimating systems, purchasing systems, proposal
systems, billing systems and material management systems), where required, that
are in compliance in all material respects with all requirements of all of the
Government Contracts and of applicable government laws and regulations.

 

(j)            [Intentionally Omitted].

 

(k)           All reasonable documentation reasonably requested by Agent for
compliance with the Assignment of Claims Act has been executed and delivered by
Borrower to Collateral Agent in connection with each Government Account.

 

(l)            To the extent required, each Loan Party required to be registered
in the System for Award Management pursuant to applicable federal statutory
provisions is so registered.

 

(m)          To the extent applicable, each Loan Party has applied for and/or
obtained a SAFETY Act certification or designation with respect to any products
or services provided by such Loan Party that could be reasonably expected to
thwart or be used to carry out an act of terrorism.

 

4.23.       [Intentionally Omitted].

 

4.24.       Inventory.  No Loan Party owns, holds, maintains or has an interest
in any Inventory.

 

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4.25.       [Intentionally Omitted].

 

4.26.       [Intentionally Omitted].

 

4.27.       Other Documents.

 

(a)           Borrower has delivered to Agent a complete and correct copy of the
Senior Unsecured Notes Documents and the Senior Secured Notes Documents,
including all schedules and exhibits thereto.  The execution, delivery and
performance of each of the Senior Unsecured Notes Documents and Senior Secured
Notes Documents have been duly authorized by all necessary action on the part of
Borrower.  Each Senior Unsecured Notes Document and Senior Secured Notes
Document is the legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, in each case, except (i) as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting generally the enforcement of
creditors’ rights and (ii) the availability of the remedy of specific
performance or injunctive or other equitable relief is subject to the discretion
of the court before which any proceeding therefor may be brought.  Borrower is
not in default in the performance or compliance with any provisions thereof.

 

(b)           As of the Closing Date, the offering and sale of the Senior
Unsecured Notes and Senior Secured Notes have been consummated in all material
respects, in accordance with all applicable laws.  As of the Closing Date, all
requisite approvals by Governmental Authorities having jurisdiction over
Borrower with respect to the offering and sale of the Senior Unsecured Notes and
the Senior Secured Notes, have been obtained, except for any approval the
failure to obtain could not reasonably be expected to be material to the
interests of the Lenders.

 

(c)           There is no default or event of default occurring or continuing
under the Senior Unsecured Notes Documents and the Senior Secured Notes
Documents.

 

4.28.       Hedge Agreements.  On each date that any Hedge Agreement is executed
by any Hedge Provider, Borrower and each other Loan Party is an eligible
contract participant under the Commodity Exchange Act (7 U.S.C. § 1, et seq., as
in effect from time to time) and the Commodity Futures Trading Commission
regulations.

 

4.29.       ESOP.

 

(a)           As of the Closing Date and, to the Borrower’s knowledge at all
times thereafter, the ESOT has been duly organized and is a validly existing
trust.  Except as set forth on Schedule 4.29, each of the ESOP Plan Documents is
in full force and effect and no term or condition thereof has been amended,
modified or waived from the terms and conditions contained in the ESOP Plan
Documents delivered to Agent without the consent of the Agent (which consent
shall not be unreasonably withheld), except to the extent such amendment,
modification or waiver could not reasonably be anticipated to have a material
adverse effect upon the Agent or any of the Lenders or otherwise have a Material
Adverse Effect.  As of the Closing Date and, to the Borrower’s knowledge at all
times thereafter, the ESOT has performed and complied with all the material
terms, provisions, agreements and conditions set forth therein and required to
be performed or complied with by the ESOT, and no unmatured default, default or
breach of any covenant by any such party exists thereunder.

 

(b)           As of the Closing Date and, to the Borrower’s knowledge at all
times thereafter, the execution, delivery and performance of each of the ESOP
Plan Documents to which the ESOT is a party do not (i) conflict with the ESOP
Plan Documents, (ii) conflict with any requirement of law, or (iii) other than
with respect to ordinary course ESOP operations, require a registration with,
consent or approval of, or notices to, or other action to, with or by any
Governmental Authority.

 

(c)           As of the Closing Date and, to the Borrower’s knowledge, at all
times thereafter, none of the assets of the Borrower constitute, for any purpose
of ERISA or Section 4975 of the IRC, assets of the ESOP or any other “plan” as
defined in Section 3(3) of ERISA or Section 4975 of the IRC.

 

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(d)           As of the Closing Date and, to the Borrower’s knowledge, at all
times thereafter, no non-exempt prohibited transaction described in Section 406
of ERISA or Section 4975 of the IRC has occurred with respect to the ESOP, and
no Loan hereunder constitutes or shall constitute or give rise to any such
non-exempt prohibited transaction.

 

(e)           The ESOP is qualified under Section 401(a) of the IRC, and the
ESOP includes two components, one of which is a stock bonus plan that
constitutes an employee stock ownership plan as defined in Section 4975(e)(7) of
the IRC, and the other is a profit sharing plan that includes a cash or deferred
arrangement under Section 401(k) of the IRC.

 

(f)            Borrower has provided Agent with a complete and true copy of each
of the ESOP Plan Documents pursuant to which the ESOP and the ESOT are
maintained by Borrower, or which concern Borrower’s obligations with respect to
the ESOP and ESOT, and Borrower has not subsequently amended or in any other way
modified or replaced such ESOP Plan Documents in any material respect without
the prior written consent of Agent, except for any amendment, modification or
replacement required by the Internal Revenue Service or by applicable law (and
Borrower shall use its best efforts to deliver a copy of any such amendment,
modification or replacement to Agent prior to the execution thereof).

 

(g)           To Borrower’s knowledge, no Loan hereunder is (for any purpose of
Section 406 of ERISA or Section 4975 of the IRC) a direct or indirect loan or
other transaction between Agent or any of the Lenders and the ESOT which, if it
is assumed that Agent and the Lenders are “parties in interest” and
“disqualified persons” (as defined in Section 3(14) of ERISA and Section 4975 of
the IRC, respectively), is a non-exempt prohibited transaction described in
Section 406 of ERISA or Section 4975 of the IRC.

 

(h)           Neither the Borrower nor any of its Subsidiaries is or shall be
subject to the tax imposed by Section 4978 of the IRC with respect to any
“disposition” by the ESOT of any shares of Equity Interests of the Borrower.

 

(i)            To Borrower’s knowledge, there is no investigation or review by
any Governmental Agency, or action, suit, proceeding or arbitration, pending or
concluded, concerning any matter with respect to the ESOP or the ESOT relevant
as to whether any representation set forth herein was, or has or will at any
time become, inaccurate or breached or, if it were to be made at any time prior
to the satisfaction of all Obligations, would be inaccurate when made (other
than in respect of (i) periodic requests to the Internal Revenue Service to
issue a favorable determination letter to the effect that the ESOP is and
continues to be a qualified plan and an employee stock ownership plan,
(ii) Annual Reports (Internal Revenue Service Form 5500 Series) for the ESOP and
(iii) routine claims for ESOP benefits), and neither the ESOP Fiduciary nor, to
the Borrower’s knowledge, the ESOT Trustee has made any assertion with respect
to the ESOP or the ESOT contrary to or inconsistent with the accuracy of any
such representation which assertion could reasonably be expected to have a
Material Adverse Effect.

 

5.             AFFIRMATIVE COVENANTS.

 

Borrower covenants and agrees that, until termination of the Credit Facility and
payment in full of the Bank Obligations:

 

5.01.       Financial Statements, Reports, Certificates.  Borrower (a) will
deliver to Agent, with copies to each Lender, each of the financial statements,
reports, and other items set forth on Schedule 5.1 no later than the times
specified therein, (b) agrees that no Subsidiary of a Loan Party will have a
fiscal year different from that of Borrower, (c) agrees to maintain a system of
accounting that enables Borrower to produce financial statements in accordance
with GAAP, and (d) agrees that it will, and will cause each other Loan Party to,
(i) keep a reporting system that shows all additions, sales, claims, returns,
and allowances with respect to its and its Subsidiaries’ sales, and
(ii) maintain its billing systems and practices substantially as in effect as of
the Closing Date and shall only make material modifications thereto with notice
to, and with the consent of, Agent.

 

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5.02.       Reporting.  Borrower (a) will deliver to Agent (and if so requested
by Agent, with copies for each Lender) each of the reports set forth on
Schedule 5.2 at the times specified therein, and (b) agrees to use commercially
reasonable efforts in cooperation with Agent to facilitate and implement a
system of electronic collateral reporting in order to provide electronic
reporting of each of the items set forth on such Schedule.  In connection with
this Agreement, Borrower has delivered to Agent a completed certificate signed
by the Loan Parties, entitled “Perfection Certificate”.  All information set
forth on the Perfection Certificate pertaining to Borrower and each of its
Subsidiaries is accurate and complete (it being understood and agreed that
Borrower may from time to time update certain information in the Perfection
Certificate after the Closing Date to the extent permitted by one or more
specific provisions in this Agreement).

 

5.03.       Existence.  Except as otherwise permitted under Section 6.03 or
Section 6.04, Borrower will, and will cause each of its Subsidiaries to, at all
times preserve and keep in full force and effect such Person’s valid existence
and good standing in its jurisdiction of organization and, except as could not
reasonably be expected to result in a Material Adverse Effect, good standing
with respect to all other jurisdictions in which it is qualified to do business
and any rights, franchises, permits, licenses, accreditations, authorizations,
or other approvals the failure so to preserve and keep in full force and effect
could reasonably be expected to result in a Material Adverse Effect.

 

5.04.       Maintenance of Properties.  Borrower will, and will cause each of
its Subsidiaries to, maintain and preserve all of its assets that are necessary
or useful in the proper conduct of its business in good working order and
condition, ordinary wear, tear, casualty, and condemnation and Permitted
Dispositions excepted.

 

5.05.       Taxes.  Borrower will, and will cause each of its Subsidiaries to,
pay in full before delinquency or before the expiration of any extension period
all material governmental assessments and taxes imposed, levied, or assessed
against it, or any of its assets or in respect of any of its income, businesses,
or franchises, except to the extent that the validity of such governmental
assessment or tax is the subject of a Permitted Protest.

 

5.06.       Insurance.  Borrower will, at Borrower’s expense, maintain insurance
respecting each of Borrower’s and its Subsidiaries’ assets wherever located,
covering liabilities, losses or damages as are customarily are insured against
by other Persons engaged in same or similar businesses and similarly situated
and located.  All such policies of insurance shall be with financially sound and
reputable insurance companies acceptable to Agent (it being agreed that, as of
the Closing Date, Zurich American Insurance and American Guarantee and Liability
Insurance Company are acceptable to Agent) and in such amounts as is carried
generally in accordance with sound business practice by companies in similar
businesses similarly situated and located and, in any event, in amount,
adequacy, and scope reasonably satisfactory to Agent (it being agreed that the
amount, adequacy, and scope of the policies of insurance of Borrower in effect
as of the Closing Date are acceptable to Agent).  All property insurance
policies covering the Collateral are to be made payable to Agent for the benefit
of Agent and the Lenders, as their interests may appear, in case of loss,
pursuant to a standard loss payable endorsement with a standard non contributory
“lender” or “secured party” clause and are to contain such other provisions as
Agent may reasonably require to fully protect the Lenders’ interest in the
Collateral and to any payments to be made under such policies.  All certificates
of property and general liability insurance are to be delivered to Agent, with
the loss payable (but only in respect of Collateral) and additional insured
endorsements in favor of Agent and shall provide for not less than 30 days (10
days in the case of non-payment) prior written notice to Agent of the exercise
of any right of cancellation.  If Borrower fails to maintain such insurance,
Agent may arrange for such insurance, but at Borrower’s expense and without any
responsibility on Agent’s part for obtaining the insurance, the solvency of the
insurance companies, the adequacy of the coverage, or the collection of claims. 
Borrower shall give Agent prompt notice of any loss exceeding $500,000 covered
by its casualty or business interruption insurance.  Upon the occurrence and
during the continuance of an Event of Default, Agent shall have the sole right
to file claims under any property and general liability insurance policies in
respect of the Collateral, to receive, receipt and give acquittance for any
payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.

 

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5.07.       Inspection.

 

(a)           Borrower will, and will cause each of its Subsidiaries to, permit
Agent, and its duly authorized representatives or agents, to visit any of its
properties and inspect any of its assets or books and records, to examine and
make copies of its books and records, and to discuss its affairs, finances, and
accounts with, and to be advised as to the same by, its officers and employees
(provided an authorized representative of Borrower shall be allowed to be
present) at such reasonable times and intervals as Agent may designate and, so
long as no Default or Event of Default has occurred and is continuing, with
reasonable prior notice to Borrower and during regular business hours.

 

(b)           [Intentionally Omitted].

 

5.08.       Compliance with Laws.

 

(a)           Borrower will, and will cause each of its Subsidiaries to, comply
with the requirements of all applicable laws, rules, regulations, and orders of
any Governmental Authority, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

 

(b)           Without limiting the generality of Section 5.08(a), Borrower will,
upon Agent’s reasonable request, (i) with respect to Government Accounts, comply
in all respects, to the reasonable satisfaction of Agent and Collateral Agent,
with the Assignment of Claims Act, and (ii) execute and deliver to Collateral
Agent all documentation reasonably requested by Agent and Collateral Agent for
compliance with the Assignment of Claims Act in connection with each Government
Account.

 

5.09.       Environmental.  Borrower will, and will cause each of its
Subsidiaries to,

 

(a)           Keep any property either owned or operated by Borrower or its
Subsidiaries free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens,

 

(b)           Comply, in all material respects, with Environmental Laws and
provide to Agent documentation of such compliance which Agent reasonably
requests,

 

(c)           Promptly notify Agent of any release of which Borrower has
knowledge of a Hazardous Material in any reportable quantity from or onto
property owned or operated by Borrower or its Subsidiaries and take any Remedial
Actions required to abate said release or otherwise to come into compliance, in
all material respects, with applicable Environmental Law, and

 

(d)           Promptly, but in any event within 5 Business Days of its receipt
thereof, provide Agent with written notice of any of the following:  (i) notice
that an Environmental Lien has been filed against any of the real or personal
property of Borrower or its Subsidiaries, (ii) commencement of any Environmental
Action or written notice that an Environmental Action will be filed against
Borrower or its Subsidiaries, and (iii) written notice of a violation, citation,
or other administrative order from a Governmental Authority.

 

5.10.       Disclosure Updates.  Borrower will, promptly and in no event later
than 5 Business Days after obtaining knowledge thereof, notify Agent if any
written information, exhibit, or report furnished to Agent or the Lenders
contained, at the time it was furnished, any untrue statement of a material fact
or omitted to state any material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made.  The
foregoing to the contrary notwithstanding, any notification pursuant to the
foregoing provision will not cure or remedy the effect of the prior untrue
statement of a material fact or omission of any material fact nor shall any such
notification have the effect of amending or modifying this Agreement or any of
the Schedules hereto.

 

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5.11.       Formation of Subsidiaries.  Borrower will, at the time that any Loan
Party forms any direct or indirect Subsidiary or acquires any direct or indirect
Subsidiary after the Closing Date, within 10 days of such formation or
acquisition (or such later date as permitted by Agent in its sole discretion)
(a) cause such new Subsidiary to provide to Agent a joinder to each of the
Guaranty Agreement and the Security Agreement, together with such other security
agreements, as well as appropriate financing statements (and with respect to all
property subject to a mortgage, fixture filings), all in form and substance
reasonably satisfactory to Agent (including being sufficient to grant Collateral
Agent a first priority Lien (subject to Permitted Liens) in and to the assets of
such newly formed or acquired Subsidiary); provided, that the joinder to the
Guaranty and Security Agreement, and such other security agreements shall not be
required to be provided to Agent with respect to any Subsidiary of any Borrower
that is a Foreign Subsidiary if providing such agreements would result in
adverse tax consequences or the costs to the Loan Parties of providing such
guaranty or such security agreements are unreasonably excessive (as reasonably
determined by Agent in consultation with Borrower) in relation to the benefits
to Agent and the Lenders of the security or guarantee afforded thereby,
(b) provide, or cause the applicable Loan Party to provide, to Agent a pledge
agreement (or an addendum to the Security Agreement) and appropriate
certificates and powers or financing statements, pledging all of the direct or
beneficial ownership interest in such new Subsidiary that is a Foreign
Subsidiary in form and substance reasonably satisfactory to Agent; provided,
that only 65% of the total outstanding voting Equity Interests of any first tier
Subsidiary of Borrower that is a Foreign Subsidiary (and none of the Equity
Interests of any Subsidiary of such Foreign Subsidiary) shall be required to be
pledged if pledging a greater amount would result in adverse tax consequences or
the costs to the Loan Parties of providing such pledge are unreasonably
excessive (as reasonably determined by Agent in consultation with Borrower) in
relation to the benefits to Agent and the Lenders of the security afforded
thereby (which pledge, if reasonably requested by Agent, shall be governed by
the laws of the jurisdiction of such Subsidiary), and (c) provide to Agent all
other documentation, including one or more opinions of counsel reasonably
satisfactory to Agent, which, in its opinion, is appropriate with respect to the
execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all Real Property owned in fee and subject to a mortgage).  Any document,
agreement, or instrument executed or issued pursuant to this Section 5.11 shall
constitute a Loan Document.

 

5.12.       Further Assurances.  Borrower will, and will cause each of the other
Loan Parties to, at any time upon the reasonable request of Agent or the
Collateral Agent, execute or deliver to Agent or the Collateral Agent, as
applicable, any and all financing statements, fixture filings, security
agreements, pledges, assignments, mortgages, deeds of trust, opinions of
counsel, and all other documents (the “Additional Documents”) that Agent or
Collateral Agent may reasonably request in form and substance reasonably
satisfactory to Agent or Collateral Agent, as applicable, to create, perfect,
and continue perfected Collateral Agent’s Liens in all of the assets of Borrower
and its Subsidiaries that constitute Collateral (whether now owned or hereafter
arising or acquired, tangible or intangible, real or personal), and in order to
fully consummate all of the transactions contemplated hereby and under the other
Loan Documents; provided that the foregoing shall not apply to any Subsidiary of
Borrower that is a Foreign Subsidiary if providing such documents would result
in adverse tax consequences or the costs to the Loan Parties of providing such
documents are unreasonably excessive (as reasonably determined by Agent in
consultation with Borrower) in relation to the benefits to Agent and the Lenders
of the security afforded thereby.  To the maximum extent permitted by applicable
law, if Borrower or any other Loan Party refuses or fails to execute or deliver
any reasonably requested Additional Documents within a reasonable period of time
following the request to do so, Borrower and each other Loan Party hereby
authorizes Agent and/or Collateral Agent to execute any such Additional
Documents in the applicable Loan Party’s name (for the avoidance of doubt, not
including opinions of counsel) and authorizes Agent or Collateral Agent to file
such executed Additional Documents in any appropriate filing office.  In
furtherance of, and not in limitation of, the foregoing, each Loan Party shall
take such actions as Agent or Collateral Agent may reasonably request from time
to time to ensure that the Bank Obligations are guaranteed by the Guarantors and
are secured by substantially all of the assets of Borrower and its Subsidiaries,
including all of the outstanding capital Equity Interests of Borrower’s
Subsidiaries (subject to exceptions and limitations contained in the Loan
Documents with respect to Foreign Subsidiaries) excluding Insignificant
Subsidiaries.  In addition, from time to time, Borrower will, at its cost and
expense, promptly secure the Obligations by pledging or creating, or causing to
be pledged or created, perfected security interests with respect to such of its
assets and properties as the Agent, the Collateral Agent or the Required Lenders
shall designate (it being understood that it is the intent of the parties that
the Obligations shall be secured by substantially all the assets of the Borrower
and the Guarantors (including real and other properties acquired

 

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subsequent to the Closing Date)).  Such security interests and Liens will be
created under the Security Documents and other security agreements, mortgages,
deeds of trust and other instruments and documents in form and substance
satisfactory to the Agent or the Collateral Agent, and Borrower shall deliver or
cause to be delivered to the Lenders all such instruments and documents
(including legal opinions, title insurance policies and lien searches) as the
Agent or the Collateral Agent shall reasonably request to evidence compliance
with this Section.  Borrower agrees to provide such evidence as the Collateral
Agent shall reasonably request as to the perfection and priority status of each
such security interest and Lien.  In furtherance of the foregoing, Borrower will
give prompt notice to the Agent of the acquisition by it or any Subsidiary of
any real property (or any interest in real property) having a value in excess of
$5,000,000.

 

5.13.       Lender Meetings.  If there are two or more Lenders hereunder,
Borrower will, within 90 days after the close of each fiscal year of Borrower,
at the request of Agent or of the Required Lenders and upon reasonable prior
notice, hold a meeting (at a mutually agreeable location and time or, at the
option of Agent, by conference call) with all Lenders who choose to attend such
meeting at which meeting shall be reviewed the financial results of the previous
fiscal year and the financial condition of Borrower and its Subsidiaries and the
projections presented for the current fiscal year of Borrower.

 

5.14.       [Intentionally Omitted].

 

5.15.       Bank Products.  On or before the Closing Date, Borrower will, and
will cause each of the other Loan Parties to, establish their primary depository
and treasury management relationships with Wells Fargo or one or more of its
Affiliates and will maintain such depository and treasury management
relationships at all times during the term of the Agreement.

 

5.16.       Designated Accounts; Lockbox; Required Blockage/Collections Period;
Controlled Investments.

 

(a)           Borrower will, and will cause each of the other Loan Parties to,
(A) maintain, at their expense, the Designated Account and Lockbox (as
hereinafter defined), and shall take reasonable steps to ensure that all of its
and its Subsidiaries’ Account Debtors continue to forward payment (whether by
cash, check, electronic or wire transfer, or other manner) of the amounts owed
by them directly to either (i) a lockbox established with Agent (a “Lockbox”),
if such payment is in the form of a check, cash, or other form of payment that
is not in the form of an electronic or wire transfer, or (ii) electronic or wire
transfer payments to Designated Account, and (B) instruct all Account Debtors to
continue to pay all Accounts (including those sent directly by their Account
Debtors to a Loan Party) directly into such Lockbox or Designated Account, as
applicable.  If, notwithstanding such instructions, Borrower receives any
payments on Accounts, Borrower shall deposit such payments into the Designated
Account not later than one (1) Business Day after its receipt of such payment. 
Borrower shall also deposit all other cash proceeds of Collateral regardless of
source or nature directly into the Designated Account.  Until so deposited,
Borrower shall hold all such payments and cash proceeds in trust for and as the
property of the Agent and the Lenders and shall not commingle such property with
any of its other funds or property.  All deposits in the Lockbox and Designated
Account, as applicable, shall constitute proceeds of Collateral and shall not
constitute payment of the Bank Obligations.  All items deposited in the Lockbox
and Designated Account, as applicable, shall be subject to final payment. 
Subject to the terms and conditions set forth in this Section 5.16, if any such
item is returned uncollected, Borrower will immediately pay the Agent, the
amount of that item, or Agent at its discretion may charge any uncollected item
to Borrower’s commercial account or other account.  Borrower shall be liable as
an endorser on all items deposited in the Lockbox or Designated Account, as
applicable, whether or not in fact endorsed by Borrower.

 

(b)           Borrower will, and will cause each of the other Loan Parties to,
establish and maintain a Blocked Account Agreement with Collateral Agent (on
behalf of Agent and Lenders) and the applicable Blocked Account Bank with
respect to the Lockbox and Designated Account, in form and substance reasonably
acceptable to Agent.  Such Blocked Account Agreement shall provide, among other
things, that during any Required Blockage/Collections Period, (A) the Blocked
Account Bank will comply with any instructions originated by Collateral Agent
(on behalf of Agent and Lenders) directing the disposition of the funds in the
Lockbox and/or

 

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Designated Account, as applicable, without further consent by the applicable
Loan Party, and (B) the Blocked Account Bank waives, subordinates, or agrees not
to exercise any rights of setoff or recoupment or any other claim against the
Lockbox or Designated Account other than for payment of its service fees and
other charges directly related to the administration of the Lockbox or
Designated Account and for returned checks or other items of payment.  During
any Required Blockage/Collections Period, Borrower agrees that if Agent elects
(i) Collateral Agent shall have the right, on behalf of Agent and Lenders, to
exercise full control over the Lockbox and Designated Account pursuant to the
terms of the Blocked Account Agreement, and (ii) all payments and other
Collections made to the Lockbox and/or Designated Account or other funds
received and collected by the Collateral Agent (on behalf of Agent and Lenders),
Agent or any Lender, whether in respect of Borrower’s Accounts, as proceeds of
Inventory or other Collateral or otherwise shall be treated as payments to the
Agent and the Lenders in respect of the Bank Obligations and therefore shall
constitute the property of the Agent and the Lenders to the extent of the then
outstanding Bank Obligations.  At all other times, Borrower and the other Loan
Parties shall have full control and dominion over the collected funds in the
Lockbox and Designated Account.  In addition to such payments and other
Collections applied in respect of the Bank Obligations during any Required
Blockage/Collections Period, Borrower shall have the right to repay Loans in
whole or in part from time to time as described in Section 2.04.  For purposes
of calculating the amount of the Loans available to Borrower, all payments and
other Collections will be applied (conditional upon final collection) to the
Bank Obligations at the expiration of the Collection Day Period.

 

(c)           Borrower and its employees and agents shall, and Borrower shall
cause the other Loan Parties and their respective employees and agents to,
acting as trustee for the Agent, receive, as the property of the Agent, any
monies, checks, notes, drafts or any other payment or Collection relating to
and/or proceeds of Accounts or other Collateral which come into their possession
or under their control and immediately upon receipt thereof, shall deposit or
cause the same to be deposited in the Designated Account, or remit the same or
cause the same to be remitted, in kind, to the Agent.  Borrower agrees to
reimburse the Agent on demand for any amounts owed or paid to any bank or other
financial institution at which the Lockbox or Designated Account is established
or any other bank, financial institution or other person involved in the
transfer of funds to or from the Lockbox or Designated Account arising out of
the Agent’s payments to or indemnification of such bank, financial institution
or other person.  In the event that the Borrower fails to comply with the
provisions of this Section 5.16, in addition to all other remedies of Agent
hereunder, Borrower shall pay a misdirection fee equal to 2.5% of the amount of
the funds which Borrower or any other Loan Party deposits in any bank account
other than bank accounts as directed by Agent under this Agreement or in the
Lockbox or Designated Account, or are otherwise not remitted to Agent as
required herein.  Nothing provided herein shall in any manner authorize the
Borrower to misdirect funds as prohibited by the Agreement.  The obligations of
Borrower to reimburse the Agent for such amounts pursuant to this Section 5.16
shall survive the termination of this Agreement.

 

(d)           [Intentionally Omitted].

 

(e)           Other than (i) an aggregate outstanding amount of not more than
$500,000 at any one time, in the case of Borrower and any Loan Party, and
(ii) amounts deposited into Deposit Accounts specially and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
any Loan Party’s or its Subsidiaries’ employees, Borrower will not, and Borrower
will not permit any Loan Party to, make, acquire, or permit to exist Permitted
Investments consisting of cash, Cash Equivalents, or amounts credited to Deposit
Accounts or Securities Accounts unless Borrower or its Subsidiary, as
applicable, and the applicable bank or securities intermediary have entered into
Control Agreements with Collateral Agent (on behalf of Agent and Lenders)
governing such Permitted Investments in order to perfect (and further establish)
Collateral Agent’s Liens in such Permitted Investments.

 

5.17.       Compliance with ERISA and the IRC; Notices.

 

(a)           In addition to and without limiting the generality of
Section 5.08, Borrower shall (i) comply in all material respects with applicable
provisions of ERISA and the IRC with respect to all Employee Benefit Plans,
(ii) without the prior written consent of Agent and the Required Lenders, not
take any action or fail to take action the result of which could result in a
Loan Party or ERISA Affiliate incurring a material liability to the

 

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PBGC or to a Multiemployer Plan (other than  to pay contributions or premiums
payable in the ordinary course), (iii) allow any facts or circumstances to exist
with respect to one or more Employee Benefit Plans that, in the aggregate,
reasonably could be expected to result in a Material Adverse Effect, (iv) not
participate in any prohibited transaction that could result in other than a de
minimis civil penalty  excise tax, fiduciary liability or correction obligation
under ERISA or the IRC, (b) operate each Employee Benefit Plan in such a manner
that will not incur any material tax liability under the IRC (including
Section 4980B of the IRC), and (v) furnish to Agent upon Agent’s written request
such additional information about any Employee Benefit Plan for which any Loan
Party or ERISA Affiliate could reasonably expect to incur any material
liability.  With respect to each Pension Plan (other than a Multiemployer Plan)
except as could not reasonably be expected to result in liability to the Loan
Parties, the Loan Parties and the ERISA Affiliates shall (i) satisfy in full and
in a timely manner, without incurring any late payment or underpayment charge or
penalty and without giving rise to any Lien, all of the contribution and funding
requirements of the IRC and of ERISA, and (ii) pay, or cause to be paid, to the
PBGC in a timely manner, without incurring any late payment or underpayment
charge or penalty, all premiums required pursuant to ERISA.

 

(b)           Furnish to Agent, and each Lender prompt written notice of the
following:

 

(i)            the occurrence of any Notification Event that, alone or together
with any other Notification Events that have occurred, could reasonably be
expected to result in liability of Borrower and its Subsidiaries in an aggregate
amount exceeding $150,000, together with a statement of a Financial Officer of
Borrower setting forth the details of such Notification Event and the corrective
action, if any, taken or proposed to be taken with respect thereto;

 

(ii)           the occurrence of a material non-exempt prohibited transaction
(defined in Section 406 of ERISA and Section 4975 of the IRC) with respect to
the ESOP or to any other Pension Plan, or knowledge that the Internal Revenue
Service or any other Governmental Authority is investigating whether any such
material non-exempt prohibited transaction might have occurred, and a statement
of Borrower describing such transaction and the corrective action, if any, taken
or proposed to be taken with respect thereto;

 

(iii)          the receipt of written notice (whether preliminary, final or
otherwise but excluding any notice of any proposed amendments) of any
unfavorable determination letter from the Internal Revenue Code regarding the
qualification of a Pension Plan under Section 401(a) of the IRC or the status of
the ESOP as an employee stock ownership plan (as defined in
Section 4975(e)(7) of the IRC), together with copies of each such letter;

 

(iv)          the receipt by Borrower or any of its Subsidiaries of notice of
any audit, investigation, litigation or inquiry by the Internal Revenue Service
or any other Governmental Authority relating to the ESOP or the ESOT, which
could reasonably be expected to subject Borrower or any of its Subsidiaries to
liability, individually or in the aggregate, in excess of $150,000, together
with copies of each such notice and copies of all subsequent correspondence
relating thereto; and

 

(v)           the occurrence of any amendment to any of the ESOP Plan Documents.

 

For purposes of this Section 5.17, Borrower and its Subsidiaries shall be deemed
to know all facts known by the administrator of any Pension Plan of which
Borrower or any Subsidiary is the plan sponsor.

 

5.18.       Notice of Certain Events With Respect To Government Contracts. 
Borrower shall, promptly (but in no event more than three (3) days after the
occurrence of each such event or matter) give written notice to Agent in
reasonable detail of any written notice of default received by a Loan Party
under any Government Contract or any event that, if not corrected, could
reasonably be expected to result in the receipt by any Loan Party of a written
notice of default under any Government Contract.  Borrower also shall promptly
(but in no event more than three (3) days after the occurrence of each such
event or matter) give written notice to Agent of (a) a termination for
convenience with respect to any Government Contract, and (b) any event described
in Section 4.22(d) or Section 8.14.

 

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5.19.       Control Agreements.

 

(a)           Except to the extent otherwise excused by Section 5.16, Borrower
will, and will cause each of the other Loan Parties to, obtain an authenticated
Control Agreement (which may include a Blocked Account Agreement), from each
bank maintaining a Deposit Account or Securities Account for such Loan Party;

 

(b)           Except to the extent otherwise excused by Section 5.16, Borrower
will, and will cause each of the other Loan Parties to, obtain an authenticated
Control Agreement, from each issuer of uncertificated securities, securities
intermediary, or commodities intermediary issuing or holding any financial
assets or commodities to or for any Loan Party, or maintaining a Securities
Account for such Loan Party; and

 

(c)           Except to the extent otherwise excused by Section 5.16, Borrower
will, and will cause each of the other Loan Parties to, obtain an authenticated
Control Agreement with respect to all of such Loan Party’s investment property.

 

5.20.       Verification.  Agent may, from time to time, verify directly with
the respective Account Debtors the validity, amount and other matters relating
to the Accounts, either in the name of Borrower or the other Loan Parties or
Agent or such other name as Agent may choose, and notify any Account Debtor of
Agent’s and Collateral Agent’s security interest in such Account.

 

5.21.       Delivery of Terms for Proposed Permitted Bond Refinancing.  Borrower
shall deliver to Agent, as soon as possible, but in no event later than 2
Business Days after its receipt, true, correct and complete copies of any term
sheet, commitment or approval for the Permitted Bond Refinancing which Permitted
Bond Refinancing must be consummated on terms satisfactory in all respects to
Agent and each Lender in their sole and absolute discretion.

 

5.22.       Notice of Default or Event of Default.  Borrower shall furnish to
Agent and each Lender, prompt written notice of any Default or Event of Default,
specifying the nature and extent thereof and the corrective action, if any,
taken or proposed to be taken with respect thereto;

 

6.           NEGATIVE COVENANTS.

 

Borrower covenants and agrees that, until termination of the Credit Facility and
payment in full of the Bank Obligations:

 

6.01.       Indebtedness.  Borrower will not, and will not permit any of its
Subsidiaries to create, incur, assume, suffer to exist, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except for Permitted Indebtedness.

 

6.02.       Liens.  Borrower will not, and will not permit any of its
Subsidiaries to create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens.

 

6.03.       Restrictions on Fundamental Changes.  Borrower will not, and will
not permit any of its Subsidiaries to:

 

(a)          Other than in order to consummate a Permitted Acquisition, enter
into any merger, consolidation, reorganization, or recapitalization, or
reclassify its Equity Interests, except for (i) any merger between Loan Parties,
provided, that Borrower must be the surviving entity of any such merger to which
it is a party, (ii) any merger or consolidation between or among a Loan Party or
Loan Parties and a Subsidiary or Subsidiaries of such Loan Party that is or are
not a Loan Party so long as such Loan Party is the surviving entity of any such
merger, and (iii) any merger or consolidation between or among Subsidiaries of
Borrower that are not Loan Parties,

 

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(b)           liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution), except for (i) the liquidation or dissolution of non-operating
Subsidiaries of Borrower with nominal assets and nominal liabilities, (ii) the
liquidation or dissolution of a Loan Party (other than Borrower) or any of its
wholly-owned Subsidiaries so long as all of the assets (including any interest
in any Equity Interests) of such liquidating or dissolving Loan Party or
Subsidiary are transferred to a Loan Party that is not liquidating or
dissolving, or (iii) the liquidation or dissolution of a Subsidiary of Borrower
that is not a Loan Party (other than any such Subsidiary the Equity Interests of
which (or any portion thereof) is subject to a Lien in favor of Collateral
Agent) so long as all of the assets of such liquidating or dissolving Subsidiary
are transferred to a Subsidiary of Borrower that is not liquidating or
dissolving, or

 

(c)           suspend or cease operating a substantial portion of its or their
business, except as permitted pursuant to clauses (a) or (b) above or in
connection with a transaction permitted under Section 6.04.

 

6.04.       Disposal of Assets.  Other than Permitted Dispositions or
transactions expressly permitted by Sections 6.03 or 6.09, Borrower will not,
and will not permit any of its Subsidiaries to convey, sell, lease, license,
assign, transfer, or otherwise dispose of (or enter into an agreement to convey,
sell, lease, license, assign, transfer, or otherwise dispose of) any of its or
their assets.  Any and all proceeds received from Borrower’s Permitted
Dispositions shall be promptly delivered to Agent, and Agent shall apply such
proceeds to any outstanding Bank Obligations owing under this Agreement.

 

6.05.       Nature of Business.  Borrower will not, and will not permit any of
its Subsidiaries to make any change in the nature of its or their business as
described in Schedule 6.5 or acquire any properties or assets that are not
reasonably related to the conduct of such business activities; provided, that
the foregoing shall not prevent Borrower and its Subsidiaries from engaging in
any business that is reasonably related or ancillary to its or their business.

 

6.06.       Prepayments and Amendments.  Borrower will not, and will not permit
any of its Subsidiaries to,

 

(a)           Except in connection with (x) the Permitted Redemption, and
(y) Refinancing Indebtedness,

 

(i)            optionally prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of Borrower or its Subsidiaries, other than (A) the
Bank Obligations in accordance with this Agreement, and (B) Permitted
Intercompany Advances, or

 

(ii)           make any payment on account of Indebtedness that has been
contractually subordinated in right of payment to the Bank Obligations if such
payment is not permitted at such time under the subordination terms and
conditions of such contract, or

 

(b)           Directly or indirectly, amend, modify, or change, in a way
materially adverse to the Agent or the Lenders or in a way that substantially
impairs the Liens granted under the Loan Documents, any of the terms or
provisions of:

 

(i)            any material agreement, instrument, document, indenture, or other
writing evidencing  or concerning Permitted Indebtedness other than (A) the Bank
Obligations in accordance with this Agreement, (B) Permitted Intercompany
Advances, (C) Indebtedness permitted under clauses (g), and (l) of the
definition of Permitted Indebtedness, and (D) any Refinancing Indebtedness in
connection Senior Secured Notes and the Senior Unsecured Notes,

 

(ii)           the Governing Documents of any Loan Party or any of its
Subsidiaries, or

 

(iii)          any ESOP Plan Document except to the extent required by
applicable law.

 

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6.07.       Restricted Payments.  Borrower will not, and will not permit any of
its Subsidiaries to make any Restricted Payment (including pursuant to any
Synthetic Purchase Agreement); provided, that, so long as it is permitted by
law, and so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom,

 

(a)           any Subsidiary may declare and pay dividends or make other
distributions ratably to its equity holders, any Subsidiary may declare and pay
dividends or make distributions to its equity holders solely in Equity
Interests, and any Subsidiary may declare and pay dividends or make
distributions directly or indirectly to the Borrower,

 

(b)           Restricted Payments may be made as required by or pursuant to the
ESOP Plan Documents or by Section 401(a)(28) of the IRC or any substantially
similar requirement of law, and

 

(c)           so long as no Default or Event of Default shall have occurred and
be continuing or would result therefrom, other Restricted Payments may be made
so long as at the time of such Restricted Payment the Borrower delivers to Agent
a certificate of a Financial Officer certifying that such Restricted Payment is
then permitted by the Senior Secured Notes Indenture as in effect on the Closing
Date (accompanied by reasonably detailed calculations showing the same) and, at
the time and after giving effect thereto, Borrower has the Required
Availability.

 

6.08.       Accounting Methods.  Borrower will not, and will not permit any of
its Subsidiaries to modify or change its fiscal year or its method of accounting
(other than as may be required to conform to GAAP).

 

6.09.       Investments.  Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly, make or acquire any Investment or incur
any liabilities (including contingent obligations) for or in connection with any
Investment except for Permitted Investments.

 

6.10.       Transactions with Affiliates.  Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into or permit
to exist any transaction with any Affiliate of Borrower or any of its
Subsidiaries except for:

 

(a)           transactions in the ordinary course of business at prices and on
terms and conditions not less favorable to Borrower or such Subsidiary than
could be obtained on an arm’s-length basis from unrelated third parties;

 

(b)           transactions permitted by Section 6.03 or Section 6.07, or any
Permitted Intercompany Advance; and

 

(c)           compensation and remuneration paid to officers and directors as
and in the manner such officers and directors historically have been compensated
and remunerated, and officers and directors hired after the Closing Date may be
compensated and remunerated in a manner commensurate with the office and
director position held.

 

6.11.       Use of Proceeds.  Borrower will not, and will not permit any of its
Subsidiaries to use the proceeds of any loan made hereunder for any purpose
other than (a) on the Closing Date, (i) to repay, in full, the outstanding
principal, accrued interest, and accrued fees and expenses owing under or in
connection with the Existing Credit Facility, (ii) to repay the outstanding
Indebtedness owing under or in connection with Existing Credit Facility;
(iii)for a Permitted Redemption; and (iv) to pay the fees, costs, and expenses
incurred in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby, in each case, as set forth in the
Funds Flow Agreement, and (b) thereafter, consistent with the terms and
conditions hereof, for their lawful and permitted purposes (including that no
part of the proceeds of the loans made to Borrower will be used to purchase or
carry any such Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any such Margin Stock or for any purpose that violates
the provisions of Regulation T, U or X of the Board of Governors).

 

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6.12.       Limitation on Issuance of Equity Interests.  Except for the issuance
or sale of Qualified Equity Interests by Borrower, Borrower will not, and will
not permit any of its Subsidiaries to issue or sell or enter into any agreement
or arrangement for the issuance or sale of any of its Equity Interests.

 

6.13.       Assignment of Claims.  Borrower will not, and will not permit any of
its Subsidiaries, to (i) assign to any Person other than Agent or Collateral
Agent, any Government Accounts pursuant to the terms of the Assignment of Claims
Act, or (ii) execute any documentation for compliance with the Assignment of
Claims Act in connection with any Government Account at the request of any
Person other than the Agent or Collateral Agent.

 

6.14.       [Intentionally Omitted].

 

6.15.       Maximum Capital Expenditures.  Borrower will not, and will not
permit any of its Subsidiaries to make any Capital Expenditures; provided, that,
so long as it is permitted by law, and so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom, Borrower may
make Capital Expenditures not exceeding $8,000,000 in the aggregate during any
fiscal year.

 

6.16.       Employee Benefits.  Borrower will not, and will not permit any of
its Subsidiaries to,

 

(a)           terminate, or permit any ERISA Affiliate to terminate, any Pension
Plan in a manner, or take any other action with respect to any Plan, which could
reasonably be expected to result in any liability of any Loan Party or ERISA
Affiliate to the PBGC and could reasonably be expected to have a Material
Adverse Effect,

 

(b)           fail to make, or permit any ERISA Affiliate to fail to make, full
payment when due of all amounts which, under the provisions of any Benefit Plan,
agreement relating thereto or applicable Law, any Loan Party or ERISA Affiliate
is required to pay if such failure could reasonably be expected to have a
Material Adverse Effect,

 

(c)           permit to exist, or allow any ERISA Affiliate to permit to exist,
any accumulated funding deficiency within the meaning of section 302 of ERISA or
section 412 of the IRC, whether or not waived, with respect to any Plan which
exceeds $150,000 with respect to all Pension Plans in the aggregate,

 

(d)           acquire, or permit any ERISA Affiliate to acquire, an interest in
any Person that causes such Person to become an ERISA Affiliate with respect to
a Loan Party or with respect to any ERISA Affiliate if such Person sponsors,
maintains or contributes to, or at any time in the six-year period preceding
such acquisition has sponsored, maintained, or contributed to, (i) any Pension
Plan or (ii) any Multiemployer Plan,

 

(e)           contribute to or assume an obligation to contribute to, or permit
any ERISA Affiliate to contribute to or assume an obligation to contribute to,
any Multiemployer Plan not set forth on Schedule 4.11, which schedule may be
amended from time to time with the consent of the Agent, such consent not to be
unreasonably withheld, conditioned or delayed,

 

(f)            amend, or permit any ERISA Affiliate to amend, a Pension Plan
resulting in a material increase in current liability such that a Loan Party or
ERISA Affiliate is required to provide security to such Plan under the IRC,

 

(g)           permit any of the assets of Borrower or any Subsidiary to
constitute, for any purpose of ERISA or Section 4975 of the Code, assets of the
ESOP or any other “plan” as defined in Section 3(3) of ERISA or Section 4975 of
the Code, or

 

(h)           permit any material non-exempt prohibited transaction described in
Section 406 of ERISA or Section 4975 of the IRC to occur with respect to the
ESOP.

 

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7.           FINANCIAL COVENANTS.

 

Borrower covenants and agrees that, until termination of the Credit Facility and
payment in full of the Bank Obligations:

 

(a)           Required Collateral Block.  At the time of each Loan and at all
other times, the Borrowing Base shall exceed the outstanding principal balance
of the Revolving Loans at such time by at least Fifteen Million Dollars
($15,000,000) (the “Required Collateral Block”).

 

(b)           Fixed Charge Coverage Ratio.  Borrower and its Subsidiaries on a
consolidated basis will have a Fixed Charge Coverage Ratio, measured on a
quarter-end basis, of at least 1.00 to 1.00 for the twelve (12) month period
ending on the last day of each fiscal quarter.

 

8.           EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

 

8.01.       Payments.  If Borrower fails to pay when due and payable, or when
declared due and payable, (a) all or any portion of the Bank Obligations
consisting of interest, fees, or charges due the Lender Group, reimbursement of
Lender Group Expenses, or other amounts (other than any portion thereof
constituting principal) constituting Bank Obligations (including any portion
thereof that accrues after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), and such failure continues for a period of 3
Business Days, (b) all or any portion of the principal of the Loans, or (c) any
amount payable to Issuing Lender in reimbursement of any drawing under a Letter
of Credit;

 

8.02.       Covenants.  If any Loan Party or any of its Subsidiaries:

 

(a)           fails to perform or observe any covenant or other agreement
contained in any of (i) Sections 3.06, 5.01, 5.02, 5.03 (solely if Borrower is
not in good standing in its jurisdiction of organization), 5.06, 5.07 (solely if
Borrower refuses to allow Agent, or its representatives or agents to visit
Borrower’s properties, inspect its assets or books or records, examine and make
copies of its books and records, or discuss Borrower’s affairs, finances, and
accounts with officers and employees of Borrower), 5.10, 5.11, 5.12, 5.13, 5.15
or 5.16 of this Agreement, (ii) Section 6 of this Agreement,
(iii) Section 7(b) of this Agreement, or (iv) Sections 3.03, 3.04 or 3.05 of the
Security Agreement;

 

(b)           fails to perform or observe any covenant or other agreement
contained in Section 7(a) of this Agreement that can be cured, has failed to
cure the default within three (3) Business Days after the occurrence thereof;
provided, however, that (i) Borrower’s aforementioned right to cure such default
shall be limited to 2 times during any calendar quarter, but not to exceed 5
times during any period of 365 consecutive days and (ii) if the Excess
Availability is equal to or less than $0, then the aforementioned cure period
provided under this section shall not apply;

 

(c)           fails to perform or observe any covenant or other agreement
contained in any of Sections 5.03 (other than if Borrower is not in good
standing in its jurisdiction of organization), 5.04, 5.05, 5.08, and 5.12 of
this Agreement and such failure continues for a period of 10 days after the
earlier of (i) the date on which such failure shall first become known to any
officer of Borrower or (ii) the date on which written notice thereof is given to
Borrower by Agent; or

 

(d)           fails to perform or observe any covenant or other agreement
contained in this Agreement, or in any of the other Loan Documents, in each
case, other than any such covenant or agreement that is the subject of another
provision of this Section 8 (in which event such other provision of this
Section 8 shall govern), and such failure continues for a period of 30 days
after the earlier of (i) the date on which such failure shall first become known
to any officer of Borrower or (ii) the date on which written notice thereof is
given to Borrower by Agent;

 

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8.03.       Judgments.  If one or more judgments, orders, or awards for the
payment of money involving an aggregate amount of $500,000, or more (except to
the extent fully covered (other than to the extent of customary deductibles) by
insurance pursuant to which the insurer has not denied coverage) is entered or
filed against a Loan Party or any of its Subsidiaries other than a Subsidiary
deemed by Agent in its sole and absolute discretion to be an Insignificant
Subsidiary, or with respect to any of their respective assets, and either
(a) there is a period of 30 consecutive days at any time after the entry of any
such judgment, order, or award during which (1) the same is not discharged,
satisfied, vacated, or bonded or otherwise pending appeal, or (2) a stay of
enforcement thereof is not in effect, or (b) enforcement proceedings are
commenced upon such judgment, order, or award;

 

8.04.       Voluntary Bankruptcy, etc.  If an Insolvency Proceeding is commenced
by a Loan Party or any of its Subsidiaries other than a Subsidiary deemed by
Agent in its sole and absolute discretion to be an Insignificant Subsidiary;

 

8.05.       Involuntary Bankruptcy, etc.  If an Insolvency Proceeding is
commenced against a Loan Party or any of its Subsidiaries other than a
Subsidiary deemed by Agent in its sole and absolute discretion to be an
Insignificant Subsidiary and any of the following events occur:  (a) such Loan
Party or such Subsidiary consents to the institution of such Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely controverted, (c) the petition commencing the Insolvency Proceeding
is not dismissed within 60 calendar days of the date of the filing thereof,
(d) an interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, such Loan Party or its Subsidiary, or (e) an order
for relief shall have been issued or entered therein;

 

8.06.       Default Under Other Agreements.  If there is a default (a) under any
Senior Unsecured Notes Document beyond any applicable notice and grace periods,
(b) under any Senior Secured Notes Document beyond any applicable notice and
grace periods, or (c) in one or more agreements to which a Loan Party or any of
its Subsidiaries is a party with one or more third Persons relative to a Loan
Party’s or any of its Subsidiaries’ Indebtedness involving an aggregate amount
of $1,000,000 or more, and such default (i) occurs at the final maturity of the
obligations thereunder, or (ii) results in a right by such third Person,
irrespective of whether exercised, to accelerate the maturity of such Loan
Party’s or its Subsidiary’s obligations thereunder;

 

8.07.       Representations, etc.  If any warranty, representation, certificate,
statement, or Record made herein or in any other Loan Document or delivered in
writing to Agent or any Lender in connection with this Agreement or any other
Loan Document proves to be untrue in any material respect (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of the date of issuance or making or deemed making thereof;

 

8.08.       Guaranty.  If the obligation of any Guarantor under the guaranty
contained in the Guaranty Agreement is limited or terminated by operation of law
or by such Guarantor (other than in accordance with the terms of this
Agreement);

 

8.09.       Security Documents.  If the Security Agreement, Security Document or
any other Loan Document that purports to create a Lien, shall, for any reason,
fail or cease to create a valid and perfected and, except to the extent of
Permitted Liens which are non-consensual Permitted Liens, permitted purchase
money Liens or the interests of lessors under Capital Leases and Synthetic
Leases, first priority Lien on the Collateral covered thereby, except (a) as a
result of a disposition of the applicable Collateral in a transaction permitted
under this Agreement, or (b) as the result of an action or failure to act on the
part of Agent or Collateral Agent (as applicable);

 

8.10.       Loan Documents.  The validity or enforceability of any Loan Document
shall at any time for any reason  (other than solely as the result of an action
or failure to act on the part of Agent) be declared to be null and void, or a
proceeding shall be commenced by a Loan Party or its Subsidiaries, or by any
Governmental Authority having jurisdiction over a Loan Party or its
Subsidiaries, seeking to establish the invalidity or unenforceability thereof,
or a Loan Party or its Subsidiaries shall deny that such Loan Party or its
Subsidiaries has any liability or obligation purported to be created under any
Loan Document; or

 

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8.11.       Change of Control.  A Change of Control shall occur, whether
directly or indirectly.

 

8.12.       ERISA.  The occurrence of any of the following events:  (a) any Loan
Party or ERISA Affiliate fails to make full payment when due of all amounts
which any Loan Party or ERISA Affiliate is required to pay as contributions,
installments, or otherwise to or with respect to a Pension Plan or Multiemployer
Plan, and such failure could reasonably be expected to result in liability in
excess of $150,000, (b) an accumulated funding deficiency or funding shortfall
in excess of $150,000 occurs or exists, whether or not waived, with respect to
any Pension Plan, individually or in the aggregate, (c) a Notification Event,
which could reasonably be expected to result in liability in excess of $150,000,
either individually or in the aggregate, (d) any Loan Party or ERISA Affiliate
completely or partially withdraws from one or more Multiemployer Plans and
incurs Withdrawal Liability in excess of $150,000 in the aggregate, or fails to
make any Withdrawal Liability payment when due, (e) any Loan hereunder shall,
for any purpose of Section 406 of ERISA or Section 4975 of the IRC, be found to
be a direct or indirect loan or other transaction between Agent or any of the
Lenders and the ESOT which, if it is assumed that Agent and the Lenders are
“parties in interest” and “disqualified persons” (as defined in Section 3(14) of
ERISA and Section 4975 of the IRC), is a non-exempt prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Code, (f) there shall
be a finding, holding, ruling or other determination not subject to cure made by
any court or Governmental Authority, or an assertion by the ESOP Fiduciary or
the ESOT Trustee, concerning any matter with respect to the ESOP or the ESOT
contrary to or inconsistent with any representation, warranty or covenant set
forth herein, which holding, ruling, determination or assertion could reasonably
be expected to have a Material Adverse Effect, (g) the Internal Revenue Service
shall notify Borrower in writing that it has made a final determination not
subject to cure that the ESOP is not a qualified plan and an employee stock
ownership plan within the meanings of Section 401(a) and 4975(e)(7),
respectively, of the IRC.

 

8.13.       Intercreditor Agreement.  So long as any Senior Secured Notes are
outstanding, the Intercreditor Agreement shall, in whole or in part, cease to be
effective or cease to be legally valid, binding and enforceable against any
party thereto (or against any person on whose behalf any such party makes any
covenants or agreements therein), or otherwise not be effective to create the
rights and obligations purported to be created thereunder, unless the same
results directly from the action or inaction of Agent.

 

8.14.       Government Contracts.  If (a) the applicable Loan Party shall be
debarred or suspended from contracting with the applicable Governmental
Authority (which suspension has occurred and remains in place for a period in
excess of 10 Business Days), (b) a notice of debarment or notice of suspension
shall have been issued to the applicable Loan Party (which suspension has
occurred and remains in place for a period in excess of 10 Business Days), or
(c) a notice of termination for default or the actual termination for default of
any Material Government Contract shall have been issued to or received by the
applicable Loan Party.

 

9.           RIGHTS AND REMEDIES.

 

9.01.       Rights and Remedies.  Upon the occurrence and during the
continuation of an Event of Default, Agent may, and, at the instruction of the
Required Lenders, shall (in each case under clauses (a)or (b) by written notice
to Borrower), in addition to any other rights or remedies provided for hereunder
or under any other Loan Document or by applicable law, do any one or more of the
following:

 

(a)           (i) declare the principal of, and any and all accrued and unpaid
interest and fees in respect of, the Loans and all other Bank Obligations (other
than the Bank Product Obligations), whether evidenced by this Agreement or by
any of the other Loan Documents to be immediately due and payable, whereupon the
same shall become and be immediately due and payable and Borrower shall be
obligated to repay all of such Bank Obligations in full, without presentment,
demand, protest, or further notice or other requirements of any kind, all of
which are hereby expressly waived by Borrower, (ii) terminate at the time
permitted, in accordance with its terms, any Letter of Credit that, pursuant to
its terms, automatically renews, and (iii) direct Borrower to provide (and
Borrower agrees that upon receipt of such notice it will provide) Letter of
Credit Collateralization to Agent to be held as security for Borrower’s
reimbursement obligations for drawings that may subsequently occur under issued
and outstanding Letters of Credit;

 

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(b)           declare the Credit Facility terminated, whereupon the Credit
Facility shall immediately be terminated together with (i) any obligation of any
Revolving Lender to make Revolving Loans, and (ii) the obligation of Issuing
Lender to issue Letters of Credit; and

 

(c)           exercise all other rights and remedies available to Agent or the
Lenders under the Loan Documents, under applicable law, or in equity.

 

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.04 or Section 8.05, in addition to the
remedies set forth above, without any notice to Borrower or any other Person or
any act by the Lender Group, the Credit Facility shall automatically terminate
and the Bank Obligations (other than the Bank Product Obligations), inclusive of
the principal of, and any and all accrued and unpaid interest and fees in
respect of, the Loans and all other Bank Obligations (other than the Bank
Product Obligations), whether evidenced by this Agreement or by any of the other
Loan Documents, shall automatically become and be immediately due and payable
and Borrower shall automatically be obligated to repay all of such Bank
Obligations in full (including Borrower being obligated to provide (and Borrower
agrees that it will provide) (1) Letter of Credit Collateralization to Agent to
be held as security for Borrower’s reimbursement obligations in respect of
drawings that may subsequently occur under issued and outstanding Letters of
Credit and (2) Bank Product Collateralization to be held as security for
Borrower’s or its Subsidiaries’ obligations in respect of outstanding Bank
Products), without presentment, demand, protest, or notice or other requirements
of any kind, all of which are expressly waived by Borrower.

 

9.02.       Remedies Cumulative.  The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative.  The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity.  No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver.  No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.

 

10.         WAIVERS; INDEMNIFICATION.

 

10.01.     Demand; Protest; etc.  Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which Borrower may in any way be liable.

 

10.02.     The Lender Group’s Liability for Collateral.  Borrower hereby agrees
that:  (a) so long as Agent complies with its obligations, if any, under the
Code, the Lender Group shall not in any way or manner be liable or responsible
for:  (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrower.

 

10.03.     Indemnification.  Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an “Indemnified Person”) harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution and delivery (provided that Borrower shall
not be liable for costs and expenses (including attorneys fees) of any Lender
(other than Wells Fargo) incurred in advising, structuring, drafting, reviewing,
administering or syndicating the Loan Documents), enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Borrower’s and its
Subsidiaries’ compliance with

 

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the terms of the Loan Documents (provided, that the indemnification in this
clause (a) shall not extend to (i) disputes solely between or among the Lenders
that do not involve any acts or omissions of any Loan Party, or (ii) disputes
solely between or among the Lenders and their respective Affiliates that do not
involve any acts or omissions of any Loan Party; it being understood and agreed
that the indemnification in this clause (a) shall extend to Agent (but not the
Lenders) relative to disputes between or among Agent on the one hand, and one or
more Lenders, or one or more of their Affiliates, on the other hand, or
(iii) any Taxes or any costs attributable to Taxes, which shall be governed by
Section 16), (b) with respect to any actual or prospective investigation,
litigation, or proceeding related to this Agreement, any other Loan
Document, the making of any Loans or issuance of any Letters of Credit
hereunder, or the use of the proceeds of the Loans or the Letters of Credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto, and (c) in connection with or arising out of any presence or release of
Hazardous Materials at, on, under, to or from any assets or properties owned,
leased or operated by Borrower or any of its Subsidiaries or any Environmental
Actions, Environmental Liabilities or Remedial Actions related in any way to any
such assets or properties of Borrower or any of its Subsidiaries (each and all
of the foregoing, the “Indemnified Liabilities”).  The foregoing to the contrary
notwithstanding, Borrower shall have no obligation to any Indemnified Person
under this Section 10.03 with respect to any Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person or its officers,
directors, employees, attorneys, or agents.  This provision shall survive the
termination of this Agreement and the repayment in full of the Bank
Obligations.  If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which Borrower
was required to indemnify the Indemnified Person receiving such payment, the
Indemnified Person making such payment is entitled to be indemnified and
reimbursed by Borrower with respect thereto.  WITHOUT LIMITATION, THE FOREGOING
INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED
LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY
NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

11.          NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as a party may
designate in accordance herewith), or telefacsimile.  In the case of notices or
demands to Borrower or Agent, as the case may be, they shall be sent to the
respective address set forth below:

 

If to Borrower:

ALION SCIENCE AND TECHNOLOGY CORPORATION

1750 Tysons Boulevard, Suite 1300

McLean, Virginia 22102

Attn: Barry M. Broadus, Chief Financial Officer

Fax No.:                                     

 

 

with copies to:

HOLLAND & KNIGHT LLP
1600 Tysons Boulevard, Suite 700

McLean, Virginia  22102

Attn: David S. Cole, Esq.

Fax No.:  (703) 720-8610

 

 

If to Agent:

WELLS FARGO BANK, NATIONAL ASSOCIATION

1753 Pinnacle Drive, Sixth Floor

 

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McLean, Virginia  22102

Attn: Hilary Hymel, Relationship Manager

Fax No.:  (877) 702-4315

 

 

with copies to:

TROUTMAN SANDERS LLP

1850 Towers Crescent Plaza, Suite 500

Tysons Corner, Virginia 22182

Attn: Richard M. Pollak, Esq.

Fax No.:  (703) 448-6511

 

Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party.  All notices or demands sent in accordance with this Section 11, shall be
deemed received on the earlier of the date of actual receipt or 3 Business Days
after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received,
(b) notices by facsimile shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient) and (c) notices by electronic mail shall be deemed received
upon the sender’s receipt of an acknowledgment from the intended recipient (such
as by the “return receipt requested” function, as available, return email or
other written acknowledgment).

 

12.          CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE
PROVISION.

 

(a)           THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO, AND
ANY CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(b)           THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY
MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT
ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND.  BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).

 

(c)           TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND
EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO
A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR
INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH A
“CLAIM”).  BORROWER AND EACH

 

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MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

(d)           BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
NEW YORK AND THE STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. 
NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT
AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

 

(e)           NO CLAIM MAY BE MADE BY ANY LOAN PARTY AGAINST THE AGENT, ANY
OTHER LENDER, ISSUING LENDER, OR THE UNDERLYING LENDER, OR ANY AFFILIATE,
DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, AGENT, OR ATTORNEY-IN-FACT
OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY
DAMAGES OR LOSSES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER
THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION, OR EVENT
OCCURRING IN CONNECTION THEREWITH, AND EACH LOAN PARTY HEREBY WAIVES, RELEASES,
AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED
AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

 

(f)            IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE
STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN CONNECTION
WITH ANY CLAIM AND THE WAIVER SET FORTH IN CLAUSE (C) ABOVE IS NOT ENFORCEABLE
IN SUCH PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:

 

(i)            WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN SUBCLAUSE
(II) BELOW, ANY CLAIM SHALL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN
ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE
SECTIONS 638 THROUGH 645.1.  THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT
TO BE SPECIFICALLY ENFORCEABLE.  VENUE FOR THE REFERENCE PROCEEDING SHALL BE IN
THE COUNTY OF LOS ANGELES, CALIFORNIA.

 

(ii)           THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A GENERAL REFERENCE
PROCEEDING:  (A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR
PERSONAL PROPERTY, (B) EXERCISE OF SELF-HELP REMEDIES (INCLUDING SET-OFF OR
RECOUPMENT), (C) APPOINTMENT OF A RECEIVER, AND (D) TEMPORARY, PROVISIONAL, OR
ANCILLARY REMEDIES (INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION,
TEMPORARY RESTRAINING ORDERS, OR PRELIMINARY INJUNCTIONS).  THIS AGREEMENT DOES
NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND
REMEDIES DESCRIBED IN CLAUSES (A)–(D) AND ANY SUCH EXERCISE OR OPPOSITION DOES
NOT WAIVE THE RIGHT OF ANY PARTY TO PARTICIPATE IN A REFERENCE PROCEEDING
PURSUANT TO THIS AGREEMENT WITH RESPECT TO ANY OTHER MATTER.

 

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(iii)          UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A
SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE.  IF THE PARTIES DO NOT
AGREE UPON A REFEREE WITHIN 10 DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY
SHALL HAVE THE RIGHT TO REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B).  THE REFEREE SHALL BE
APPOINTED TO SIT WITH ALL OF THE POWERS PROVIDED BY LAW.  PENDING APPOINTMENT OF
THE REFEREE, THE COURT SHALL HAVE THE POWER TO ISSUE TEMPORARY OR PROVISIONAL
REMEDIES.

 

(iv)          EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REFEREE SHALL
DETERMINE THE MANNER IN WHICH THE REFERENCE PROCEEDING IS CONDUCTED INCLUDING
THE TIME AND PLACE OF HEARINGS, THE ORDER OF PRESENTATION OF EVIDENCE, AND ALL
OTHER QUESTIONS THAT ARISE WITH RESPECT TO THE COURSE OF THE REFERENCE
PROCEEDING.  ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT
FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY PARTY SO
REQUESTS A COURT REPORTER AND A TRANSCRIPT IS ORDERED, A COURT REPORTER SHALL BE
USED AND THE REFEREE SHALL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT.  THE
PARTY MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR AND PAY THE
COSTS OF THE COURT REPORTER, PROVIDED THAT SUCH COSTS, ALONG WITH THE REFEREE’S
FEES, SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED
BY THE REFEREE.

 

(v)           THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES.  THE
PARTIES HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL OVERSEE
DISCOVERY IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND SHALL ENFORCE ALL
DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT
LAW IN THE STATE OF CALIFORNIA.

 

(vi)          THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO
PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN
ACCORDANCE WITH CALIFORNIA SUBSTANTIVE AND PROCEDURAL LAW.  THE REFEREE SHALL BE
EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION
WHICH WOULD BE AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR
SUMMARY JUDGMENT.  THE REFEREE SHALL REPORT HIS OR HER DECISION, WHICH REPORT
SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW.  THE REFEREE SHALL
ISSUE A DECISION AND PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE,
SECTION 644, THE REFEREE’S DECISION SHALL BE ENTERED BY THE COURT AS A JUDGMENT
IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT.  THE FINAL
JUDGMENT OR ORDER FROM ANY APPEALABLE DECISION OR ORDER ENTERED BY THE REFEREE
SHALL BE FULLY APPEALABLE AS IF IT HAS BEEN ENTERED BY THE COURT.

 

(vii)         THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN A
GENERAL REFERENCE PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND
NOT BY A JURY.  AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF THEIR OWN CHOICE, EACH PARTY HERETO KNOWINGLY AND VOLUNTARILY AND FOR
THEIR MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION SHALL APPLY TO ANY
DISPUTE BETWEEN THEM THAT ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS.

 

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13.          ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

 

13.01.     Assignments and Participations.

 

(a)           (i)            Subject to the conditions set forth in clause
(a)(ii) below, any Lender may assign and delegate all or any portion of its
rights and duties under the Loan Documents (including the Bank Obligations owed
to it and its Loans) to one or more assignees so long as such prospective
assignee is an Eligible Transferee (each, an “Assignee”), with the prior written
consent (such consent not be unreasonably withheld or delayed) of:

 

(A)          Borrower; provided, that no consent of Borrower shall be required
(1) if an Event of Default has occurred and is continuing, or (2) in connection
with an assignment to a Person that is a Lender or an Affiliate (other than
natural persons) of a Lender; provided further, that Borrower shall be deemed to
have consented to a proposed assignment unless it objects thereto by written
notice to Agent within 5 Business Days after having received notice thereof; and

 

(B)          Agent, and Issuing Lender.

 

(ii)           Assignments shall be subject to the following additional
conditions:

 

(A)          no assignment may be made (i) so long as no Event of Default has
occurred and is continuing, to a Competitor, or (ii) to a natural person,

 

(B)          no assignment may be made to a Loan Party or an Affiliate of a Loan
Party,

 

(C)          the amount of the Revolver Credit Limits and the other rights and
obligations of the assigning Lender hereunder and under the other Loan Documents
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to Agent) shall be in a
minimum amount (unless waived by Agent) of $5,000,000 (except such minimum
amount shall not apply to (I) an assignment or delegation by any Lender to any
other Lender, an Affiliate of any Lender, or a Related Fund of such Lender or
(II) a group of new Lenders, each of which is an Affiliate of each other or a
Related Fund of such new Lender to the extent that the aggregate amount to be
assigned to all such new Lenders is at least $5,000,000),

 

(D)          each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement,

 

(E)           the parties to each assignment shall execute and deliver to Agent
an Assignment and Acceptance; provided, that Borrower and Agent may continue to
deal solely and directly with the assigning Lender in connection with the
interest so assigned to an Assignee until written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Borrower and Agent by such Lender
and the Assignee,

 

(F)           unless waived by Agent, the assigning Lender or Assignee has paid
to Agent, for Agent’s separate account, a processing fee in the amount of
$5,000, and

 

(G)          the assignee, if it is not a Lender, shall deliver to Agent an
Administrative Questionnaire in a form approved by Agent (the “Administrative
Questionnaire”).

 

(H)          Upon notice from Borrower, Agent and the Lenders shall at
Borrower’s expense take such steps as may reasonably be requested by Borrower to
enable the Borrower or any Subsidiary to comply with the Foreign Ownership
Control or Influence requirements of the United States government imposed from
time to time.

 

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(b)           From and after the date that Agent receives the executed
Assignment and Acceptance and, if applicable, payment of the required processing
fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall be a “Lender” and shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assigning Lender
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 10.03) and be
released from any future obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender’s rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and thereto); provided,
that nothing contained herein shall release any assigning Lender from
obligations that survive the termination of this Agreement, including such
assigning Lender’s obligations under Section 15 and Section 17.09(a).

 

(c)           By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows:  (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto,
(iii) such Assignee confirms that it has received a copy of this Agreement,
together with such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance, (iv) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement,
(v) such Assignee appoints and authorizes Agent to take such actions and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to Agent, by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto, and (vi) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

 

(d)           Immediately upon Agent’s receipt of the required processing fee,
if applicable, and delivery of notice to the assigning Lender pursuant to
Section 13.01(b), this Agreement shall be deemed to be amended to the extent,
but only to the extent, necessary to reflect the addition of the Assignee and
the resulting adjustment of the Revolver Credit Limits arising therefrom.  The
Revolver Credit Limit allocated to each Assignee shall reduce such Revolver
Credit Limits of the assigning Lender pro tanto.

 

(e)           Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons (a “Participant”) participating
interests in all or any portion of its Bank Obligations, its Revolver Credit
Limit, its Loans, and the other rights and interests of that Lender (the
“Originating Lender”) hereunder and under the other Loan Documents; provided,
that (i) the Originating Lender shall remain a “Lender” for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Bank Obligations, the Revolver Credit Limits, the
Loans, and the other rights and interests of the Originating Lender hereunder
shall not constitute a “Lender” hereunder or under the other Loan Documents and
the Originating Lender’s obligations under this Agreement shall remain
unchanged, (ii) the Originating Lender shall remain solely responsible for the
performance of such obligations, (iii) Borrower, Agent, and the Lenders shall
continue to deal solely and directly with the Originating Lender in connection
with the Originating Lender’s rights and obligations under this Agreement and
the other Loan Documents, (iv) no Lender shall transfer or grant any
participating interest under which the Participant has the right to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would
(A) extend the final maturity date of the Bank Obligations hereunder in which
such Participant is participating; provided that the foregoing shall not apply
to the extension of the “Maturity Date” as defined, but only the due date for
the particular Loan in which such Participant is participating, (B) reduce the
interest rate applicable to the Bank Obligations hereunder in which such

 

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Participant is participating, (C) release all or substantially all of the
Collateral or guaranties (except to the extent expressly provided herein or in
any of the Loan Documents) supporting the Bank Obligations hereunder in which
such Participant is participating, (D) postpone the payment of, or reduce the
amount of, the interest or fees payable to such Participant through such Lender
(other than a waiver of default interest), or (E) decreases the amount or
postpones the due dates of scheduled principal repayments or prepayments or
premiums payable to such Participant through such Lender, (v) no participation
shall be sold to a natural person, (vi) no participation shall be sold to a Loan
Party, or any Affiliate of a Loan Party or any Person whose participation would
not comply with the National Industrial Security Program Operating Manual and
associated laws and regulations, (vii) prior to a Default or Event of Default,
no participation shall be sold to any Competitor of a Loan Party, and (viii) all
amounts payable by Borrower hereunder shall be determined as if such Lender had
not sold such participation, except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement.  The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, the Loan Parties,
the Collateral, or otherwise in respect of the Bank Obligations.  No Participant
shall have the right to participate directly in the making of decisions by the
Lenders among themselves.

 

(f)            In connection with any such assignment or participation or
proposed assignment or participation or any grant of a security interest in, or
pledge of, its rights under and interest in this Agreement, a Lender may,
subject to the provisions of Section 17.09, disclose all documents and
information which it now or hereafter may have relating to Borrower and its
Subsidiaries and their respective businesses.

 

(g)           Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Bank or U.S.
Treasury Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.

 

13.02.     Successors.  This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, that
Borrower may not assign this Agreement or any rights or duties hereunder without
the Lenders’ prior written consent and any prohibited assignment shall be
absolutely void ab initio.  No consent to assignment by the Lenders shall
release Borrower from its Bank Obligations.  A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 13.01 and, except as expressly required pursuant to
Section 13.01, no consent or approval by Borrower is required in connection with
any such assignment.

 

14.          AMENDMENTS; WAIVERS.

 

14.01.     Amendments and Waivers.

 

(a)           No amendment, waiver or other modification of any provision of
this Agreement or any other Loan Document (other than Bank Product Agreements or
the Fee Letter), and no consent with respect to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and the Loan Parties that are party thereto and then any such waiver or
consent shall be effective, but only in the specific instance and for the
specific purpose for which given; provided, that no such waiver, amendment, or
consent shall, unless in writing and signed by all of the Lenders directly
affected thereby and all of the Loan Parties that are party thereto, do any of
the following:

 

(i)            increase the amount of or extend the expiration date of any
Revolver Credit Limit of any Lender, or amend, modify, or eliminate the last
sentence of Section 2.04(c),

 

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(ii)           postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,

 

(iii)          reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document (except (y) in connection with the
waiver of applicability of Section 2.06(c) (which waiver shall be effective with
the written consent of the Required Lenders), and (z) that any amendment or
modification of defined terms used in the financial covenants in this Agreement
shall not constitute a reduction in the rate of interest or a reduction of fees
for purposes of this clause (iii)),

 

(iv)          amend, modify, or eliminate this Section or any provision of this
Agreement providing for consent or other action by all Lenders,

 

(v)           amend, modify, or eliminate Section 15.11,

 

(vi)         other than as permitted by Section 15.11, release Collateral
Agent’s Lien in and to any of the Collateral,

 

(vii)         amend, modify, or eliminate the definitions of “Required Lenders”
or “Pro Rata Share”,

 

(viii)        contractually subordinate any of Collateral Agent’s Liens,

 

(ix)          other than in connection with a merger, liquidation, dissolution
or sale of such Person expressly permitted by the terms hereof or the other Loan
Documents, release Borrower or any Guarantor from any obligation for the payment
of money or consent to the assignment or transfer by Borrower or any Guarantor
of any of its rights or duties under this Agreement or the other Loan Documents,

 

(x)           amend, modify, or eliminate any of the provisions of
Section 2.04(b)(i) or (ii), or

 

(xi)          amend, modify, or eliminate any of the provisions of Section 13.01
with respect to assignments to, or participations with, Persons who are  a Loan
Party or an Affiliate of a Loan Party;

 

(b)           No amendment, waiver, modification, or consent shall amend,
modify, waive, or eliminate,

 

(i)            the definition of, or any of the terms or provisions of, the Fee
Letter, without the written consent of Agent and Borrower (and shall not require
the written consent of any of the Lenders),

 

(ii)           any provision of Section 15 pertaining to Agent, or any other
rights or duties of Agent under this Agreement or the other Loan Documents,
without the written consent of Agent, Borrower, and the Required Lenders;

 

(c)           No amendment, waiver, modification, elimination, or consent shall
amend, without written consent of Agent, Borrower and the Supermajority Lenders,
modify, or eliminate the definition of Borrowing Base or any of the defined
terms (including the definitions of Eligible Accounts and Eligible Government
Accounts) that are used in such definition to the extent that any such change
results in more credit being made available to Borrower based upon the Borrowing
Base, but not otherwise, or the definition of Maximum Revolver Credit Limit, or
change Section 2.01(c);

 

(d)           No amendment, waiver, modification, elimination, or consent shall
amend, modify, or waive any provision of this Agreement or the other Loan
Documents pertaining to Agent, or any other rights or duties of Agent under this
Agreement or the other Loan Documents, without the written consent of Agent;

 

(e)           [Intentionally Omitted];

 

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(f)            No amendment, waiver, modification, elimination, or consent shall
amend, modify, or waive any provision of this Agreement or the other Loan
Documents pertaining to Issuing Lender, or any other rights or duties of Issuing
Lender or Underlying Issuer under this Agreement or the other Loan Documents,
without the written consent of Issuing Lender, Agent, Borrower, and the Required
Lenders.

 

(g)           [Intentionally Omitted]; and

 

(h)           Anything in this Section 14.01 to the contrary notwithstanding,
(i) any amendment, modification, elimination, waiver, consent, termination, or
release of, or with respect to, any provision of this Agreement or any other
Loan Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of Borrower,
shall not require consent by or the agreement of any Loan Party, (ii) any
amendment, waiver, modification, elimination, or consent of or with respect to
any provision of this Agreement or any other Loan Document may be entered into
without the consent of, or over the objection of, any Defaulting Lender and
(iii) Agent may, with the consent of Borrower only, amend, modify or supplement
this Agreement to cure any ambiguity, omission, defect or inconsistency, so long
as such amendment, modification or supplement does not adversely affect the
rights of Agent, any Lender, Issuing Lender or Underlying Issuer.

 

14.02.     Replacement of Certain Lenders.

 

(a)           If (i) any action to be taken by the Lender Group or Agent
hereunder requires the consent, authorization, or agreement of all Lenders or
all Lenders affected thereby and if such action has received the consent,
authorization, or agreement of the Required Lenders but not of all Lenders or
all Lenders affected thereby, or (ii) any Lender makes a claim for compensation
under Section 16, then Borrower or Agent, upon at least 5 Business Days prior
irrevocable notice, may permanently replace any Lender that failed to give its
consent, authorization, or agreement (a “Non-Consenting Lender”) or any Lender
that made a claim for compensation (a “Tax Lender”) with one or more Replacement
Lenders, and the Non-Consenting Lender or Tax Lender, as applicable, shall have
no right to refuse to be replaced hereunder.  Such notice to replace the
Non-Consenting Lender or Tax Lender, as applicable, shall specify an effective
date for such replacement, which date shall not be later than 15 Business Days
after the date such notice is given.

 

(b)           Prior to the effective date of such replacement, the
Non-Consenting Lender or Tax Lender, as applicable, and each Replacement Lender
shall execute and deliver an Assignment and Acceptance, subject only to the
Non-Consenting Lender or Tax Lender, as applicable, being repaid in full its
share of the outstanding Bank Obligations (without any premium or penalty of any
kind whatsoever, but including (i) all interest, fees and other amounts that may
be due in payable in respect thereof, and (ii) an assumption of its Pro Rata
Share of participations in the Letters of Credit).  If the Non-Consenting Lender
or Tax Lender, as applicable, shall refuse or fail to execute and deliver any
such Assignment and Acceptance prior to the effective date of such replacement,
Agent may, but shall not be required to, execute and deliver such Assignment and
Acceptance in the name or and on behalf of the Non-Consenting Lender or Tax
Lender, as applicable, and irrespective of whether Agent executes and delivers
such Assignment and Acceptance, the Non-Consenting Lender or Tax Lender, as
applicable, shall be deemed to have executed and delivered such Assignment and
Acceptance.  The replacement of any Non-Consenting Lender or Tax Lender, as
applicable, shall be made in accordance with the terms of Section 13.01.  Until
such time as one or more Replacement Lenders shall have acquired all of the Bank
Obligations, the Loans, the Revolver Credit Limits, and the other rights and
obligations of the Non-Consenting Lender or Tax Lender, as applicable, hereunder
and under the other Loan Documents, the Non-Consenting Lender or Tax Lender, as
applicable, shall remain obligated to make the Non-Consenting Lender’s or Tax
Lender’s, as applicable, Pro Rata Share of Revolving Loans and to purchase a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share
of participations in such Letters of Credit.

 

14.03.     No Waivers; Cumulative Remedies.  No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof.  No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated.  No waiver by
Agent or any Lender on any occasion

 

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shall affect or diminish Agent’s and each Lender’s rights thereafter to require
strict performance by Borrower of any provision of this Agreement.  Agent’s and
each Lender’s rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.

 

15.                               AGENT; THE LENDER GROUP.

 

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

 

15.02.              Delegation of Duties.  Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties.  Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

 

15.03.              Liability of Agent.  None of the Agent-Related Persons shall
(a) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders (or Bank
Product Providers) for any recital, statement, representation or

 

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warranty made by Borrower or any of its Subsidiaries or Affiliates, or any
officer or director thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other document referred to
or provided for in, or received by Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of Borrower or its Subsidiaries or any other party
to any Loan Document to perform its obligations hereunder or thereunder.  No
Agent-Related Person shall be under any obligation to any Lenders (or Bank
Product Providers) to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the books and records or
properties of Borrower or its Subsidiaries.

 

15.04.              Reliance by Agent.  Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, telefacsimile or other
electronic method of transmission, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent, or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to Borrower or counsel to any
Lender), independent accountants and other experts selected by Agent.  Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable.  If Agent so requests, it shall first be indemnified to its
reasonable satisfaction by the Lenders (and, if it so elects, the Bank Product
Providers) against any and all liability and expense that may be incurred by it
by reason of taking or continuing to take any such action.  Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders (and Bank Product
Providers).

 

15.05.              Notice of Default or Event of Default.  Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders
and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a “notice of default.”  Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge.  If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default.  Each Lender shall be solely
responsible for giving any notices to its Participants, if any.  Subject to
Section 15.04, Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, that unless and until Agent has received any such request,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable.

 

15.06.              Credit Decision.  Each Lender (and Bank Product Provider)
acknowledges that none of the Agent-Related Persons has made any representation
or warranty to it, and that no act by Agent hereinafter taken, including any
review of the affairs of Borrower and its Subsidiaries or Affiliates, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender (or Bank Product Provider).  Each Lender represents (and by
entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to represent) to Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such due diligence, documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrower or any other Person party to a
Loan Document, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrower.  Each Lender also represents (and by
entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to represent) that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects,

 

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operations, property, financial and other condition and creditworthiness of
Borrower or any other Person party to a Loan Document.  Except for notices,
reports, and other documents expressly herein required to be furnished to the
Lenders by Agent, Agent shall not have any duty or responsibility to provide any
Lender (or Bank Product Provider) with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrower or any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons. 
Each Lender acknowledges (and by entering into a Bank Product Agreement, each
Bank Product Provider shall be deemed to acknowledge) that Agent does not have
any duty or responsibility, either initially or on a continuing basis (except to
the extent, if any, that is expressly specified herein) to provide such Lender
(or Bank Product Provider) with any credit or other information with respect to
Borrower, its Affiliates or any of their respective business, legal, financial
or other affairs, and irrespective of whether such information came into Agent’s
or its Affiliates’ or representatives’ possession before or after the date on
which such Lender became a party to this Agreement (or such Bank Product
Provider entered into a Bank Product Agreement).

 

15.07.              Costs and Expenses; Indemnification.  Agent may incur and
pay Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, attorneys
fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside collection agencies,
auctioneer fees and expenses, and costs of security guards or insurance premiums
paid to maintain the Collateral, whether or not Borrower is obligated to
reimburse Agent or Lenders for such expenses pursuant to this Agreement or
otherwise.  Agent is authorized and directed to deduct and retain sufficient
amounts from payments or proceeds of the Collateral received by Agent to
reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders (or Bank Product Providers).  In the
event Agent is not reimbursed for such costs and expenses by Borrower or its
Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay
to Agent such Lender’s ratable thereof.  Whether or not the transactions
contemplated hereby are consummated, each of the Lenders, on a ratable basis,
shall indemnify and defend the Agent-Related Persons (to the extent not
reimbursed by or on behalf of Borrower and without limiting the obligation of
Borrower to do so) from and against any and all Indemnified Liabilities;
provided, that no Lender shall be liable for the payment to any Agent-Related
Person of any portion of such Indemnified Liabilities resulting solely from such
Person’s gross negligence or willful misconduct nor shall any Lender be liable
for the obligations of any Defaulting Lender in failing to make a Revolving Loan
or other extension of credit hereunder.  Without limitation of the foregoing,
each Lender shall reimburse Agent upon demand for such Lender’s ratable share of
any costs or out of pocket expenses (including attorneys, accountants, advisors,
and consultants fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any other Loan Document to the extent that Agent is not reimbursed for such
expenses by or on behalf of Borrower.  The undertaking in this Section shall
survive the payment of all Bank Obligations hereunder and the resignation or
replacement of Agent.

 

15.08.           Agent in Individual Capacity.  Wells Fargo and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, provide Bank Products to, acquire Equity Interests in, and generally
engage in any kind of banking, trust, financial advisory, underwriting, or other
business with Borrower and its Subsidiaries and Affiliates and any other Person
party to any Loan Document as though Wells Fargo were not Agent hereunder, and,
in each case, without notice to or consent of the other members of the Lender
Group.  The other members of the Lender Group acknowledge (and by entering into
a Bank Product Agreement, each Bank Product Provider shall be deemed to
acknowledge) that, pursuant to such activities, Wells Fargo or its Affiliates
may receive information regarding Borrower or its Affiliates or any other Person
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders (or Bank Product Providers), and the Lenders
acknowledge (and by entering into a Bank Product Agreement, each Bank Product
Provider shall be deemed to acknowledge) that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver Agent will
use its reasonable best efforts to obtain), Agent shall not be under any
obligation to provide such information to them.  The terms “Lender” and
“Lenders” include Wells Fargo in its individual capacity.

 

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15.09.              Successor Agent.  Agent may resign as Agent upon 30 days (10
days if an Event of Default has occurred and is continuing) prior written notice
to the Lenders (unless such notice is waived by the Required Lenders) and
Borrower (unless such notice is waived by Borrower) and without any notice to
the Bank Product Providers.  If Agent resigns under this Agreement, the Required
Lenders shall be entitled, with (so long as no Event of Default has occurred and
is continuing) the consent of Borrower (such consent not to be unreasonably
withheld, delayed, or conditioned), appoint a successor Agent for the Lenders
(and the Bank Product Providers).  If, at the time that Agent’s resignation is
effective, it is acting as Issuing Lender, such resignation shall also operate
to effectuate its resignation as Issuing Lender, and it shall automatically be
relieved of any further obligation to issue Letters of Credit, or to cause the
Underlying Issuer to issue Letters of Credit.  If no successor Agent is
appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders and Borrower, a successor Agent.  If
Agent has materially breached or failed to perform any material provision of
this Agreement or of applicable law, the Required Lenders may agree in writing
to remove and replace Agent with a successor Agent from among the Lenders with
(so long as no Event of Default has occurred and is continuing) the consent of
Borrower (such consent not to be unreasonably withheld, delayed, or
conditioned).  In any such event, upon the acceptance of its appointment as
successor Agent hereunder, such successor Agent shall succeed to all the rights,
powers, and duties of the retiring Agent and the term “Agent” shall mean such
successor Agent and the retiring Agent’s appointment, powers, and duties as
Agent shall be terminated.  After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Section 15 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.  If no successor Agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.

 

15.10.              Lender in Individual Capacity.  Any Lender and its
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, provide Bank Products to, acquire Equity Interests in
and generally engage in any kind of banking, trust, financial advisory,
underwriting, or other business with Borrower and its Subsidiaries and
Affiliates and any other Person party to any Loan Documents as though such
Lender were not a Lender hereunder without notice to or consent of the other
members of the Lender Group (or the Bank Product Providers).  The other members
of the Lender Group acknowledge (and by entering into a Bank Product Agreement,
each Bank Product Provider shall be deemed to acknowledge) that, pursuant to
such activities, such Lender and its respective Affiliates may receive
information regarding Borrower or its Affiliates or any other Person party to
any Loan Documents that is subject to confidentiality obligations in favor of
Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge (and by entering into a
Bank Product Agreement, each Bank Product Provider shall be deemed to
acknowledge) that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender shall not be under any obligation to
provide such information to them.

 

15.11.              Collateral Matters.

 

(a)                                 The Lenders hereby irrevocably authorize
(and by entering into a Bank Product Agreement, each Bank Product Provider shall
be deemed to authorize) Agent to cause Collateral Agent to release any Lien on
any Collateral (i) upon the termination of the Credit Facility and payment and
satisfaction in full by Borrower of all of the Bank Obligations,
(ii) constituting property being sold or disposed of if a release is required or
desirable in connection therewith and if Borrower certifies to Agent that the
sale or disposition is permitted under Section 6.04 (and Agent may rely
conclusively on any such certificate, without further inquiry),
(iii) constituting property in which Borrower or its Subsidiaries owned no
interest at the time Collateral Agent’s Lien was granted nor at any time
thereafter, (iv) constituting property leased or licensed to Borrower or its
Subsidiaries under a lease or license that has expired or is terminated in a
transaction permitted under this Agreement, or (v) in connection with a credit
bid or purchase authorized under this Section 15.11.  The Loan Parties and the
Lenders hereby irrevocably authorize (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to authorize) Agent, based
upon the instruction of the Required Lenders, to (a) consent to, credit bid or
purchase (either directly or indirectly through one or more entities) all or any
portion of the Collateral at any sale thereof conducted under the provisions of
the Bankruptcy Code, including Section 363 of the Bankruptcy Code,

 

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(b) credit bid or purchase (either directly or indirectly through one or more
entities) all or any portion of the Collateral at any sale or other disposition
thereof conducted under the provisions of the Code, including pursuant to
Sections 9-610 or 9-620 of the Code, or (c) credit bid or purchase (either
directly or indirectly through one or more entities) all or any portion of the
Collateral at any other sale or foreclosure conducted or consented to by Agent
in accordance with applicable law in any judicial action or proceeding or by the
exercise of any legal or equitable remedy.  In connection with any such credit
bid or purchase, (i) the Bank Obligations owed to the Lenders and the Bank
Product Providers shall be entitled to be, and shall be, credit bid on a ratable
basis (with Bank Obligations with respect to contingent or unliquidated claims
being estimated for such purpose if the fixing or liquidation thereof would not
impair or unduly delay the ability of Agent to credit bid or purchase at such
sale or other disposition of the Collateral and, if such contingent or
unliquidated claims cannot be estimated without impairing or unduly delaying the
ability of Agent to credit bid at such sale or other disposition, then such
claims shall be disregarded, not credit bid, and not entitled to any interest in
the Collateral that is the subject of such credit bid or purchase) and the
Lenders and the Bank Product Providers whose Bank Obligations are credit bid
shall be entitled to receive interests (ratably based upon the proportion of
their Bank Obligations credit bid in relation to the aggregate amount of Bank
Obligations so credit bid) in the Collateral that is the subject of such credit
bid or purchase (or in the Equity Interests of the any entities that are used to
consummate such credit bid or purchase), and (ii) Agent, based upon the
instruction of the Required Lenders, may accept non-cash consideration,
including debt and equity securities issued by any entities used to consummate
such credit bid or purchase and in connection therewith Agent may reduce the
Bank Obligations owed to the Lenders and the Bank Product Providers (ratably
based upon the proportion of their Bank Obligations credit bid in relation to
the aggregate amount of Bank Obligations so credit bid) based upon the value of
such non-cash consideration.  Except as provided above, Agent will not cause
Collateral Agent to execute and deliver a release of any Lien on any Collateral
without the prior written authorization of (y) if the release is of all or
substantially all of the Collateral, all of the Lenders (without requiring the
authorization of the Bank Product Providers), or (z) otherwise, the Required
Lenders (without requiring the authorization of the Bank Product Providers). 
Upon request by Agent or Borrower at any time, the Lenders will (and if so
requested, the Bank Product Providers will) confirm in writing Agent’s authority
to cause Collateral Agent to release any such Liens on particular types or items
of Collateral pursuant to this Section 15.11; provided, that (1) anything to the
contrary contained in any of the Loan Documents notwithstanding, Agent shall not
be required to cause Collateral Agent to execute any document or take any action
necessary to evidence such release on terms that, in Agent’s opinion, could
expose Agent to liability or create any obligation or entail any consequence
other than the release of such Lien without recourse, representation, or
warranty, and (2) such release shall not in any manner discharge, affect, or
impair the Bank Obligations or any Liens (other than those expressly released)
upon (or obligations of Borrower in respect of) any and all interests retained
by Borrower, including, the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.  Each Lender further hereby irrevocably
authorize (and by entering into a Bank Product Agreement, each Bank Product
Provider shall be deemed to irrevocably authorize) Agent, at its option and in
its sole discretion, to subordinate any Lien granted to or held by Collateral
Agent under any Loan Document to the holder of any Permitted Lien on such
property if such Permitted Lien secures Permitted Purchase Money Indebtedness.

 

(b)                                 Agent shall have no obligation whatsoever to
any of the Lenders (or the Bank Product Providers) (i) to verify or assure that
the Collateral exists or is owned by Borrower or its Subsidiaries or is cared
for, protected, or insured or has been encumbered, (ii) to verify or assure that
Collateral Agent’s Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular priority,
(iii) to verify or assure that any particular items of Collateral meet the
eligibility criteria applicable in respect thereof, (iv) to impose, maintain,
increase, reduce, implement, or eliminate any particular reserve hereunder or to
determine whether the amount of any reserve is appropriate or not, or (v) to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent’s own interest in the Collateral in their respective
capacities as Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender (or Bank Product Provider) as to any of the foregoing,
except as otherwise expressly provided herein.

 

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15.12.              Restrictions on Actions by Lenders; Sharing of Payments.

 

(a)                                 Each of the Lenders agrees that it shall
not, without the express written consent of Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the written request of Agent, set
off against the Bank Obligations, any amounts owing by such Lender to Borrower
or its Subsidiaries or any Deposit Accounts of Borrower or its Subsidiaries now
or hereafter maintained with such Lender.  Each of the Lenders further agrees
that it shall not, unless specifically requested to do so in writing by Agent,
take or cause to be taken any action, including, the commencement of any legal
or equitable proceedings to enforce any Loan Document against Borrower or any
Guarantor or to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.

 

(b)                                 If, at any time or times any Lender shall
receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of
Collateral or any payments with respect to the Bank Obligations, except for any
such proceeds or payments received by such Lender from Agent pursuant to the
terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s
Pro Rata Share of all such distributions by Agent, such Lender promptly shall
(A) turn the same over to Agent, in kind, and with such endorsements as may be
required to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Bank Obligations in accordance with the applicable provisions of this Agreement,
or (B) purchase, without recourse or warranty, an undivided interest and
participation in the Bank Obligations owed to the other Lenders so that such
excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, that to the extent that such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.

 

15.13.              Agency for Perfection.  Agent hereby appoints each other
Lender (and each Bank Product Provider) as its agent (and each Lender hereby
accepts (and by entering into a Bank Product Agreement, each Bank Product
Provider shall be deemed to accept) such appointment) for the purpose of
perfecting Collateral Agent’s Liens in assets which, in accordance with
Article 8 or Article 9, as applicable, of the Code can be perfected by
possession or control.  Should any Lender obtain possession or control of any
such Collateral, such Lender shall notify Agent thereof, and, promptly upon
Agent’s request therefor shall deliver possession or control of such Collateral
to Agent or in accordance with Agent’s instructions.

 

15.14.              Payments by Agent to the Lenders.  All payments to be made
by Agent to the Lenders (or Bank Product Providers) shall be made by bank wire
transfer of immediately available funds pursuant to such wire transfer
instructions as each party may designate for itself by written notice to Agent. 
Concurrently with each such payment, Agent shall identify whether such payment
(or any portion thereof) represents principal, premium, fees, or interest of the
Bank Obligations.

 

15.15.              Concerning the Collateral and Related Loan Documents.  Each
member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents.  Each member of the Lender Group agrees
(and by entering into a Bank Product Agreement, each Bank Product Provider shall
be deemed to agree) that any action taken by Agent in accordance with the terms
of this Agreement or the other Loan Documents relating to the Collateral and the
exercise by Agent of its powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be binding upon all
of the Lenders (and such Bank Product Provider).

 

15.16.              Field Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information.  By becoming a party to this Agreement,
each Lender:

 

(a)                                 is deemed to have requested that Agent
furnish such Lender, promptly after it becomes available, a copy of each field
examination report respecting Borrower or its Subsidiaries (each, a “Report”)
prepared by or at the request of Agent, and Agent shall so furnish each Lender
with such Reports,

 

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(b)                                 expressly agrees and acknowledges that Agent
does not (i) make any representation or warranty as to the accuracy of any
Report, and (ii) shall not be liable for any information contained in any
Report,

 

(c)                                  expressly agrees and acknowledges that the
Reports are not comprehensive audits or examinations, that Agent or other party
performing any field examination will inspect only specific information
regarding Borrower and its Subsidiaries and will rely significantly upon
Borrower’s and its Subsidiaries’ books and records, as well as on
representations of Borrower’s personnel,

 

(d)                                 agrees to keep all Reports and other
material, non-public information regarding Borrower and its Subsidiaries and
their operations, assets, and existing and contemplated business plans in a
confidential manner in accordance with Section 17.09, and

 

(e)                                  without limiting the generality of any
other indemnification provision contained in this Agreement, agrees:  (i) to
hold Agent and any other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to
Borrower, or the indemnifying Lender’s participation in, or the indemnifying
Lender’s purchase of, a loan or loans of Borrower, and (ii) to pay and protect,
and indemnify, defend and hold Agent, and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including, attorneys fees and costs)
incurred by Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.

 

(f)                                   In addition to the foregoing, (x) any
Lender may from time to time request of Agent in writing that Agent provide to
such Lender a copy of any report or document provided by Borrower or its
Subsidiaries to Agent that has not been contemporaneously provided by Borrower
or such Subsidiary to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrower or its Subsidiaries, any Lender
may, from time to time, reasonably request Agent to exercise such right as
specified in such Lender’s notice to Agent, whereupon Agent promptly shall
request of Borrower the additional reports or information reasonably specified
by such Lender, and, upon receipt thereof from Borrower or such Subsidiary,
Agent promptly shall provide a copy of same to such Lender, and (z) any time
that Agent renders to Borrower a statement regarding the Loan Account, Agent
shall send a copy of such statement to each Lender.

 

15.17.              Several Obligations; No Liability.  Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of Agent in its capacity as such, and not by or in favor of
the Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Revolver Credit Limits, to make an amount of such credit not to
exceed, in principal amount, at any one time outstanding, the amount of their
respective Revolver Credit Limits.  Nothing contained herein shall confer upon
any Lender any interest in, or subject any Lender to any liability for, or in
respect of, the business, assets, profits, losses, or liabilities of any other
Lender.  Each Lender shall be solely responsible for notifying its Participants
of any matters relating to the Loan Documents to the extent any such notice may
be required, and no Lender shall have any obligation, duty, or liability to any
Participant of any other Lender.  Except as provided in Section 15.07, no member
of the Lender Group shall have any liability for the acts of any other member of
the Lender Group.  No Lender shall be responsible to Borrower or any other
Person for any failure by any other Lender (or Bank Product Provider) to fulfill
its obligations to make credit available hereunder, nor to advance for such
Lender (or Bank Product Provider) or on its behalf, nor to take any other action
on behalf of such Lender (or Bank Product Provider) hereunder or in connection
with the financing contemplated herein.

 

15.18.              Sole Lead Arranger and Sole Book Runner.  The Sole Lead
Arranger and Sole Book Runner, in such capacities, shall not have any right,
power, obligation, liability, responsibility, or duty under this Agreement other
than those applicable to them in their respective capacities as a Lender, as
Agent, or as Issuing Lender.

 

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Without limiting the foregoing, the Sole Lead Arranger and Sole Book Runner, in
such capacities, shall not have or be deemed to have any fiduciary relationship
with any Lender or any Loan Party.  Each Lender, Agent, Issuing Lender, and each
Loan Party acknowledges that it has not relied, and will not rely, on the Sole
Lead Arranger or Sole Book Runner in deciding to enter into this Agreement or in
taking or not taking action hereunder.  The Sole Lead Arranger and Sole Book
Runner, in such capacities, shall be entitled to resign at any time by giving
notice to Agent and Borrower.

 

16.                               WITHHOLDING TAXES.

 

16.01.              Payments.  All payments made by Borrower hereunder or under
any note or other Loan Document will be made without setoff, counterclaim, or
other defense.  In addition, all such payments will be made free and clear of,
and without deduction or withholding for, any present or future Indemnified
Taxes, and in the event any deduction or withholding of Indemnified Taxes is
required, Borrower shall comply with the next sentence of this Section 16.01. 
If any Indemnified Taxes are so levied or imposed, Borrower agrees to pay the
full amount of such Indemnified Taxes and such additional amounts as may be
necessary so that every payment of all amounts due under this Agreement, any
note, or Loan Document, including any amount paid pursuant to this Section 16.01
after withholding or deduction for or on account of any Indemnified Taxes, will
not be less than the amount provided for herein.  Borrower will furnish to Agent
as promptly as possible after the date the payment of any Indemnified Tax is due
pursuant to applicable law, certified copies of tax receipts evidencing such
payment by Borrower.  Borrower agrees to pay any present or future stamp, value
added or documentary taxes or any other excise or property taxes, charges, or
similar levies that arise from any payment made hereunder or from the execution,
delivery, performance, recordation, or filing of, or otherwise with respect to
this Agreement or any other Loan Document.

 

16.02.              Exemptions.

 

(a)                                 If a Lender or Participant is entitled to
claim an exemption or reduction from United States withholding tax, such Lender
or Participant agrees with and in favor of Agent, to deliver to Agent (or, in
the case of a Participant, to the Lender granting the participation only) one of
the following before receiving its first payment under this Agreement:

 

(i)                                     if such Lender or Participant is
entitled to claim an exemption from United States withholding tax pursuant to
the portfolio interest exception, (A) a statement of the Lender or Participant,
signed under penalty of perjury, that it is not a (I) a “bank” as described in
Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of Borrower (within the
meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign
corporation related to Borrower within the meaning of Section 864(d)(4) of the
IRC, and (B) a properly completed and executed IRS Form W-8BEN or Form W-8IMY
(with proper attachments);

 

(ii)                                  if such Lender or Participant is entitled
to claim an exemption from, or a reduction of, withholding tax under a United
States tax treaty, a properly completed and executed copy of IRS Form W-8BEN;

 

(iii)                               if such Lender or Participant is entitled 
to claim that interest paid under this Agreement is exempt from United States
withholding tax because it is effectively connected with a United States trade
or business of such Lender, a properly completed and executed copy of IRS
Form W-8ECI;

 

(iv)                              if such Lender or Participant is entitled to
claim that interest paid under this Agreement is exempt from United States
withholding tax because such Lender or Participant serves as an intermediary, a
properly completed and executed copy of IRS Form W-8IMY (with proper
attachments); or

 

(v)                                 a properly completed and executed copy of
any other form or forms, including IRS Form W-9, as may be required under the
IRC or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding or backup withholding tax.

 

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(b)                                 Each Lender or Participant shall provide new
forms (or successor forms) upon the expiration or obsolescence of any previously
delivered forms and to promptly notify Agent (or, in the case of a Participant,
to the Lender granting the participation only) of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.

 

(c)                                  If a Lender or Participant claims an
exemption from withholding tax in a jurisdiction other than the United States,
such Lender or such Participant agrees with and in favor of Agent, to deliver to
Agent (or, in the case of a Participant, to the Lender granting the
participation only) any such form or forms, as may be required under the laws of
such jurisdiction as a condition to exemption from, or reduction of, foreign
withholding or backup withholding tax before receiving its first payment under
this Agreement, but only if such Lender or such Participant is legally able to
deliver such forms, provided, that nothing in this Section 16.02(c) shall
require a Lender or Participant to disclose any information that it deems to be
confidential (including without limitation, its tax returns).  Each Lender and
each Participant shall provide new forms (or successor forms) upon the
expiration or obsolescence of any previously delivered forms and to promptly
notify Agent (or, in the case of a Participant, to the Lender granting the
participation only) of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

 

(d)                                 If a Lender or Participant claims exemption
from, or reduction of, withholding tax and such Lender or Participant sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Bank Obligations of Borrower to such Lender or Participant, such Lender or
Participant agrees to notify Agent (or, in the case of a sale of a participation
interest, to the Lender granting the participation only) of  the percentage
amount in which it is no longer the beneficial owner of Bank Obligations of
Borrower to such Lender or Participant.  To the extent of such percentage
amount, Agent will treat such Lender’s or such Participant’s documentation
provided pursuant to Section 16.02(a) or (c) as no longer valid.  With respect
to such percentage amount, such Participant or Assignee may provide new
documentation, pursuant to Section 16.02(a) or (c), if applicable.  Borrower
agrees that each Participant shall be entitled to the benefits of this
Section 16 with respect to its participation in any portion of the Revolver
Credit Limits and the Bank Obligations so long as such Participant complies with
the obligations set forth in this Section 16 with respect thereto.

 

16.03.              Reductions.

 

(a)                                 If a Lender or a Participant is subject to
an applicable withholding tax, Agent (or, in the case of a Participant, the
Lender granting the participation) may withhold from any payment to such Lender
or such Participant an amount equivalent to the applicable withholding tax.  If
the forms or other documentation required by Section 16.02(a) or 16.02(c) are
not delivered to Agent (or, in the case of a Participant, to the Lender granting
the participation), then Agent (or, in the case of a Participant, to the Lender
granting the participation) may withhold from any payment to such Lender or such
Participant not providing such forms or other documentation an amount equivalent
to the applicable withholding tax.

 

(b)                                 If the IRS or any other Governmental
Authority of the United States or other jurisdiction asserts a claim that Agent
(or, in the case of a Participant, to the Lender granting the participation) did
not properly withhold tax from amounts paid to or for the account of any Lender
or any Participant due to a failure on the part of the Lender or any Participant
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify Agent (or such Participant failed to notify
the Lender granting the participation) of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Lender shall indemnify and hold Agent harmless (or,
in the case of a Participant, such Participant shall indemnify and hold the
Lender granting the participation harmless) for all amounts paid, directly or
indirectly, by Agent (or, in the case of a Participant, to the Lender granting
the participation), as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
(or, in the case of a Participant, to the Lender granting the participation
only) under this Section 16, together with all costs and expenses (including
attorneys fees and expenses).  The obligation of the Lenders and the
Participants under this subsection shall survive the payment of all Bank
Obligations and the resignation or replacement of Agent.

 

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16.04.              Refunds.  If Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Indemnified Taxes to which
Borrower has paid additional amounts pursuant to this Section 16, so long as no
Default or Event of Default has occurred and is continuing, it shall pay over
such refund to Borrower (but only to the extent of payments made, or additional
amounts paid, by Borrower under this Section 16 with respect to Indemnified
Taxes giving rise to such a refund), net of all out-of-pocket expenses of Agent
or such Lender and without interest (other than any interest paid by the
applicable Governmental Authority with respect to such a refund); provided, that
Borrower, upon the request of Agent or such Lender, agrees to repay the amount
paid over to Borrower (plus any penalties, interest or other charges, imposed by
the applicable Governmental Authority, other than such penalties, interest or
other charges imposed as a result of the willful misconduct or gross negligence
of Agent hereunder) to Agent or such Lender in the event Agent or such Lender is
required to repay such refund to such Governmental Authority.  Notwithstanding
anything in this Agreement to the contrary, this Section 16 shall not be
construed to require Agent or any Lender to make available its tax returns (or
any other information which it deems confidential) to Borrower or any other
Person.

 

17.                               GENERAL PROVISIONS.

 

17.01.              Effectiveness.  This Agreement shall be binding and deemed
effective when executed by Borrower, Agent, and each Lender whose signature is
provided for on the signature pages hereof.

 

17.02.              Section Headings.  Headings and numbers have been set forth
herein for convenience only.  Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.

 

17.03.              Interpretation.  Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed against the Lender Group or Borrower,
whether under any rule of construction or otherwise.  On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.

 

17.04.              Severability of Provisions.  Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.

 

17.05.              Bank Product Providers.  Each Bank Product Provider in its
capacity as such shall be deemed a third party beneficiary hereof and of the
provisions of the other Loan Documents for purposes of any reference in a Loan
Document to the parties for whom Agent is acting.  Agent hereby agrees to act as
agent for such Bank Product Providers and, by virtue of entering into a Bank
Product Agreement, the applicable Bank Product Provider shall be automatically
deemed to have appointed Agent as its agent and to have accepted the benefits of
the Loan Documents.  It is understood and agreed that the rights and benefits of
each Bank Product Provider under the Loan Documents consist exclusively of such
Bank Product Provider’s being a beneficiary of the Liens and security interests
(and, if applicable, guarantees) granted to Agent and Collateral Agent (for the
benefit of Agent) and the right to share in payments and collections out of the
Collateral as more fully set forth herein.  In addition, each Bank Product
Provider, by virtue of entering into a Bank Product Agreement, shall be
automatically deemed to have agreed that Agent shall have the right, but shall
have no obligation, to establish, maintain, relax, or release reserves in
respect of the Bank Product Obligations and that if reserves are established
there is no obligation on the part of Agent to determine or insure whether the
amount of any such reserve is appropriate or not.  In connection with any such
distribution of payments or proceeds of Collateral, Agent shall be entitled to
assume no amounts are due or owing to any Bank Product Provider unless such Bank
Product Provider has provided a written certification (setting forth a
reasonably detailed calculation) to Agent as to the amounts that are due and
owing to it and such written certification is received by Agent a reasonable
period of time prior to the making of such distribution.  Agent shall have no
obligation to calculate the amount due and payable with respect to any Bank
Products, but may rely upon the written certification of the amount due and
payable from the applicable Bank Product Provider.  In the absence of an updated
certification, Agent shall be entitled to assume that the amount due and payable
to the applicable Bank Product Provider is the amount last certified to Agent by
such Bank Product Provider as being due and payable (less any distributions made
to such Bank Product Provider on account thereof).  Borrower may obtain Bank
Products from any Bank Product Provider, although Borrower is not required to do
so.  Borrower

 

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acknowledges and agrees that no Bank Product Provider has committed to provide
any Bank Products and that the providing of Bank Products by any Bank Product
Provider is in the sole and absolute discretion of such Bank Product Provider. 
Notwithstanding anything to the contrary in this Agreement or any other Loan
Document, no provider or holder of any Bank Product shall have any voting or
approval rights hereunder (or be deemed a Lender) solely by virtue of its status
as the provider or holder of such agreements or products or the Bank Obligations
owing thereunder, nor shall the consent of any such provider or holder be
required (other than in their capacities as Lenders, to the extent applicable)
for any matter hereunder or under any of the other Loan Documents, including as
to any matter relating to the Collateral or the release of Collateral or
Guarantors.

 

17.06.              Debtor-Creditor Relationship.  The relationship between the
Lenders and Agent, on the one hand, and the Loan Parties, on the other hand, is
solely that of creditor and debtor.  No member of the Lender Group has (or shall
be deemed to have) any fiduciary relationship or duty to any Loan Party arising
out of or in connection with the Loan Documents or the transactions contemplated
thereby, and there is no agency or joint venture relationship between the
members of the Lender Group, on the one hand, and the Loan Parties, on the other
hand, by virtue of any Loan Document or any transaction contemplated therein.

 

17.07.              Counterparts; Electronic Execution.  This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement.  Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. 
Any party delivering an executed counterpart of this Agreement by telefacsimile
or other electronic method of transmission also shall deliver an original
executed counterpart of this Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement.  The foregoing shall apply to each other Loan Document
mutatis mutandis.

 

17.08.              Revival and Reinstatement of Obligations; Certain Waivers. 
If any member of the Lender Group or any Bank Product Provider repays, refunds,
restores, or returns in whole or in part, any payment or property (including any
proceeds of Collateral) previously paid or transferred to such member of the
Lender Group or such Bank Product Provider in full or partial satisfaction of
any Bank Obligation or on account of any other obligation of any Loan Party
under any Loan Document or any Bank Product Agreement, because the payment,
transfer, or the incurrence of the obligation so satisfied is asserted or
declared to be void, voidable, or otherwise recoverable under any law relating
to creditors’ rights, including provisions of the Bankruptcy Code relating to
fraudulent transfers, preferences, or other voidable or recoverable obligations
or transfers (each, a “Voidable Transfer”), or because such member of the Lender
Group or Bank Product Provider elects to do so on the reasonable advice of its
counsel in connection with a claim that the payment, transfer, or incurrence is
or may be a Voidable Transfer, then, as to any such Voidable Transfer, or the
amount thereof that such member of the Lender Group or Bank Product Provider
elects to repay, restore, or return (including pursuant to a settlement of any
claim in respect thereof), and as to all reasonable costs, expenses, and
attorneys fees of such member of the Lender Group or Bank Product Provider
related thereto, (i) the liability of the Loan Parties with respect to the
amount or property paid, refunded, restored, or returned will automatically and
immediately be revived, reinstated, and restored and will exist and
(ii) Collateral Agent’s Liens securing such liability shall be effective,
revived, and remain in full force and effect, in each case, as fully as if such
Voidable Transfer had never been made.  If, prior to any of the foregoing,
(A) Collateral Agent’s Liens shall have been released or terminated or (B) any
provision of this Agreement shall have been terminated or cancelled, Collateral
Agent’s Liens, or such provision of this Agreement, shall be reinstated in full
force and effect and such prior release, termination, cancellation or surrender
shall not diminish, release, discharge, impair or otherwise affect the
obligation of any Loan Party in respect of such liability or any Collateral
securing such liability.

 

17.09.              Confidentiality.

 

(a)                                 Agent and Lenders each individually (and not
jointly or jointly and severally) agree that material, non-public information
regarding Borrower and its Subsidiaries, their operations, assets, and existing
and contemplated business plans (“Confidential Information”) shall be treated by
Agent and the Lenders in a

 

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confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except:  (i) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group and to employees, directors and officers of any member of the
Lender Group (the Persons in this clause (i), “Lender Group Representatives”) on
a “need to know” basis in connection with this Agreement and the transactions
contemplated hereby and on a confidential basis, (ii) to Subsidiaries and
Affiliates of any member of the Lender Group (including the Bank Product
Providers), provided that any such Subsidiary or Affiliate shall have agreed to
receive such information hereunder subject to the terms of this Section 17.09,
(iii) as may be required by regulatory authorities so long as such authorities
are informed of the confidential nature of such information, (iv) as may be
required by statute, decision, or judicial or administrative order, rule, or
regulation; provided that (x) prior to any disclosure under this clause (iv),
the disclosing party agrees to provide Borrower with prior notice thereof, to
the extent that it is practicable to do so and to the extent that the disclosing
party is permitted to provide such prior notice to Borrower pursuant to the
terms of the applicable statute, decision, or judicial or administrative order,
rule, or regulation and (y) any disclosure under this clause (iv) shall be
limited to the portion of the Confidential Information as may be required by
such statute, decision, or judicial or administrative order, rule, or
regulation, (v) as may be agreed to in advance in writing by Borrower, (vi) as
requested or required by any Governmental Authority pursuant to any subpoena or
other legal process, provided, that, (x) prior to any disclosure under this
clause (vi) the disclosing party agrees to provide Borrower with prior written
notice thereof, to the extent that it is practicable to do so and to the extent
that the disclosing party is permitted to provide such prior written notice to
Borrower pursuant to the terms of the subpoena or other legal process and
(y) any disclosure under this clause (vi) shall be limited to the portion of the
Confidential Information as may be required by such Governmental Authority
pursuant to such subpoena or other legal process, (vii) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Agent or the Lenders or the Lender Group
Representatives), (viii) in connection with any assignment, participation  or
pledge of any Lender’s interest under this Agreement, provided that prior to
receipt of Confidential Information any such assignee, participant, or pledgee
shall have agreed in writing to receive such Confidential Information either
subject to the terms of this Section 17.09 or pursuant to confidentiality
requirements substantially similar to those contained in this Section 17.09 (and
such Person may disclose such Confidential Information to Persons employed or
engaged by them as described in clause (i) above), (ix) in connection with any
litigation or other adversary proceeding involving parties hereto which such
litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents;
provided, that, prior to any disclosure to any Person (other than any Loan
Party, Agent, any Lender, any of their respective Affiliates, or their
respective counsel) under this clause (ix) with respect to litigation involving
any Person (other than Borrower, Agent, any Lender, any of their respective
Affiliates, or their respective counsel), the disclosing party agrees to provide
Borrower with prior written notice thereof, and (x) in connection with, and to
the extent reasonably necessary for, the exercise of any secured creditor remedy
under this Agreement or under any other Loan Document.

 

(b)                                 Anything in this Agreement to the contrary
notwithstanding, Agent may disclose information concerning the terms and
conditions of this Agreement and the other Loan Documents to loan syndication
and pricing reporting services or in its marketing or promotional materials,
with such information to consist of deal terms and other information customarily
found in such publications or marketing or promotional materials and may
otherwise use the name, logos, and other insignia of Borrower or the other Loan
Parties and the Credit Facility provided hereunder in any “tombstone” or other
advertisements, on its website or in other marketing materials of the Agent.

 

(c)                                  The Loan Parties hereby acknowledge that
Agent or its Affiliates may make available to the Lenders materials or
information provided by or on behalf of Borrower hereunder (collectively,
“Borrower Materials”) by posting the Borrower Materials on IntraLinks, SyndTrak
or another similar electronic system (the “Platform”) and certain of the Lenders
may be “public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Loan Parties or their securities)
(each, a “Public Lender”).  The Loan Parties shall be deemed to have authorized
Agent and its Affiliates and the Lenders to treat Borrower Materials marked
“PUBLIC” or otherwise at any time filed with the SEC as not containing any
material non-public information with respect to the Loan Parties or their
securities for purposes of United States federal and state securities laws.  All
Borrower Materials marked “PUBLIC” are permitted to be made available through a
portion of the Platform designated as “Public Investor” (or another similar
term).  Agent and its Affiliates and the Lenders

 

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shall be entitled to treat any Borrower Materials that are not marked “PUBLIC”
or that are not at any time filed with the SEC as being suitable only for
posting on a portion of the Platform not marked as “Public Investor” (or such
other similar term).

 

(d)                                 The Agent, the Lenders and all other persons
who are or who may become party to this Agreement or who may participate in the
Loans acknowledge that Borrower and its Subsidiaries perform classified
contracts funded by or for the benefit of the United States federal government,
and, accordingly, notwithstanding any other provision of this Agreement, neither
Borrower nor any Subsidiary will be obligated to release, disclose or otherwise
make available:  (i) any classified information to any Person including the
Agent, any Lender or any other Person not in possession of a valid security
clearance and authorized by the appropriate agency of the United States federal
government to receive such material, and (ii) any material whatsoever to any
Person including the Agent, any Lender or any other Person if such release,
disclosure or availability would not comply with the National Industrial
Security Program Operating Manual and associated laws and regulations.  The
Agent and the Lenders agree that, in connection with any exercise of a right or
remedy, the United States federal government may remove classified information
or government-issued property prior to any remedial action implicating such
classified information or government-issued property.  Upon notice from the
Borrower, the Agent and the Lenders shall take such steps as may reasonably be
requested by the Borrower to enable the Borrower or any Subsidiary to comply
with the Foreign Ownership Control or Influence requirements of the United
States government imposed from time to time.

 

17.10.              Survival.  All representations and warranties made by the
Loan Parties in the Loan Documents and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of the Loan Documents and
the making of any Loans and issuance of any Letters of Credit, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that Agent, Issuing Lender, or any Lender may have had notice or knowledge of
any Default or Event of Default or incorrect representation or warranty at the
time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of, or any accrued interest on, any Loan or any
fee or any other amount payable under this Agreement is outstanding or unpaid or
any Letter of Credit is outstanding and so long as the Credit Facility has not
expired or been terminated.

 

17.11.              Patriot Act.  Each Lender that is subject to the
requirements of the Patriot Act hereby notifies Borrower that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies Borrower, which information includes the name and address of
Borrower and other information that will allow such Lender to identify Borrower
in accordance with the Patriot Act.  In addition, if Agent is required by law or
regulation or internal policies to do so, it shall have the right to
periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and customary
individual background checks for the Loan Parties and (b) OFAC/PEP searches and
customary individual  background checks for the Loan Parties’ senior management
and key principals, and Borrower agrees to cooperate in respect of the conduct
of such searches and further agrees that the reasonable costs and charges for
such searches shall constitute Lender Group Expenses hereunder and be for the
account of Borrower.

 

17.12.              Integration.  This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.  The foregoing to
the contrary notwithstanding, all Bank Product Agreements, if any, are
independent agreements governed by the written provisions of such Bank Product
Agreements, which will remain in full force and effect, unaffected by any
repayment, prepayments, acceleration, reduction, increase, or change in the
terms of any credit extended hereunder, except as otherwise expressly provided
in such Bank Product Agreement.

 

17.13.              Transitional Arrangements.  On the Closing Date, this
Agreement shall amend, restate and supersede the Existing Credit Agreement in
its entirety, except as provided in this Section.  On the Closing Date, the
rights and obligations of the parties evidenced by the Existing Credit Agreement
shall be evidenced by this Agreement and the other Loan Documents and the grant
of security interest in the Collateral by the Borrower under

 

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the other “Loan Documents” and “Security Documents” (as each such term is
defined in the Existing Credit Agreement) shall continue under this Agreement
and the other Loan Documents (as defined in this Agreement), and shall not in
any event be terminated, extinguished or annulled but shall hereafter be
governed by this Agreement and the other Loan Documents (as defined in this
Agreement).  All references to the Existing Credit Agreement in any “Loan
Document” or “Security Document” (as each such term is defined in the Existing
Credit Agreement) or other document or instrument delivered in connection
therewith shall be deemed to refer to this Agreement and the provisions hereof.

 

[Signature pages to follow.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.

 

BORROWER:

ALION SCIENCE AND TECHNOLOGY CORPORATION a Delaware corporation

 

 

 

 

 

 

 

By:

/s/ Barry Broadus

 

Name:

Barry Broadus

 

Title:

Chief Financial Officer

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, Sole Lead
Arranger, Sole Book Runner, and a Lender

 

 

 

 

 

 

 

By:

/s/ Marc Grossman

 

Name:

Marc Grossman

 

 

Its Authorized Signatory

 

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Schedule 1.1

 

to

 

Second Amended and Restated Credit Agreement

 

Definitions

 

As used in the Agreement, the following terms shall have the following
definitions:

 

“Account” means an account (as that term is defined in the Code).

 

“Account Debtor” means any Person who is obligated on an Account, chattel paper,
or a general intangible.

 

“Accounting Changes” means changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions).

 

“Acquisition” means (a) the purchase or other acquisition by a Person or its
Subsidiaries of all or substantially all of the assets of (or any division or
business line of) any other Person, or (b) the purchase or other acquisition
(whether by means of a merger, consolidation, or otherwise) by a Person or its
Subsidiaries of all or substantially all of the Equity Interests of any other
Person.

 

“Acquired Indebtedness” means Indebtedness of a Person whose assets or Equity
Interests are acquired by Borrower or any of its Subsidiaries in a Permitted
Acquisition; provided, that such Indebtedness (a) is either purchase money
Indebtedness or a Capital Lease with respect to Equipment or mortgage financing
with respect to Real Property, (b) was in existence prior to the date of such
Permitted Acquisition, and (c) was not incurred in connection with, or in
contemplation of, such Permitted Acquisition.

 

“Additional Documents” has the meaning specified therefor in Section 5.12 of the
Agreement.

 

“Administrative Questionnaire” has the meaning specified therefor in
Section 13.01(a) of the Agreement.

 

“Affected Lender” has the meaning specified therefor in Section 2.13(b) of the
Agreement.

 

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person.  For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Equity Interests, by contract, or
otherwise; provided, that, for purposes of the definition of Eligible Accounts
and Section 6.10 of the Agreement:  (a) any Person which owns directly or
indirectly 10% or more of the Equity Interests having ordinary voting power for
the election of directors or other members of the governing body of a Person or
10% or more of the partnership or other ownership interests of a Person (other
than as a limited partner of such Person) shall be deemed an Affiliate of such
Person, (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such Person, and (c) each partnership in which a Person is a
general partner shall be deemed an Affiliate of such Person.

 

“Agent” has the meaning specified therefor in the preamble to the Agreement.

 

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“Agent-Related Persons” means Agent, together with its Affiliates, officers,
directors, employees, attorneys, and agents.

 

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1
to the Agreement (or such other Deposit Account of Agent that has been
designated as such, in writing, by Agent to Borrower and the Lenders).

 

“Agreement” means the Second Amended and Restated Credit Agreement to which this
Schedule 1.1 is attached.

 

“Applicable Margin” means 4.75 percentage points.

 

“Applicable Prepayment Premium” means, as of any date of determination, an
amount equal to 2.0% times the Maximum Revolver Credit Limit on the date
immediately prior to the date of determination.

 

“Applicable Revolver Reduction Premium” means, as of any date of determination,
an amount equal to 2.0% times the amount of the reduction of the Revolver Credit
Limits on such date.

 

“Application Event” means the occurrence of (a) a failure by Borrower to repay
all of the Bank Obligations in full on the Maturity Date, or (b) an Event of
Default and the election by Agent or the Required Lenders to require that
payments and proceeds of Collateral be applied pursuant to
Section 2.04(b)(ii) of the Agreement.

 

“Assignee” has the meaning specified therefor in Section 13.01(a) of the
Agreement.

 

“Assignment and Acceptance” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1 to the Agreement.

 

“Assignment of Claims Act” means the Federal Assignment of Claims Act of 1940,
as amended.

 

“Authorized Person” means any one of the individuals identified on Schedule A-2
to the Agreement, as such schedule is updated from time to time by written
notice from Borrower to Agent.

 

“Availability” means, as of any date of determination, the amount that Borrower
is entitled to borrow as Revolving Loans under Section 2.01 of the Agreement
(after giving effect to the then outstanding Revolver Usage).

 

“Bank Obligations” means (a) all loans (including the Revolving Loans (inclusive
of Extraordinary Advances)), debts, principal, interest (including any interest
that accrues after the commencement of an Insolvency Proceeding, regardless of
whether allowed or allowable in whole or in part as a claim in any such
Insolvency Proceeding), reimbursement or indemnification obligations with
respect to Letters of Credit (irrespective of whether contingent), premiums,
liabilities (including all amounts charged to the Loan Account pursuant to the
Agreement), obligations (including indemnification obligations), fees (including
the fees provided for in the Fee Letter), Lender Group Expenses (including any
fees or expenses that accrue after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), guaranties, and all covenants and duties of any
other kind and description owing by any Loan Party arising out of, under,
pursuant to, in connection with, or evidenced by the Agreement or any of the
other Loan Documents and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all interest

 

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not paid when due and all other expenses or other amounts that Borrower is
required to pay or reimburse by the Loan Documents or by law or otherwise in
connection with the Loan Documents, and (b) all Bank Product Obligations. 
Without limiting the generality of the foregoing, the Bank Obligations of
Borrower under the Loan Documents include the obligation to pay (i) the
principal of the Revolving Loans, (ii) interest accrued on the Revolving Loans,
(iii) the amount necessary to reimburse Issuing Lender for amounts paid or
payable pursuant to Letters of Credit, (iv) Letter of Credit commissions, fees
(including fronting fees) and charges, (v) Lender Group Expenses, (vi) fees
payable under the Agreement or any of the other Loan Documents, and
(vii) indemnities and other amounts payable by any Loan Party under any Loan
Document.  Any reference in the Agreement or in the Loan Documents to the Bank
Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.

 

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

 

“Bank Product Agreements” means those agreements entered into from time to time
by Borrower or its Subsidiaries with a Bank Product Provider in connection with
the obtaining of any of the Bank Products, including, without limitation, the
Bank Product Provider Agreement.

 

“Bank Product Collateralization” means providing cash collateral (pursuant to
documentation reasonably satisfactory to Agent) to be held by Agent for the
benefit of the Bank Product Providers (other than the Hedge Providers) in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure with respect to the then existing Bank Product Obligations
(other than Hedge Obligations).

 

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

 

“Bank Product Provider” means Wells Fargo or any of its Affiliates, including
each of the foregoing in its capacity, if applicable, as a Hedge Provider.

 

“Bank Product Provider Agreement” means an agreement in substantially the form
attached hereto as Exhibit B-2 to the Agreement, in form and substance
satisfactory to Agent, duly executed by the applicable Bank Product Provider,
Borrower, and Agent.

 

“Bank Product Reserves” means, as of any date of determination, those reserves
that Agent deems necessary or appropriate to establish, in its sole and absolute
discretion (based upon the Bank Product Providers’ determination of the
liabilities and obligations of Borrower and its Subsidiaries in respect of Bank
Product Obligations), in respect of Bank Products then provided or outstanding.

 

“Bank Secured Parties” means (a) each of the members of the Lender Group,
(b) the Agent, (c) the Sole Lead Arranger, (d) the Sole Book Runner, (e) each
counterparty to any Hedge Agreement

 

4

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with a Loan Party that (i) is in effect on the Closing Date if such counterparty
is a Lender or an Affiliate of a Lender as of the Closing Date or (ii) is
entered into after the Closing Date if such counterparty is a Lender or an
Affiliate of a Lender at the time such Hedge Agreement is entered into, (f) the
beneficiaries of each indemnification obligation undertaken by any Loan Party
under any Loan Document and (g) the successors and permitted assigns of each of
the foregoing.

 

“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

 

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which Borrower or any of its Subsidiaries or ERISA Affiliates has
been an “employer” (as defined in Section 3(5) of ERISA) within the past six
years.

 

“Blockage/Collections Trigger Event” means (a) during the occurrence and
continuance of any Default or Event of Default, or (b) the date on which Agent
has determined that Borrower’s Excess Availability is less than 20% of the
Maximum Revolver Credit Limit.

 

“Blocked Account Bank” means the bank or financial institution set forth on
Section 5.16 of the Agreement.

 

“Blocked Account Agreement” means that certain blocked account agreement,
lockbox agreement or Control Agreement, as the case may be, in form and
substance reasonably satisfactory to Agent, which is executed and delivered by a
Loan Party, Collateral Agent (on behalf of Agent and Lenders), and the Blocked
Account Bank.

 

“Board of Directors” means, as to any Person, the board of directors (or
comparable managers) of such Person, or any committee thereof duly authorized to
act on behalf of the board of directors (or comparable managers).

 

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

 

“Borrower” has the meaning specified therefor in the preamble to the Agreement.

 

“Borrower Materials” has the meaning specified therefor in Section 17.09(c) of
the Agreement.

 

“Borrowing” means a borrowing consisting of Revolving Loans made on the same day
by the Lenders (or Agent on behalf thereof), or by Agent in the case of an
Extraordinary Advance.

 

“Borrowing Base” means, as of any date of determination, the result of:

 

(a)                                 85% of the amount of Eligible Accounts, less
the amount, if any, of the Dilution Reserve, plus

 

(b)                                 85% of the amount of Eligible Government
Accounts, less the amount, if any, of the Dilution Reserve attributable to
Eligible Government Accounts, minus

 

(c)                                  the aggregate amount of reserves, if any,
established by Agent under Section 2.01(c) of the Agreement.

 

“Borrowing Base Certificate” means a certificate in the form of Exhibit B-1.

 

5

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“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the State of New York.

 

“Capital Expenditures” means, with respect to any Person for any period, the
amount of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP,
whether such expenditures are paid in cash or financed (including, without
limitation, Capital Lease Obligations or Synthetic Lease Obligations incurred by
such Person during such period), but excluding, without duplication
(a) expenditures made during such period in connection with the replacement,
substitution, or restoration of assets or properties, (b) with respect to the
purchase price of assets that are purchased substantially contemporaneously with
the trade-in of existing assets during such period, the amount that the gross
amount of such purchase price is reduced by the credit granted by the seller of
such assets for the assets being traded in at such time, (c) capitalized
software development costs to the extent such costs are deducted from net
earnings under the definition of Consolidated EBITDA for such period, and
(d) expenditures during such period that, pursuant to a written agreement, are
reimbursed by a third Person (excluding Borrower or any of its Affiliates).

 

“Capitalized Lease Obligation” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

 

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

 

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time
deposits, overnight bank deposits or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws
of the United States or any state thereof or the District of Columbia or any
United States branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $1,000,000,000, (e) Deposit
Accounts maintained with (i) any bank that satisfies the criteria described in
clause (d) above, or (ii) any other bank organized under the laws of the United
States or any state thereof so long as the full amount maintained with any such
other bank is insured by the Federal Deposit Insurance Corporation,
(f) repurchase obligations of any commercial bank satisfying the requirements of
clause (d) of this definition or recognized securities dealer having combined
capital and surplus of not less than $1,000,000,000, having a term of not more
than seven days, with respect to securities satisfying the criteria in clauses
(a) or (d) above, (g) debt securities with maturities of six months or less from
the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the criteria described in clause (d) above,
(h) Investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (g) above, and
(i) other short-term investments utilized by Foreign Subsidiaries in accordance
with normal investment practices for cash management in investments of a type
analogous to the foregoing.

 

“Cash Management Services” means any cash management or related services
including treasury, depository, return items, overdraft, controlled
disbursement,  merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer

 

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(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other cash management
arrangements.

 

“Change of Control” shall be deemed to have occurred if (a) prior to a Qualified
Public Offering, the ESOT shall fail to own, directly or indirectly,
beneficially and of record, shares representing at least 51% of each of the
aggregate ordinary voting power and aggregate equity value represented by the
issued and outstanding Equity Interests of the Borrower, (b) after a Qualified
Public Offering, any “person” or “group” (within the meaning of the Exchange Act
and the rules of the Securities and Exchange Commission thereunder as in effect
on the date hereof) other than the ESOT becomes, directly or indirectly, the
beneficial owner of Equity Interests in the Borrower representing more than
37.5% of the aggregate ordinary voting power represented by the issued and
outstanding Equity Interests of the Borrower, (c) a majority of the seats (other
than vacant seats) on the board of directors of the Borrower shall at any time
be occupied by persons who were neither (i) nominated by the board of directors
of the Borrower nor (ii) appointed by directors so nominated, or (d) any change
in control (or similar event, however denominated) with respect to the Borrower
shall occur under and as defined in the Senior Secured Notes Indenture or any
other indenture or agreement in respect of Material Indebtedness to which the
Borrower or any Subsidiary is a party.

 

“Claim” has the meaning set forth therefor in Section 12(c) of the Agreement.

 

“Closing Date” means the date of the making of the initial Revolving Loan (or
other extension of credit) under the Agreement.

 

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

 

“Collateral” means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by Borrower or its Subsidiaries in or upon which a
Lien is granted by such Person in favor of Collateral Agent, for the benefit of
Agent and the Lenders, under any of the Loan Documents.

 

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in Borrower’s or its Subsidiaries’ books and records or Equipment, in each case,
in form and substance reasonably satisfactory to Agent.

 

“Collateral Agent” shall mean Wilmington Trust Company, in its capacity as
collateral agent under the Security Documents, and any successor thereto.

 

“Collateral Agent’s Liens” means the Liens granted by Borrower or another Loan
Party to Collateral Agent, for the benefit of Agent and the Lenders, under the
Loan Documents and securing the Bank Obligations.

 

“Collection Day Period” means:  (a) with respect to Collections to reduce the
outstanding principal amount of the Loans hereunder, on the same Business Day of
receipt by the Borrower of immediately available funds in the Designated Account
provided such payments and notice thereof are received in accordance with the
Agent’s usual and customary practices as in effect from time to time and within
sufficient time to credit such Borrower’s loan account on such day, and if not,
then on the next Business Day, and (b) with respect to Collections to apply to
accrued interest on the outstanding Loans, on the same Business Day of receipt
by the Borrower of immediately available funds in the Designated Account
provided such payments and notice thereof are received in accordance with the
Agent’s usual and customary practices as in effect from time to time.

 

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“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, cash proceeds of asset sales, rental
proceeds, and tax refunds).

 

“Competitor” means any Person which is a direct competitor of Borrower or its
Subsidiaries if, at the time of a proposed assignment, Borrower has provided
evidence satisfactory to Agent and the assigning Lender in their sole and
absolute discretion that such Person is a direct competitor of Borrower or its
Subsidiaries; provided, that in connection with any assignment or participation,
the Assignee or Participant with respect to such proposed assignment or
participation that is an investment bank, a commercial bank, a finance company,
a fund, or other Person which merely has an economic interest in any such direct
competitor, and is not itself such a direct competitor of Borrower or its
Subsidiaries, shall not be deemed to be a direct competitor for the purposes of
this definition.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 to the Agreement delivered by the chief financial officer of
Borrower to Agent.

 

“Confidential Information” has the meaning specified therefor in
Section 17.09(a) of the Agreement.

 

“Consolidated EBITDA” means, for any period, Consolidated Net Income for such
period plus (a) without duplication and to the extent deducted in determining
such Consolidated Net Income, the sum of (i) consolidated interest expense for
such period, (ii) consolidated income tax expense for such period, (iii) all
amounts attributable to depreciation and amortization, including amortization of
goodwill and other intangible assets, for such period, (iv) cash contributions
to the ESOP during such period in respect of the repurchase liability of the
Borrower under the ESOP Plan Documents, (v) any non-cash charges or expenses
(other than the write-down of current assets) for such period, including
(A) non-cash expenses associated with the recognition of the difference between
the fair market value of the Warrants and the exercise price of such Warrants,
(B) non-cash expenses with respect to stock appreciation rights, phantom stock
plans, the Warrants and accretion of the Warrants and (C) non-cash contributions
to the ESOP, (vi) any extraordinary losses for such period, (vii) any
non-recurring charges and adjustments for such period treated as such by the
independent third-party valuation firm that prepares valuation reports in
connection with the ESOP and (viii) that portion of employee compensation that
was both recorded by the Borrower as compensation expense for such period and
that was directed by an employee of the Borrower to be used by the ESOT to
purchase Equity Interests of the Borrower; provided that the aggregate amount
added back under this clause (viii) in any period of four consecutive fiscal
quarters shall not exceed an amount equal to 10% of the Consolidated EBITDA
(without giving effect to this clause (viii)) for the period of four consecutive
fiscal quarters immediately preceding such period and minus (b) without
duplication (i) all cash payments made during such period on account of
reserves, restructuring charges (not including expenses in connection with the
Exchange Offer and contemporaneous related transactions) and other non- cash
charges added to Consolidated Net Income pursuant to clause (a)(v) above in a
previous period, (ii) to the extent included in determining such Consolidated
Net Income, any  extraordinary and all non-cash items of income for such period,
and (iii) all cash payments made during such period to repurchase Equity
Interests in respect of which cash compensation expense was added back to
Consolidated Net Income pursuant to clause (a)(viii) above in a previous period,
all determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” shall mean, for any period, the net income or loss of
the Borrower and the Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a) the
income of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by the Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, statute, rule or governmental regulation
applicable to such Subsidiary, (b) the income or loss of any person accrued
prior

 

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to the date it becomes a Subsidiary or is merged into or consolidated with the
Borrower or any Subsidiary or the date that such person’s assets are acquired by
the Borrower or any Subsidiary, (c) any gains or losses attributable to sales of
assets out of the ordinary course of business and the transaction costs in
connection with such sales and (d) any income or loss attributable to the early
extinguishment of Indebtedness.

 

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by Borrower or one of its
Subsidiaries, Collateral Agent (on behalf of Agent and Lenders), and the
applicable securities intermediary (with respect to a Securities Account) or
bank (with respect to a Deposit Account or lockbox).

 

“Controlled Group” shall mean the group consisting of (a) any corporation which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the IRC) as Borrower, (b) a partnership or other trade or
business (whether or not incorporated) which is under common control (within the
meaning of Section 414(c) of the IRC) with Borrower, and (c) a member of the
same affiliated service group (within the meaning of Section 414(m) of the IRC)
as Borrower, any corporation described in clause (a) above or any partnership or
trade or business described in clause (b) above.

 

“Copyright Security Agreement” means that certain Copyright Security Agreement,
dated as of even date with the Agreement, by and among Borrower, Alion — BMH
Corporation, a Virginia corporation, and Collateral Agent (as the same may be
further amended, amended and restated, supplemented, renewed, restated,
replaced, or otherwise modified from time to time).

 

“Credit Facility” means the credit facility being made available to Borrower by
the Lenders pursuant to Section 2, and with respect to each such Lender, its
Revolver Credit Limit, and, with respect to all such Lenders, their Revolver
Credit Limit, in each case as such Dollar amounts are set forth beside such
Lender’s name under the applicable heading on Schedule C-1 to the Agreement or
in the Assignment and Acceptance pursuant to which such Lender became a Lender
under the Agreement, as such amounts may be reduced or increased from time to
time pursuant to assignments made in accordance with the provisions of
Section 13.01 of the Agreement.

 

“Daily One Month LIBOR” shall mean, for any day the rate per annum (rounded
upward to the nearest thousandth of 1%) for United States dollar deposits
determined by Agent for the purpose of calculating the effective interest rate
for loans that reference Daily One Month LIBOR as the Inter-Bank Market Offered
Rate in effect from time to time for the 1 month delivery of funds in amounts
approximately equal to the principal amount of such loans.  The Loan Parties
understand and agree that Agent may base its determination of the Inter-Bank
Market Offered Rate upon such offers or other market indicators of the
Inter-Bank Market as Agent in its discretion deems appropriate, including but
not limited to the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.  When interest is determined in relation to Daily One Month
LIBOR, each change in the interest rate shall become effective each Business Day
that Agent determines that Daily One Month LIBOR has changed.

 

“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

 

“Defaulting Lender” means, subject to the terms and conditions of Section 2, any
Lender that (a) has failed to fund any amounts required to be funded by it under
the Agreement within 1 Business Day of the date that it is required to do so
under the Agreement (including the failure to make available to Agent amounts
required pursuant to a Settlement or to make a required payment in connection
with a Letter of Credit Disbursement), (b) notified the Borrower, Agent, or any
Lender in writing that it does not intend to comply with all or any portion of
the terms and conditions under the Agreement, (c) has made a

 

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public statement to the effect that it does not intend to comply with its
funding requirements under the Agreement, (d) failed, within 1 Business Day
after written request by Agent, to confirm that it will comply with the terms of
the Agreement relating to its obligations to fund any amounts required to be
funded by it under the Agreement, (e) otherwise failed to pay over to Agent or
any other Lender any other amount required to be paid by it under the Agreement
within 1 Business Day of the date that it is required to do so under the
Agreement, or (f) (i) becomes or is insolvent or has a parent company that has
become or is insolvent or (ii) becomes the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee, or custodian or
appointed for it, or has taken any action in furtherance of, or indicating its
consent to, approval of or acquiescence in any such proceeding or appointment or
has a parent company that has become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee, or custodian appointed
for it, or has taken any action in furtherance of, or indicating its consent to,
approval of or acquiescence in any such proceeding or appointment.

 

“Defaulting Lender Rate” means (a) for the first 3 days from and after the date
the relevant payment is due, Daily One Month LIBOR, and (b) thereafter, the
interest rate then applicable to Revolving Loans (inclusive of the Applicable
Margin applicable thereto).

 

“Deposit Account” means any deposit account (as that term is defined in the
Code).

 

“Designated Account” means the Deposit Account of Borrower identified on
Schedule D-1 to the Agreement (or such other Deposit Account of Borrower located
at Designated Account Bank that has been designated as such, in writing, by
Borrower to Agent).

 

“Designated Account Bank” has the meaning specified therefor in Schedule D-1 to
the Agreement (or such other bank that is located within the United States that
has been designated as such, in writing, by Borrower to Agent).

 

“Dilution” means, as of any date of determination, a percentage, based upon the
experience of the immediately prior 12 months, that is the result of dividing
the Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to Borrower’s Accounts
during such period, by (b) Borrower’s cash received from Accounts during such
period.

 

“Dilution Reserve” means, as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Accounts by 1 percentage point for
each percentage point by which Dilution is in excess of 5%, provided, however,
that Agent has the right to adjust the foregoing percentages in its sole and
absolute discretion.

 

“Disqualified Equity Interests” shall mean any Equity Interest that, by its
terms (or by the terms of any security other Equity Interests into which it is
convertible or for which it is exchangeable), or upon the happening of any event
or condition, (a) matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable (other than for
Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof (other than for Qualified
Equity Interests), in whole or in part, or requires the payment of any cash
dividend or any other scheduled cash payment constituting a return of capital,
in each case at any time on or prior to the date that is 180 days after the
Maturity Date, or (b) is convertible into or exchangeable (unless at the sole
option of the issuer thereof) for (i) debt securities or (ii) any Equity
Interest referred to in clause (a) above, in each case at any time prior to the
date that is 180 days after the Maturity Date; provided, however, that if such
Equity Interest is issued to any employee or to any plan for the benefit of
employees of the Borrower or any of its Subsidiaries or by any such plan to such
employees, such Equity Interest shall not constitute a Disqualified Equity
Interest solely because it may be required to be repurchased by the Borrower or
any of its Subsidiaries in order to satisfy applicable statutory or

 

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regulatory obligations, obligations set forth in the ESOP Plan Documents or as a
result of such employee’s termination, death or disability.

 

“Dollars” or “$” means United States dollars.

 

“Domestic Subsidiaries” shall mean all Subsidiaries incorporated or organized
under the laws of the United States of America, any State thereof or the
District of Columbia.

 

“Drawing Document” means any Letter of Credit or other document presented for
purposes of drawing under any Letter of Credit.

 

“Eligible Accounts” means those Accounts (other than Government Accounts)
created by Borrower in the ordinary course of its business, that arise out of
Borrower’s sale of goods or rendition of services, that comply with each of the
representations and warranties respecting Eligible Accounts made in the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the excluding criteria set forth below; provided, that such criteria may be
revised from time to time by Agent in Agent’s Permitted Discretion.  In
determining the amount to be included, Eligible Accounts shall be calculated net
of customer deposits, unapplied cash, taxes, discounts, credits, allowances, and
rebates.  Eligible Accounts shall not include the following:

 

(a)           Accounts that the Account Debtor has failed to pay within 90 days
of original invoice date,

 

(b)           Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above; provided that, for purposes of this
clause (b), with respect to any Account Debtor which is a Governmental Authority
other than the United States, (x) any department, agency or instrumentality of
such a Governmental Authority shall be deemed to be an Affiliate of another
department, agency or instrumentality of such Governmental Authority only to the
extent comprised or organized under the same program within any such
Governmental Authority and (y) each State, territory and the District of
Columbia within the Unites States shall not be deemed to be Affiliates of each
other,

 

(c)           Accounts with respect to which the Account Debtor is an Affiliate
of Borrower or an employee or agent of Borrower or any Affiliate of Borrower,

 

(d)           Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,

 

(e)           Accounts that are not payable in Dollars,

 

(f)            Accounts with respect to which the Account Debtor either (i) does
not maintain its chief executive office in the United States, or (ii) is not
organized under the laws of the United States or any state thereof, or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(A) the Account is supported by an irrevocable letter of credit reasonably
satisfactory to Agent (as to form, substance, and issuer or domestic confirming
bank) that has been delivered to Agent and is directly drawable by Agent, or
(B) the Account is covered by credit insurance in form, substance, and amount,
and by an insurer, reasonably satisfactory to Agent,

 

(g)           Accounts with respect to which the Account Debtor is either
(i) the United States or any department, agency, or instrumentality of the
United States, or (ii) any state of the United States,

 

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(h)           Accounts with respect to which the Account Debtor is a creditor of
Borrower, has or has asserted a right of recoupment or setoff, or has disputed
its obligation to pay all or any portion of the Account, to the extent of such
claim, right of recoupment or setoff, or dispute,

 

(i)            Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceed (i) 20%, for Account Debtors that are
deemed investment grade from either Moody’s, Standard & Poor’s or any other
nationally recognized statistical rating organization recognized as such by the
SEC that has been designated by the Agent in its sole and discretion, or
(ii) 10% for Account Debtors that are not deemed investment grade from either
Moody’s, Standard & Poor’s or any other nationally recognized statistical rating
organization recognized as such by the SEC that has been designated by the Agent
in its sole and discretion (such percentages, as applied to a particular Account
Debtor, being subject to reduction by Agent in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts,
to the extent of the obligations owing by such Account Debtor in excess of such
percentages; provided, that, in each case, the amount of Eligible Accounts that
are excluded because they exceed the foregoing percentages shall be determined
by Agent based on all of the otherwise Eligible Accounts prior to giving effect
to any eliminations based upon the foregoing concentration limit,

 

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

 

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

 

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

 

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

 

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

 

(o)           Accounts that represent the right to receive progress payments
(other than with respect to work already completed and for which the applicable
Loan Party is entitled to bill the Account Debtor and which is not subject to
future offset or counterclaim by such Account Debtor) or other advance billings
that are due prior to the completion of performance with respect to that payment
by a Loan Party of the subject contract for goods or services.

 

“Eligible Government Accounts” means those Government Accounts created by a Loan
Party in the ordinary course of its business, that arise out of such Loan
Party’s sale of goods or rendition of services pursuant to a Government
Contract, that comply with each of the representations and warranties respecting
Eligible Government Accounts made in the Loan Documents, and that are not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth below; provided, that such criteria may be revised from time to time by
Agent in its Permitted Discretion.  In determining the amount to be included,
Eligible Government Accounts shall be calculated net of customer deposits,
unapplied cash, taxes, discounts, credits, allowances, and rebates.  Eligible
Government Accounts shall not include the following:

 

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(a)           Government Accounts that the Account Debtor has failed to pay
within 90 days of original invoice date,

 

(b)           Government Accounts owed under a particular program with the
United States of America where 30% or more of all Government Accounts owed under
that particular program are deemed ineligible under clause (a) above,

 

(c)           Government Accounts arising in a transaction wherein goods are
placed on consignment or are sold pursuant to a guaranteed sale, a sale or
return, a sale on approval, a bill and hold, or any other terms by reason of
which the payment by the Account Debtor may be conditional,

 

(d)           Government Accounts that are not payable in Dollars,

 

(e)           Government Accounts with respect to which, if reasonably requested
by Agent pursuant to Section 5.08(b), the applicable Loan Party has not
complied, to the reasonable satisfaction of Agent and Collateral Agent, with the
provisions applicable to it of the Assignment of Claims Act,

 

(f)            Government Accounts, the collection of which, Agent, in its
Permitted Discretion, believes to be doubtful,

 

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

 

(h)           Government Accounts that represent billings in unearned revenue,

 

(i)            Government Accounts that represent the right to receive progress
payments (other than with respect to work already completed and for which the
applicable Loan Party is entitled to bill the Account Debtor and which is not
subject to future offset or counterclaim by such Account Debtor) or other
advance billings that are due prior to the completion of performance with
respect to that payment by a Loan Party of the subject contract for goods or
services,

 

(j)            Government Accounts with respect to which the Account Debtor is a
creditor of a Loan Party, has or has asserted a right of recoupment or setoff,
or has disputed its obligation to pay all or any portion of the Government
Account, to the extent of such claim, right of recoupment or setoff, or dispute,

 

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

 

(l)            Government Accounts that are not subject to a valid and perfected
first priority Collateral Agent’s Lien, or

 

(m)          Government Accounts which are security for obligations due a surety
in respect of a bond issued by it in connection with a Bonded Contract.

 

“Eligible Transferee” means (a) any Lender (other than a Defaulting Lender), any
Affiliate of any Lender and any Related Fund of any Lender; and (b) (i) a
commercial bank organized under the laws of the United States or any state
thereof, and having total assets in excess of $1,000,000,000; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof, and having total assets in excess of $1,000,000,000;
(iii) a commercial bank organized under the laws of

 

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any other country or a political subdivision thereof; provided that (A) (x) such
bank is acting through a branch or agency located in the United States or
(y) such bank is organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political subdivision
of such country, and (B) such bank has total assets in excess of $1,000,000,000;
(d) any other entity (other than a natural person) that is an “accredited
investor” (as defined in Regulation D under the Securities Act) that extends
credit or buys loans as one of its businesses including insurance companies,
investment or mutual funds and lease financing companies, and having total
assets in excess of $1,000,000,000; and (f) during the continuation of an Event
of Default, any other Person approved by Agent; provided, that, except pursuant
to Section 13.01(a)(ii)(B), no Loan Party and No Affiliate of a Loan Party shall
qualify as an Eligible Transferee.

 

“Employee Benefit Plan” means any employee benefit plan within the meaning of
Section 3(3) of ERISA, whether or not subject to ERISA, (a) that is or within
the preceding six (6) years has been sponsored, maintained or contributed to by
any Loan Party or ERISA Affiliate or (b) to which any Loan Party or ERISA
Affiliate has, or has had at any time within the preceding six (6) years, any
liability, contingent or otherwise.

 

“Environmental Action” means any written complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other written communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials (a) from any assets, properties, or
businesses of any Borrower, any Subsidiary of Borrower, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or
(c) from or onto any facilities which received Hazardous Materials generated by
any Borrower, any Subsidiary of Borrower, or any of their predecessors in
interest.

 

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on
Borrower or its Subsidiaries, relating to the environment, the effect of the
environment on employee health, or Hazardous Materials, in each case as amended
from time to time.

 

“Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.

 

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

 

“Equipment” means equipment (as that term is defined in the Code).

 

“Equity Interest” means, with respect to a Person, all of the shares, options,
warrants, interests, participations, beneficial interests in a trust, including
the ESOT, or other equivalents (regardless of how designated) of or in such
Person, whether voting or nonvoting, including capital stock (or other ownership
or profit interests or units), preferred stock, or any other “equity security”
(as such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the SEC under the Exchange Act).

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statutes, and all regulations and guidance promulgated
thereunder.  Any reference to a specific section of ERISA shall be deemed to be
a reference to such section of ERISA and any successor statutes, and all
regulations and guidance promulgated thereunder.

 

“ERISA Affiliate” means each entity, trade or business (whether or not
incorporated) that together with a Loan Party or a Subsidiary would be (or has
been) treated as a “single employer” within the meaning of section 4001(b)(1) of
ERISA or subsections (b), (c), (m) or (o) of section 414 of the IRC.  ERISA
Affiliate shall include any Subsidiary of any Loan Party.

 

“ESOP” shall mean the employee benefit plan entitled “The Alion Science and
Technology Corporation Employee Ownership, Savings and Investment Plan” adopted
and maintained by the Borrower.

 

“ESOP Fiduciary” shall mean the named fiduciary of the ESOP under ERISA.  As of
the Closing Date, the ESOP Fiduciary is the ESOP Committee of the Borrower.

 

“ESOP Plan Documents” shall mean collectively, those certain documents listed on
Schedule E-3, each as may be amended, supplemented or modified from time to time
as permitted by Section 6.06(b)(iii).

 

“ESOT” shall mean the trust entitled “Alion Science and Technology Corporation
Employee Ownership, Savings and Investment Trust” and adopted and maintained by
the Borrower pursuant to the applicable ESOP Plan Documents.

 

“ESOT Trustee” shall mean the trustee of the ESOT.  As of the Closing Date, the
ESOT Trustee is State Street Bank and Trust Company.

 

“Event of Default” has the meaning specified therefor in Section 8 of the
Agreement.

 

“Excess Availability” means, as of any date of determination, the amount equal
to Availability minus the aggregate amount, if any, of all trade payables of
Borrower and its Subsidiaries aged in excess of 30 days or, at the option of
Agent, such other period as Agent and Borrower may agree based on Borrower’s
historical performance with respect thereto and all book overdrafts of Borrower
and its Subsidiaries, in each case as determined by Agent in its sole and
absolute discretion.

 

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

 

“Exchange Offer” has the meaning specified therefor in the Borrower’s
Registration Statement on Form S-1, filed with the Securities Exchange
Commission on February 13, 2014, and as amended by that certain Amendment No. 1
to Form S-1, filed with the Securities Exchange Commission on March 26, 2014 and
as further amended from time to time thereafter.

 

“Excluded Taxes” means (i) any tax imposed on the net income or net profits of
any Lender or any Participant (including any branch profits taxes), in each case
imposed by the jurisdiction (or by any political subdivision or taxing authority
thereof) in which such Lender or such Participant is organized or the
jurisdiction (or by any political subdivision or taxing authority thereof) in
which such Lender’s or such Participant’s principal office is located in each
case as a result of a present or former connection between such Lender or such
Participant and the jurisdiction or taxing authority imposing the tax (other
than any such connection arising solely from such Lender or such Participant
having executed, delivered or performed its obligations or received payment
under, or enforced its rights or remedies under the

 

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Agreement or any other Loan Document); (ii) taxes resulting from a Lender’s or a
Participant’s failure to comply with the requirements of Section 16.02 of the
Agreement, (iii) any United States federal withholding taxes that would be
imposed on amounts payable to a Foreign Lender based upon the applicable
withholding rate in effect at the time such Foreign Lender becomes a party to
the Agreement (or designates a new lending office), except that Taxes shall
include (A) any amount that such Foreign Lender (or its assignor, if any) was
previously entitled to receive pursuant to Section 16.01 of the Agreement, if
any, with respect to such withholding tax at the time such Foreign Lender
becomes a party to the Agreement (or designates a new lending office), and
(B) additional United States federal withholding taxes that may be imposed after
the time such Foreign Lender becomes a party to the Agreement (or designates a
new lending office), as a result of a change in law, rule, regulation, order or
other decision with respect to any of the foregoing by any Governmental
Authority, and (iv) any United States federal withholding taxes imposed under
FATCA.

 

“Existing Credit Agreement” has the meaning specified therefor in the preamble
to the Agreement.

 

“Existing Credit Facility” means Borrower’s existing credit facility governed by
the Existing Credit Agreement, by and among the Borrower, the Original Lenders
and the Former Administrative Agent, and the other related loan documentation.

 

“Existing Letters of Credit” means those letters of credit described on
Schedule E-2 to the Agreement.

 

“Extraordinary Advances” has the meaning specified therefor in
Section 2.03(d)(iii) of the Agreement.

 

“FAR” has the meaning specified therefor in Section 4.22(d) of this Agreement.

 

“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of the
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof.

 

“Fee Letter” means that certain fee letter, dated as of even date with the
Agreement, between Borrower and Agent, in form and substance reasonably
satisfactory to Agent.

 

“Financial Officer” of any person shall mean the chief financial officer,
principal accounting officer, treasurer or controller of such person.

 

“Fixed Charge Coverage Ratio” means (i) Consolidated EBITDA plus all management,
consulting, monitoring and advisory fees now or hereafter paid, plus one-time
qualified Non-Recurring Permitted Refinancing Expenses (to the extent not
already capitalized by the Borrower), minus (to the extent added to Consolidated
Net Income in the calculation of Consolidated EBITDA):  (a) cash contributions
to the ESOP during such period in respect of the repurchase liability of the
Company under the ESOP Plan Documents, (b) any extraordinary (to the extent
these are cash) losses for such period, (c) any non-recurring charges and
adjustments (to the extent these are cash) for such period treated as such by
the independent third-party valuation firm that prepares valuation reports in
connection with the ESOP, (d) non-financed Capital Expenditures, (e) cash income
taxes, to (ii) Fixed Charges for such period.  Notwithstanding the foregoing,
(i) Indebtedness incurred in connection with a Permitted Redemption and (ii) all
interest, fees, and other amounts that may be due and payable in connection with
the refinance of all existing Obligations under the Existing Credit Agreement,
shall be excluded from the calculation of the Fixed Charge Coverage Ratio.

 

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“Fixed Charges” means the sum of, without duplication (1) interest expense paid
in cash, (2) principal payments paid in cash (3) all management, consulting,
monitoring fees paid to equity sponsor, (4) and other dividends or distributions
paid to Borrower’s shareholders in cash.

 

“Flow of Funds Agreement” means a flow of funds agreement, dated as of even date
with the Agreement, in form and substance reasonably satisfactory to Agent,
executed and delivered by each Loan Party and Agent.

 

“Foreign Lender” means any Lender or Participant that is not a United States
person within the meaning of IRC section 7701(a)(30).

 

“Foreign Ownership Control or Influence” shall have the meaning given to such
phrase in the Federal National Industrial Security Program Operating Manual and
any successor documentation or program thereto.

 

“Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic
Subsidiary.

 

“Former Administrative Agent” has the meaning specified therefor in the preamble
to the Agreement.

 

“Former Credit Agreement” has the meaning specified therefor in the preamble to
the Agreement.

 

“Funding Date” means the date on which a Borrowing occurs.

 

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.

 

“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

 

“Government Account” shall mean any Account owing directly by the United States
of America or any department, agency or instrumentality of the United States of
America to a Loan Party under a Government Contract.

 

“Government Contract” means any prime contract between the United States of
America or any department, agency or instrumentality of the United States of
America and a Loan Party.

 

“Governmental Authority” means the government of any nation or any political
subdivision thereof, whether at the national, state, territorial, provincial,
municipal or any other level, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of, or pertaining to, government (including any supra-national bodies such as
the European Union or the European Central Bank).

 

“Guarantor” has the meaning specified therefor in the Guaranty Agreement.

 

“Guaranty Agreement” means that certain Amended and Restated Guaranty Agreement,
dated as of even date with the Agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by Borrower and each of the
Guarantors to Agent.

 

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“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

 

“Hedge Agreement” means a “swap agreement” as that term is defined in
Section 101(53B)(A) of the Bankruptcy Code.

 

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

 

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

 

“Indebtedness” as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments (c) all reimbursement or other
obligations in respect of letters of credit, (d) all reimbursement and other
obligations in respect of bankers acceptances, or other financial products,
(e) all obligations of such Person as a lessee under Capital Leases and
Synthetic Leases, (f) all obligations or liabilities of others secured by a Lien
on any asset of such Person, irrespective of whether such obligation or
liability is assumed, (g) all obligations of such Person to pay the deferred
purchase price of assets (other than trade payables incurred in the ordinary
course of business and repayable in accordance with customary trade practices
and, for the avoidance of doubt, other than royalty payments payable in the
ordinary course of business in respect of non-exclusive licenses), (h) all
monetary obligations of such Person owing under Hedge Agreements (which amount
shall be calculated based on the amount that would be payable by such Person if
the Hedge Agreement were terminated on the date of determination), (i) any
Disqualified Equity Interests of such Person, and (j) any obligation of such
Person guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation
of any other Person that constitutes Indebtedness under any of clauses
(a) through (i) above.  For purposes of this definition, (i) the amount of any
Indebtedness represented by a guaranty or other similar instrument shall be the
lesser of the principal amount of the obligations guaranteed and still
outstanding and the maximum amount for which the guaranteeing Person may be
liable pursuant to the terms of the instrument embodying such Indebtedness, and
(ii) the amount of any Indebtedness which is limited or is non-recourse to a
Person or for which recourse is limited to an identified asset shall be valued
at the lesser of (A) if applicable, the limited amount of such obligations, and
(B) if applicable, the fair market value of such assets securing such
obligation.

 

“Indemnified Liabilities” has the meaning specified therefor in Section 10.03 of
the Agreement.

 

“Indemnified Person” has the meaning specified therefor in Section 10.03 of the
Agreement.

 

“Indemnified Taxes” means, any Taxes other than Excluded Taxes.

 

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“Insignificant Subsidiary” shall mean any Subsidiary that either (a)(i) does not
conduct any business operations, (ii) has assets with a total book value not in
excess of $100,000 and (iii) does not have any Indebtedness outstanding, or
(b) is a direct or indirect Subsidiary of Borrower formed for purposes of
effecting an acquisition which Subsidiary is formed with the intention of
meeting, and within one year after the consummation of such acquisition meets,
the criteria set forth in clause (a) above; provided that at no time shall any
Subsidiary otherwise satisfying the criteria of this clause (b) be considered an
“Insignificant Subsidiary” if such Subsidiary and all other such Subsidiaries
hold 5% or more of the consolidated assets of the Borrower.  Notwithstanding the
foregoing, a Subsidiary will not be deemed to be an “Insignificant Subsidiary”
if Borrower or any other Loan Party provides to such Subsidiary an Investment of
$1,000,000 in the aggregate at any time.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

 

“Intercompany Subordination Agreement” means an intercompany subordination
agreement, dated as of even date with the Agreement, executed and delivered by
Borrower, each of its Subsidiaries that is a party thereto, and Agent, the form
and substance of which is reasonably satisfactory to Agent (as the same may be
further amended, amended and restated, supplemented,  renewed, restated,
replaced, or otherwise modified from time to time).

 

“Intercreditor Agreement” means that certain Intercreditor Agreement dated
March 22, 2010 by and among the Loan Parties, Agent, as administrative agent for
the Bank Secured Parties, the Collateral Agent, as collateral agent for the
Secured Parties named therein, and the authorized representative named therein
for the Senior Secured Notes named therein, as amended and supplemented by that
certain Replacement Authorized Representative Joinder Agreement dated of even
date herewith (the “Intercreditor Joinder”), by and among Borrower, the Agent,
as administrative agent for the Bank Secured Parties, the Collateral Agent, as
collateral agent for the Secured Parties named therein, and Credit Suisse AG,
Cayman Islands Branch (as the same may be further amended, amended and restated,
supplemented,  renewed, restated, replaced, or otherwise modified from time to
time).  Agent was added to the Intercreditor Agreement, and replaced Credit
Suisse AG, Cayman Islands Branch, as an authorized representative for the Bank
Secured Parties, pursuant to the terms of the Intercreditor Joinder.

 

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

 

“Interest Rate Agreement” means any interest rate swap agreement, interest rate
cap agreement or other financial agreement or arrangement with respect to
exposure to interest rates.

 

“Inventory” means inventory (as that term is defined in the Code).

 

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course of
business, and (b) bona fide accounts receivable arising in the ordinary course
of business), or acquisitions of Indebtedness, Equity Interests, or all or
substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP. 
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without

 

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any adjustment for increases or decreases in value, or write-ups, write-downs,
or write-offs with respect to such Investment.

 

“IRC” means the Internal Revenue Code of 1986, as amended, and any successor
statutes, and all regulations and guidance promulgated thereunder.  Any
reference to a specific section of the IRC shall be deemed to be a reference to
such section of the IRC and any successor statutes, and all regulations and
guidance promulgated thereunder.

 

“ISP” means, with respect to any Letter of Credit, the International Standby
Practices 1998 (International Chamber of Commerce Publication No. 590) and any
subsequent revision thereof adopted by the International Chamber of Commerce on
the date such Letter of Credit is issued.

 

“Issuer Document” means, with respect to any Letter of Credit, a letter of
credit application, a letter of credit agreement, or any other document,
agreement or instrument entered into (or to be entered into) by Borrower in
favor of Issuing Lender and relating to such Letter of Credit.

 

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

 

“Knowledge”, means, for purposes of the Loan Documents, whenever a
representation or warranty is made to Borrower’s knowledge or awareness, to the
“best of” Borrower’s knowledge, or with a similar qualification, knowledge or
awareness means the actual knowledge, after reasonable investigation, of any
Responsible Officer.

 

“LC Cash Collateral” has the meaning specified therefor in Section (a) of the
Agreement.

 

“Lender” has the meaning set forth in the preamble to the Agreement, shall
include Issuing Lender, and shall also include any other Person made a party to
the Agreement pursuant to the provisions of Section 13.01 of the Agreement and
“Lenders” means each of the Lenders or any one or more of them.

 

“Lender Group” means each of the Lenders (including the Issuing Lender) and
Agent, or any one or more of them.

 

“Lender Group Expenses” means all (a) costs or expenses (including taxes and
insurance premiums) required to be paid by Borrower or its Subsidiaries under
any of the Loan Documents that are paid, advanced, or incurred by the Lender
Group, (b) documented out-of-pocket fees or charges paid or incurred by Agent in
connection with the Lender Group’s transactions with Borrower or its
Subsidiaries under any of the Loan Documents, including, photocopying,
notarization, couriers and messengers, telecommunication, public record
searches, filing fees, recording fees, publication, real estate surveys, real
estate title policies and endorsements, and environmental audits, (c) Agent’s
customary fees and charges imposed or incurred in connection with any background
checks or OFAC/PEP searches related to Borrower or its Subsidiaries, (d) Agent’s
customary fees and charges (as adjusted from time to time) with respect to the
disbursement of funds (or the receipt of funds) to or for the account of
Borrower (whether by wire transfer or otherwise), together with any
out-of-pocket costs and expenses incurred in connection therewith, (e) customary
charges imposed or incurred by Agent resulting from the dishonor of checks
payable by or to any Loan Party, (f) reasonable documented out-of-pocket costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or during the continuance of an
Event of Default, in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any

 

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portion thereof, irrespective of whether a sale is consummated excluding
attorneys’ fees and disbursements of a Lender, (g) field examination fees and
expenses of Agent related to any field examinations to the extent of the fees
and charges (and up to the amount of any limitation) provided in Section 2.10 of
the Agreement, (h) during the continuance of an Event of Default, appraisal and
valuation fees and expenses of Agent related to any appraisals or valuations to
the extent of the fees and charges (and up to the amount of any limitation)
provided in Section 2.10 of the Agreement, (h) Agent’s reasonable costs and
expenses (including reasonable documented attorneys fees and expenses) relative
to third party claims or any other lawsuit or adverse proceeding paid or
incurred, whether in enforcing or defending the Loan Documents or otherwise in
connection with the transactions contemplated by the Loan Documents, Collateral
Agent’s Liens in and to the Collateral, or the Lender Group’s relationship with
Borrower or any of its Subsidiaries, (i) Agent’s reasonable documented costs and
expenses (including reasonable documented attorneys fees and due diligence
expenses) incurred in advising, structuring, drafting, reviewing, administering
(including travel, meals, and lodging), syndicating (including reasonable costs
and expenses relative to CUSIP, DXSyndicate™, SyndTrak or other communication
costs incurred in connection with a syndication of the loan facilities), or
amending, waiving, or modifying the Loan Documents, and (j) Agent’s reasonable
documented attorneys, accountants, consultants, and other advisors fees and
expenses incurred in terminating, enforcing (including reasonable attorneys,
accountants, consultants, and other advisors fees and expenses incurred in
connection with a “workout,” a “restructuring,” or an Insolvency Proceeding
concerning Borrower or any of its Subsidiaries or in exercising rights or
remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether a lawsuit or other adverse proceeding is brought, or in
taking any enforcement action or any Remedial Action with respect to the
Collateral.

 

“Lender Group Representatives” has the meaning specified therefor in
Section 17.09 of the Agreement.

 

“Lender-Related Person” means, with respect to any Lender, such Lender, together
with such Lender’s Affiliates, officers, directors, employees, attorneys, and
agents.

 

“Letter of Credit” means a letter of credit (as that term is defined in the
Code) issued by Issuing Lender.

 

“Letter of Credit Collateralization” means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent, including
provisions that specify that the Letter of Credit Fees and all commissions,
fees, charges and expenses provided for in Section 2.11(l) of the Agreement
(including any fronting fees) will continue to accrue while the Letters of
Credit are outstanding) to be held by Agent for the benefit of the Revolving
Lenders in an amount equal to 103% of the then existing Letter of Credit Usage,
(b) delivering to Agent documentation executed by all beneficiaries under the
Letters of Credit, in form and substance reasonably satisfactory to Agent and
Issuing Lender, terminating all of such beneficiaries’ rights under the Letters
of Credit, or (c) providing Agent with a standby letter of credit, in form and
substance reasonably satisfactory to Agent, from a commercial bank acceptable to
Agent (in its sole discretion) in an amount equal to 103% of the then existing
Letter of Credit Usage (it being understood that the Letter of Credit Fee and
all fronting fees set forth in the Agreement will continue to accrue while the
Letters of Credit are outstanding and that any such fees that accrue must be an
amount that can be drawn under any such standby letter of credit).

 

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

 

“Letter of Credit Exposure” means, as of any date of determination with respect
to any Lender, such Lender’s Pro Rata Share of the Letter of Credit Usage on
such date.

 

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“Letter of Credit Fee” has the meaning specified therefor in Section 2.06(b) of
the Agreement.

 

“Letter of Credit Indemnified Costs” has the meaning specified therefor in
Section 2.11(g) of the Agreement.

 

“Letter of Credit Related Person” has the meaning specified therefor in
Section 2.11(g) of the Agreement.

 

“Letter of Credit Usage” means, as of any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease, Synthetic Lease, and any other
synthetic or other financing lease having substantially the same economic effect
as any of the foregoing.

 

“Loan” shall mean any Revolving Loan, or Extraordinary Advance made (or to be
made) hereunder.

 

“Loan Account” has the meaning specified therefor in Section 2.09 of the
Agreement.

 

“Loan Documents” means the Agreement, the Control Agreements and Blocked Account
Agreements, the Copyright Security Agreement, any Borrowing Base Certificate,
the Fee Letter, the Security Documents, the Intercompany Subordination
Agreement, any Issuer Documents, the Letters of Credit, the Patent Security
Agreement, the Trademark Security Agreement, any note or notes executed by
Borrower in connection with the Agreement and payable to any member of the
Lender Group, and any other instrument or agreement entered into, now or in the
future, by Borrower or any of its Subsidiaries and any member of the Lender
Group in connection with the Agreement.

 

“Loan Party” means Borrower or any Guarantor.

 

“Margin Stock” as defined in Regulation U of the Board of Governors as in effect
from time to time.

 

“Material Adverse Effect” means (a) a material adverse effect in the business,
operations, results of operations, assets, liabilities or financial condition of
Borrower and its Subsidiaries, taken as a whole, (b) a material impairment of
Borrower’s and its Subsidiaries ability, taken as a whole, to perform their
obligations under the Loan Documents to which they are parties or of the Lender
Group’s ability, taken as a whole, to enforce the Bank Obligations or realize
upon the Collateral (other than as a result of as a result of an action taken or
not taken that is solely in the control of Agent or the Collateral Agent), or
(c) a material impairment of the enforceability or priority of Collateral
Agent’s Liens with respect to all or a material portion of the Collateral.

 

“Material Contract” means, with respect to any Person, (a) each contract or
agreement to which such Person or any of its Subsidiaries is a party involving
aggregate consideration payable to or by such Person or such Subsidiary of
$1,000,000 or more (other than purchase orders in the ordinary course of the
business of such Person or such Subsidiary and other than contracts that by
their terms may be terminated by such Person or Subsidiary in the ordinary
course of its business upon less than 60 days notice without penalty or
premium), and (b) all other contracts or agreements, the loss of which could
reasonably be

 

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expected to result in a Material Adverse Effect.  For the avoidance of doubt,
the Senior Unsecured Notes Indenture and the Senior Secured Notes Indenture each
constitute a Material Contract.

 

“Material Government Contract” means any of the Borrower’s Government Contracts
that has produced revenue for Borrower in excess of $10,000,000 in the
applicable fiscal year.

 

“Material Indebtedness” shall mean Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedge Agreements,
of any one or more of the Borrower and the Subsidiaries in an aggregate
principal amount exceeding $1,000,000.  For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of the Borrower or any
Subsidiary in respect of any Hedge Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower or
such Subsidiary would be required to pay if such Hedge Agreement were terminated
at such time.

 

“Maturity Date” means the earlier of (a) August 1, 2014; (b) the date which is
90 days prior to the stated maturity date of the Senior Secured Notes; or
(c) the date which is 90 days prior to the stated maturity date of the Senior
Unsecured Notes.

 

“Maximum Revolver Credit Limit” means $45,000,000.

 

“Minimum Interest” has the meaning specified therefor in Section 2.06(g) of the
Agreement.

 

“Minimum Interest Period” has the meaning specified therefor in
Section 2.06(g) of the Agreement.

 

“Moody’s” has the meaning specified therefor in the definition of Cash
Equivalents.

 

“Mortgages” means, individually and collectively, one or more mortgages, deeds
of trust, or deeds to secure debt, executed and delivered by Borrower or its
Subsidiaries in favor of Agent, in form and substance reasonably satisfactory to
Agent, that encumber the Real Property Collateral.

 

“Multiemployer Plan” means any multiemployer plan within the meaning of
Section 3(37) or 4001(a)(3) of ERISA with respect to which any Loan Party or
ERISA Affiliate has an obligation to contribute or has any liability, contingent
or otherwise or could be assessed withdrawal liability assuming a complete
withdrawal from any such multiemployer plan.

 

“Net Cash Proceeds” means:

 

(a)           with respect to any sale or disposition by Borrower or any of its
Subsidiaries of assets, the amount of cash proceeds actually received by
Borrower or any of its Subsidiaries from time to time (whether as initial
consideration or through the payment of deferred consideration) by or on behalf
of Borrower or its Subsidiaries, in connection therewith after deducting
therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien
on any asset (other than (A) Indebtedness owing to Agent or any Lender under the
Agreement or the other Loan Documents and (B) Indebtedness assumed by the
purchaser of such asset) which is required to be, and is, repaid in connection
with such sale or disposition, (ii) reasonable fees, commissions, and expenses
related thereto and required to be paid by Borrower or such Subsidiary in
connection with such sale or disposition (including, without limitation, legal,
accounting, investment banking, valuation, investment and financial advisor
fees), (iii) taxes (including, without limitation, sales, transfer, deed or
mortgage recording taxes) paid or payable to any taxing authorities by Borrower
or such Subsidiary in connection with such sale or disposition, in each case to
the extent, but only to the extent, that the amounts so deducted are, at the
time of receipt of such cash,

 

23

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actually paid or payable to a Person that is not an Affiliate of Borrower or any
of its Subsidiaries, and are properly attributable to such transaction;
(iv) (1) amounts held in escrow to be applied as part of the purchase price of
any such sale or disposition and (2) all amounts that are set aside as a reserve
(A) for adjustments in respect of the purchase price of such assets, (B) for any
liabilities associated with such sale including reserves for pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with any such sale
or disposition and (C) for the payment of unassumed liabilities relating to the
assets sold or otherwise disposed of at the time of, or within 30 days after,
the date of such sale or other disposition, to the extent that in each case the
funds described above in this clause (iv) are (x) deposited into escrow with a
third party escrow agent or set aside in a separate Deposit Account that is
subject to a Control Agreement in favor of Collateral Agent (on behalf of Agent
and Lenders) and (y) paid to Agent as a prepayment of the applicable Bank
Obligations in accordance with Section 2.04(e) of the Agreement at such time
when such amounts are no longer required to be set aside as such a reserve; and
(v) other out-of-pocket fees and expenses actually incurred in connection
therewith.

 

(b)           with respect to the issuance or incurrence of any Indebtedness by
Borrower or any of its Subsidiaries, or the issuance by Borrower or any of its
Subsidiaries of any Equity Interests, the aggregate amount of cash received
(directly or indirectly) from time to time (whether as initial consideration or
through the payment or disposition of deferred consideration) by or on behalf of
Borrower or such Subsidiary in connection with such issuance or incurrence,
after deducting therefrom only (i) reasonable fees, commissions, and expenses
related thereto and required to be paid by Borrower or such Subsidiary in
connection with such issuance or incurrence (including, without limitation,
legal, accounting and investment banking fees, advisory fees, sales commissions
or underwriting discounts), (ii) taxes paid or payable to any taxing authorities
by Borrower or such Subsidiary in connection with such issuance or incurrence,
in each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid or payable to a Person
that is not an Affiliate of Borrower or any of its Subsidiaries, and are
properly attributable to such transaction, and (iii) other out-of-pocket fees
and expenses actually incurred in connection therewith.

 

“Non-Consenting Lender” has the meaning specified therefor in
Section 14.02(a) of the Agreement.

 

“Non-Defaulting Lender” means each Lender other than a Defaulting Lender.

 

“Non-Financed Capital Expenditures” means Capital Expenditures not financed by
the seller of the capital asset, by a third party lender or by means of any
extension of credit by Lender other than by means of a Loan under the Credit
Facility;

 

“Non-Recurring Permitted Refinancing Expenses” means expenses incurred from the
period commencing on October 1, 2013 and continuing through June 30, 2014,
associated solely with the transactions contemplated by this Agreement and the
Permitted Bond Refinancing, provided that for purposes of calculating the Fixed
Charge Coverage Ratio, such expenses shall not exceed $37,000,000 in the
aggregate.  When calculating the Fixed Charge Coverage Ratio, any qualified
portion of Non-Recurring Permitted Refinancing Expenses shall be included in the
Consolidated EBITDA portion of the Fixed Charge Coverage Ratio one-time for the
corresponding fiscal quarter incurred.

 

“Notification Event” means (a) the occurrence of a “reportable event” described
in Section 4043 of ERISA for which the 30-day notice requirement has not been
waived by applicable regulations issued by the PBGC, (b) the withdrawal of any
Loan Party or ERISA Affiliate from a Pension Plan during a plan year in which it
was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the
termination of a Pension Plan, the filing of a notice of intent to terminate a
Pension Plan or the treatment

 

24

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of a Pension Plan amendment as a termination, under Section 4041 of ERISA, if
the plan assets are not sufficient to pay all plan liabilities, (d) the
institution of proceedings to terminate, or the appointment of a trustee with
respect to, any Pension Plan by the PBGC or any Pension Plan or Multiemployer
Plan administrator, (e) any other event or condition that would constitute
grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan, (f) the imposition of
a Lien pursuant to the IRC or ERISA in connection with any Employee Benefit Plan
or the existence of any facts or circumstances that could reasonably be expected
to result in the imposition of a Lien, (g) the partial or complete withdrawal of
any Loan Party or ERISA Affiliate from a Multiemployer Plan (other than any
withdrawal that would not constitute an Event of Default under Section 8.12),
(h) any event or condition that results in the reorganization or insolvency of a
Multiemployer Plan under Sections of ERISA, (i) any event or condition that
results in the termination of a Multiemployer Plan under Section 4041A of ERISA
or the institution by the PBGC of proceedings to terminate or to appoint a
trustee to administer a Multiemployer Plan under ERISA, (j) any Pension Plan
being in “at risk status” within the meaning of IRC Section 430(i), (k) any
Multiemployer Plan being in “endangered status” or “critical status” within the
meaning of IRC Section 432(b) or the determination that any Multiemployer Plan
is or is expected to be insolvent or in reorganization within the meaning of
Title IV of ERISA, (l) with respect to any Pension Plan, any Loan Party or ERISA
Affiliate incurring a substantial cessation of operations within the meaning of
ERISA Section 4062(e), (m) an “accumulated funding deficiency” within the
meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302 of
ERISA) or the failure of any Pension Plan or Multiemployer Plan to meet the
minimum funding standards within the meaning of the IRC or ERISA (including
Section 412 of the IRC or Section 302 of ERISA), in each case, whether or not
waived, (n) the filing of an application for a waiver of the minimum funding
standards within the meaning of the IRC or ERISA (including Section 412 of the
IRC or Section 302 of ERISA) with respect to any Pension Plan or Multiemployer
Plan, (o) the failure to make by its due date a required payment or contribution
with respect to any Pension Plan or Multiemployer Plan, (p) any event that
results in or could reasonably be expected to result in a liability by a Loan
Party pursuant to Title I of ERISA or the excise tax provisions of the IRC
relating to Employee Benefit Plans or any event that results in or could
reasonably be expected to result in a liability to any Loan Party or ERISA
Affiliate pursuant to Title IV of ERISA or Section 401(a)(29) of the IRC, or
(q) any of the foregoing is reasonably likely to occur in the following 30 days.

 

“Obligations” shall mean all obligations defined as “Obligations” in the
Intercreditor Agreement.

 

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the
Treasury.

 

“Original Lenders” has the meaning specified therefor in the preamble to the
Agreement.

 

“Originating Lender” has the meaning specified therefor in Section 13.01(e) of
the Agreement.

 

“Overadvance” means, as of any date of determination, that the Revolver Usage is
greater than any of the limitations set forth in Section 2.01 or Section 2.11.

 

“Participant” has the meaning specified therefor in Section 13.01(e) of the
Agreement.

 

“Pass-Through Tax Liabilities” means the amount of state and federal income tax
paid or to be paid by the owner of any Equity Interest in Borrower on taxable
income earned by Borrower and attributable to such owner of Equity Interest as a
result of Borrower’s “pass-through” tax status, assuming the highest marginal
income tax rate for federal and state (for the state or states in which any
owner of Equity Interest is liable for income taxes with respect to such income)
income tax purposes, after taking into account any deduction for state income
taxes in calculating the federal income tax liability and all

 

25

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other deductions, credits, deferrals and other reductions available to such
owners of Equity Interest from or through Borrower.

 

“Patent Security Agreement” means that certain Patent Security Agreement, dated
as of even date with the Agreement, by and among Borrower, Alion — BMH
Corporation, a Virginia corporation, Alion — IPS Corporation, a Virginia
corporation and Collateral Agent (as the same may be further amended, amended
and restated, supplemented, renewed, restated, replaced, or otherwise modified
from time to time).

 

“Patriot Act” has the meaning specified therefor in Section 4.13 of the
Agreement.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.

 

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan,
which is subject to the provisions of Title IV or Section 302 of ERISA or
Sections 412 or 430 of the Code and which is sponsored, maintained, or
contributed to by any Loan Party or ERISA Affiliate or to which any Loan Party
or ERISA Affiliate has any liability, contingent or otherwise.

 

“Perfection Certificate” means a certificate in the form of Exhibit P-1 to the
Agreement.

 

“Permitted Acquisition” means any Acquisition so long as:

 

(a)                                 no Default or Event of Default shall have
occurred and be continuing or would result from the consummation of the proposed
Acquisition,

 

(b)                                 the proposed Acquisition is consensual and
is not a hostile acquisition,

 

(c)                                  Borrower or any Subsidiary acquires all or
substantially all the assets of a Person or line of business or division of such
Person, or not less than 100% of the Equity Interests of a Person (referred to
herein as the “Acquired Entity”),

 

(d)                                 the Borrower is the sole surviving legal
entity,

 

(e)                                  no Indebtedness will be incurred, assumed,
or would exist with respect to Borrower or its Subsidiaries as a result of such
Acquisition other than Permitted Indebtedness, and no Liens will be incurred,
assumed, or would exist with respect to the assets of Borrower or its
Subsidiaries as a result of such Acquisition other than Permitted Liens,

 

(f)                                   such Acquisition was not preceded by an
unsolicited tender offer for such Equity Interests by, or proxy contest
initiated by, Borrower or any Subsidiary,

 

(g)                                  at the time of the Acquisition and after
giving effect to the Acquisition, Borrower will comply with the requirements of
all applicable laws, rules, regulations, and orders of any Governmental
Authority pursuant to the terms and conditions set forth in Section 5.08 of this
Agreement,

 

(h)                                 Borrower has provided Agent with written
confirmation, supported by reasonably detailed calculations, that on a pro forma
basis (including pro forma adjustments arising out of events which are directly
attributable to such proposed Acquisition, are factually supportable, and are
expected to have a continuing impact, in each case, determined as if the
combination had been accomplished at the beginning of the relevant period; such
eliminations and inclusions to be mutually and reasonably agreed upon by
Borrower and Agent) created by adding the historical combined financial
statements of Borrower

 

26

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(including the combined financial statements of any other Person or assets that
were the subject of a prior Permitted Acquisition during the relevant period) to
the historical consolidated financial statements of the Person to be acquired
(or the historical financial statements related to the assets to be acquired)
pursuant to the proposed Acquisition, Parent and its Subsidiaries (i) would have
been in compliance with the financial covenant in Section 7 of the Agreement for
the 12 fiscal month period ended immediately prior to the proposed date of
consummation of such proposed Acquisition, and (ii) are projected to be in
compliance with the financial covenant in Section 7 of the Agreement for the 12
fiscal month period ended one year after the proposed date of consummation of
such proposed Acquisition, in each case regardless of whether such financial
covenant is then applicable pursuant to Section 7 of the Agreement,

 

(i)                                     Borrower has provided Agent with their
due diligence package relative to the proposed Acquisition, including forecasted
balance sheets, profit and loss statements, and cash flow statements of the
Person or assets to be acquired, all prepared on a basis consistent with such
Person’s (or assets’) historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions for the 1 year
period following the date of the proposed Acquisition, on a quarter by quarter
basis), in form and substance (including as to scope and underlying assumptions)
reasonably satisfactory to Agent,

 

(j)                                    Borrower shall have Excess Availability
in an amount equal to or greater than $10,000,000 immediately after giving
effect to the consummation of the proposed Acquisition,

 

(k)                                 the assets being acquired or the Acquired
Entity did not have negative Consolidated EBITDA during the 12 consecutive month
period most recently concluded prior to the date of the proposed Acquisition,

 

(l)                                     Borrower has provided Agent with written
notice of the proposed Acquisition at least 15 Business Days prior to the
anticipated closing date of the proposed Acquisition and, not later than 5
Business Days prior to the anticipated closing date of the proposed Acquisition,
copies of the acquisition agreement and other material documents relative to the
proposed Acquisition in substantially the same form as which will be executed
and delivered, which agreement and documents must be reasonably acceptable to
Agent,

 

(m)                             the assets being acquired, or the Acquired
Entity, as applicable, are useful in or engaged in, as applicable, the business
of Borrower and its Subsidiaries or a business reasonably related thereto, and
the Acquired Entity shall be a going concern,

 

(n)                                 the assets being acquired, or the Acquired
Entity, as applicable, shall be located, and substantially all of the operations
of the Acquired Entity are conducted, in the United States of America,

 

(o)                                 the subject assets or Equity Interests of
the Acquired Entity, as applicable, are being acquired directly by Borrower or
one of its Subsidiaries that is a Loan Party, and, in connection therewith, the
applicable Loan Party shall have complied with Section 5.11 or 5.12 of the
Agreement, as applicable, and, in the case of an acquisition of Equity
Interests, the applicable Loan Party shall have demonstrated to Agent that the
new Loan Parties have received consideration sufficient to make the joinder
documents binding and enforceable against such new Loan Parties, and

 

(p)                                 the aggregate purchase consideration payable
in respect of all Permitted Acquisitions (including (i) the proposed
Acquisition, (ii) deferred payment obligations and (iii) cash consideration and
the value of any non-cash consideration) shall not exceed $5,000,000
individually, and $25,000,000 in the aggregate.

 

27

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Notwithstanding anything to the contrary in the definition of “Permitted
Acquisitions”, Borrower hereby agrees that any assets of any Acquired Entity
resulting from a Permitted Acquisition shall be excluded from the calculation of
the Borrowing Base until (i) such Acquired Entity becomes a Loan Party pursuant
to Section 5.11 or 5.12 of the Agreement, and (ii) Agent has completed an audit,
inspection, or examination of such Acquired Entity’s Accounts, Collateral, and
books and records with results satisfactory to Agent in its sole and absolute
discretion.

 

“Permitted Bond Refinancing” means any refinancing, replacing, defeasing or
discharge of any Indebtedness of Borrower and the other Loan Parties relating to
Senior Secured Notes and Senior Unsecured Notes that qualifies as Refinancing
Indebtedness and the material terms of which are satisfactory in all respects to
Agent and each Lender in their sole and absolute discretion.

 

“Permitted Dispositions” means:

 

(a)                                 sales, abandonment, or other dispositions of
Equipment that is substantially worn, damaged, or obsolete or no longer used or
useful in the ordinary course of business and leases or subleases of Real
Property not useful in the conduct of the business of Borrower and its
Subsidiaries,

 

(b)                                 sales of Inventory to buyers in the ordinary
course of business,

 

(c)                                  the use or transfer of money or Cash
Equivalents in a manner that is not prohibited by the terms of the Agreement or
the other Loan Documents,

 

(d)                                 the licensing, on a non-exclusive basis, of
patents, trademarks, copyrights, and other intellectual property rights in the
ordinary course of business,

 

(e)                                  the granting of Permitted Liens,

 

(f)                                   the sale or discount, in each case without
recourse, of accounts receivable arising in the ordinary course of business, but
only in connection with the compromise or collection thereof,

 

(g)                                  any involuntary loss, damage or destruction
of property,

 

(h)                                 any involuntary condemnation, seizure or
taking, by exercise of the power of eminent domain or otherwise, or confiscation
or requisition of use of property,

 

(i)                                     the leasing or subleasing of assets of
Borrower or its Subsidiaries in the ordinary course of business,

 

(j)                                    the sale or issuance of Equity Interests
(other than Disqualified Equity Interests) of Borrower,

 

(k)                                 (i) the lapse of registered patents,
trademarks, copyrights and other intellectual property of Borrower and its
Subsidiaries to the extent not economically desirable in the conduct of their
business or (ii) the abandonment of patents, trademarks, copyrights, or other
intellectual property rights in the ordinary course of business so long as (in
each case under clauses (i) and (ii)), (A) with respect to copyrights, such
copyrights are not material revenue generating copyrights, and (B) such lapse is
not materially adverse to the interests of the Lender Group,

 

(l)                                     the making of Restricted Payments that
are expressly permitted to be made pursuant to the Agreement,

 

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(m)                             the making of Permitted Investments,

 

(n)                                 so long as no Event of Default has occurred
and is continuing or would immediately result therefrom, transfers of assets
(i) from Borrower or any of its Subsidiaries to a Loan Party, and (ii) from any
Subsidiary of Borrower that is not a Loan Party to any other Subsidiary of
Borrower,

 

(o)                                 any sale, lease, license, transfer or other
disposition of an asset with a fair market value less than $1,000,000 in the
aggregate which, in the opinion of a Financial Officer, is no longer necessary
for the proper conduct of the business of the Borrower or any Subsidiary, and

 

(p)                                 sales or dispositions of assets (other than
Accounts, Equity Interests of Subsidiaries) not otherwise permitted in clauses
(a) through (n) above so long as made at fair market value and the aggregate
fair market value of all assets disposed of in fiscal year (including the
proposed disposition) would not exceed $500,000.

 

“Permitted Discretion” means a determination made in the exercise of reasonable
business judgment from the perspective of a secured asset-based lender.

 

“Permitted Indebtedness” means:

 

(a)                                 Indebtedness evidenced by the Agreement or
the other Loan Documents, including Indebtedness incurred in connection with a
Permitted Redemption,

 

(b)                                 Indebtedness set forth on Schedule 4.14 to
the Agreement and any Refinancing Indebtedness in respect of such Indebtedness,

 

(c)                                  Indebtedness evidenced by the Senior
Secured Notes and the other Senior Secured Notes Documents in an aggregate
principal amount not to exceed $375,000,000 at any one time outstanding,

 

(d)                                 Indebtedness evidenced by the Senior
Unsecured Notes and the other Senior Unsecured Notes Documents in an aggregate
principal amount not to exceed $250,000,000 at any one time outstanding,

 

(e)                                  Permitted Purchase Money Indebtedness and
any Refinancing Indebtedness in respect of such Indebtedness,

 

(f)                                   endorsements for collection, deposit or
negotiation and warranties of products or services, in each case incurred in the
ordinary course of business;

 

(g)                                  Indebtedness consisting of (i) unsecured
guarantees incurred in the ordinary course of business with respect to surety
and appeal bonds, performance bonds, bid bonds, appeal bonds, completion
guarantee and similar obligations or with respect to workers’ compensation
claims; (ii) unsecured guarantees arising with respect to customary
indemnification obligations to purchasers in connection with Permitted
Dispositions; and (iii) unsecured guarantees with respect to Indebtedness of the
Borrower;

 

(h)                                 [Intentionally Omitted],

 

29

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(i)                                     Acquired Indebtedness in an amount not
to exceed $500,000 outstanding at any one time,

 

(j)                                    Indebtedness incurred in the ordinary
course of business under performance, surety, statutory, or appeal bonds,

 

(k)                                 Indebtedness owed to any Person providing
property, casualty, liability, or other insurance to Borrower or any of its
Subsidiaries, so long as the amount of such Indebtedness is not in excess of the
amount of the unpaid cost of, and shall be incurred only to defer the cost of,
such insurance for the year in which such Indebtedness is incurred and such
Indebtedness is outstanding only during such year,

 

(l)                                     the incurrence by Borrower or its
Subsidiaries of Indebtedness under Hedge Agreements that are incurred for the
bona fide purpose of hedging the interest rate, commodity, or foreign currency
risks associated with Borrower’s and its Subsidiaries’ operations and not for
speculative purposes,

 

(m)                          Indebtedness incurred in the ordinary course of
business in respect of credit cards, credit card processing services, debit
cards, stored value cards, commercial cards (including so-called “purchase
cards”, “procurement cards” or “p-cards”), or Cash Management Services,

 

(n)                                 intercompany Indebtedness of the Borrower
and the Subsidiaries to the extent such Indebtedness consists of Permitted
Intercompany Advances,

 

(o)                                 Indebtedness of any person that becomes a
Subsidiary after the date hereof; provided that (i) such Indebtedness exists at
the time such person becomes a Subsidiary and is not created in contemplation of
or in connection with such person becoming a Subsidiary and (ii) the aggregate
principal amount of Indebtedness permitted by this paragraph shall not exceed
$500,000 at any time outstanding,

 

(p)                                 [Intentionally Omitted],

 

(q)                                 Indebtedness constituting Permitted
Investments,

 

(r)                                    unsecured Indebtedness arising from the
honoring by a bank or other financial institution of a check, draft or similar
instrument inadvertently drawn against insufficient funds in the ordinary course
of business, so long as such Indebtedness is extinguished within 3 Business Days
of the Borrower’s knowledge of such incurrence,

 

(s)                                   [Intentionally Omitted],

 

(t)                                    Indebtedness in an aggregate outstanding
principal amount not to exceed $500,000 at any time outstanding for all
Subsidiaries of Borrower that are Foreign Subsidiaries; provided, that such
Indebtedness is not directly or indirectly recourse to any of the Loan Parties
or of their respective assets,

 

(u)                                 accrual of interest, accretion or
amortization of original issue discount, or the payment of interest in kind, in
each case, on Indebtedness that otherwise constitutes Permitted Indebtedness,

 

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(v)                                 Indebtedness arising as a result of (i) the
redemption or repurchase of any Equity Interests of Borrower as a result of
distributions by the ESOT to participants in the ESOP pursuant to the ESOP Plan
Documents subsequent to or in connection with their termination of employment
with Borrower or any Controlled Group member or (ii) the requirements of
Section 401(a)(28) of the IRC or any substantially similar requirement of law,

 

(w)                               Indebtedness of one or more Loan Parties
permitted by, and incurred under, Section 4.03(b) of the Senior Secured Notes
Indenture as in effect on the Closing Date,

 

(x)                                 Indebtedness of Foreign Subsidiaries in an
aggregate principal amount not to exceed $500,000 at any time outstanding,

 

(y)                                 Borrower’s deferred compensation agreements,
and

 

(z)                                  any other Indebtedness incurred by Borrower
or any of its Subsidiaries in an aggregate outstanding amount not to exceed
$500,000 at any one time.

 

“Permitted Intercompany Advances” means loans made in the ordinary course of
business by (a) a Loan Party to another Loan Party, (b) a Subsidiary of Borrower
that is not a Loan Party to another Subsidiary of Borrower that is not a Loan
Party, and (c) a Subsidiary of Borrower that is not a Loan Party to a Loan
Party, so long as the parties thereto are party to the Intercompany
Subordination Agreement, provided that the aggregate principal amount of such
loans shall not exceed $500,000 at any time outstanding.

 

“Permitted Investments” means:

 

(a)                                 Investments in cash and Cash Equivalents,

 

(b)                                 Investments in negotiable instruments
deposited or to be deposited for collection in the ordinary course of business,

 

(c)                                  advances made in connection with purchases
of goods or services in the ordinary course of business,

 

(d)                                 Investments received in settlement of
amounts due to any Loan Party or any of its Subsidiaries effected in the
ordinary course of business or owing to any Loan Party or any of its
Subsidiaries as a result of Insolvency Proceedings involving an account debtor
or upon the foreclosure or enforcement of any Lien in favor of a Loan Party or
its Subsidiaries,

 

(e)                                  Investments owned by any Loan Party or any
of its Subsidiaries on the Closing Date and set forth on Schedule P-1 to the
Agreement,

 

(f)                                   guarantees permitted under the definition
of Permitted Indebtedness,

 

(g)                                  Permitted Intercompany Advances,

 

(h)                                 Equity Interests or other securities
acquired in connection with the satisfaction or enforcement of Indebtedness or
claims due or owing to a Loan Party or its Subsidiaries (in bankruptcy of
customers or suppliers or otherwise outside the ordinary course of business) or
as security for any such Indebtedness or claims,

 

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(i)                                     deposits of cash made in the ordinary
course of business to secure performance of operating leases,

 

(j)                                    (i) non-cash loans and advances to
employees, officers, and directors of Borrower or any of its Subsidiaries for
the purpose of purchasing Equity Interests in Borrower so long as the proceeds
of such loans are used in their entirety to purchase such Equity Interests in
Borrower, and (ii) loans and advances to employees and officers of Borrower or
any of its Subsidiaries in the ordinary course of business for any other
business purpose and in an aggregate amount not to exceed $100,000 at any one
time,

 

(k)                                 Permitted Acquisitions,

 

(l)                                     Investments in the form of capital
contributions and the acquisition of Equity Interests made by any Loan Party in
any other Loan Party (other than capital contributions to or the acquisition of
Equity Interests of Borrower),

 

(m)                             Investments resulting from entering into
(i) Bank Product Agreements, or (ii) agreements relative to Indebtedness that is
permitted under clause (l) of the definition of Permitted Indebtedness,

 

(n)                                 equity Investments by any Loan Party in any
Subsidiary of such Loan Party which is required by law to maintain a minimum net
capital requirement or as may be otherwise required by applicable law,

 

(o)                                 [Intentionally Omitted],

 

(p)                                 Investments through Hedge Agreements entered
into by Borrower which are not speculative in nature, and

 

(q)                                 so long as no Event of Default has occurred
and is continuing or would result therefrom, any other Investments so long as
the aggregate amount of such Investments pursuant to this clause (determined
without regard to any write-downs or write-offs of such Investments) do not
exceed $500,000 in the aggregate at any time outstanding, and none of (i) any
Investment specifically consented to by the Required Lenders, or (ii) any
Investment that is subsequently sold (to the extent of the net cash proceeds of
such sale) shall count toward such $500,000 amount.

 

“Permitted Liens” means

 

(a)                                 Liens granted to Collateral Agent, for the
benefit of Agent and the Lenders, to secure the Bank Obligations,

 

(b)                                 so long as the same are subject to the
Intercreditor Agreement, Liens on assets of Borrower securing Indebtedness under
the Senior Secured Notes Documents,

 

(c)                                  Liens granted or existing pursuant to
Refinancing Indebtedness, including Refinancing Indebtedness incurred to
refinance the Senior Secured Notes and Senior Unsecured Notes, provided that
with respect to the Senior Secured Notes and the Senior Unsecured Notes, such
Liens are subject to an intercreditor agreement on terms substantially identical
to the Intercreditor Agreement,

 

(d)                              Liens for unpaid taxes, assessments, or other
governmental charges or levies that either (i) are not yet delinquent, or
(ii) do not have priority over Collateral Agent’s Liens and the

 

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underlying taxes, assessments, or charges or levies are the subject of Permitted
Protests and such taxes, assessments, or charges or levies do not, individually
or in the aggregate, exceed $500,000,

 

(e)                                  judgment Liens arising solely as a result
of the existence of judgments, orders, or awards that do not constitute an Event
of Default under Section 8.03 of the Agreement,

 

(f)                                   Liens set forth on Schedule P-2 to the
Agreement; provided, that to qualify as a Permitted Lien, any such Lien
described on Schedule P-2 to the Agreement shall only secure the Indebtedness
that it secures on the Closing Date and any Refinancing Indebtedness in respect
thereof,

 

(g)                                  the interests of lessors under operating
leases and non-exclusive licensors under license agreements,

 

(h)                                 purchase money Liens or the interests of
lessors under Capital Leases and/or Synthetic Leases to the extent that such
Liens or interests secure Permitted Purchase Money Indebtedness and so long as
(i) such Lien attaches only to the asset purchased or acquired and the proceeds
thereof, and (ii) such Lien only secures the Indebtedness that was incurred to
acquire the asset purchased or acquired or any Refinancing Indebtedness in
respect thereof,

 

(i)                                     Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business and not in connection
with the borrowing of money, and which Liens either (i) are for sums not yet
delinquent, or (ii) are the subject of Permitted Protests,

 

(j)                                    Liens on amounts deposited to secure
Borrower’s and its Subsidiaries obligations in connection with worker’s
compensation, other unemployment insurance,  old-age pensions, social security
and other like obligations incurred in the ordinary course of business (other
than Liens imposed by ERISA),

 

(k)                                 Liens on amounts deposited to secure
Borrower’s and its Subsidiaries’ obligations in connection with the making or
entering into of bids, tenders, or leases in the ordinary course of business and
not in connection with the borrowing of money,

 

(l)                                     Liens on amounts deposited to secure
Borrower’s and its Subsidiaries reimbursement obligations with respect to
surety, performance and appeal bonds obtained in the ordinary course of
business,

 

(m)                             with respect to any Real Property, easements,
rights of way, zoning restrictions and other restrictions on the use of real
property that do not materially interfere with or impair the  ordinary conduct
of the business of the Borrower or any Subsidiary,

 

(n)                                 non-exclusive licenses of patents,
trademarks, copyrights, and other intellectual property rights in the ordinary
course of business,

 

(o)                                 Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is the subject of permitted
Refinancing Indebtedness and so long as the replacement Liens only encumber
those assets that secured the original Indebtedness,

 

(p)                                 rights of setoff or bankers’ liens upon
deposits of funds in favor of banks or other depository institutions, solely to
the extent incurred in connection with the maintenance of such Deposit Accounts
in the ordinary course of business,

 

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(q)                                 Liens granted in the ordinary course of
business on the unearned portion of insurance premiums securing the financing of
insurance premiums to the extent the financing is permitted under the definition
of Permitted Indebtedness,

 

(r)                                    Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods,

 

(s)                                   licenses, leases or subleases granted by
the Borrower or any Subsidiary to third persons in the ordinary course of
business not interfering in any material respect with the business of the
Borrower or any Subsidiary,

 

(t)                                    Liens assumed by Borrower or its
Subsidiaries in connection with a Permitted Acquisition that secure Acquired
Indebtedness, and

 

(u)                                 other Liens which do not secure Indebtedness
for borrowed money or letters of credit and as to which the aggregate amount of
the obligations secured thereby does not exceed $1,000,000.

 

“Permitted Protest” means the right of Borrower or any of its Subsidiaries to
protest any Lien (other than any Lien that secures the Bank Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on Borrower’s or its Subsidiaries’ books and
records in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Borrower or its Subsidiary, as
applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of Collateral Agent’s Liens.

 

“Permitted Purchase Money Indebtedness” means, as of any date of
determination, Indebtedness (other than the Bank Obligations, but including
Capitalized Lease Obligations and Synthetic Lease Obligations), incurred after
the Closing Date and at the time of, or within 30 days after, the acquisition of
any fixed assets for the purpose of financing all or any part of the acquisition
cost thereof, in an aggregate principal amount outstanding at any one time not
in excess of $500,000.

 

“Permitted Redemption” means, Borrower’s redemption and/or repurchase of all or
any portion of the outstanding principal owing under the Senior Unsecured Notes
or all or any portion of the Secured Note Warrants, provided that (i) Borrower
has provided Agent with written notice 30 days prior to each such redemption
and/or repurchase, and (ii) Borrower has provided Agent with evidence
satisfactory to Agent, in its sole and absolute discretion, that Borrower has
the Required Availability at the time of such redemption and/or repurchase and
for a period of 30 days after giving effect to each such redemption and
repurchase.

 

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

 

“Platform” has the meaning specified therefor in Section 17.09(c) of the
Agreement.

 

“Prepayment” means, that (i) Borrower has paid in full all of the Bank
Obligations at any time prior to the Maturity Date, and (ii) the Agent has
terminated the Credit Facility.

 

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“Projections” means Borrower’s forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Borrower’s historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.

 

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

 

(a)                                 with respect to a Lender’s obligation to
make all or a portion of the Revolving Loans, with respect to such Lender’s
right to receive payments of interest, fees, and principal with respect to the
Revolving Loans, and with respect to all other computations and other matters
related to the Revolver Credit Limits or the Revolving Loans, the percentage
obtained by dividing (i) the Revolving Loan Exposure of such Lender by (ii) the
aggregate Revolving Loan Exposure of all Lenders,

 

(b)                                 with respect to a Lender’s obligation to
participate in the Letters of Credit, with respect to such Lender’s obligation
to reimburse Issuing Lender, and with respect to such Lender’s right to receive
payments of Letter of Credit Fees, and with respect to all other computations
and other matters related to the Letters of Credit, the percentage obtained by
dividing (i) the Revolving Loan Exposure of such Lender by (ii) the aggregate
Revolving Loan Exposure of all Lenders; provided, that if all of the Revolving
Loans have been repaid in full and the Credit Facility has been terminated, but
Letters of Credit remain outstanding, Pro Rata Share under this clause shall be
determined as if the Credit Facility had not been terminated and based upon the
Revolver Loans as they existed immediately prior to their termination,

 

(c)                                  [Intentionally Omitted], and

 

(d)                                 with respect to all other matters and for
all other matters as to a particular Lender (including the indemnification
obligations arising under Section 15.07 of the Agreement), the percentage
obtained by dividing (i) the Revolving Loan Exposure of such Lender by (ii) the
aggregate Revolving Loan Exposure of all Lenders, in any such case as the
applicable percentage may be adjusted by assignments permitted pursuant to
Section 13.01; provided, that if all of the Loans have been repaid in full, all
Letters of Credit have been made the subject of Letter of Credit
Collateralization, and the Credit Facility has been terminated, Pro Rata Share
under this clause shall be determined as if the Revolving Loan Exposures had not
been repaid, collateralized, or terminated and shall be based upon the Revolving
Loan Exposures as they existed immediately prior to their repayment,
collateralization, or termination.

 

“Protective Advances” has the meaning specified therefor in
Section 2.03(d)(i) of the Agreement.

 

“Public Lender” has the meaning specified therefor in Section 17.09(c) of the
Agreement.

 

“Qualified Equity Interest” means and refers to any Equity Interests issued by
Borrower (and not by one or more of its Subsidiaries) that is not a Disqualified
Equity Interest.

 

“Qualified Public Offering” means an underwritten public offering of common
stock of the Borrower pursuant to an effective registration statement filed with
the Securities and Exchange Commission in accordance with the Securities Act of
1933, as amended, that results in at least $5,000,000 of net cash proceeds to
the Borrower and results in the listing of the common stock of the Borrower on a
national securities exchange or the NASDAQ National Market quotation system.

 

“Real Property” means any estates or interests in real property now owned or
hereafter acquired by Borrower or its Subsidiaries and the improvements thereto.

 

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“Real Property Collateral” means (a) the Real Property identified on
Schedule R-1 to the Agreement and (b) any Real Property hereafter acquired by
Borrower or its Subsidiaries with a fair market value in excess of $500,000.

 

“Receivable Reserves” means, as of any date of determination, those reserves
that Agent deems necessary or appropriate, in its sole and absolute discretion
and subject to Section 2.01(c), to establish and maintain (including reserves
for rebates, discounts, warranty claims, and returns) with respect to the
Eligible Accounts or the Maximum Revolver Credit Limit.

 

“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

 

“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as:

 

(a)                                 such refinancings, renewals, or extensions
do not result in an increase in the principal amount or the committed amount of
the Indebtedness so refinanced, renewed, or extended, other than by the amount
of premiums paid thereon and the fees and expenses incurred in connection
therewith and by the amount of unfunded commitments with respect thereto,

 

(b)                                 such refinancings, renewals, or extensions
do not result in a shortening of the average weighted maturity (measured as of
the refinancing, renewal, or extension) of the Indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions that, taken as a
whole, are or could reasonably be expected to be materially adverse to the
interests of the Lenders,

 

(c)                                  if the Indebtedness that is refinanced,
renewed, or extended was subordinated in right of payment to the Obligations,
then the terms and conditions of the refinancing, renewal, or extension must
include subordination terms and conditions that are substantially as favorable
to the Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness, and

 

(d)                                 the Indebtedness that is refinanced,
renewed, or extended is not recourse to any Person that is liable on account of
the Obligations other than those Persons which were obligated with respect to
the Indebtedness that was refinanced, renewed, or extended.

 

provided, however, that any amendment, extension, renewal, restatement,
refunding, replacement, refinancing, supplement, or modification in whole or in
part of the Senior Secured Notes and Senior Unsecured Notes shall be deemed to
be Refinancing Indebtedness and Permitted Indebtedness in all respects as long
as:

 

i.                  the Liens securing such Refinancing Indebtedness as it
relates to the refinancing, replacing, defeasing or discharge of the any Senior
Secured Notes are pari passu with the Liens securing the Obligations,

 

ii.               the Liens securing such Refinancing Indebtedness as it relates
to the refinancing, replacing, defeasing or discharge of the any Senior
Unsecured Notes are subordinated to the Bank Obligations, pursuant to the
Replacement Intercreditor Agreement,

 

iii.            such Refinancing Indebtedness is subordinated in right of
payment to the Bank Obligations after the occurrence of an event of default by
Borrower under the documents governing such Refinancing Indebtedness, pursuant
to the Replacement Intercreditor Agreement,

 

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iv.           such Refinancing Indebtedness has a stated maturity no earlier
than the stated maturity of the Senior Secured Notes and Senior Unsecured Notes
being refinanced as the case may be,

 

v.              Agent has received true, correct and complete copies of the
notes, documents and instruments evidencing the Refinancing Indebtedness, and
such notes, documents and instruments shall (i) not impose more burdensome terms
upon Borrower or the other Loan Parties, as the case may be, and (ii) is on
terms that are satisfactory in all respects to Agent and each Lender in their
sole discretion, and

 

vi.           no Default or Event of Default has occurred and continues to exist
or would result from the incurrence of such Refinancing Indebtedness.

 

“Refinancing Support Agreement” means that certain refinancing support agreement
by and among the Company, ASOF II Investments, LLC and Phoenix Investment
Advisor LLC dated as of December 24, 2013, as amended by that certain amendment
by and among the parties thereto dated as of February 13, 2014.

 

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

 

“Related Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of
credit in the ordinary course and that is administered, advised or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers, advises or manages a Lender.

 

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials required by Environmental Laws.

 

“Replacement Collateral Agent” has the meaning specified therefor in
Section 3.07 of the Agreement.

 

“Replacement Credit Agreement” has the meaning specified therefor in
Section 3.07 of the Agreement.

 

“Replacement Intercreditor Agreement” means that certain Intercreditor Agreement
executed along with the other Replacement Loan Documents in connection with the
Permitted Bond Refinancing, substantially the form of Exhibit R.

 

“Replacement Lender” has the meaning specified therefor in Section 2.13(b) of
the Agreement.

 

“Replacement Letters of Credit” has the meaning specified therefor in
Section (a) of the Agreement.

 

“Replacement Loan Documents” has the meaning specified therefor in Section 3.07
of the Agreement.

 

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“Report” has the meaning specified therefor in Section 15.16(a) of the
Agreement.

 

“Required Availability” means that Excess Availability exceeds $15,000,000. 
(Notwithstanding anything to the contrary, no portion of the Required Collateral
Block will be included in the Agent’s calculation of Required Availability.)

 

“Required Blockage/Collections Period” is any period of time, on and after the
Closing Date, where the Blockage/Collections Trigger Event has occurred and is
continuing, at which point during such period, (i) all Collections will be
applied to reduce the Bank Obligations, and (ii) Agent will have full control
over the Lockbox and Designated Account pursuant to the terms of the Blocked
Account Agreement, whether or not a Default or an Event of Default has occurred
and is continuing.  Notwithstanding anything to the contrary in this Agreement,
at any time a Blockage/Collections Trigger Event occurs as a result of
Borrower’s Excess Availability being less than 20% of the Maximum Revolver
Credit Limit, the Required Blockage/Collections Period will continue until such
time as Agent confirms that (a) Borrower’s Excess Availability is equal to or
greater than 20% of the Maximum Revolver Credit Limit and (b) Borrower’s Excess
Availability is equal to or greater than 20% of the Maximum Revolver Credit
Limit at all times during the immediately preceding 2 calendar months.

 

“Required Collateral Block” has the meaning specified therefor in
Section 7(a) of the Agreement.

 

“Required Lenders” means, at any time, Lenders having or holding more than 50%
of the sum of the aggregate Revolving Loan Exposure of all Lenders; provided,
that (i) the Revolving Loan Exposure of any Defaulting Lender shall be
disregarded in the determination of the Required Lenders, and (ii) at any time
there are 2 or more Lenders, “Required Lenders” must include at least 2 Lenders
(who are not Affiliates of one another).

 

“Reserves” means, as of any date of determination, those reserves (other than
Receivable Reserves and Bank Product Reserves) that Agent deems necessary or
appropriate, in its sole and absolute and subject to Section 2.01(c), to
establish and maintain (including reserves with respect to (a) sums that
Borrower or its Subsidiaries are required to pay under any Section of the
Agreement or any other Loan Document (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable under
such leases) and has failed to pay, and (b) amounts owing by Borrower or its
Subsidiaries to any Person to the extent secured by a Lien on, or trust over,
any of the Collateral (other than a Permitted Lien), which Lien or trust, in the
sole and absolute discretion of Agent likely would have a priority superior to
the Collateral Agent’s Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens
or trusts for ad valorem, excise, sales, or other taxes where given priority
under applicable law) in and to such item of the Collateral) with respect to the
Borrowing Base or the Maximum Revolver Credit Limit.

 

“Responsible Officer” is any of the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Corporate Controller and Treasury Manager of
Borrower.

 

“Restricted Payment” means to (a) declare or pay any dividend or make any other
payment or distribution, directly or indirectly, on account of Equity Interests
issued by Borrower (including any payment in connection with any merger or
consolidation involving Borrower) or to the direct or indirect holders of Equity
Interests issued by Borrower in their capacity as such (other than dividends or
distributions payable in Qualified Equity Interests issued by Borrower, or
(b) purchase, redeem, make any sinking fund or similar payment, or otherwise
acquire or retire for value (including in connection with any merger or
consolidation involving Borrower) any Equity Interests issued by Borrower, and
(c) make any payment to retire, or to obtain the surrender of, any outstanding
warrants, options, or other rights to acquire Equity Interests of Borrower now
or hereafter outstanding, and (d) make, or cause or suffer to

 

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permit any of Borrower’s Subsidiaries to make, any payment or prepayment of
principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking
fund or similar payment with respect to, any Subordinated Indebtedness.

 

“Revolver Credit Limit” means, with respect to each Revolving Lender, its
Revolver Credit Limit, and, with respect to all Revolving Lenders, their
Revolver Credit Limits, in each case as such Dollar amounts are set forth beside
such Revolving Lender’s name under the applicable heading on Schedule C-1 to the
Agreement or in the Assignment and Acceptance pursuant to which such Revolving
Lender became a Revolving Lender under the Agreement, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.01 of the Agreement.

 

“Revolver Usage” means, as of any date of determination, the sum of (a) the
amount of outstanding Revolving Loans (inclusive of Protective Advances), plus
(b) the amount of the Letter of Credit Usage.

 

“Revolving Lender” means a Lender that has a Revolver Credit Limit or that has
an outstanding Revolving Loan.

 

“Revolving Loan Exposure” means, with respect to any Revolving Lender, as of any
date of determination (a) prior to the termination of the Credit Facility, the
amount of such Lender’s Revolver Credit Limit, and (b) after the termination of
the Credit Facility, the aggregate outstanding principal amount of the Revolving
Loans of such Lender.

 

“Revolving Loans” has the meaning specified therefor in Section 2.01(a) of the
Agreement.

 

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

 

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

 

“S&P” has the meaning specified therefor in the definition of Cash Equivalents.

 

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

 

“Secured Note Warrants” means an aggregate of 350,000 detachable redeemable
common stock warrants issued to the holders of the Senior Secured Notes.

 

“Securities Account” means a securities account (as that term is defined in the
Code).

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

 

“Security Agreement” means that certain Security Agreement dated March 22, 2010,
by and among the Borrower and the other Loan Parties and the Collateral Agent
for the benefit of the Secured Parties party thereto, as amended by that certain
Amendment No. 1, dated as of even date with the Agreement, to the Security
Agreement dated as of March 22, 2010 (the “Amendment No. 1 to Security
Agreement”), by and among the Borrower and the other Loan Parties and the
Collateral Agent for the

 

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benefit of the Secured Parties party thereto (as the same may be further
amended, modified, supplemented or restated, from time to time).

 

“Security Documents” shall mean the Guaranty Agreement, the Security Agreement,
the Intercreditor Agreement and each of the security agreements, mortgages and
other instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.12.

 

“Settlement” has the meaning specified therefor in Section 2.03(e)(i) of the
Agreement.

 

“Settlement Date” has the meaning specified therefor in Section 2.03(e)(i) of
the Agreement.

 

“Senior Secured Notes” means Borrower’s 12% senior secured notes due 2014 issued
pursuant to the Senior Secured Notes Indenture in the original principal amount
of $310,000,000 (as increased by PIK Notes issued thereunder), and the
Indebtedness represented thereby.

 

“Senior Secured Notes Documents” means the Senior Secured Notes, the Senior
Secured Notes Indenture, any collateral documents entered into in connection
therewith, any guaranty issued pursuant thereto and the Intercreditor Agreement,
each as may be amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with the terms thereof, as the same may be
amended, extended, renewed, restated, refunded, replaced, refinanced,
supplemented, or modified in whole or in part.

 

“Senior Secured Notes Indenture” means that certain indenture, dated as of
March 22, 2010, made by and among Borrower, as issuer, certain of its
Subsidiaries, as guarantors, and Wilmington Trust Company, as trustee, pursuant
to which the Senior Secured Notes are issued, as it may be amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof.

 

“Senior Unsecured Notes” means Borrower’s 10.25% Senior Unsecured Notes issued
pursuant to the Senior Unsecured Notes Indenture in the original aggregate
principal amount of approximately $250,000,000, and the Indebtedness represented
thereby, as the same may be amended, extended, renewed, restated, refunded,
replaced, refinanced, supplemented, or modified in whole or in part.

 

“Senior Unsecured Notes Documents” mean the Senior Unsecured Notes, the Senior
Unsecured Notes Indenture, any guaranty issued pursuant thereto, and any
intercreditor agreement entered into in connection therewith, each as may be
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with the terms thereof.

 

“Senior Unsecured Notes Indenture” means that certain indenture, dated as of
February 8, 2007, made by and among Borrower, as issuer, certain of its
Subsidiaries, as guarantors, and Wilmington Trust Company, as trustee, pursuant
to which the Senior Unsecured Notes are issued, as it may be amended, amended
and restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof.

 

“Senior Warrants” shall mean an aggregate of 350,000 detachable redeemable
common stock warrants issued to the holders of the Senior Secured Notes.

 

“Special Diversification Payments” shall mean payments (other than payments
required by applicable law) pursuant to the ESOP Plan Documents in respect of
employee elections to transfer up to 10% of the value of their ESOP accounts to
investments other than the Borrower’s common stock.

 

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“Sole Book Runner” has the meaning set forth in the preamble to the Agreement.

 

“Sole Lead Arranger” has the meaning set forth in the preamble to the Agreement.

 

“Solvent” means, with respect to any Person as of any date of determination,
that (a) at fair valuations, the sum of such Person’s debts (including
contingent liabilities) is less than all of such Person’s assets, (b) such
Person is not engaged or about to engage in a business or transaction for which
the remaining assets of such Person are unreasonably small in relation to the
business or transaction or for which the property remaining with such Person is
an unreasonably small capital, and (c) except as disclosed in the Borrower’s
Form 10-K for its fiscal year ended September 30, 2013 and in its registration
statement on Form S-1 initially filed with the SEC on February 13, 2014, such
Person has not incurred and does not intend to incur, or reasonably believe that
it will incur, debts beyond its ability to pay such debts as they become due
(whether at maturity or otherwise), and (d) such Person is “solvent” or not
“insolvent”, as applicable within the meaning given those terms and similar
terms under applicable laws relating to fraudulent transfers and conveyances. 
For purposes of this definition, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability (irrespective of whether
such contingent liabilities meet the criteria for accrual under Statement of
Financial Accounting Standard No. 5).

 

“Standard Letter of Credit Practice” means, for Issuing Lender, any domestic or
foreign law or letter of credit practices applicable in the city in which
Issuing Lender issued the applicable Letter of Credit or, for its branch or
correspondent, such laws and practices applicable in the city in which it has
advised, confirmed or negotiated such Letter of Credit, as the case may be, in
each case, (a) which letter of credit practices are of banks that regularly
issue letters of credit in the particular city, and (b) which laws or letter of
credit practices are required or permitted under ISP or UCP, as chosen in the
applicable Letter of Credit.

 

“Subordinated Indebtedness” means any unsecured Indebtedness of Borrower or its
Subsidiaries incurred from time to time that is subordinated in right of payment
to the Bank Obligations and (a) that is only guaranteed by the Guarantors,
(b) that is not subject to scheduled amortization, redemption, sinking fund or
similar payment and does not have a final maturity, in each case, on or before
the date that is six months after the Maturity Date, (c) that does not include
any financial covenants or any covenant or agreement that is more restrictive or
onerous on any Loan Party in any material respect than any comparable covenant
in the Agreement and is otherwise on terms and conditions reasonably acceptable
to Agent, (d) shall be limited to cross-payment default and cross-acceleration
to designated “senior debt” (including the “Bank Obligations”), and (e) the
terms and conditions of the subordination are set forth in a written agreement
reasonably acceptable to Agent.

 

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the Equity Interests having ordinary voting power to elect a majority
of the Board of Directors of such corporation, partnership, limited liability
company, or other entity.

 

“Supermajority Lenders” means, at any time, Lenders having or holding more than
66 2/3% of the sum of the aggregate Revolving Loan Exposure of all Lenders;
provided, that (i) the Revolving Loan Exposure of any Defaulting Lender shall be
disregarded in the determination of the Required Lenders, and (ii) at any time
there are 2 or more Lenders, “Supermajority Lenders” must include at least 2
Lenders (who are not Affiliates of one another)

 

41

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“Synthetic Lease” shall mean, as to any Person, any lease (including leases that
may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) having a value in excess of $100,000 (a) that is accounted
for as an operating lease under GAAP and (b) in respect of which the lessee
retains or obtains ownership of the property so leased for U.S. Federal income
tax purposes, other than any such lease under which such person is the lessor.

 

“Synthetic Lease Obligations” shall mean, as to any Person, an amount equal to
the capitalized amount of the remaining lease payments under any Synthetic Lease
that would appear on a balance sheet of such person in accordance with GAAP if
such obligations were accounted for as Capital Lease Obligations.

 

“Synthetic Purchase Agreement” shall mean any swap, derivative or other
agreement or combination of agreements pursuant to which Borrower or any
Subsidiary is or may become obligated to make (a) any payment in connection with
a purchase by any third party from a person other than Borrower or any
Subsidiary of any Equity Interest or (b) any payment (other than on account of a
permitted purchase by it of any Equity Interest) the amount of which is
determined by reference to the price or value at any time of any Equity
Interest; provided that no phantom stock plan, stock appreciation right plan or
similar plan providing for payments only to current or former directors,
officers or employees of Borrower or the Subsidiaries (or to their heirs or
estates) shall be deemed to be a Synthetic Purchase Agreement.

 

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein, and all
interest, penalties or similar liabilities with respect thereto.

 

“Tax Lender” has the meaning specified therefor in Section 14.02(a) of the
Agreement.

 

“Termination Date” means the earliest of (i) the Maturity Date, (ii) the date
the Agent or the Borrower terminates the Credit Facility, or (iii) the date the
Agent demands payment of the Bank Obligations or the Bank Obligations otherwise
become due and payable.

 

“Threshold Amount” means $10,000,000.

 

“Trademark Security Agreement” means that certain Trademark Security Agreement,
dated as of even date with the Agreement, by and among Borrower, Washington
Consulting, Inc., a Virginia corporation, and Collateral Agent (as the same may
be further amended, amended and restated, supplemented, renewed, restated,
replaced, or otherwise modified from time to time).

 

“UCP” means, with respect to any Letter of Credit, the Uniform Customs and
Practice for Documentary Credits 2007 Revision, International Chamber of
Commerce Publication No. 600 and any subsequent revision thereof adopted by the
International Chamber of Commerce on the date such Letter of Credit is issued.

 

“United States” means the United States of America.

 

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

 

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

 

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

 

42

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

 

“Unused Line Fee” has the meaning specified therefor in Section 2.10(b) of the
Agreement.

 

“Voidable Transfer” has the meaning specified therefor in Section 17.08 of the
Agreement.

 

“Warrants” shall mean an aggregate of 350,000 detachable redeemable common stock
warrants issued to the holders of the Senior Secured Notes and any warrants
issued in connection with the refinancing of the Senior Unsecured Notes or the
Senior Secured Notes.

 

“Wells Fargo” means Wells Fargo Bank, National Association, a national banking
association.

 

“Withdrawal Liability” means liability with respect to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

 

43

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

 

Schedule 3.1

 

to

 

Second Amended and Restated Credit Agreement

 

Conditions Precedent

 

The obligation of each Lender to make its initial extension of credit provided
for in the Agreement is subject to the fulfillment, to the satisfaction of each
Lender (the making of such initial extension of credit by any Lender being
conclusively deemed to be its satisfaction or waiver of the following), of each
of the following conditions precedent:

 

(a)                                 the Closing Date shall occur on or before
May 2, 2014;

 

(b)                                 Agent shall have received a letter duly
executed by each Loan Party authorizing Agent to file appropriate financing
statements in such office or offices as may be necessary or, in the opinion of
Agent, desirable to perfect the security interests to be created by the Loan
Documents;

 

(c)                                  Agent shall have received Borrower’s
financial statements for the quarter-ending, March 31, 2014, in a form
satisfactory to Agent in its sole and absolute discretion;

 

(d)                                 Agent shall have received each of the
following documents, in form and substance satisfactory to Agent, duly executed
and delivered, and each such document shall be in full force and effect:

 

(i)                                     a completed Borrowing Base Certificate;

 

(ii)                                  the Blocked Account Agreements,

 

(iii)                               the Amendment No. 1 to Copyright Security
Agreement,

 

(iv)                              the Fee Letter,

 

(v)                                 the Flow of Funds Agreement,

 

(vi)                              the Amendment No. 1 to Security Agreement,

 

(vii)                           the Intercreditor Joinder,

 

(viii)                        the Amended and Restated Guaranty Agreement,

 

(ix)                              the Intercompany Subordination Agreement,

 

(x)                                 [Intentionally Omitted],

 

(xi)                              a completed Perfection Certificate executed by
each of the Loan Parties,

 

(xii)                           the Amendment No. 1 to Patent Security
Agreement,

 

(xiii)                        the Amendment No. 1 to Trademark Security
Agreement,

 

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

 

(xiv)                       a completed Form 8821 (IRS); and

 

(xv)                          a completed Form 13 FMS (Treasury Department).

 

(e)                                  Agent shall have received a certificate
from the Secretary of each Loan Party (i) attesting to the resolutions of such
Loan Party’s Board of Directors authorizing its execution, delivery, and
performance of the Loan Documents to which it is a party, and authorizing
specific officers of such Loan Party to execute the same, and (ii) attesting to
the incumbency and signatures of such specific officers of such Loan Party;

 

(f)                                   Agent shall have received copies of each
Loan Party’s Governing Documents, as amended, modified, or supplemented to the
Closing Date, which Governing Documents shall be (i) certified by the Secretary
of such Loan Party, and (ii) with respect to Governing Documents that are
charter documents, certified as of a recent date by the appropriate governmental
official;

 

(g)                                  30 days prior to the Closing Date, Agent
shall have received a certificate of status with respect to each Loan Party,
such certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Loan Party, which certificate shall indicate that such Loan
Party is in good standing in such jurisdiction;

 

(h)                                 30 days prior to the Closing Date, Agent
shall have received certificates of status with respect to each Loan Party, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Loan Party) in which its failure
to be duly qualified or licensed would constitute a Material Adverse Effect,
which certificates shall indicate that such Loan Party is in good standing in
such jurisdictions;

 

(i)                                     Agent shall have received a certificate
of insurance, together with the endorsements thereto, as are required by
Section 5.06 of the Agreement, the form and substance of which shall be
satisfactory to Agent;

 

(j)                                    Agent shall have received Collateral
Access Agreements with respect to the location, 1750 Tysons Boulevard,
Suite 1300, McLean, Virginia 22102;

 

(k)                                 Agent shall have received an opinion of the
Loan Parties’ counsel in form and substance satisfactory to Agent;

 

(l)                                     Borrower shall have the Required
Collateral Block after giving effect to the initial extensions of credit under
the Agreement and the payment of all fees and expenses required to be paid by
Borrower on the Closing Date under the Agreement or the other Loan Documents;

 

(m)                             Agent shall have completed its business, legal,
and collateral due diligence, including (i) a collateral audit and review of
Borrower’s and its Subsidiaries’ books and records and verification of
Borrower’s representations and warranties to Lender Group, and (ii) a review of
Borrower’s and its Subsidiaries’ material agreements, in each case, the results
of which shall be satisfactory to Agent;

 

(n)                                 Agent shall have completed (i) Patriot Act
searches, OFAC/PEP searches and customary individual background checks for each
Loan Party, and (ii) OFAC/PEP searches and customary individual background
searches for each Loan Party’s senior management and key principals,  the
results of which shall be satisfactory to Agent;

 

2

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

 

(o)                                 Agent shall have received a set of
Projections of Borrower for the 3 year period following the Closing Date (on a
year by year basis, and for the 1 year period following the Closing Date, on a
month by month basis), in form and substance (including as to scope and
underlying assumptions) satisfactory to Agent;

 

(p)                                 Borrower shall have paid all Lender Group
Expenses incurred in connection with the transactions evidenced by the Agreement
and the other Loan Documents;

 

(q)                                 [Intentionally Omitted];

 

(r)                                    [Intentionally Omitted];

 

(s)                                   [Intentionally Omitted];

 

(t)                                    Agent shall have received a Solvency
certificate, in form and substance satisfactory to it, certifying as to the
solvency of the Borrower and its Subsidiaries on a consolidated basis;

 

(u)                                 Borrower and each of its Subsidiaries shall
have received all licenses, approvals or evidence of other actions required by
any Governmental Authority in connection with the execution and delivery by
Borrower or its Subsidiaries of the Loan Documents or with the consummation of
the transactions contemplated thereby; and

 

(v)                                 all other documents and legal matters in
connection with the transactions contemplated by the Agreement shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to Agent.

 

3

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

 

Schedule 3.6

 

to

 

Second Amended and Restated Credit Agreement

 

Conditions Subsequent

 

NONE.

 

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

 

SCHEDULE 4.1(b)

 

CAPITALIZATION OF BORROWER

 

Issuer

 

Number of
Certificate

 

Registered
Owner

 

Authorized
Shares and
Class of
Equity Interest

 

Issued
Shares and
Class of
Equity Interest

 

Percentage
Of Equity
Interests

 

Alion Science and Technology Corporation

 

84

 

Alion Science and Technology Corporation Employee Ownership, Savings and
Investment Trust

 

20,000,000

common

 

5,000,000

preferred

 

7,641,493.2889 common

 

100

%

 

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

 

SCHEDULE 4.1(c)

 

CAPITALIZATION OF BORROWER’S SUBSIDIARIES

 

Issuer

 

Number of
Certificate

 

Registered
Owner

 

Authorized
Shares of
Common Stock

 

Issued
Shares of
Common Stock

 

Percentage
Of Equity
Interests

 

 

 

 

 

 

 

 

 

 

 

 

 

Innovative Technology Solutions Corporation

 

575

 

Alion Science and Technology Corporation

 

800,000

 

97,104
common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Alion — IPS Corporation

 

1

 

Alion Science and Technology Corporation

 

1,000,000

 

100
common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Alion — CATI Corporation

 

6

 

Alion Science and Technology Corporation

 

200,000

 

176,471
common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Alion — METI Corporation

 

6

 

Alion Science and Technology Corporation

 

1,000

 

100
common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Alion — JJMA Corporation

 

21

 

Alion Science and Technology Corporation

 

5,000,000

 

1,224,545.6793
common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Washington Consulting, Inc.

 

9, 10

 

Alion Science and Technology Corporation

 

50,000

 

10,100
common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Alion — MA&D Corporation

 

23

 

Alion Science and Technology Corporation

 

50,000

 

1,050
common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Washington Consulting Government Services, Inc.

 

2

 

Alion Science and Technology Corporation

 

1,000

 

100
common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Alion Asia Corporation

 

1

 

Alion International Corporation

 

1,000

 

100
common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Alion Offshore Services, Inc.

 

1

 

Alion International Corporation

 

3,000

 

100
common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Alion International Corporation

 

1

 

Alion Science and Technology Corporation

 

5,000

 

1,000
common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Alion Maritime India PLC

 

1

 

Alion Asia Corporation

 

50,000

 

50 common

 

1

%

 

 

2

 

Alion International Corporation

 

 

 

49,950 common

 

99

%

 

 

 

 

 

 

 

 

 

 

 

 

Alion Science And Technology (Canada) Corporation

 

2

 

Alion International Corporation

 

100,000 Common

 

100 Common

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Alion-BMH Corporation

 

8

 

Alion Science and Technology Corporation

 

5,000

 

1,000 Common

 

100

%

 

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

 

SCHEDULE 4.1(d)

 

SUBSCRIPTIONS, OPTIONS, WARRANTS, CALLS

 

Warrant Agreement, dated as of March 22, 2010, by and between the Company and
Wilmington Trust Company, as warrant agent.

 

ESOP Plan Documents

 

Refinancing Support Agreement

 

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

 

SCHEDULE 4.2(b)(iv)

 

APPROVALS

 

Under the terms of the Refinancing Support Agreement, the consent of the
Supporting Noteholders (as defined therein) must be obtained.

 

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

 

SCHEDULE 4.6(b)

 

LITIGATION

 

None.

 

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

 

SCHEDULE 4.10

 

BENEFIT PLANS

 

None.

 

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

 

SCHEDULE 4.11

 

ENVIRONMENTAL MATTERS

 

None.

 

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

 

SCHEDULE 4.14

 

PERMITTED INDEBTEDNESS

 

Intercreditor Agreement, dated as of March 22, 2010, by and among the Company,
the other grantors party thereto, Credit Suisse AG, as administrative agent, and
Wilmington Trust Company, as collateral agent and trustee.

 

12% Senior Secured Notes, issued March 22, 2010 and maturing November 1, 2014,
with an outstanding principal amount of 336,436,694 as of May 2, 2014.

 

Indenture Agreement for 12% Senior Secured Notes, dated as of March 22, 2010,
among the Company, the other grantors party thereto and Wilmington Trust
Company, as collateral agent and trustee.

 

10¼% Senior Unsecured Notes, issued February 8, 2007 and maturing February 1,
2015 with an outstanding principal amount of $235,000,000 as of April 23, 2014.

 

Indenture Agreement for 10¼% Senior Unsecured Notes, dated as of February 8,
2007, among the Company, the other grantors party thereto and Wilmington Trust
Company, as collateral agent and trustee.

 

See Schedule E-2

 

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

 

SCHEDULE 4.22

 

GOVERNMENT CONTRACTS

 

None.

 

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

 

SCHEDULE 4.29

 

CERTAIN ESOP PLAN DOCUMENTS EXCEPTIONS

 

None.

 

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

 

Schedule 5.1

 

to

 

Second Amended and Restated Credit Agreement

 

Financial Statements, Reports, Certificates

 

Deliver to Agent (and if so requested by Agent, with copies for each Lender)
each of the financial statements, reports, or other items set forth below at the
following times in form satisfactory to Agent:

 

as soon as available, but in any event no later than the 45th day after the end
of each fiscal quarter during each of Borrower’s fiscal years, except the fourth
fiscal quarter,

 

 

(a)   an unaudited consolidated balance sheet as of the last day of Borrower’s
first three fiscal quarters and an income statement and statement of cash flow,
covering Borrower’s operations on a consolidated basis for such period and
compared to the prior quarter,

 

(b)   a reconciliation of billed and unbilled Accounts and trade accounts
payable of Borrower’s general ledger accounts to its quarterly financial
statements including any book reserves related to each category, and

 

(c)   a Compliance Certificate.

 

 

 

as soon as available, but in any event no later than the 90th day after the end
of each of Borrower’s fiscal years during the term of the Agreement,

 

(d)   consolidated balance sheet as of the last day of Borrower’s fiscal year,
and an income statement and statement of cash flow covering Borrower’s
operations on a consolidated basis for such fiscal year, audited by independent
certified public accountants reasonably acceptable to Agent and certified,
without any  of the following qualifications (including any (A) “going concern”
or like qualification or exception, other than for fiscal year 2013 provided
such “going concern” qualification is solely with respect the pending maturities
of Borrower’s existing Indebtedness, its recurring net losses and its excess of
liabilities over its assets, (B) qualification or exception as to the scope of
such audit, or (C) qualification which relates to the treatment or
classification of any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect of which
would be to cause any noncompliance with the provisions of Section 5.07 of the
Agreement), by such accountants to have been prepared in accordance with GAAP
(such audited financial statements to include a balance sheet, income statement,
statement of cash flow, and statement of shareholder’s equity, and, if prepared,
such accountants’ letter to management), and

 

(e)   a Compliance Certificate.

 

 

 

as soon as available, but in any event within 30 days prior to the start of each
of Borrower’s fiscal years, or more

 

(f)   copies of Borrower’s Projections (including management’s projected (and
audited and non-reviewed) income statements, balance sheets and cash flow
statements), in form and substance satisfactory to Agent, in its sole but
reasonable discretion, for the forthcoming fiscal year, month by month,
certified by the chief financial officer of Borrower as being the Borrower’s
good faith projection of the financial performance of Borrower during the period
covered thereby subject to

 

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

 

frequently upon any material change to Borrower’s business,

 

assumptions believed by Borrower to be reasonable at the time of the delivery of
such Projections to Agent (it being understood that such Projections are subject
to significant uncertainties and contingencies, many of which are beyond the
control of the Loan Parties and their Subsidiaries, and no assurances can be
given that such Projections will be realized, and although reflecting Borrower’s
good faith estimate, projections or forecasts based on methods and assumptions
which Borrower believed to be reasonable at the time such Projections were
prepared, are not to be viewed as facts, and that actual results during the
period or periods covered by the Projections may differ materially from
projected or estimated results.

 

 

 

if and when filed by Borrower,

 

(g)   Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K
current reports, all within 5 days of filing

 

(h)   any other filings made by Borrower with the SEC, and

 

(i)    any other information that is provided by Borrower to its shareholders
generally in their capacity as shareholders and not information generally
provided to individuals in their capacity as employees.

 

 

 

promptly, but in any event no later than 5 Business Days after Borrower has
knowledge of any event or condition that constitutes a Default or an Event of
Default,

 

(j)    notice of such event or condition and a statement of the curative action
that Borrower proposes to take with respect thereto.

 

 

 

promptly after the commencement thereof, but in any event no later than 5
Business Days after the service of process with respect thereto on Borrower or
any of its Subsidiaries,

 

(k)   notice of all actions, suits, or proceedings brought by or against
Borrower or any of its Subsidiaries before any Governmental Authority which
reasonably could be expected to result in a Material Adverse Effect.

 

 

 

upon the request of Agent,

 

(l)    true, correct and complete copies of all Material Government Contracts
(including current and ongoing modifications) which support any Loan Party’s
receivables.

 

(m) any other information reasonably requested relating to the financial
condition

 

2

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

 

 

 

of Borrower or its Subsidiaries.

 

 

 

as soon as practicable and in any event (i) no later than 10 Business Days after
receipt, by the Borrower’s Board of Directors and the Borrower’s ESOP Committee
of the annual valuation report prepared for the ESOP for each fiscal year,

 

(n)   true, correct and complete copies of such semi-annual valuation report
prepared for the ESOP for each fiscal year.  Borrower shall alert Agent within
10 days of completion of each valuation, and Borrower agrees to make such
valuations available at Borrower’s office for Agent to review such valuations.

 

 

 

on the date that is the second anniversary of the delivery of the most recent
repurchase liability study of the Borrower prepared for the ESOP

 

(o)   true, correct and complete copies of a repurchase liability study of
Borrower prepared for the ESOP as of a recent date, in each case in form and
substance reasonably acceptable to the Agent.

 

3

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

 

Schedule 5.2

 

to

 

Second Amended and Restated Credit Agreement

 

Collateral Reporting

 

Provide Agent (and if so requested by Agent, with copies for each Lender) with
each of the documents and reports set forth below at the following times and as
of the reporting dates or periods set forth below, all in form satisfactory to
Agent in its reasonable discretion:

 

Not later than Tuesday of each week, unless Agent has received and approved a
Borrowing Base Certificate within the prior 5 Business Days, by Agent, for the
period ending on the preceding Friday

 

(a)   a billed Account roll-forward with supporting details supplied from sales
journals, collection journals, credit registers and any other records,

 

(b)   notice of all claims, offsets, or disputes asserted by Account Debtors
with respect to Borrower’s and the Loan Party’s billed Accounts involving
amounts equal to or greater than $500,000 individually, or $1,000,000 in the
aggregate, and

 

(c) provide a listing of invoices.

 

 

 

Prior to any Permitted Redemption and 30 days after the date of any Permitted
Redemption, semi-monthly as of the 15th and the last day of each month, which
reports shall be delivered not later than the 22nd and the 12th day of each
month, respectively, and for 30 days after any Permitted Redemption has
occurred, weekly, prepared as of Friday of each week, and delivered not later
than the 2nd Business Day thereafter

 

(d) a detailed aging, by total, of Borrower’s Accounts, together with a
reconciliation and supporting documentation for any reconciling items noted,

 

(e) a detailed calculation (together with supporting documents) of those
Accounts that are not eligible for the Borrowing Base,

 

(f)  a summary aging, by vendor, of Borrower’s and its Subsidiaries’ accounts
payable and any book overdraft and an aging, by vendor, of any held checks,

 

(g) a monthly billed Account roll-forward, in a format acceptable to Agent in
its discretion, tied to the beginning and ending account receivable balances of
Borrower’s general ledger, and

 

(h) an executed Borrowing Base Certificate.

 

 

 

Annually, within 30 days of fiscal year end

 

(i) a list of Borrower’s and its Subsidiaries’ customers on a contract level,
with address and contact information.

 

 

 

Upon request by Agent

 

(j) copies of purchase orders and invoices exceeding $200,000 for Equipment
acquired by Borrower or its Subsidiaries, and

 

(k) such other reports as to the Collateral or the financial condition of
Borrower and its Subsidiaries, as Agent may reasonably request.

 

 

 

Quarterly, within 15 days of each fiscal

 

(l) a report regarding the Government Contracts of each Loan Party, together
with a backlog report of each Loan Party

 

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

 

quarter end

 

 

 

 

 

Monthly, along with the delivery of each Borrowing Base Certificate due on the
last day of each month (which reports shall be delivered not later than the
12th day of each month), or more frequently if requested

 

(m) a detailed report regarding Borrower’s unbilled Accounts.

 

Additionally, provide Agent (and if so requested by Agent, with copies for each
Lender) with each of the documents set forth below at the following times in
form satisfactory to Agent:

 

(a)  promptly after the filing thereof with the United States Secretary of
Labor, the Internal Revenue Service or the PBGC, copies of each annual and other
report with respect to each Pension Plan or any trust created thereunder,

 

(b)  promptly upon becoming aware of the occurrence of any Notification Event or
of any “prohibited transaction,” as described in section 406 of ERISA or in
section 4975 of the IRC in connection with any Pension Plan or any trust created
thereunder, a written notice signed by a chief financial officer of Borrower,
specifying the nature thereof, what action the Loan Parties propose to take with
respect thereto, and, when known, any action taken or proposed by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto,

 

(c)  promptly upon receipt thereof, copies of any notice of the PBGC’s intention
to terminate or to have a trustee appointed to administer any Pension Plan,

 

(d)  no later than March 15 of each year during the term of the Agreement, proof
that each Loan Party submitted a request for a Withdrawal Liability estimate to
each Multiemployer Plan no later than February 15 of each year during the term
of the Agreement, and

 

(e)  promptly upon its receipt thereof, a copy of each estimate of Withdrawal
Liability received by any Loan Party or ERISA Affiliate from a Multiemployer
Plan.

 

2

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

 

SCHEDULE 6.5

 

NATURE OF BUSINESS

 

The Company provides for U.S. federal, state and local governmental, non-U.S.
governmental and commercial customers scientific, engineering, program
management, information technology and other solutions for problems relating to
national defense, homeland security, energy, the environment and other
engineering and technical disciplines.

 

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

 

SCHEDULE 5.16

 

BLOCKED ACCOUNT BANK

 

1.             Wells Fargo Bank, National Association

 

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

 

Schedule A-1

 

to

 

Second Amended and Restated Credit Agreement

 

Agent’s Account

 

WELLS FARGO BANK, N.A.

420 Montgomery Street

San Francisco, CA

For the account of

Wells Fargo/Wells Fargo Business Credit

For Further Credit (Alion Science and Technology Corporation)

 

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

 

SCHEDULE A-2

 

AUTHORIZED PERSONS

 

Bahman Atefi, President and Chief Executive Officer of Borrower

Stacy Mendler, Executive Vice President and Chief Operating Officer of Borrower

Barry Broadus, Senior Vice President and Chief Financial Officer of Borrower

Jeffrey Boyers, Senior Vice President, Corporate Controller of Borrower

Joanne Gove, Assistant Vice President, Treasury Manager of Borrower

 

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

 

Schedule C-1

 

to

 

Second Amended and Restated Credit Agreement

 

Revolver Credit Limits

 

Lender

 

Revolver Credit Limit

 

Wells Fargo Bank, National Association

 

$

45,000,000

 

 

 

 

 

TOTAL

 

$

45,000,000

 

 

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

 

SCHEDULE D-1

 

DESIGNATED ACCOUNT

 

Wells Fargo Bank, N.A.

1753 Pinnacle Drive, 3rd Floor

McLean, VA  22102

Account No. 

 

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

 

SCHEDULE E-2

 

EXISTING LETTERS OF CREDIT

 

Beneficiary

 

Letter of Credit Amount

 

US Bank NA

 

$

75,000.00

 

US Bank NA

 

$

275,000.00

 

Cognac Fairlakes, LLC c/o Prudential Real Estate Investors

 

$

345,002.52

 

P6/Griffith 8609 Westwood LLC c/o AEW Capital Management LP

 

$

41,512.50

 

TYE Development Co LLC, c/o Lerner Corp

 

$

59,325.75

 

Square 742, LLC, c/o William C. Smith Co.

 

$

2,836,733.75

 

Northwestern Mutual Life Insurance Co.

 

$

139,207.67

 

Lafayette Buildings LLC, c/o Duke Realty Corp

 

$

88,086.46

 

NBP 306 LLC, c/o Corporate Office Partners L.P.

 

$

75,334.00

 

 

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

 

SCHEDULE E-3

 

ESOP PLAN DOCUMENTS

 

Amended and Restated Alion Science and Technology Corporation Employee
Ownership, Savings and Investment Plan, dated as of October 1, 2011.

 

First Amendment to Amended and Restated Alion Science and Technology Corporation
Employee Ownership, Savings and Investment Plan, dated as of October 1, 2013.

 

Second Amendment to Amended and Restated Alion Science and Technology
Corporation Employee Ownership, Savings and Investment Plan, dated as of
September 27, 2013.

 

The Alion Science and Technology Corporation Employee Ownership, Savings and
Investment Trust, dated as of June 4, 2002.

 

First Amendment to the Alion Science and Technology Corporation Employee
Ownership, Savings and Investment Trust, dated August 26, 2008.

 

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

 

SCHEDULE P-1

 

PERMITTED INVESTMENTS

 

Entity Name

 

Jurisdiction of
Incorporation/Formation

 

Shares Owned

 

Registered
Owner

Vectorcommand Limited

 

England and Wales

 

520,495 A Ordinary Shares

 

Alion

iMove, Inc.

 

Oregon

 

9,821 Shares of ($100 par value) Common Stock

 

Alion

iMove, Inc.

 

Oregon

 

7,038 Shares of ($.001 par value) Series A-1 Preferred Stock

 

Alion

 

Joint Venture Name

 

Investment Amount

 

Dynamic Power Tech Joint Venture

 

$

25,000.00

 

 

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

 

SCHEDULE P-2

 

PERMITTED LIENS

 

Debtor

 

Jurisdiction

 

Lien Information

Alion Science and Technology Corporation

 

Delaware

 

File Number: 41416827

File Date: 05/21/2004

Current Secured Party of Record: U.S. BANCORP OLIVER-ALLEN TECHNOLOGY LEASING

Continuation Filed:03/09/2009

Alion Science and Technology Corporation

 

Delaware

 

File Number: 62635076

File Date: 07/31/2006

Current Secured Party of Record: DELL FINANCIAL SERVICES L.L.C.

Continuation Filed: 07/01/2011

Amendment Date: 05/10/2012

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20093379077

File Date: 10/21/2009

Current Secured Party of Record: EPLUS GROUP, INC.

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20093479117

File Date: 10/29/2009

Current Secured Party of Record: EPLUS GROUP, INC.

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20094084189

File Date: 12/21/2009

Current Secured Party of Record: SUNTRUST BANK

Assignment Date:02/12/2010

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20100374722

File Date: 02/03/2010

Current Secured Party of Record: DPOE IMAGE-FLEX INC.

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20100976138

File Date: 03/22/2010

Current Secured Party of Record: WILMINGTON TRUST COMPANY

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20102450470

File Date: 07/14/2010

Current Secured Party of Record:  GREATAMERICA LEASING CORPORATION

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20103828617

File Date: 11/02/2010

Current Secured Party of Record: CIT FINANCE LLC

Assignment Date: 12/14/2012

 

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

 

Debtor

 

Jurisdiction

 

Lien Information

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20114896240

File Date: 12/20/2011

Current Secured Party of Record: CIT FINANCE LLC

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20122506634

File Date: 06/28/2012

Current Secured Party of Record:  CIT FINANCE LLC

Assignment Date:12/13/2012

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20123396290

File Date: 08/31/2012

Current Secured Party of Record:  CIT FINANCE LLC

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20124872455

File Date: 12/14/2012

Current Secured Party of Record:  LEAF CAPITAL FUNDING, LLC AND/OR ITS ASSIGNS

Alion Canada (US) Corporation

 

Delaware

 

File Number: 20100975957

File Date: 3/22/2010

Current Secured Party of Record: WILMINGTON TRUST COMPANY

Alion International Corporation

 

Delaware

 

File Number: 20134053683

File Date: 10/16/2013

Current Secured Party of Record: WILMINGTON TRUST COMPANY

Washington Consulting, Inc.

 

Virginia

 

File Number: 1003237260-2

File Date: 3/23/2010

Current Secured Party of Record: WILMINGTON TRUST COMPANY

Washington Consulting Government Services, Inc.

 

Virginia

 

File Number: 1003237261-4

File Date: 3/23/2010

Current Secured Party of Record: WILMINGTON TRUST COMPANY

Alion-BMH Corporation

 

Virginia

 

File Number: 1003237257-5

File Date: 03/23/2010

Current Secured Party of Record: WILMINGTON TRUST COMPANY

Alion-CATI Corporation

 

California

 

File Number: 10-7226242228

File Date: 03/22/2010

Current Secured Party of Record: WILMINGTON TRUST COMPANY

Alion-IPS Corporation

 

Virginia

 

File Number: 1003237258-7

File Date: 03/23/2010

Current Secured Party of Record: WILMINGTON TRUST COMPANY

 

2

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

 

Debtor

 

Jurisdiction

 

Lien Information

Alion-JJMA Corporation

 

New York

 

File Number: 201003220145950

File Date: 03/22/2010

Current Secured Party of Record: WILMINGTON TRUST COMPANY

Alion MA&D Corporation

 

Colorado

 

File Number: 20102023873

File Date: 03/22/2010

Current Secured Party of Record: WILMINGTON TRUST COMPANY

Alion-METI Corporation

 

Virginia

 

File Number: 1003237259-9

File Date: 03/23/2010

Current Secured Party of Record: WILMINGTON TRUST COMPANY

Alion Science and Technology Corporation

 

Delaware

 

File Number: 2013 4242765

File Date: 10/29/2013

Current Secured Party of Record: ELECTRO RENT CORPORATION

 

3

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

 

SCHEDULE R-1

 

REAL PROPERTY COLLATERAL

 

Owned Real Property — None.

 

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

 

EXHIBIT A-1

 

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

[see attached]

 

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

 

EXHIBIT B-1

 

FORM OF BORROWING BASE CERTIFICATE

 

[see attached]

 

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

 

EXHIBIT B-2

 

FORM OF BANK PRODUCT PROVIDER AGREEMENT

 

[see attached]

 

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

 

EXHIBIT C-1

 

FORM OF COMPLIANCE CERTIFICATE

 

[see attached]

 

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

 

EXHIBIT P-1

 

FORM OF PERFECTION CERTIFICATE

 

[see attached]

 

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

 

EXHIBIT R

 

FORM OF REPLACEMENT INTERCREDITOR AGREEMENT

 

[see attached]

 

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