Execution Copy

 
 

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This agreement and the rights and obligations evidenced hereby are subordinate
in the manner and to the extent set forth in that certain Subordination and
Intercreditor Agreement (as amended, amended and restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof, the
“Subordination Agreement”) dated as of June 30, 2011 among Ares Mezzanine
Partners, L.P., the other Subordinated Creditors party thereto from time to
time, Dynamics Research Corporation, a Massachusetts corporation (“Borrower”),
certain subsidiaries of the Borrower party thereto and Bank of America, N.A., as
administrative agent (“Administrative Agent”), to the indebtedness (including
interest) owed by the Borrower pursuant to that certain Credit Agreement dated
as of June 30, 2011 by and among the Borrower, the Administrative Agent and the
lenders from time to time party thereto (the “Credit Agreement”), as such Credit
Agreement and the other loan documents thereunder (subject to the terms of the
Subordination Agreement) have been and hereafter may be amended, supplemented,
amended and restated or otherwise modified from time to time and (subject to the
terms of the Subordination Agreement) to indebtedness refinancing the
indebtedness under the Credit Agreement as permitted by the Subordination
Agreement; and each holder of obligations issued under this agreement, by its
acceptance hereof, irrevocably agrees to be bound by the provisions of the
Subordination Agreement.
 

 
SENIOR SUBORDINATED LOAN AGREEMENT
 
dated as of June 30, 2011
 
among
 
DYNAMICS RESEARCH CORPORATION,
the Borrower,
 
ARES MEZZANINE PARTNERS, L.P., as a Lender and Lead Investor
 
and
 
THE OTHER LENDERS FROM TIME TO TIME PARTY HERETO
 

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TABLE OF CONTENTS
 

Section   Page 
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1
Section 1.01.
Defined Terms
1
Section 1.02.
Other Interpretive Provisions
18
Section 1.03.
Accounting Terms
19
Section 1.04.
Rounding
19
Section 1.05.
Times of Day
19
ARTICLE II
CREDIT FACILITY
20
Section 2.01.
The Loans
20
Section 2.02.
Reserved
20
Section 2.03.
Obligations Several
20
Section 2.04.
Reserved
20
Section 2.05.
Prepayments
20
Section 2.06.
AHYDO
22
Section 2.07.
Repayment of Loans
22
Section 2.08.
Interest
22
Section 2.09.
Fees
23
Section 2.10.
Computation of Interest and Fees
23
Section 2.11.
Evidence of Debt
23
Section 2.12.
Payments Generally
24
Section 2.13.
Proration of Payments
24
Section 2.14.
Lost Note
24
ARTICLE III
TAXES and YIELD PROTECTION
24
Section 3.01.
Taxes
24
Section 3.02.
Increased Costs
27
Section 3.03.
Mitigation Obligations; Replacement of Lenders
28
Section 3.04.
Survival
28
ARTICLE IV
CONDITIONS PRECEDENT TO CREDIT EXTENSION
29
Section 4.01.
Conditions of Credit Extension
29
ARTICLE V
REPRESENTATIONS AND WARRANTIES
32
Section 5.01.
Existence, Qualification and Power
32

 
 
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Section 5.02.  Authorization; No Contravention 32
Section 5.03.
Governmental Authorization; Other Consents
32
Section 5.04.
Binding Effect
33
Section 5.05.
Financial Statements; No Material Adverse Effect
33
Section 5.06.
Litigation
34
Section 5.07.
No Default
34
Section 5.08.
Ownership of Property; Liens; Investments
34
Section 5.09.
Environmental Compliance
35
Section 5.10.
Insurance
35
Section 5.11.
Taxes
35
Section 5.12.
ERISA Compliance
35
Section 5.13.
Subsidiaries; Equity Interests
36
Section 5.14.
Use of Proceeds; Margin Regulations; Investment Company Act
36
Section 5.15.
Disclosure
36
Section 5.16.
Compliance with Laws
36
Section 5.17.
Solvency
37
Section 5.18.
Intellectual Property; Licenses, Etc
37
Section 5.19.
Reserved
37
Section 5.20.
Material Contracts and Material Licenses
37
Section 5.21.
Indebtedness Status
38
Section 5.22.
Casualty, Etc
38
ARTICLE VI
AFFIRMATIVE COVENANTS
38
Section 6.01.
Financial Statements
38
Section 6.02.
Certificates; Other Information
39
Section 6.03.
Notices
40
Section 6.04.
Payment of Obligations
41
Section 6.05.
Preservation of Existence, Etc
41
Section 6.06.
Maintenance of Properties
41
Section 6.07.
Maintenance of Insurance
41
Section 6.08.
Compliance with Laws
41
Section 6.09.
Books and Records
42
Section 6.10.
Inspection Rights
42

 
 
 
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Section 6.11. Use of Proceeds 42
Section 6.12.
Covenant to Guarantee, Additional Subsidiaries
42
Section 6.13.
Compliance with Environmental Laws
42
Section 6.14.
Further Assurances
43
Section 6.15.
Compliance with Terms of Leaseholds
43
Section 6.16.
Reserved
43
Section 6.17.
Annual Lender Meeting
43
Section 6.18.
Material Contracts and Material Licenses
43
Section 6.19.
Government Contracts
43
Section 6.20.
Reserved
43
Section 6.21.
HPTi Merger Sub
43
ARTICLE VII
NEGATIVE COVENANTS
44
Section 7.01.
Liens
44
Section 7.02.
Investments
45
Section 7.03.
Indebtedness
46
Section 7.04.
Fundamental Changes
48
Section 7.05.
Dispositions
48
Section 7.06.
Restricted Payments
49
Section 7.07.
Change in Nature of Business
49
Section 7.08.
Transactions with Affiliates
49
Section 7.09.
Burdensome Agreements
50
Section 7.10.
Use of Proceeds
50
Section 7.11.
Financial Covenants
51
Section 7.12.
Amendments of Organization Documents
52
Section 7.13.
Accounting Changes
52
Section 7.14.
Prepayments and Amendments
52
Section 7.15.
Senior Indebtedness Status
53
Section 7.16.
HPTi Merger Sub
53
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
53
Section 8.01.
Events of Default
53
Section 8.02.
Remedies Upon Event of Default
55
Section 8.03.
Application of Funds
56
ARTICLE IX
RESERVED
56

 
 
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ARTICLE X MISCELLANEOUS 56
Section 10.01.
Amendments, Etc
56
Section 10.02.
Notices; Effectiveness; Electronic Communication
57
Section 10.03.
No Waiver; Cumulative Remedies; Enforcement
58
Section 10.04.
Expenses; Indemnity; Damage Waiver
58
Section 10.05.
Payments Set Aside
59
Section 10.06.
Successors and Assigns
60
Section 10.07.
Treatment of Certain Information; Confidentiality
62
Section 10.08.
Right of Setoff
63
Section 10.09.
Interest Rate Limitation
63
Section 10.10.
Counterparts; Integration; Effectiveness
63
Section 10.11.
Survival of Representations and Warranties
64
Section 10.12.
Severability
64
Section 10.13.
Replacement of Lenders
64
Section 10.14.
Governing Law; Jurisdiction; Etc
65
Section 10.15.
Waiver of Jury Trial
66
Section 10.16.
No Advisory or Fiduciary Responsibility
66
Section 10.17.
Electronic Execution of Assignments and Certain Other Documents
66
Section 10.18.
USA PATRIOT Act
66
Section 10.19.
Subordination Agreement
67

 

 
 
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SCHEDULES  
1.01-A
Historical Consolidated EBITDA
2.01
Commitments and Applicable Percentages
5.05
Supplement to Interim Financial Statements
5.08
Leases of Real Property
5.13
Subsidiaries; Guarantors; Other Equity Investments
5.20
Material Contracts; Material Licenses
7.01
Existing Liens
7.02
Existing Investments
7.03
Existing Indebtedness
10.02
Lending Office and Lender’s Accounts; Certain Addresses for Notices
   
EXHIBITS
 
A
Reserved
B
Reserved
C-1
Form of Note
C-2
Form of PIK Note
D
Form of Compliance Certificate
E
Form of Assignment and Assumption

 

 
 
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SENIOR SUBORDINATED LOAN AGREEMENT
 
This SENIOR SUBORDINATED LOAN AGREEMENT (“Agreement”) is entered into as of June
30, 2011 among DYNAMICS RESEARCH CORPORATION, a Massachusetts corporation (the
“Borrower”), ARES MEZZANINE PARTNERS, L.P. (the “Lead Investor”) and each of the
other Persons who are  from time to time party hereto, pursuant to Section
10.06(b) (all such other Persons collectively with the Lead Investor, the
“Lenders”, and each of such Persons or the Lead Investor on an individual basis,
a “Lender”).
 
The Borrower has requested that the Lenders provide a term loan to the Borrower,
and the Lenders are willing to do so on the terms and conditions set forth
herein.
 
In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:
 
ARTICLE I
 
DEFINITIONS AND ACCOUNTING TERMS
 
Section 1.01.                      Defined Terms.  As used in this Agreement,
the following terms shall have the meanings set forth below:
 
 “Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.
 
“Aggregate Accrual” has the meaning specified in Section 2.06.
 
“Aggregate Commitments” means the Commitments of all the Lenders.
 
“Agreement” has the meaning specified in the introductory paragraph hereto.
 
“AHYDO Payment” has the meaning specified in Section 2.06.
 
“Applicable Percentage” means, with respect to any Lender at any time, the
percentage (carried out to the ninth decimal place) of the Facility represented
by (i) on or prior to the Closing Date, such Lender’s Commitment at such time
and (ii) thereafter, the principal amount of such Lender’s Loans at such
time.  The initial Applicable Percentage of each Lender in respect of the
Facility is set forth opposite the name of such Lender on Schedule 2.01 or in
the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable.
 
 “Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
 
“Assignee Group” means (a) two or more Eligible Assignees that are Affiliates of
one another or (b) two or more Approved Funds managed by the same investment
advisor.
 
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 10.06(b)), in substantially the form of Exhibit E.
 

 
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“Attributable Indebtedness” means, on any date, (a) in respect of any Capital
Lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
(b) in respect of any Synthetic Lease Obligation, the capitalized amount of the
remaining lease or similar payments under the relevant lease or other applicable
agreement or instrument that would appear on a balance sheet of such Person
prepared as of such date in accordance with GAAP if such lease or other
agreement or instrument were accounted for as a Capital Lease and (c) all
Synthetic Debt of such Person.
 
“Audited Financial Statements” means the audited consolidated balance sheet of
the Borrower and its Subsidiaries for the fiscal year ended December 31, 2010
and the related consolidated statements of income and cash flows for such fiscal
year for the Borrower and its Subsidiaries, including the notes thereto.
 
“Borrower” has the meaning specified in the introductory paragraph hereto.
 
“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state of New York.
 
“Capital Expenditures” means, with respect to any Person for any period, any
expenditure in respect of the purchase or other acquisition of any fixed or
capital asset (excluding normal replacements and maintenance which are properly
charged to current operations).
 
“Capital Leases” means all leases that have been or should be, in accordance
with GAAP, recorded as capitalized leases.
 
“Cash Equivalents” means any of the following types of Investments, to the
extent owned by the Borrower or any of its Subsidiaries free and clear of all
Liens (other than any Permitted Lien):
 
(a)           readily marketable obligations issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than one year from the
date of acquisition thereof; provided that the full faith and credit of the
United States of America is pledged in support thereof;
 
(b)           demand money market or time deposits (including sweep accounts)
with, or insured certificates of deposit or bankers’ acceptances of, any
commercial bank that (i)(A) is a Senior Lender or (B) is organized under the
laws of the United States of America, any state thereof or the District of
Columbia or is the principal banking subsidiary of a bank holding company
organized under the laws of the United States of America, any state thereof or
the District of Columbia, and is a member of the Federal Reserve System, (ii)
issues (or the parent of which issues) commercial paper rated as described in
clause (c) of this definition and (iii) has combined capital and surplus of at
least $50,000,000, in each case with maturities of not more than 90 days from
the date of acquisition thereof;
 
(c)           commercial paper issued by any Person organized under the laws of
any state of the United States of America and rated at least “Prime-1” (or the
then equivalent grade) by Moody’s Investors Service, Inc. (or any successor
thereto) or at least “A-1” (or the then equivalent grade) by Standard & Poor’s
Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. (or any
successor thereto), in each case with maturities of not more than 180 days from
the date of acquisition thereof; and
 
(d)           Investments, classified in accordance with GAAP as current assets
of the Borrower or any of its Subsidiaries, in money market investment programs
registered under the Investment Company
 

 
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Act of 1940, which are administered by financial institutions that have the two
highest rating obtainable from either Moody’s or S&P, and the portfolios of
which are limited solely to Investments of the character, quality and maturity
described in clauses (a), (b) and (c) of this definition.
 
“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, guideline
or directive (whether or not having the force of law) by any Governmental
Authority; provided that notwithstanding anything herein to the contrary, (x)
the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives thereunder or issued in connection therewith and
(y) all requests, rules, guidelines or directives promulgated by the Bank for
International settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or the United States regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law”, regardless of the date enacted, adopted or issued.
 
“Change of Control” means an event or series of events by which:
 
(a)           any “person” or “group” (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, but excluding any employee
benefit plan of such person or its subsidiaries, and any person or entity acting
in its capacity as trustee, agent or other fiduciary or administrator of any
such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, except that a person or group shall
be deemed to have “beneficial ownership” of all securities that such person or
group has the right to acquire, whether such right is exercisable immediately or
only after the passage of time (such right, an “option right”)), directly or
indirectly, of 20% or more of the equity securities of the Borrower entitled to
vote for members of the board of directors or equivalent governing body of the
Borrower on a fully-diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to any option
right);
 
(b)           during any period of 12 consecutive months, a majority of the
members of the board of directors or other equivalent governing body of the
Borrower cease to be composed of individuals (i) who were members of that board
or equivalent governing body on the first day of such period, (ii) whose
election or nomination to that board or equivalent governing body was approved
by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors); or
 
(c)           there shall have occurred, under any indenture, any agreement or
any other instrument evidencing any Indebtedness or Equity Interest in excess of
the Threshold Amount, any “change of control” or any comparable term (as set
forth in any indenture, any agreement or any other instrument evidencing such
Indebtedness or Equity Interest) obligating the Borrower or any other Loan Party
to repurchase, redeem or repay all or any part of the Indebtedness or Equity
Interest provided for therein.
 
“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.
 

 
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“Code” means the Internal Revenue Code of 1986.
 
“Commitment” means as to each Lender, its obligation to make its portion of the
Loan to the Borrower on the Closing Date pursuant to Section 2.01 in an
aggregate principal amount, before applying original issue discount in
accordance with Section 2.01, equal to the amount set forth opposite such
Lender’s name on Schedule 2.01 under the caption “Commitment”.  The aggregate
principal amount of the Commitments of all of the Lenders as in effect on the
Closing Date is $40,000,000.
 
“Compliance Certificate” means a certificate substantially in the form of
Exhibit D.
 
“Consolidated EBITDA” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income
for such period plus (a) the following to the extent deducted in calculating
such Consolidated Net Income for such period and without duplication: (i)
Consolidated Interest Expense, (ii) the provision for Federal, state, local and
foreign income taxes payable by the Borrower and its Subsidiaries, (iii)
depreciation and amortization expense, (iv) non-cash expenses incurred pursuant
to equity compensation plans approved by the Borrower’s board of directors, (v)
other non-recurring expenses of the Borrower and its Subsidiaries reducing such
Consolidated Net Income which do not represent a cash item in such period or any
future period and (vi) Transaction Costs incurred by the Borrower and its
Subsidiaries and minus (b) the following to the extent included in calculating
such Consolidated Net Income for such period: (i) Federal, state, local and
foreign income tax credits of the Borrower and its Subsidiaries, (ii) all
non-cash items increasing Consolidated Net Income and (iii) all interest
income; provided that for all purposes under this Agreement, Consolidated EBITDA
for the Borrower and its Subsidiaries for each of the fiscal quarters ended June
30, 2010, September 30, 2010, December 31, 2010 and March 31, 2011 shall be
deemed to equal the respective amounts set forth on Schedule 1.01-A.
 
For the purposes of calculating Consolidated EBITDA for any period pursuant to
any determination of Consolidated EBITDA hereunder, (i) if, at any time during
such period, the Borrower or any Subsidiary shall have made any Disposition,
Consolidated EBITDA for such period shall be reduced by an amount equal to the
Consolidated EBITDA (if positive) attributable to the property that is the
subject of such Disposition for such period or increased by an amount equal to
the Consolidated EBITDA (if negative) attributable thereto for such period and
(ii) if, at any time during such period, the Borrower or any Subsidiary shall
have made a Permitted Acquisition (other than the HPTi Acquisition),
Consolidated EBITDA for such period shall be calculated after giving pro forma
effect thereto as if such Permitted Acquisition occurred on the first day of
such period in connection with such Permitted Acquisition to the extent deducted
in calculating Consolidated Net Income (and not otherwise added back in
calculating Consolidated EBITDA) for such pro forma period.
 
“Consolidated Fixed Charge Coverage Ratio” means, as of any date of
determination, the ratio of (a) Consolidated EBITDA for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such date minus
Capital Expenditures for such period minus federal, state, local and foreign
taxes paid or payable in cash to (b) Consolidated Fixed Charges for the period
of four (4) consecutive fiscal quarters ending on or immediately prior to such
date; provided that for purposes of determining the Consolidated Fixed Charge
Coverage Ratio for any date of determination prior to June 30, 2012, the
determination of Capital Expenditures of the Borrower and its Subsidiaries shall
be deemed to be the amount of (i) for the four consecutive fiscal quarter period
ending September 30, 2011, the amount of Capital Expenditures for the fiscal
quarter ending September 30, 2011 times four (4); (ii) for the four consecutive
fiscal quarter period ending December 31, 2011, the amount of Capital
Expenditures for the two consecutive fiscal quarters ending December 31, 2011
times two (2); and (iii) for the four consecutive fiscal quarter period ending
March 31, 2012, the amount of Capital Expenditures for the three consecutive
fiscal quarters ending March 31, 2012 times 4/3.
 

 
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“Consolidated Fixed Charges” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum, in each case determined in
accordance with GAAP for such period and without duplication, of (a)
Consolidated Interest Expense paid or payable in cash plus (b) scheduled
principal payments with respect to Indebtedness, regardless of whether or not
such Scheduled Principal Payments are actually made by the Borrower or any
Subsidiary during such period (“Scheduled Principal Payments”) plus (c)
Restricted Payments; provided that for purposes of determining Consolidated
Fixed Charges for any period of the Borrower prior to June 30, 2012, the
determination of Scheduled Principal Payments and Consolidated Interest Expense
shall be deemed to be the amount of (i) for the four consecutive fiscal quarter
period ending September 30, 2011, the amount of Scheduled Principal Payments and
Consolidated Interest Expense for the fiscal quarter ending September 30, 2011
times four (4); (ii) for the four consecutive fiscal quarter period ending
December 31, 2011, the amount of Scheduled Principal Payments and Consolidated
Interest Expense for the two consecutive fiscal quarters ending December 31,
2011 times two (2); and (iii) for the four consecutive fiscal quarter period
ending March 31, 2012, the amount of Scheduled Principal Payments and
Consolidated Interest Expense for the three consecutive fiscal quarters ending
March 31, 2012 times 4/3.
 
“Consolidated Funded Indebtedness” means, as of any date of determination, for
the Borrower and its Subsidiaries on a consolidated basis, the sum of the
following (without duplication): (a) the outstanding principal amount of all
obligations, whether current or long-term, for borrowed money (including
Obligations hereunder) and all obligations evidenced by bonds, debentures,
notes, loan agreements or other similar instruments, (b) all purchase money
Indebtedness, (c) all direct obligations arising under letters of credit
(including standby and commercial), bankers’ acceptances, bank guaranties,
surety bonds and similar instruments, (d) all obligations in respect of the
deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business), (e) all Attributable Indebtedness,
(f) without duplication, all Guarantees with respect to outstanding Indebtedness
of the types specified in clauses (a) through (e) above of Persons other than
the Borrower or any Subsidiary, and (g) all Indebtedness of the types referred
to in clauses (a) through (f) above of any partnership or joint venture (other
than a joint venture that is itself a corporation or limited liability company)
in which the Borrower or a Subsidiary is a general partner or joint venturer,
unless such Indebtedness is expressly made non-recourse to the Borrower or such
Subsidiary.
 
“Consolidated Interest Expense” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum, in each case determined in
accordance with GAAP and without duplication, interest expense (including,
without limitation, interest expense attributable to Capital Leases and all net
payment obligations pursuant to Swap Contracts) for such period.
 
“Consolidated Net Income” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the net income of the Borrower and its
Subsidiaries (excluding extraordinary gains and extraordinary losses) for that
period.
 
“Consolidated Senior Leverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated Funded Indebtedness as of such date minus the
Obligations hereunder minus all Subordinated Indebtedness of the Borrower and
its Subsidiaries as of such date to (b) Consolidated EBITDA for the period of
the four (4) consecutive fiscal quarters most recently ended on or immediately
prior to such date.
 
“Consolidated Total Leverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated Funded Indebtedness as of such date to (b)
Consolidated EBITDA for the period of the four (4) consecutive fiscal quarters
most recently ended on or immediately prior to such date.
 

 
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“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
 
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or
otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.
 
“Credit Extension” means a Loan.
 
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.
 
“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.
 
“Default Rate” has the meaning specified in Section 2.08(b).
 
“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person (or the granting of any option or other right to do any of the
foregoing), including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.
 
“Dollar” and “$” mean lawful money of the United States.
 
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.
 
“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 10.06(b)(iii) and (v) (subject to such consents, if any,
as may be required under Section 10.06(b)(iii)).
 
“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
 
“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
 
“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase
 

 
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or acquisition from such Person of shares of capital stock of (or other
ownership or profit interests in) such Person, all of the securities convertible
into or exchangeable for shares of capital stock of (or other ownership or
profit interests in) such Person or warrants, rights or options for the purchase
or acquisition from such Person of such shares (or such other interests), and
all of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting,
and whether or not such shares, warrants, options, rights or other interests are
outstanding on any date of determination.
 
“ERISA” means the Employee Retirement Income Security Act of 1974.
 
“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
 
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b)
the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which such entity was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate or the
treatment of a Pension Plan amendment as a termination under Section 4041 or
4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a
Pension Plan; (f) any event or condition which constitutes grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (g) the determination that any Pension Plan is
considered an at-risk plan or a plan in endangered or critical status within the
meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of
ERISA; or (h) the imposition of any liability under Title IV of ERISA, other
than for PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon  the Borrower or any ERISA Affiliate.
 
“Event of Default” has the meaning specified in Section 8.01.
 
“Excluded Taxes” means, with respect to any Lender or any other recipient of any
payment to be made by or on account of any obligation of the Borrower hereunder,
(a) taxes imposed on or measured by its overall net income (however
denominated), and franchise taxes imposed on it (in lieu of net income taxes),
by the jurisdiction (or any political subdivision thereof) under the Laws of
which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable Lending Office is
located, (b) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction in which the Borrower is located,
(c) any backup withholding tax that is required by the Code to be withheld from
amounts payable to a Lender that has failed to comply with clause (A) of Section
3.01(e)(ii), (d) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 10.13), any United States
withholding tax that (i) is required to be imposed on amounts payable to such
Foreign Lender pursuant to the Laws in force at the time such Foreign Lender
becomes a party hereto (or designates a new Lending Office) or (ii) is
attributable to such Foreign Lender’s failure or inability (other than as a
result of a Change in Law) to comply with clause (B) of Section 3.01(e)(ii),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new Lending Office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 3.01(a)(ii) or Section 3.01(c) and (e) any Taxes imposed
under FATCA or any amended or successor version of FATCA that is substantively
comparable and not materially more onerous to comply with.
 

 
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“Facility” means, at any time (a) on or prior to the funding of the Loans on the
Closing Date, the aggregate amount of the Commitments at such time and (b)
thereafter, the aggregate principal amount of the Loans of all Lenders
outstanding at such time.
 
 “FASB ASC” means the Accounting Standards Codification of the Financial
Accounting Standards Board.
 
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement, and any current or future regulations or official interpretations
thereof.
 
“Fee Letter” means that certain amended and restated fee letter, dated as of
June 30, 2011, by and between the Borrower and Ares Management LLC, on behalf of
one or more funds managed by Ares Management LLC or affiliates of Ares
Management LLC.
 
“Foreign Lender” means any Lender that is organized under the Laws of a
jurisdiction other than that in which the Borrower is resident for tax
purposes.  For purposes of this definition, the United States, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.
 
“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.
 
“FRB” means the Board of Governors of the Federal Reserve System of the United
States.
 
“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its activities.
 
“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.
 
“Government Contract” means, with respect to the Borrower or any Subsidiary, any
contract between or among the Borrower or such Subsidiary and an agency,
department or instrumentality of the United States or any state, municipal or
local Governmental Authority located in the United States or any obligation of
any such Governmental Authority arising under any Account (as defined in the
UCC) now or hereafter owing by any such Governmental Authority, as account
debtor, to the Borrower or any Subsidiary.
 
“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, 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).
 
“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or
 

 
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lease property, securities or services for the purpose of assuring the obligee
in respect of such Indebtedness or other obligation of the payment or
performance of such Indebtedness or other obligation, (iii) to maintain working
capital, equity capital or any other financial statement condition or liquidity
or level of income or cash flow of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or other obligation, or (iv) entered
into for the purpose of assuring in any other manner the obligee in respect of
such Indebtedness or other obligation of the payment or performance thereof or
to protect such obligee against loss in respect thereof (in whole or in part),
or (b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien).  The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith.  The term “Guarantee” as a verb has a
corresponding meaning.
 
“Guarantors” means, collectively, (a) all direct and indirect Subsidiaries of
the Borrower (other than any Foreign Subsidiary to the extent that, and for so
long as, the guaranty of such Foreign Subsidiary would have material adverse tax
consequences for the Borrower or any other Loan Party or result in a violation
of applicable Laws) in existence on the Closing Date and (b) each other
Subsidiary of the Borrower that shall be required to become a party to the
Guaranty or execute and deliver a guaranty or guaranty supplement pursuant to
Section 6.12.
 
“Guaranty” means that certain Guaranty dated as of the Closing Date, made by
each of the Guarantors in favor of the Lenders, together with each other
guaranty and guaranty supplement or joinder thereto delivered pursuant to
Section 6.12.
 
“H.J. Ford” means H.J. Ford Associates, Inc., a Delaware corporation, which is a
wholly-owned Subsidiary of the Borrower.
 
“H.J. Ford Disposition” means the Disposition by the Borrower of all of the
Equity Interests issued by H.J. Ford or all or substantially all of the assets
of H.J. Ford on substantially the same terms and conditions as previously
disclosed in writing to the Lead Investor prior to the Closing Date or such
other terms and conditions as are reasonably acceptable to the Required Lenders.
 
“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
 
“HPTi” means High Performance Technologies, Inc., a Florida corporation.
 
“HPTi Acquisition” means the acquisition by the Borrower of all of the Equity
Interests of HPTi and the merger of the HPTi Merger Sub with and into HPTi (with
HPTi surviving as a wholly owned Subsidiary of the Borrower).
 
“HPTi Merger Agreement” means that certain Agreement and Plan of Merger dated as
of June 2, 2011 among the Borrower, HPTi Merger Sub, HPTi and the shareholders
of HPTi as of such date.
 
“HPTi Merger Sub” means DRC-Prize Acquisition, Inc., a Florida corporation.
 

 
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“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
 
(a)           all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments;
 
(b)           the maximum amount of all direct or contingent obligations of such
Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments;
 
(c)           the Swap Termination Value under any Swap Contract of such Person;
 
(d)           all obligations of such Person to pay the deferred purchase price
of property or services (other than trade accounts payable in the ordinary
course of business and, in each case, not past due for more than 30 days after
the date on which such trade account payable was created);
 
(e)           indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether or
not such indebtedness shall have been assumed by such Person or is limited in
recourse;
 
(f)           all Attributable Indebtedness in respect of Capital Leases and
Synthetic Lease Obligations of such Person and all Synthetic Debt of such
Person;
 
(g)           all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any Equity Interest in such
Person or any other Person or any warrant, right or option to acquire such
Equity Interest, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and
 
(h)           all Guarantees of such Person in respect of any of the foregoing.
 
For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person.
 
“Indemnified Taxes” means Taxes other than Excluded Taxes.
 
“Indemnitees” has the meaning specified in Section 10.04(b).
 
“Information” has the meaning specified in Section 10.07.
 
“Initial Loan” has the meaning specified in Section 2.01.
 
“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities or Equity Interests of another
Person, (b) a loan, advance or capital contribution to, Guarantee or assumption
of debt of, or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, including any partnership or joint
venture interest in such other Person and any arrangement
 

 
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pursuant to which the investor Guarantees Indebtedness of such other Person, or
(c) the purchase or other acquisition (in one transaction or a series of
transactions) of assets of another Person that constitute a business unit.  For
purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.
 
“IP Rights” has the meaning specified in Section 5.18.
 
“IRS” means the United States Internal Revenue Service.
 
“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
 
“Lead Investor” has the meaning specified in the introductory paragraph hereto.
 
“Lender” has the meaning specified in the introductory paragraph hereto.
 
“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in Schedule 10.02, or such other office or offices as a Lender
may from time to time notify the Borrower.
 
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).
 
“Loan” has the meaning specified in Section 2.01.
 
“Loan Documents” means this Agreement, the Notes, the Fee Letter, the
Guaranty, the Subordination Agreement, the Management Rights Letter and all
documents, instruments and agreements delivered in connection with the
foregoing.
 
“Loan Parties” means, collectively, the Borrower and each Guarantor.
 
“Make-Whole Premium” means, with respect to any prepayment of the Loans to which
it applies,  the excess of (a) the “present value” as of the date of such
prepayment of (i) the prepayment price equal to 105% of the principal amount of
the Loans being prepaid, plus (ii) all required interest payments due on the
Loans being prepaid at the applicable rate hereunder through the second
anniversary of the Closing Date (excluding interest accrued prior to the date of
such prepayment), minus (b) the principal amount of the Loans being prepaid;
provided, that the Make-Whole Premium may in no event be less than zero.  For
purposes of this definition, “present value” with respect to each of clauses
(a)(i) and (a)(ii) of this definition shall be computed using a discount rate
applied quarterly equal to the Treasury Rate as of the date of such prepayment
(or repayment) plus 50 basis points.
 
“Management Rights Letter” means that certain letter agreement, dated as of June
30, 2011, by and among the Borrower and the Lead Investor.
 

 
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“Mandatory Prepayment Event” means (a) any merger of the Borrower with and into
any Person (other than any merger of any Subsidiary of the Borrower with or into
the Borrower or a merger or consolidation permitted by Section 7.04(a);
provided, however, in either case, that the Borrower shall be the continuing or
surviving corporation), (b) any sale or other Disposition of all or
substantially all of the assets of the Borrower (other than as permitted by
Section 7.04(b), (c) any Change of Control, or (d) any acceleration of the Loans
resulting from the failure to prepay the Loans upon the occurrence of any of the
events set forth in clauses (a) through (c) above.
 
“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect on, the operations, business, assets, properties, liabilities
(actual or contingent) or financial condition of the Borrower or the Borrower
and its Subsidiaries taken as a whole; (b) a material impairment of the rights
and remedies of any Lender under any Loan Document or of the ability of any Loan
Party to perform its obligations under any Loan Document to which it is a party;
or (c) a material adverse effect upon the legality, validity, binding effect or
enforceability against any Loan Party of any Loan Document to which it is, or
will be, a party.
 
“Material Contract” means, with respect to the Borrower or any Subsidiary, each
contract to which the Borrower or such Subsidiary is a party (a) that involves
monetary liability of or to the Borrower or such Subsidiary in an amount in
excess of $11,500,000 per annum and/or (b) the failure to maintain or comply
with which could reasonably be expected to have a Material Adverse Effect.
 
“Material Government Contract” means, as of any date of determination, with
respect to the Borrower or any of its Subsidiaries, any Government Contract
having a remaining term of at least six months between or among the Borrower
and/or any of its Subsidiaries and any Governmental Authority that (a) involves
a monetary liability of, or to, the Borrower and/or any of its Subsidiaries in
excess of $11,500,000 or (b) the failure to maintain or comply with which could
reasonably be expected to have a Material Adverse Effect.
 
“Material License” means, with respect to the Borrower or any Subsidiary, each
permit, license, distribution agreement, franchise agreement and any similar
agreement issued to the Borrower or such Subsidiary or to which the Borrower or
such Subsidiary is a party (a) that involves monetary liability of or to the
Borrower or such Subsidiary in an amount in excess of $5,750,000 per annum
and/or (b) the failure to maintain or comply with which could reasonably be
expected to have a Material Adverse Effect.
 
“Material Real Property” means any single parcel or contiguous parcels of real
property in which a Loan Party has a fee simple ownership interest with a fair
market value in excess of $1,000,000.
 
“Maturity Date” means June 30, 2017.
 
“Maximum Accrual” has the meaning specified in Section 2.06.
 
“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.
 
“Multiple Employer Plan” means a Plan which has two or more contributing
sponsors (including the Borrower or any ERISA Affiliate) at least two of whom
are not under common control, as such a plan is described in Section 4064 of
ERISA.
 

 
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“Note” means a promissory note made by the Borrower in favor of a Lender
evidencing the Loans made by such Lender, substantially in the form of
Exhibit C-1, and collectively with any PIK Notes, the “Notes”.
 
“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, in each case whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against any Loan Party or any Affiliate
thereof of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding.
 
“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement or limited liability
company agreement; and (c) with respect to any partnership, joint venture, trust
or other form of business entity, the partnership, joint venture or other
applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or
organization with the applicable Governmental Authority in the jurisdiction of
its formation or organization and, if applicable, any certificate or articles of
formation or organization of such entity.
 
“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
 
“Outstanding Amount” means, on any date, the aggregate outstanding principal
amount of the Loans after giving effect to any prepayments or repayments of the
Loans occurring on such date.
 
“Participant” has the meaning specified in Section 10.06(d).
 
“PBGC” means the Pension Benefit Guaranty Corporation.
 
“Pension Act” means the Pension Protection Act of 2006.
 
“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension
Plans and set forth in, with respect to plan years ending prior to the effective
date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each
as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431,
432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
 
“Pension Plan” means any employee pension benefit plan (including a Multiple
Employer Plan or a Multiemployer Plan) that is maintained or is contributed to
by the Borrower and any ERISA Affiliate and is either covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the
Code.
 
 “Permitted Acquisition” means any non-hostile acquisition by the Borrower or
any of its Subsidiaries in the form of acquisitions of any other Person or of
all or substantially all of the business or a line of business (whether by the
acquisition of Equity Interests, assets or any combination thereof, including
any merger or consolidation) of any other Person if each such acquisition meets
all of the
 

 
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following requirements within the time periods set forth below (unless extended
by the Required Lenders in their reasonable discretion):
 
(a)           no less than fourteen (14) calendar days prior to the proposed
closing date of such acquisition (or such later time as may be agreed to by the
Required Lenders in their sole discretion), the Borrower shall have delivered
written notice of such acquisition to the Lenders, which notice shall include
the proposed closing date of such acquisition;
 
(b)           if such transaction involves a merger or consolidation, the
Borrower or a Guarantor shall be the surviving Person and no Change of Control
shall have been effected thereby;
 
(c)           the Borrower shall have delivered to the Lenders such documents
reasonably requested by the Required Lenders pursuant to Section 6.12 to be
delivered at the time required pursuant to Section 6.12;
 
(d)           no later than five (5) Business Days prior to the proposed closing
date of such acquisition, the Borrower shall have delivered to the Lenders a
Compliance Certificate for the most recent fiscal quarter end preceding such
acquisition for which financial statements are available demonstrating, in form
and substance reasonably satisfactory to the Required Lenders, (A) that the
Borrower is in compliance (as of the date of the acquisition and immediately
after giving effect thereto and any Indebtedness incurred in connection
therewith) with each covenant contained in Section 7.11, (B) that the
Consolidated Total Leverage Ratio (as of the proposed closing date of the
acquisition and after giving effect thereto and any Indebtedness incurred in
connection therewith) shall be at least 0.25 below the then applicable ratio set
forth in Section 7.11(a) and (C) that the Consolidated Senior Leverage Ratio (as
of the proposed closing date of the acquisition and after giving effect thereto
and any Indebtedness incurred in connection therewith) shall be at least 0.25
below the then applicable ratio set forth in Section 7.11(b);
 
(e)           no Default shall have occurred and be continuing both immediately
before and immediately after giving effect to such acquisition and any
Indebtedness incurred in connection therewith;
 
(f)           the Borrower shall have obtained the prior written consent of the
Required Lenders prior to the consummation of such acquisition if (A) the
Permitted Acquisition Consideration for any such acquisition (or series of
related acquisitions) exceeds $17,250,000 and (B) the Permitted Acquisition
Consideration for such acquisition (or series of related acquisitions) when
aggregated with the aggregate Permitted Acquisition Consideration for all
acquisitions consummated during the twelve (12) month period immediately
preceding such acquisition exceeds $23,000,000;
 
(g)           the Borrower shall demonstrate, in form and substance reasonably
satisfactory to the Required Lenders, that the entity to be acquired had
positive Consolidated EBITDA for the four (4) fiscal quarter period ended
immediately prior to the proposed closing date of such acquisition;
 
(h)           after giving effect to the acquisition, at least $2,500,000 in
availability shall exist under the Senior Credit Agreement; and
 
(i)           the Borrower shall have (i) delivered to the Lenders a certificate
of a Responsible Officer certifying that all of the requirements set forth above
have been satisfied or will be satisfied on or prior to the consummation of such
purchase or other acquisition and (ii) provided such other documents and other
information as may be reasonably requested by the Required Lenders in connection
with such purchase or other acquisition.
 

 
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“Permitted Acquisition Consideration” means the aggregate amount of the purchase
price, including, but not limited to, any assumed debt, earn-outs (valued at the
maximum amount payable thereunder), deferred payments, or Equity Interests of
the Borrower, net of the applicable acquired company’s cash and Cash
Equivalents, balance (as shown on its most recent financial statements delivered
in connection with the applicable Permitted Acquisition) to be paid on a
singular basis in connection with any applicable Permitted Acquisition as set
forth in the definitive legal documents executed by the Borrower or any of its
Subsidiaries in order to consummate the applicable Permitted Acquisition.
 
“Permitted Indebtedness” has the meaning specified in Section 7.03.
 
“Permitted Liens” means, at any time, Liens in respect of property of any Loan
Party or any Subsidiary permitted to exist at such time pursuant to Section
7.01.
 
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
 
“PIK Amount” has the meaning specified in Section 2.08(c)(i).
 
“PIK Note” has the meaning specified in Section 2.08(c)(i).
 
“Plan” means any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Plan), maintained for employees of the Borrower or
any ERISA Affiliate or any such Plan to which the Borrower or any ERISA
Affiliate is required to contribute on behalf of any of its employees.
 
“Quarterly Payment Date” has the meaning specified in Section 2.08(c)(i).
 
“Register” has the meaning specified in Section 10.06(c).
 
“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees and advisors
of such Person and of such Person’s Affiliates.
 
“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.
 
“Required Lenders” means, as of any date of determination, Lenders having more
than 50% of the Total Outstandings.
 
“Responsible Officer” means the chief executive officer, president, chief
financial officer or general counsel of a Loan Party and solely for purposes of
the delivery of incumbency certificates pursuant to Section 4.01, the secretary
or any assistant secretary of a Loan Party.  Any document delivered hereunder
that is signed by a Responsible Officer of a Loan Party shall be conclusively
presumed to have been authorized by all necessary corporate, partnership and/or
other action on the part of such Loan Party and such Responsible Officer shall
be conclusively presumed to have acted on behalf of such Loan Party.
 
“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
 

 
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termination of any such capital stock or other Equity Interest, or on account of
any return of capital to the Borrower’s stockholders, partners or members (or
the equivalent Person thereof).
 
“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
 
“Senior Agent” has the meaning given to the term “Administrative Agent” in the
Subordination Agreement.
 
“Senior Credit Agreement” means the “Senior Credit Agreement” (as defined in the
Subordination Agreement), as amended, restated, supplemented or otherwise
modified from time to time to the extent not prohibited under the terms of the
Subordination Agreement or any credit agreement or equivalent agreement entered
into in connection with a “Permitted Refinancing” (as defined in the
Subordination Agreement).
 
“Senior Indebtedness” has the meaning given to the term “Senior Indebtedness” in
the Subordination Agreement.
 
“Senior Lenders” has the meaning given to the term “Senior Lenders” in the
Subordination Agreement.
 
“Senior Loan Documents” has the meaning given to the term “Senior Debt
Documents” in the Subordination Agreement.
 
“Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature, (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital, and (e)
such Person is able to pay its debts and liabilities, contingent obligations and
other commitments as they mature in the ordinary course of business.  The amount
of contingent liabilities at any time shall be computed as the amount that, in
the light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.
 
 “Subordinated Indebtedness” means the collective reference to any Indebtedness
incurred by the Borrower or any of its Subsidiaries that is subordinated in
right and time of payment to the Obligations.
 
“Subordination Agreement” means that certain Subordination and Intercreditor
Agreement dated as of the Closing Date among the Loan Parties, the Senior Agent
and the Lenders.
 
“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person.  Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
the Borrower.
 

 
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“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.
 
“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Senior Lender or any
Affiliate of a Senior Lender).
 
“Synthetic Debt” means, with respect to any Person as of any date of
determination thereof, all obligations of such Person in respect of transactions
entered into by such Person that are intended to function primarily as a
borrowing of funds but are not otherwise included in the definition of
“Indebtedness” or as a liability on the consolidated balance sheet of such
Person and its Subsidiaries in accordance with GAAP.
 
“Synthetic Lease Obligation” means the monetary obligation of a Person under (a)
a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
 
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.
 
“Threshold Amount” means $3,450,000.
 
“Total Outstandings” means the aggregate Outstanding Amount of all Loans.
 
“Transaction Costs” means all transaction fees, charges and other amounts
related to the Transactions (other than clause (e) of the definition of
“Transactions”) and any Permitted Acquisitions (including, without limitation,
any financing fees, merger and acquisition fees, legal fees and expenses, due
diligence fees or any other fees and expenses in connection therewith), in each
case to the extent paid within six (6) months of the Closing Date or such
Permitted Acquisition, as applicable, and approved by the Required Lenders in
their reasonable discretion.
 

 
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“Transactions” means, collectively, (a) the HPTi Acquisition, (b) the
refinancing of certain indebtedness of the Borrower and its Subsidiaries and
HPTi and its Subsidiaries as contemplated by Section 4.01(j), (c) the entering
into and funding on the Closing Date of the Facility, (d) the entering into and
funding of the Senior Indebtedness and (e) the payment of fees, costs and
expenses incurred in connection with each of the foregoing.
 
“Treasury Rate” means, as of any prepayment date, the yield to maturity as of
such prepayment date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least
two (2) Business Days prior to the prepayment date (or, if such Statistical
Release is no longer published, any publicly available source of similar market
data)) most nearly equal to the period from the prepayment date to the second
anniversary of the Closing Date; provided, however, that if the period from the
prepayment date to the second anniversary of the Closing Date is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year will be used.
 
“UCC” means the Uniform Commercial Code as in effect in the State of New York.
 
“United States” and “U.S.” mean the United States of America.
 
Section 1.02.                      Other Interpretive Provisions.  With
reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:
 
(a)           The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include,” “includes” and “including” shall be deemed
to be followed by the phrase “without limitation.”  The word “will” shall be
construed to have the same meaning and effect as the word “shall.”  Unless the
context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein
or in any other Loan Document), (ii) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (iii) the words
“hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when
used in any Loan Document, shall be construed to refer to such Loan Document in
its entirety and not to any particular provision thereof, (iv) all references in
a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending,
replacing or interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) 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, including cash,
securities, accounts and contract rights.  Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Loan Party,
such words are intended to signify that such Loan Party (or any of the
Responsible Officers of such Loan Party) has actual knowledge or awareness of a
particular fact or circumstance or that such Loan Party (or any of the
Responsible Officers of such Loan Party), if it had exercised reasonable and
customary diligence, would have known or been aware of such fact or
circumstance.
 

 
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(b)           In the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including;” the words “to”
and “until” each mean “to but excluding;” and the word “through” means “to and
including.”
 
(c)           Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document.
 
Section 1.03.                      Accounting Terms.
 
(a)           Generally.  All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein.  Notwithstanding the
foregoing, for purposes of determining compliance with any covenant (including
the computation of any financial covenant) contained herein, Indebtedness of the
Borrower and its Subsidiaries shall be deemed to be carried at 100% of the
outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB
ASC 470-20 on financial liabilities shall be disregarded.
 
(b)           Changes in GAAP.  If at any time any change in GAAP would affect
the computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower or the Required Lenders shall so request, the
Lenders and the Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders); provided that, until so
amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Lenders financial statements and other documents required under
this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in GAAP.  Notwithstanding the foregoing, for
purposes of determining compliance with any covenant (including the computation
of any financial covenant) contained herein, the effects of any changes in GAAP
described in the Proposed Accounting Standards Update to Leases (Topic 840)
issued by the Financial Accounting Standards Board on August 17, 2010 (as the
same may be amended from time to time) shall be disregarded.
 
(c)           Consolidation of Variable Interest Entities.  All references
herein to consolidated financial statements of the Borrower and its Subsidiaries
or to the determination of any amount for the Borrower and its Subsidiaries on a
consolidated basis or any similar reference shall, in each case, be deemed to
include each variable interest entity that the Borrower is required to
consolidate pursuant to FASB ASC 810 as if such variable interest entity were a
Subsidiary as defined herein.
 
Section 1.04.                      Rounding.  Any financial ratios required to
be maintained by the Borrower pursuant to this Agreement shall be calculated by
dividing the appropriate component by the other component, carrying the result
to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).
 
Section 1.05.                      Times of Day.  Unless otherwise specified,
all references herein to times of day shall be references to Eastern time
(daylight or standard, as applicable).
 

 
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ARTICLE II
 
CREDIT FACILITY
 
Section 2.01.                      The Loans.   Subject to the terms and
conditions set forth herein, each Lender severally agrees to purchase a Note
from the Borrower and make a corresponding loan to the Borrower (individually,
an “Initial Loan” and collectively, the “Initial Loans; the Initial Loans, as
the outstanding principal amount thereof may be increased by any PIK Amount
pursuant to Section 2.08(c)(i), the “Loans”, and individually, a “Loan”) in the
amount of such Lender’s Note on the Closing Date in an amount equal to such
Lender’s Commitment; provided, that, notwithstanding anything to the contrary
contained herein (and without affecting any other provisions hereof), the
Borrower and the Lenders hereby agree that original issue discount shall apply
to the Notes such that the Lenders shall purchase the Notes from the Borrower
for an amount equal to 96.5% of the principal amount of such Note (it being
agreed that the full principal amount of each Note shall be deemed outstanding
on the Closing Date and the Borrower shall be obligated to repay 100% of the
principal amount of each Loan as provided hereunder).  Amounts borrowed under
this Section 2.01 and repaid or prepaid may not be reborrowed.  The Commitments
shall terminate on the Closing Date (after giving effect to the Initial Loans
made hereunder).
 
Section 2.02.                      Reserved.
 
Section 2.03.                      Obligations Several.  The failure of any
Lender to make a requested Loan on any date shall not relieve any other Lender
of its obligation to make a Loan on such date, but no Lender shall be
responsible for the failure of any other Lender to make any Loan to be made by
such other Lender.
 
Section 2.04.                       Reserved.
 
Section 2.05.                       Prepayments.
 
(a)           Optional Prepayments.
 
(i)           After the Closing Date but on or before the second anniversary of
the Closing Date, the Loans may not be redeemed or prepaid; provided, however,
that upon the occurrence of a Mandatory Prepayment Event on or before the second
anniversary of the Closing Date, the Borrower may prepay the entire principal
amount of the Loans at the prepayment price set forth in clause (iv) below with
respect to prepayments made on or before the second anniversary of the Closing
Date.
 
(ii)           After the second anniversary of the Closing Date, the Borrower
may from time to time prepay the Loans in whole or in part, at the prepayment
price set forth in clause (iv) below.
 
(iii)           Any prepayment pursuant to this Section 2.05(a) shall be made on
at least five (5) Business Days' written notice or telephonic notice (followed
promptly by written confirmation thereof) to the Lenders not later than
2:00 p.m. on such day.  Such notice to the Lenders shall specify the Loans to be
prepaid and the date and amount of prepayment and the application of such
prepayment shall be subject to Section 2.05(c).  Any such partial prepayment
permitted under Section 2.05(a)(ii) shall be in an amount equal to $1,000,000 or
a higher integral multiple of $250,000 (or, in each case, if less, the remaining
outstanding principal balance thereof).
 
(iv)           Any prepayment of the Loans pursuant to this Section 2.05(a)
shall be made at the following prepayment prices (expressed as a percentage of
the principal amount of the Loans
 

 
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being prepaid ) plus accrued and unpaid interest on the principal amount being
prepaid to the prepayment date:
 
Period
Prepayment Price
On or before second anniversary of Closing Date
The greater of (a) 100%  plus the Make-Whole Premium, or (b) 115%
After second anniversary but on or before third anniversary of Closing Date
105%
After third anniversary but on or before fourth anniversary of Closing Date
103%
After fourth anniversary but on or before fifth anniversary of Closing Date
101%
Thereafter
100%

 
 
 
(b)           Mandatory Prepayments.  The Borrower shall, within five (5)
Business Days of any Loan Party obtaining knowledge of any Mandatory Prepayment
Event, provide written notice (the “Borrower Notice”) to the Lenders of such
Mandatory Prepayment Event.  The Borrower shall use commercially reasonable
efforts to give the Lenders notice of any potential Mandatory Prepayment Event
that is reasonably likely to occur, and upon such time as such potential
Mandatory Prepayment Event is certain to occur, provide the Borrower Notice to
the Lenders with respect to such Mandatory Prepayment Event.  Upon receipt of
Borrower Notice, each of the Lenders shall have the right, exercisable within
fifteen (15) Business Days after the receipt of the Borrower Notice, upon
written notice to the Borrower (the “Lender Notice”), to require that all of the
Loans be prepaid on the Business Day specified in the Lender Notice (which shall
be a Business Day no earlier than the later of (x) the date on which such
Mandatory Prepayment Event occurs and (y) ten (10) Business Days after receipt
of the Borrower Notice) at the prepayment price (expressed as a percentage of
the principal amount of the Loans being prepaid set forth opposite the
applicable period during which the prepayment date occurs), plus accrued and
unpaid interest on the principal amount of such Loans to the prepayment date:
 
Period
Prepayment Price
On or before second anniversary of Closing Date
100%  plus the Make-Whole Premium
After second anniversary but on or before third anniversary of Closing Date
105%
After third anniversary but on or before fourth anniversary of Closing Date
103%

 
 
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After fourth anniversary but on or before fifth anniversary of Closing Date
101%
Thereafter
100%

 
 
 
(c)           Application of Payments.  Any voluntary prepayments made pursuant
to Section 2.05(a), shall be applied pro rata among the Lenders.  In the event
that more than one Lender elects to require a mandatory prepayment of their
Loans pursuant to Section 2.05(b), such mandatory prepayment shall be applied
pro rata among each of the Lenders who made such an election.
 
Section 2.06.                      AHYDO.   If, on any Quarterly Payment Date
following the fifth anniversary of the Closing Date, the aggregate amount that
would be includible in income of a Lender with respect to a Loan for periods
ending on or before such interest payment date (within the meaning of Section
163(i) of the Code) (the “Aggregate Accrual”) would exceed an amount equal to
the sum of (x) the aggregate amount of interest to be paid (within the meaning
of Section 163(i) of the Code) under the Loan on or before such interest payment
date and (y) the product of (A) the issue price (as defined in Sections 1273(b)
and 1274(a) of the Code) of the Loan and (B) the yield to maturity (interpreted
in accordance with Section 163(i) of the Code) of the Loan (such sum, the
“Maximum Accrual”), then, on such interest payment date, the Borrower shall pay
to such Lender an aggregate amount of cash equal to the excess, if any, of the
Aggregate Accrual over the Maximum Accrual (each such payment referred to as an
“AHYDO Payment”) and the amount of such payment shall be treated for purposes of
Section 163(i) of the Code as interest paid under the Loan.
 
Section 2.07.                      Repayment of Loans.  The outstanding
principal amount and all accrued and unpaid interest on the Loans shall be due
and payable on the Maturity Date.
 
Section 2.08.                      Interest.
 
(a)           Interest Rate.  Except as otherwise provided in this Section 2.08,
the unpaid principal amount of the Loans shall accrue interest for the period
commencing on the date of such Loan (whether an Initial Loan or a PIK Amount
increase, as applicable) until such Loan is paid in full at an annual rate of
thirteen percent (13.0%) per annum.
 
(b)           Default Rate.  Upon the occurrence and during the continuance of
an Event of Default, the Required Lenders may, by written notice to the
Borrower, require that the unpaid principal amount of the Loans shall accrue
interest at an annual rate equal to the applicable rate under Section 2.08(a)
plus two percent (2.0%) per annum (such sum, the “Default Rate”) from and after
the date of such written notice.  Upon the occurrence of an Event of Default
under Section 8.01(a) or 8.01(f), any such increase described in the foregoing
sentence shall occur automatically.
 
(c)           Interest Payment Dates.  Interest shall for the period commencing
on the date of such Loan (whether an Initial Loan or a PIK Amount increase, as
applicable) until such Loan is paid in full be payable:
 
(i)           quarterly in arrears  on the last Business Day of each March,
June, September and December (the “Quarterly Payment Date”) commencing on
September 30, 2011.  On each
 

 
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Quarterly Payment Date the Borrower shall pay all accrued and unpaid interest on
the Loans by either (A) paying all such accrued interest in cash or (B) paying
all such accrued interest except the PIK Amount (as defined below) in cash and
paying the PIK Amount by (x) increasing the then aggregate outstanding principal
amount of the Loans by the PIK Amount and (y) if requested by any Lender,
issuing a promissory note (as any such promissory note may be amended, restated
or otherwise modified from time to time, and all other promissory notes accepted
from time to time in substitution, replacement or renewal thereof, a “PIK Note”)
to such Lender in an amount equal to such Lender’s pro rata share of the PIK
Amount.  PIK Notes shall be substantially in the form of Exhibit C-2 with blanks
appropriately completed in conformity herewith and, after issuance thereof, any
such PIK Note shall be a “Note”, and the loan evidenced thereby shall be a
“Loan”, for all purposes under this Agreement and the other Loan
Documents.  “PIK Amount” means, in relation to any Quarterly Payment Date,
interest accrued on the outstanding principal amount of the Loans for the period
to but excluding such Quarterly Payment Date at the rate of up to one percent
(1%) per annum.  The Borrower shall, five (5) Business Days prior to each
Quarterly Payment Date, give the Lenders notice of its election to either (A)
pay all accrued interest in cash or (B) pay all accrued interest except the PIK
Amount in cash and to pay the PIK Amount by increasing the outstanding principal
of the Loans by the PIK Amount; provided, that if the Borrower fails to give
such notice, the Borrower shall be deemed to have elected the option set forth
in clause (B) of this sentence.  The Borrower shall, promptly at the request of
any Lender, deliver a certification to such Lender as to the outstanding
principal amount of the Loans, including all PIK Amounts and all PIK Notes, as
of the most recent Quarterly Payment Date, in form and substance reasonably
satisfactory to such Lender;
 
(ii)           in cash on the Maturity Date (or any other date upon acceleration
of the Loans pursuant to Section 8.02); and
 
(iii)           on the date of payment or prepayment (whether voluntary or
mandatory), in whole or in part, of principal outstanding on such Loans on the
principal amount so paid or prepaid to the extent such payment or prepayment is
permitted under this Agreement.
 
(d)           Interest accrued on Loans after the date such amount is due and
payable (whether on the Maturity Date, upon acceleration or otherwise) shall be
payable upon demand.
 
Section 2.09.                      Fees.  The Borrower shall pay to the Lead
Investor for its own account fees in the amounts and at the times specified in
the Fee Letter.
 
Section 2.10.                      Computation of Interest and Fees.  All
computations of fees and interest shall be made on the basis of a year of 365 or
366 days, as the case may be, and actual days elapsed.
 
Section 2.11.                      Evidence of Debt.
 
(a)           Each Loan held by any Lender shall be evidenced by a Note, with
appropriate insertions.  The Notes issued to each Lender shall (i) be executed
by the Borrower, (ii) be payable to the order of such Lender, (iii) be in a face
principal amount equal to the sum of such Lender’s Commitment on the Closing
Date (or in the case of a new Note issued pursuant to Section 10.06, the Loan
evidenced thereby) and be payable in such amounts as set forth therein, (iv)
mature on the Maturity Date, (v) bear interest as provided in Section 2.08, and
(vi) be entitled to the benefits of this Agreement and the other Loan Documents.
 

 
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(b)           Each Lender will note on its internal records the amount of each
Loan made or acquired by it and each payment in respect thereof and will, prior
to any transfer of any Note, endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby.
 
Section 2.12.                      Payments Generally.  All payments to be made
by the Borrower shall be made without condition or deduction for any
counterclaim, defense, recoupment or setoff.   Except as otherwise expressly
provided herein, all payments by the Borrower to any Lender hereunder shall be
made to the account of such Lender specified in Schedule 10.02 hereto, or to
such other account of such Lender as specified in writing to the Borrower at
least five (5) Business Days’ in advance of the relevant payment, in Dollars and
in immediately available funds not later than 2:00 p.m. on the date specified
herein.  All payments received by any Lender after 2:00 p.m. shall be deemed
received on the next succeeding Business Day and any applicable interest or fee
shall continue to accrue.  If any payment to be made by the Borrower shall come
due on a day other than a Business Day, payment shall be made on the next
following Business Day, and such extension of time shall be reflected in
computing interest or fees, as the case may be.
 
Section 2.13.                      Proration of Payments.  If any Lender shall
obtain any payment or other recovery (whether voluntary, involuntary, by
application of set off or otherwise, on account of  principal or interest on a
Loan but excluding any payment pursuant to Sections 3.01, 3.02, or 10.06) in
excess of its Applicable Percentage thereof, then such Lender shall purchase
from the other Lenders such Loans held by them as shall be necessary to cause
such purchasing Lender to share the excess payment or other recovery ratably
with each of them; provided, that if all or any portion of the excess payment or
other recovery is thereafter recovered from such purchasing Lender, the purchase
shall be rescinded and the purchase price restored to the extent of such
recovery.
 
Section 2.14.                      Lost Note.  Notwithstanding any provision in
any Loan Document to the contrary, if any mutilated Note is surrendered to the
Borrower, the Borrower shall execute and deliver in exchange therefor a new Note
of the same principal amount and in the same form as the mutilated Note.  If
there shall be delivered to the Borrower evidence to its reasonable satisfaction
of the destruction, loss or theft of any Note, together with a lost, destroyed
or stolen note indemnity in form and substance reasonably satisfactory to the
Borrower, then, in the absence of notice that such Note has been acquired by a
bona fide purchaser, the Borrower shall promptly execute and deliver, in lieu of
any such destroyed, lost or stolen Note, a new Note of a like principal amount,
and in the same form as the destroyed, lost or stolen Note, bearing interest
from the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note.
 
ARTICLE III
 
TAXES AND YIELD PROTECTION
 
Section 3.01.                      Taxes.
 
(a)           Payments Free of Taxes; Obligation to Withhold; Payments on
Account of Taxes.
 
(i)           Any and all payments by or on account of any obligation of the
Borrower hereunder or under any other Loan Document shall to the extent
permitted by applicable Laws be made free and clear of and without reduction or
withholding for any Taxes.  If, however, applicable Laws require the Borrower to
withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance
with such Laws as determined by the Borrower upon the basis of the information
and documentation to be delivered pursuant to subsection (e) below.
 

 
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(ii)           If the Borrower shall be required by the Code to withhold or
deduct any Taxes, including both United States Federal backup withholding and
withholding taxes, from any payment, then (A) the Borrower shall withhold or
make such deductions as are determined by the Borrower to be required based upon
the information and documentation it has received pursuant to subsection (e)
below, (B) the Borrower shall timely pay the full amount withheld or deducted to
the relevant Governmental Authority in accordance with the Code, and (C) to the
extent that the withholding or deduction is made on account of Indemnified Taxes
or Other Taxes, the sum payable by the Borrower shall be increased as necessary
so that after any required withholding or the making of all required deductions
(including deductions applicable to additional sums payable under this Section)
the applicable Lenders receive amounts equal to the sum they would have received
had no such withholding or deduction been made.
 
(b)           Payment of Other Taxes by the Borrower.  Without limiting the
provisions of subsection (a) above, the Borrower shall timely pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable Laws.
 
(c)           Tax Indemnifications.
 
(i)           Without limiting the provisions of subsection (a) or (b) above,
the Borrower shall, and does hereby, indemnify each Lender, and shall make
payment in respect thereof within 10 days after demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) withheld or deducted by the Borrower or paid by such Lender, and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority.  A
certificate as to the amount of any such payment or liability delivered to the
Borrower by a Lender shall be conclusive absent manifest error.
 
(ii)           Without limiting the provisions of subsection (a) or (b) above,
each Lender shall, and does hereby, indemnify the Borrower, and shall make
payment in respect thereof within 10 days after demand therefor, against any and
all Taxes and any and all related losses, claims, liabilities, penalties,
interest and expenses (including the fees, charges and disbursements of any
counsel for the Borrower) incurred by or asserted against the Borrower by any
Governmental Authority as a result of the failure by such Lender to deliver, or
as a result of the inaccuracy, inadequacy or deficiency of, any documentation
required to be delivered by such Lender to the Borrower pursuant to subsection
(e).  The agreements in this clause (ii) shall survive any assignment of rights
by, or the replacement of, a Lender, the termination of the Aggregate
Commitments and the repayment, satisfaction or discharge of all other
Obligations.
 
(d)           Evidence of Payments.  Upon request by the Borrower or any Lender,
as the case may be, after any payment of Taxes by the Borrower or any Lender to
a Governmental Authority as provided in this Section 3.01, the Borrower shall
deliver to such Lender or such Lender shall deliver to the Borrower, as the case
may be, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of any return required by
Laws to report such payment or other evidence of such payment reasonably
satisfactory to the Borrower or such Lender, as the case may be.
 
(e)           Status of Lenders; Tax Documentation.
 
(i)           Each Lender shall deliver to the Borrower, at the time or times
prescribed by applicable Laws or when reasonably requested by the Borrower, such
properly completed and executed documentation prescribed by applicable Laws or
by the taxing authorities of any
 

 
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jurisdiction and such other reasonably requested information as will permit the
Borrower to determine (A) whether or not payments made hereunder or under any
other Loan Document are subject to Taxes, (B) if applicable, the required rate
of withholding or deduction, and (C) such Lender’s entitlement to any available
exemption from, or reduction of, applicable Taxes in respect of all payments to
be made to such Lender by the Borrower pursuant to this Agreement or otherwise
to establish such Lender’s status for withholding tax purposes in the applicable
jurisdiction.
 
(ii)           Without limiting the generality of the foregoing, if the Borrower
is resident for tax purposes in the United States,
 
(A)           any Lender that is a “United States person” within the meaning of
Section 7701(a)(30) of the Code shall deliver to the Borrower executed originals
of Internal Revenue Service Form W-9 or such other documentation or information
prescribed by applicable Laws or reasonably requested by the Borrower as will
enable the Borrower to determine whether or not such Lender is subject to backup
withholding or information reporting requirements; and
 
(B)           each Foreign Lender that is entitled under the Code or any
applicable treaty to an exemption from or reduction of withholding tax with
respect to payments hereunder or under any other Loan Document shall deliver to
the Borrower (in such number of copies as shall be requested by the recipient)
on or prior to the date on which such Foreign Lender becomes a Lender under this
Agreement (and from time to time thereafter upon the request of the Borrower,
but only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:
 
(I)           executed originals of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United
States is a party,
 
(II)           executed originals of Internal Revenue Service Form W-8ECI,
 
(III)           executed originals of Internal Revenue Service Form W-8IMY and
all required supporting documentation,
 
(IV)           in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a “bank” within
the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder”
of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation” described in section 881(c)(3)(C) of the Code
and (y) executed originals of  Internal Revenue Service Form W-8BEN, or
 
(V)           executed originals of any other form prescribed by applicable Laws
as a basis for claiming exemption from or a reduction in United States Federal
withholding tax together with such supplementary documentation as may be
prescribed by applicable Laws to permit the Borrower to determine the
withholding or deduction required to be made.
 
(iii)           Each Lender shall promptly (A) notify the Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction, and
 

 
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(B) take such steps as shall not be materially disadvantageous to it, in the
reasonable judgment of such Lender, and as may be reasonably necessary
(including the re-designation of its Lending Office) to avoid any requirement of
applicable Laws of any jurisdiction that the Borrower make any withholding or
deduction for taxes from amounts payable to such Lender.
 
If a payment made to a Lender under any Loan Document would be subject to U.S.
federal withholding Tax imposed by FATCA if such Lender were to fail to comply
with the applicable reporting requirements of FATCA (including those contained
in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall
deliver to the Borrower at the time or times prescribed by Law and at such time
or times reasonably requested by the Borrower such documentation prescribed by
applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code)
and such additional documentation reasonably requested by the Borrower as may be
necessary for the Borrower to comply with its obligations under FATCA and to
determine that such Lender has complied with such Lender’s obligations under
FATCA or to determine the amount to deduct and withhold from such
payment.  Solely for purposes of this clause (v), “FATCA” shall include any
amendments made to FATCA after the date of this Agreement.
 
(f)           Treatment of Certain Refunds.  If any Lender determines, in its
sole discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section, it shall pay to
the Borrower an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses incurred by such Lender and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such
refund), provided that the Borrower, upon the request of such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to such Lender in
the event such Lender is required to repay such refund to such Governmental
Authority.  This subsection shall not be construed to require any Lender to make
available its tax returns (or any other information relating to its taxes that
it deems confidential) to the Borrower or any other Person.
 
Section 3.02.                      Increased Costs.
 
(a)           Increased Costs Generally.  If any Change in Law shall:
 
(i)           impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender;
 
(ii)           subject any Lender to any tax of any kind whatsoever with respect
to this Agreement, any Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Indemnified Taxes or
Other Taxes covered by Section 3.01 and the imposition of, or any change in the
rate of, any Excluded Tax payable by such Lender); or
 
(iii)           impose on any Lender any other condition, cost or expense
affecting this Agreement or Loans made by such Lender;
 
and the result of any of the foregoing shall be to reduce the amount of any sum
received or receivable by such Lender hereunder (whether of principal, interest
or any other amount) then, upon request of such Lender, the Borrower will pay to
such Lender such additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered.
 

 
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(b)           Capital Requirements.  If any Lender determines that any Change in
Law affecting such Lender or any Lending Office of such Lender or such Lender’s
holding company, if any, regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender’s capital or on the capital
of such Lender’s holding company, if any, as a consequence of this Agreement,
the Commitments of such Lender or the Loans made by such Lender to a level below
that which such Lender or such Lender’s holding company could have achieved but
for such Change in Law (taking into consideration such Lender’s policies and the
policies of such Lender’s holding company with respect to capital adequacy),
then from time to time the Borrower will pay to such Lender such additional
amount or amounts as will compensate such Lender or such Lender’s holding
company for any such reduction suffered.
 
(c)           Certificates for Reimbursement.  A certificate of a Lender setting
forth the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in subsection (a) or (b) of this
Section and delivered to the Borrower shall be conclusive absent manifest
error.  The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
 
(d)           Delay in Requests.  Failure or delay on the part of any Lender to
demand compensation pursuant to the foregoing provisions of this Section shall
not constitute a waiver of such Lender’s right to demand such compensation,
provided that the Borrower shall not be required to compensate a Lender pursuant
to the foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than nine months prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the nine-month period referred to above shall be
extended to include the period of retroactive effect thereof).
 
Section 3.03.                      Mitigation Obligations; Replacement of
Lenders.
 
(a)           Designation of a Different Lending Office.  If any Lender requests
compensation under Section 3.02 or the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 3.01, then such Lender shall, as applicable, use
reasonable efforts to designate a different Lending Office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 3.01 or 3.02, as the case may be, in the future, and
(ii) in each case, would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender.  The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
 
(b)           Replacement of Lenders.  If any Lender requests compensation under
Section 3.02, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, the Borrower may replace such Lender in accordance with Section
10.13.
 
Section 3.04.                      Survival.  All of the Borrower’s obligations
under this Article III shall survive termination of the Aggregate Commitments
and repayment of all other Obligations hereunder.
 

 
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ARTICLE IV
 
CONDITIONS PRECEDENT TO CREDIT EXTENSION
 
Section 4.01.                      Conditions of Credit Extension.  The
obligation of each Lender to make the Loan and purchase Notes hereunder on the
Closing Date is subject to satisfaction of the following conditions precedent:
 
(a)           Loan Documents.  Receipt by the Lead Investor of executed
counterparts of this Agreement, the Guaranty, a Note in favor of each Lender and
any other applicable Loan Documents, each of which shall be (i) originals or
telecopies or files in pdf format (followed promptly by originals) unless
otherwise specified, (ii) properly executed by a Responsible Officer of the
signing Loan Party, dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and (iii) in form
and substance reasonably satisfactory to each of the Lenders.
 
(b)           Organization Documents, Resolutions, etc.  Receipt by the Lead
Investor of certificates from a Responsible Officer of each Loan Party (each of
which shall be originals or facsimiles or files in pdf format (followed promptly
by originals), in form and substance reasonably satisfactory to the Lead
Investor) certifying (i) the identity, authority and capacity of each
Responsible Officer thereof authorized to act as a Responsible Officer in
connection with this Agreement and the other Loan Documents to which such Loan
Party is a party or is to be a party and (ii) that attached thereto are true,
correct and complete copies of (A) the Organization Documents of such Loan Party
(including all amendments thereto), which in the case of the certificate or
articles of incorporation or organization or other article of formation or
similar charter (as the case may be) shall be certified as of a recent date by
the appropriate Governmental Authority in such Loan Party’s jurisdiction of
incorporation or formation, (B) resolutions duly adopted by the board of
directors or board of managers (or appropriate governing body) of such Loan
Party authorizing the transactions contemplated hereunder and the execution,
delivery and performance of this Agreement and the other Loan Documents to which
it is a party or is to be a party and (C) such documents and certifications as
the Lead Investor may reasonably require to evidence that each Loan Party is
duly organized or formed, validly existing, in good standing and qualified to
engage in business in such Loan Party’s jurisdiction of incorporation or
formation, certified as of a recent date by the appropriate Governmental
Authority in such Loan Party’s jurisdiction of incorporation or formation.
 
(c)           Financial Certificate.  Receipt by the Lead Investor of a
certificate in form and substance reasonably satisfactory to the Lead Investor
and signed by the chief financial officer of the Borrower, certifying that (i)
the Borrower and its Subsidiaries (after giving effect to the Transactions) are
Solvent on a consolidated basis, (ii) the financial statements delivered in
accordance with Section 4.01(k)(ii) accurately present the pro forma financial
position of the Borrower and its Subsidiaries in accordance with GAAP and
Regulation S-X (and in any event after giving effect to the Transactions), (iii)
there has been no circumstance, development, event, condition, effect or change
since December 31, 2010 that has had or could be reasonably expected to have,
either individually or in the aggregate, (1) a Material Adverse Effect or (2) or
a material adverse change in, or a material adverse effect on, the operations,
business, assets, properties, liabilities (actual or contingent) or financial
condition of HPTi and its Subsidiaries (taken as a whole); (iv) attached thereto
are calculations that are true and accurate as of the Closing Date and
demonstrate that, after giving pro forma effect to all elements of the
Transactions, (1) Consolidated EBITDA for the twelve consecutive months ended
March 31, 2011 is at least $37,800,000, (2) the Consolidated Total Leverage
Ratio is not greater than 4.00 to 1.00, and (3) the Consolidated Senior Leverage
Ratio is not greater than 3.00 to 1.00; (v) attached thereto is a detailed
sources and uses statement and a funds flow memorandum for the Transactions,
including the payment of all fees, commissions and expenses in connection
therewith, and (vi) attached thereto is an organizational chart and a list of
officers and directors of each of the Loan Parties.
 

 
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(d)           Closing Date Certificate.  Receipt by the Lead Investor of a
certificate signed by a Responsible Officer of the Borrower, in form and
substance reasonably satisfactory to each of the Lenders:
 
(i)           either (A) attaching copies of all consents, licenses and
approvals required in connection with the consummation of the Transactions, the
execution, delivery and performance by each Loan Party and the validity against
such Loan Party of the Loan Documents to which it is a party, and such consents,
licenses and approvals shall be in full force and effect, or (B) stating that no
such consents, licenses or approvals are so required; and
 
(ii)           certifying that:
 
(A)           all applicable waiting periods related to the Transactions shall
have expired without any action being taken by any authority that could
restrain, prevent or impose any material adverse conditions on the Borrower,
HPTi or any of their respective Subsidiaries, or that seek or threaten any of
the foregoing, and no law or regulation shall be applicable which in the
reasonable judgment of the Lead Investor could have such effect;
 
(B)           the conditions specified in Sections 4.01(o) and (p) have been
satisfied; and
 
(C)           the copies attached thereto (in each case including all exhibits,
schedules and annexes thereto and in form and substance reasonably satisfactory
to the Lead Investor) of (1) the Senior Loan Documents (other than any fee
letter relating to the Senior Indebtedness) and (2) the HPTi Merger Agreement,
in each case, are true, complete and correct.
 
(e)           Legal Opinions.  Receipt by the Lead Investor of favorable
opinions of each applicable counsel to the Loan Parties, in form and substance
reasonably satisfactory to the Lead Investor, addressed to the Lead Investor and
each Lender (including language allowing all assignees of the Lead Investor and
each Lender to rely on such opinion after the Closing Date), as to certain
matters concerning the Loan Parties and the Loan Documents as the Lead Investor
may reasonably request.
 
(f)           Reserved.
 
(g)           Reserved.
 
(h)             Senior Indebtedness.  The Lead Investor shall have received
evidence reasonably satisfactory to it that the Borrower shall have received an
aggregate amount of not less than $110,000,000 in gross cash proceeds from the
Senior Lenders in accordance with the terms of the Senior Loan Documents (it
being understood that such proceeds will be reduced by fees and/or original
issue discount applied to the Senior Indebtedness).
 
(i)             Consummation of the HPTi Acquisition.  The HPTi Acquisition
(including the payment of at least $18,000,000 in cash on hand of the Borrower
and all other amounts due and payable in connection with the consummation of the
HPTi Acquisition) shall have been consummated in compliance with applicable Law
and regulatory approvals and in accordance with the HPTi Merger Agreement.
 
(j)             Refinancing. All existing Indebtedness (other than Permitted
Indebtedness) of each of (i) the Borrower and its Subsidiaries and (ii) HPTi and
its Subsidiaries shall, in each case, be repaid in full
 

 
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and terminated and all guarantees and collateral security therefor shall be
released, and the Lead Investor shall have received payoff letters in form and
substance reasonably satisfactory to it evidencing such repayment, termination
and release.
 
(k)           Financial Matters.  The Lead Investor shall have received:
 
(i)           (A) the audited consolidated balance sheets and related
consolidated statements of income and cash flows of each of (1) the Borrower and
its subsidiaries and (2) HPTi and its Subsidiaries, in each case for the fiscal
years ended December 31, 2008, December 31, 2009 and December 31, 2010, and (B)
to the extent available, the unaudited consolidated balance sheets and related
consolidated statements of income and cash flows of each of (1) the Borrower and
its subsidiaries and (2) HPTi and its Subsidiaries, in each case for each fiscal
quarter ended after December 31, 2010 but not less than 45 days prior to the
Closing Date and for each fiscal month ended on or after April 30, 2011 but not
less than 30 days prior to the Closing Date.
 
(ii)           the consolidated pro forma balance sheet and related pro forma
consolidated statements of income and cash flows of the Borrower and its
Subsidiaries (after giving effect to the Transactions) as of and for the four
fiscal quarter period ending March 31, 2011, prepared after giving effect to the
Transactions as if, in the case of such balance sheet, the Transactions had
occurred as of such date or in the case of such other financial statements, at
the beginning of such period; and
 
(iii)           the then most recent forecasts of a consolidated balance sheet
of the Borrower and its Subsidiaries and related consolidated statements of
income and cash flows of the Borrower and its Subsidiaries on a quarterly basis
for the remainder of the current fiscal year and the fiscal year immediately
following the Closing Date and an annual basis for each fiscal year thereafter
during the term of this Agreement.
 
(l)           Consents; Defaults.
 
(i)           Governmental and Third Party Approvals.  The Loan Parties shall
have received all governmental, shareholder and third party consents and
approvals necessary in connection with the Transactions and all applicable
waiting periods shall have expired without any action being taken by any Person
that could reasonably be expected to restrain, prevent or impose any material
adverse conditions on any of the Loan Parties or such other Transactions or that
seek or threaten any of the foregoing, and no law or regulation shall be
applicable which in the reasonable judgment of the Lead Investor could
reasonably be expected to have such effect.
 
(ii)           No Injunction, Etc.  No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of this
Agreement or the other Loan Documents or the consummation of the Transactions
contemplated hereby or thereby, or wherein an unfavorable judgment, decree or
order would prevent the performance or consummation of the Transactions, declare
unlawful any of the Transactions, reasonably be expected to cause the
Transactions to be rescinded, or result in damages owing by the Lead Investor or
any Lender in connection with the consummation of the Transactions other than as
a result of a breach by the Lead Investor or its Affiliates under the Commitment
Letter dated June 2, 2011 between one or more of such parties and the Borrower.
 
(m)           Fees and Expenses.  The Borrower shall have paid (i) to the Lead
Investor all fees required to be paid to it on or before the Closing Date
(whether pursuant to Section 2.09, 10.04 or
 

 
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otherwise) and (ii) all fees, charges and disbursements of counsel to the Lead
Investor (directly to such counsel if requested by the Lead Investor) to the
extent accrued and unpaid prior to or on the Closing Date, plus such additional
amounts of such fees, charges and disbursements as shall constitute its
reasonable estimate of such fees, charges and disbursements incurred or to be
incurred by it through the closing proceedings; provided that such estimate
shall not thereafter preclude a final settling of accounts between the Borrower
and the Lead Investor.
 
(n)           Patriot Act.  The Lead Investor shall have received all
documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including, without limitation, the Patriot Act, that has been reasonably
requested by the Lead Investor not less than five Business Days prior to the
Closing Date.
 
(o)           Representations and Warranties.  The representations and
warranties contained in Article V or any other Loan Document, or which are
contained in any document furnished at any time under or in connection herewith
or therewith, shall be true and correct in all material respects (except if
qualified by materiality or reference to Material Adverse Effect, such
representation and warranty shall be true and correct in all respects) on and as
of the date of the Loan with the same effect as if made on and as of such date
(except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they shall be true and correct as of
such earlier date).
 
(p)           No Default.  No Default shall exist, or would result from the Loan
or from the application of the proceeds thereof.
 
ARTICLE V
 
REPRESENTATIONS AND WARRANTIES
 
The Borrower represents and warrants to the Lenders that:
 
Section 5.01.                      Existence, Qualification and Power.  Each
Loan Party and each Subsidiary thereof (a) is duly organized or formed, validly
existing and, as applicable, in good standing (or the equivalent) under the Laws
of the jurisdiction of its incorporation or organization, (b) has all requisite
power and authority and all requisite governmental licenses, authorizations,
consents and approvals to (i) own or lease its assets and carry on its business
and (ii) execute, deliver and perform its obligations under the Loan Documents
to which it is a party, and (c) is duly qualified and is licensed and, as
applicable, in good standing (or the equivalent) under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license; except in each
case referred to in clause (b)(i) or (c), to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect.
 
Section 5.02.                      Authorization; No Contravention.  The
execution, delivery and performance by each Loan Party of each Loan Document to
which such Person is party, have been duly authorized by all necessary corporate
or other organizational action, and do not and will not (a) contravene the terms
of any of such Person’s Organization Documents; (b) conflict with or result in
any breach or contravention of, or the creation of any Lien under, or require
any payment to be made under, any Contractual Obligation to which such Person is
a party or affecting such Person or the properties of such Person or any of its
Subsidiaries or any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is subject;
or (c) violate any Law.
 
Section 5.03.                      Governmental Authorization; Other
Consents.  No approval, consent, exemption, authorization, or other action by,
or notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with (a) the execution, delivery or
performance by, or
 

 
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enforcement against, any Loan Party of this Agreement or any other Loan Document
or (b) the exercise by any Lender of its rights under the Loan Documents.  All
applicable waiting periods in connection with the Transaction have expired
without any action having been taken by any Governmental Authority restraining,
preventing or imposing materially adverse conditions upon the Transaction or the
rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise
dispose of, or to create any Lien on, any properties now owned or hereafter
acquired by any of them.
 
Section 5.04.                      Binding Effect.  This Agreement has been, and
each other Loan Document, when delivered hereunder, will have been, duly
executed and delivered by each Loan Party that is party thereto.  This Agreement
constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against such
Loan Party in accordance with its terms; provided that the enforceability hereof
and thereof is subject in each case to general principles of equity and to
bankruptcy, insolvency and similar Laws affecting the enforcement of creditors’
rights generally.
 
Section 5.05.                      Financial Statements; No Material Adverse
Effect.
 
(a)           The audited financial statements delivered (i) on the Closing Date
pursuant to Section 4.01(k)(i)(A) (A) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby; (B) in the case of
the financial statements delivered pursuant to Section 4.01(k)(i)(A)(1), fairly
present the financial condition of the Borrower and its Subsidiaries as of the
date thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered thereby
and show all material indebtedness and other liabilities, direct or contingent,
of the Borrower and its Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Indebtedness; and (C) in the
case of the financial statements delivered pursuant to Section 4.01(k)(i)(A)(2),
to the knowledge of any Responsible Officer of the Borrower, fairly present the
financial condition of HPTi and its Subsidiaries as of the date thereof and
their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby and show all
material indebtedness and other liabilities, direct or contingent, of HPTi and
its Subsidiaries as of the date thereof, including liabilities for taxes,
material commitments and Indebtedness; and (ii) at any time after the Closing
Date pursuant to Section 6.01(a) (A) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby; (B) fairly present
the financial condition of the Borrower and its Subsidiaries as of the date
thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered thereby;
and (C) show all material indebtedness and other liabilities, direct or
contingent, of the Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Indebtedness.
 
(b)           The interim financial statements delivered (i) on the Closing Date
pursuant to Section 4.01(k)(i)(B), subject to the absence of footnotes and to
normal year-end audit adjustments, (A) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, (B) in the case of
the financial statements delivered pursuant to Section 4.01(k)(i)(B)(1), fairly
present the financial condition of the Borrower and its Subsidiaries as of the
date thereof and their results of operations for the period covered thereby; and
(C) in the case of the financial statements delivered pursuant to Section
4.01(k)(i)(B)(2), to the knowledge of any Responsible Officer of the Borrower,
fairly present the financial condition of HPTi and its Subsidiaries as of the
date thereof and their results of operations for the period covered thereby and
(ii) at any time after the Closing Date pursuant to Section 6.01(b) (A) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, and (B) fairly present the financial condition of the Borrower
and its Subsidiaries (or HPTi and its Subsidiaries) as of the date thereof and
their results of operations for the period covered thereby, subject, in the case
of clauses (A) and (B), to the absence of footnotes and to normal year-end audit
 

 
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adjustments.  Schedule 5.05 sets forth all indebtedness and other liabilities,
direct or contingent, (other than Permitted Indebtedness and any liabilities for
taxes, commitments and Indebtedness in an outstanding amount of less than
$1,000,000) of the Borrower and its consolidated Subsidiaries (or, in connection
with the interim financial statements delivered on the Closing Date pursuant to
Section 4.01(k)(i)(B), HPTi and its Subsidiaries) as of the date of such
financial statements.
 
(c)           Since December 31, 2010, there has been no event or circumstance,
either individually or in the aggregate, that has had or could reasonably be
expected to have a Material Adverse Effect.
 
(d)           The consolidated forecasted balance sheet and statements of income
and cash flows of the Borrower and its Subsidiaries delivered pursuant to
Section 4.01(k)(iii) or Section 6.01(d), as applicable, were prepared in good
faith on the basis of the assumptions stated therein, which assumptions were
fair in light of the conditions existing at the time of delivery of such
forecasts, and represented, at the time of delivery, the Borrower’s reasonable
estimate of its future financial condition and performance.
 
Section 5.06.                      Litigation.  There are no actions, suits,
proceedings, claims or disputes pending or, to the knowledge of any Responsible
Officer of the Borrower, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against the Borrower or
any of its Subsidiaries or against any of their properties that (a) purport to
affect or pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby, or (b) either individually or in the
aggregate, if determined adversely, could reasonably be expected to have a
Material Adverse Effect.
 
Section 5.07.                      No Default.  Neither any Loan Party nor any
Subsidiary thereof is in default under or with respect to any Material Contract
except to the extent that any such default could not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.  No
Default has occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan Document.
 
Section 5.08.                      Ownership of Property; Liens; Investments.
 
(a)           Each of the Borrower and its Subsidiaries have good record and
marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of its business, except for
such defects in title as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.  The property of the Borrower and
its Subsidiaries is subject to no Liens, other than Permitted Liens.
 
(b)           As of the Closing Date, the Borrower and its Subsidiaries own no
Material Real Property.
 
(c)           Schedule 5.08 sets forth a complete and accurate list of all
leases of real property under which any Loan Party or any Subsidiary of a Loan
Party is the lessee (other than any such leases having an aggregate annual rent
due thereunder of less than $2,000,000), identifying as of the Closing Date, the
street address, county or other relevant jurisdiction, state, lessor, lessee,
expiration date and annual rental cost thereof.  Each such lease is the legal,
valid and binding obligation of the lessor thereof, enforceable in accordance
with its terms; provided that the enforceability hereof and thereof is subject
in each case to general principles of equity and to bankruptcy, insolvency and
similar Laws affecting the enforcement of creditors’ rights generally.
 
(d)           Schedule 7.02 sets forth a complete and accurate list of all
Investments held by any Loan Party or any Subsidiary of any Loan Party as of the
Closing Date and not otherwise permitted by Section 7.02.
 

 
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Section 5.09.                      Environmental Compliance.  The Borrower and
its Subsidiaries are in compliance with all Environmental Laws, and there are no
claims alleging potential liability or responsibility for violation of any
Environmental Law on their respective businesses, operations and properties
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
 
Section 5.10.                      Insurance.  The properties of the Borrower
and its Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of the Borrower, in such amounts, with such deductibles
and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the
Borrower or the applicable Subsidiary operates.
 
Section 5.11.                      Taxes.  The Borrower and its Subsidiaries
have filed (or have filed and have been granted an extension for filing) all
Federal, state and other material tax returns and reports required to be filed,
and have paid all Federal, state and other material taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings diligently conducted and for
which adequate reserves have been provided in accordance with GAAP.  There is no
proposed tax assessment against the Borrower or any Subsidiary that would, if
made, have a Material Adverse Effect.  Neither any Loan Party nor any Subsidiary
thereof is party to any tax sharing agreement.
 
Section 5.12.                      ERISA Compliance.
 
(a)           Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state laws.  Each
Pension Plan that is intended to be a qualified plan under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service to the effect that the form of such Pension Plan is qualified under
Section 401(a) of the Code and the trust related thereto has been determined by
the Internal Revenue Service to be exempt from federal income tax under Section
501(a) of the Code, or an application for such a letter is currently being
processed by the Internal Revenue Service.  To the knowledge of any Responsible
Officer of the Borrower, nothing has occurred that would prevent or cause the
loss of such tax-qualified status.
 
(b)           There are no pending or, to the knowledge of any Responsible
Officer of the Borrower, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan that could reasonably be
expected to have a Material Adverse Effect.  There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan that has resulted or could reasonably be expected to result in a
Material Adverse Effect.
 
(c)           i)  No ERISA Event has occurred, and neither the Borrower nor any
ERISA Affiliate is aware of any fact, event or circumstance that could
reasonably be expected to constitute or result in an ERISA Event with respect to
any Pension Plan; (ii) the Borrower and each ERISA Affiliate has met all
applicable requirements under the Pension Funding Rules in respect of each
Pension Plan, and no waiver of the minimum funding standards under the Pension
Funding Rules has been applied for or obtained; (iii) as of the most recent
valuation date for any Pension Plan, the funding target attainment percentage
(as defined in Section 430(d)(2) of the Code) is 60% or higher and neither the
Borrower nor any ERISA Affiliate knows of any facts or circumstances that could
reasonably be expected to cause the funding target attainment percentage for any
such plan to drop below 60% as of the most recent valuation date; (iv) neither
the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC
other than for the payment of premiums, and there are no premium payments which
have become due that are unpaid; (v) neither the Borrower nor any ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the
plan
 

 
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administrator thereof nor by the PBGC, and no event or circumstance has occurred
or exists that could reasonably be expected to cause the PBGC to institute
proceedings under Title IV of ERISA to terminate any Pension Plan.
 
Section 5.13.                      Subsidiaries; Equity Interests.  As of the
Closing Date, the Borrower has no Subsidiaries other than those specifically
disclosed on Schedule 5.13, and all of the outstanding Equity Interests in such
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by a Loan Party in the amounts specified on Schedule 5.13 free and clear
of all Liens (other than Permitted Liens).  The Borrower has no equity
investments in any other corporation or entity other than those specifically
disclosed in Schedule 5.13.  All of the outstanding Equity Interests in the
Borrower have been validly issued are fully paid and nonassessable.  Set forth
on Schedule 5.13 is a complete and accurate list of the exact legal name of each
Loan Party, showing as of the Closing Date (as to each Loan Party) the
jurisdiction of its incorporation or formation, as applicable, the address of
its principal place of business and its U.S. taxpayer identification number or,
in the case of any non-U.S. Loan Party that does not have a U.S. taxpayer
identification number, its unique identification number issued to it by the
jurisdiction of its incorporation.  The copy of the charter of each Loan Party
and each amendment thereto provided pursuant to Section 4.01(b) is a true and
correct copy of each such document, each of which is valid and in full force and
effect.
 
Section 5.14.                      Use of Proceeds; Margin Regulations;
Investment Company Act.
 
(a)           The Borrower intends to use the proceeds of each Credit Extension
solely for the purposes described in Section 6.11.
 
(b)           The Borrower is not engaged and will not engage, principally or as
one of its important activities, in the business of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the FRB), or
extending credit for the purpose of purchasing or carrying margin
stock.  Following the application of the proceeds of each Loan, not more than
25% of the value of the assets (either of the Borrower only or of the Borrower
and its Subsidiaries on a consolidated basis) subject to the provisions of
Section 7.01 or Section 7.05 or subject to any restriction contained in any
agreement or instrument between the Borrower and any Lender or any Affiliate of
any Lender relating to Indebtedness and within the scope of Section 8.01(e) will
be margin stock.
 
(c)           None of the Borrower, any Person Controlling the Borrower, or any
Subsidiary is or is required to be registered as an “investment company” under
the Investment Company Act of 1940.
 
Section 5.15.                      Disclosure.  The Borrower has disclosed to
the Lead Investor all agreements, instruments and corporate or other
restrictions to which it or any of its Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.  No report, financial
statement, certificate or other information furnished (whether in writing or
orally) by or on behalf of any Loan Party to the Lead Investor in connection
with the transactions contemplated hereby and the negotiation of this Agreement
or delivered hereunder or under any other Loan Document (in each case, as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
 
Section 5.16.                      Compliance with Laws.
 

 
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(a)           Each Loan Party and each Subsidiary thereof is in compliance in
all material respects with the requirements of all Laws and all orders, writs,
injunctions and decrees applicable to it or to its properties, except in such
instances in which (i) such requirement of Law or order, writ, injunction or
decree is being contested in good faith by appropriate proceedings diligently
conducted or (ii) the failure to comply therewith, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
 
(b)           No Loan Party (i) is a person whose property or interest in
property is blocked or subject to blocking pursuant to Section 1 of Executive
Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)), (ii) engages in any dealings or transactions prohibited by
Section 2 of such executive order, or is otherwise associated with any such
person in any manner violative of Section 2, or (iii) is a person on the list of
Specially Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other U.S. Department of Treasury’s Office of Foreign
Assets Control regulation or executive order.
 
(c)           Each Loan Party is in compliance, in all material respects, with
(i) the 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 (ii) the Act.  No part of the proceeds of the Loans will
be used, 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.
 
Section 5.17.                      Solvency.  Each Loan Party is, individually
and together with its Subsidiaries on a consolidated basis, Solvent.
 
Section 5.18.                      Intellectual Property; Licenses, Etc.  The
Borrower and its Subsidiaries own, or possess the right to use, all of the
trademarks, service marks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intellectual property rights (collectively, “IP
Rights”) that are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other Person.  To the
knowledge of any Responsible Officer of the Borrower, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Borrower or any
Subsidiary infringes upon any rights held by any other Person.  No claim or
litigation regarding any of the foregoing is pending or, to the knowledge of any
Responsible Officer of the Borrower, threatened, which, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
 
Section 5.19.                      Reserved.
 
Section 5.20.                      Material Contracts and Material
Licenses.  Schedule 5.20 sets forth a complete and accurate list of all Material
Contracts and Material Licenses of the Borrower and each Subsidiary in effect as
of the Closing Date.  Other than as set forth in Schedule 5.20, each Material
Contract and Material License is, and after giving effect to the consummation of
the Transactions contemplated by the Loan Documents will be, in full force and
effect in accordance with the terms thereof.  To the extent requested by the
Lead Investor, the Borrower and each Subsidiary has delivered to the Lead
Investor a true and complete copy of each Material Contract and Material License
required to be listed on Schedule 5.20 or any other Schedule hereto or to any
other Loan Document.  Neither the Borrower nor any Subsidiary is in breach of or
in default under any Material Contract and Material License in any respect,
 

 
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except to the extent that any such breach or default could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
 
Section 5.21.                      Indebtedness Status.  The Obligations of the
Borrower and each Subsidiary under this Agreement and each of the other Loan
Documents ranks and shall continue to rank at least senior in priority of
payment to all Subordinated Indebtedness of each such Person and is designated
as “Senior Indebtedness” (or the equivalent) under all instruments and
documents, now or in the future, relating to all Subordinated Indebtedness.
 
Section 5.22.                      Casualty, Etc.  Neither the businesses nor
the properties of any Loan Party or any of its Subsidiaries are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
 
ARTICLE VI
 
AFFIRMATIVE COVENANTS
 
So long as any Loan or other Obligation (other than contingent indemnification
obligations not then due) hereunder shall remain unpaid or unsatisfied, the
Borrower shall, and shall (except in the case of the covenants set forth in
Sections 6.01, 6.02, and 6.03) cause each Subsidiary to:
 
Section 6.01.                      Financial Statements.  Deliver to each
Lender, in form and detail reasonably satisfactory to the Required Lenders:
 
(a)           commencing with the fiscal year ended December 31, 2011, as soon
as available, but in any event upon the earlier of (i) the date that is 120 days
after the end of each fiscal year of the Borrower and (ii) the date such
information is required to be filed with the SEC (without giving effect to any
extension granted by the SEC), a consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such fiscal year, and the related consolidated
statements of income or operations, changes in shareholders’ equity, and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year and against the most recent annual
forecasts delivered pursuant to Section 6.01(d), all in reasonable detail and
prepared in accordance with GAAP, audited and accompanied by a report and
opinion of Grant Thornton LLP or any other independent certified public
accountant of nationally recognized standing reasonably acceptable to the
Required Lenders, which report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception as
to the scope of such audit, together with a copy of the management discussion
and analysis submitted by the Borrower to the SEC with respect to such period;
 
(b)           commencing with the fiscal quarter ending June 30, 2011, as soon
as available, but in any event within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of the Borrower, a consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal
quarter, the related consolidated statements of income or operations, changes in
shareholders’ equity and cash flows for such fiscal quarter and for the portion
of the Borrower’s fiscal year then ended, in each case setting forth in
comparative form, as applicable, the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail, and a comparison (both in Dollar
and percentage terms) to projections for such fiscal quarter and the period
commencing at the end of the previous fiscal year of the Borrower and ending
with the end of such fiscal quarter, in each case as set forth in the most
recent forecasts delivered pursuant to Section 6.01(d), certified by the chief
executive officer or chief financial officer of the Borrower as fairly
presenting the
 

 
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financial condition, results of operations, shareholders’ equity and cash flows
of the Borrower and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes;
 
(c)           commencing with the fiscal month ending June 30, 2011, as soon as
available, but in any event within 30 days after the end of each fiscal month, a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such fiscal month, and the related consolidated statement of income and trial
balance for such fiscal month and for the portion of the Borrower’s fiscal year
then ended, in each case setting forth in comparative form, as applicable, the
figures for the corresponding fiscal month of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail, and
a comparison (both in Dollar and percentage terms) to projections for such
fiscal month in the then current forecasts delivered pursuant to Section
6.01(d);
 
(d)           as soon as available, but in any event at least 15 days before the
end of each fiscal year of the Borrower, forecasts prepared by management of the
Borrower, in form reasonably satisfactory to the Required Lenders, of
consolidated balance sheets and statements of income or operations and cash
flows of the Borrower and its Subsidiaries on a monthly basis for the
immediately following fiscal year (beginning with the fiscal year 2012 and
including the fiscal year in which the Maturity Date occurs).
 
As to any information contained in materials furnished pursuant to Section
6.02(d), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Borrower to furnish the information and
materials described in clauses (a) and (b) above at the times specified therein.
 
Section 6.02.                      Certificates; Other Information.  Deliver to
each Lender, in form and detail reasonably satisfactory to the Required Lenders:
 
ii)           concurrently with the delivery of the financial statements
referred to in Section 6.01(a), a certificate of its independent certified
public accountants certifying such financial statements and stating that in
making the examination necessary therefor no knowledge was obtained of any
Default under the financial covenants set forth in Section 7.11 or, if any such
Default shall exist, stating the nature and status of such event;
 
(b)           concurrently with the delivery of the financial statements
referred to in Sections 6.01(a) and (b) (commencing with the delivery of the
financial statements for the fiscal quarter ended September 30, 2011), a duly
completed Compliance Certificate signed by the chief executive officer or chief
financial officer of the Borrower (which delivery may, unless a Lender requests
executed originals, be by electronic communication including fax or email and
shall be deemed to be an original authentic counterpart thereof for all
purposes), including a summary of the Borrower’s and each Subsidiary’s backlog
of revenue-generating Government Contracts as of the date of such financial
statements;
 
(c)           promptly after any request by any Lender, copies of any detailed
audit reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of the Borrower by
independent accountants in connection with the accounts or books of the Borrower
or any of its Subsidiaries, or any audit of any of them;
 
(d)           promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of the Borrower, and copies of all annual, regular, periodic
and special reports and registration statements which the Borrower may file or
be required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934, and not otherwise required to be delivered to the Lenders
pursuant hereto;
 

 
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(e)           promptly, and in any event within five Business Days after receipt
thereof by any Loan Party or any Subsidiary thereof, copies of each notice or
other correspondence received from the SEC (or comparable agency in any
applicable non-U.S. jurisdiction) concerning any investigation or possible
investigation or other inquiry by such agency regarding financial or other
operational results of any Loan Party or any Subsidiary thereof;
 
(f)           promptly after the assertion or occurrence thereof, notice of any
action or proceeding against or of any noncompliance by any Loan Party or any of
its Subsidiaries with any Environmental Law or Environmental Permit that could
(i) reasonably be expected to have a Material Adverse Effect or (ii) cause any
Material Real Property to be subject to any restrictions on ownership,
occupancy, use or transferability under any Environmental Law;
 
(g)           no later than five (5) Business Days following execution thereof,
true, correct and complete copies of any agreement, instrument or document
effecting an amendment, modification, supplement or waiver of any Senior Loan
Document;
 
(h)           promptly after the furnishing thereof, copies of any statement or
report furnished to the Senior Agent or any Senior Lender pursuant to the terms
of the Senior Loan Documents and not otherwise required to be furnished to the
Lenders pursuant to Section 6.01 or any other clause of this Section (other than
routine borrowing or interest conversion notices or routine diligence deliveries
with respect to then existing items requested by the Senior Agent or a Senior
Lender); and
 
(i)           promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any of its Subsidiaries, or
compliance with the terms of the Loan Documents, as any Lender may from time to
time reasonably request.
 
Documents required to be delivered pursuant to Section 6.01 or Section 6.02 may
be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto on the Borrower’s website on the Internet at the website
address listed on Schedule 10.02; or (ii) on which such documents are posted on
the Borrower’s behalf on an Internet or intranet website, if any, to which each
Lender has access (whether a commercial, third-party website or otherwise);
provided that the Borrower shall notify each Lender (by telecopier or electronic
mail) of the posting of any such documents.  Each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.
 
Section 6.03.                      Notices.  Promptly notify each Lender:
 
(a)           of the occurrence of any Default;
 
(b)           of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
or any default under, a Contractual Obligation of the Borrower or any
Subsidiary; (ii) any dispute, litigation, investigation, proceeding or
suspension between the Borrower or any Subsidiary and any Governmental
Authority; (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws; or (iv) any pending or threatened
audit by any Governmental Authority of the Government Contracts of the Borrower
and its Subsidiaries;
 
(c)           of the occurrence of any ERISA Event;
 

 
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(d)           of any material change in accounting policies or financial
reporting practices by the Borrower or any Subsidiary;
 
(e)           of the occurrence of any Mandatory Prepayment Event in accordance
with Section 2.05(b); and
 
(f)           of any notice of default or event of default received by Borrower
from the Senior Agent or the Senior Lenders, including a copy thereof, except to
the extent the Lenders have received such notice from the Senior Agent directly.
 
Each notice pursuant to this Section 6.03 (other than Section 6.03(e)) shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth reasonable details of the occurrence referred to therein and stating what
action the Borrower has taken and proposes to take with respect thereto.  Each
notice pursuant to Section 6.03(a) shall describe with particularity any and all
provisions of this Agreement and any other Loan Document that have been
breached.
 
Section 6.04.                      Payment of Obligations.  Pay and discharge as
the same shall become due and payable, all its obligations and liabilities,
including (a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings diligently conducted and adequate
reserves in accordance with GAAP are being maintained by the Borrower or any
Subsidiary; (b) all lawful claims which, if unpaid, would by Law become a Lien
upon any of its property; and (c) all Indebtedness with an outstanding principal
amount in excess of $1,000,000, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
 
Section 6.05.                      Preservation of Existence, Etc.  (a)
Preserve, renew and maintain in full force and effect its legal existence and
good standing (or the equivalent) under the Laws of the jurisdiction of its
organization except in a transaction permitted by Section 7.04 or 7.05; (b) take
all reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.
 
Section 6.06.                      Maintenance of Properties.  (a) Maintain,
preserve and protect all of its material properties and equipment necessary in
the operation of its business in good working order and condition, ordinary wear
and tear excepted; and (b) make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
 
Section 6.07.                      Maintenance of Insurance.  Maintain with
financially sound and reputable insurance companies not Affiliates of the
Borrower, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons.
 
Section 6.08.                      Compliance with Laws.  Comply in all material
respects with the requirements of all Laws and all orders, writs, injunctions
and decrees applicable to it or to its business or property, except in such
instances in which (a) such requirement of Law or order, writ, injunction or
decree is being contested in good faith by appropriate proceedings diligently
conducted; or (b) the failure to comply therewith could not reasonably be
expected to have a Material Adverse Effect.
 

 
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Section 6.09.                      Books and Records.  (a) Maintain proper books
of record and account, in which full, true and correct entries in conformity
with GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Borrower or such Subsidiary, as
the case may be; and (b) maintain such books of record and account in material
conformity with all applicable requirements of any Governmental Authority having
regulatory jurisdiction over the Borrower or such Subsidiary, as the case may
be.
 
Section 6.10.                      Inspection Rights.  Permit representatives
and independent contractors of one of the Lenders appointed by the Required
Lenders (such Lender, the “Lender Representative”)  to visit and inspect any of
its properties, to examine its corporate, financial and operating records, and
make copies thereof or abstracts therefrom, and to discuss its affairs, finances
and accounts with its Responsible Officers, and independent public accountants,
all at the reasonable expense of the Borrower and at such reasonable times
during normal business hours and up to two times per year, upon reasonable
advance notice to the Borrower; provided that when an Event of Default exists
the Lender Representative (or any of its respective representatives or
independent contractors) may do any of the foregoing at the expense of the
Borrower at any time during normal business hours and without advance notice or
any limitation on the number of times per year.
 
Section 6.11.                      Use of Proceeds.  Use the proceeds of the
Loans on the Closing Date (i) to finance a portion of the purchase price for the
HPTi Acquisition, (ii) to refinance all existing Indebtedness (other than
Permitted Indebtedness) of each of (A) the Borrower and its Subsidiaries and (B)
HPTi and its Subsidiaries, and (iii) to pay fees, costs and expenses incurred in
connection with the Transactions.
 
Section 6.12.                      Covenant to Guarantee, Additional
Subsidiaries.  Notify the Lenders of the creation or acquisition of any
Subsidiary and promptly thereafter (and in any event within thirty (30) days
after such creation or acquisition (or at such earlier time as may be required
in connection with a Permitted Acquisition or such later time as may be
determined by the Required Lenders in their sole discretion)), cause such Person
to (A) become a Guarantor by delivering to each Lender a duly executed
supplement to the Guaranty or such other document as the Required Lenders shall
deem appropriate for such purpose, (B) deliver to each Lender such documents and
certificates referred to in Section 4.01 as may be reasonably requested by the
Required Lenders (including, without limitation, legal opinions), (C) deliver to
each Lender such updated Schedules to the Loan Documents as requested by the
Required Lenders with respect to such Subsidiary and (D) deliver to each Lender
such other documents as may be reasonably requested by the Required Lenders, all
in form, content and scope reasonably satisfactory to the Required Lenders;
provided that the provisions of this clause (i) shall not apply if the Borrower
and the Required Lenders reasonably determine that the taking of the actions
hereunder (x) in the case of a Foreign Subsidiary would have material adverse
tax consequences for the Borrower or any other Loan Party or (y) would result in
a violation of Laws applicable to the Borrower and its Subsidiaries.
 
Notwithstanding anything to the contrary contained herein, if at any time any
Subsidiary guarantees any obligation of any Person under any Senior Loan
Document and such Subsidiary is not a Guarantor under the Loan Documents at the
time of such Guarantee, such Subsidiary shall be required to become a Guarantor
hereunder in accordance with the terms of this Section 6.12.
 
Section 6.13.                      Compliance with Environmental Laws.  Comply,
and cause all lessees and other Persons operating or occupying its properties to
comply, in all material respects, with all applicable Environmental Laws and
Environmental Permits; obtain and renew all Environmental Permits necessary for
its operations and properties; and conduct any investigation, study, sampling
and testing, and undertake any cleanup, removal, remedial or other action
necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws;
provided that neither the Borrower nor any of its Subsidiaries shall be required
to undertake any such
 

 
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cleanup, removal, remedial or other action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and appropriate
reserves are being maintained with respect to such circumstances in accordance
with GAAP.
 
Section 6.14.                      Further Assurances.  Promptly upon request by
any Lender, (a) correct any material defect or error that may be discovered in
any Loan Document or in the execution or acknowledgment thereof, and (b) do,
execute, acknowledge and deliver any and all such further acts, deeds,
certificates, assurances and other instruments as any Lender may reasonably
require from time to time in order to (i) carry out more effectively the
purposes of the Loan Documents, and (ii) assure, preserve, protect and confirm
more effectively unto such Lender the rights granted or now or hereafter
intended to be granted to such Lender under any Loan Document or under any other
instrument executed in connection with any Loan Document to which any Loan Party
or any of its Subsidiaries is or is to be a party, and cause each of its
Subsidiaries to do so.
 
Section 6.15.                      Compliance with Terms of Leaseholds.  Make
all payments and otherwise perform all obligations in respect of all leases of
real property to which the Borrower or any of its Subsidiaries is a party, keep
such leases in full force and effect and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or cancelled.
 
Section 6.16.                      Reserved.
 
Section 6.17.                      Annual Lender Meeting.  Upon the request by
the Required Lenders, participate in a meeting of the Lenders, so long as no
Event of Default or Default under Section 8.01(f) shall have occurred and be
continuing, once, and otherwise as frequently as may be required by the Required
Lenders, during each fiscal year, to be held via teleconference and in person at
least once per year, at a time reasonably acceptable to the Lenders and the
Borrower.  The purpose of this meeting shall be to present the Loan Parties’
previous fiscal years’ financial results and to present the Loan Parties’ budget
for the current fiscal year.
 
Section 6.18.                      Material Contracts and Material
Licenses.  Perform and observe all the terms and provisions of each Material
Contract and each Material License to be performed or observed by it, maintain
each such Material Contract and Material License in full force and effect,
enforce each such Material Contract and Material License in accordance with its
terms.
 
Section 6.19.                      Government Contracts.  Perform and observe
all the terms and provisions of each Material Government Contract to be
performed or observed by it, maintain each such Material Government Contract in
full force and effect, enforce each such Material Government Contract in
accordance with its terms.
 
Section 6.20.                      Reserved.
 
Section 6.21.                      HPTi Merger Sub.  Notwithstanding anything to
the contrary contained herein, in connection with the HPTi Acquisition, as
promptly as practicable on the Closing Date, deliver to the Required Lenders
evidence satisfactory to the Required Lenders that the HPTi Merger Sub has
merged with and into HPTi in accordance with the HPTi Merger Agreement, with
HPTi surviving such merger as a wholly owned Subsidiary of the Borrower.
 

 
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ARTICLE VII
 
NEGATIVE COVENANTS
 
So long as any Loan or other Obligation (other than contingent indemnification
obligations not then due) hereunder shall remain unpaid or unsatisfied, the
Borrower shall not, nor shall it permit any of its Subsidiaries to, directly or
indirectly:
 
Section 7.01.                      Liens.  Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, other than the following:
 
(a)           Liens securing the Senior Indebtedness;
 
(b)           Liens existing on the Closing Date and listed on Schedule 7.01 and
any renewals or extensions thereof, provided that (i) the property covered
thereby is not changed, (ii) the amount secured or benefited thereby is not
increased except as contemplated by Section 7.03(b), (iii) the direct or any
contingent obligor with respect thereto is not changed, and (iv) any renewal or
extension of the obligations secured or benefited thereby is permitted by
Section 7.03(b);
 
(c)           Liens for taxes not yet due or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;
 
(d)           carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s
or other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 30 days or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person;
 
(e)           pledges or deposits in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other social
security legislation, other than any Lien imposed by ERISA;
 
(f)           deposits to secure the performance of bids, trade contracts and
leases (other than Indebtedness), statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
 
(g)           easements, rights-of-way, restrictions and other similar
encumbrances affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the applicable Person;
 
(h)           Liens securing judgments for the payment of money not constituting
an Event of Default under Section 8.01(h);
 
(i)           Liens securing Indebtedness permitted under Section 7.03(e);
provided that (i) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness and (ii) the Indebtedness secured
thereby does not exceed the cost or fair market value, whichever is lower, of
the property being acquired on the date of acquisition;
 
(j)           Liens on property of any Subsidiary, which are in existence at the
time that such Subsidiary is acquired pursuant to a Permitted Acquisition;
provided that (A) such Liens are not incurred in connection with, or in
anticipation of, such Permitted Acquisition, (B) such Liens are applicable only
to
 

 
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specific property, (C) such Liens are not “blanket” or all asset Liens and
(D) such Liens do not attach to any other property of the Borrower or any of its
Subsidiaries and (E) the Indebtedness secured by such Liens is permitted under
Section 7.03(j) of this Agreement;
 
(k)           Liens arising from the filing of precautionary UCC financing
statements relating solely to personal property leased pursuant to operating
leases entered into in the ordinary course of business of the Borrower and its
Subsidiaries;
 
(l)           (i) Liens of a collecting bank arising in the ordinary course of
business under Section 4-210 of the UCC in effect in the relevant jurisdiction
and (ii) Liens of any depositary bank in connection with statutory, common law
and contractual rights of set-off and recoupment with respect to any deposit
account of any Borrower or any Subsidiary thereof;
 
(m)           (i) contractual or statutory Liens of landlords to the extent
relating to the property and assets relating to any lease agreements with such
landlord, and (ii) contractual Liens of suppliers (including sellers of goods)
or customers granted in the ordinary course of business to the extent limited to
the property or assets relating to such contract;
 
(n)           any interest or title of a licensor, sublicensor, lessor or
sublessor with respect to any assets under any license or lease agreement
entered into in the ordinary course of business which do not (i) interfere in
any material respect with the business of the Borrower or its Subsidiaries or
materially detract from the value of the relevant assets of the Borrower or its
Subsidiaries or (ii) secure any Indebtedness;
 
(o)           to the extent constituting Liens, restrictions under federal and
state securities Laws on the transfer of securities not securing Indebtedness
and which do not, individually or in the aggregate, materially detract from the
value of the properties or assets of the Borrower and its Subsidiaries; and
 
(p)           other Liens incidental to the ordinary conduct of the business of
the Borrower or any Subsidiary or to the ownership of their respective
properties or assets, which were not incurred in connection with the borrowing
of money or the obtaining of credit, do not secure Indebtedness and which do
not, individually or in the aggregate, materially detract from the value of the
properties or assets of the Borrower and its Subsidiaries or materially affect
the use thereof in the operation of their business.
 
Section 7.02.                      Investments.  Make any Investments, except:
 
(a)           Investments (i) existing on the Closing Date in Subsidiaries and
other Investments held by the Borrower and its Subsidiaries existing as of the
Closing Date and set forth on Schedule 7.02 and (ii) made after the Closing Date
in Domestic Subsidiaries formed or acquired after the Closing Date, so long as,
in each case the Borrower and its Subsidiaries comply with Section 6.12;
 
(b)           Investments held by the Borrower or any Subsidiary in the form of
Cash Equivalents;
 
(c)           advances to officers, directors and employees of the Borrower and
its Subsidiaries for travel, entertainment, relocation and analogous ordinary
business purposes in an aggregate amount in any calendar year not to exceed
$115,000;
 
(d)           Investments of (i) any Loan Party in any other Loan Party, (ii)
any Subsidiary that is not a Loan Party in any other Subsidiary that is not a
Loan Party and (iii) any Subsidiary that is not a Loan Party in any Loan Party
provided that any Investments consisting of Intercompany Indebtedness must be
permitted under Section 7.03;
 

 
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(e)           Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss;
 
(f)           Guarantees and Swap Contracts permitted by Section 7.03;
 
(g)           Investments by the Borrower or any of its Subsidiaries in the form
of Capital Expenditures permitted pursuant to this Agreement;
 
(h)           Investments relating to any deferred portion of the purchase price
in connection with a Disposition permitted pursuant to this Agreement;
 
(i)           Investments by the Borrower or any Subsidiary thereof in the form
of Permitted Acquisitions;
 
(j)           the HPTi Acquisition; and
 
(k)           other Investments not to exceed $2,300,000 in the aggregate at any
time.
 
Section 7.03.                      Indebtedness.  Create, incur, assume or
suffer to exist any Indebtedness, except for the following (collectively,
“Permitted Indebtedness”):
 
(a)           Indebtedness under the Loan Documents;
 
(b)           Indebtedness outstanding on the Closing Date (other than the
Senior Indebtedness as to which clause (f) below applies) and listed on Schedule
7.03 and any refinancings, refundings, renewals or extensions thereof; provided
that (i) the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder, (ii) the terms relating to
principal amount, amortization, maturity, collateral (if any) and subordination
(if any), and other material terms taken as a whole, of any such refinancing,
refunding, renewing or extending Indebtedness, and of any agreement entered into
and of any instrument issued in connection therewith, are no less favorable in
any material respect to the Loan Parties or the Lenders than the terms of any
agreement or instrument governing the Indebtedness being refinanced, refunded,
renewed or extended and the interest rate applicable to any such refinancing,
refunding, renewing or extending Indebtedness does not exceed the then
applicable market interest rate and (iii) such refinancing, refunding, renewing
or extending Indebtedness is not recourse to, or an obligation of, any of the
Borrower or any Subsidiary that was not obligated on the Indebtedness being
refinanced, refunded, renewed or extended;
 
(c)           Guarantees of the Borrower or any Subsidiary in respect of
Indebtedness otherwise permitted hereunder;
 
(d)           obligations (contingent or otherwise) of the Borrower or any
Subsidiary existing or arising under any Swap Contract, provided that (i) such
obligations are (or were) entered into by such Person in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or reasonably
anticipated by such Person, or changes in the value of securities issued by such
Person, and not for purposes of speculation or taking a “market view;” and (ii)
such Swap Contract does not contain any provision exonerating the non-defaulting
party from its obligation to make payments on outstanding transactions to the
defaulting party;
 

 
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(e)           Indebtedness in respect of Capital Leases and purchase money
obligations for fixed or capital assets within the limitations set forth in
Section 7.01(i); provided that the aggregate amount of all such Indebtedness at
any one time outstanding shall not exceed $2,300,000;
 
(f)           (i) Senior Indebtedness (other than Secured Hedge Agreements (as
defined in the Subordination Agreement)  and Secured Cash Management Agreements
(as defined in the Subordination Agreement)) and (ii) Secured Hedge Agreements
and Secured Cash Management Agreements, in each case, to the extent incurred in
the ordinary course of business and not for speculative purposes;
 
(g)           unsecured intercompany indebtedness of (i) any Loan Party to any
other Loan Party, (ii) any Subsidiary that is not a Loan Party to any other
Subsidiary that is not a Loan Party, and (iii) any Loan Party to any Subsidiary
that is not a Loan Party so long as the Indebtedness under this clause (iii)
constitutes Subordinated Indebtedness;
 
(h)           Indebtedness under performance bonds, surety bonds, release,
appeal and similar bonds, statutory obligations or with respect to workers’
compensation claims, in each case incurred in the ordinary course of business,
and reimbursement obligations in respect of any of the foregoing;
 
(i)           Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or other similar instrument drawn
against insufficient funds in the ordinary course of business;
 
(j)           Indebtedness of a Person existing at the time such Person became a
Subsidiary or assets were acquired from such Person in connection with an
Investment permitted pursuant to Section 7.02, to the extent that (i) such
Indebtedness was not incurred in connection with, or in contemplation of, such
Person becoming a Subsidiary or the acquisition of such assets, (ii) neither the
Borrower nor any Subsidiary thereof (other than such Person or any other Person
that such Person merges with or that acquires the assets of such Person) shall
have any liability or other obligation with respect to such Indebtedness,
(iii) the Consolidated Total Leverage Ratio (as of the date of the assumption of
such Indebtedness and after giving effect thereto) shall be at least 0.25 below
the then applicable ratio set forth in Section 7.11(a) and (iv) the Consolidated
Senior Leverage Ratio (as of the date of the assumption of such Indebtedness and
after giving effect thereto) shall be at least 0.25 below the then applicable
ratio set forth in Section 7.11(b); and
 
(k)           unsecured Indebtedness in an aggregate principal amount not to
exceed $3,450,000 at any time outstanding.
 
Notwithstanding the foregoing, no Loan Party shall, nor shall it permit any
Subsidiary to, at any time (i) create or incur any Indebtedness which, under the
terms of the documentation pursuant to which such Indebtedness is created or
incurred (including any intercreditor arrangement), is contractually
subordinated in right of payment to any other Indebtedness of the Loan Parties
(other than the Indebtedness incurred under the Loan Documents and the Senior
Loan Documents), unless such newly created or incurred Indebtedness is pari
passu in right of payment with, or contractually subordinated in right of
payment to, the Obligations, or (ii) enter into any arrangements (or agreement
or waivers, amendments or modifications thereof) or take any other action (or
permit any such other action to be taken) or cooperate with any other party in
taking any action which would (or purport to) contractually subordinate in right
of payment any Indebtedness of the Loan Parties to any other Indebtedness of the
Loan Parties (other than the Indebtedness incurred under the Loan Documents and
the Senior Loan Documents) including for this purpose, the granting of
subordinated participations in any such Indebtedness, unless such Indebtedness
(or such participation) is pari passu with, or contractually subordinated in
right of payment to, the Obligations.
 

 
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Section 7.04.                      Fundamental Changes.  Merge, dissolve,
liquidate, consolidate with or into another Person, or Dispose of (whether in
one transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except that, so long as no Default exists or would result therefrom:
 
(a)           each of the Borrower and any of its wholly-owned Subsidiaries may
merge into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, in connection with a Permitted Acquisition,
so long as (i) in the case of any such merger to which the Borrower is a party,
the Borrower is the surviving corporation and (ii) in the case of any such
merger to which any Loan Party (other than the Borrower) is a party, such Loan
Party shall be the continuing or surviving Person;
 
(b)           any Loan Party may Dispose of all or substantially all of its
assets (upon voluntary liquidation or otherwise) to another Loan Party;
 
(c)           any Subsidiary that is not a Loan Party may Dispose of all or
substantially all its assets (including any Disposition that is in the nature of
a liquidation) to (i) another Subsidiary that is not a Loan Party or (ii) to a
Loan Party provided that in case of clause (ii) such Disposition shall be for no
more than the fair market value of such assets;
 
(d)           any wholly-owned Subsidiary may merge with (i) the Borrower;
provided that the Borrower shall be the continuing or surviving Person, or (ii)
any one or more other wholly-owned Subsidiaries; provided that when any Loan
Party is merging with another Subsidiary that is not a Loan Party such Loan
Party shall be the continuing or surviving Person;
 
(e)           HPTi Merger Sub may merge into HPTi in accordance with the HPTi
Merger Agreement and Section 6.21; and
 
(f)           the H.J. Ford Disposition.
 
Section 7.05.                      Dispositions.  Make any Disposition or enter
into any agreement to make any Disposition, except:
 
(a)           Dispositions of obsolete or worn out property, whether now owned
or hereafter acquired, in the ordinary course of business;
 
(b)           Dispositions of inventory in the ordinary course of business;
 
(c)           Dispositions of equipment or real property to the extent that (i)
such property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such Disposition are reasonably
promptly applied to the purchase price of such replacement property;
 
(d)           Dispositions of property by any Loan Party to a Loan Party;
 
(e)           Dispositions permitted by Section 7.04;
 
(f)           non-exclusive licenses and sublicenses of intellectual property
rights in the ordinary course of business not interfering, individually or in
the aggregate, in any material respect with the conduct of the business of the
Borrower and its Subsidiaries;
 

 
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(g)           leases, subleases, licenses or sublicenses of real or personal
property granted by any Borrower or any of its Subsidiaries to others in the
ordinary course of business not interfering in any material respect with the
business of the Borrower or any of its Subsidiaries;
 
(h)           Dispositions in connection with casualty events;
 
(i)           the H.J. Ford Disposition; provided that the Lenders shall have
received a copy of each of the operative documents for such Disposition at least
two (2) Business Days prior to the completion of such Disposition; and
 
(j)            Dispositions not otherwise permitted pursuant to this Section;
provided that (i) at the time of such Disposition, no Default shall exist or
would result from such Disposition, (ii) such Asset Disposition is made for fair
market value, and (iii) the aggregate fair market value of all property disposed
of in reliance on this clause (j) shall not exceed $2,300,000 during the term of
this Agreement.
 
Section 7.06.                      Restricted Payments.  Declare or make,
directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except that, so long as no Default shall
have occurred and be continuing at the time of any action described below or
would result therefrom:
 
(a)           each Subsidiary may make Restricted Payments to the Borrower, the
Guarantors and any other Person that owns an Equity Interest in such Subsidiary,
ratably according to their respective holdings of the type of Equity Interest in
respect of which such Restricted Payment is being made;
 
(b)           the Borrower and each Subsidiary may declare and make dividend
payments or other distributions payable solely in the common stock or other
common Equity Interests of such Person;
 
(c)           the Borrower and each Subsidiary may purchase, redeem or otherwise
acquire Equity Interests issued by it with the proceeds received from the
substantially concurrent issue of new shares of its common stock or other common
Equity Interests; and
 
(d)           so long as iii) no Default has occurred and is continuing or would
result therefrom, iv) the Borrower and its Subsidiaries are in pro forma
compliance with each of the financial covenants set forth in Section 7.11, and
v) the Consolidated Total Leverage Ratio is less than 3.0 to 1.0, the Borrower
may make additional Restricted Payments not to exceed the lesser of (A) the
maximum aggregate amount which after giving pro forma effect to such Restricted
Payments and any indebtedness incurred in connection therewith would not cause
the Consolidated Total Leverage Ratio to equal or exceed 3.0 to 1.0 or (B)
$5,750,000 in the aggregate in any fiscal year; provided, that, no less than
three (3) Business Days prior to making any such additional Restricted Payments,
the Borrower shall have delivered to the Required Lenders a Compliance
Certificate for the most recent fiscal quarter end preceding such Restricted
Payment for which financial statements are available (with pro forma adjustments
taking into account such proposed Restricted Payment and any Indebtedness
incurred in connection therewith) demonstrating, in form and substance
reasonably satisfactory to the Required Lenders, compliance with each of the
clauses of this Section 7.06(d).
 
Section 7.07.                      Change in Nature of Business.  Engage in any
material line of business substantially different from those lines of business
conducted by the Borrower and its Subsidiaries on the Closing Date or any
business substantially related or incidental thereto.
 
Section 7.08.                      Transactions with Affiliates.  Enter into any
transaction of any kind with any Affiliate of the Borrower, whether or not in
the ordinary course of business, other than on fair and
 

 
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reasonable terms substantially as favorable to the Borrower or such Subsidiary
as would be obtainable by the Borrower or such Subsidiary at the time in a
comparable arm’s length transaction with a Person other than an Affiliate,
provided that the foregoing restriction shall not apply to transactions between
or among the Borrower and any of its wholly-owned Subsidiaries or between and
among any wholly-owned Subsidiaries.
 
Section 7.09.                      Burdensome Agreements.  Enter into or permit
to exist any Contractual Obligation (other than this Agreement or any other Loan
Document or any Senior Loan Document) that:
 
(a)           limits the ability of any Subsidiary to make Restricted Payments
to any Loan Party or to otherwise transfer property to a Loan Party or to
Guarantee the Indebtedness of any Loan Party other than those existing under or
by reason of:
 
(i)           applicable Law;
 
(ii)           any document or instrument governing Indebtedness incurred
pursuant to Section 7.03(e); provided that any such restriction contained
therein relates only to asset or assets acquired or financing therewith;
 
(iii)           any Permitted Lien or any document or instrument governing any
Permitted Lien; provided that any such restriction contained therein relates
only to the asset or assets subject to such Permitted Lien;
 
(iv)           customary restrictions contained in any agreement relating to a
Disposition of property (so long as such Disposition is permitted under this
Agreement); and
 
(v)           customary restrictions on assignments of any Contractual
Obligation entered into in the ordinary course of business.
 
(b)           limits the ability of the Borrower or any Subsidiary to create,
incur, assume, suffer to exist Liens on property of such Person (including any
provisions requiring the grant of a Lien to secure the obligation under such
Contractual Obligation if a Lien is granted to secure another obligation of such
Person) other than those:
 
(i)           existing under applicable Law;
 
(ii)           contained in any document or instrument governing Indebtedness
incurred pursuant to Section 7.03(e); provided that any such restriction
contained therein relates only to asset or assets acquired or financing
therewith;
 
(iii)           contained in the Organization Documents of any Loan Party as of
the Closing Date; and
 
(iv)           contained in any document or instrument governing any Permitted
Lien; provided that any such restriction contained therein relates only to the
asset or assets subject to such Permitted Lien.
 
Section 7.10.                      Use of Proceeds.  Use the proceeds of any
Credit Extension, whether directly or indirectly, and whether immediately,
incidentally or ultimately, to purchase or carry margin stock (within the
meaning of Regulation U of the FRB) or to extend credit to others for the
purpose of purchasing or carrying margin stock or to refund indebtedness
originally incurred for such purpose, in each case, which
 

 
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use of proceeds would cause the representation in Section 5.14(b) to be untrue
if such representation were made at the time of the use of such proceeds.
 
Section 7.11.                      Financial Covenants.
 
(a)           Consolidated Total Leverage Ratio.  Permit the Consolidated Total
Leverage Ratio as of the last day of any fiscal quarter of the Borrower ending
during the periods specified below to be greater than the ratio set forth below
opposite such period:
 

 
 
 
Four Fiscal Quarters Ending
Maximum
Consolidated Total
Leverage Ratio
Closing Date through June 29, 2012
5.00 to 1.00
June 30, 2012 through June 29, 2013
4.50 to 1.00
June 30, 2013 through June 29, 2014
4.00 to 1.00
June 30, 2014 and each fiscal quarter thereafter
3.50 to 1.00

 

 

 
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b)           Consolidated Senior Leverage Ratio.  Permit the Consolidated Senior
Leverage Ratio as of the last day of any fiscal quarter of the Borrower ending
during the periods specified below to be greater than the ratio set forth below
opposite such period:
 
Four Fiscal Quarters Ending
Maximum
Consolidated Senior
Leverage Ratio
Closing Date through June 29, 2012
4.00 to 1.00
June 30, 2012 through June 29, 2013
 3.50 to 1.00
June 30, 2013 through June 29, 2014
3.00 to 1.00
June 30, 2014 and each fiscal quarter thereafter
2.50 to 1.00

 
(c)           Consolidated Fixed Charge Coverage Ratio.  Permit the Consolidated
Fixed Charge Coverage Ratio as of the last day of any fiscal quarter of the
Borrower to be less than 1.10 to 1.00.
 
(d)           Capital Expenditures.  Permit the aggregate amount of all Capital
Expenditures (other than leasehold improvement expenditures not made in cash)
made by the Loan Parties in any fiscal year to exceed the amounts set forth
opposite such period:
 
Period
Maximum
Capital Expenditure
Closing Date through December 31, 2011
$2,500,000
January 1, 2012 through December 31, 2012
$5,250,000
January 1, 2013 through December 31, 2013
$6,500,000
January 1, 2014 through December 31, 2014 and each fiscal year thereafter
$7,000,000

 
provided, that, if the Loan Parties do not utilize the entire amount of Capital
Expenditures permitted in any fiscal year, so long as no Default or Event of
Default exists or would be caused thereby, the Loan Parties may carry forward to
the immediately succeeding fiscal year only, 50% of such unutilized amount (with
Capital Expenditures made by the Loan Parties in such succeeding fiscal year
applied last to such unutilized amount).
 
Section 7.12.                      Amendments of Organization Documents.  Amend
any of its Organization Documents in any manner materially adverse to the rights
and interests of the Lenders.
 
Section 7.13.                      Accounting Changes.  Make any change in
accounting policies or reporting practices, except as required by GAAP,
(including any change in its fiscal year end).
 
Section 7.14.                      Prepayments and Amendments.
 
(a)           Prepay, redeem, purchase, defease or otherwise satisfy prior to
the scheduled maturity thereof in any manner, or make any payment of any
Subordinated Indebtedness in violation of any subordination terms of such
Subordinated Indebtedness; or
 

 
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(b)           Amend, modify, waive or supplement in any manner (or permit the
modification, amendment, waiver or supplement of) any of the terms or provisions
of any Subordinated Indebtedness other than to the extent such amendment,
modification, waiver or supplement is not prohibited by the subordination terms
thereof; or
 
(c)           Amend, modify, waive or supplement in any manner (or permit the
modification, amendment, waiver or supplement thereof) of the terms or
provisions of the Senior Loan Documents other than to the extent such amendment,
modification, waiver or supplement is not prohibited by the Subordination
Agreement.
 
Section 7.15.                      Senior Indebtedness Status.  Designate any
Indebtedness (other than the Obligations and the Senior Indebtedness) of the
Borrower or any of its Subsidiaries as “Designated Senior Debt”, “Senior
Indebtedness” (or any comparable or equivalent term) under, and as defined in,
any Subordinated Indebtedness or the applicable subordination agreement for such
Subordinated Indebtedness.
 
Section 7.16.                      HPTi Merger Sub.  In the case of HPTi Merger
Sub, HPTi Merger Sub shall not (a) incur any Indebtedness or any other
obligation or liability whatsoever, (b) own or hereafter acquire any property or
assets, or (c) engage in any business or activity other than acting as an
acquisition vehicle in accordance with the terms of the HPTi Merger Agreement.
 
ARTICLE VIII
 
EVENTS OF DEFAULT AND REMEDIES
 
Section 8.01.                      Events of Default.  Any of the following
occurrences (each, an “Event of Default”):
 
(a)           Non-Payment.  The Borrower or any other Loan Party fails to pay
(i) when and as required to be paid herein, any amount of principal of any Loan,
or (ii) within five (5) Business Days after the same becomes due, any interest
on any Loan, any fee due hereunder or any other amount payable hereunder or
under any other Loan Document; or
 
(b)           Specific Covenants.  The Borrower fails to perform or observe any
term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05,
6.10, 6.11, 6.12, 6.14, 6.19, 6.21, or Article VII, or any Loan Party fails to
perform or observe any term, covenant or agreement contained in the Guaranty; or
 
(c)           Other Defaults.  Any Loan Party fails to perform or observe any
other covenant or agreement (not specified in subsection (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure shall continue un-remedied for a period of thirty (30) days after the
earlier of (i) the date on which a Responsible Officer of the Borrower first has
knowledge of such failure or (ii) the date on which written notice thereof shall
have been given to the Borrower by any Lender; or
 
(d)           Representations and Warranties.  Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the
Borrower or any other Subsidiary in this Agreement, in any other Loan Document,
or in any document delivered in connection herewith that is subject to
materiality or Material Adverse Effect qualifications, shall be incorrect or
misleading in any respect when made or deemed made or any representation,
warranty, certification or statement of fact made or deemed made by or on behalf
of the Borrower or any Subsidiary thereof in this Agreement, any other Loan
Document, or in any document delivered in connection herewith or therewith that
is not subject to
 

 
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materiality or Material Adverse Effect qualifications, shall be incorrect or
misleading in any material respect when made or deemed made; or
 
(e)           Cross-Default.  (i) The Senior Indebtedness shall not be paid in
full at final maturity or shall as a result of an “Event of Default” (as defined
in the Senior Credit Agreement) be accelerated in accordance with the terms of
the Senior Loan Documents prior to the final maturity thereof, (ii) the Borrower
or any Subsidiary (A) fails to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) in respect of
(x)  Senior Indebtedness, which failure continues unremedied for more than sixty
(60) consecutive days or (y) any other Indebtedness or Guarantee (other than
Indebtedness hereunder, the Senior Indebtedness and Indebtedness under any Swap
Contract) having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than the Threshold Amount, or
(B) fails to observe or perform any other agreement or condition relating to any
such other Indebtedness or such other Guarantee or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
occurs, the effect of which default or other event is to cause, or to permit the
holder or holders thereof or the beneficiary or beneficiaries of such other
Guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such other Guarantee to become payable or cash collateral in
respect thereof to be demanded; or (iii) there occurs under any Swap Contract an
Early Termination Date (as defined in such Swap Contract) resulting from (A) any
event of default under such Swap Contract as to which the Borrower or any
Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any
Termination Event (as defined in such Swap Contract) under such Swap Contract as
to which the Borrower or any Subsidiary is an Affected Party (as defined in such
Swap Contract) and, in either event, the Swap Termination Value owed by the
Borrower or such Subsidiary as a result thereof is greater than the Threshold
Amount; or
 
(f)           Insolvency Proceedings, Etc.  Any Loan Party or any of its
Subsidiaries institutes or consents to the institution of any proceeding under
any Debtor Relief Law, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding under any
Debtor Relief Law relating to any such Person or to all or any material part of
its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or
 
(g)           Inability to Pay Debts; Attachment.  (i) The Borrower or any
Subsidiary becomes unable or admits in writing its inability or fails generally
to pay its debts as they become due, or (ii) any writ or warrant of attachment
or execution or similar process is issued or levied against all or any material
portion of the property of the Borrower or any Subsidiary and is not released,
vacated or fully bonded within 30 days after its issue or levy; or
 
(h)           Judgments.  There is entered against the Borrower or any
Subsidiary (i) one or more final judgments or orders for the payment of money in
an aggregate amount (as to all such judgments or orders) exceeding the Threshold
Amount (to the extent not covered by independent third-party insurance as to
which the insurer does not dispute coverage), or (ii) any one or more
non-monetary final judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either case,
(A) enforcement proceedings are commenced by any creditor upon such
 

 
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judgment or order, or (B) there is a period of 10 consecutive days during which
a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or
 
(i)           ERISA.  (i) An ERISA Event occurs with respect to a Pension Plan
or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or
 
(j)           Invalidity of Loan Documents.  Any provision of any Loan Document,
at any time after its execution and delivery and for any reason (other than as
expressly permitted hereunder or thereunder or satisfaction in full of all the
Obligations) ceases to be in full force and effect; or any Loan Party or any
Subsidiary or Affiliate thereof contests in any manner the validity or
enforceability of any provision of any Loan Document; or any Loan Party denies
that it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any provision of any Loan Document; or
 
(k)           Change of Control.  There occurs any Change of Control; or
 
(l)           Reserved.
 
(m)           Subordination.  (i) The subordination provisions applicable to any
Subordinated Indebtedness in a principal amount in excess of the Threshold
Amount (the “Subordination Provisions”) shall, in whole or in part, terminate,
cease to be effective or cease to be legally valid, binding and enforceable
against any holder of Subordinated Indebtedness; or (ii) the Borrower or any
other Loan Party shall, directly or indirectly, disavow or contest in any manner
(A) the effectiveness, validity or enforceability of any of the Subordination
Provisions, (B) that the Subordination Provisions exist for the benefit of the
Lenders or (C) that all payments of principal of or premium and interest on the
Subordinated Indebtedness, or realized from the liquidation of any property of
any Loan Party, shall be subject to any of the Subordination Provisions; or
 
(n)           Governmental Authority; Material Contracts; Material
Licenses.  (i) The Borrower or any Subsidiary shall be debarred or suspended
from any contracting with the United States government, (ii) a final decision of
debarment or a final decision of suspension shall have been issued to the
Borrower or any Subsidiary, (iii) the actual termination for default of any
Material Contract or Material License shall have been issued to or received by
the Borrower or any Subsidiary and, in each case of the foregoing clauses (i),
(ii) and (iii), such debarment or suspension, final notice of disbarment or
suspension or termination for default shall not have been revoked, rescinded,
withdrawn, stayed or reversed within thirty (30) days of the entry or issuance
thereof.
 
Section 8.02.                      Remedies Upon Event of Default.  If any Event
of Default occurs and is continuing, the Required Lenders may take any or all of
the following actions:
 
(a)           declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; and
 
(b)           exercise all rights and remedies available to the Lenders under
the Loan Documents;
 

 
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provided that upon the occurrence of an actual or deemed entry of an order for
relief with respect to the Borrower under the Bankruptcy Code of the United
States, the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable
without further act of any Lender.
 
Section 8.03.                      Application of Funds.  After the exercise of
remedies provided for in Section 8.02 (or after the Loans have automatically
become immediately due and payable as set forth in the proviso to Section 8.02),
any amounts received on account of the Obligations shall be applied in the
following order:
 
First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Lead Investor and amounts payable under Article
III) payable to the Lead Investor in its capacity as such;
 
Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders (including fees, charges and disbursements of counsel to the respective
Lenders arising under the Loan Documents and amounts payable under Article III),
ratably among them in proportion to the respective amounts described in this
clause Second payable to them;
 
Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans and other Obligations arising under the Loan
Documents, ratably among the Lenders in proportion to the respective amounts
described in this clause Third payable to them;
 
Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, ratably among the Lenders, in proportion to the
respective amounts described in this clause Fourth held by them; and
 
Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Borrower or as otherwise required by Law.
 
ARTICLE IX
 
RESERVED.
 
ARTICLE X
 
MISCELLANEOUS
 
Section 10.01.                                Amendments, Etc.  No amendment or
waiver of any provision of this Agreement or any other Loan Document, and no
consent to any departure by the Borrower or any other Loan Party therefrom,
shall be effective unless in writing signed by the Required Lenders and the
Borrower or the applicable Loan Party, as the case may be, and each such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided that no such amendment, waiver or consent
shall:
 
(a)           waive any condition set forth in Article IV, without the written
consent of each Lender;
 
(b)           Reserved;
 
(c)           postpone any date fixed by this Agreement or any other Loan
Document for any payment (other than any mandatory prepayment) of principal,
interest, fees or other amounts due to the Lenders (or
 

 
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any of them) hereunder or under any other Loan Document without the written
consent of each Lender entitled to such payment;
 
(d)           reduce the principal of, or the rate of interest specified herein
on, any Loan, or any fees or other amounts payable hereunder or under any other
Loan Document without the written consent of each Lender directly affected
thereby; provided that only the consent of the Required Lenders shall be
necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of the Borrower to pay interest at the Default Rate or (ii) to amend
any financial covenant hereunder (or any defined term used therein) even if the
effect of such amendment would be to reduce the rate of interest on any Loan or
to reduce any fee payable hereunder;
 
(e)           change Section 8.03 in a manner that would alter the pro rata
sharing of payments required thereby without the written consent of each Lender;
 
(f)           change any provision of this Section or the definition of
“Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to amend, waive or otherwise modify any rights
hereunder or make any determination or grant any consent without the written
consent of each Lender; or
 
(g)           Reserved;
 
(h)           release all or substantially all of the value of the Guaranty,
without the written consent of each Lender, unless such Guarantor ceases to be a
Subsidiary as a result of a transaction permitted hereunder.
 
Section 10.02.                                Notices; Effectiveness; Electronic
Communication.
 
(a)           Notices Generally.  Except as provided in subsection (b) below,
all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopier as follows: to the address or telecopier
number specified for such Person on Schedule 10.02, or in the case of assignee
Lenders that become party hereto pursuant to Section 10.06, in the Assignment
and Assumption.   Notices and other communications sent by hand or overnight
courier service, or mailed by certified or registered mail, shall be deemed to
have been given when received; notices and other communications sent by
telecopier 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).  Notices and other communications delivered through electronic
communications to the extent provided in subsection (b) below, shall be
effective as provided in such subsection (b).
 
(b)           Electronic Communications.  Notices and other communications to
the Lenders hereunder may be delivered or furnished by e-mail pursuant to
procedures approved by the Required Lenders at the electronic mail address
specified for such Person on Schedule 10.02.
 
Notices and other communications (i) sent to an e-mail address shall be deemed
received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), provided that if such notice or
other communication is not sent during the normal business hours of the
recipient, such notice or communication shall be deemed to have been sent at the
opening of business on the next business day for the recipient and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in
 

 
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the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
 
(c)           Reserved.
 
(d)           Change of Address, Etc.  Each of the Borrower and the Lenders may
change its address, telecopier or telephone number for notices and other
communications hereunder by notice to the other parties hereto.
 
(e)           Reliance by Lenders.  The Lenders shall be entitled to rely and
act upon any notices purportedly given by or on behalf of the Borrower even if
(i) such notices were not made in a manner specified herein, were incomplete or
were not preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof.  The Borrower shall indemnify each Lender and the Related
Parties of each of them from all losses, costs, expenses and liabilities
resulting from the reliance by such Person on each notice purportedly given by
or on behalf of the Borrower.
 
Section 10.03.                                No Waiver; Cumulative Remedies;
Enforcement.  No failure by any Lender to exercise, and no delay by any such
Person in exercising, any right, remedy, power or privilege hereunder or under
any other Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder or under
any other Loan Document preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.  The rights, remedies,
powers and privileges herein provided, and provided under each other Loan
Document, are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by Law.
 
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the authority to enforce rights and remedies hereunder and under the
other Loan Documents against the Loan Parties or any of them shall be vested
exclusively in, and all actions and proceedings at Law in connection with such
enforcement shall be instituted and maintained exclusively by, the Required
Lenders in accordance with Section 8.02 for the benefit of all the Lenders;
provided that the foregoing shall not prohibit (a) any Lender from exercising
setoff rights in accordance with Section 10.08 (subject to the terms of Section
2.13), or (b) any Lender from filing proofs of claim or appearing and filing
pleadings on its own behalf during the pendency of a proceeding relative to any
Loan Party under any Debtor Relief Law; and provided, further, that in addition
to the matters set forth in clauses (a) and (b) of the preceding proviso and
subject to Section 2.13, any Lender may, with the consent of the Required
Lenders, enforce any rights and remedies available to it and as authorized by
the Required Lenders.
 
Section 10.04.                                Expenses; Indemnity; Damage
Waiver.
 
(a)           Costs and Expenses.  The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Lead Investor and its respective
Affiliates (including the reasonable fees, charges and disbursements of counsel
for the Lead Investor), in connection with the preparation, negotiation,
execution, delivery and administration of this Agreement and the other Loan
Documents or any amendments, modifications or waivers (including any amendments
pursuant to Section 2.7(b) of the Subordination Agreement) of the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by
the Lead Investor and any Lender (including the fees, charges and disbursements
of any counsel for the Lead Investor and any Lender), in connection with the
enforcement or protection of its rights (A) in connection with this Agreement
and the other Loan Documents, including its rights under this Section, or (B) in
connection with the Loans made hereunder, including all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans.
 

 
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(b)           Indemnification by the Borrower.  The Borrower shall indemnify the
Lead Investor and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses (including the fees, charges and disbursements of any counsel
for any Indemnitee (including the allocated costs of internal counsel of any
Indemnitee and any settlement costs)), incurred by any Indemnitee or asserted
against any Indemnitee by any third party or by the Borrower or any other Loan
Party arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations hereunder or thereunder, the consummation of the
transactions contemplated hereby or thereby, any other aspect of the
Transactions, (ii) any Loan or the use or proposed use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Borrower or any other Loan Party, and regardless of whether any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee or (y) result from a claim
brought by the Borrower or any other Loan Party against an Indemnitee for breach
in bad faith of such Indemnitee’s material obligations hereunder or under any
other Loan Document, if the Borrower or such other Loan Party has obtained a
final and nonappealable judgment in its favor on such claim as determined by a
court of competent jurisdiction.
 
(c)           Reserved.
 
(d)           Waiver of Consequential Damages, Etc.  To the fullest extent
permitted by applicable law, the Borrower shall not assert, and hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or the use of the proceeds
thereof.  No Indemnitee referred to in subsection (b) above shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed to such unintended recipients by such Indemnitee
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby other than for direct or actual
damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and non-appealable judgment of a court of
competent jurisdiction.
 
(e)           Payments.  All amounts due under this Section shall be payable not
later than ten Business Days after demand therefor.
 
(f)           Survival.  The agreements in this Section shall survive the
replacement of any Lender, the termination of the Aggregate Commitments and the
repayment, satisfaction or discharge of all the other Obligations.
 
Section 10.05.                                Payments Set Aside.  To the extent
that any payment by or on behalf of the Borrower is made to any Lender, or any
Lender exercises its right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by such Lender in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any proceeding under
 

 
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any Debtor Relief Law or otherwise, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such setoff had not occurred.
 
Section 10.06.                                Successors and Assigns.
 
(a)           Successors and Assigns Generally.  The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that
neither the Borrower nor any other Loan Party may assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an assignee in accordance with the
provisions of subsection (b) of this Section, (ii) by way of participation in
accordance with the provisions of subsection (d) of this Section, or (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of subsection (f) of this Section (and any other attempted assignment or
transfer by any party hereto shall be null and void).  Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in subsection (d) of this
Section and, to the extent expressly contemplated hereby, the Related Parties of
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
 
(b)           Assignments by Lenders.  Any Lender may at any time assign to one
or more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of the Loans at the time owing to it);
provided that any such assignment shall be subject to the following conditions:
 
(i)           Minimum Amounts.
 
(A)           in the case of an assignment of the entire remaining amount of the
assigning Lender’s Loans at the time owing to it under the Facility, or in the
case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund,
no minimum amount need be assigned; and
 
(B)           in any case not described in subsection (b)(i)(A) of this Section,
the aggregate amount of the principal outstanding balance of the Loans of the
assigning Lender subject to each such assignment, determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Borrower or, if “Trade Date” is specified in the Assignment and Assumption, as
of the Trade Date, shall not be less than $5,000,000 or a whole multiple of
$1,000,000 in excess thereof, unless, so long as no Event of Default has
occurred and is continuing, the Borrower otherwise consents (each such consent
not to be unreasonably withheld or delayed); provided that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been met.
 
(ii)           Proportionate Amounts.  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 with respect to the Loans assigned;
 
(iii)           Required Consents.  No consent shall be required for any
assignment except to the extent required by subsection (b)(i)(B) of this Section
and, in addition, the consent of the Borrower (such consent not to be
unreasonably withheld) shall be required unless (1) an Event of
 

 
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Default has occurred and is continuing at the time of such assignment or (2)
such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;
provided that the Borrower shall be deemed to have consented to any such
assignment unless it shall object thereto by written notice to the assigning
Lender within five (5) Business Days after having received notice thereof; and
 
(iv)           Assignment and Assumption.  The parties to each assignment shall
execute and deliver to the Borrower an Assignment and Assumption.
 
(v)           No Assignment to Certain Persons.  No such assignment shall be
made (A) to the Borrower or any of the Borrower’s Affiliates or Subsidiaries, or
(B) to a natural person.
 
Subject to the completion of the procedures set forth in Section 10.06(c), from
and after the effective date specified in each Assignment and Assumption, the
assignee thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections
3.01, 3.02, and 10.04 with respect to facts and circumstances occurring prior to
the effective date of such assignment.  Any assignment or transfer by a Lender
of rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.

In the event there are more than three (3) unaffiliated Lenders, the Lenders
shall, at the sole cost  and expense of the Borrower and pursuant to such
agreements and other documentation as the Required Lenders reasonably require,
appoint one of the Lenders to act as agent for the Lenders hereunder and shall
amend this Agreement and the other Loan Documents accordingly.

(c)           Note.  In connection with the execution of any Assignment and
Assumption, the original Note of the assigning Lender shall be surrendered to
the Borrower, and upon receipt thereof the Borrower shall issue a new Note to
the assignee evidencing such assignee’s assigned share of the Loans (and, if
applicable, shall have issued a replacement Note in the principal amount of the
Loans retained by the assigning Lender hereunder (such Note to be in exchange
for, but not in any payment of, the Note then held by such assigning
Lender).  Each Note so issued shall be dated the date of the predecessor
Note.  The assigning Lender shall mark each predecessor Note “exchanged” and
deliver each of them to the Borrower upon such assigning Lender’s receipt of the
new Note and replacement Note (if any).  Accrued interest on that part of each
predecessor Note evidenced by a new Note, and accrued fees, shall be paid as
provided in the Assignment and Assumption.  Accrued interest on that part of
each predecessor Note evidenced by a replacement Note shall be paid to the
assigning Lender.  Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Note and in this Agreement.  Any
attempted assignment and delegation not made in accordance with this Section
10.06 shall be null and void.  From and after the date that the Assignment and
Assumption has been delivered to the Borrower, the relevant Note has been
surrendered to the Borrower and the Borrower has issued a new Note to the
assignee (and a replacement Note to the assigning Lender, if applicable), the
Borrower shall update its records to reflect the new ownership of the assignee
and assigning Lender, as applicable of the Notes.
 
(d)           Participations.  Any Lender may at any time, without the consent
of, or notice to, the Borrower or any Lender, sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower’s Affiliates
or Subsidiaries) (each, a “Participant”) in all or a portion of such
 

 
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Lender’s rights and/or obligations under this Agreement (including all or a
portion of the Loans owing to it); provided that (i) such Lender’s obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations and (iii) the Borrower, the Required Lenders and the Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement.
 
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any  provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant.  Subject to subsection (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01 and 3.02 to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to subsection (b) of this
Section.  To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.13 as though it were a
Lender.
 
(e)           Limitations upon Participant Rights.  A Participant shall not be
entitled to receive any greater payment under Section 3.01 or 3.02 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.01 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 3.01(e) as though it were a
Lender.
 
(f)           Certain Pledges.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement
(including under its Note) to secure obligations of such Lender or any of its
Affiliates to any Person providing any loan, letter of credit or other extension
of credit to or for the account of such Lender or any of its Affiliates and any
agent, trustee or representative of such Person, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
 
Section 10.07.                                Treatment of Certain Information;
Confidentiality.  Each of the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed (a)
to its Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, trustees, advisors and representatives (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the consent of
the Borrower or (h) to the extent such Information (x) becomes publicly
available other than as a result of a breach of this Section or (y) becomes
available to any Lender or any Lender’s Affiliates on a nonconfidential basis
from a source other than the Borrower.  For purposes of this Section,
“Information” means all information received from the Borrower or any Subsidiary
relating to the Borrower or any Subsidiary or any of their respective
businesses, other than any
 

 
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such information that is available to any Lender on a nonconfidential basis
prior to disclosure by the Borrower or any Subsidiary, provided that, in the
case of information received from the Borrower or any Subsidiary after the
Closing Date, such information is clearly identified at the time of delivery as
confidential.  Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
 
Each of the Lenders acknowledges that (a) the Information may include material
non-public information concerning the Borrower or a Subsidiary, as the case may
be, (b) it has developed compliance procedures regarding the use of material
non-public information and (c) it will handle such material non-public
information in accordance with applicable Law, including United States Federal
and state securities Laws.
 
Section 10.08.                                Right of Setoff.  If an Event of
Default shall have occurred and be continuing, each Lender and its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by such
Lender or any such Affiliate to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or hereafter existing
under this Agreement or any other Loan Document to such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
any other Loan Document and although such obligations of the Borrower may be
contingent or unmatured or are owed to a branch or office of such Lender
different from the branch or office holding such deposit or obligated on such
indebtedness.  The rights of each Lender and its Affiliates under this Section
are in addition to other rights and remedies (including other rights of setoff)
that such Lender or its Affiliates may have.  Each Lender agrees to notify the
Borrower promptly after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such setoff and
application.
 
Section 10.09.                                Interest Rate
Limitation.  Notwithstanding anything to the contrary contained in any Loan
Document, the interest paid or agreed to be paid under the Loan Documents shall
not exceed the maximum rate of non-usurious interest permitted by applicable Law
(the “Maximum Rate”).  If any Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal
of the Loans or, if it exceeds such unpaid principal, refunded to the
Borrower.  In determining whether the interest contracted for, charged, or
received by a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.
 
Section 10.10.                                Counterparts; Integration;
Effectiveness.  This Agreement may be executed in counterparts (and by different
parties hereto in different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.  This Agreement and the other Loan Documents constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof.  Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the Lenders and when
the Lead Investor shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto.  Delivery of
an executed counterpart of a signature page of this Agreement by telecopy or
other electronic imaging means shall be effective as delivery of a manually
executed counterpart of this Agreement.
 

 
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Section 10.11.                                Survival of Representations and
Warranties.  All representations and warranties made hereunder and in any other
Loan Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery hereof
and thereof.  Such representations and warranties have been or will be relied
upon by each Lender, regardless of any investigation made by any Lender or on
their behalf and notwithstanding that any Lender may have had notice or
knowledge of any Default at the time of any Loan, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied.
 
Section 10.12.                                Severability.  If any provision of
this Agreement or the other Loan Documents is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the remaining
provisions of this Agreement and the other Loan Documents shall not be affected
or impaired thereby and (b) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the illegal, invalid or unenforceable provisions.  The invalidity of a
provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
 
Section 10.13.                                Replacement of Lenders.
 
 
(a)           If at any time (i) any Lender requests compensation under Section
3.02, (ii) the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section
3.01, or (iii) any Lender does not consent to a proposed amendment, waiver,
consent or release with respect to any Loan Document that has received the
consent of the Required Lenders, but requires the consent of all Lenders or all
affected Lenders, then the Borrower may, at its sole expense and effort, upon
notice to such Lender, replace such Lender by causing such Lender to (and such
Lender shall be obligated to) assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in, and consents
required by, Section 10.06) pursuant to and in accordance with Section 10.06 all
of its interests, rights and obligations under this Agreement (or, with respect
to clause (iii) above, all of its rights and obligations with respect to the
Loans or Commitments that are the subject of the related consent, waiver or
amendment) and the related Loan Documents to one or more Eligible Assignees;
provided, however, that:
 
(A)           no Lender shall have any obligation to the Borrower to find a
replacement Lender or other such Person;
 
(B)           such Lender shall have received payment of an amount equal to 100%
of the outstanding principal of its Loans, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder and under the other Loan
Documents (it being understood that any assignment required by the Borrower
under this Section shall not be deemed to be a prepayment by the Borrower to
such assigning Lender requiring the payment of a prepayment price under Section
2.05) from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts);
 
(C)           in the case of any such assignment resulting from a claim for
compensation under Section 3.02 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such compensation or
payments thereafter;
 
(D)           such assignment does not conflict with applicable Laws; and
 
(E)           with respect to clause (a)(iii) above, the applicable Eligible
Assignees shall have agreed to the applicable consent, waiver or amendment of
the Loan Documents.
 
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

 
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(b)           Any Lender being replaced pursuant to Section 10.13(a) above shall
(i) execute and deliver an Assignment and Assumption with respect to such
Lender’s outstanding Loans, pursuant to which (A) the assignee Lender shall
acquire all or a portion, as the case may be, of the assigning Lender’s
outstanding Loans, (B) the assignee Lender shall purchase, at par, all Loans,
accrued interest, accrued fees and other amounts owing to the assigning Lender
(it being understood that any assignment required by the Borrower under this
Section shall not be deemed to be a prepayment by the Borrower to such assigning
Lender requiring the payment of a prepayment price under Section 2.05)  as of
the date of replacement and (C) upon such payment (regardless of whether such
replaced Lender has executed an Assignment and Assumption or returned its Notes
to the Borrower), the assignee Lender shall become a Lender hereunder, and the
assigning Lender shall cease to constitute a Lender hereunder with respect to
such assigned Loans and participations, except with respect to indemnification
provisions under this Agreement, which shall survive as to such assigning Lender
and (ii) return any Notes evidencing such Loans to the Borrower (or a lost or
destroyed note indemnity in lieu thereof).

Section 10.14.                                Governing Law; Jurisdiction; Etc.
 
(a)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
 
(b)           SUBMISSION TO JURISDICTION.  THE BORROWER IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF
MANHATTAN, NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT.  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.
 
(c)           WAIVER OF VENUE.  THE BORROWER IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY
COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
 
(d)           SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
 

 
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Section 10.15.                                Waiver of Jury Trial.  EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
 
Section 10.16.                                No Advisory or Fiduciary
Responsibility.  In connection with all aspects of each transaction contemplated
hereby (including in connection with any amendment, waiver or other modification
hereof or of any other Loan Document), the Borrower acknowledges and agrees, and
acknowledges its Affiliates’ understanding, that: (i) (A) the services regarding
this Agreement provided by the Lead Investor are arm’s-length commercial
transactions between the Borrower and its Affiliates, on the one hand, and the
Lead Investor, on the other hand, (B) the Borrower has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed appropriate,
and (C) the Borrower is capable of evaluating, and understands and accepts, the
terms, risks and conditions of the transactions contemplated hereby and by the
other Loan Documents; (ii) (A) the Lead Investor and each of the Lenders is and
has been acting solely as a principal and, except as expressly agreed in writing
by the relevant parties, has not been, is not, and will not be acting as an
advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any
other Person and (B) neither the Lead Investor nor any Lender has any obligation
to the Borrower or any of its Affiliates with respect to the transactions
contemplated hereby except those obligations expressly set forth herein and in
the other Loan Documents; and (iii) the Lead Investor and each of the Lenders
may be engaged in a broad range of transactions that involve interests that
differ from those of the Borrower and its Affiliates, and neither the Lead
Investor nor any Lender has any obligation to disclose any of such interests to
the Borrower or its Affiliates.  To the fullest extent permitted by law, the
Borrower hereby waives and releases any claims that it may have against the Lead
Investor and each of the Lenders with respect to any breach or alleged breach of
agency or fiduciary duty in connection with any aspect of any transaction
contemplated hereby.
 
Section 10.17.                                Electronic Execution of
Assignments and Certain Other Documents.  The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption or in any
amendment or other modification hereof (including waivers and consents) shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.
 
Section 10.18.                                USA PATRIOT Act.  Each Lender that
is subject to the Act (as hereinafter defined) hereby notifies the Borrower that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the Act.  The
Borrower shall, promptly following a request by any Lender, provide all
documentation and
 

 
A/74396737.7
 
66

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

 

other information that such Lender requests in order to comply with its ongoing
obligations under applicable “know your customer” and anti-money laundering
rules and regulations, including the Act.
 
Section 10.19.                                Subordination Agreement.  Each
Lender and each other holder of any Note (including any Lender that becomes a
party hereto after the date hereof) by its execution of this Agreement or its
Assignment and Assumption, as the case may be, hereby acknowledges and agrees
that (i) it has received and reviewed a copy of the Subordination Agreement and
will execute a counterpart thereof or a joinder agreement thereto agreeing to be
bound by the terms of the Subordination Agreement and (ii) the Obligations are
subordinated to the Senior Indebtedness to the extent and in the manner
described in the Subordination Agreement.  In the event of a conflict between
this Agreement and the Subordination Agreement, the latter shall govern.
 
[Signature Pages Follow]
 

 
A/74396737.7
 
67

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

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
 
DYNAMICS RESEARCH CORPORATION
 
 
 
By:
/s/ David G. Keleher     Name:  David G. Keleher     Title:  Senior Vice
President and Chief Financial Officer          

 
 
 

Signature Page to Senior Subordinated Loan Agreement
A/74396737.7
 
 

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

 

ARES MEZZANINE PARTNERS, L.P.

By:  ARES MEZZANINE PARTNERS GP, L.P.,
 
its general partner
 
By:  ARES MEZZANINE MANAGEMENT LLC,
its general partner

 
 
By:
/s/ Mitchell Goldstein     Name:  Mitchell Goldstein     Title:  Authorized
Signatory          

 

 

Signature Page to Senior Subordinated Loan Agreement
A/74396737.7
 
 

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

 

Schedule 1.01-A
to the Senior Subordinated Loan Agreement

Historical Consolidated EBITDA
 
Dynamics Research Corporation
           
Trailing Twelve Months EBITDA
                                             
$k
   
Less
 
Plus
 
TTM
               
TTM
 
Year Ended
 
Quarter Ended
 
Quarter Ended
 
EBITDA
       
Quarter Ended
EBITDA
 
12/31/2010
 
3/31/2010
 
3/31/2011
 
3/31/2011
 
3X
4X
 
6/30/2010
9/30/2010
12/31/2010
3/31/2011
3/31/2011
                                 
DYNAMICS RESEARCH CORPORATION
                                                                 
Net Income
 $          12,705
 
 $               (2,869)
 
 $                2,708
 
 $                12,544
                 
Income from Discontinued Operations
                 (392)
 
                        132
 
                            -
 
                       (260)
                 
Income from Continuing Operations
             12,313
 
                  (2,737)
 
                   2,708
 
                   12,284
       
 $      2,579
 $      3,006
 $        3,991
 $      2,708
 $     12,284
Interest Expense, Net
                1,150
 
                      (423)
 
                       254
 
                         981
       
             381
             343
                    3
             254
               981
Provision for Income Taxes
                7,871
 
                  (1,415)
 
                   1,857
 
                      8,313
       
         1,755
         2,015
           2,686
         1,857
           8,313
Depreciation Expense
                3,564
 
                      (886)
 
                       865
 
                      3,543
       
             879
             895
               905
             864
           3,543
Amortization Expense
                1,541
 
                      (385)
 
                       374
 
                      1,530
       
             385
             385
               385
             374
           1,530
Stock Compensation Expense
                   718
 
                      (163)
 
                       187
 
                         742
       
             201
             189
               166
             187
               742
Transaction Costs
                         -
 
                             -
 
                       126
 
                         126
       
                  -
                  -
                    -
             126
               126
Less:
                               
Non-cash Items increasing Net Income
                   676
 
                      (169)
 
                       169
 
                         676
       
             169
             169
               169
             169
               676
Interest Income
                      66
 
                        (46)
 
                            2
 
                            22
       
               14
                 4
                    1
                 2
                 22
EBITDA
 $          26,415
 
 $               (5,794)
 
 $                6,200
 
 $                26,821
 
 $        80,463
 $        107,284
 
 $      5,997
 $      6,659
 $        7,965
 $      6,199
 $     26,821
                                 
HIGH PERFORMANCE TECHNOLOGIES, INC.
                                                               
Net Income
 $            7,676
 
 $                  (974)
 
 $                3,139
 
 $                  9,841
       
 $      1,398
 $      2,805
 $        2,499
 $      3,139
 $        9,841
Interest Expense
                      11
 
                             -
 
                            -
 
                            11
       
                 2
                 3
                    6
                  -
                 11
Provision for Income Taxes
                      33
 
                        (10)
 
                         20
 
                            43
       
               10
               10
                    3
               20
                 43
Depreciation Expense
                   668
 
                      (174)
 
                       159
 
                         653
       
             154
             164
               176
             159
               653
Stock Compensation Expense
                1,368
 
                        (75)
 
                         75
 
                      1,368
       
               75
               75
           1,143
               75
           1,368
Less:
                               
Interest Income
                        5
     
                            5
 
                            10
       
                  -
                 3
                    2
                 5
                 10
EBITDA
 $            9,751
 
 $               (1,233)
 
 $                3,388
 
 $                11,906
 
           35,718
              47,623
 
 $      1,639
 $      3,054
 $        3,825
 $      3,388
 $     11,906
                                 
Combined EBITDA
           
 $                38,727
 
 $      116,181
 $        154,908
 
 $      7,636
 $      9,713
 $      11,790
 $      9,587
 $     38,727

 
 
 
13527021.3
 
- 1 -

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

 

Schedule 2.01
to the Senior Subordinated Loan Agreement

Commitments and Applicable Percentages

Lender
Commitment
Applicable Percentage
Ares Mezzanine Partners, L.P.
$40,000,000
100.000000000%
     
Total
$40,000,000
100.000000000%

13527021.3
 
- 2 -

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

 

Schedule 5.05
to the Senior Subordinated Loan Agreement

Supplement to Interim Financial Statements
 
 
1.
Liabilities for investments held in the Loan Parties’ Rabbi Trust.  Investments
relate specifically to deferred compensation.  The assets have an equal and
corresponding deferred compensation liability on the balance sheet.  The assets
are held and will be released in accordance with the terms of the deferred
compensation plan.  At March 31, 2011 the assets total approximately $1,574,000,
all in the Borrower.

 
 
2.
VCB Credit Card MRICD Liability account.  The Borrower collects payments on
behalf of a customer and keeps the collected funds in a cash management account
for the benefit of the customer.  There is approximately $372,000 in this
account.

 
 
3.
Amounts due pursuant to settlement of FLSA class action.  The remaining
liability pursuant to the settlement agreement is approximately $600,000.

 
 
4.
The Borrower’s federal income tax returns remain open and subject to audit for
the years 2004 through the present, and from 2006 through the present in state
and local jurisdictions.  The Borrower is contesting with the Internal Revenue
Service (“IRS”) amounts assessed and requesting relief for interest and
penalties under IRC 7805B.

 
 
5.
The IRS has initiated an audit of the Borrower’s 2009 income tax return.

 
 
6.
The Commonwealth of Massachusetts has initiated a sales and use tax audit for
the years 2008 through 2011, which is scheduled to begin on June 12, 2011.

 
 
7.
HPTi has filed a correction with the IRS related to understated 401k
contributions from 2003-2008.  HPTi made a 3% contribution to all employees but
failed to make the 3% contribution in excess of the social security limit.

 
 
8.
On March 5, 2010 the Borrower filed suit in the court of common pleas, Franklin
County, Ohio against Ohio for the balance of the amount owed, $1,181,109.51 plus
interest, and attorneys fees and costs, for services provided to the State of
Ohio for the SACWIS work completed in February 2009.  The State of Ohio filed a
counterclaim alleging that DRC was paid for work that it did not perform.  The
approximate amount of this claim is $440,000.

 
 
9.
Discrimination action filed with the EEOC by a former Kadix Systems, LLC
employee (approximate filing date April 1, 2011).  The EEOC/DC Human Rights
matter has been formally withdrawn by the former employee (subject to a tolling
agreement) while the parties explore whether the matter can be resolved without
further litigation. 

 
 
10.
Action by a former Kadix Systems, LLC employee disputing commission owed to the
former employee after the former employee’s resignation.  An agreement to
resolve the dispute has been reached, conditioned upon the former employee
signing a general release.

 
 
11.
In September 2010, HPTi received a letter from the attorney of a former HPTi
employee, claiming that (a) the former employee was terminated in violation of
NJ Conscientious Employees Protection Act and (b) HPTi instructed the former
employee to bill non

 

13527021.3
 
- 3 -

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

 

 
chargeable (office administration) hours to certain projects.  HPTi has found no
basis for these claims.  A settlement of $25,000 to $100,000 is trying to be
reached.

 

13527021.3
 
- 4 -

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

 

Schedule 5.08
to the Senior Subordinated Loan Agreement
 
Leases of Real Property
 
None of the Loan Parties has entered into a lease with an aggregate annual rent
of equal to or greater than $2,000,000.

13527021.3
 
- 5 -

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

 

Schedule 5.13
to the Senior Subordinated Loan Agreement
 
Subsidiaries; Guarantors; Other Equity Investments
 
Name of Subsidiary
Jurisdiction of Incorporation or Organization
Guarantor
U.S. Taxpayer Identification Number
Percentage of Ownership
Address of Principal Place of Business
DRC International Corporation
Massachusetts
Yes
04-6404321
100% owned by Borrower
2 Tech Drive,
Andover, MA  01810
H.J. Ford Associates, Inc.
Delaware
Yes
95-3667510
100% owned by Borrower
2 Tech Drive,
Andover, MA  01810
 
Kadix Systems, LLC
Virginia
Yes
54-2060505
100% owned by Borrower
2 Tech Drive,
Andover, MA  01810
 
DRC-Prize Acquisition, Inc.1
Florida
No
45-2392876
100% owned by Borrower
2 Tech Drive,
Andover, MA  01810
High Performance Technologies, Inc.2
Florida
Yes
59-3096114
100% owned by Borrower
11955 Freedom Drive
Suite 1100
Reston, VA 20190

 
Other Equity Investments – H.J. Ford Associates, Inc. owns 40% of HMR Tech, LLC,
a Virginia limited liability company.
 

 

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

 
1 HPTi Merger Sub to be merged out of existence in connection with the HPTi
Acquisition substantially concurrently with closing.
 
2 To be acquired in HPTi Acquisition substantially concurrently with closing.

-  -
13527021.3
 
- 6 -

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

 

Schedule 5.20
to the Senior Subordinated Loan Agreement
 
Material Contracts; Material Licenses
 
1.
Agreement between Borrower and U.S. Army Medical Research and Acquisition to
provide technology services and medical program support to Walter Reed Army
Medical Center (DRC Contract No. 14180).

 
2.
Agreement among Borrower, S&K Aerospace, U.S. Army Contracting Agency, and ASC
to provide program management, engineering, test and evaluation, foreign
military sales, quality assurance and logistics services to the U.S. Air Force
(Medium Altitude Unmanned Aerial SPO) for their Predator/Reaper Program (DRC
Contract Nos. 13946, 13963, 13972, 14187, WA13108 and WA13335).

 
3.
Agreement between High Performance Technologies, Inc. and the U.S. Army High
Performance Computer Resource Center to provide S&T services including
computational scientists and engineers, algorithm developers, HPC architects,
R&D managers to the Department of Defense.

 
4.
Agreement between High Performance Technologies, Inc. and the Veterans
Administration to provide services to assist with a program overseeing a number
of IT development projects with a goal to create a one stop system that will
allow veterans to access information on education, benefits, healthcare,
hospitalization and outreach programs within a single consistent enterprise.

 
 

13527021.3
 
- 7 -

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

 

Schedule 7.01
 
to the Senior Subordinated Loan Agreement

 
 
Existing Liens

 
Debtor
Secured Party
Type of Filing
Date of Filing
Jurisdiction of Filing
Description of Collateral
Dynamics Research Corporation
IOS Capital
Precautionary
UCC-1
4/23/2007
MA
Equipment leased in an equipment leasing transaction between IOS Capital, LLC
and Dynamics Research Corporation pursuant to Master Agreement/Lease No. 43404
IKCPP650 03UP10000337
Dynamics Research Corporation
IOS Capital
UCC-1
5/29/2007
MA
43404 CASENDKIT D1 SLQ05103A
Dynamics Research Corporation
Ikon Financial Svcs
Precautionary
UCC-1
9/10/2007
MA
Equipment leased in an equipment leasing transaction between IOS Capital, LLC
and Dynamics Research Corporation pursuant to Master Agreement/Lease

 
- 8 -

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

 

         
No. 43404 CASENDKIT D1 SLQ05115ACC
Kadix Systems, LLC
Dell Financial Services, L.P., later amended to change party name to:
Dell Financial Services L.L.C.
UCC-1
9/15/2004, continuation filed 9/4/2009; amendment filed 9/15/2009
VA
All computer equipment and peripherals leased pursuant to a Master Lease
Agreement #5309192, dated September 9, 2004.

 

13527021.3
 
- 9 -

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

 

Schedule 7.02
to the Senior Subordinated Loan Agreement
 
Existing Investments
 
1.           Subordinated Term Note, dated July 20, 2010, from Metrigraphics,
LLC to Dynamics Research Corporation, in the original principal amount of
$750,000.
 
2.           Investments held in Loan Parties’ Rabbi Trust.  The assets have an
equal and corresponding deferred compensation liability on the balance
sheet.  The assets are held and will be released in accordance with the terms of
the deferred compensation plan.  At March 31, 2011 the assets total
approximately $1,574,000, all in the Borrower.
 
3.           H.J. Ford Associates, Inc. owns 40% of HMR Tech, LLC, a Virginia
limited liability company.

13527021.3
 
- 10 -

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

 

Schedule 7.03
to the Senior Subordinated Loan Agreement
 
Existing Indebtedness
 
1.           VCB Credit Card MRICD Liability account in the approximate amount
of $372,000 as of March 31, 2011.

 

13527021.3
 
- 11 -

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

 

Schedule 10.02
to the Senior Subordinated Loan Agreement
 
Lending Office and Lender’s Accounts; Certain Addresses for Notices
 
1.  Address for the Borrower:
 
Borrower:
 
Dynamics Research Corporation
 
Two Tech Drive
 
Andover, Massachusetts 01810
 
Attention:
Mr. David Keleher
 
Chief Financial Officer
Telephone:
(978) 289-1500
Facsimile:
(978) 289-1887
E-mail:
DKeleher@drc.com
Website:
www.drc.com
   
With copies to:
 
Dynamics Research Corporation
 
Two Tech Drive
 
Andover, Massachusetts 01810
 
Attention:
Mr. Richard A. Covel
 
Vice President and General Counsel
Telephone:
(978) 289-1500
Facsimile:
(978) 289-1887
E-mail:
RCovel@drc.com
Website:
www.drc.com

 
2.  Addresses for the Lenders:
 
Lead Investor:
 
Ares Mezzanine Partners, L.P.
 
2000 Avenue of the Stars, 12th Floor
 
Los Angeles, CA 90067
 
Attention:
Mark Affolter and Mitchell Goldstein
Telephone:
(310) 201-4100
Facsimile:
(310) 921-7213
E-mail:
maffolter@aresmgmt.com and goldstein@aresmgmt.com
   
With copies to:
 
Bingham McCutchen LLP
 
399 Park Avenue
 
New York, NY  10022
 
Attention: Frederick F. Eisenbiegler, Esq.
 
Telephone:
 (212) 705-7745
Facsimile:
 (212) 702-3646
E-mail:
frederick.eisenbiegler@bingham.com

 

13527021.3
 
- 12 -

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

 

Remittance Instructions:
The Bank of New York Mellon
601 Travis 16th Floor
Houston, TX 77002
ABA#:  021000018
GL (General Ledger) Acct.#:  211551
BNF A/C Name: Ares Mezzanine Partners, L.P.
FFC: TAS 813723
Ref:  Dynamics Research Corp./Senior Subordinated Loan

13527021.3
 
- 13 -

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

 

 
EXHIBIT C-1

THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (AS AMENDED, AMENDED AND RESTATED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS THEREOF, THE
“SUBORDINATION AGREEMENT”) DATED AS OF JUNE 30, 2011 AMONG ARES MEZZANINE
PARTNERS, L.P., THE OTHER SUBORDINATED CREDITORS PARTY THERETO FROM TIME TO
TIME, DYNAMICS RESEARCH CORPORATION, A MASSACHUSETTS CORPORATION (“BORROWER”),
CERTAIN SUBSIDIARIES OF THE BORROWER PARTY THERETO AND BANK OF AMERICA, N.A., AS
ADMINISTRATIVE AGENT (“ADMINISTRATIVE AGENT”), TO THE INDEBTEDNESS (INCLUDING
INTEREST) OWED BY THE BORROWER PURSUANT TO THAT CERTAIN CREDIT AGREEMENT DATED
AS OF JUNE 30, 2011 BY AND AMONG THE BORROWER, THE ADMINISTRATIVE AGENT AND THE
LENDERS FROM TIME TO TIME PARTY THERETO (THE “CREDIT AGREEMENT”), AS SUCH CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS THEREUNDER (SUBJECT TO THE TERMS OF THE
SUBORDINATION AGREEMENT) HAVE BEEN AND HEREAFTER MAY BE AMENDED, SUPPLEMENTED,
AMENDED AND RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME AND (SUBJECT TO THE
TERMS OF THE SUBORDINATION AGREEMENT) TO INDEBTEDNESS REFINANCING THE
INDEBTEDNESS UNDER THE CREDIT AGREEMENT AS PERMITTED BY THE SUBORDINATION
AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF,
IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

FORM OF
NOTE

$[40,000,000.] June [___], 2011

FOR VALUE RECEIVED, the undersigned hereby promises to pay to
_____________________ or registered assigns (the “Lender”), in accordance with
the provisions of the Loan Agreement (as hereinafter defined), the principal
amount of [FORTY MILLION DOLLARS ($40,000,000)] plus the addition of any PIK
Amount (as defined in the Loan Agreement (defined below)) not evidenced by a PIK
Note (as defined in the Loan Agreement), made by the Lender to the Borrower
under that certain Senior Subordinated Loan Agreement, dated as of June 30, 2011
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Loan Agreement;” the terms defined therein being used
herein as therein defined), among Dynamics Research Corporation, a Massachusetts
corporation (the “Borrower”) and the lenders from time to time party thereto.

The undersigned promises to pay interest on the unpaid principal amount of this
Note from the date of such Loan until such principal amount is paid in full, at
such interest rates and at such times as provided in Section 2.08 of the Loan
Agreement.  All payments of principal and interest shall be made to the Lender
in Dollars in immediately available funds at the Lender’s account identified in
Section 10.02 of the Loan Agreement.  If any amount is not paid in full when due
hereunder, such unpaid amount shall bear interest, to be paid upon demand, from
the due date thereof until the date of actual payment (and before as well as
after judgment) computed at the per annum rate set forth in the Loan Agreement.

This Note is one of the Notes referred to in the Loan Agreement, is entitled to
the benefits thereof and may be prepaid in whole or in part subject to the terms
and conditions provided therein. This Note is also entitled to the benefits of
the Guaranty. Upon the occurrence and continuation of one or more of the

A/74411269.3
 
 

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

 

Events of Default specified in the Loan Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Loan Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business.  The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

The undersigned, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

A/74411269.3
 
 

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THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

DYNAMICS RESEARCH CORPORATION

By:_________________________________
Name:
Title:

A/74411269.3
 
 

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EXHIBIT C-2

THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (AS AMENDED, AMENDED AND RESTATED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS THEREOF, THE
“SUBORDINATION AGREEMENT”) DATED AS OF JUNE 30, 2011 AMONG ARES MEZZANINE
PARTNERS, L.P., THE OTHER SUBORDINATED CREDITORS PARTY THERETO FROM TIME TO
TIME, DYNAMICS RESEARCH CORPORATION, A MASSACHUSETTS CORPORATION (“BORROWER”),
CERTAIN SUBSIDIARIES OF THE BORROWER PARTY THERETO AND BANK OF AMERICA, N.A., AS
ADMINISTRATIVE AGENT (“ADMINISTRATIVE AGENT”), TO THE INDEBTEDNESS (INCLUDING
INTEREST) OWED BY THE BORROWER PURSUANT TO THAT CERTAIN CREDIT AGREEMENT DATED
AS OF JUNE 30, 2011 BY AND AMONG THE BORROWER, THE ADMINISTRATIVE AGENT AND THE
LENDERS FROM TIME TO TIME PARTY THERETO (THE “CREDIT AGREEMENT”), AS SUCH CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS THEREUNDER (SUBJECT TO THE TERMS OF THE
SUBORDINATION AGREEMENT) HAVE BEEN AND HEREAFTER MAY BE AMENDED, SUPPLEMENTED,
AMENDED AND RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME AND (SUBJECT TO THE
TERMS OF THE SUBORDINATION AGREEMENT) TO INDEBTEDNESS REFINANCING THE
INDEBTEDNESS UNDER THE CREDIT AGREEMENT AS PERMITTED BY THE SUBORDINATION
AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF,
IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

FORM OF
PIK NOTE

$[____________] [__________, 20__]

FOR VALUE RECEIVED, the undersigned hereby promises to pay to
[_____________________] or registered assigns (the “Lender”), in accordance with
the provisions of the Loan Agreement (as hereinafter defined), the principal
amount of [_______________ $__________] (the “Quarterly PIK Amount”) owed to the
Lender by the Borrower under Section 2.08(c) of that certain Senior Subordinated
Loan Agreement, dated as of June 30, 2011 (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the “Loan
Agreement;” the terms defined therein being used herein as therein defined),
among Dynamics Research Corporation, a Massachusetts corporation (the
“Borrower”) and the lenders from time to time party thereto.

The undersigned promises to pay interest on the unpaid principal amount of the
Quarterly PIK Amount from the date hereof until such principal amount is paid in
full, at such interest rates and at such times as provided in Section 2.08 of
the Loan Agreement.  All payments of principal and interest shall be made to the
Lender in Dollars in immediately available funds at the Lender’s account
identified in Section 10.02 of the Loan Agreement.  If any amount is not paid in
full when due hereunder, such unpaid amount shall bear interest, to be paid upon
demand, from the due date thereof until the date of actual payment (and before
as well as after judgment) computed at the per annum rate set forth in the Loan
Agreement.

This PIK Note is one of the PIK Notes referred to in the Loan Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This PIK Note is also entitled to
the benefits of the Guaranty. Upon the occurrence and continuation of one or
more of the Events of Default specified in the Loan Agreement, all amounts then
remaining unpaid on

A/74411270.4
 
 

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this PIK Note shall become, or may be declared to be, immediately due and
payable all as provided in the Loan Agreement.  Loans made by the Lender shall
be evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business.  The Lender may also attach schedules to this
PIK Note and endorse thereon the date, amount and maturity of its Loans and
payments with respect thereto.

The undersigned, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this PIK Note.

THIS PIK NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.

DYNAMICS RESEARCH CORPORATION

By:_________________________________
Name:
Title:

A/74411270.4
 
 

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Exhibit D

FORM OF
COMPLIANCE CERTIFICATE

Financial Statement Date: __________, 20___

To:           Each Lender (defined below) under the Loan Agreement (defined
below)

Re:
Senior Subordinated Loan Agreement, dated as of June 30, 2011 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to
time, the “Loan Agreement;” the terms defined therein being used herein as
therein defined), among Dynamics Research Corporation, a Massachusetts
corporation (the “Borrower”) and the Lenders from time to time party thereto
(collectively, the “Lenders” and, individually, a “Lender”).

Ladies and Gentlemen:

The undersigned Responsible Officer of the Borrower hereby certifies as of the
date hereof that he/she is the [chief executive officer][chief financial
officer] of the Borrower, and that, as such, he/she is authorized to execute and
deliver this Compliance Certificate to each Lender on the behalf of the
Borrower, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1.
The Borrower has delivered the year-end audited financial statements required by
Section 6.01(a) of the Loan Agreement for the fiscal year of the Borrower ended
as of the above date and a comparison against the figures for the previous
fiscal year and against the most recent annual forecasts delivered pursuant to
Section 6.01(d) of the Loan Agreement, together with (i) the report and opinion
of an independent certified public accountant required by such section and (ii)
a management discussion and analysis submitted by the Borrower to the SEC with
respect to such period.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1.
The Borrower has delivered the unaudited financial statements required by
Section 6.01(b) of the Loan Agreement for the fiscal quarter of the Borrower
ended as of the above date.  Such financial statements fairly present the
financial condition, results of operations and cash flows of the Borrower and
its Subsidiaries in accordance with GAAP as at such date and for such period,
subject only to normal year-end audit adjustments and the absence of footnotes
and a comparison (both in Dollar and percentage terms) to projections for such
fiscal quarter, and period commencing at the end of the previous fiscal year of
Borrower and ending with the end of such fiscal quarter, in each case as set
forth in the most recent forecasts delivered pursuant to Section 6.01(d) of the
Loan Agreement.

2.
The undersigned has reviewed and is familiar with the terms of the Loan
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the transactions and condition (financial or otherwise) of
the Borrower during the accounting period covered by such financial statements.

A/74411271.5
 
 

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3.
A review of the activities of the Borrower during such fiscal period has been
made under the supervision of the undersigned with a view to determining whether
during such fiscal period the Borrower performed and observed all its
Obligations under the Loan Documents, and

 
[select one:]

[to the knowledge of the undersigned, during such fiscal period the Borrower
performed and observed each covenant and condition of the Loan Documents
applicable to it, and no Default has occurred and is continuing.]

 
[or:]

 
 
[to the knowledge of the undersigned, during such fiscal period the following
covenants or conditions have not been performed or observed and attached hereto
is a list of each such Default and its nature and status.]

 
4.
The representations and warranties of (a) the Borrower contained in Article V of
the Loan Agreement and (b) each Loan Party contained in each other Loan Document
or in any document furnished at any time under or in connection with the Loan
Documents, are true and correct in all material respects (except if qualified by
materiality or reference to Material Adverse Effect, such representation and
warranty shall be true and correct in all respects) on and as of the date hereof
with the same effect as if made on and as of such date (except (i) to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they shall be true and correct as of such earlier date, and (ii)
that for purposes of this Compliance Certificate, the representations and
warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed
to refer to the most recent statements furnished pursuant to clauses (a) and
(b), respectively, of Section 6.01 of the Loan Agreement, including the
statements in connection with which this Compliance Certificate is delivered.

5.
Set forth on Schedule 1 attached hereto are true and accurate calculations
demonstrating compliance with Section 7.11 of the Loan Agreement on and as of
the date of this Compliance Certificate.

6.
Set forth on Schedule 2 attached hereto is a true and accurate summary of the
Borrower’s and each Subsidiary’s backlog of revenue-generating Government
Contracts on and as of the date of this Compliance Certificate.

IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate as
of , 20__.

 

 
DYNAMICS RESEARCH CORPORATION

By:_________________________________
Name:
Title:

 

 

A/74411271.5
 
 

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Schedule 1
to Compliance Certificate1

For the fiscal [quarter][year] ended: ______________, 20___ (the “Statement
Date”)

I.  Consolidated EBITDA (for the period of the four (4) consecutive fiscal
quarters most recently ended on or immediately prior to the Statement Date):
 
A.
Consolidated Net Income
$____________
 
B.
Consolidated Interest Expense
$____________
 
C.
the provision for Federal, state, local and foreign income taxes payable by the
Borrower and its Subsidiaries
$____________
 
D.
depreciation and amortization expense
$____________
 
E.
non-cash expenses incurred pursuant to equity compensation plans approved by the
Borrower’s board of directors
$____________
 
F.
other non-recurring expenses of the Borrower and its Subsidiaries reducing such
Consolidated Net Income which do not represent a cash item in such period or any
future period
$____________
 
G.
Transaction Costs incurred by the Borrower and its Subsidiaries
$____________
 
H.
Federal, state, local and foreign income tax credits of the Borrower and its
Subsidiaries
$____________
 
I.
all non-cash items increasing Consolidated Net Income
$____________
 
J.
all interest income
$____________
 
K.
Consolidated EBITDA = Lines A + B + C + D + E + F + G – H – I – J
$____________

II.  Consolidated Total Leverage Ratio [Section 7.11(a) of the Loan Agreement]
A.
Consolidated Funded Indebtedness as of the Statement Date:
    1.
the outstanding principal amount of all obligations, whether current or
long-term, for borrowed money (including Obligations hereunder) and all
obligations evidenced by bonds, debentures, notes, loan agreements or other
similar instruments
$____________
  2.
all purchase money Indebtedness
$____________
  3.
all direct obligations arising under letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, surety bonds and similar
instruments
$____________
  4.
all obligations in respect of the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business)
$____________

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 1 This schedule is intended as a template only.  Please refer to all relevant
definitions and Sections in the Loan Agreement and Schedule 1.01-A to the Loan
Agreement when completing this schedule.
 
 
 
 

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II.  Consolidated Total Leverage Ratio [Section 7.11(a) of the Loan Agreement]
A.
Consolidated Funded Indebtedness as of the Statement Date:
    5.
all Attributable Indebtedness
$____________
  6.
without duplication, all Guarantees with respect to outstanding Indebtedness of
the types specified in Lines II.A.1 through 5 above of Persons other than the
Borrower or any Subsidiary
$____________
  7.
all Indebtedness of the types referred to in Lines II.A.1 through 6 above of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which the Borrower or a Subsidiary
is a general partner or joint venturer, unless such Indebtedness is expressly
made non-recourse to the Borrower or such Subsidiary
$____________
  8.
Consolidated Funded Indebtedness = Lines II.A.1 + 2 + 3 + 4 + 5 + 6 + 7
$____________
B.
Consolidated EBITDA for the period of the four (4) consecutive fiscal quarters
most recently ended on or immediately prior to the Statement Date
[Line I.K above]
$____________
C.
Consolidated Total Leverage Ratio = Line II.A.8 / Line II.B
_____ to 1.00
 
Maximum Consolidated Total Leverage Ratio permitted pursuant to Section 7.11(a)
of the Loan Agreement as of the Statement Date:
_____ to 1.00

 
III.  Consolidated Senior Leverage Ratio [Section 7.11(b) of the Loan Agreement]
A.
Consolidated Funded Indebtedness as of the Statement Date
[Line II.A.8 above]
$____________
B.
All Obligations under the Loan Agreement
$____________
C.
All Subordinated Indebtedness of the Borrower and its Subsidiaries as of the
Statement Date
$____________
D.
Consolidated EBITDA for the period of the four (4) consecutive fiscal quarters
most recently ended on or immediately prior to the Statement Date
[Line I.K above]
$____________
E.
Consolidated Senior Leverage Ratio = [Line III.A – Line III.B – Line III.C] /
Line III.D
_____ to 1.00
 
Maximum Consolidated Senior Leverage Ratio permitted pursuant to Section 7.11(b)
of the Loan Agreement as of the Statement Date:
_____ to 1.00

 
IV.  Consolidated Fixed Charge Coverage Ratio [Section 7.11(c) of the Loan
Agreement]
A.
Consolidated EBITDA for the period of the four (4) consecutive fiscal quarters
most recently ended on or immediately prior to the Statement Date
[Line I.K. above]:
$____________
B.
Capital Expenditures for such period
$____________
C.
federal, state, local and foreign taxes paid or payable in cash
$____________
D.
Consolidated Fixed Charges for such period:
 

 
 

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IV.  Consolidated Fixed Charge Coverage Ratio [Section 7.11(c) of the Loan
Agreement]
 
1.
Consolidated Interest Expense paid or payable in cash
$____________
 
2.
scheduled principal payments with respect to Indebtedness, regardless of whether
or not such Scheduled Principal Payments are actually made by the Borrower or
any Subsidiary during such period
$____________
 
3.
Restricted Payments
   
4.
Consolidated Fixed Charges = Lines IV.D.1 + 2 + 3
$____________
E.
Consolidated Fixed Charge Coverage Ratio =
[Lines IV.A. – B – C] / Line IV.D.4
_____ to 1.00
 
Minimum Consolidated Fixed Charge Coverage Ratio required pursuant to Section
7.11(c) of the Loan Agreement as of the Statement Date:
[___] to 1.00

 
V.  CAPITAL EXPENDITURES [Section 7.11(d) of the Loan Agreement]
A.
Aggregate amount of all Capital Expenditures (other than leasehold improvement
expenditures not made in cash) made by the Borrower and its Subsidiaries for the
portion of the current fiscal year ended on the Statement Date:
$____________
 
Maximum amount of all Capital Expenditures (other than leasehold improvement
expenditures not made in cash) allowed to be made by the Borrower and its
Subsidiaries in any fiscal year pursuant to Section 7.11(d) of the Loan
Agreement as of the Statement Date (including amounts permitted to be carried
over from the previous year in accordance with such Section):
$[____________]

 
 
A/74411271.5
 
 

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Schedule 2
to Compliance Certificate

Summary of the Borrower’s and each Subsidiary’s backlog of
revenue-generating Government Contracts as of the Statement Date

[See attached.]

A/74411271.5
 
 

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Exhibit E

FORM OF
ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between
[the][each]1 Assignor identified in item 1 below ([the][each, an] “Assignor”)
and [the][each]2  Assignee identified in item 2 below ([the][each, an]
“Assignee”).  [It is understood and agreed that the rights and obligations of
[the Assignors][the Assignees]3 hereunder are several and not
joint.]4  Capitalized terms used but not defined herein shall have the meanings
given to them in the Loan Agreement identified below, receipt of a copy of which
is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set
forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Loan Agreement, as of the Effective Date inserted by the Assignor as
contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights
and obligations in [its capacity as a Lender][their respective capacities as
Lenders] under the Loan Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
[the Assignor][the respective Assignors] under the Loan Agreement and (ii) to
the extent permitted to be assigned under applicable law, all claims, suits,
causes of action and any other right of [the Assignor (in its capacity as a
Lender)][the respective Assignors (in their respective capacities as Lenders)]
against any Person, whether known or unknown, arising under or in connection
with the Loan Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or
related to any of the foregoing, including, but not limited to, contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned by [the][any]
Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being
referred to herein collectively as [the][an] “Assigned Interest”).  Each such
sale and assignment is without recourse to [the][any] Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or
warranty by [the][any] Assignor.

1.
Assignor[s]:                                            ______________________________
2.
Assignee[s]:                                            ______________________________
[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]

3. Borrower:                                            Dynamics Research
Corporation, a Massachusetts corporation

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1 For bracketed language here and elsewhere in this form relating to the
Assignor(s), if the assignment is from a single Assignor, choose the first
bracketed language.  If the assignment is from multiple Assignors, choose the
second bracketed language.
 
2 For bracketed language here and elsewhere in this form relating to the
Assignee(s), if the assignment is to a single Assignee, choose the first
bracketed language.  If the assignment is to multiple Assignees, choose the
second bracketed language.
 
3 Select as appropriate.
 
4 Include bracketed language if there are either multiple Assignors or multiple
Assignees.

A/74411272.3
 
 

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4. Loan Agreement:
Senior Subordinated Loan Agreement, dated as of June 30, 2011 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to
time, the “Loan Agreement”), among the Borrower and the Lenders from time to
time party thereto

5. Assigned Interest[s] of Loan:
 
Assignor[s]5
Assignee[s]6
Aggregate Amount of Loans for all Lenders7
Amount of
Loans
Assigned
Percentage Assigned of
Loans8
   
$_______________
$___________
___________%
   
$_______________
$___________
___________%
   
$_______________
$___________
___________%

 
[6.           Trade Date:                      __________________]9
 
Effective Date: __________________, 20__ [TO BE INSERTED BY ASSIGNOR AND WHICH
SHALL BE THE EFFECTIVE DATE OF TRANSFER.]

7.           Notice information of Assignee:
Notice
address:                                     _____________________________
_____________________________
_____________________________
Telephone: ____________________
Telecopier: ____________________

Remittance Instructions:                    [Bank Name___________________]
[Bank Address_________________]
ABA#:  _______________________
Acct.#:  _______________________
Ref:  _________________________

[Signature Page Follows]

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5 List each Assignor, as appropriate.
 
6 List each Assignee, as appropriate.
 
7 Amounts in this column and in the column immediately to the right to be
adjusted by the counterparties to take into account any payments or prepayments
made between the Trade Date and the Effective Date.
 
8 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.
 
9 To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.
 

A/74411272.3
 
 

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The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By: _____________________________
Name:
Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By: _____________________________
Name:
Title:

[Consented to:]10

DYNAMICS RESEARCH CORPORATION

By: _________________________________
Name:
Title:

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10 To be added only if the consent of the Borrower is required by the terms of
the Loan Agreement.

A/74411272.3
 
 

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ANNEX 1 TO ASSIGNMENT AND ASSUMPTION
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1.           Representations and Warranties.

1.1.           Assignor.  [The][Each] Assignor (a) represents and warrants that
(i) it is the legal and beneficial owner of [the][[the relevant] Assigned
Interest, (ii) [the][such] Assigned Interest is free and clear of any lien,
encumbrance or other adverse claim and (iii) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby; and (b)
assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Loan Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.

1.2.           Assignee.  [The][Each] Assignee (a) represents and warrants that
(i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Loan
Agreement, (ii) it meets all the requirements to be an Eligible Assignee
(subject to such consents, if any, as may be required under Section
10.06(b)(iii) of the Loan Agreement), (iii) from and after the Effective Date,
it shall be bound by the provisions of the Loan Agreement as a Lender thereunder
and, to the extent of [the][the relevant] Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it is sophisticated with respect to
decisions to acquire assets of the type represented by [the][such] Assigned
Interest and either it, or the Person exercising discretion in making its
decision to acquire [the][such] Assigned Interest, is experienced in acquiring
assets of such type, (v) it has received a copy of the Loan Agreement, and has
received or has been accorded the opportunity to receive copies of the most
recent financial statements delivered pursuant to Section 6.01 thereof, as
applicable, and such other documents and information as it deems appropriate to
make its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase [the][such] Assigned Interest, (vi) it has,
independently and without reliance upon any Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase
[the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached
hereto is any documentation required to be delivered by it pursuant to the terms
of the Loan Agreement, duly completed and executed by [the][such] Assignee; and
(b) agrees that (i) it will, independently and without reliance upon [the][any]
Assignor 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 the Loan Documents, and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

2.           Payments.  From and after the Effective Date, the Borrower shall
make all payments in respect of [the][each] Assigned Interest (including
payments of principal, interest, fees and other amounts) to [the][the relevant]
Assignor for amounts which have accrued to but excluding the Effective Date and
to [the][the relevant] Assignee for amounts which have accrued from and after
the Effective Date.

3.           General Provisions.  This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.  This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument.  Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption.  This
Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of New York.

A/74411272.3
 
 

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