Exhibit 10.52

 

 

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CREDIT AGREEMENT

 

by and among

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

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

 

THE LENDERS THAT ARE PARTIES HERETO,

 

as the Lenders,

 

and

 

ALION SCIENCE AND TECHNOLOGY CORPORATION,

 

as Borrower

 

Dated as of August 18, 2014

 

 

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

1.

DEFINITIONS AND CONSTRUCTION

1

 

 

 

 

1.01.

Definitions

1

 

1.02.

Construction

1

 

1.03.

Accounting Terms

2

 

1.04.

Code

2

 

1.05.

Time References

2

 

1.06.

Schedules and Exhibits

2

 

 

 

2.

LOANS AND TERMS OF PAYMENT

2

 

 

 

 

2.01.

Revolving Loans

2

 

2.02.

[Intentionally Omitted]

3

 

2.03.

Borrowing Procedures and Settlements

3

 

2.04.

Payments; Reductions of Revolver Credit Limits; Prepayments

8

 

2.05.

Promise to Pay

11

 

2.06.

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

11

 

2.07.

Crediting Payments

13

 

2.08.

Designated Account

13

 

2.09.

Maintenance of Loan Account; Statements of Bank Obligations

13

 

2.10.

Fees

13

 

2.11.

Letters of Credit

14

 

2.12.

[Intentionally Omitted]

19

 

2.13.

Capital Requirements

19

 

 

 

3.

CONDITIONS; TERM OF AGREEMENT

20

 

 

 

 

3.01.

Conditions Precedent to the Initial Extension of Credit

20

 

3.02.

Conditions Precedent to all Extensions of Credit

20

 

3.03.

Maturity

20

 

3.04.

Effect of Maturity

20

 

3.05.

Early Termination by Borrower

21

 

3.06.

Conditions Subsequent

21

 

 

 

4.

REPRESENTATIONS AND WARRANTIES

21

 

 

 

 

4.01.

Due Organization and Qualification; Subsidiaries

21

 

4.02.

Due Authorization; No Conflict

22

 

4.03.

Governmental Consents

22

 

4.04.

Binding Obligations; Perfected Liens

23

 

4.05.

Title to Assets; No Encumbrances

23

 

4.06.

Litigation

23

 

4.07.

Compliance with Laws

23

 

4.08.

No Material Adverse Effect

24

 

4.09.

Solvency

24

 

4.10.

Employee Benefits

24

 

4.11.

Environmental Condition

25

 

4.12.

Complete Disclosure

25

 

4.13.

Patriot Act and Foreign Corrupt Practices Act

25

 

4.14.

Indebtedness

26

 

4.15.

Payment of Taxes

26

 

4.16.

Margin Stock

26

 

4.17.

Governmental Regulation

26

 

4.18.

OFAC

26

 

4.19.

Employee and Labor Matters

26

 

ii

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

 

4.20.

Borrower’s Liabilities, Assets and Operations

27

 

4.21.

Leases

27

 

4.22.

Eligible Accounts; Eligible Government Accounts; Eligible Unbilled Accounts

27

 

4.23.

[Intentionally Omitted]

28

 

4.24.

Inventory

28

 

4.25.

No Restricted Payments

29

 

4.26.

Senior Indebtedness

29

 

4.27.

Other Documents

29

 

4.28.

Hedge Agreements

29

 

4.29.

ESOP

29

 

 

 

5.

AFFIRMATIVE COVENANTS

31

 

 

 

 

5.01.

Financial Statements, Reports, Certificates

31

 

5.02.

Reporting

31

 

5.03.

Existence

31

 

5.04.

Maintenance of Properties

31

 

5.05.

Taxes

31

 

5.06.

Insurance

31

 

5.07.

Books and Records; Inspection

32

 

5.08.

Compliance with Laws

32

 

5.09.

Environmental

32

 

5.10.

Disclosure Updates

33

 

5.11.

Formation of Subsidiaries

33

 

5.12.

Further Assurances

33

 

5.13.

Lender Meetings

34

 

5.14.

Maintenance of Ratings

34

 

5.15.

Bank Products

34

 

5.16.

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

34

 

5.17.

Compliance with ERISA and the IRC; Reports; Notices

36

 

5.18.

Notice of Certain Events With Respect To Government Contracts

37

 

5.19.

Control Agreements

38

 

5.20.

Verification

38

 

5.21.

ESOP Compliance

38

 

5.22.

Intellectual Property

38

 

5.23.

Material Government Contracts

38

 

5.24.

Additional Material Real Property

38

 

5.25.

Notice of Default or Event of Default

39

 

 

 

6.

NEGATIVE COVENANTS

39

 

 

 

 

6.01.

Indebtedness

39

 

6.02.

Liens

39

 

6.03.

Restrictions on Fundamental Changes

39

 

6.04.

Disposal of Assets

39

 

6.05.

Nature of Business

39

 

6.06.

Prepayments and Amendments

40

 

6.07.

Restricted Payments

41

 

6.08.

Accounting Methods

41

 

6.09.

Investments

41

 

6.10.

Transactions with Affiliates

41

 

6.11.

Use of Proceeds

41

 

iii

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

 

6.12.

Limitation on Issuance of Equity Interests

42

 

6.13.

Assignment of Claims

42

 

6.14.

No Further Negative Pledges

42

 

6.15.

[Intentionally Omitted]

42

 

6.16.

Restrictions on Subsidiary Distributions

42

 

6.17.

Amendments or Waivers of with respect to Certain Indebtedness

43

 

6.18.

Employee Benefits

43

 

 

 

7.

FINANCIAL COVENANTS

43

 

 

 

8.

EVENTS OF DEFAULT

44

 

 

 

 

 

8.01.

Payments

44

 

8.02.

Covenants

44

 

8.03.

Judgments

45

 

8.04.

Voluntary Bankruptcy, etc.

45

 

8.05.

Involuntary Bankruptcy, etc.

45

 

8.06.

Default Under Other Agreements

45

 

8.07.

Representations, etc.

45

 

8.08.

Guaranty

46

 

8.09.

Security Documents

46

 

8.10.

Loan Documents

46

 

8.11.

Change of Control

46

 

8.12.

ERISA

46

 

8.13.

Intercreditor Agreement

46

 

8.14.

Government Contracts

46

 

 

 

9.

RIGHTS AND REMEDIES

47

 

 

 

 

9.01.

Rights and Remedies

47

 

9.02.

Remedies Cumulative

47

 

 

 

10.

WAIVERS; INDEMNIFICATION

47

 

 

 

 

10.01.

Demand; Protest; etc.

47

 

10.02.

The Lender Group’s Liability for Collateral

48

 

10.03.

Indemnification

48

 

 

 

11.

NOTICES

48

 

 

 

12.

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

49

 

 

 

 

13.

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

52

 

 

 

 

13.01.

Assignments and Participations

52

 

13.02.

Successors

55

 

 

 

14.

AMENDMENTS; WAIVERS

55

 

 

 

 

14.01.

Amendments and Waivers

55

 

14.02.

Replacement of Certain Lenders

57

 

14.03.

No Waivers; Cumulative Remedies

57

 

 

 

15.

AGENT; THE LENDER GROUP

57

 

 

 

 

15.01.

Appointment and Authorization of Agent

57

 

15.02.

Delegation of Duties

58

 

15.03.

Liability of Agent

58

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

 

15.04.

Reliance by Agent

58

 

15.05.

Notice of Default or Event of Default

59

 

15.06.

Credit Decision

59

 

15.07.

Costs and Expenses; Indemnification

59

 

15.08.

Agent in Individual Capacity

60

 

15.09.

Successor Agent

60

 

15.10.

Lender in Individual Capacity

61

 

15.11.

Collateral Matters

61

 

15.12.

Restrictions on Actions by Lenders; Sharing of Payments

62

 

15.13.

Agency for Perfection

63

 

15.14.

Payments by Agent to the Lenders

63

 

15.15.

Concerning the Collateral and Related Loan Documents

63

 

15.16.

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

63

 

15.17.

Several Obligations; No Liability

64

 

15.18.

Sole Lead Arranger and Sole Book Runner

64

 

 

 

16.

WITHHOLDING TAXES

64

 

 

 

 

16.01.

Payments

64

 

16.02.

Exemptions

65

 

16.03.

Reductions

66

 

16.04.

Refunds

66

 

 

 

17.

GENERAL PROVISIONS

67

 

 

 

 

17.01.

Effectiveness

67

 

17.02.

Section Headings

67

 

17.03.

Interpretation

67

 

17.04.

Severability of Provisions

67

 

17.05.

Bank Product Providers

67

 

17.06.

Debtor-Creditor Relationship

67

 

17.07.

Counterparts; Electronic Execution

68

 

17.08.

Revival and Reinstatement of Obligations; Certain Waivers

68

 

17.09.

Confidentiality

68

 

17.10.

Survival

70

 

17.11.

Patriot Act

70

 

17.12.

Intercreditor Agreement

70

 

17.13.

Integration

70

 

v

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SCHEDULES AND EXHIBITS

 

Schedule 1.1

Definitions

Schedule 3.1

Conditions Precedent

Schedule 3.6

Conditions Subsequent

Schedule 4.1(b)

Capitalization of Borrower

Schedule 4.1(c)

Capitalization of Borrower’s Subsidiaries

Schedule 4.1(d)

Subscriptions, Options, Warrants, Calls

Schedule 4.2(b)(i)

Approvals

Schedule 4.6

Litigation

Schedule 4.11

Environmental Matters

Schedule 4.14

Permitted Indebtedness

Schedule 4.22

Government Contracts

Schedule 4.29

Certain ESOP Plan Documents Exceptions

Schedule 5.1

Financial Statements, Reports, Certificates

Schedule 5.2

Collateral Reporting

Schedule 5.16

Blocked Account Bank

Schedule 6.5

Nature of Business

Schedule A-1

Agent’s Account

Schedule A-2

Authorized Persons

Schedule C-1

Revolver Credit Limits

Schedule D-1

Designated Account

Schedule E-2

Existing Letters of Credit

Schedule P-1

Permitted Investments

Schedule P-2

Permitted Liens

Schedule R-1

Real Property

 

 

Exhibit A-1

Form of Assignment and Acceptance

Exhibit B-1

Form of Borrowing Base Certificate

Exhibit C-1

Form of Compliance Certificate

Exhibit P-1

Form of Perfection Certificate

 

vi

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CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”) is entered into as of August 18, 2014
by and among the lenders identified on the signature pages hereof (each of such
lenders, together with its successors and permitted assigns, is referred to
hereinafter as a “Lender”, as that term is hereinafter further defined), WELLS
FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as
administrative agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, “Agent”), as sole lead arranger (in
such capacity, together with its successors and assigns in such capacity, the
“Sole Lead Arranger”), and as sole book runner (in such capacity, together with
its successors and assigns in such capacity, the “Sole Book Runner”), and ALION
SCIENCE AND TECHNOLOGY CORPORATION, a Delaware corporation (“Borrower”).

 

The parties agree as follows:

 

1.                                      DEFINITIONS AND CONSTRUCTION.

 

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

 

1.02.                     Construction.  Unless the context of this Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms
“includes” and “including” are not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or.” 
The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this
Agreement or any other Loan Document refer to this Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular provision of
this Agreement or such other Loan Document, as the case may be.  Section,
subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified.  Any reference in this Agreement or in any
other Loan Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein).  The words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties.  Any reference herein or in
any other Loan Document to the satisfaction, repayment, or payment in full of
the Bank Obligations shall mean (a) the payment or repayment in full in
immediately available funds of (i) the principal amount of, and interest accrued
and unpaid with respect to, all outstanding Loans, together with the payment of
any premium applicable to the repayment of the Loans, (ii) all Lender Group
Expenses that have accrued and are unpaid regardless of whether demand has been
made therefor, (iii) all fees or charges that have accrued hereunder or under
any other Loan Document (including the Letter of Credit Fee and the Unused Line
Fee) and are unpaid, (b) in the case of contingent reimbursement obligations
with respect to Letters of Credit, providing Letter of Credit Collateralization,
(c) in the case of obligations with respect to Bank Products (other than Hedge
Obligations), providing Bank Product Collateralization, (d) the receipt by Agent
of cash collateral in order to secure any other contingent Bank Obligations for
which a claim or demand for payment has been made on or prior to such time or in
respect of matters or circumstances known to Agent or a Lender at such time that
are reasonably expected to result in any loss, cost, damage, or expense
(including attorneys fees and legal expenses), such cash collateral to be in
such amount as Agent reasonably determines is appropriate to secure such
contingent Bank Obligations, (e) the payment or repayment in full in immediately
available funds of all other outstanding Bank Obligations (including the payment
of any termination amount then applicable (or which would or could become
applicable as a result of the repayment of the other Bank Obligations) under
Hedge Agreements provided by Hedge Providers) other than (i) unasserted
contingent indemnification Bank Obligations, (ii) any Bank Product Obligations
(other than Hedge Obligations) that, at such time, are allowed by the applicable
Bank Product Provider to remain outstanding without being required to be repaid
or cash collateralized, and (iii) any Hedge Obligations that, at such time, are
allowed by the applicable Hedge Provider to remain outstanding without being
required to be repaid, and (f) the termination of the Credit Facility.  Any
reference herein to any Person shall be construed to include such Person’s
successors and assigns.  Any requirement of a writing contained herein or in any
other Loan Document shall be satisfied by the transmission of a Record.

 

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

 

1.04.                     Code.  Any terms used in this Agreement that are
defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein; provided, that to the extent that the Code is
used to define any term herein and such term is defined differently in different
Articles of the Code, the definition of such term contained in Article 9 of the
Code shall govern.

 

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

 

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

 

2.                                      LOANS AND TERMS OF PAYMENT.

 

2.01.                     Revolving Loans.

 

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

 

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

 

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

 

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

 

2

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

 

(b)                                 Amounts borrowed pursuant to this
Section 2.01 may be repaid and, subject to the terms and conditions of this
Agreement, reborrowed at any time during the term of this Agreement.  The
outstanding principal amount of the Revolving Loans, together with interest
accrued and unpaid thereon, shall constitute Bank Obligations and shall be due
and payable on the Maturity Date or, if earlier, on the date on which they are
declared due and payable pursuant to the terms of this Agreement.  In the event
that all of the Term A Loan Exposure (as such term is defined in the First Lien
Credit Agreement) is repaid in full prior to the Maturity Date and no Default or
Event of Default has occurred and is continuing, Agent and Lenders will upon
written request of the Borrower received not less than sixty (60) days prior to
the Maturity Date, extend the Maturity Date for one (1) year.

 

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

 

2.02.                     [Intentionally Omitted].

 

2.03.                     Borrowing Procedures and Settlements.

 

(a)                                 Procedure for Borrowing Revolving Loans. 
Subject to the terms and conditions of Section 2.01, each Borrowing shall be
made by a written request by an Authorized Person delivered to Agent and
received by Agent no later than 10:00 a.m. on the same Business Day that is the
requested Funding Date, specifying (A) the amount of such Borrowing, and (B) the
requested Funding Date (which shall be a Business Day); provided, that Agent
may, in its sole discretion, elect to accept as timely requests that are
received later than 10:00 a.m. on the applicable Business Day.  At Agent’s
election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the
required time.  In such circumstances, Borrower agrees that any such telephonic
notice will be confirmed in writing within 24 hours of the giving of such
telephonic notice, but the failure to provide such written confirmation shall
not affect the validity of the request.  For each Borrowing, Agent may rely on
information set forth in or provided with the Borrowing Base Certificate most
recently delivered to Agent pursuant to Schedule 5.2.

 

(b)                                 [Intentionally Omitted].

 

(c)                                  Making of Revolving Loans.

 

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

 

3

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

 

(d)                                 Protective Advances and Optional
Overadvances.

 

(i)                                     Any contrary provision of this Agreement
or any other Loan Document notwithstanding, but subject to Section 2.03(d)(iv),
at any time (A) after the occurrence and during the continuance of a Default or
an Event of Default, or (B) that any of the other applicable conditions
precedent set forth in Section 3 are not satisfied, Agent hereby is authorized
by Borrower and the Lenders, from time to time, in Agent’s sole discretion, to
make Revolving Loans to, or for the benefit of, Borrower, on behalf of the
Revolving Lenders, that Agent, in its sole and absolute discretion, deems
necessary or desirable (1) to preserve or protect the Collateral, or any portion
thereof, or (2) to enhance the likelihood of repayment of the Bank Obligations
(other than the Bank Product Obligations) (the Revolving Loans described in this
Section 2.03(d)(i) shall be referred to as “Protective Advances”). 
Notwithstanding the foregoing, the aggregate amount of all Protective Advances
outstanding at any one time shall not exceed the amount which is equal to the
Maximum Revolver Credit Limit, plus up to an additional $6,500,000, less the
aggregate outstanding Revolver Usage.

 

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

 

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benefit of the Lenders and Agent and are not meant for the benefit of Borrower,
which shall continue to be bound by the provisions of Section 2.04(e).  Each
Revolving Lender shall be obligated to settle with Agent as provided in
Section 2.03(e) (or Section 2.03(g), as applicable) for the amount of such
Lender’s Pro Rata Share of any unintentional Overadvances by Agent reported to
such Lender, any intentional Overadvances made as permitted under this
Section 2.03(d)(ii), and any Overadvances resulting from the charging to the
Loan Account of interest, fees, or Lender Group Expenses.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)                                  Defaulting Lenders.

 

(i)                                     Notwithstanding the provisions of
Section 2.04(b)(ii), Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrower to Agent for the Defaulting Lender’s
benefit or any proceeds of Collateral that would otherwise be remitted hereunder
to the Defaulting Lender, and, in the absence of such transfer to the Defaulting
Lender, Agent shall transfer any such payments (A) first, to Issuing Lender, to
the extent of the portion of a Letter of Credit Disbursement that was required
to be, but was not, paid by the Defaulting Lender, (B) second, to each
Non-Defaulting Lender ratably in accordance with their Revolver Credit Limits
(but, in each case, only to the extent that such Defaulting Lender’s portion of
a Revolving Loan was funded by such other Non-Defaulting Lender), (C) to a
suspense account maintained by Agent, the proceeds of which shall be retained by
Agent and may be made available to be re-advanced to or for the benefit of
Borrower (upon the request of Borrower and subject to the conditions set forth
in Section 3.02) as if such Defaulting Lender had made its portion of Revolving
Loans (or other funding obligations) hereunder, and (D) from and after the date
on which all other Bank Obligations have been paid in full, to such Defaulting
Lender in accordance with tier (J) of Section 2.04(b)(ii).  Subject to the
foregoing, Agent may hold and, in its discretion, re-lend to Borrower for the
account of such Defaulting Lender the amount of all such payments received and
retained by Agent for the account of such Defaulting Lender.  Solely for the
purposes of voting or consenting to matters with respect to the Loan Documents
(including the calculation of Pro Rata Share in connection therewith) and for
the purpose of calculating the fee payable under Section 2.10(b), such
Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s
Revolver Credit Limit shall be deemed to be zero; provided, that the foregoing
shall not apply to any of the matters governed by Section 14.01(a)(i) through
(iii).  The provisions of this Section 2.03(g) shall remain effective with
respect to such Defaulting Lender until the earlier of (y) the date on which all
of the Non-Defaulting Lenders, Agent, Issuing Lender, and Borrower shall have
waived, in writing, the application of this Section 2.03(g) to such Defaulting
Lender, or (z) the date on which such Defaulting Lender makes payment of all
amounts that it was obligated to fund hereunder, pays to Agent all amounts owing
by Defaulting Lender in respect of the amounts that it was obligated to fund
hereunder, and, if requested by Agent, provides adequate assurance of its
ability to perform its future obligations hereunder (on which earlier date, so
long as no Event of Default has occurred and is continuing, any remaining cash
collateral held by Agent pursuant to Section 2.03(g)(ii) shall be released to
Borrower).  The operation of this Section 2.03(g) shall not be construed to
increase or otherwise affect the Revolver Credit Limit of any Lender, to relieve
or excuse the performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder, or to relieve or excuse the performance by
Borrower of its duties and

 

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obligations hereunder to Agent, Issuing Lender, or to the Lenders other than
such Defaulting Lender.  Any failure by a Defaulting Lender to fund amounts that
it was obligated to fund hereunder shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Borrower, at its option,
upon written notice to Agent, to arrange for a substitute Lender to assume the
Revolver Credit Limit of such Defaulting Lender, such substitute Lender to be
reasonably acceptable to Agent.  In connection with the arrangement of such a
substitute Lender, the Defaulting Lender shall have no right to refuse to be
replaced hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance in favor of the substitute Lender (and agrees that it
shall be deemed to have executed and delivered such document if it fails to do
so) subject only to being paid its share of the outstanding Bank Obligations
(other than Bank Product Obligations, but including (1) all interest, fees, and
other amounts that may be due and payable in respect thereof, and (2) an
assumption of its Pro Rata Share of its participation in the Letters of Credit);
provided, that any such assumption of the Revolver Credit Limit of such
Defaulting Lender shall not be deemed to constitute a waiver of any of the
Lender Groups’ or Borrower’s rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund.  In the event of a
direct conflict between the priority provisions of this Section 2.03(g) and any
other provision contained in this Agreement or any other Loan Document, it is
the intention of the parties hereto that such provisions be read together and
construed, to the fullest extent possible, to be in concert with each other.  In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.03(g) shall control and
govern.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)                                 Payments by Borrower.

 

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

 

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

 

(b)                                 Apportionment and Application.

 

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

 

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the Revolving Loans outstanding and, thereafter, to Borrower (to be wired to the
Designated Account) or such other Person entitled thereto under applicable law.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(H)                              eighth, ratably

 

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

 

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

 

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

 

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

 

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

 

(K)                              eleventh, to Collateral Agent for further
distribution in accordance with the Intercreditor Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)                                 Payment of Interest Fees and Expenses. 
Except to the extent provided to the contrary in Section 2.06(b), Section 2.10
and Section 5.16, (i) all interest, all Letter of Credit Fees, and all other
fees payable hereunder or under any of the other Loan Documents shall be due and
payable, in arrears, on the last day of each month and (ii) all costs and
expenses payable hereunder or under any of the other Loan Documents, and all
Lender Group Expenses shall be due and payable on the earlier of (x) THE FIRST
DAY OF THE MONTH FOLLOWING THE DATE ON WHICH THE APPLICABLE COSTS, EXPENSES, OR
LENDER GROUP

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.10.                     Fees.

 

(a)                                 Origination Fee.  Borrower shall pay to
Agent, a fully earned, non-refundable facility fee of $100,000, on the Closing
Date.

 

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

 

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

 

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Agent for more than (i) 2 field examinations of Borrower’s assets, books and
records or other Collateral during any calendar year and (ii) 2 field
examinations of Borrower’s unbilled Accounts during any calendar year (such
field examinations shall be in addition to the field examinations as provided
for in clause (i) of this Section).

 

2.11.                     Letters of Credit.

 

(a)                                 Subject to the terms and conditions of this
Agreement and provided that all of the conditions set forth in Sections 3.01 and
3.02 are satisfied to the Termination Date, upon the request of Borrower made in
accordance herewith, Agent will cause Issuing Lender (severally, not jointly or
jointly and severally) to issue, or to cause an Underlying Issuer (including, as
Issuing Lender’s agent) to issue, a requested Letter of Credit for the account
of Borrower.

 

(b)                                 Borrower and the Lender Group hereby
acknowledge and agree that all Existing Letters of Credit issued under the
Existing Credit Agreement shall constitute Letters of Credit under this
Agreement on and after the Closing Date with the same effect as if such Existing
Letters of Credit were issued by Issuing Lender at the request of Borrower on
the Closing Date.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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occurrence or continuation of an Event of Default or Default or the failure to
satisfy any condition set forth in Section 3.  If any such Revolving Lender
fails to make available to Agent the amount of such Revolving Lender’s Pro Rata
Share of a Letter of Credit Disbursement as provided in this Section, such
Revolving Lender shall be deemed to be a Defaulting Lender and Agent (for the
account of Issuing Lender) shall be entitled to recover such amount on demand
from such Revolving Lender together with interest thereon at the Defaulting
Lender Rate until paid in full.

 

(h)                                 Borrower agrees to indemnify, defend and
hold harmless each member of the Lender Group (including Issuing Lender and its
branches, Affiliates, and correspondents) and each such Person’s respective
directors, officers, employees, attorneys and agents (each, including Issuing
Lender, a “Letter of Credit Related Person”) (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, fines, costs, penalties, and damages,
and all reasonable fees and disbursements of attorneys, experts, or consultants
and all other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), which may be incurred by
or awarded against any Letter of Credit Related Person (other than Taxes, which
shall be governed by Section 16) (the “Letter of Credit Indemnified Costs”), and
which arise out of or in connection with, or as a result of this Agreement, any
Letter of Credit, any Issuer Document, or any Drawing Document referred to in or
related to any Letter of Credit, or any action or proceeding arising out of any
of the foregoing (whether administrative, judicial or in connection with
arbitration); in each case, including that resulting from the Letter of Credit
Related Person’s own negligence; provided, however, that such indemnity shall
not be available to any Letter of Credit Related Person claiming indemnification
to the extent that such Letter of Credit Indemnified Costs may be finally
determined in a final, non-appealable judgment of a court of competent
jurisdiction to have resulted directly from the gross negligence, or willful
misconduct of the Letter of Credit Related Person claiming indemnity.  This
indemnification provision shall survive termination of this Agreement and all
Letters of Credit.

 

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

 

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

 

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Lender at least 15 calendar days before Issuing Lender is required to notify the
beneficiary of such Letter of Credit or any advising bank of such nonrenewal
pursuant to the terms of such Letter of Credit.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.12.                     [Intentionally Omitted].

 

2.13.                     Capital Requirements.

 

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

 

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

 

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Replacement Lender, such Replacement Lender shall be deemed to be a “Lender” for
purposes of this Agreement and such Affected Lender shall cease to be a “Lender”
for purposes of this Agreement.

 

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

 

3.                                      CONDITIONS; TERM OF AGREEMENT.

 

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

 

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

 

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

 

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

 

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

 

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

 

3.04.                     Effect of Maturity.  On the Termination Date, all of
the Bank Obligations immediately shall become due and payable without notice or
demand and Borrower shall be required to repay all of the Bank

 

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Obligations in full (including, without limitation, cash collateral in an amount
equal to 103% of the then existing Letter of Credit Usage (if applicable) plus
all interest, fees, and costs due or to become due in connection therewith (in
such amounts as estimated by Agent), to secure all of the Obligations relating
to the applicable Letters of Credit).  No termination of any obligations of the
Lender Group (other than payment in full of the Bank Obligations and termination
of the Credit Facility) shall relieve or discharge any Loan Party of its duties,
obligations, or covenants hereunder or under any other Loan Document and
Collateral Agent’s Liens in the Collateral shall continue to secure the Bank
Obligations and shall remain in effect until all Bank Obligations have been paid
in full and the Credit Facility has been terminated and the other conditions to
release of the Collateral Agent’s Liens in the Collateral as set forth in the
Intercreditor Agreement have been satisfied.

 

3.05.                     Early Termination by Borrower.  Borrower has the
option, at any time upon 30 days prior written notice to Agent, to terminate
this Agreement and terminate the Credit Facility hereunder by repaying to Agent
all of the Bank Obligations in full.  The foregoing notwithstanding,
(a) Borrower may rescind termination notices relative to proposed payments in
full of the Bank Obligations with the proceeds of third party Indebtedness if
the closing for such issuance or incurrence does not happen on or before the
date of the proposed termination (in which case, a new notice shall be required
to be sent in connection with any subsequent termination), and (b) Borrower may
extend the date of termination at any time with the consent of Agent (which
consent shall not be unreasonably withheld or delayed).  If Borrower has sent a
notice of termination pursuant to this Section 3.05, or if the Bank Obligations
are purchased pursuant to Section 2.20 of the Intercreditor Agreement, then on
the date set forth as the date of termination of this Agreement in such notice
or on the date of purchase, as applicable, Borrower, shall pay to Agent, in
cash, for the benefit of the Lenders in accordance with their Pro Rata Shares,
the Applicable Prepayment Premium.  Notwithstanding anything to the contrary in
this Agreement, Agent and Lender Group agree that if, after the Closing Date,
Borrower obtains financing from Wells Fargo or one or more of its Affiliates and
such financing is utilized to pay and satisfy in full all Bank Obligations, the
Applicable Prepayment Premium shall be waived.

 

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

 

4.                                      REPRESENTATIONS AND WARRANTIES.

 

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

 

4.01.                     Due Organization and Qualification; Subsidiaries.

 

(a)                                 Each Loan Party (i) is duly organized and
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) is qualified to do business in any state where the failure to
be so qualified

 

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could reasonably be expected to result in a Material Adverse Effect, and
(iii) has all requisite power and authority to own and operate its properties,
to carry on its business as now conducted and as proposed to be conducted, to
enter into the Loan Documents to which it is a party and to carry out the
transactions contemplated thereby.

 

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

 

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

 

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

 

4.02.                     Due Authorization; No Conflict.

 

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

 

(b)                                 As to each Loan Party, the execution,
delivery, and performance by such Loan Party of the Loan Documents to which it
is a party do not and will not (i) result in a violation of any provision of
federal, state, or local law or regulation applicable to any Loan Party or its
Subsidiaries, the Governing Documents of any Loan Party or its Subsidiaries, or
any order, judgment, or decree of any court or other Governmental Authority
binding on any Loan Party or its Subsidiaries reasonably expected to have a
Material Adverse Effect, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material agreement of any Loan Party or its Subsidiaries where any such
conflict, breach or default could individually or in the aggregate reasonably be
expected to have a Material Adverse Effect, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any assets of
any Loan Party, other than Permitted Liens, or (iv) except as set forth on
Schedule 4.2(b)(iv), require any approval of any holder of Equity Interests of a
Loan Party or any approval or consent of any Person under any material agreement
of any Loan Party, other than consents or approvals that have been obtained and
that are still in force and effect and except, in the case of material
agreements, for consents or approvals, the failure to obtain could not
individually or in the aggregate reasonably be expected to cause a Material
Adverse Effect.

 

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

 

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4.04.                     Binding Obligations; Perfected Liens.

 

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

 

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

 

4.05.                     Title to Assets; No Encumbrances.

 

(a)                                 Title.  Each of the Loan Parties and its
Subsidiaries has (b) good, sufficient and legal title to (in the case of fee
interests in Real Property), (c) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (d) good and marketable
title to (in the case of all other personal property), all of their respective
assets reflected in their most recent financial statements delivered pursuant to
Section 5.01, in each case except for assets disposed of since the date of such
financial statements to the extent permitted hereby and except for those assets,
the failure of which to have such interests or title therein, could not
reasonably be expected to have a Material Adverse Effect.  All of such assets
are free and clear of Liens except for Permitted Liens.

 

(b)                                 Real Property.  As of the Closing Date,
Schedule R-1 contains a true, accurate and complete list of (i) all Real
Property, and (ii) all leases, subleases or assignments of leases in which a
Loan Party is the assignee (together with all amendments, modifications,
supplements, renewals or extensions of any thereof) of each Real Property of any
Loan Party, regardless of whether such Loan Party is the landlord or tenant
(whether directly or as an assignee or successor in interest) under such lease,
sublease or assignment.  Each agreement listed in clause (ii) of the immediately
preceding sentence is in full force and effect and Borrower does not have
knowledge of any default that has occurred and is continuing thereunder, and
each such agreement constitutes the legally valid and binding obligation of each
applicable Loan Party, enforceable against such Loan Party in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles.

 

4.06.                     Litigation.

 

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

 

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

 

4.07.                     Compliance with Laws.  No Loan Party nor any of its
Subsidiaries (a) is in violation of any applicable laws, rules, regulations,
executive orders, or codes (including Environmental Laws) that, individually or

 

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in the aggregate, could reasonably be expected to result in a Material Adverse
Effect, or (b) is subject to or in default with respect to any final judgments,
writs, injunctions, decrees, rules or regulations of any court or any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect. 
To the Borrower’s knowledge, neither the ESOP Fiduciary nor the ESOT Trustee has
made any assertion with respect to the ESOP or the ESOT contrary to or
inconsistent with the accuracy of any representation or warranty set forth
herein that could reasonably be expected to result in a Material Adverse Effect.

 

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

 

4.09.                     Solvency.

 

(a)                                 Borrower and its Subsidiaries are and, upon
the incurrence of any Bank Obligation by Borrower or any of its Subsidiaries on
any date on which this representation and warranty is made, will be, on a
consolidated basis, Solvent.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)                                  No Loan Party or ERISA Affiliate sponsors,
maintains, or contributes to any Employee Benefit Plan, including, without
limitation, any such plan maintained to provide benefits to former employees of

 

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such entities that may not be terminated by any Loan Party or ERISA Affiliate in
its sole discretion at any time without material liability other than
contributions accrued but not yet due.

 

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

 

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

 

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

 

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

 

4.13.                     Patriot Act and Foreign Corrupt Practices Act.  To the
extent applicable, each Loan Party is in compliance, in all material respects,
with the (a) Trading with the Enemy Act, as amended, and each of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (b) Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
Patriot Act of 2001) (the “Patriot Act”).  No part of the proceeds of the loans
made hereunder will be used by any Loan Party or any of their

 

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Affiliates, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.  No Loan
Party and, to Borrower’s knowledge, none of any Loan Party’s employees,
officers, or agents has committed (or taken any action to promote or conceal)
any violation of the Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-1, -2.

 

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

 

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

 

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

 

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

 

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

 

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

 

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to employees of Borrower or its Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable legal requirements, except to
the extent such violations could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.  All material
payments due from Borrower or its Subsidiaries on account of wages and employee
health and welfare insurance and other benefits have been paid or accrued as a
liability on the books of Borrower, except where the failure to do so could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

 

4.20.                     Borrower’s Liabilities, Assets and Operations. 
Borrower does not have any material liabilities (other than liabilities arising
under the Loan Documents, the First Lien Loan Documents, the Second Lien Loan
Documents, the Third Lien Note Documents and the Remaining Unsecured Notes
Documents, Permitted Indebtedness, the ESOP Plan Documents, the Preferred Shares
Certificate of Designation, liabilities for taxes and in connection with
Employee Benefit Plans and guarantees of Subsidiary obligations and fees payable
in connection with transactions contemplated by the Refinancing Support
Agreement).  Borrower’s liabilities arising under the Loan Documents, the First
Lien Loan Documents, the Second Lien Loan Documents, the Third Lien Note
Documents and the Remaining Unsecured Notes Documents have been and are being
incurred, among other things, for the benefit of those Subsidiaries that are
Loan Parties.

 

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

 

4.22.                     Eligible Accounts; Eligible Government Accounts;
Eligible Unbilled Accounts.

 

(a)                                 As to each Account that is identified by
Borrower as an Eligible Account, Eligible Government Account or Eligible
Unbilled Account in a Borrowing Base Certificate submitted to Agent, such
Account is (i) a bona fide existing payment obligation of the applicable Account
Debtor or in the case of an Eligible Unbilled Account will be such an obligation
within 30 days of the creation of such Eligible Unbilled Account, created by the
sale and delivery of Inventory or the rendition of services to such Account
Debtor in the ordinary course of the applicable Loan Party’s business, (ii) owed
to such Loan Party without any known defenses, disputes, offsets, counterclaims,
or rights of return or cancellation, and (iii) not excluded as ineligible by
virtue of one or more of the excluding criteria (other than any
Agent-discretionary criteria) set forth in the definition of Eligible Accounts,
Eligible Government Accounts or Eligible Unbilled Accounts, as applicable.

 

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

 

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

 

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

 

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

 

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

 

(g)                                  [Intentionally Omitted].

 

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

 

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

 

(j)                                    [Intentionally Omitted].

 

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

 

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

 

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

 

4.23.                     [Intentionally Omitted].

 

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

 

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4.25.                     No Restricted Payments.  Since the Closing Date,
neither Borrower nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Payment or agreed to do so except as permitted pursuant to
Section 6.07.

 

4.26.                     Senior Indebtedness.  The Bank Obligations constitute
“Senior Indebtedness” (or other equivalent term) of the Loan Parties under any
definitive documentation governing Subordinated Indebtedness of a Loan Party.

 

4.27.                     Other Documents.

 

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

 

(b)                                 On the Closing Date, (i) all of the
conditions to effecting or consummating the Transactions set forth in the
Related Agreements have been duly satisfied or, with the consent of Agent,
waived, and (ii) the Transactions have been consummated in accordance with the
Related Agreements and all applicable laws.

 

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

 

(d)                                 There is no default or event of default
occurring or continuing under the First Lien Loan Documents, the Second Lien
Loan Documents, the Third Lien Note Documents, the Remaining Unsecured Notes
Documents and all other Related Agreements.

 

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

 

4.29.                     ESOP.

 

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

 

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conditions set forth therein and required to be performed or complied with by
the ESOT, and no unmatured default, default or breach of any covenant by any
such party exists thereunder.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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5.                                      AFFIRMATIVE COVENANTS.

 

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

 

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

 

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

 

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

 

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

 

5.05.                     Taxes.  Borrower will, and will cause each of its
Subsidiaries to, pay in full before delinquency or before the expiration of any
extension period all material governmental assessments and taxes imposed,
levied, or assessed against it, or any of its assets or in respect of any of its
income, businesses, or franchises, except to the extent that the validity of
such governmental assessment or tax is the subject of a Permitted Protest. 
Borrower will not, nor will it permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than Borrower or any of its Subsidiaries).

 

5.06.                     Insurance.  Borrower will, at Borrower’s expense,
maintain insurance respecting each of Borrower’s and its Subsidiaries’ assets
wherever located, covering liabilities, losses or damages as are customarily are
insured against by other Persons engaged in same or similar businesses and
similarly situated and located.  All such policies of insurance shall be with
financially sound and reputable insurance companies acceptable to Agent (it
being agreed that, as of the Closing Date, Zurich American Insurance and
American Guarantee and Liability Insurance Company are acceptable to Agent) and
in such amounts as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated and located and,
in any event, in amount, adequacy, and scope reasonably satisfactory to Agent
(it being agreed that the amount, adequacy, and scope of the policies of
insurance of Borrower in effect as of the Closing Date are acceptable to
Agent).  All property insurance policies covering the Collateral are to be made
payable to Collateral Agent for the benefit of Agent, the Lenders and the other
Secured Parties (as defined in the Intercreditor Agreement), as their interests
may appear, in case of loss, pursuant to a standard loss payable endorsement
with a standard non contributory “lender” or “secured party”

 

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clause and are to contain such other provisions as Agent may reasonably require
to fully protect the Lenders’ interest in the Collateral and to any payments to
be made under such policies.  All certificates of property and general liability
insurance are to be delivered to Collateral Agent, with the loss payable (but
only in respect of Collateral) and additional insured endorsements in favor of
Collateral Agent and shall provide for not less than 30 days (10 days in the
case of non-payment) prior written notice to Collateral Agent of the exercise of
any right of cancellation.  Without limiting the generality of the foregoing,
Borrower will maintain or cause to be maintained (a) flood insurance with
respect to each Flood Hazard Property that is located in a community that
participates in the National Flood Program, in each case in compliance with any
applicable regulations of the Board of Governors, and (b) replacement value
casualty insurance on Collateral for which such insurance is customarily
obtained under such policies of insurance, with such insurance companies, in
such amounts, with such deductibles, and covering such risks as are at all times
carried or maintained under similar circumstances by similar businesses
operating in similar locations.  If Borrower fails to maintain such insurance,
Agent may arrange for such insurance, but at Borrower’s expense and without any
responsibility on Agent’s part for obtaining the insurance, the solvency of the
insurance companies, the adequacy of the coverage, or the collection of claims. 
Borrower shall give Agent prompt notice of any loss exceeding $500,000 covered
by its casualty or business interruption insurance.  Upon the occurrence and
during the continuance of an Event of Default, Collateral Agent shall have the
sole right to file claims under any property and general liability insurance
policies in respect of the Collateral, to receive, receipt and give acquittance
for any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.

 

5.07.                     Books and Records; Inspection.

 

(a)                                 Borrower will, and will cause each of its
Subsidiaries to, keep proper books of record and accounts in which full, true
and correct entries in conformity in all material respects with GAAP shall be
made of all dealings and transactions in relation to its business and
activities.

 

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

 

5.08.                     Compliance with Laws.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.11.                     Formation of Subsidiaries.  Borrower will, at the time
that any Loan Party forms any direct or indirect Domestic Subsidiary (other than
an Excluded Subsidiary), acquires any direct or indirect Domestic Subsidiary
(other than an Excluded Subsidiary) or a Domestic Subsidiary ceases to be an
Excluded Subsidiary after the Closing Date, within 10 days of such formation,
acquisition or cessation (or such later date as permitted by Agent in its sole
discretion) (a) cause such Subsidiary to provide to Agent and Collateral Agent a
joinder to each of the Guaranty Agreement and the Security Agreement, together
with such other security agreements, and pledge agreements, certificates and
powers, as well as appropriate financing statements (and with respect to all
property subject to a mortgage, fixture filings), all in form and substance
reasonably satisfactory to Agent (including being sufficient to grant Collateral
Agent a first priority Lien (subject to Permitted Liens) in and to the assets of
such Subsidiary); provided, that only 65% of the total outstanding voting Equity
Interests (and 100% of the total outstanding non-voting Equity Interests) of any
first tier Subsidiary of Borrower that is a Foreign Subsidiary or a Disregarded
Domestic Subsidiary and none of the Equity Interests of any Subsidiary of such
Person shall be required to be pledged and (b) provide to Agent all other
documentation, including one or more opinions of counsel reasonably satisfactory
to Agent, which, in its opinion, is appropriate with respect to the execution
and delivery of the applicable documentation referred to above (including
policies of title insurance or other documentation with respect to all Real
Property owned in fee and subject to a mortgage).  Any document, agreement, or
instrument executed or issued pursuant to this Section 5.11 shall constitute a
Loan Document.  In the event that any Person becomes a Foreign Subsidiary of
Borrower or a Disregarded Domestic Subsidiary, and the ownership interests of
such Foreign Subsidiary or Disregarded Domestic Subsidiary are owned by Borrower
or by any Domestic Subsidiary thereof (other than any Excluded Subsidiary),
Borrower shall, or shall cause such Domestic Subsidiary to, deliver, all such
documents, instruments, agreements, and certificates as are similar to those
described above, and Borrower shall take, or shall cause such Domestic
Subsidiary to take, all of the actions referred to above necessary to grant and
to perfect a first priority Lien in favor of Collateral Agent, for the benefit
of Secured Parties, under the Security Agreement in 65% of the voting Equity
Interests of such Foreign Subsidiary or Disregarded Domestic Subsidiary and 100%
of the non-voting Equity Interests of such Foreign Subsidiary or Disregarded
Domestic Subsidiary.

 

5.12.                     Further Assurances.  Borrower will, and will cause
each of the other Loan Parties to, at any time upon the reasonable request of
Agent or the Collateral Agent, execute or deliver to Agent or the Collateral
Agent, as applicable, any and all financing statements, fixture filings,
security agreements, pledges, assignments, mortgages, deeds of trust, opinions
of counsel, and all other documents (the “Additional Documents”) that Agent or

 

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Collateral Agent may reasonably request in form and substance reasonably
satisfactory to Agent or Collateral Agent, as applicable, to create, perfect,
and continue perfected Collateral Agent’s Liens in all of the assets of Borrower
and its Subsidiaries that constitute Collateral (whether now owned or hereafter
arising or acquired, tangible or intangible, real or personal), and in order to
fully consummate all of the transactions contemplated hereby and under the other
Loan Documents.  To the maximum extent permitted by applicable law, if Borrower
or any other Loan Party refuses or fails to execute or deliver any reasonably
requested Additional Documents within a reasonable period of time following the
request to do so, Borrower and each other Loan Party hereby authorizes Agent
and/or Collateral Agent to execute any such Additional Documents in the
applicable Loan Party’s name (for the avoidance of doubt, not including opinions
of counsel) and authorizes Agent or Collateral Agent to file such executed
Additional Documents in any appropriate filing office.  In furtherance of, and
not in limitation of, the foregoing, each Loan Party shall take such actions as
Agent or Collateral Agent may reasonably request from time to time to ensure
that the Bank Obligations are guaranteed by the Guarantors and are secured by
substantially all of the assets of Borrower and its Subsidiaries, including all
of the outstanding capital Equity Interests of Borrower’s Subsidiaries (subject
to exceptions and limitations contained in the Loan Documents with respect to
Foreign Subsidiaries) excluding Excluded Subsidiaries.  In addition, from time
to time, Borrower will, at its cost and expense, promptly secure the Obligations
by pledging or creating, or causing to be pledged or created, perfected security
interests with respect to such of its assets and properties as the Agent, the
Collateral Agent or the Required Lenders shall designate (it being understood
that it is the intent of the parties that the Obligations shall be secured by
substantially all the assets of the Borrower and the Guarantors (including real
and other properties acquired subsequent to the Closing Date)).  Such security
interests and Liens will be created under the Security Documents and other
security agreements, mortgages, deeds of trust and other instruments and
documents in form and substance satisfactory to the Agent or the Collateral
Agent, and Borrower shall deliver or cause to be delivered to the Lenders all
such instruments and documents (including legal opinions, title insurance
policies and lien searches) as the Agent or the Collateral Agent shall
reasonably request to evidence compliance with this Section.  Borrower agrees to
provide such evidence as the Collateral Agent shall reasonably request as to the
perfection and priority status of each such security interest and Lien.  In
furtherance of the foregoing, Borrower will give prompt notice to the Agent of
the acquisition by it or any Subsidiary of any Real Property (or any interest in
Real Property) having a value in excess of $5,000,000.

 

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

 

5.14.                     Maintenance of Ratings.  Borrower shall use
commercially reasonable efforts to maintain a public corporate family rating
(but not any specific rating) issued by Moody’s and a public corporate credit
rating (but not any specific rating) issued by S&P.

 

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

 

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

 

(a)                                 Borrower will, and will cause each of the
other Loan Parties to, (A) maintain, at their expense, the Designated Account
and Lockbox (as hereinafter defined), and shall take reasonable steps to ensure
that all of its and its Subsidiaries’ Account Debtors continue to forward
payment (whether by cash, check, electronic or wire transfer, or other manner)
of the amounts owed by them directly to either (i) a lockbox established with
Collateral Agent (on behalf of the Secured Parties (as defined in the
Intercreditor Agreement) in accordance with the Intercreditor Agreement) or its
Agent (a “Lockbox”), if such payment is in the form of a check,

 

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

 

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

 

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

 

(d)                                 [Intentionally Omitted].

 

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

 

5.17.                     Compliance with ERISA and the IRC; Reports; Notices.

 

(a)                                 In addition to and without limiting the
generality of Section 5.08, Borrower shall (i) comply in all material respects
with applicable provisions of ERISA and the IRC with respect to all Employee
Benefit Plans, (ii) without the prior written consent of Agent and the Required
Lenders, not take any action or fail to take action the result of which could
result in a Loan Party or ERISA Affiliate incurring a material liability to the
PBGC or to a Multiemployer Plan (other than  to pay contributions or premiums
payable in the ordinary course), (iii) allow any facts or circumstances to exist
with respect to one or more Employee Benefit Plans that, in the aggregate,
reasonably could be expected to result in a Material Adverse Effect, (iv) not
participate in any prohibited transaction that could result in other than a de
minimis civil penalty  excise tax, fiduciary liability or correction obligation
under ERISA or the IRC, (b) operate each Employee Benefit Plan in such a manner
that will not incur any material tax liability under the IRC (including
Section 4980B of the IRC), and (v) furnish to Agent upon Agent’s written request
such additional information about any Employee Benefit Plan for which any Loan
Party or ERISA Affiliate could reasonably expect to incur any material
liability.  With respect to each Pension Plan (other than a Multiemployer Plan)
except as could not reasonably be expected to result in liability to the Loan
Parties, the Loan Parties and the ERISA Affiliates shall (i) satisfy in full and
in a timely manner, without incurring any late payment or underpayment charge or
penalty and without giving rise to any Lien, all of the contribution and funding
requirements of the IRC and of ERISA, and (ii) pay, or cause to be paid, to the
PBGC in a timely manner, without incurring any late payment or underpayment
charge or penalty, all premiums required pursuant to ERISA.

 

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

 

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

 

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

 

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

 

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

 

(v)                                 the occurrence of any amendment, waiver,
supplement or other modification to any of the ESOP Plan Documents, together
with a copy of such amendment, waiver, supplement or other modification, and

 

(vi)                              any other material notices, reports and
documents to be delivered by Borrower to the ESOP or the ESOT Trustee pursuant
to the terms of the ESOP or applicable law or to be delivered by the ESOP or the
ESOT Trustee to Borrower pursuant to the terms of the ESOP or applicable law.

 

(c)                                  Furnish to Agent as soon as practicable and
in any event within 10 Business Days after the receipt by Borrower of the annual
valuation report prepared for the ESOP for each Fiscal Year, commencing with the
Fiscal Year ending September 30, 2014, a copy of such report, and (ii) as soon
as practicable and in any event within 90 days after the end of each Fiscal
Year, commencing with the Fiscal Year ending September 30, 2014, a report of the
latest repurchase liability study of Borrower prepared for the ESOP.

 

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

 

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

 

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5.19.                     Control Agreements.

 

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

 

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

 

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

 

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

 

5.21.                     ESOP Compliance.  Borrower shall at all times maintain
the ESOP as a qualified employee stock ownership plan under the IRC and take
action each plan year of the ESOP to assess whether or not allocations under the
ESOP comply with Section 409(p) of the IRC or whether there has been an
allocation of synthetic equity resulting in an excise tax to Borrower or any of
its Subsidiaries under Section 4979A of the IRC.

 

5.22.                     Intellectual Property.  With respect to Intellectual
Property that, in the applicable Loan Party’s reasonable business judgment, is
material to the business of any Loan Party, each Loan Party shall (i) preserve
and maintain the Intellectual Property owned by such Loan Party; (ii) use
reasonable endeavors to prevent any infringement of such Intellectual Property,
(iii) in such Loan Party’s reasonable business judgment, consistent with past
business practices, and to the extent the following are within the applicable
Loan Party’s actual control, make registrations and pay all registration fees
and taxes necessary to maintain such Intellectual Property in full force and
effect; and (iv) not knowingly use such Intellectual Property or knowingly
permit such Intellectual Property to be used in a way (or knowingly take any
steps or knowingly omit to take any step in respect of such Intellectual
Property) that will adversely affect the existence or value of such Intellectual
Property or imperil the right of any Loan Party to use such property.

 

5.23.                     Material Government Contracts.  The Loan Parties shall
comply in all respects with the terms and provisions of the Material Government
Contracts and cause the Material Government Contracts to remain in full force
and effect other than to the extent such Material Government Contracts terminate
or lapse in accordance with their respective terms in the ordinary course of
business, except to the extent the failure to do so could not reasonably be
expected to have a Material Adverse Effect.

 

5.24.                     Additional Material Real Property.  In the event that
any Loan Party acquires Material Real Property or Real Property owned on the
Closing Date becomes Material Real Property and such interest in such Material
Real Property has not otherwise been made subject to the Lien of the Security
Documents in favor of Collateral Agent, for the benefit of Secured Parties, then
such Loan Party shall promptly take all such actions and execute and deliver, or
cause to be executed and delivered, all such mortgages, documents, instruments,
agreements, opinions and certificates, including the applicable clauses of
Schedule 3.1 and the definition of the term “Specified Real Property Matters”
set forth herein, (to the extent applicable to such Material Real Property),
with respect to each such Material Real Property that Agent or Collateral Agent
shall reasonably request to create in favor of Collateral Agent, for the benefit
of Secured Parties, a valid and, subject to any filing and/or recording referred
to herein, perfected first priority Lien (subject to any Permitted Liens set
forth in clause (n) of the

 

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definition of Permitted Liens) in such Material Real Property.  In addition to
the foregoing, Borrower shall, at the request of Agent or Collateral Agent,
deliver, from time to time, to Agent and Collateral Agent such appraisals as are
required by law or regulation of Real Property with respect to which Collateral
Agent has been granted a Lien.

 

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

 

6.                                      NEGATIVE COVENANTS.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.04.                     Disposal of Assets.  Other than Permitted Dispositions
or transactions expressly permitted by Sections 6.03 or 6.09, Borrower will not,
and will not permit any of its Subsidiaries to convey, sell, lease, license,
assign, transfer, or otherwise dispose of (or enter into an agreement to convey,
sell, lease, license, assign, transfer, or otherwise dispose of) any of its or
their assets.

 

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

 

39

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Borrower and its Subsidiaries from engaging in any business that is reasonably
related or ancillary to its or their business.

 

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

 

(a)                                 Except in connection with (x) the Permitted
Redemption, and (y) Permitted Refinancing of Indebtedness otherwise permitted
under this Agreement,

 

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

 

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

 

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

 

(i)                                     any material agreement, instrument,
document, indenture, or other writing evidencing or concerning Permitted
Indebtedness other than (A) the Bank Obligations in accordance with this
Agreement, (B) Permitted Intercompany Advances, and (C) Indebtedness permitted
under clauses (c), (d), (e), (f) (i), and (m) of the definition of Permitted
Indebtedness (provided that, with respect to Indebtedness permitted under clause
(f) of the definition of Permitted Indebtedness, any amendments, modifications
or changes to repayment provisions in any material agreement, instrument,
document, indenture, or other writing evidencing or concerning such Permitted
Indebtedness which could be materially adverse to the Agent or the Lenders,
shall require the prior written consent of Agent),

 

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

 

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

 

(c)                                  Without obtaining the prior written consent
of Agent, agree to any material amendment, restatement, supplement or other
modification to, or waiver of:

 

(i)                                     the Shareholders’ Agreement,

 

(ii)                                  the Warrant Agreements,

 

(iii)                               the Preferred Shares Certificate of
Designation,

 

(iv)                              the Remaining Unsecured Notes Documents, or

 

(v)                                 any of its material rights under any Related
Agreement (other than the First Lien Loan Documents, the Second Lien Loan
Documents and the Third Lien Note Documents).

 

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6.07.                     Restricted Payments.  Borrower will not, and will not
permit any of its Subsidiaries to make any Restricted Payment (including
pursuant to any Synthetic Purchase Agreement); provided, that, so long as it is
permitted by law, and so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom (it being understood and
agreed that this proviso shall not be applicable to the payments referred to in
subclauses (ii), (iii) and (iv) of clause (c) below),

 

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

 

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

 

(c)                                  Borrower may make regularly scheduled
payments of interest in respect of any (i) Subordinated Indebtedness in
accordance with the terms of, and only to the extent required by, and subject to
any subordination provisions contained in, the indenture or other agreement
pursuant to which such Indebtedness was issued, (ii) Second Lien Obligations,
(iii) Third Lien Obligations and (iv) Indebtedness in respect of the Remaining
Unsecured Notes,

 

(d)                                 payments of Earn Out Indebtedness will be
permitted; provided that both immediately prior to and after giving effect to
the incurrence thereof, (x) no Default or Event of Default shall have occurred
and be continuing or would result therefrom, (y) Borrower will be in pro forma
compliance with the covenants set forth in Section 7,

 

(e)                                  Borrower may consummate a Permitted
Redemption and

 

(f)                                   Permitted Refinancings of the Second Lien
Obligations and the Third Lien Obligations.

 

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

 

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

 

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

 

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

 

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

 

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

 

6.11.                     Use of Proceeds.  Borrower will not, and will not
permit any of its Subsidiaries to use the proceeds of any loan made hereunder
for any purpose other than (a) on the Closing Date, (i) to repay, in full, the
outstanding

 

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principal, accrued interest, and accrued fees and expenses owing under or in
connection with the Existing Credit Facility; (ii) for a Permitted Redemption;
and (iii) to pay the Transaction Costs incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, in each case, as set forth in the Funds Flow Agreement, and
(b) thereafter, consistent with the terms and conditions hereof, for their
lawful and permitted purposes (including that no part of the proceeds of the
loans made to Borrower will be used to purchase or carry any such Margin Stock
or to extend credit to others for the purpose of purchasing or carrying any such
Margin Stock or for any purpose that violates the provisions of Regulation T, U
or X of the Board of Governors).

 

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

 

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

 

6.14.                     No Further Negative Pledges.  Except with respect to
(a) specific property encumbered to secure payment of particular Indebtedness or
to be sold pursuant to an executed agreement with respect to a Permitted
Disposition, (b) restrictions by reason of customary provisions restricting
assignments, subletting or other transfers contained in leases, licenses and
similar agreements entered into in the ordinary course of business (provided
that such restrictions are limited to the property or assets secured by such
Liens or the property or assets subject to such leases, licenses or similar
agreements, as the case may be) and (c) customary provisions prohibiting the
creation of Liens by any joint venture agreement otherwise permitted hereunder,
so long as any such prohibition contained therein relates only to the Equity
Interests in the joint venture to which such agreement relates, Borrower will
not, and will not permit any of its Subsidiaries to enter into any agreement
prohibiting the creation or assumption of any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, to secure the Bank Obligations.

 

6.15.                     Reserved.

 

6.16.                     Restrictions on Subsidiary Distributions.  Except as
provided herein, in the First Lien Loan Documents, in the Second Lien Loan
Documents, in the Third Lien Note Documents or in any documents evidencing a
Permitted Refinancing of any Indebtedness under such documents, Borrower shall
not, nor shall it permit any of its Subsidiaries to, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any Subsidiary of Borrower to (a) pay dividends or
make any other distributions on any of such Subsidiary’s Equity Interests owned
by Borrower or any other Subsidiary of Borrower, (b) repay or prepay any
Indebtedness owed by such Subsidiary to Borrower or any other Subsidiary of
Borrower, (c) make loans or advances to Borrower or any other Subsidiary of
Borrower, or (d) transfer, lease or license any of its property or assets to
Borrower or any other Subsidiary of Borrower other than restrictions (i) in
agreements evidencing Indebtedness permitted by clause (g) of the definition of
Permitted Indebtedness that impose restrictions on the property so acquired,
(ii) by reason of customary provisions restricting assignments, subletting or
other transfers contained in leases, licenses, joint venture agreements and
similar agreements entered into in the ordinary course of business, (iii) that
are or were created by virtue of any transfer of, agreement to transfer or
option or right with respect to any property, assets or Equity Interests not
otherwise prohibited under this Agreement, (iv) in agreements for the sale or
other disposition of assets permitted hereunder prior to the closing of such
sale or other disposition, so long as such restriction only relates to the
assets that are to be sold or disposed of, (v) required pursuant to applicable
law, rule, regulation or order, (vi) with respect to a Foreign Subsidiary
entered into the ordinary course of business or pursuant to the terms of
Indebtedness that was incurred by such Foreign Subsidiary in compliance with the
terms of this Agreement, (vii) contained in any license, permit or other
accreditation with a regulatory authority entered into the ordinary course of
business, (viii) in agreements or instruments (including any joint venture or
strategic alliance agreements) which prohibit the payment or making of dividends
or other distributions other than on a pro rata basis and (ix) in any agreement
in effect at the time a

 

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Person becomes a Subsidiary of Borrower, so long as such agreement was not
entered into in contemplation of such Person becoming a Subsidiary of Borrower
and so long as such restriction only applies to such Person that becomes a
Subsidiary of Borrower.

 

6.17.                     Amendments or Waivers of with respect to Certain
Indebtedness.  Borrower shall not, nor shall it permit any of its Subsidiaries
to, amend or otherwise change the terms of any Indebtedness under the First Lien
Loan Documents, any Indebtedness under the Second Lien Loan Documents or any
Indebtedness under the Third Lien Note Documents, or make any payment consistent
with an amendment thereof or change thereto, if such amendment or other change
is prohibited by the Intercreditor Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.                                      FINANCIAL COVENANTS.

 

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

 

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

 

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(b)                                 Fixed Charge Coverage Ratio.  Borrower and
its Subsidiaries on a consolidated basis will have a Fixed Charge Coverage
Ratio, measured on a quarter-end basis, of at least 1.00 to 1.00 for the twelve
(12) month period ending on the last day of each Fiscal Quarter, commencing with
the Fiscal Quarter ending September 30, 2014.

 

(c)                                  Consolidated EBITDA.  Borrower shall not
permit Consolidated EBITDA as of the end of any Fiscal Quarter, beginning with
the Fiscal Quarter ending September 30, 2014, for the four Fiscal Quarter period
then ended to be less than $50,000,000.

 

(d)                                 Maximum Consolidated Capital Expenditures. 
Borrower shall not, and shall not permit its Subsidiaries to, make or incur
Consolidated Capital Expenditures, in an aggregate amount for Borrower and its
Subsidiaries in excess of $8,000,000 in any Fiscal Year.

 

(e)                                  Certain Calculations.  With respect to any
period during which a Permitted Acquisition or any asset sale permitted under
this Agreement has occurred (each, a “Subject Transaction”), for purposes of
determining compliance with the financial covenants set forth in this Section 7,
Consolidated EBITDA and the components of consolidated interest expense shall be
calculated with respect to such period on a pro forma basis (including pro forma
adjustments arising out of events which are directly attributable to a specific
transaction, are factually supportable and are expected to have a continuing
impact, in each case determined on a basis consistent with Article 11 of
Regulation S-X promulgated under the Securities Act and as interpreted by the
staff of the U.S. Securities and Exchange Commission, which may include, among
other things, (to the extent permitted by Regulation S-X) cost savings resulting
from head count reduction, closure of facilities and similar restructuring
charges, which pro forma adjustments shall be certified by the chief financial
officer of Borrower) using the historical financial statements of any business
so acquired or to be acquired or sold or to be sold and the consolidated
financial statements of Borrower and its Subsidiaries which shall be
reformulated as if such Subject Transaction, and any Indebtedness incurred or
repaid in connection therewith, had been consummated or incurred or repaid at
the beginning of such period (and assuming that such Indebtedness bears interest
during any portion of the applicable measurement period prior to the relevant
acquisition at the weighted average of the interest rates applicable to
outstanding Loans incurred during such period).

 

8.                                      EVENTS OF DEFAULT.

 

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

 

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

 

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

 

(a)                                 fails to perform or observe any covenant or
other agreement contained in any of (i) Sections 3.06, 5.01, 5.02, 5.03 (solely
if Borrower is not in good standing in its jurisdiction of organization), 5.06,
5.07 (solely if Borrower refuses to allow Agent, or its representatives or
agents to visit Borrower’s properties, inspect its assets or books or records,
examine and make copies of its books and records, or discuss Borrower’s affairs,
finances, and accounts with officers and employees of Borrower), 5.10, 5.11,
5.12, 5.13, 5.15 or 5.16 of this Agreement, (ii) Section 6 of this Agreement,
(iii) Section 7(b) of this Agreement, or (iv) Sections 4 or 6 of the Security
Agreement;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8.07.                     Representations, etc.  If any warranty,
representation, certificate, statement, or Record made herein or in any other
Loan Document or delivered in writing to Agent or any Lender in connection with
this Agreement or any other Loan Document proves to be untrue in any material
respect (except that such materiality

 

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qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof) as of the
date of issuance or making or deemed making thereof;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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the applicable Loan Party (which suspension has occurred and remains in place
for a period in excess of 10 Business Days), or (c) a notice of termination for
default or the actual termination for default of any Material Government
Contract shall have been issued to or received by the applicable Loan Party.

 

9.                                      RIGHTS AND REMEDIES.

 

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

 

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

 

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

 

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

 

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

 

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

 

10.                               WAIVERS; INDEMNIFICATION.

 

10.01.              Demand; Protest; etc.  Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,

 

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or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which Borrower may in any way be liable.

 

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

 

10.03.              Indemnification.  Borrower shall pay, indemnify, defend, and
hold the Agent-Related Persons, the Lender-Related Persons, and each Participant
(each, an “Indemnified Person”) harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, fines, costs, penalties, and damages,
and all reasonable fees and disbursements of attorneys, experts, or consultants
and all other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution and delivery (provided that Borrower shall
not be liable for costs and expenses (including attorneys fees) of any Lender
(other than Wells Fargo) incurred in advising, structuring, drafting, reviewing,
administering or syndicating the Loan Documents), enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Borrower’s and its
Subsidiaries’ compliance with the terms of the Loan Documents (provided, that
the indemnification in this clause (a) shall not extend to (i) disputes solely
between or among the Lenders that do not involve any acts or omissions of any
Loan Party, or (ii) disputes solely between or among the Lenders and their
respective Affiliates that do not involve any acts or omissions of any Loan
Party; it being understood and agreed that the indemnification in this clause
(a) shall extend to Agent (but not the Lenders) relative to disputes between or
among Agent on the one hand, and one or more Lenders, or one or more of their
Affiliates, on the other hand, or (iii) any Taxes or any costs attributable to
Taxes, which shall be governed by Section 16), (b) with respect to any actual or
prospective investigation, litigation, or proceeding related to this Agreement,
any other Loan Document, the making of any Loans or issuance of any Letters of
Credit hereunder, or the use of the proceeds of the Loans or the Letters of
Credit provided hereunder (irrespective of whether any Indemnified Person is a
party thereto), or any act, omission, event, or circumstance in any manner
related thereto, and (c) in connection with or arising out of any presence or
release of Hazardous Materials at, on, under, to or from any assets or
properties owned, leased or operated by Borrower or any of its Subsidiaries or
any Environmental Actions, Environmental Liabilities or Remedial Actions related
in any way to any such assets or properties of Borrower or any of its
Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”). 
The foregoing to the contrary notwithstanding, Borrower shall have no obligation
to any Indemnified Person under this Section 10.03 with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person or its officers, directors, employees, attorneys, or agents. 
This provision shall survive the termination of this Agreement and the repayment
in full of the Bank Obligations.  If any Indemnified Person makes any payment to
any other Indemnified Person with respect to an Indemnified Liability as to
which Borrower was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto.  WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.

 

11.                               NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or

 

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certified mail (postage prepaid, return receipt requested), overnight courier,
electronic mail (at such email addresses as a party may designate in accordance
herewith), or telefacsimile.  In the case of notices or demands to Borrower or
Agent, as the case may be, they shall be sent to the respective address set
forth below:

 

If to Borrower:

 

ALION SCIENCE AND TECHNOLOGY CORPORATION
1750 Tysons Boulevard, Suite 1300
McLean, Virginia 22102
Attn: Barry M. Broadus, Chief Financial Officer
Fax No.: (703) 714-6511

 

 

 

with copies to:

 

HOLLAND & KNIGHT LLP
1600 Tysons Boulevard, Suite 700
McLean, Virginia 22102
Attn: David S. Cole, Esq.
Fax No.: (703) 720-8610

 

 

 

If to Agent:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION
1753 Pinnacle Drive, Sixth Floor
McLean, Virginia 22102
Attn: Hilary Hymel, Relationship Manager
Fax No.: (877) 702-4315

 

 

 

with copies to:

 

TROUTMAN SANDERS LLP
1850 Towers Crescent Plaza, Suite 500
Tysons Corner, Virginia 22182
Attn: Richard M. Pollak, Esq.
Fax No.: (703) 448-6511

 

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

 

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

 

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

 

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

 

(c)                                  TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR
RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR
CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS (EACH A “CLAIM”).  BORROWER AND EACH MEMBER OF THE LENDER GROUP
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(vi)                              THE REFEREE SHALL APPLY THE RULES OF EVIDENCE
APPLICABLE TO PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA AND SHALL DETERMINE
ALL ISSUES IN ACCORDANCE WITH CALIFORNIA SUBSTANTIVE AND PROCEDURAL LAW.  THE
REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE
ON ANY MOTION WHICH WOULD BE AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR
DEFAULT JUDGMENT OR SUMMARY JUDGMENT.  THE REFEREE

 

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SHALL REPORT HIS OR HER DECISION, WHICH REPORT SHALL ALSO INCLUDE FINDINGS OF
FACT AND CONCLUSIONS OF LAW.  THE REFEREE SHALL ISSUE A DECISION AND PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE, SECTION 644, THE REFEREE’S DECISION SHALL BE
ENTERED BY THE COURT AS A JUDGMENT IN THE SAME MANNER AS IF THE ACTION HAD BEEN
TRIED BY THE COURT.  THE FINAL JUDGMENT OR ORDER FROM ANY APPEALABLE DECISION OR
ORDER ENTERED BY THE REFEREE SHALL BE FULLY APPEALABLE AS IF IT HAS BEEN ENTERED
BY THE COURT.

 

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

 

13.                               ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

 

13.01.              Assignments and Participations.

 

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

 

(A)                               Borrower; provided, that no consent of
Borrower shall be required (1) if an Event of Default has occurred and is
continuing, (2) in connection with an assignment to a Person that is a Lender or
an Affiliate (other than natural persons) of a Lender (3) to an assignment to
Apollo/Guggenheim Group or any of their respective Affiliates or (4) in
connection with any Revolver Purchase; provided further, that Borrower shall be
deemed to have consented to a proposed assignment unless it objects thereto by
written notice to Agent within 5 Business Days after having received notice
thereof; and

 

(B)                               Agent, and Issuing Lender, provided, that no
consent of Agent or Issuing Lender shall be required in connection with any
Revolver Purchase.

 

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

 

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

 

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

 

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

 

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

 

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

 

(F)                                 unless waived by Agent, the assigning Lender
or Assignee has paid to Agent, for Agent’s separate account, a processing fee in
the amount of $5,000, provided, that in no event shall a processing fee be
payable in connection with any Revolver Purchase, and

 

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

 

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

 

(iii)                               Notwithstanding anything to the contrary in
clauses (i) and (ii) above, if any Event of Default has occurred and is
continuing which arises from Borrower’s failure to make any payment with respect
to the Bank Obligations, the occurrence of any bankruptcy, breach of any
representations and warranties (to the extent such breach could reasonably be
expected to have a Material Adverse Effect), violation of any negative covenant
or financial covenant (any such Event of Default, a “Specified Event of
Default”), the Lenders may make conditional assignments to Disqualified
Institutions without the prior written consent of the First Lien Credit
Agreement Lenders, provided that (1) the Agent shall provide notice of any such
proposed conditional assignment to the First Lien Administrative Agent in
accordance with Section 2.20 of the Intercreditor Agreement, (2) no such
conditional assignment shall be consummated unless and until the First Lien
Administrative Agent shall have failed to deliver a Revolver Purchase Notice to
the Collateral Agent and the Agent within five Business Days after its receipt
of a Revolver Right to Purchase Notice and (3) if the Revolver Purchase Notice
is delivered, any such proposed conditional assignment shall be null and void
and shall be deemed ineffective for all purposes of this Agreement.

 

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

 

(c)                                  By executing and delivering an Assignment
and Acceptance, the assigning Lender thereunder and the Assignee thereunder
confirm to and agree with each other and the other parties hereto as follows: 
(i) other than as provided in such Assignment and Acceptance, such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the

 

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financial condition of Borrower or the performance or observance by Borrower of
any of its obligations under this Agreement or any other Loan Document furnished
pursuant hereto, (iii) such Assignee confirms that it has received a copy of
this Agreement, together with such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such Assignee will, independently and
without reliance upon Agent, such assigning Lender or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement, (v) such Assignee appoints and authorizes Agent to take
such actions and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to Agent, by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto, and (vi) such Assignee
agrees that it will perform all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.

 

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

 

(e)                                  Any Lender may at any time sell to one or
more commercial banks, financial institutions, or other Persons (a
“Participant”) participating interests in all or any portion of its Bank
Obligations, its Revolver Credit Limit, its Loans, and the other rights and
interests of that Lender (the “Originating Lender”) hereunder and under the
other Loan Documents; provided, that (i) the Originating Lender shall remain a
“Lender” for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Bank Obligations, the
Revolver Credit Limits, the Loans, and the other rights and interests of the
Originating Lender hereunder shall not constitute a “Lender” hereunder or under
the other Loan Documents and the Originating Lender’s obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrower,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender’s rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Bank
Obligations hereunder in which such Participant is participating; provided that
the foregoing shall not apply to the extension of the “Maturity Date” as
defined, but only the due date for the particular Loan in which such Participant
is participating, (B) reduce the interest rate applicable to the Bank
Obligations hereunder in which such Participant is participating, (C) release
all or substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the Bank
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender (other than a waiver of default interest), or
(E) decreases the amount or postpones the due dates of scheduled principal
repayments or prepayments or premiums payable to such Participant through such
Lender, (v) no participation shall be sold to a natural person, (vi) no
participation shall be sold to a Loan Party, or any Affiliate of a Loan Party or
any Person whose participation would not comply with the National Industrial
Security Program Operating Manual and associated laws and regulations,
(vii) prior to a Default or Event of Default, no participation shall be sold to
any Competitor of a Loan Party, and (viii) all amounts payable by Borrower
hereunder shall be determined as if such Lender had not sold such participation,
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement.  The rights of any
Participant only shall be derivative through the Originating Lender with whom
such Participant participates and no Participant shall have any rights under
this Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, the Loan Parties, the Collateral, or otherwise in respect of the
Bank Obligations.  No Participant shall have the right to participate directly
in the making of decisions by the Lenders among themselves.

 

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

 

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

 

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

 

14.                               AMENDMENTS; WAIVERS.

 

14.01.              Amendments and Waivers.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     [Reserved],

 

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

 

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

 

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

 

(e)                                  [Intentionally Omitted];

 

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

 

(g)                                  [Intentionally Omitted]; and

 

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

 

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14.02.              Replacement of Certain Lenders.

 

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

 

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

 

14.03.              No Waivers; Cumulative Remedies.  No failure by Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
other Loan Document, or delay by Agent or any Lender in exercising the same,
will operate as a waiver thereof.  No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated.  No waiver by Agent or any Lender on any occasion shall affect or
diminish Agent’s and each Lender’s rights thereafter to require strict
performance by Borrower of any provision of this Agreement.  Agent’s and each
Lender’s rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.

 

15.                               AGENT; THE LENDER GROUP.

 

15.01.              Appointment and Authorization of Agent.  Each Lender hereby
designates and appoints Wells Fargo as its agent under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes (and by
entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to designate, appoint, and authorize) Agent to execute and deliver each
of the other Loan Documents on its behalf and to take such other action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
Agent by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto.  Agent agrees to act as agent
for and on behalf of the Lenders (and the Bank Product Providers) on the
conditions contained in this Section 15.  Any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, Agent shall not have any duties or responsibilities, except
those expressly set forth herein or in the other Loan Documents, nor shall Agent
have or be deemed to have any fiduciary relationship with any Lender (or Bank
Product Provider), and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall

 

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be read into this Agreement or any other Loan Document or otherwise exist
against Agent.  Without limiting the generality of the foregoing, the use of the
term “agent” in this Agreement or the other Loan Documents with reference to
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law.  Instead, such
term is used merely as a matter of market custom, and is intended to create or
reflect only a representative relationship between independent contracting
parties.  Each Lender hereby further authorizes (and by entering into a Bank
Product Agreement, each Bank Product Provider shall be deemed to authorize)
Collateral Agent and the Agent to act as the secured party under each of the
Loan Documents that create a Lien on any item of Collateral.  Except as
expressly otherwise provided in this Agreement, Agent shall have and may use its
sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents.  Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect:  (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Bank Obligations, the Collateral, payments and proceeds of Collateral,
and related matters, (b) execute or file any and all financing or similar
statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Revolving Loans, for itself or on behalf of
Lenders, as provided in the Loan Documents, (d) exclusively receive, apply, and
distribute payments and proceeds of the Collateral as provided in the Loan
Documents, (e) open and maintain such bank accounts and cash management
arrangements as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes, (f) perform, exercise, and enforce
any and all other rights and remedies of the Lender Group with respect to
Borrower or its Subsidiaries, the Bank Obligations, the Collateral, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.

 

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

 

15.03.              Liability of Agent.  None of the Agent-Related Persons shall
(a) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders (or Bank
Product Providers) for any recital, statement, representation or warranty made
by Borrower or any of its Subsidiaries or Affiliates, or any officer or director
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
Borrower or its Subsidiaries or any other party to any Loan Document to perform
its obligations hereunder or thereunder.  No Agent-Related Person shall be under
any obligation to any Lenders (or Bank Product Providers) to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the books and records or properties of Borrower or its Subsidiaries.

 

15.04.              Reliance by Agent.  Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, telefacsimile or other
electronic method of transmission, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent, or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to Borrower or counsel to any
Lender), independent accountants and other experts selected by Agent.  Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it

 

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deems advisable.  If Agent so requests, it shall first be indemnified to its
reasonable satisfaction by the Lenders (and, if it so elects, the Bank Product
Providers) against any and all liability and expense that may be incurred by it
by reason of taking or continuing to take any such action.  Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders (and Bank Product
Providers).

 

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

 

15.06.              Credit Decision.  Each Lender (and Bank Product Provider)
acknowledges that none of the Agent-Related Persons has made any representation
or warranty to it, and that no act by Agent hereinafter taken, including any
review of the affairs of Borrower and its Subsidiaries or Affiliates, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender (or Bank Product Provider).  Each Lender represents (and by
entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to represent) to Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such due diligence, documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrower or any other Person party to a
Loan Document, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrower.  Each Lender also represents (and by
entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to represent) that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of Borrower or any other Person party
to a Loan Document.  Except for notices, reports, and other documents expressly
herein required to be furnished to the Lenders by Agent, Agent shall not have
any duty or responsibility to provide any Lender (or Bank Product Provider) with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of Borrower or any
other Person party to a Loan Document that may come into the possession of any
of the Agent-Related Persons.  Each Lender acknowledges (and by entering into a
Bank Product Agreement, each Bank Product Provider shall be deemed to
acknowledge) that Agent does not have any duty or responsibility, either
initially or on a continuing basis (except to the extent, if any, that is
expressly specified herein) to provide such Lender (or Bank Product Provider)
with any credit or other information with respect to Borrower, its Affiliates or
any of their respective business, legal, financial or other affairs, and
irrespective of whether such information came into Agent’s or its Affiliates’ or
representatives’ possession before or after the date on which such Lender became
a party to this Agreement (or such Bank Product Provider entered into a Bank
Product Agreement).

 

15.07.              Costs and Expenses; Indemnification.  Agent may incur and
pay Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, attorneys
fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside

 

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

 

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

 

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

 

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omitted to be taken by it while it was Agent under this Agreement.  If no
successor Agent has accepted appointment as Agent by the date which is 30 days
following a retiring Agent’s notice of resignation, the retiring Agent’s
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Lenders appoint a successor Agent as provided for above.

 

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

 

15.11.              Collateral Matters.

 

(a)                                 The Lenders hereby irrevocably authorize
(and by entering into a Bank Product Agreement, each Bank Product Provider shall
be deemed to authorize) Agent to cause Collateral Agent to release any Lien on
any Collateral (i) upon the termination of the Credit Facility and payment and
satisfaction in full by Borrower of all of the Bank Obligations and subject to
the satisfaction of the other conditions described in the Intercreditor
Agreement, (ii) constituting property being sold or disposed of if a release is
required or desirable in connection therewith and if Borrower certifies to Agent
that the sale or disposition is permitted under Section 6.04 (and Agent may rely
conclusively on any such certificate, without further inquiry),
(iii) constituting property in which Borrower or its Subsidiaries owned no
interest at the time Collateral Agent’s Lien was granted nor at any time
thereafter, (iv) constituting property leased or licensed to Borrower or its
Subsidiaries under a lease or license that has expired or is terminated in a
transaction permitted under this Agreement, or (v) in connection with a credit
bid or purchase authorized under this Section 15.11.  The Loan Parties and the
Lenders hereby irrevocably authorize (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to authorize) Agent, based
upon the instruction of the Required Lenders, to (a) consent to, credit bid or
purchase (either directly or indirectly through one or more entities) all or any
portion of the Collateral at any sale thereof conducted under the provisions of
the Bankruptcy Code, including Section 363 of the Bankruptcy Code, (b) credit
bid or purchase (either directly or indirectly through one or more entities) all
or any portion of the Collateral at any sale or other disposition thereof
conducted under the provisions of the Code, including pursuant to Sections 9-610
or 9-620 of the Code, or (c) credit bid or purchase (either directly or
indirectly through one or more entities) all or any portion of the Collateral at
any other sale or foreclosure conducted or consented to by Agent in accordance
with applicable law in any judicial action or proceeding or by the exercise of
any legal or equitable remedy.  In connection with any such credit bid or
purchase, (i) the Bank Obligations owed to the Lenders and the Bank Product
Providers shall be entitled to be, and shall be, credit bid on a ratable basis
(with Bank Obligations with respect to contingent or unliquidated claims being
estimated for such purpose if the fixing or liquidation thereof would not impair
or unduly delay the ability of Agent to credit bid or purchase at such sale or
other disposition of the Collateral and, if such contingent or unliquidated
claims cannot be estimated without impairing or unduly delaying the ability of
Agent to credit bid at such sale or other disposition, then such claims shall be
disregarded, not credit bid, and not entitled to any interest in the Collateral
that is the subject of such credit bid or purchase) and the Lenders and the Bank
Product Providers whose Bank Obligations are credit bid shall be entitled to
receive interests (ratably based upon the proportion of their Bank Obligations
credit bid in relation to the aggregate amount of Bank Obligations so credit
bid) in the Collateral that is the subject of such credit bid or purchase (or in
the Equity Interests of the any entities that are used to consummate such credit
bid or purchase), and (ii) Agent, based upon the instruction of the Required
Lenders, may accept non-cash consideration, including debt and equity

 

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securities issued by any entities used to consummate such credit bid or purchase
and in connection therewith Agent may reduce the Bank Obligations owed to the
Lenders and the Bank Product Providers (ratably based upon the proportion of
their Bank Obligations credit bid in relation to the aggregate amount of Bank
Obligations so credit bid) based upon the value of such non-cash consideration. 
Except as provided above, Agent will not cause Collateral Agent to execute and
deliver a release of any Lien on any Collateral without the prior written
authorization of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders (without requiring the authorization of the Bank
Product Providers), or (z) otherwise, the Required Lenders (without requiring
the authorization of the Bank Product Providers).  Upon request by Agent or
Borrower at any time, the Lenders will (and if so requested, the Bank Product
Providers will) confirm in writing Agent’s authority to cause Collateral Agent
to release any such Liens on particular types or items of Collateral pursuant to
this Section 15.11; provided, that (1) anything to the contrary contained in any
of the Loan Documents notwithstanding, Agent shall not be required to cause
Collateral Agent to execute any document or take any action necessary to
evidence such release on terms that, in Agent’s opinion, could expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Lien without recourse, representation, or warranty, and (2) such
release shall not in any manner discharge, affect, or impair the Bank
Obligations or any Liens (other than those expressly released) upon (or
obligations of Borrower in respect of) any and all interests retained by
Borrower, including, the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.  Each Lender further hereby irrevocably
authorize (and by entering into a Bank Product Agreement, each Bank Product
Provider shall be deemed to irrevocably authorize) Agent, at its option and in
its sole discretion, to subordinate any Lien granted to or held by Collateral
Agent under any Loan Document to the holder of any Permitted Lien on such
property if such Permitted Lien secures Permitted Purchase Money Indebtedness.

 

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

 

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

 

(a)                                 Each of the Lenders agrees that it shall
not, without the express written consent of Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the written request of Agent, set
off against the Bank Obligations, any amounts owing by such Lender to Borrower
or its Subsidiaries or any Deposit Accounts of Borrower or its Subsidiaries now
or hereafter maintained with such Lender.  Each of the Lenders further agrees
that it shall not, unless specifically requested to do so in writing by Agent,
take or cause to be taken any action, including, the commencement of any legal
or equitable proceedings to enforce any Loan Document against Borrower or any
Guarantor or to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.  Each Lender agrees (a) to be bound by, and
consents to, the terms and provisions of the Intercreditor Agreement and
(b) that it will take no actions contrary to the terms and provisions of the
Intercreditor Agreement.

 

(b)                                 If, at any time or times any Lender shall
receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of
Collateral or any payments with respect to the Bank Obligations, except for any
such proceeds or payments received by such Lender from Agent pursuant to the
terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s
Pro Rata Share of all such distributions by Agent, such Lender promptly shall
(A) turn the same over to Agent, in kind, and with such endorsements as may be
required to

 

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negotiate the same to Agent, or in immediately available funds, as applicable,
for the account of all of the Lenders and for application to the Bank
Obligations in accordance with the applicable provisions of this Agreement, or
(B) purchase, without recourse or warranty, an undivided interest and
participation in the Bank Obligations owed to the other Lenders so that such
excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, that to the extent that such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)                                  without limiting the generality of any
other indemnification provision contained in this Agreement, agrees:  (i) to
hold Agent and any other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from

 

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any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrower, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of Borrower, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

 

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

 

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

 

15.18.              Sole Lead Arranger and Sole Book Runner.  The Sole Lead
Arranger and Sole Book Runner, in such capacities, shall not have any right,
power, obligation, liability, responsibility, or duty under this Agreement other
than those applicable to them in their respective capacities as a Lender, as
Agent, or as Issuing Lender.  Without limiting the foregoing, the Sole Lead
Arranger and Sole Book Runner, in such capacities, shall not have or be deemed
to have any fiduciary relationship with any Lender or any Loan Party.  Each
Lender, Agent, Issuing Lender, and each Loan Party acknowledges that it has not
relied, and will not rely, on the Sole Lead Arranger or Sole Book Runner in
deciding to enter into this Agreement or in taking or not taking action
hereunder.  The Sole Lead Arranger and Sole Book Runner, in such capacities,
shall be entitled to resign at any time by giving notice to Agent and Borrower.

 

16.                               WITHHOLDING TAXES.

 

16.01.              Payments.  All payments made by Borrower hereunder or under
any note or other Loan Document will be made without setoff, counterclaim, or
other defense.  In addition, all such payments will be made free and clear of,
and without deduction or withholding for, any present or future Indemnified
Taxes, and in the event any deduction or withholding of Indemnified Taxes is
required, Borrower shall comply with the next sentence of this Section 16.01. 
If any Indemnified Taxes are so levied or imposed, Borrower agrees to pay the
full amount of such Indemnified Taxes and such additional amounts as may be
necessary so that every payment of all amounts due

 

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under this Agreement, any note, or Loan Document, including any amount paid
pursuant to this Section 16.01 after withholding or deduction for or on account
of any Indemnified Taxes, will not be less than the amount provided for herein. 
Borrower will furnish to Agent as promptly as possible after the date the
payment of any Indemnified Tax is due pursuant to applicable law, certified
copies of tax receipts evidencing such payment by Borrower.  Borrower agrees to
pay any present or future stamp, value added or documentary taxes or any other
excise or property taxes, charges, or similar levies that arise from any payment
made hereunder or from the execution, delivery, performance, recordation, or
filing of, or otherwise with respect to this Agreement or any other Loan
Document.

 

16.02.              Exemptions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16.03.              Reductions.

 

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

 

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

 

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

 

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17.                               GENERAL PROVISIONS.

 

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

 

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

 

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

 

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

 

17.05.              Bank Product Providers.  Each Bank Product Provider in its
capacity as such shall be deemed a third party beneficiary hereof and of the
provisions of the other Loan Documents for purposes of any reference in a Loan
Document to the parties for whom Agent is acting.  Agent hereby agrees to act as
agent for such Bank Product Providers and, by virtue of entering into a Bank
Product Agreement, the applicable Bank Product Provider shall be automatically
deemed to have appointed Agent as its agent and to have accepted the benefits of
the Loan Documents.  It is understood and agreed that the rights and benefits of
each Bank Product Provider under the Loan Documents consist exclusively of such
Bank Product Provider’s being a beneficiary of the Liens and security interests
(and, if applicable, guarantees) granted to Agent and Collateral Agent (for the
benefit of Agent) and the right to share in payments and collections out of the
Collateral as more fully set forth herein.  In addition, each Bank Product
Provider, by virtue of entering into a Bank Product Agreement, shall be
automatically deemed to have agreed that Agent shall have the right, but shall
have no obligation, to establish, maintain, relax, or release reserves in
respect of the Bank Product Obligations and that if reserves are established
there is no obligation on the part of Agent to determine or insure whether the
amount of any such reserve is appropriate or not.  In connection with any such
distribution of payments or proceeds of Collateral, Agent shall be entitled to
assume no amounts are due or owing to any Bank Product Provider unless such Bank
Product Provider has provided a written certification (setting forth a
reasonably detailed calculation) to Agent as to the amounts that are due and
owing to it and such written certification is received by Agent a reasonable
period of time prior to the making of such distribution.  Agent shall have no
obligation to calculate the amount due and payable with respect to any Bank
Products, but may rely upon the written certification of the amount due and
payable from the applicable Bank Product Provider.  In the absence of an updated
certification, Agent shall be entitled to assume that the amount due and payable
to the applicable Bank Product Provider is the amount last certified to Agent by
such Bank Product Provider as being due and payable (less any distributions made
to such Bank Product Provider on account thereof).  Borrower may obtain Bank
Products from any Bank Product Provider, although Borrower is not required to do
so.  Borrower acknowledges and agrees that no Bank Product Provider has
committed to provide any Bank Products and that the providing of Bank Products
by any Bank Product Provider is in the sole and absolute discretion of such Bank
Product Provider.  Notwithstanding anything to the contrary in this Agreement or
any other Loan Document, no provider or holder of any Bank Product shall have
any voting or approval rights hereunder (or be deemed a Lender) solely by virtue
of its status as the provider or holder of such agreements or products or the
Bank Obligations owing thereunder, nor shall the consent of any such provider or
holder be required (other than in their capacities as Lenders, to the extent
applicable) for any matter hereunder or under any of the other Loan Documents,
including as to any matter relating to the Collateral or the release of
Collateral or Guarantors.

 

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

 

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venture relationship between the members of the Lender Group, on the one hand,
and the Loan Parties, on the other hand, by virtue of any Loan Document or any
transaction contemplated therein.

 

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

 

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

 

17.09.              Confidentiality.

 

(a)                                 Agent and Lenders each individually (and not
jointly or jointly and severally) agree that material, non-public information
regarding Borrower and its Subsidiaries, their operations, assets, and existing
and contemplated business plans (“Confidential Information”) shall be treated by
Agent and the Lenders in a confidential manner, and shall not be disclosed by
Agent and the Lenders to Persons who are not parties to this Agreement, except: 
(i) to attorneys for and other advisors, accountants, auditors, and consultants
to any member of the Lender Group and to employees, directors and officers of
any member of the Lender Group (the Persons in this clause (i), “Lender Group
Representatives”) on a “need to know” basis in connection with this Agreement
and the transactions contemplated hereby and on a confidential basis, (ii) to
Subsidiaries and Affiliates of any member of the Lender Group (including the
Bank Product Providers), provided that any such Subsidiary or Affiliate shall
have agreed to receive such information hereunder subject to the terms of this
Section 17.09, (iii) as may be required by regulatory authorities so long as
such authorities are informed of the confidential nature of such information,
(iv) as may be required by statute, decision, or judicial or administrative
order, rule, or regulation; provided that (x) prior to any disclosure under this
clause (iv), the disclosing party agrees to provide Borrower with prior notice
thereof, to the extent that it is practicable to do so and to the extent that
the disclosing party is permitted to provide such prior notice to Borrower
pursuant to the terms of the applicable statute, decision, or judicial or
administrative order, rule, or regulation and (y) any disclosure under this
clause (iv) shall be limited to the portion of the Confidential

 

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Information as may be required by such statute, decision, or judicial or
administrative order, rule, or regulation, (v) as may be agreed to in advance in
writing by Borrower, (vi) as requested or required by any Governmental Authority
pursuant to any subpoena or other legal process, provided, that, (x) prior to
any disclosure under this clause (vi) the disclosing party agrees to provide
Borrower with prior written notice thereof, to the extent that it is practicable
to do so and to the extent that the disclosing party is permitted to provide
such prior written notice to Borrower pursuant to the terms of the subpoena or
other legal process and (y) any disclosure under this clause (vi) shall be
limited to the portion of the Confidential Information as may be required by
such Governmental Authority pursuant to such subpoena or other legal process,
(vii) as to any such information that is or becomes generally available to the
public (other than as a result of prohibited disclosure by Agent or the Lenders
or the Lender Group Representatives), (viii) in connection with any assignment,
participation or pledge of any Lender’s interest under this Agreement, provided
that prior to receipt of Confidential Information any such assignee,
participant, or pledgee shall have agreed in writing to receive such
Confidential Information either subject to the terms of this Section 17.09 or
pursuant to confidentiality requirements substantially similar to those
contained in this Section 17.09 (and such Person may disclose such Confidential
Information to Persons employed or engaged by them as described in clause (i)
above), (ix) in connection with any litigation or other adversary proceeding
involving parties hereto which such litigation or adversary proceeding involves
claims related to the rights or duties of such parties under this Agreement or
the other Loan Documents; provided, that, prior to any disclosure to any Person
(other than any Loan Party, Agent, any Lender, any of their respective
Affiliates, or their respective counsel) under this clause (ix) with respect to
litigation involving any Person (other than Borrower, Agent, any Lender, any of
their respective Affiliates, or their respective counsel), the disclosing party
agrees to provide Borrower with prior written notice thereof, and (x) in
connection with, and to the extent reasonably necessary for, the exercise of any
secured creditor remedy under this Agreement or under any other Loan Document.

 

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

 

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

 

(d)                                 The Agent, the Lenders and all other persons
who are or who may become party to this Agreement or who may participate in the
Loans acknowledge that Borrower and its Subsidiaries perform classified
contracts funded by or for the benefit of the United States federal government,
and, accordingly, notwithstanding any other provision of this Agreement, neither
Borrower nor any Subsidiary will be obligated to release, disclose or otherwise
make available:  (i) any classified information to any Person including the
Agent, any Lender or any other Person not in possession of a valid security
clearance and authorized by the appropriate agency of the United States federal
government to receive such material, and (ii) any material whatsoever to any
Person including the Agent, any Lender or any other Person if such release,
disclosure or availability would not comply with the National Industrial
Security Program Operating Manual and associated laws and regulations.  The
Agent and the

 

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Lenders agree that, in connection with any exercise of a right or remedy, the
United States federal government may remove classified information or
government-issued property prior to any remedial action implicating such
classified information or government-issued property.  Upon notice from the
Borrower, the Agent and the Lenders shall take such steps as may reasonably be
requested by the Borrower to enable the Borrower or any Subsidiary to comply
with the Foreign Ownership Control or Influence requirements of the United
States government imposed from time to time.

 

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

 

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

 

17.12.              Intercreditor Agreement.  The parties agree that
notwithstanding the provisions of this Agreement, in the event of any conflict
between the terms of this Agreement and the Intercreditor Agreement, the terms
of the Intercreditor Agreement shall govern and control, and no party shall be
required to take any action hereunder that is prohibited by the Intercreditor
Agreement.

 

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

 

[Signature pages to follow.]

 

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

 

BORROWER:

ALION SCIENCE AND TECHNOLOGY CORPORATION

 

a Delaware corporation

 

 

 

 

 

By:

/s/ Barry Broadus

 

Name:

Barry Broadus

 

Title:

Chief Financial Officer

 

[Credit Agreement]

 

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

 

 

 

 

 

By:

/s/ Marc Grossman

 

Name:

Marc Grossman

 

 

Its Authorized Signatory

 

[Signature Page to Credit Agreement]

 

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Schedule 1.1

 

to

 

Credit Agreement

 

Definitions

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.

 

“Applicable Margin” means 4.75 percentage points.

 

“Applicable Prepayment Premium” means, as of any date of determination, an
amount equal to (a) during the period from and after the Closing Date up to (but
not including) the date that is the second anniversary of the Closing Date, 2.0%
times the Maximum Revolver Credit Limit on the date immediately prior to the
date of determination, (b) during the period from and after the date that is the
second anniversary of the Closing Date up to (but not including) the date that
is the third anniversary of the Closing Date, 1.0% times the Maximum Revolver
Credit Limit on the date immediately prior to the date of determination, and
(c) from and after the date that is the third anniversary of the Closing Date,
0.5% times the Maximum Revolver Credit Limit on the date immediately prior to
the date of determination.

 

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

 

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

 

“Apollo/Guggenheim Group” means each of Apollo Global Management, Guggenheim
Life and Annuity Company, Delaware Life Insurance Company, Security Benefit Life
Insurance Company and each of their respective Affiliates and funds and accounts
managed by it and its Affiliates.

 

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

 

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

 

“Assignment of Claims Act” means, collectively, the Assignment of Claims Act of
1940, as amended, any applicable rules, regulations and interpretations issued
pursuant thereto and any amendments to any of the foregoing.

 

“ASOF” means ASOF II Investments, LLC, a Delaware limited liability company.

 

“ASOF/Phoenix Group” means ASOF, Phoenix, any Control Investment Affiliates of
ASOF or Phoenix and any party that is a member of any “group” (within the
meaning of Rules 13d 3 and 13d 5 under the Exchange Act) that includes ASOF,
Phoenix or any Control Investment Affiliates of ASOF or Phoenix; provided that
ASOF, Phoenix or any Control Investment Affiliates of ASOF or Phoenix shall
collectively and beneficially own and control or have the power to direct at
least a majority of the voting power of the Equity Interests of Borrower held by
such “group”.

 

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

 

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

 

“Bank Obligations” means (a) all loans (including the Revolving Loans (inclusive
of Extraordinary Advances)), debts, principal, interest (including any interest
that accrues after the commencement of an Insolvency Proceeding, regardless of
whether allowed or allowable in whole or in part as a claim in any such
Insolvency Proceeding), reimbursement or indemnification obligations with
respect to Letters of Credit (irrespective of whether contingent), premiums,
liabilities (including all amounts charged to the Loan Account pursuant to the
Agreement), obligations (including indemnification obligations), fees, Lender
Group Expenses (including any fees or expenses that accrue after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
guaranties, and all covenants and duties of any other kind and description owing
by any Loan Party arising out of, under, pursuant to, in connection with, or
evidenced by the Agreement or any of the other Loan Documents and irrespective
of whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all other expenses or other amounts
that Borrower is required to pay or reimburse by the Loan Documents or by law or
otherwise in connection with the Loan Documents, and (b) all Bank Product
Obligations.  Without limiting the generality of the foregoing, the Bank
Obligations of Borrower under the Loan Documents include the obligation to pay
(i) the principal of the Revolving Loans, (ii) interest accrued on the Revolving
Loans, (iii) the amount necessary to reimburse Issuing Lender for amounts paid
or payable pursuant to Letters of Credit, (iv) Letter of Credit commissions,
fees (including fronting fees) and charges, (v) Lender Group Expenses, (vi) fees
payable under the Agreement or any of the other Loan Documents, and
(vii) indemnities and other amounts payable by any Loan Party under any Loan
Document.  Any reference in the Agreement or in the Loan Documents to the Bank
Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.

 

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

 

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

 

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

 

“Bank Product Obligations” means (a) all obligations, liabilities, reimbursement
obligations, fees, or expenses owing by Borrower or its Subsidiaries to any Bank
Product Provider pursuant to or evidenced by a Bank Product Agreement and
irrespective of whether for the payment of money, whether direct or

 

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indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, (b) all Hedge Obligations, and (c) all amounts that Agent or
any Lender is obligated to pay to a Bank Product Provider as a result of Agent
or such Lender purchasing participations from, or executing guarantees or
indemnities or reimbursement obligations to, a Bank Product Provider with
respect to the Bank Products provided by such Bank Product Provider to Borrower
or its Subsidiaries.

 

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

 

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

 

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

 

“Bank Secured Parties” means (a) each of the members of the Lender Group,
(b) the Agent, (c) the Sole Lead Arranger, (d) the Sole Book Runner, (e) each
counterparty to any Hedge Agreement with a Loan Party that (i) is in effect on
the Closing Date if such counterparty is a Lender or an Affiliate of a Lender as
of the Closing Date or (ii) is entered into after the Closing Date if such
counterparty is a Lender or an Affiliate of a Lender at the time such Hedge
Agreement is entered into, (f) the beneficiaries of each indemnification
obligation undertaken by any Loan Party under any Loan Document and (g) the
successors and permitted assigns of each of the foregoing.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                  the lesser of (i) 70% of the amount of
Eligible Unbilled Accounts, less the amount, if any, of the Dilution Reserve
attributable to Eligible Unbilled Accounts, or (ii) $30,000,000, minus

 

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

 

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

 

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

 

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

 

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

 

“Capital Lease” means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person; provided that for all purposes hereunder the amount of
obligations under any Capital Lease shall be the amount thereof accounted for as
a liability in accordance with GAAP.

 

“Cash” means money, currency or a credit balance in any demand or Deposit
Account.

 

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

 

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

 

“Change of Control” means, (i) at any time prior to consummation of a Qualified
IPO, ASOF, Phoenix or the ASOF/Phoenix Group shall directly or indirectly cease
to collectively and beneficially own and control at least a majority on a fully
diluted basis of the voting power of the Equity Interests of Borrower (taking
into account preferences set forth in the Preferred Shares Certificate of
Designation); (ii) at any time on or after consummation of a Qualified IPO
(a) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act) other than ASOF, Phoenix or the ASOF/Phoenix Group shall have
acquired beneficial ownership or control of 37.5% or more on a fully diluted
basis of the voting power of the Equity Interests of Borrower (taking into
account preferences set forth in the Preferred Shares Certificate of
Designation), (b) ASOF, Phoenix and the ASOF/Phoenix Group shall have directly
or indirectly ceased to collectively and beneficially own and control 37.5% or
more on a fully diluted basis of the voting power of the Equity Interests of
Borrower (taking into account preferences set forth in the Preferred Shares
Certificate of Designation) or (c) any Person or “group” (within the meaning of
Rules 13d-3 and 13d-5 under the Exchange Act) other than ASOF, Phoenix or the
ASOF/Phoenix Group shall have acquired beneficial ownership or control of a
greater percentage of the voting power of the Equity Interests of Borrower (on a
fully diluted basis) than ASOF, Phoenix and the ASOF/Phoenix Group, taken as a
whole (taking into account preferences set forth in the Preferred Shares
Certificate of Designation); or (iii) any “change of control” or similar event
shall occur under the Revolving Loan Documents, the Second Lien Loan Documents,
the Third Lien Note Documents or any agreement in respect of Indebtedness in an
aggregate principal amount in excess of $10,000,000 to which Borrower or any of
its Subsidiaries shall be a party.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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“Consolidated Capital Expenditures” means, for any period, the aggregate of all
Capital Expenditures of Borrower and its Subsidiaries during such period
determined on a consolidated basis, reflected in the consolidated statement of
cash flows of Borrower and its Subsidiaries.

 

“Consolidated Current Assets” means, as at any date of determination, the total
assets of a Person and its Subsidiaries on a consolidated basis that may
properly be classified as current assets in conformity with GAAP, excluding Cash
and Cash Equivalents and current deferred tax assets.

 

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

 

“Consolidated Net Income” shall mean, for any period, the net income or loss of
the Borrower and the Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a) the
income of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by the Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, statute, rule or governmental regulation
applicable to such Subsidiary, (b) the income or loss of any person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated with
the Borrower or any Subsidiary or the date that such person’s assets are
acquired by the Borrower or any Subsidiary, (c) any gains or losses attributable
to sales of assets out of the ordinary course of business and the transaction
costs in connection with such sales and (d) any income or loss attributable to
the early extinguishment of Indebtedness.

 

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by Borrower or one of its
Subsidiaries, Collateral Agent (on behalf of Agent and Lenders and the other
Secured Parties (as defined in the Intercreditor Agreement)), and the

 

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applicable securities intermediary (with respect to a Securities Account) or
bank (with respect to a Deposit Account or lockbox).

 

“Control Investment Affiliate” means, as applied to any Person, any other Person
(a) directly or indirectly controlling, controlled by, or under common control
with, that Person and (b) that is organized by such Person primarily for the
purpose of making equity or debt investments in one or more companies.  For the
purposes of this definition, “control” (including, with correlative meanings,
the terms “controlling”, “controlled by” and “under common control with”), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or by contract or
otherwise.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Disregarded Domestic Subsidiary” as defined in the definition of “Excluded
Subsidiary.”

 

“Disqualified Institution” means any Person other than an Eligible Transferee.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)                                  Accounts that are not payable in Dollars,

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Eligible Government Accounts” means those Government Accounts created by a Loan
Party in the ordinary course of its business, that arise out of such Loan
Party’s sale of goods or rendition of services pursuant to a Government
Contract, that comply with each of the representations and warranties respecting
Eligible Government Accounts made in the Loan Documents, and that are not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth below; provided, that such criteria may with notice be revised from time
to time by Agent in its Permitted Discretion.  In determining the

 

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amount to be included, Eligible Government Accounts shall be calculated net of
customer deposits, unapplied cash, taxes, discounts, credits, allowances, and
rebates.  Eligible Government Accounts shall not include the following:

 

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

 

(b)                                 Government Accounts owed under a particular
program with the United States of America where 50% or more of all Government
Accounts owed under that particular program are deemed ineligible under clause
(a) above,

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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“Eligible Transferee” means (a) any Lender (other than a Defaulting Lender), any
Affiliate of any Lender and any Related Fund of any Lender; and (b) (i) a
commercial bank organized under the laws of the United States or any state
thereof, and having total assets in excess of $1,000,000,000; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof, and having total assets in excess of $1,000,000,000;
(iii) a commercial bank organized under the laws of any other country or a
political subdivision thereof; provided that (A) (x) such bank is acting through
a branch or agency located in the United States or (y) such bank is organized
under the laws of a country that is a member of the Organization for Economic
Cooperation and Development or a political subdivision of such country, and
(B) such bank has total assets in excess of $1,000,000,000,
(c) Apollo/Guggenheim Group and their respective Affiliates and (d) in
connection with any Revolver Purchase, any First Lien Credit Agreement Lender.

 

“Eligible Unbilled Accounts” means those Accounts which would otherwise
constitute Eligible Accounts or Eligible Government Accounts, except that the
services giving rise to such Accounts, although performed and completed, have
not been billed to the Account Debtor; provided that such Accounts are billable
within thirty (30) days from the date on which the services giving rise to such
Accounts shall have been completed or, if sooner, within the applicable Loan
Party’s billing cycle next commencing after the date on which the services
giving rise to such Accounts shall have been completed, each as evidenced by
backup documentation acceptable to Agent in its Permitted Discretion.  For the
avoidance of doubt, Eligible Unbilled Accounts shall not include any Account
(a) arising from the sale of goods and (b) which has not been billed within the
time periods described in the immediately preceding sentence.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“ESOP SPA” means that certain stock purchase agreement by and between the
Borrower and the ESOT dated as of December, 2002, as amended, containing an
obligation, among others, requiring the Borrower to honor put obligations
arising under the ESOP Plan Documents and applicable law.

 

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

 

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

 

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

 

“Excess Availability” means, as of any date of determination, the amount equal
to Availability minus the aggregate amount, if any, of all trade payables of
Borrower and its Subsidiaries aged in excess of 60 days or, at the option of
Agent, such other period as Agent and Borrower may agree based on Borrower’s
historical performance with respect thereto and all book overdrafts of Borrower
and its Subsidiaries, in each case as determined by Agent in its sole and
absolute discretion.

 

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

 

“Excluded Subsidiary” means (a) any Immaterial Subsidiary, (b) any direct or
indirect Domestic Subsidiary so long as such Domestic Subsidiary is a
disregarded entity for federal income tax purposes and has no material assets
other than Equity Interests of one or more Foreign Subsidiaries (each such
Person, a “Disregarded Domestic Subsidiary”) and (c) any Domestic Subsidiary so
long as such Subsidiary is a direct or indirect Subsidiary of a Foreign
Subsidiary.

 

“Excluded Taxes” means (i) any tax imposed on the net income or net profits of
any Lender or any Participant (including any branch profits taxes), in each case
imposed by the jurisdiction (or by any political subdivision or taxing authority
thereof) in which such Lender or such Participant is organized or the
jurisdiction (or by any political subdivision or taxing authority thereof) in
which such Lender’s or such Participant’s principal office is located in each
case as a result of a present or former connection between such Lender or such
Participant and the jurisdiction or taxing authority imposing the tax (other
than any such connection arising solely from such Lender or such Participant
having executed, delivered or performed its obligations or received payment
under, or enforced its rights or remedies under the Agreement or any other Loan
Document); (ii) taxes resulting from a Lender’s or a Participant’s failure to
comply with the requirements of Section 16.02 of the Agreement, (iii) any United
States federal withholding taxes that would be imposed on amounts payable to a
Foreign Lender based upon the applicable withholding rate in effect at the time
such Foreign Lender becomes a party to the Agreement (or designates a new
lending office), except that Taxes shall include (A) any amount that such
Foreign Lender (or its assignor, if any) was previously entitled to receive
pursuant to Section 16.01 of the Agreement, if any, with respect to such
withholding tax at the time such Foreign Lender becomes a party to the Agreement
(or designates a new lending office), and (B) additional United States federal
withholding taxes that may be imposed after the time such Foreign Lender becomes
a party to the Agreement (or designates a new lending office), as a result of a
change in law, rule, regulation, order or other decision with respect to any of
the foregoing by any Governmental Authority, and (iv) any United States federal
withholding taxes imposed under FATCA.

 

“Existing Credit Agreement” means that certain Second Amended and Restated
Credit Agreement dated as of May 2, 2014 by and among Borrower and Wells Fargo
in its capacity as administrative agent, in its capacity as a lender, and in its
capacities as sole lead arranger and sole book runner (as amended, amended and
restated, replaced, supplemented, or otherwise modified from time to time).

 

“Existing Credit Facility” means Borrower’s existing credit facility governed by
the Existing Credit Agreement and the other related loan documentation.

 

“Existing Indebtedness” means (i) the outstanding principal, accrued interest,
and accrued fees and expenses owing under or in connection with the Existing
Credit Facility and the related loan documents and (ii) the Indebtedness owing
under the Existing Secured Notes.

 

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

 

“Existing Secured Notes” means the 12% Senior Secured Notes due 2014 of Borrower
issued pursuant to that certain Indenture, dated as of March 22, 2010, among
Borrower, Wilmington Trust Company, as trustee, and the subsidiary guarantors
named therein.

 

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“Existing Unsecured Notes” means the 10¼% Senior Notes due 2015 of Borrower
issued pursuant to that certain Indenture, dated as of February 8, 2007, among
Borrower, Wilmington Trust Company, as trustee, and the subsidiary guarantors
named therein.

 

“Existing Warrant Agreement” means that certain warrant agreement dated as of
March 22, 2010 between Borrower and Wilmington Trust Company, as warrant agent,
with respect to warrants to purchase in the aggregate 602,614 shares of
Borrower’s common stock issued in connection with the issuance of the Existing
Secured Notes.

 

“Existing Warrants” means the warrants issued pursuant to the Existing Warrant
Agreement.

 

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

 

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

 

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the
date of this Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply with), any
current or future regulations or official interpretations thereof and any
agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue
Code.

 

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

 

“First Lien Administrative Agent” has the meaning assigned to that term in the
Intercreditor Agreement.

 

“First Lien Credit Agreement” means the First Lien Credit and Guaranty Agreement
dated as of the date hereof among Borrower, Guarantors, the lenders and agents
from time to time party thereto and Goldman Sachs Lending Partners LLC, as
administrative agent.

 

“First Lien Credit Agreement Lender” means, as of any date of determination,
each lender party to the First Lien Credit Agreement.

 

“First Lien Loan Documents” means the “Credit Document” under and as defined in
the First Lien Credit Agreement.

 

“First Lien Obligations” has the meaning assigned to that term in the
Intercreditor Agreement.

 

“First Lien Secured Party” has the meaning assigned to that term in the
Intercreditor Agreement.

 

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

 

“Fiscal Year” means the fiscal year of Borrower and its Subsidiaries ending on
September 30 of each calendar year.

 

“Fixed Charge Coverage Ratio” means (i) Consolidated EBITDA plus all management,
consulting, monitoring and advisory fees now or hereafter paid, plus one-time
qualified Non-Recurring Permitted Refinancing Expenses (to the extent not
already capitalized by the Borrower), minus (to the extent added to Consolidated
Net Income in the calculation of Consolidated EBITDA):  (a) cash contributions
to the ESOP during such period in respect of the repurchase liability of the
Company under

 

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the ESOP Plan Documents, (b) any extraordinary (to the extent these are cash)
losses for such period, (c) any non-recurring charges and adjustments (to the
extent these are cash) for such period treated as such by the independent
third-party valuation firm that prepares valuation reports in connection with
the ESOP, (d) non-financed Capital Expenditures, (e) cash income taxes, to
(ii) Fixed Charges for such period.  Notwithstanding the foregoing,
(i) Indebtedness incurred in connection with a Permitted Redemption and (ii) all
interest, fees, and other amounts that may be due and payable in an amount up to
the cap set forth in the definition of Non-Recurring Permitted Refinancing
Expenses in connection with the Transactions, shall be excluded from the
calculation of the Fixed Charge Coverage Ratio.

 

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

 

“Flood Hazard Property” means any Real Property subject to a mortgage in favor
of Collateral Agent, for the benefit of Secured Parties, and located in an area
designated by the Federal Emergency Management Agency as having special flood or
mud slide hazards.

 

“Flood Certificate” means a “Standard Flood Hazard Determination Form” of the
Federal Emergency Management Agency and any successor Governmental Authority
performing a similar function.

 

“Flood Program” means the National Flood Insurance Program created by the U.S.
Congress pursuant to the National Flood Insurance Act of 1968, the Flood
Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994
and the Flood Insurance Reform Act of 2004, in each case as amended from time to
time, and any successor statutes.

 

“Flood Zone” means areas having special flood hazards as described in the
National Flood Insurance Act of 1968, as amended from time to time, and any
successor statute.

 

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

 

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

 

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

 

“Foreign Subsidiary” means any Subsidiary that is (i) treated as a “controlled
foreign corporation” within the meaning of Section 957 of the Internal Revenue
Code or (ii) a Subsidiary of any entity described in clause (i) herein.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Guarantor” means each Domestic Subsidiary of Borrower other than Excluded
Subsidiaries.

 

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

 

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

 

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

 

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

 

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

 

“Immaterial Subsidiary” means any Domestic Subsidiary of Borrower that is
designated in writing by Borrower to Agent as an “Immaterial Subsidiary”;
provided, that any such Domestic Subsidiary shall not constitute an Immaterial
Subsidiary to the extent it (x) individually accounts for more than 1.0% of the
consolidated assets of Borrower and its Subsidiaries or more than 1.0% of the
consolidated total revenues of Borrower and its Subsidiaries or (y) together
with each of the other Domestic Subsidiaries designated as an “Immaterial
Subsidiary”, on a combined consolidated basis, accounts for more than 2.0% of
the consolidated assets of Borrower and its Subsidiaries or more than 2.0% of
the consolidated total revenues of Borrower and its Subsidiaries, in each case
per the most recently delivered financial statements required to be delivered
pursuant to Schedules 5.1 and 5.2.  For the avoidance of doubt, as of the
Closing Date, Innovative Technology Solutions Corporation, a New Mexico

 

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corporation, and Alion-MA&D Corporation, a Colorado corporation, are each an
Immaterial Subsidiary, but each shall thereafter cease to be an Immaterial
Subsidiary to the extent provided in the proviso to the preceding sentence.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Intellectual Property” has the meaning specified therefor in the Security
Agreement.

 

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“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of
even date with the Agreement by and among the Loan Parties, Agent, as
administrative agent for the Bank Secured Parties, Wells Fargo Bank, National
Association, as administrative agent under the First Lien Credit Agreement,
Second Lien Administrative Agent, as administrative agent under the Second Lien
Credit Agreement, Wilmington Trust, National Association, as trustee under the
Indenture, and the Collateral Agent, as collateral agent for the Secured Parties
named therein (as the same may be amended, amended and restated, supplemented, 
renewed, restated, replaced, or otherwise modified from time to time).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Lender Group Expenses” means all (a) costs or expenses (including taxes and
insurance premiums) required to be paid by Borrower or its Subsidiaries under
any of the Loan Documents that are paid, advanced, or incurred by the Lender
Group, (b) documented out-of-pocket fees or charges paid or incurred by Agent in
connection with the Lender Group’s transactions with Borrower or its
Subsidiaries under any of the Loan Documents, including, photocopying,
notarization, couriers and messengers, telecommunication, public record
searches, filing fees, recording fees, publication, real estate surveys, real
estate title policies and endorsements, and environmental audits, (c) Agent’s
customary fees and charges imposed or incurred in connection with any background
checks or OFAC/PEP searches related to Borrower or its Subsidiaries, (d) Agent’s
customary fees and charges (as adjusted from time to time) with respect to the
disbursement of funds (or the receipt of funds) to or for the account of
Borrower (whether by wire transfer or otherwise), together with any
out-of-pocket costs and expenses incurred in connection therewith, (e) customary
charges imposed or incurred by Agent resulting from the dishonor of checks
payable by or to any Loan Party, (f) reasonable documented out-of-pocket costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or during the continuance of an
Event of Default, in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, irrespective of whether a sale is
consummated excluding attorneys’ fees and disbursements of a Lender, (g) field
examination fees and expenses of Agent related to any field examinations to the
extent of the fees and charges (and up to the amount of any limitation) provided
in Section 2.10 of the Agreement, (h) during the continuance of an Event of
Default, appraisal and valuation fees and expenses of Agent related to any
appraisals or valuations to the extent of the fees and charges (and up to the
amount of any limitation) provided in Section 2.10 of the Agreement, (h) Agent’s
reasonable costs and expenses (including reasonable documented attorneys fees
and expenses) relative to third party claims or any other lawsuit or adverse
proceeding paid or incurred, whether in enforcing or defending the Loan
Documents or otherwise in connection with the transactions contemplated by the
Loan Documents, Collateral Agent’s Liens in and to the Collateral, or the Lender
Group’s relationship with Borrower or any of its Subsidiaries, (i) Agent’s
reasonable documented costs and expenses (including reasonable documented
attorneys fees and due diligence expenses) incurred in advising, structuring,
drafting, reviewing, administering (including travel, meals, and lodging),
syndicating (including reasonable costs and expenses relative to CUSIP,
DXSyndicate™, SyndTrak or other communication costs incurred in connection with
a syndication of the loan facilities), or amending, waiving, or modifying the
Loan Documents, and (j) Agent’s reasonable documented attorneys, accountants,
consultants, and other advisors fees and expenses incurred in terminating,
enforcing (including reasonable attorneys, accountants, consultants, and other
advisors fees and expenses incurred in connection with a “workout,” a
“restructuring,” or an Insolvency Proceeding concerning Borrower or any of its
Subsidiaries or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether a lawsuit or other adverse
proceeding is brought, or in taking any enforcement action or any Remedial
Action with respect to the Collateral.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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in the future, by Borrower or any of its Subsidiaries and any member of the
Lender Group in connection with the Agreement.

 

“Loan Party” means Borrower or any Guarantor.

 

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

 

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

 

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

 

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

 

“Material Real Property” means any Real Property owned by Borrower or its
Subsidiaries having a fair market value in excess of $5,000,000.

 

“Maturity Date” means the earlier of (a) April 30, 2018, (b) the date which is
90 days prior to the scheduled maturity date of all of the Indebtedness owing
under the First Lien Loan Documents (c) the date on which the First Lien
Obligations become due and payable in full thereunder, whether by acceleration
or otherwise, (d) the date which is 90 days prior to the date on which the
Second Lien Obligations become due and payable in full thereunder, whether by
acceleration or otherwise, or (f) the date which is 90 days prior to the
scheduled maturity date of all of the Indebtedness owing under the Third Lien
Note Documents or (g) the date on which the Third Lien Obligations become due
and payable in full thereunder, whether by acceleration or otherwise. the
Indebtedness owing under the Third Lien Note Documents becomes due and payable
in full thereunder, whether by acceleration or otherwise.

 

“Maximum Revolver Credit Limit” means $65,000,000.

 

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

 

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

 

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

 

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

 

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

 

“Net Cash Proceeds” means:

 

(a)                                 with respect to any sale or disposition by
Borrower or any of its Subsidiaries of assets, the amount of cash proceeds
actually received by Borrower or any of its Subsidiaries from time to time
(whether as initial consideration or through the payment of deferred
consideration) by or on behalf of Borrower or its Subsidiaries, in connection
therewith after deducting therefrom only (i) the amount of any Indebtedness
secured by any Permitted Lien on any asset (other than (A) Indebtedness owing to
Agent or any Lender under the Agreement or the other Loan Documents and
(B) Indebtedness assumed by the purchaser of such asset) which is required to
be, and is, repaid in connection with such sale or disposition, (ii) reasonable
fees, commissions, and expenses related thereto and required to be paid by
Borrower or such Subsidiary in connection with such sale or disposition
(including, without limitation, legal, accounting, investment banking,
valuation, investment and financial advisor fees), (iii) taxes (including,
without limitation, sales, transfer, deed or mortgage recording taxes) paid or
payable to any taxing authorities by Borrower or such Subsidiary in connection
with such sale or disposition, in each case to the extent, but only to the
extent, that the amounts so deducted are, at the time of receipt of such cash,
actually paid or payable to a Person that is not an Affiliate of Borrower or any
of its Subsidiaries, and are properly attributable to such transaction;
(iv) (1) amounts held in escrow to be applied as part of the purchase price of
any such sale or disposition and (2) all amounts that are set aside as a reserve
(A) for adjustments in respect of the purchase price of such assets, (B) for any
liabilities associated with such sale including reserves for pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with any such sale
or disposition and (C) for the payment of unassumed liabilities relating to the
assets sold or otherwise disposed of at the time of, or within 30 days after,
the date of such sale or other disposition, to the extent that in each case the
funds described above in this clause (iv) are (x) deposited into escrow with a
third party escrow agent or set aside in a separate Deposit Account that is
subject to a Control Agreement in favor of Collateral Agent (on behalf of Agent
and Lenders) and (y) paid to Agent as a prepayment of the applicable Bank
Obligations in accordance with Section 2.04(e) of the Agreement at such time
when such amounts are no longer required to be set aside as such a reserve; and
(v) other out-of-pocket fees and expenses actually incurred in connection
therewith.

 

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

 

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Affiliate of Borrower or any of its Subsidiaries, and are properly attributable
to such transaction, and (iii) other out-of-pocket fees and expenses actually
incurred in connection therewith.

 

“New Warrant Agreement” means the Warrant Agreement dated as of August 18, 2014
between Borrower and Wilmington Trust, National Association, as warrant agent.

 

“New Warrants” means, collectively, the warrants issued pursuant to the New
Warrant Agreement.

 

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

 

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

 

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

 

“Non-Recurring Permitted Refinancing Expenses” means expenses incurred from the
period commencing on October 1, 2013 and continuing through the Closing Date,
associated solely with the Transactions, provided that for purposes of
calculating the Fixed Charge Coverage Ratio, such expenses shall not exceed
$41,000,000 in the aggregate.  When calculating the Fixed Charge Coverage Ratio,
any qualified portion of Non-Recurring Permitted Refinancing Expenses shall be
included in the Consolidated EBITDA portion of the Fixed Charge Coverage Ratio
one-time for the corresponding Fiscal Quarter incurred.

 

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

 

“Notification Event” means (a) the occurrence of a “reportable event” described
in Section 4043 of ERISA for which the 30-day notice requirement has not been
waived by applicable regulations issued by the PBGC, (b) the withdrawal of any
Loan Party or ERISA Affiliate from a Pension Plan during a plan year in which it
was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the
termination of a Pension Plan, the filing of a notice of intent to terminate a
Pension Plan or the treatment of a Pension Plan amendment as a termination,
under Section 4041 of ERISA, if the plan assets are not sufficient to pay all
plan liabilities, (d) the institution of proceedings to terminate, or the
appointment of a trustee with respect to, any Pension Plan by the PBGC or any
Pension Plan or Multiemployer Plan administrator, (e) any other event or
condition that would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan,
(f) the imposition of a Lien pursuant to the IRC or ERISA in connection with any
Employee Benefit Plan or the existence of any facts or circumstances that could
reasonably be expected to result in the imposition of a Lien, (g) the partial or
complete withdrawal of any Loan Party or ERISA Affiliate from a Multiemployer
Plan (other than any withdrawal that would not constitute an Event of Default
under Section 8.12), (h) any event or condition that results in the
reorganization or insolvency of a Multiemployer Plan under Sections of ERISA,
(i) any event or condition that results in the termination of a Multiemployer
Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings
to terminate or to appoint a trustee to administer a Multiemployer Plan under
ERISA, (j) any Pension Plan being in “at risk status” within the meaning of IRC
Section 430(i), (k) any Multiemployer Plan being in “endangered status” or
“critical status” within the meaning of IRC Section 432(b) or the determination
that any Multiemployer Plan is or is expected to be insolvent or in
reorganization within the meaning of Title IV of ERISA, (l) with respect to any
Pension Plan, any Loan Party or ERISA Affiliate incurring a substantial
cessation

 

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of operations within the meaning of ERISA Section 4062(e), (m) an “accumulated
funding deficiency” within the meaning of the IRC or ERISA (including
Section 412 of the IRC or Section 302 of ERISA) or the failure of any Pension
Plan or Multiemployer Plan to meet the minimum funding standards within the
meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302 of
ERISA), in each case, whether or not waived, (n) the filing of an application
for a waiver of the minimum funding standards within the meaning of the IRC or
ERISA (including Section 412 of the IRC or Section 302 of ERISA) with respect to
any Pension Plan or Multiemployer Plan, (o) the failure to make by its due date
a required payment or contribution with respect to any Pension Plan or
Multiemployer Plan, (p) any event that results in or could reasonably be
expected to result in a liability by a Loan Party pursuant to Title I of ERISA
or the excise tax provisions of the IRC relating to Employee Benefit Plans or
any event that results in or could reasonably be expected to result in a
liability to any Loan Party or ERISA Affiliate pursuant to Title IV of ERISA or
Section 401(a)(29) of the IRC, or (q) any of the foregoing is reasonably likely
to occur in the following 30 days.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Patent Security Agreement” means that certain First Lien Patent Security
Agreement, dated as of even date with this Agreement, by and among Borrower and
Collateral Agent (as the same may be further amended, amended and restated,
supplemented, renewed, restated, replaced, or otherwise modified from time to
time).

 

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

 

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

 

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

 

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

 

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“Permitted Acquisition” means any Acquisition so long as:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)                                 Borrower has provided Agent with written
confirmation, supported by reasonably detailed calculations, that on a pro forma
basis (including pro forma adjustments arising out of events which are directly
attributable to such proposed Acquisition, are factually supportable, and are
expected to have a continuing impact, in each case, determined as if the
combination had been accomplished at the beginning of the relevant period; such
eliminations and inclusions to be mutually and reasonably agreed upon by
Borrower and Agent) created by adding the historical combined financial
statements of Borrower (including the combined financial statements of any other
Person or assets that were the subject of a prior Permitted Acquisition during
the relevant period) to the historical consolidated financial statements of the
Person to be acquired (or the historical financial statements related to the
assets to be acquired) pursuant to the proposed Acquisition, Parent and its
Subsidiaries (i) would have been in compliance with the financial covenants in
Section 7 of the Agreement for the 12 fiscal month period ended immediately
prior to the proposed date of consummation of such proposed Acquisition, and
(ii) are projected to be in compliance with the financial covenants in Section 7
of the Agreement for the 12 fiscal month period ended one year after the
proposed date of consummation of such proposed Acquisition, in each case
regardless of whether such financial covenants are then applicable pursuant to
Section 7 of the Agreement,

 

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

 

29

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(j)                                    Borrower shall have Excess Availability
in an amount equal to or greater than $13,000,000 immediately after giving
effect to the consummation of the proposed Acquisition,

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Permitted Dispositions” means:

 

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

 

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

 

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

 

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

 

(e)                                  the granting of Permitted Liens,

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(m)                             the making of Permitted Investments,

 

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

 

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

 

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

 

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

 

“Permitted First Lien Loan Mandatory Prepayments” means those certain mandatory
prepayments made by Borrower pursuant to Section 2.14 of the First Lien Credit
Agreement, provided that, solely with respect to any prepayments made pursuant
to Section 2.14(e) of the First Lien Credit Agreement, provided that (a) no
fraud, intentional material misrepresentation or willful misconduct by Borrower
(or an Authorized

 

31

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Person) has occurred and is continuing in connection with the Borrowing Base at
the time of each such mandatory prepayment pursuant to Section 2.14(e) of the
First Lien Credit Agreement, (b) Borrower has provided Agent with evidence
satisfactory to Agent, in its sole and absolute discretion, that Borrower is in
compliance with the Fixed Charge Coverage Ratio set forth in Section 7(b) (with
such Fixed Charge Coverage Ratio being calculated by Agent to reflect the
proposed mandatory prepayment pursuant to Section 2.14(e) of the First Lien
Credit Agreement on a pro forma basis) immediately prior to and after giving
effect to each such mandatory prepayment pursuant to Section 2.14(e) of the
First Lien Credit Agreement, and (c) has the Required Availability as of the
date of each such mandatory prepayment and after giving pro forma effect to any
regularly scheduled cash principal and interest payments payable under the First
Lien Credit Agreement, the Second Lien Agreement and the Third Lien Notes during
the subsequent 30-day period thereafter; provided, further, that to the extent
that the condition in clause (b) cannot be satisfied, the Borrower shall be
permitted to make mandatory prepayments pursuant to Section 2.14(e) of the First
Lien Credit Agreement to the extent that a portion of proceeds contemplated by
Section 2.14(e) of the First Lien Credit Agreement is used to repay Revolving
Loans such that (a) the aggregate outstanding principal balance of the Revolving
Loans is less than $10,000,000 after giving effect to each such mandatory
prepayment pursuant to Section 2.14(e) of the First Lien Credit Agreement,
(b) Borrower has provided Agent with evidence satisfactory to Agent, in its sole
and absolute discretion, that Borrower has the Required Availability after
giving effect to each such mandatory prepayment pursuant to Section 2.14(e) of
the First Lien Credit Agreement and (c) Borrower delivers to Agent an updated
Borrowing Base Certificate immediately prior to each such mandatory prepayment
pursuant to Section 2.14(e) of the First Lien Credit Agreement.

 

“Permitted First Lien Loan Voluntary Prepayments” means those certain voluntary
prepayments made by Borrower pursuant to Section 2.13(a) of the First Lien
Credit Agreement, provided that (a) no Default or Event of Default shall have
occurred and be continuing or would result therefrom immediately prior to and
after giving effect to each such voluntary prepayment, and (b) Borrower has
provided Agent with evidence satisfactory to Agent, in its sole and absolute
discretion, that Borrower (i) is in compliance with the Fixed Charge Coverage
Ratio set forth in Section 7(b) (with such Fixed Charge Coverage Ratio being
calculated by Agent to reflect the proposed voluntary prepayment on a pro forma
basis) immediately prior to and after giving effect to each such voluntary
prepayment, and (ii) has the Required Availability as of the date of each such
voluntary prepayment and after giving pro forma effect to any regularly
scheduled principal and interest payments payable under the First Lien Credit
Agreement, the Second Lien Credit Agreement and the Third Lien Notes during the
subsequent 30-day period thereafter; provided, further, that none of the
foregoing restrictions shall apply to any voluntary prepayment of the First Lien
Credit Agreement in connection with a Permitted Refinancing of all or any part
thereof.

 

“Permitted Indebtedness” means:

 

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

 

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

 

(c)                                  Indebtedness evidenced by the First Lien
Loan Documents in an aggregate principal amount not to exceed $285,000,000 at
any one time outstanding, and Permitted Refinancings in respect thereof,

 

(d)                                 Indebtedness of the Loan Parties under the
Second Lien Loan Documents in an aggregate principal amount not to exceed at any
time outstanding $70,000,000 (plus (i) the amount of all interest including PIK
accrued or capitalized thereon in accordance with the terms of the Second Lien
Loan Documents as in effect on the date hereof and (ii) the amount of any
additional Indebtedness of the Loan Parties under the Second Lien Loan Documents
incurred in the form of a Specified Contribution (as

 

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defined in the First Lien Credit Agreement)) (less the amount of any permanent
principal prepayments or repayments thereof), and Permitted Refinancings in
respect thereof (less the amount of any permanent principal prepayments or
repayments thereof),

 

(e)                                  Indebtedness of the Loan Parties under the
Third Lien Note Documents in an aggregate principal amount not to exceed at any
time outstanding $210,986,000 (plus the amount of all interest including PIK
accrued or capitalized thereon in accordance with the terms of the Third Lien
Note Documents as in effect on the date hereof) (less the amount of any
permanent principal prepayments or repayments thereof), and Permitted
Refinancings in respect thereof (less the amount of any permanent principal
prepayments or repayments thereof),

 

(f)                                   Indebtedness of the Loan Parties under the
Remaining Unsecured Notes Documents in an aggregate principal amount not to
exceed at any time outstanding $24,014,000 (less the amount of any permanent
principal prepayments or repayments thereof), and Permitted Refinancings in
respect thereof (less the amount of any permanent principal prepayments or
repayments thereof),

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(q)                                 Indebtedness constituting Permitted
Investments,

 

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

 

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

 

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

 

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

 

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

 

(w)                               Borrower’s deferred compensation agreements,

 

(x)                                 Indebtedness incurred by Borrower or any of
its Subsidiaries arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations (including, Indebtedness
consisting of the deferred purchase price of property acquired in a Permitted
Acquisition “Earn Out Indebtedness”), or from guaranties or letters of credit,
surety bonds or performance bonds securing the performance of Borrower or any
such Subsidiary pursuant to such agreements, in each case in connection with
Permitted Acquisitions or permitted dispositions of any business, assets or
Subsidiary of Borrower or any of its Subsidiaries, in an aggregate principal
amount not to exceed $1,000,000 at any time outstanding, and

 

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

 

“Permitted Intercompany Advances” means loans made in the ordinary course of
business by (a) a Loan Party to another Loan Party, (b) a Subsidiary of Borrower
that is not a Loan Party to another Subsidiary of Borrower that is not a Loan
Party, and (c) a Subsidiary of Borrower that is not a Loan Party

 

34

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to a Loan Party, provided that the aggregate principal amount of such loans
shall not exceed $500,000 at any time outstanding and provided further that all
such loans shall be evidenced by the Intercompany Note (as defined in the First
Lien Credit Agreement), and if owed to a Loan Party, shall be subject to a first
priority Lien pursuant to the Security Agreement.

 

“Permitted Investments” means:

 

(a)                                 Investments in cash and Cash Equivalents,

 

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

 

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

 

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

 

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

 

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

 

(g)                                  Permitted Intercompany Advances,

 

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

 

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

 

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

 

(k)                                 Permitted Acquisitions,

 

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

 

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

 

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

 

(o)                                 [Intentionally Omitted],

 

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

 

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

 

“Permitted Liens” means:

 

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

 

(b)                                 on a pari passu basis and so long as the
same are subject to the Intercreditor Agreement, Liens on assets of Borrower
securing, First Lien Obligations (as defined in the Intercreditor Agreement)
(other than the Revolving Credit Obligations) (as defined in the Intercreditor
Agreement) and Permitted Refinancings in respect thereof,

 

(c)                                  on a second priority basis and so long as
the same are subject to the Intercreditor Agreement, Liens on assets of Borrower
securing Second Lien Obligations (as defined in the Intercreditor Agreement) and
Permitted Refinancings in respect thereof,

 

(d)                                 on a third priority basis and so long as the
same are subject to the Intercreditor Agreement, Liens on assets of Borrower
securing, Third Lien Obligations (as defined in the Intercreditor Agreement) and
Permitted Refinancings in respect thereof,

 

(e)                                  Liens for unpaid taxes, assessments, or
other governmental charges or levies that either (i) are not yet delinquent, or
(ii) do not have priority over Collateral Agent’s Liens and the underlying
taxes, assessments, or charges or levies are the subject of Permitted Protests
and such taxes, assessments, or charges or levies do not, individually or in the
aggregate, exceed $500,000,

 

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

 

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

 

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

 

(i)                                     purchase money Liens or the interests of
lessors under Capital Leases and/or Synthetic Leases to the extent that such
Liens or interests secure Permitted Purchase Money Indebtedness

 

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and so long as (i) such Lien attaches only to the asset purchased or acquired
and the proceeds thereof, and (ii) such Lien only secures the Indebtedness that
was incurred to acquire the asset purchased or acquired or any Permitted
Refinancing in respect thereof,

 

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

 

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

 

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

 

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

 

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

 

(o)                                 non-exclusive licenses of patents,
trademarks, copyrights, and other Intellectual Property rights in the ordinary
course of business,

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Permitted Redemption” means, Borrower’s redemption and/or repurchase of all or
any portion of the outstanding principal owing under the Remaining Unsecured
Notes, the Third Lien Notes or all or any portion of the Warrants after the
Closing Date, provided that (a) Borrower has provided Agent with written notice
5 days prior to each such redemption and/or repurchase, (b) no Default or Event
of Default shall have occurred and be continuing or would result therefrom
immediately prior to and after giving effect to each such redemption and/or
repurchase, and (c) Borrower has provided Agent with evidence satisfactory to
Agent, in its sole and absolute discretion, that Borrower (i) is in compliance
with the Fixed Charge Coverage Ratio set forth in Section 7(b) (with such Fixed
Charge Coverage Ratio being calculated by Agent to reflect the proposed
redemption and/or repurchase on a pro forma basis) immediately prior to and
after giving effect to each such redemption and/or repurchase, and (ii) has the
Required Availability at the time of each such redemption and/or repurchase and
for a period of 30 days after giving effect to each such redemption and
repurchase.

 

“Permitted Refinancing” means, as to any Indebtedness, the incurrence of other
Indebtedness to refinance, extend, renew, defease, restructure, replace or
refund (collectively, “refinance”) such existing Indebtedness; provided that, in
the case of such other Indebtedness, the following conditions are satisfied:
(a) the weighted average life to maturity of such refinancing Indebtedness shall
be greater than or equal to the weighted average life to maturity of the
Indebtedness being refinanced; (b) the principal amount of such refinancing
Indebtedness shall be less than or equal to the principal amount (including any
accreted or capitalized interest) then outstanding of the Indebtedness being
refinanced, plus any required premiums and other reasonable amounts paid, and
fees and expenses reasonably incurred, in connection with such modification,
refinancing, refunding, renewal or extension and plus an amount equal to any
existing commitments unutilized thereunder; (c) the respective obligor or
obligors shall be the same on the refinancing Indebtedness as on the
Indebtedness being refinanced; (d) the security, if any, for the refinancing
Indebtedness shall be the same as that for the Indebtedness being refinanced
(except to the extent that less security is granted to holders of refinancing
Indebtedness); (e) the refinancing Indebtedness and any guarantee in support
thereof is subordinated to the Obligations to the same degree, if any, or to a
greater degree as the Indebtedness and the guarantees in support thereof being
refinanced or, solely in the case of refinancing Indebtedness in respect of
Indebtedness under the Second Lien Loan Documents or Indebtedness under the
Third Lien Note Documents, the Lien priority of such refinancing Indebtedness
and any guarantees in support thereof need only be subordinated to the same
degree or to a greater degree than the Liens securing the Indebtedness under the
First Lien Loan Documents pursuant to

 

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the Intercreditor Agreement; (f) no material terms (other than interest rate,
fees, premiums, funding discounts, optional prepayment provisions or, in the
case of subordination provisions, as permitted by clause (e) above) applicable
to such refinancing Indebtedness or, if applicable, the related security or
guarantees of such refinancing Indebtedness (including covenants, events of
default, remedies and acceleration rights) shall be, taken as a whole,
materially more favorable to the refinancing lenders than the terms that are
applicable under the instruments and documents governing the Indebtedness being
refinanced; provided that in the case of any Permitted Refinancing of the First
Lien Credit Agreement, the Second Lien Credit Agreement or the Third Lien Note
Indenture, the parties to such refinanced debt instrument shall agree to be
bound by the terms of the Intercreditor Agreement.

 

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

 

“Phoenix” means Phoenix Investment Adviser LLC, a Delaware limited liability
company.

 

“PIK” means payment-in-kind interest payable by the issuance of payment-in-kind
notes or by increasing the principal amount of an obligation.

 

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

 

“Preferred Shares” means the shares of Series A Preferred Stock of Borrower
issued to ASOF and JLP Credit Opportunity Master Fund Ltd pursuant to the
Preferred Shares Certificate of Designation.

 

“Preferred Shares Certificate of Designation” means the Certificate of
Designation, Powers, Preferences and Rights of Series A Preferred Stock of
Borrower dated as of the date hereof and filed with the Delaware Secretary of
State on or about the Closing Date.

 

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

 

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

 

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

 

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

 

(b)                                 with respect to a Lender’s obligation to
participate in the Letters of Credit, with respect to such Lender’s obligation
to reimburse Issuing Lender, and with respect to such Lender’s right to receive
payments of Letter of Credit Fees, and with respect to all other computations
and other matters related to the Letters of Credit, the percentage obtained by
dividing (i) the Revolving Loan Exposure of such Lender by (ii) the aggregate
Revolving Loan Exposure of all Lenders; provided, that if all of the Revolving
Loans have been repaid in full and the Credit Facility has been terminated, but
Letters of Credit remain outstanding, Pro Rata Share under this clause shall be
determined as if the Credit Facility

 

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had not been terminated and based upon the Revolver Loans as they existed
immediately prior to their termination,

 

(c)                                  [Intentionally Omitted], and

 

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

 

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

 

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

 

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

 

“Qualified IPO” means an underwritten public offering of common stock of the
Borrower pursuant to an effective registration statement filed with the
Securities and Exchange Commission in accordance with the Securities Act of
1933, as amended, that results in at least $50,000,000 of net cash proceeds to
Borrower and results in the listing of the common stock of Borrower on a
national securities exchange or the NASDAQ National Market quotation system.

 

“Real Property” means (a) the real property identified on Schedule R-1 to the
Agreement and (b) any estates or interests (fee, leasehold or otherwise) in real
property now owned or hereafter acquired by Borrower or its Subsidiaries and the
improvements thereto.

 

“Real Property Collateral” means any real property hereafter acquired by
Borrower or its Subsidiaries with a fair market value in excess of $5,000,000.

 

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

 

“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

 

“Refinancing Support Agreement” means the Amended and Restated Refinancing
Support Agreement dated as of May 2, 2014 among Borrower, ASOF II Investments,
LLC and Phoenix Investment Adviser LLC as amended by a term sheet amendment
agreement dated July 22, 2014 among the parties thereto.

 

“Registration Statement” means the Borrower’s and its Subsidiaries’ registration
statement on Form S-1 filed July 29, 2014, as amended, which was declared
effective on August 11, 2014 and contains

 

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a prospectus merged with a prospectus included in their registration statement
on Form S-1 filed February 13, 2014 and declared effective May 9, 2014.

 

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

 

“Related Agreements” means, collectively, the Refinancing Support Agreement, the
First Lien Loan Documents, the Second Lien Loan Documents, the Third Lien Note
Documents, the Warrant Agreements, the Shareholders’ Agreement, the
Tender/Exchange Offer Documents and the Preferred Shares Certificate of
Designation.

 

“Related Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of
credit in the ordinary course and that is administered, advised or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers, advises or manages a Lender.

 

“Remaining Unsecured Notes” means Borrower’s Existing Unsecured Notes, and the
Indebtedness represented thereby, that remain outstanding after the consummation
of the Tender/Exchange Offer.

 

“Remaining Unsecured Notes Documents” means the Remaining Unsecured Notes, the
Remaining Unsecured Notes Indenture and all other documents executed and
delivered with respect to the Remaining Unsecured Notes or the Remaining
Unsecured Notes Indenture.

 

“Remaining Unsecured Notes Indenture” means the Indenture dated as of
February 8, 2007 among Borrower, certain subsidiary guarantors and Wilmington
Trust Company, as trustee, as amended.

 

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials required by Environmental Laws.

 

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

 

“Report” has the meaning specified therefor in Section 15.16(a) of the
Agreement.

 

“Required Availability” means that Excess Availability exceeds the amount that
is equal to 20% of the Maximum Revolver Credit Limit.  (Notwithstanding anything
to the contrary, the Required Availability is in addition to the Required
Collateral Block and no portion of the Required Collateral Block will be
included in the Agent’s calculation of the Required Availability.)

 

“Required Blockage/Collections Period” is any period of time, on and after the
Closing Date, where the Blockage/Collections Trigger Event has occurred and is
continuing, at which point during such period, (i) all Collections will be
applied to reduce the Bank Obligations (or during the occurrence and continuance
of a Secured Debt Default (as defined in the Intercreditor Agreement, applied to
reduce the Secured Obligations (as defined in the Intercreditor Agreement) in
accordance with the Intercreditor Agreement), and (ii) the Collateral Agent (or
its agent) will have full control over the Lockbox and Designated Account
pursuant to the terms of the Blocked Account Agreement, whether or not a Default

 

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or an Event of Default has occurred and is continuing.  Notwithstanding anything
to the contrary in this Agreement, at any time a Blockage/Collections Trigger
Event occurs as a result of Borrower’s Excess Availability being less than 20%
of the Maximum Revolver Credit Limit, the Required Blockage/Collections Period
will continue until such time as Agent confirms that (a) Borrower’s Excess
Availability is equal to or greater than 20% of the Maximum Revolver Credit
Limit and (b) Borrower’s Excess Availability is equal to or greater than 20% of
the Maximum Revolver Credit Limit at all times during the immediately preceding
2 calendar months.

 

“Required Collateral Block” has the meaning specified therefor in
Section 7(a) of the Agreement.

 

“Required Lenders” means, at any time, Lenders having or holding more than 50%
of the sum of the aggregate Revolving Loan Exposure of all Lenders; provided,
that (i) the Revolving Loan Exposure of any Defaulting Lender shall be
disregarded in the determination of the Required Lenders, and (ii) at any time
there are 2 or more Lenders, “Required Lenders” must include at least 2 Lenders
(who are not Affiliates of one another).

 

“Reserves” means, as of any date of determination, those reserves (other than
Receivable Reserves and Bank Product Reserves) that Agent deems necessary or
appropriate, in its sole and absolute and subject to Section 2.01(c), to
establish and maintain (including reserves with respect to (a) sums that
Borrower or its Subsidiaries are required to pay under any Section of the
Agreement or any other Loan Document (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable under
such leases) and has failed to pay, and (b) amounts owing by Borrower or its
Subsidiaries to any Person to the extent secured by a Lien on, or trust over,
any of the Collateral (other than a Permitted Lien), which Lien or trust, in the
sole and absolute discretion of Agent likely would have a priority superior to
the Collateral Agent’s Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens
or trusts for ad valorem, excise, sales, or other taxes where given priority
under applicable law) in and to such item of the Collateral) with respect to the
Borrowing Base or the Maximum Revolver Credit Limit.

 

“Responsible Officer” is any of the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Corporate Controller and Treasury Manager of
Borrower.

 

“Restricted Payment” means to (a) declare or pay any dividend or make any other
payment or distribution, directly or indirectly, on account of Equity Interests
issued by Borrower (including any payment in connection with any merger or
consolidation involving Borrower) or to the direct or indirect holders of Equity
Interests issued by Borrower in their capacity as such (other than dividends or
distributions payable in Qualified Equity Interests issued by Borrower, or
(b) purchase, redeem, make any sinking fund or similar payment, or otherwise
acquire or retire for value (including in connection with any merger or
consolidation involving Borrower) any Equity Interests issued by Borrower, and
(c) make any payment to retire, or to obtain the surrender of, any outstanding
warrants, options, or other rights to acquire Equity Interests of Borrower now
or hereafter outstanding, and (d) make, or cause or suffer to permit any of
Borrower’s Subsidiaries to make, any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement, defeasance
(including in-substance or legal defeasance), sinking fund or similar payment
with respect to, any Subordinated Indebtedness, any Indebtedness incurred under
clauses (d), (e) and (f) of the definition of Permitted Indebtedness, or any
Earn Out Indebtedness.

 

“Revolver Credit Limit” means, with respect to each Revolving Lender, its
Revolver Credit Limit, and, with respect to all Revolving Lenders, their
Revolver Credit Limits, in each case as such Dollar amounts are set forth beside
such Revolving Lender’s name under the applicable heading on Schedule C-1 to the
Agreement or in the Assignment and Acceptance pursuant to which such Revolving

 

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Lender became a Revolving Lender under the Agreement, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.01 of the Agreement.

 

“Revolver Purchase” has the meaning assigned to that term in the Intercreditor
Agreement.

 

“Revolver Purchase Triggering Event” has the meaning assigned to that term in
the Intercreditor Agreement.

 

“Revolver Right to Purchase Notice” has the meaning assigned to that term in the
Intercreditor Agreement.

 

“Revolver Usage” means, as of any date of determination, the sum of (a) the
amount of outstanding Revolving Loans (inclusive of Protective Advances), plus
(b) the amount of the Letter of Credit Usage.

 

“Revolving Lender” means a Lender that has a Revolver Credit Limit or that has
an outstanding Revolving Loan.

 

“Revolving Loan Exposure” means, with respect to any Revolving Lender, as of any
date of determination (a) prior to the termination of the Credit Facility, the
amount of such Lender’s Revolver Credit Limit, and (b) after the termination of
the Credit Facility, the aggregate outstanding principal amount of the Revolving
Loans of such Lender.

 

“Revolving Loans” has the meaning specified therefor in Section 2.01(a) of the
Agreement.

 

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

 

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

 

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Corporation.

 

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

 

“Second Lien Credit Agreement” means the Second Lien Credit and Guaranty
Agreement dated as of the date hereof among Borrower, Guarantors, the lenders
from time to time party thereto and Wilmington Trust, National Association, as
administrative agent.

 

“Second Lien Loan Documents” means the “Credit Documents” under and as defined
in the Second Lien Credit Agreement.

 

“Second Lien Obligations” has the meaning assigned to that term in the
Intercreditor Agreement.

 

“Secured Parties” has the meaning assigned to that term in the Security
Agreement.

 

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

 

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“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

 

“Security Agreement” means that certain First Lien Pledge and Security Agreement
dated as of even date hereof, by and among Borrower and each Guarantor and
Collateral Agent, as it may be amended, restated, supplemented or otherwise
modified from time to time.

 

“Security Documents” shall mean the Guaranty Agreement, the Security Agreement,
the Trademark Security Agreement, the Patent Security Agreement, the Copyright
Security Agreement, the Intercreditor Agreement and each of the security
agreements, mortgages and other instruments and documents executed and delivered
pursuant to any of the foregoing or pursuant to Section 5.12.

 

“Settlement” has the meaning specified therefor in Section 2.03(e)(i) of the
Agreement.

 

“Settlement Date” has the meaning specified therefor in Section 2.03(e)(i) of
the Agreement.

 

“Sole Book Runner” has the meaning set forth in the preamble to the Agreement.

 

“Sole Lead Arranger” has the meaning set forth in the preamble to the Agreement.

 

“Solvent” means, with respect to Borrower and its Subsidiaries taken as a whole,
that as of the date of determination, both (i) (a) the sum of Borrower’s and its
Subsidiaries’ consolidated debt (including contingent liabilities) does not
exceed the present fair saleable value of their consolidated assets;
(b) Borrower’s and its Subsidiaries’ capital is not unreasonably small in
relation to their business as contemplated on the Closing Date or as proposed
thereafter; and (c) Borrower and its Subsidiaries taken as a whole have not
incurred and do not intend to incur, or reasonably believe that they, taken
together, will incur, debts beyond their ability to pay such debts as they
become due (whether at maturity, through refinancing or otherwise); and (ii) the
Borrower and its Subsidiaries, taken as a whole, are “solvent” or not
“insolvent”, as applicable, within the meaning given those terms and similar
terms under the Bankruptcy Code and other applicable laws relating to fraudulent
transfers and conveyances.  For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light
of all of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability
(irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standards No. 5).

 

“Special Diversification Payments” shall mean payments (other than payments
required by applicable law) pursuant to the ESOP Plan Documents in respect of
employee elections to transfer up to 10% of the value of their ESOP accounts to
investments other than the Borrower’s common stock.

 

“Specified Event of Default” has the meaning specified therefor in Section 13.01
of the Agreement.

 

“Specified Real Property Matters” means (i) fully executed and notarized
Mortgages, in proper form for recording in all appropriate places in all
applicable jurisdictions, encumbering each applicable Material Real Property,
(ii) an opinion of counsel (which counsel shall be reasonably satisfactory to
Agent) in each state in which an applicable Material Real Property is located
with respect to the enforceability of the form(s) of Mortgages to be recorded in
such state and such other matters as Agent may reasonably request, in each case
in form and substance reasonably satisfactory to Agent, (iii) (a) ALTA mortgagee
title insurance policies or unconditional commitments therefor issued by one or
more title companies reasonably satisfactory to Administrative Agent with
respect to each applicable Material

 

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Real Property (each, a “Title Policy”), in amounts not less than the fair market
value of each applicable Material Real Property, together with a title report
issued by a title company with respect thereto, dated not more than 30 days
prior to the occurrence specified in Section 5.24 and copies of all recorded
documents listed as exceptions to title or otherwise referred to therein, each
in form and substance reasonably satisfactory to Agent and (b) evidence
satisfactory to Agent that such Loan Party has paid to the title company or to
the appropriate Governmental Authorities all expenses and premiums of the title
company and all other sums required in connection with the issuance of each
Title Policy and all recording and stamp Taxes (including mortgage recording and
intangible Taxes) payable in connection with recording the Mortgages for each
applicable Material Real Property in the appropriate real estate records,
(v) (a) a completed Flood Certificate with respect to each applicable Material
Real Property, which Flood Certificate shall (I) be addressed to Collateral
Agent and (II) otherwise comply with the Flood Program; (b) if the Flood
Certificate states that such applicable Material Real Property is located in a
Flood Zone, Borrower’s written acknowledgment of receipt of written notification
from Agent (I) as to the existence of such applicable Material Real Property and
(II) as to whether the community in which each such applicable Material Real
Property is located is participating in the Flood Program; and (c) if such
applicable Material Real Property is located in a Flood Zone and is located in a
community that participates in the Flood Program, evidence that Borrower has
obtained a policy of flood insurance that is in compliance with all applicable
requirements of the Flood Program; and (vi) ALTA surveys of each applicable
Material Real Property, in a form sufficient for the title company to issue a
survey endorsement to the Title Policy or otherwise provide such affirmative
title insurance coverage as reasonably acceptable to Agent.

 

“Standard Letter of Credit Practice” means, for Issuing Lender, any domestic or
foreign law or letter of credit practices applicable in the city in which
Issuing Lender issued the applicable Letter of Credit or, for its branch or
correspondent, such laws and practices applicable in the city in which it has
advised, confirmed or negotiated such Letter of Credit, as the case may be, in
each case, (a) which letter of credit practices are of banks that regularly
issue letters of credit in the particular city, and (b) which laws or letter of
credit practices are required or permitted under ISP or UCP, as chosen in the
applicable Letter of Credit.

 

“Subordinated Indebtedness” means any unsecured Indebtedness of Borrower or its
Subsidiaries incurred from time to time that is subordinated in right of payment
to the Bank Obligations and (a) that is only guaranteed by the Guarantors,
(b) that is not subject to scheduled amortization, redemption, sinking fund or
similar payment and does not have a final maturity, in each case, on or before
the date that is six months after the Maturity Date, (c) that does not include
any financial covenants or any covenant or agreement that is more restrictive or
onerous on any Loan Party in any material respect than any comparable covenant
in the Agreement and is otherwise on terms and conditions reasonably acceptable
to Agent, (d) shall be limited to cross-payment default and cross-acceleration
to designated “senior debt” (including the “Bank Obligations”), and (e) the
terms and conditions of the subordination are set forth in a written agreement
reasonably acceptable to Agent.  For the avoidance of doubt, Indebtedness under
the First Lien Loan Documents, the Second Lien Loan Documents, the Third Lien
Note Documents and Indebtedness under the Remaining Unsecured Notes shall not
constitute Subordinated Indebtedness.

 

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the Equity Interests having ordinary voting power to elect a majority
of the Board of Directors of such corporation, partnership, limited liability
company, or other entity.

 

“Supermajority Lenders” means, at any time, Lenders having or holding more than
66 2/3% of the sum of the aggregate Revolving Loan Exposure of all Lenders;
provided, that (i) the Revolving Loan Exposure of any Defaulting Lender shall be
disregarded in the determination of the Required Lenders,

 

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and (ii) at any time there are 2 or more Lenders, “Supermajority Lenders” must
include at least 2 Lenders (who are not Affiliates of one another)

 

“Synthetic Lease” shall mean, as to any Person, any lease (including leases that
may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) having a value in excess of $100,000 (a) that is accounted
for as an operating lease under GAAP and (b) in respect of which the lessee
retains or obtains ownership of the property so leased for U.S. Federal income
tax purposes, other than any such lease under which such person is the lessor.

 

“Synthetic Lease Obligations” shall mean, as to any Person, an amount equal to
the capitalized amount of the remaining lease payments under any Synthetic Lease
that would appear on a balance sheet of such person in accordance with GAAP if
such obligations were accounted for as Capital Lease Obligations.

 

“Synthetic Purchase Agreement” shall mean any swap, derivative or other
agreement or combination of agreements pursuant to which Borrower or any
Subsidiary is or may become obligated to make (a) any payment in connection with
a purchase by any third party from a person other than Borrower or any
Subsidiary of any Equity Interest or (b) any payment (other than on account of a
permitted purchase by it of any Equity Interest) the amount of which is
determined by reference to the price or value at any time of any Equity
Interest; provided that no phantom stock plan, stock appreciation right plan or
similar plan providing for payments only to current or former directors,
officers or employees of Borrower or the Subsidiaries (or to their heirs or
estates) shall be deemed to be a Synthetic Purchase Agreement.

 

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein, and all
interest, penalties or similar liabilities with respect thereto.

 

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

 

“Tender/Exchange Offer” has the meaning assigned to such term in the Refinancing
Support Agreement.

 

“Termination Date” means the earliest of (i) the Maturity Date, (ii) the date
the Agent or the Borrower terminates the Credit Facility, or (iii) the date the
Agent demands payment of the Bank Obligations or the Bank Obligations otherwise
become due and payable.

 

“Third Lien Note Documents” means the Third Lien Note Indenture and any other
document executed and delivered in connection with the Third Lien Notes.

 

“Third Lien Note Indenture” means the Indenture dated as of the date hereof
among Borrower, certain subsidiaries of Borrower and Wilmington Trust, National
Association, as the trustee and collateral trustee thereunder.

 

“Third Lien Notes” means Borrower’s third-lien senior secured notes due 2020
issued pursuant to the Third Lien Note Indenture.

 

“Third Lien Obligations” has the meaning assigned to that term in the
Intercreditor Agreement.

 

“Trademark Security Agreement” means that certain First Lien Trademark Security
Agreement, dated as of even date with this Agreement, by and among Borrower,
Washington Consulting, Inc., a

 

46

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

 

Virginia corporation, and Collateral Agent (as the same may be further amended,
amended and restated, supplemented, renewed, restated, replaced, or otherwise
modified from time to time).

 

“Transaction Costs” means the fees, costs and expenses payable by Borrower or
any of Borrower’s Subsidiaries on or before the Closing Date in connection with
the transactions contemplated by the Loan Documents and the Related Agreements.

 

“Transactions” means, collectively, (a) the execution, delivery and performance
by the Loan Parties of the Loan Documents to which they are a party and, in the
case of Borrower, the making of the initial borrowings hereunder, (b) the
execution, delivery and performance by the Loan Parties of the First Lien Loan
Documents to which they are a party and, in the case of Borrower, the making of
the initial borrowings thereunder, (c) the execution, delivery and performance
by the Loan Parties of the Second Lien Loan Documents to which they are a party
and, in the case of Borrower, the making of the borrowings thereunder, (d) the
execution, delivery and performance by the Loan Parties of the Third Lien Note
Documents to which they are a party and, in the case of Borrower, the issuance
of the Third Lien Notes thereunder, (e) the execution, delivery and performance
by the Loan Parties of the other Related Agreements to which they are a party
and the issuance of the Preferred Shares and the New Warrants, (f) the
consummation of the Tender/Exchange Offer, (g) the repayment of all amounts due
or outstanding under, and the termination of the Existing Credit Agreement and
the Existing Secured Notes and (h) the payment of the Transaction Costs.

 

“UCP” means, with respect to any Letter of Credit, the Uniform Customs and
Practice for Documentary Credits 2007 Revision, International Chamber of
Commerce Publication No. 600 and any subsequent revision thereof adopted by the
International Chamber of Commerce on the date such Letter of Credit is issued.

 

“United States” means the United States of America.

 

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

 

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

 

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

 

“Unused Line Fee” has the meaning specified therefor in Section 2.10(b) of the
Agreement.

 

“Voidable Transfer” has the meaning specified therefor in Section 17.08 of the
Agreement.

 

“Warrant Agent” means Wilmington Trust, National Association.

 

“Warrant Agreements” means, collectively, the Existing Warrant Agreement and the
New Warrant Agreement.

 

“Warrants” means, collectively, the Existing Warrants and the New Warrants.

 

“Wells Fargo” means Wells Fargo Bank, National Association, a national banking
association.

 

“Withdrawal Liability” means liability with respect to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

 

47

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

 

Schedule 3.1

 

to

 

Credit Agreement

 

Conditions Precedent

 

The obligation of each Lender to make its initial extension of credit provided
for in the Agreement is subject to the fulfillment, to the satisfaction of each
Lender (the making of such initial extension of credit by any Lender being
conclusively deemed to be its satisfaction or waiver of the following), of each
of the following conditions precedent:

 

(a)                                 the Closing Date shall occur on or before
August 18, 2014;

 

(b)                                 Agent shall have received a letter duly
executed by each Loan Party authorizing Agent to file (on behalf of Collateral
Agent) appropriate financing statements in such office or offices as may be
necessary or, in the opinion of Agent, desirable to perfect the security
interests to be created by the Loan Documents;

 

(c)                                  Agent shall have received Borrower’s
financial statements for the quarter-ending, March 31, 2014, in a form
satisfactory to Agent in its sole and absolute discretion;

 

(d)                                 Agent shall have received each of the
following documents, in form and substance satisfactory to Agent, duly executed
and delivered, and each such document shall be in full force and effect:

 

(i)                                     a completed Borrowing Base Certificate;

 

(ii)                                  the Guaranty Agreement,

 

(iii)                               stock powers required by the Security
Agreement,

 

(iv)                              the Blocked Account Agreements,

 

(v)                                 the Security Agreement in favor of
Collateral Agent,

 

(vi)                              the Copyright Security Agreement in favor of
Collateral Agent,

 

(vii)                           the Patent Security Agreement in favor of
Collateral Agent,

 

(viii)                        the Trademark Security Agreement in favor of
Collateral Agent,

 

(ix)                              the Intercreditor Agreement,

 

(x)                                 the Flow of Funds Agreement,

 

(xi)                              a completed Perfection Certificate executed by
each of the Loan Parties,

 

(xii)                           a completed Form 8821 (IRS), and

 

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

 

(xiii)                        a completed Form 13 FMS (Treasury Department).

 

(e)                                  Agent shall have received a certificate
from the Secretary of each Loan Party (i) attesting to the resolutions of such
Loan Party’s Board of Directors authorizing its execution, delivery, and
performance of the Loan Documents to which it is a party, and authorizing
specific officers of such Loan Party to execute the same, and (ii) attesting to
the incumbency and signatures of such specific officers of such Loan Party;

 

(f)                                   Agent shall have received copies of each
Loan Party’s Governing Documents, as amended, modified, or supplemented to the
Closing Date, which Governing Documents shall be (i) certified by the Secretary
of such Loan Party, and (ii) with respect to Governing Documents that are
charter documents, certified as of a recent date by the appropriate governmental
official;

 

(g)                                  30 days prior to the Closing Date, Agent
shall have received a certificate of status with respect to each Loan Party,
such certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Loan Party, which certificate shall indicate that such Loan
Party is in good standing in such jurisdiction;

 

(h)                                 30 days prior to the Closing Date, Agent
shall have received certificates of status with respect to each Loan Party, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Loan Party) in which its failure
to be duly qualified or licensed would constitute a Material Adverse Effect,
which certificates shall indicate that such Loan Party is in good standing in
such jurisdictions;

 

(i)                                     Agent shall have received a certificate
of insurance in favor of Collateral Agent, together with the endorsements
thereto, as are required by Section 5.06 of the Agreement, the form and
substance of which shall be satisfactory to Agent;

 

(j)                                    Agent shall have received a Collateral
Access Agreement in favor of Collateral Agent with respect to Borrower’s
location at 1750 Tysons Boulevard, Suite 1300, McLean, Virginia 22102;

 

(k)                                 Agent shall have received an opinion of the
Loan Parties’ counsel in form and substance satisfactory to Agent;

 

(l)                                     Borrower shall have the Required
Collateral Block after giving effect to the initial extensions of credit under
the Agreement and the payment of all fees and expenses required to be paid by
Borrower on the Closing Date under the Agreement or the other Loan Documents;

 

(m)                             Agent shall have completed its business, legal,
and collateral due diligence, including (i) a collateral audit and review of
Borrower’s and its Subsidiaries’ books and records and verification of
Borrower’s representations and warranties to Lender Group, and (ii) a review of
Borrower’s and its Subsidiaries’ material agreements, in each case, the results
of which shall be satisfactory to Agent;

 

(n)                                 Agent shall have completed (i) Patriot Act
searches, OFAC/PEP searches and customary individual background checks for each
Loan Party, and (ii) OFAC/PEP searches and customary individual background
searches for each Loan Party’s senior management and key principals, the results
of which shall be satisfactory to Agent;

 

2

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

 

(o)                                 Agent shall have received a set of
Projections of Borrower for the 3 year period following the Closing Date (on a
year by year basis, and for the 1 year period following the Closing Date, on a
month by month basis), in form and substance (including as to scope and
underlying assumptions) satisfactory to Agent;

 

(p)                                 Borrower shall have paid all Lender Group
Expenses incurred in connection with the transactions evidenced by the Agreement
and the other Loan Documents;

 

(q)                                 on the Closing Date:

 

(i)                                     Borrower shall have obtained at least
$285,000,000 in commitments under the First Lien Credit Agreement;

 

(ii)                                  Borrower shall have received gross cash
proceeds of at least $70,000,000 from borrowings under the Second Lien Credit
Agreement;

 

(iii)                               Borrower shall have issued at least
$210,986,000 of the Third Lien Notes in connection with the consummation of the
Tender/Exchange Offer; and

 

(iv)                              Borrower shall have Excess Availability in an
amount equal to or greater than $13,000,000;

 

(r)                                    (1) All conditions (including the Minimum
Condition described in the Refinancing Support Agreement) to the Transactions
set forth in the Related Agreements shall have been satisfied or the fulfillment
of any such conditions shall have been waived with the consent of Arranger and
(2) effective as of the Closing, the Transactions shall be consummated in
accordance with the terms of the Related Agreements and applicable law;

 

(s)                                   Agent shall have received a fully executed
or conformed copy of each Related Agreement and any documents executed in
connection therewith.  Each Related Agreement shall be in full force and effect,
shall include terms and provisions reasonably satisfactory to Agent and no
provision thereof shall have been modified or waived in any respect determined
by Agent to be material, in each case without the consent of Agent;

 

(t)                                    on the Closing Date, Borrower and its
Subsidiaries shall have (i) repaid in full all Existing Indebtedness and all
Existing Unsecured Notes (other than the Remaining Unsecured Notes),
(ii) terminated any commitments to lend or make other extensions of credit
thereunder, and (iii) delivered to Agent all documents or instruments necessary
to release all Liens securing the Existing Credit Facility or other obligations
of Borrower and its Subsidiaries under the Existing Indebtedness and Existing
Unsecured Notes (other than the Remaining Unsecured Notes) being repaid on the
Closing Date;

 

(u)                                 Agent shall have received a Solvency
certificate, in form and substance satisfactory to it, certifying as to the
solvency of the Borrower and its Subsidiaries on a consolidated basis;

 

(v)                                 Borrower and each of its Subsidiaries shall
have received all licenses, approvals or evidence of other actions required by
any Governmental Authority in connection with the execution and delivery by
Borrower or its Subsidiaries of the Loan Documents or with the consummation of
the transactions contemplated thereby; and

 

3

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

 

(w)                               all other documents and legal matters in
connection with the transactions contemplated by the Agreement shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to Agent.

 

4

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

 

Schedule 3.6

 

to

 

Credit Agreement

 

Conditions Subsequent

 

1.                                      Related Agreements.  On or prior to the
date that is ten Business Days after the Closing Date (or such later date as may
be agreed by the Required Lenders in their sole discretion), the Borrower shall
deliver to the Agent and the Lenders all immaterial Related Agreements not
delivered on or prior to the Closing Date.

 

2.                                      Additional Guarantors.  On or prior to
the date that is ten Business Days after the Closing Date (or such later date as
may be agreed to by the Required Lenders in their sole discretion), the Borrower
shall cause each of (i) Alion — MA&D Corporation, (ii) Alion Asia Corporation,
(iii) Alion Offshore Services, Inc. and (iv) Innovative Technology Solutions
Corporation to (a) become a Guarantor under this Agreement and a Grantor under
the Pledge and Security Agreement and Intercreditor Agreement by executing and
delivering to the Agent and the Collateral Agent a Guaranty Agreement, a Pledge
Supplement and Intercreditor Joinder and (b) take all such actions and execute
and deliver, or cause to be executed and delivered, all such documents,
instruments, agreements and certificates reasonably requested by the Required
Lenders, Agent or the Collateral Agent, including those which are similar to
those described in the applicable clauses of Schedule 3.1 to the Credit
Agreement; provided that no Colorado or New Mexico local counsel opinions shall
be required to be delivered with respect to Alion — MA&D Corporation or
Innovative Technology Solutions Corporation.

 

3.                                      Stock Certificates.  On or prior to the
date that is ten Business Days after the Closing Date (or such later date as may
be agreed by the Required Lenders in their sole discretion), the Borrower shall
cause (i) the stock certificate of Alion Science and Technology (Canada)
Corporation to be re-issued to update the name of the registered owner to be
Alion International Corporation, and deliver such stock certificate to the
Collateral Agent, together with three undated stock powers executed in blank by
a duly authorized officer of Alion International Corporation and (ii) the stock
certificate of Alion India Corporation to be re-issued to update the name of the
issuer to be Alion Asia Corporation, and deliver such stock certificate to the
Collateral Agent, together with three undated stock powers executed in blank by
a duly authorized officer of Alion International Corporation.

 

4.                                      Real Property.  On or prior to the date
that is ten Business Days after the Closing Date (or such later date as may be
agreed to by the Required Lenders in their sole discretion), the Borrower shall
deliver to Agent, in form and substance reasonably satisfactory to the Agent, a
true, accurate and complete list of (i) all Real Property, and (ii) all leases,
subleases or assignments of leases in which a Loan Party is the assignee
(together with all amendments, modifications, supplements, renewals or
extensions of any thereof) of each Real Property of any Loan Party, regardless
of whether such Loan Party is the landlord or tenant (whether directly or as an
assignee or successor in interest) under such lease, sublease or assignment,
pursuant to the terms of Section 4.05(b).

 

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

 

SCHEDULE 4.1(b)

 

CAPITALIZATION OF BORROWER

 

Issuer

 

Number of
Certificate

 

Registered
Owner

 

Authorized
Shares and
Class of
Equity Interest

 

Issued
Shares and
Class of
Equity Interest

 

Percentage
Of Equity
Interests

Alion Science and Technology Corporation

 

84

 

Alion Science and Technology Corporation Employee Ownership, Savings and
Investment Trust

 

20,000,000 common

 

5,000,000 preferred, of which 70 are designated Series A Preferred Stock

 

7,641,493.2889 common

 

100% common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,000,000 common

 

 

 

 

 

Alion Science and Technology Corporation

 

 

 

 

 

 

 

 

 

78.57% Series A Preferred Stock

 

1

 

ASOF II Investments, LLC

 

5,000,000 preferred, of which 70 are designated Series A Preferred Stock

 

55 Series A Preferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,000,000 common

 

 

 

 

 

Alion Science and Technology Corporation

 

 

 

 

 

 

 

 

 

21.43% Series A Preferred

 

2

 

JLP Credit Opportunity Fund LP

 

5,000,000 preferred, of which 70 are designated Series A Preferred Stock

 

15 Series A Preferred

 

 

See Schedule 4.1(d).

 

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

 

SCHEDULE 4.1(c)

 

CAPITALIZATION OF BORROWER’S SUBSIDIARIES

 

Issuer

 

Number of
Certificate

 

Registered
Owner

 

Authorized
Shares of
Common Stock

 

Issued
Shares of
Common Stock

 

Percentage
Of Equity
Interests

 

 

 

 

 

 

 

 

 

 

 

Innovative Technology Solutions Corporation

 

1

 

Alion Science and Technology Corporation

 

800,000

 

97,104 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Alion — IPS Corporation

 

1

 

Alion Science and Technology Corporation

 

1,000,000

 

100 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Alion — CATI Corporation

 

6

 

Alion Science and Technology Corporation

 

200,000

 

176,471 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Alion — METI Corporation

 

6

 

Alion Science and Technology Corporation

 

1,000

 

100 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Alion — JJMA Corporation

 

21

 

Alion Science and Technology Corporation

 

5,000,000

 

1,224,545.6793 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Washington Consulting, Inc.

 

9

 

10

 

Alion Science and Technology Corporation

 

50,000

 

9,000 common

 

1,100 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Alion — MA&D Corporation

 

23

 

Alion Science and Technology Corporation

 

50,000

 

1,050 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Washington Consulting Government Services, Inc.

 

2

 

Alion Science and Technology Corporation

 

1,000

 

100 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Alion Asia Corporation

 

2

 

Alion International Corporation

 

1,000

 

100 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Alion Offshore Services, Inc.

 

2

 

Alion International Corporation

 

3,000

 

100 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Alion International Corporation

 

2

 

Alion Science and Technology Corporation

 

5,000

 

1,000 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Alion Maritime India PLC

 

1

 

2

 

Alion Asia Corporation

 

Alion International Corporation

 

50,000

 

49,950 common

 

50 common

 

99%

 

1%

 

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

 

Issuer

 

Number of
Certificate

 

Registered
Owner

 

Authorized
Shares of
Common Stock

 

Issued
Shares of
Common Stock

 

Percentage
Of Equity
Interests

 

 

 

 

 

 

 

 

 

 

 

Alion Science And Technology (Canada) Corporation

 

3

 

4

 

Alion International Corporation

 

100,000 Common

 

65 common

 

35 common

 

100%

 

 

 

 

 

 

 

 

 

 

 

Alion-BMH Corporation

 

8

 

Alion Science and Technology Corporation

 

5,000

 

1,000 Common

 

100%

 

2

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

 

SCHEDULE 4.1(d)

 

SUBSCRIPTIONS, OPTIONS, WARRANTS, CALLS

 

ESOP Plan Documents

 

Amended and Restated Refinancing Support Agreement, dated as of May 2, 2014,
among Borrower, ASOF Investments, LLC and Phoenix Investment Adviser LLC, as
amended (the “Refinancing Support Agreement”).

 

Warrant Agreement, dated as of March 22, 2010, by and between the Borrower and
Wilmington Trust Company, as warrant agent and the warrants issued thereunder to
purchase 602,614 shares of common stock of the Borrower.

 

Warrant Agreement, dated as of August 18, 2014, by and between the Borrower and
Wilmington Trust, National Association, as warrant agent and the penny warrants
issued thereunder to purchase 40% shares of outstanding common stock of the
Borrower.

 

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

 

SCHEDULE 4.2(b)(iv)

 

APPROVALS

 

Under the terms of the Refinancing Support Agreement, the consent of the
Supporting Noteholders (as defined therein) must be obtained.

 

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

 

SCHEDULE 4.6(b)

 

LITIGATION

 

(a) None.

 

(b) None.

 

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

 

SCHEDULE 4.10

 

BENEFIT PLANS

 

None.

 

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

 

SCHEDULE 4.11

 

ENVIRONMENTAL MATTERS

 

In April 2013, the EPA requested Alion send gas-filled canisters to a vendor for
testing.  Alion shipped the canisters to the vendor via UPS.  On May 2, 2013,
the FAA advised Alion that one of the containers had leaked during
shipment/storage and that UPS and the FAA had initiated an investigation.  Alion
conducted an internal investigation into the matter. In a May 17, 2013 response
to the FAA, Alion noted possible contributing factors (e.g., the EPA customer
prepared some of the shipping labels; UPS removed or obscured other labels that
might have been required), but accepted responsibility.  In that response, Alion
agreed to cease engaging in pre-transportation functions (packing, packaging,
marking and labeling) and to train and certify applicable employees with respect
to proper shipping/storing procedures.  On July 11, 2014, the FAA formally
advised Alion that its investigation revealed that Alion did not comply with
regulatory requirements involving training, marking, labeling, and preparation
of shipping documents and proposed a civil penalty of $49,000.  Alion is
diligently working with the FAA to resolve this matter.

 

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

 

SCHEDULE 4.14

 

PERMITTED INDEBTEDNESS

 

10¼% Senior Unsecured Notes, issued February 8, 2007 and maturing February 1,
2015 with an outstanding principal amount of $235,000,000 as of May 2, 2014, as
amended.

 

Indenture Agreement for 10¼% Senior Unsecured Notes, dated as of February 8,
2007, among the Borrower, the other grantors party thereto and Wilmington Trust
Company, as collateral agent and trustee.

 

See Schedule E-2

 

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

 

SCHEDULE 4.22

 

GOVERNMENT CONTRACTS

 

None.

 

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

 

SCHEDULE 4.29

 

CERTAIN ESOP PLAN DOCUMENTS EXCEPTIONS

 

None.

 

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

 

Schedule 5.1

 

to

 

Credit Agreement

 

Financial Statements, Reports, Certificates

 

Deliver to Agent (and if so requested by Agent, with copies for each Lender)
each of the financial statements, reports, or other items set forth below at the
following times in form satisfactory to Agent:

 

as soon as available, but in any event no later than the 45th day after the end
of each Fiscal Quarter during each of Borrower’s Fiscal Years, except the fourth
Fiscal Quarter,

 

(a)         an unaudited consolidated balance sheet as of the last day of
Borrower’s first three Fiscal Quarters and an income statement and statement of
cash flow, covering Borrower’s operations on a consolidated basis for such
period and compared to the prior quarter,

 

(b)         a reconciliation of billed Accounts and trade accounts payable of
Borrower’s general ledger accounts to its quarterly financial statements
including any book reserves related to each category, and

 

(c)          a Compliance Certificate.

 

 

 

as soon as available, but in any event within 30 days after the end of each
calendar month, or more frequently upon any material change to Borrower’s
business,

 

(d)         a detailed report regarding Borrower’s unbilled Accounts.

 

 

 

as soon as available, but in any event no later than the 90th day after the end
of each of Borrower’s Fiscal Years during the term of the Agreement,

 

(e)          consolidated balance sheet as of the last day of Borrower’s Fiscal
Year, and an income statement and statement of cash flow covering Borrower’s
operations on a consolidated basis for such Fiscal Year, audited by independent
certified public accountants reasonably acceptable to Agent and certified,
without any of the following qualifications (including any (A) “going concern”
or like qualification or exception, other than for Fiscal Year 2013 provided
such “going concern” qualification is solely with respect the pending maturities
of Borrower’s existing Indebtedness, its recurring net losses and its excess of
liabilities over its assets, (B) qualification or exception as to the scope of
such audit, or (C) qualification which relates to the treatment or
classification of any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect of which
would be to cause any noncompliance with the

 

 

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

 

 

 

provisions of Section 5.07 of the Agreement), by such accountants to have been
prepared in accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, statement of cash flow, and statement of
shareholder’s equity, and, if prepared, such accountants’ letter to management),
and

 

(f)           a Compliance Certificate.

 

 

 

as soon as available, but in any event within 30 days prior to the start of each
of Borrower’s Fiscal Years, or more frequently upon any material change to
Borrower’s business,

 

(g)          copies of Borrower’s Projections (including management’s projected
income statements, balance sheets and cash flow statements), in form and
substance satisfactory to Agent, in its sole but reasonable discretion, for the
forthcoming Fiscal Year, month by month, certified by the chief financial
officer of Borrower as being the Borrower’s good faith projection of the
financial performance of Borrower during the period covered thereby subject to
assumptions believed by Borrower to be reasonable at the time of the delivery of
such Projections to Agent (it being understood that such Projections are subject
to significant uncertainties and contingencies, many of which are beyond the
control of the Loan Parties and their Subsidiaries, and no assurances can be
given that such Projections will be realized, and although reflecting Borrower’s
good faith estimate, projections or forecasts based on methods and assumptions
which Borrower believed to be reasonable at the time such Projections were
prepared, are not to be viewed as facts, and that actual results during the
period or periods covered by the Projections may differ materially from
projected or estimated results.

 

 

 

if and when filed by Borrower,

 

(h)         Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K
current reports, all within 5 days of filing

 

(i)             any other filings made by Borrower with the SEC, and

 

(j)            any other information that is provided by Borrower to its
shareholders generally in their capacity as shareholders and not information
generally provided to individuals in their capacity as employees.

 

 

 

promptly, but in any event no later than 5 Business Days after Borrower has
knowledge of any event or condition that constitutes a Default or an Event of
Default,

 

(k)         notice of such event or condition and a statement of the curative
action that Borrower proposes to take with respect thereto.

 

 

 

promptly after the commencement thereof, but in any

 

(l)             notice of all actions, suits, or proceedings brought by or
against Borrower or any of its Subsidiaries before any Governmental Authority
which reasonably

 

2

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

 

event no later than 5 Business Days after the service of process with respect
thereto on Borrower or any of its Subsidiaries,

 

could be expected to result in a Material Adverse Effect.

 

 

 

upon the request of Agent,

 

(m)     true, correct and complete copies of all Material Government Contracts
(including current and ongoing modifications) which support any Loan Party’s
receivables.

 

(n)         any other information reasonably requested relating to the financial
condition of Borrower or its Subsidiaries.

 

 

 

as soon as practicable and in any event (i) no later than 10 Business Days after
receipt, by the Borrower’s Board of Directors and the Borrower’s ESOP Committee
of the annual valuation report prepared for the ESOP for each Fiscal Year,

 

(o)         true, correct and complete copies of such semi-annual valuation
report prepared for the ESOP for each Fiscal Year. Borrower shall alert Agent
within 10 days of completion of each valuation, and Borrower agrees to make such
valuations available at Borrower’s office for Agent to review such valuations.

 

 

 

on the date that is the second anniversary of the delivery of the most recent
repurchase liability study of the Borrower prepared for the ESOP

 

(p)         true, correct and complete copies of a repurchase liability study of
Borrower prepared for the ESOP as of a recent date, in each case in form and
substance reasonably acceptable to the Agent.

 

 

 

to the extent not otherwise delivered hereunder, promptly after being furnished
or received

 

(q)         true, correct and complete copies of all notices, reports,
certificates, documents and other information furnished to or received from the
administrative agent under the First Lien Credit Agreement, the administrative
agent under the Second Lien Credit Agreement, the trustee under the Third Lien
Note Documents, any lenders under the First Lien Credit Agreement, any lenders
under the Second Lien Credit Agreement , any holders of the Third Lien Notes, or
any other agent or representative of such lenders or holders (including any
amendments, waivers,

 

3

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

 

 

 

supplements, modifications, notices or other documents relating to any default
or potential default thereunder, but in any event excluding routine notices,
reports and certificates of an administrative nature)

 

4

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

 

Schedule 5.2

 

to

 

Credit Agreement

 

Collateral Reporting

 

Provide Agent (and if so requested by Agent, with copies for each Lender) with
each of the documents and reports set forth below at the following times and as
of the reporting dates or periods set forth below, all in form satisfactory to
Agent in its reasonable discretion:

 

Not later than Tuesday of each week, unless Agent has received and approved a
Borrowing Base Certificate within the prior 5 Business Days, by Agent, for the
period ending on the preceding Friday

 

(a)         a billed Account roll-forward with supporting details supplied from
sales journals, collection journals, credit registers and any other records,

 

(b)         notice of all claims, offsets, or disputes asserted by Account
Debtors with respect to Borrower’s and the Loan Party’s billed Accounts
involving amounts equal to or greater than $500,000 individually, or $1,000,000
in the aggregate, and

 

(c)          provide a listing of invoices.

 

 

 

(a) Prior to any Permitted Redemption in excess of $2,000,000 and 30 days after
the date of any Permitted Redemption, monthly as of the last day of each month,
which reports shall be delivered not later than the 15th day of each month, and
for 30 days after any Permitted Redemption in excess of $2,000,000 has occurred,
or (b) at any time that Borrower does not have the Required Availability,
weekly, prepared as of Friday of each week, and delivered not later than the
2nd Business Day thereafter

 

(d)         a detailed aging, by total, of Borrower’s billed Accounts, together
with a reconciliation and supporting documentation for any reconciling items
noted,

 

(e)          a detailed calculation (together with supporting documents) of
those Accounts that are not eligible for the Borrowing Base,

 

(f)           a summary aging, by vendor, of Borrower’s and its Subsidiaries’
accounts payable and any book overdraft and an aging, by vendor, of any held
checks,

 

(g)          a monthly billed Account roll-forward, in a format acceptable to
Agent in its discretion, tied to the beginning and ending account receivable
balances of Borrower’s general ledger, and

 

(h)         an executed Borrowing Base Certificate.

 

(i)             a detailed report regarding Borrower’s unbilled Accounts.

 

 

 

Annually, within 30 days of Fiscal Year end

 

(j)            a list of Borrower’s and its Subsidiaries’ customers on a
contract level, with address and contact information.

 

 

 

Annually, within 30 days of Fiscal Year end

 

(k)         a list of Borrower’s and its Subsidiaries’ customers on a contract
level, with address and contact information, unless with respect to Government
Contracts, the disclosure of this information would cause Borrower to be in

 

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

 

 

 

violation of the law, in which case, Borrower shall take such actions as are
required under the Pledge Agreement to permit this classified information to be
released to the Agent.

 

 

 

Upon request by Agent

 

(l)             copies of purchase orders and invoices exceeding $200,000 for
Equipment acquired by Borrower or its Subsidiaries, and

 

(m)     such other reports as to the Collateral or the financial condition of
Borrower and its Subsidiaries, as Agent may reasonably request.

 

 

 

Quarterly, within 15 days of each Fiscal Quarter end or if not available within
15 days, then as soon as such reports are available but in no event more than 30
days after each Fiscal Quarter end

 

(n)         a report regarding the Government Contracts of each Loan Party,
together with a backlog report of each Loan Party, and

 

(o)         a detailed report regarding Borrower’s unbilled Accounts.

 

Additionally, provide Agent (and if so requested by Agent, with copies for each
Lender) with each of the documents set forth below at the following times in
form satisfactory to Agent:

 

(a)  promptly after the filing thereof with the United States Secretary of
Labor, the Internal Revenue Service or the PBGC, copies of each annual and other
report with respect to each Pension Plan or any trust created thereunder,

 

(b)  promptly upon becoming aware of the occurrence of any Notification Event or
of any “prohibited transaction,” as described in section 406 of ERISA or in
section 4975 of the IRC in connection with any Pension Plan or any trust created
thereunder, a written notice signed by a chief financial officer of Borrower,
specifying the nature thereof, what action the Loan Parties propose to take with
respect thereto, and, when known, any action taken or proposed by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto,

 

(c)  promptly upon receipt thereof, copies of any notice of the PBGC’s intention
to terminate or to have a trustee appointed to administer any Pension Plan,

 

(d)  no later than March 15 of each year during the term of the Agreement, proof
that each Loan Party submitted a request for a Withdrawal Liability estimate to
each Multiemployer Plan no later than February 15 of each year during the term
of the Agreement, and

 

(e)  promptly upon its receipt thereof, a copy of each estimate of Withdrawal
Liability received by any Loan Party or ERISA Affiliate from a Multiemployer
Plan.

 

2

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

 

SCHEDULE 6.5

 

NATURE OF BUSINESS

 

The Borrower provides for U.S. federal, state and local governmental, non-U.S.
governmental and commercial customers scientific, engineering, program
management, information technology and other solutions for problems relating to
national defense, homeland security, energy, the environment and other
engineering and technical disciplines.

 

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

 

SCHEDULE 5.16

 

BLOCKED ACCOUNT BANK

 

1.                                      Wells Fargo Bank, National Association

 

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

 

Schedule A-1

 

to

 

Credit Agreement

 

Agent’s Account

 

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

 

SCHEDULE A-2

 

AUTHORIZED PERSONS

 

Bahman Atefi, President and Chief Executive Officer of Borrower

Stacy Mendler, Executive Vice President and Chief Operating Officer of Borrower

Barry Broadus, Senior Vice President and Chief Financial Officer of Borrower

Jeffrey Boyers, Senior Vice President, Corporate Controller of Borrower

Joanne Gove, Assistant Vice President, Treasury Manager of Borrower

 

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

 

Schedule C-1

 

to

 

Credit Agreement

 

Revolver Credit Limits

 

Lender

 

Revolver Credit Limit

 

Wells Fargo Bank, National Association

 

$

65,000,000

 

 

 

 

 

TOTAL

 

$

65,000,000

 

 

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

 

SCHEDULE D-1

 

DESIGNATED ACCOUNT

 

Wells Fargo Bank, N.A.

1753 Pinnacle Drive, 3rd Floor

McLean, VA 22102

Account No. 2000036283501

 

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

 

SCHEDULE E-2

 

EXISTING LETTERS OF CREDIT

 

Beneficiary

 

Letter of Credit Amount

 

US Bank NA

 

$

75,000.00

 

US Bank NA

 

$

275,000.00

 

Cognac Fairlakes, LLC c/o Prudential Real Estate Investors

 

$

345,002.52

 

P6/Griffith 8609 Westwood LLC c/o AEW Capital Management LP

 

$

41,512.50

 

TYE Development Co LLC, c/o Lerner Corp

 

$

59,325.75

 

Square 742, LLC, c/o William C. Smith Co.

 

$

2,836,733.75

 

Northwestern Mutual Life Insurance Co.

 

$

139,207.67

 

Lafayette Buildings LLC, c/o Duke Realty Corp

 

$

88,086.46

 

NBP 306 LLC, c/o Corporate Office Partners L.P.

 

$

75,334.00

 

 

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

 

SCHEDULE E-3

 

ESOP PLAN DOCUMENTS

 

Amended and Restated Alion Science and Technology Corporation Employee
Ownership, Savings and Investment Plan, dated as of October 1, 2011.

 

First Amendment to Amended and Restated Alion Science and Technology Corporation
Employee Ownership, Savings and Investment Plan, dated as of October 1, 2013.

 

Second Amendment to Amended and Restated Alion Science and Technology
Corporation Employee Ownership, Savings and Investment Plan, dated as of
September 27, 2013.

 

Third Amendment to Amended and Restated Alion Science and Technology Corporation
Employee Ownership, Savings and Investment Plan, dated as of March 28, 2014.

 

Fourth Amendment to Amended and Restated Alion Science and Technology
Corporation Employee Ownership, Savings and Investment Plan, dated as of
March 28, 2014.

 

The Alion Science and Technology Corporation Employee Ownership, Savings and
Investment Trust, dated as of June 4, 2002.

 

First Amendment to the Alion Science and Technology Corporation Employee
Ownership, Savings and Investment Trust, dated August 26, 2008.

 

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

 

SCHEDULE P-1

 

PERMITTED INVESTMENTS

 

Entity Name

 

Jurisdiction of
Incorporation/Formation

 

Shares Owned

 

Registered
Owner

Vectorcommand Limited

 

England and Wales

 

520,495 A Ordinary Shares

 

Borrower

iMove, Inc.

 

Oregon

 

9,821 Shares of ($100 par value) Common Stock

 

Borrower

iMove, Inc.

 

Oregon

 

7,038 Shares of ($.001 par value) Series A-1 Preferred Stock

 

Borrower

Dynamic Power Technologies, LLC

 

Pennsylvania

 

33.33% membership interest

 

Alion-JJMA Corporation

 

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

 

SCHEDULE P-2

 

PERMITTED LIENS (1)

 

Debtor

 

Jurisdiction

 

Lien Information

Alion Science and Technology Corporation

 

Delaware

 

File Number: 62635076

File Date: 07/31/2006

Current Secured Party of Record: DELL FINANCIAL SERVICES L.L.C.

Continuation Filed: 07/01/2011

Amendment Date: 05/10/2012

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20093379077

File Date: 10/21/2009

Current Secured Party of Record: EPLUS GROUP, INC.

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20093479117

File Date: 10/29/2009

Current Secured Party of Record: EPLUS GROUP, INC.

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20094084189

File Date: 12/21/2009

Current Secured Party of Record: SUNTRUST BANK

Assignment Date:02/12/2010

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20100374722

File Date: 02/03/2010

Current Secured Party of Record: DPOE IMAGE-FLEX INC.

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20102450470

File Date: 07/14/2010

Current Secured Party of Record: GREATAMERICA LEASING CORPORATION

 

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

(1)  Pending updated lien search results.

 

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

 

Debtor

 

Jurisdiction

 

Lien Information

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20103828617

File Date: 11/02/2010

Current Secured Party of Record: CIT FINANCE LLC

Assignment Date: 12/14/2012

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20114896240

File Date: 12/20/2011

Current Secured Party of Record: CIT FINANCE LLC

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20122506634

File Date: 06/28/2012

Current Secured Party of Record: CIT FINANCE LLC

Assignment Date:12/13/2012

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20123396290

File Date: 08/31/2012

Current Secured Party of Record: CIT FINANCE LLC

Alion Science and Technology Corporation

 

Delaware

 

File Number: 20124872455

File Date: 12/14/2012

Current Secured Party of Record: LEAF CAPITAL FUNDING, LLC AND/OR ITS ASSIGNS

Alion Science and Technology Corporation

 

Delaware

 

File Number: 2013 4242765

File Date: 10/29/2013

Current Secured Party of Record: Electro Rent Corporation

 

2

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

 

SCHEDULE R-1

 

REAL PROPERTY COLLATERAL

 

Owned Real Property — None.

 

See attached list of leased Real Property.

 

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

 

EXHIBIT A-1

 

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

[see attached]

 

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

 

EXHIBIT A-1

 

ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered
into as of                         
between                                 (“Assignor”)
and                                                   (“Assignee”). Reference is
made to the Credit Agreement described in Annex I hereto (the “Credit
Agreement”).  Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Credit Agreement.

 

1.             Subject to and in accordance with the terms and conditions of the
Credit Agreement, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
the Assignor’s rights and obligations under the Loan Documents as of the date
hereof with respect to the Bank Obligations owing to the Assignor, and
Assignor’s portion of the Revolver Credit Limit, all to the extent specified on
Annex I.

 

2.             The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim and (ii) it has full power
and authority, and has taken all action necessary, to execute and deliver this
Assignment Agreement and to consummate the transactions contemplated hereby;
(b) makes no representation or warranty and assumes no responsibility with
respect to (i) any statements, representations or warranties made in or in
connection with the Loan Documents, or (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
other instrument or document furnished pursuant thereto; (c) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower or any Guarantor or the performance or
observance by Borrower or any Guarantor of any of their respective obligations
under the Loan Documents or any other instrument or document furnished pursuant
thereto, and (d) represents and warrants that the amount set forth as the
Purchase Price on Annex I represents the amount owed by Borrower to Assignor
with respect to Assignor’s share of the Revolving Loans assigned hereunder, as
reflected on Assignor’s books and records.

 

3.             The Assignee (a) confirms that it has received copies of the
Credit Agreement and the other Loan Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement; (b) agrees that it will,
independently and without reliance upon Agent, Assignor, or any other Lender,
based upon such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking any
action under the Loan Documents; (c) confirms that it is an Eligible Transferee;
(d) appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto; (e) agrees that 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; and (f) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee’s
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to the Assignee under the Credit
Agreement or such other documents as are necessary to indicate that all such
payments are subject to such rates at a rate reduced by an applicable tax
treaty.

 

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

 

4.             Following the execution of this Assignment Agreement by the
Assignor and Assignee, the Assignor will deliver this Assignment Agreement to
the Agent for recording by the Agent. The effective date of this Assignment (the
“Settlement Date”) shall be the latest to occur of (a) the date of the execution
and delivery hereof by the Assignor and the Assignee, (b) the receipt by Agent
for its sole and separate account a processing fee in the amount of $5,000
(unless waived by the Agent), and (c) the receipt of any required consent of the
Agent.

 

5.             As of the Settlement Date (a) the Assignee shall be a party to
the Credit Agreement and, to the extent of the interest assigned pursuant to
this Assignment Agreement and in accordance with the terms of the Credit
Agreement and Intercreditor Agreement, shall have the rights and obligations of
a Lender thereunder and under the other Loan Documents, and (b) the Assignor
shall, to the extent of the interest assigned pursuant to this Assignment
Agreement, relinquish its rights and be released from its obligations under the
Credit Agreement and the other Loan Documents, provided, however, that nothing
contained herein shall release any assigning Lender from obligations that
survive the termination of the Credit Agreement, including such assigning
Lender’s obligations under Section 15 and Section 17.09(a) of the Credit
Agreement.

 

6.             Upon the Settlement Date, Assignee shall pay to Assignor the
Purchase Price (as set forth in Annex I). From and after the Settlement Date,
Agent shall make all payments that are due and payable to the holder of the
interest assigned hereunder (including payments of principal, interest, fees and
other amounts) to Assignor for amounts which have accrued up to but excluding
the Settlement Date and to Assignee for amounts which have accrued from and
after the Settlement Date.  On the Settlement Date, Assignor shall pay to
Assignee an amount equal to the portion of any interest, fee, or any other
charge that was paid to Assignor prior to the Settlement Date on account of the
interest assigned hereunder and that are due and payable to Assignee with
respect thereto, to the extent that such interest, fee or other charge relates
to the period of time from and after the Settlement Date.

 

7.             This Assignment Agreement may be executed in counterparts and by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument.  This Assignment Agreement may be executed and
delivered by telecopier or other facsimile transmission all with the same force
and effect as if the same were a fully executed and delivered original manual
counterpart.

 

8.             THIS ASSIGNMENT AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS
REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET
FORTH IN SECTION 12 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE
INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

 

[Signature Page Follows.]

 

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

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and
Annex I hereto to be executed by their respective officers, as of the first date
written above.

 

 

[NAME OF ASSIGNOR]

 

 

 

as Assignor

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

[NAME OF ASSIGNEE]

 

 

 

as Assignee

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

ACCEPTED THIS    DAY OF

 

 

 

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking
association, as Agent

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

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

 

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

ANNEX I

 

1.

 

Borrower: Alion Science and Technology Corporation, a Delaware corporation

 

 

 

 

 

 

 

2.

 

Name and Date of Credit Agreement:

 

 

 

Credit Agreement dated as of July [    ], 2014 (as amended, amended and
restated, replaced, supplemented, or otherwise modified from time to time, the
“Credit Agreement”) by and among Borrower, the lenders party thereto as
“Lenders”, and Wells Fargo Bank, National Association, a national banking
association (“Wells Fargo”), as administrative agent for the Lenders, as sole
lead arranger, and as sole book runner.

 

3.

 

Date of Assignment Agreement:

 

 

 

 

 

 

 

4.

 

Amounts:

 

 

 

 

 

 

 

 

 

a.

Assigned Amount of Revolver Credit Limit

 

$

 

 

 

 

 

 

 

 

b.

Assigned Amount of Revolving Loans

 

$

 

 

 

 

 

5.

 

Settlement Date:

 

 

 

 

 

 

 

6.

 

Purchase Price

 

$

 

 

 

 

 

7.

 

Notice and Payment Instructions, etc.

 

 

 

Assignee:

 

Assignor:

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

EXHIBIT B-1

 

FORM OF BORROWING BASE CERTIFICATE

 

[see attached]

 

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

 

Alion Science and Technology Corporation - Borrowing Base Certificate

As of

 

Starting A/R as of

 

 

 

 

 

 

 

New Sales

 

$

—

 

Collections

 

$

—

 

 

 

 

 

Ending AR Balance as of

 

$

—

 

 

 

 

 

Billed Ineligibles:

 

 

 

Past Due: A/R > 90 days from inv date

 

$

—

 

Commerical Cross Age -Debtors w/50% of A/R considered Past Due

 

$

—

 

Government Cross Age -Program w/50% of A/R considered Past Due

 

$

—

 

Intercompany/ Affiliates Accounts Receivable

 

$

—

 

Foreign Accounts Receivable

 

$

—

 

Contra Accounts Receivable

 

$

—

 

Concentrated A/R >20% for investment grade or >10% for others (excludes gov’t)

 

$

—

 

Insolvent or Doubtful Accounts

 

$

—

 

Customer Deposits

 

$

—

 

Progress Billings still incomplete

 

$

—

 

Billings in Excess of Costs for Unearned Revenue

 

$

—

 

Accounts Receivable Tied to Performance Bonds

 

$

—

 

Other Ineligibles / GL vs Aging Variance

 

$

—

 

Total Ineligibles:

 

$

—

 

 

 

 

 

Total Eligible Billed A/R:

 

$

—

 

 

 

 

 

85% of Total Eligible Billed A/R:

 

$

—

 

 

 

 

 

Unbilled Balance

 

$

—

 

Unbilled Ineligibles:

 

$

—

 

 

 

 

 

Total Eligible Unbilled A/R:

 

$

—

 

 

 

 

 

70% of Total Eligible Unbilled A/R:

 

$

—

 

UNBILLED FACILITY SUB LIMIT

 

$

30,000,000.00

 

 

 

 

 

TOTAL AVAILABLE COLLATERAL

 

$

—

 

COLLATERAL BLOCK

 

$

15,000,000.00

 

AVAILABILITY AFTER COLLATERAL BLOCK

 

$

(15,000,000.00

)

 

 

 

 

MAXIMUM LINE OF CREDIT AVAILABLE

 

$

65,000,000.00

 

 

 

 

 

AVAILABILITY

 

$

(15,000,000.00

)

 

 

 

 

LESS: CURRENT OUTSTANDINGS

 

$

—

 

LESS: OUTSTANDING LETTERS OF CREDIT (up to $10,000,000)

 

$

—

 

SURPLUS / (DEFICIT)

 

$

(15,000,000.00

)

 

REQUIRED AVAILABILITY

 

 

 

 

 

TOTAL AVAILABLE COLLATERAL

 

$

—

 

LESS: BOOK OVERDRAFTS

 

$

—

 

LESS: AP > 60 DAY

 

$

—

 

LESS: CURRENT OUTSTANDINGS

 

$

—

 

LESS: CURRENT DRAW

 

$

—

 

LESS: Outstanding Letters of Credit

 

$

—

 

TOTAL

 

$

—

 

Must be greater than $ 13,000,000

 

 

 

 

 

DOES NOT PASS

 

 

Alion Science and Technology Corporation (the “Company”), by its duly authorized
officer signing below, hereby certifies that (a) the information set forth in
this certificate is true, accurate and correct as of the date(s) indicated
herein, (b) as disclosed herein, (i) no amount of “Total Eligible Unbilled A/R”
is included in the amount of “Total Eligible Billed A/R”, and (ii) no amount of
“Total Eligible Billed A/R” is included in the amount of “Total Eligible
Unbilled A/R” , (c) the information in this Borrowing Base Certificate complies
with the representations and warranties in that certain Credit Agreement by and
among the Company and Wells Fargo Bank, National Association, as administrative
agent (in such capacity and together with its successors in such capacity, the
“Agent”), and the lenders party thereto (as the same may be amended, modified,
supplemented or restated from time to time, the “Credit Agreement”), and (d) the
Company is in compliance with all terms and provisions contained in (i) the
Credit Agreement and (ii) any and all documents, instruments and agreements
evidencing, governing or securing the Credit Agreement or otherwise executed in
connection herewith.

 

 

 

 

Name, Title

 

Date

 

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

 

EXHIBIT B-2

 

FORM OF BANK PRODUCT PROVIDER AGREEMENT

 

[see attached]

 

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

 

EXHIBIT B-2

 

BANK PRODUCT PROVIDER AGREEMENT

 

[Letterhead of Specified Bank Products Provider]

 

[Date]

 

Wells Fargo Bank, National Association, as Agent

1753 Pinnacle Drive, 6th Floor

McLean, Virginia 22102

Attn: Hilary Hymel

Fax No.: (877) 702-4315

 

Reference hereby is made to that certain Credit Agreement dated as of August 18,
2014 (as amended, restated, supplemented, or otherwise modified from time to
time, the “Credit Agreement”) by and among Alion Science and Technology
Corporation, a Delaware corporation, as borrower (“Borrower”), the lenders party
thereto as “Lenders” (each of such Lenders, together with its successors and
permitted assigns, is referred to hereinafter as a “Lender”), and Wells Fargo
Bank, National Association, a national banking association (“Wells Fargo”), as
administrative agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, the “Agent”), as sole lead arranger,
and as sole book runner.  Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Credit Agreement.

 

Reference is also made to that certain [                            and
                    ] (the “Specified Bank Product Agreement [Agreements]”)
dated as of             , by and between [Lender or Affiliate of Lender] (the
“Specified Bank Products Provider”) and Borrower.

 

1.                                      Appointment of Agent. The Specified Bank
Products Provider hereby designates and appoints Agent, and Agent by its
signature below hereby accepts such appointment, as its agent under the Credit
Agreement and the other Loan Documents. The Specified Bank Products Provider
hereby acknowledges that it has reviewed Sections 15.01 through 15.15 and
Sections 15.17, 15.18, and 17.05 of the Credit Agreement (collectively such
sections are referred to herein as the “Agency Provisions”), including, as
applicable, the defined terms used therein.  Specified Bank Products Provider
and Agent each agree that the Agency Provisions which govern the relationship,
and certain representations, acknowledgements, appointments, rights,
restrictions, and agreements, between the Agent, on the one hand, and the
Lenders or the Lender Group, on the other hand, shall, from and after the date
of this letter agreement also apply to and govern, mutatis mutandis, the
relationship between the Agent, on the one hand, and the Specified Bank Products
Provider with respect to the Bank Products provided pursuant to the Specified
Bank Product Agreement[s], on the other hand.

 

2.                                          Acknowledgement of Certain
Provisions of Credit Agreement. The Specified Bank Products Provider hereby
acknowledges that it has reviewed the provisions of Sections 2.04(b)(ii), 14.0l,
15, and 17.05 of the Credit Agreement, including, as applicable, the defined
terms used therein, and agrees to be bound by the provisions thereof.  Without
limiting the generality of any of the foregoing referenced provisions, Specified
Bank Products Provider understands and agrees that its rights and benefits under
the Loan Documents consist solely of it being a beneficiary of the Liens and
security

 

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

 

interests granted to Agent and the right to share in proceeds of the Collateral
to the extent set forth in the Credit Agreement.

 

3.                                      Reporting Requirements.  Agent shall
have no obligation to calculate the amount due and payable with respect to any
Bank Products.  On a monthly basis (not later than the 10th Business Day of each
calendar month) or as more frequently as Agent shall request, the Specified Bank
Products Provider agrees to provide Agent with a written report, in form and
substance satisfactory to Agent, detailing Specified Bank Products Provider’s
reasonable determination of the liabilities and obligations (and mark- to-market
exposure) of Borrower and the other Loan Parties in respect of the Bank Products
provided by Specified Bank Products Provider pursuant to the Specified Bank
Product Agreement[s].  If Agent does not receive such written report within the
time period provided above, Agent shall be entitled to assume that the
reasonable determination of the liabilities and obligations of Borrower and the
other Loan Parties with respect to the Bank Products provided pursuant to the
Specified Bank Product Agreement[s] is zero.

 

4.                                      Bank Product Reserve Conditions. 
Specified Bank Products Provider further acknowledges and agrees that Agent
shall have the right (to the extent permitted pursuant to the Credit Agreement),
but shall have no obligation to establish, maintain, relax, or release reserves
in respect of any of the Bank Product Obligations and that if reserves are
established there is no obligation on the part of the Agent to determine or
insure whether the amount of any such reserve is appropriate or not (including
whether it is sufficient in amount).  If Agent chooses to implement a reserve,
Specified Bank Products Provider acknowledges and agrees that Agent shall be
entitled to rely on the information in the reports described above to establish
the Bank Product Reserve Amount.

 

5.                                      Bank Product Obligations.  From and
after the delivery to Agent of this agreement duly executed by Specified Bank
Products Provider and the acknowledgement of this agreement by Agent and
Borrower, the obligations and liabilities of Borrower and the other Loan Parties
to Specified Bank Products Provider in respect of Bank Products evidenced by the
Specified Bank Product Agreement[s] shall constitute Bank Product Obligations
(and which, in turn, shall constitute Obligations), and Specified Bank Products
Provider shall constitute a Bank Product Provider until such time as Specified
Bank Products Provider or its Affiliate is no longer a Lender. Specified Bank
Products Provider acknowledges that other Bank Products (which may or may not be
Specified Bank Products) may exist at any time.

 

6.                                      Notices.  All notices and other
communications provided for hereunder shall be given in the form and manner
provided in Section 11 of the Credit Agreement, and, if to Agent, shall be
mailed, sent, or delivered to Agent in accordance with Section 11 in the Credit
Agreement, if to Borrower, shall be mailed, sent, or delivered to Borrower in
accordance with Section 11 in the Credit Agreement, and, if to Specified Bank
Products Provider, shall be mailed, sent, or delivered to the address set forth
below, or, in each case as to any party, at such other address as shall be
designated by such party in a written notice to the other party.

 

If to Specified Bank

 

Products Provider:

 

 

 

 

 

 

 

 

Attn:

 

 

Fax No.

 

 

7.                                      Miscellaneous.  This agreement shall
bind and inure to the benefit of the respective successors and assigns of each
of the parties hereto (including any successor agent pursuant to Section

 

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15.09 of the Credit Agreement); provided, that Borrower may not assign this
agreement or any rights or duties hereunder without the other parties’ prior
written consent and any prohibited assignment shall be absolutely void ab
initio.  Unless the context of this agreement clearly requires otherwise,
references to the plural include the singular, references to the singular
include the plural, the terms “includes” and “including” are not limiting, and
the term “or”  has, except where otherwise indicated, the inclusive meaning
represented by the phrase “and/or.”   This agreement may be executed in any
number of counterparts and by different parties on separate counterparts.  Each
of such counterparts shall be deemed to be an original, and all of such
counterparts, taken together, shall constitute but one and the same agreement.
Delivery of an executed counterpart of this letter by telefacsimile or other
means of electronic transmission shall be equally effective as delivery of a
manually executed counterpart.

 

8.                                      Governing Law, Etc. THIS AGREEMENT SHALL
BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL
WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION 12 OF THE CREDIT AGREEMENT,
AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

 

[signature pages to follow]

 

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

 

 

Sincerely,

 

 

 

[SPECIFIED BANK PRODUCTS PROVIDER]

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

 

Acknowledged, accepted, and agreed
as of the date first written above:

 

 

 

ALION SCIENCE AND TECHNOLOGY CORPORATION,
a Delaware corporation, as Borrower

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

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

 

Acknowledged, accepted, and
agreed as of

 

 

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

a national banking association,
as Agent

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

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

 

EXHIBIT C-1

 

FORM OF COMPLIANCE CERTIFICATE

 

[see attached]

 

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

 

EXHIBIT C-1

 

COMPLIANCE CERTIFICATE

 

[on Borrower’s letterhead]

 

To:                                        Wells Fargo Bank, National
Association

1753 Pinnacle Drive, 6th Floor

McLean, Virginia 22102

Attn: Hilary Hymel

 

Re:                                     Compliance Certificate
dated                    , 20

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement dated as of August [   ],
2014 (as amended, restated, supplemented, or otherwise modified from time to
time, the “Credit Agreement”) by and among Alion Science and Technology
Corporation, a Delaware corporation, as borrower (“Borrower”), the lenders party
thereto as “Lenders” (each of such Lenders, together with its successors and
permitted assigns, is referred to hereinafter as a “Lender”), and Wells Fargo
Bank, National Association, a national banking association (“Wells Fargo”), as
administrative agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, the “Agent”), as sole lead arranger,
and as sole book runner. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Credit Agreement.

 

Pursuant to Section 5.01 of the Credit Agreement, the undersigned officer of
Borrower hereby certifies as of the date hereof that:

 

1.                                      The financial information of Borrower
and its Subsidiaries furnished in Schedule l attached hereto, has been prepared
in accordance with GAAP (except, in the case of unaudited financial statements,
for year-end audit adjustments and the lack of footnotes), and fairly presents
in all material respects the financial condition of Borrower and its
Subsidiaries as of the date set forth therein.

 

2.                                      Such officer has reviewed the terms of
the Credit Agreement and has made, or caused to be made under his/her
supervision, a review in reasonable detail of the transactions and financial
condition of Borrower and its Subsidiaries during the accounting period covered
by the financial statements delivered pursuant to Section 5.01 of the Credit
Agreement.

 

3.                                      Such review has not disclosed the
existence on and as of the date hereof, and the undersigned does not have
knowledge of the existence as of the date hereof, of any event or condition that
constitutes a Default or Event of Default, except for such conditions or events
listed on Schedule 2 attached hereto, in each case specifying the nature and
period of existence thereof and what action Borrower and/or its Subsidiaries
have taken, are taking, or propose to take with respect thereto.

 

4.                                      Except as set forth on Schedule 3
attached hereto, the representations and warranties of Borrower and its
Subsidiaries set forth in the Credit Agreement and the other Loan

 

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

 

Documents are true and correct in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) on and as of the date hereof (except to the extent that such
representations and warranties relate solely to an earlier date, in which case
such representations and warranties shall be true and correct in all material
respects (except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) as of such earlier date.

 

5.                                      As of the date hereof, Borrower and its
Subsidiaries are in compliance with the applicable covenants contained in
Section 7 of the Credit Agreement as demonstrated on Schedule 4 hereof.

 

[Signature page follows.]

 

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

 

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned
this        day of           , 20  .

 

 

 

ALION SCIENCE AND TECHNOLOGY CORPORATION,

 

a Delaware corporation, as Borrower

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

 

SCHEDULE 1

 

Financial Information

 

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

 

SCHEDULE 2

 

Default or Event of Default

 

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

 

SCHEDULE 3

 

Representations and Warranties

 

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

 

SCHEDULE 4

 

Financial Covenants

 

1.                                      Required Collateral Block.

 

REQUIRED:  At the time of each Loan and at all other times, the Borrowing Base
shall exceed the outstanding principal balance of the Revolving Loans at such
time by at least $15,000,000.

 

ACTUAL:  As of the date hereof, (i) the outstanding principal balance of the
Revolving Loans at such time is equal to $           , and (ii) the Borrowing
Base is equal to $                                   .

 

Does the Borrowing Base, as of the date hereof, exceed the outstanding principal
balance of the Revolving Loans at such time by at least $15,000,000?

 

 

No, not in compliance

Yes, in compliance

 

2.                                      Fixed Charge Coverage Ratio.

 

REQUIRED:  Measured as of the end of the Fiscal Quarter most recently completed,
commencing with the Fiscal Quarter ending September 30, 2014, the Fixed Charge
Coverage Ratio for the Borrower and its Subsidiaries on a consolidated basis for
the twelve (12)  month period ending on the last day of such Fiscal Quarter
shall be at least 1.00 to 1.00.

 

ACTUAL:  The Fixed Charge Coverage Ratio for the Borrower and its Subsidiaries
on a consolidated basis, measured on a quarter-end basis, for the Fiscal Quarter
period ending                                , 20      , is        :1.00 for the
twelve (12) month period ending on the last day of such Fiscal Quarter,
commencing with the Fiscal Quarter ending September 30, 2014.

 

Is the Fixed Charge Coverage Ratio for the Borrower and its Subsidiaries on a
consolidated basis, measured on a quarter-end basis, for the Fiscal Quarter
period ending                                , 20     , at least 1.00 to 1.00
for the twelve (12) month period ending on the last day of such Fiscal Quarter?

 

 

No, not in compliance

Yes, in compliance

 

3.                                      Consolidated EBITDA.

 

REQUIRED:  Measured as of the end of the Fiscal Quarter most recently completed,
commencing with the Fiscal Quarter ending September 30, 2014, the Consolidated
EBITDA for the Borrower for the four Fiscal Quarter period ending on the last
day of such Fiscal Quarter shall be at least $50,000,000.

 

ACTUAL:  The Consolidated EBITDA for the Borrower, measured on a quarter-end
basis, for the Fiscal Quarter period ending                 , 20   , is
$                            for the four Fiscal Quarter period ending on the
last day of such Fiscal Quarter, commencing with the Fiscal Quarter ending
September 30, 2014.

 

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

 

Is the Consolidated EBITDA for the Borrower, measured on a quarter-end basis,
for the Fiscal Quarter period ending                                , 20  , at
least $50,000,000 for the four Fiscal Quarter period ending on the last day of
such Fiscal Quarter?

 

 

No, not in compliance

Yes, in compliance

 

4.                                      Maximum Consolidated Capital
Expenditures.

 

REQUIRED:  Measured at any time, the Consolidated Capital Expenditures for the
Borrower and its Subsidiaries shall not exceed $8,000,0000 in any Fiscal Year.

 

ACTUAL:  The Consolidated Capital Expenditures for the Borrower and its
Subsidiaries, measured at any time, is $                for the Fiscal Year.

 

Is the Consolidated Capital Expenditures for the Borrower and its Subsidiaries,
measured at any time, not greater than $8,000,000 for the Fiscal Year?

 

 

No, not in compliance

Yes, in compliance

 

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

 

EXHIBIT P-1

 

FORM OF PERFECTION CERTIFICATE

 

[see attached]

 

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

 

PERFECTION CERTIFICATE

 

In connection with a proposed transaction by and among Alion Science and
Technology Corporation (the “Company”), Goldman Sachs Bank USA and Wells Fargo
Bank, National Association, as arrangers, and Wilmington Trust, National
Association, as collateral agent, the Company hereby certifies on behalf of
itself and the other grantors specified below (collectively, together with the
Company, the “Grantors”) as follows:

 

I.                                        CURRENT INFORMATION

 

A.                                    Legal Names, Organizations, Jurisdictions
of Organization and Organizational Identification Numbers. The full and exact
legal name (as it appears in each respective certificate or articles of
incorporation, limited liability membership agreement or similar organizational
documents, in each case as amended to date or, for natural persons, the name as
set forth on their valid driver’s license issued by their state of residence),
the type of organization (or if a particular Grantor is a natural person, please
indicate so), the jurisdiction of organization (or formation, as applicable),
and the organizational identification number (not tax i.d. number) of the
Company and each other Grantor are as follows:

 

Name of Grantor

 

Type of Organization 

(e.g. corporation, limited
liability company,
limited partnership)

 

Jurisdiction
of
Organization/
Formation

 

Organizational
Identification
Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B.                                      Chief Executive Offices and Mailing
Addresses.  The chief executive office address (or the principal residence if a
particular Grantor is a natural person) and the preferred mailing address (if
different than chief executive office or residence) of the Company and each
other Grantor are as follows:

 

Name of Grantor

 

Address of Chief Executive
Office (or for natural persons,
residence)

 

(Mailing Address (if different
than CEO or residence)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Name of Grantor

 

Address of Chief Executive
Office (or for natural persons,
residence)

 

Mailing Address (if different
than CEO or residence)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C.                                      Special Grantors and Former Article 9
Grantors. Except as specifically identified below none of the Grantors is: (i) a
transmitting utility (as defined in Section 9-102(a)(80)), (ii) primarily
engaged in farming operations (as defined in Section 9-102(a)(35)), (iii) a
trust, (iv) a foreign air carrier within the meaning of the federal aviation act
of 1958, as amended, (v) a branch or agency of a bank which bank is not
organized under the law of the United States or any state thereof or
(vi) located (within the meaning of Section 9-307) in the Commonwealth of Puerto
Rico.

 

Name of Grantor

 

Type of Special Grantor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D.                                      Other Names.

 

Other Names.  Set forth below is each other name used by the Company or any
other Grantor in connection with any business or organization to which the
Company or such Grantor became the successor by merger, consolidation,
acquisition, change in form, nature or jurisdiction of organization or otherwise
or on any filings with the Internal Revenue Services, in each case, at any time
in the past five (5) years:

 

Grantor

 

Trade/Assumed Name

 

 

 

 

 

 

 

 

 

 

ii

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

 

E.                       Changes in Names, Jurisdiction of Organization or
Corporate Structure.

 

Except as set forth below, neither the Company nor any other Grantor has changed
its name, jurisdiction of organization or its corporate structure (by merger,
consolidation, change in corporate form, or change in jurisdiction of
organization) within the past five (5) years:

 

Grantor

 

Date of Change

 

Description of Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F.                        Prior Addresses.

 

Except as set forth below, neither the Company nor any other Grantor has changed
its chief executive office, or principal residence if a particular Grantor is a
natural person, within the past five (5) years:

 

Grantor

 

Prior Address/City/State/Zip Code

 

 

 

 

 

 

 

 

 

 

 

 

 

 

G.                      Acquisitions of Equity Interests or Assets.

 

Except as set forth below, neither the Company nor any Grantor has acquired the
equity interests of another entity or substantially all the assets of another
entity within the past five (5) years:

 

Grantor

 

Date of
Acquisition

 

Description of Acquisition including
full legal name of seller and seller’s
jurisdiction of organization and
seller’s chief executive office

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iii

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

 

 

 

 

 

Description of Acquisition including

 

 

 

 

full legal name of seller and seller’s

 

 

Date of

 

jurisdiction of organization and

Grantor

 

Acquisition

 

seller’s chief executive office

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H.                              Corporate Ownership and Organizational
Structure.

 

Attached as Exhibit A hereto is a true and correct chart showing the ownership
relationship of the Company and all of its subsidiaries.

 

II.                                 INFORMATION REGARDING CERTAIN COLLATERAL

 

A.                                  Investment Related Property

 

1.                                        Equity Interests.  Set forth below is
a list of all equity interests owned by the Company or any other Grantor
together with the type of organization which issued such equity interests (e.g.
corporation, limited liability company, partnership or trust):

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificate No.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(if

 

 

 

 

 

 

 

 

 

 

 

Total

 

% of

 

uncertificated,

 

 

 

 

 

 

 

Type of

 

# of Shares

 

Shares

 

Interest

 

please indicate

 

Par

 

Grantor

 

Issuer

 

Organization

 

Owned

 

Outstanding

 

Pledged

 

so)

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.                                        Securities Accounts.   Set forth below
is a list of all securities accounts in which the Company or any other Grantor
customarily maintains securities having an aggregate value in excess of $10,000:

 

 

 

 

 

Name & Address of

Grantor

 

Type of Account

 

Financial Institutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iv

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

 

3.                                        Deposit Accounts. Set forth below is a
list of all deposit accounts (checking, savings, money market or the like) in
which the Company or any other Grantor customarily maintains in excess of
$10,000:

 

 

 

 

 

Name & Address of

Grantor

 

Type of Account

 

Financial Institutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.                                        Debt Securities & Instruments. Set
forth below is a list of all debt securities and instruments (other than checks
to be deposited in the ordinary course of business) owed to the Company or any
other Grantor having an aggregate value or face amount in excess of $25,000:

 

 

 

 

 

Principal Amount of

 

Maturity

Grantor

 

Issuer of Instrument

 

Instrument

 

Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B.                                     Intellectual Property.   Set forth below
is a list of all registered copyrights, registered patents, and registered
trademarks, all applications and licenses (other than licenses of intellectual
property entered into in the ordinary course of business and “shrink wrap,”
“click through” or similar license agreements accompanying commercially
available computer software) thereof owned by the Company or any other Grantor:

 

l.                                         Copyrights, Copyright Applications
and Copyright Licenses

 

Copyrights

 

Title

 

Registration No.

 

Registered Date

 

Owner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Copyright Licenses

 

 

 

Description of Copyright

 

Registration Number (if any)

 

 

Grantor

 

License

 

of underlying Copyright

 

Name of Licensor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

v

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

 

2.                                      Patents, Patent Applications and Patent
Licenses

 

Patents and Patent Applications:

(Alion Science and Technology Corporation is the Assignee)

 

 

 

 

 

 

 

Filing

 

 

 

 

 

Title

 

Inventor(s)

 

Application No.

 

Date

 

Status

 

Patent No.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expired Patents and Abandoned Patent Applications

 

 

 

 

 

Expiration Date

 

 

 

Reference Number

 

Status

 

(if any)

 

Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

vi

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

 

 

 

 

 

Registration No

 

 

 

Licensee

 

Licensor

 

(Registration Date)

 

Description

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.                                      Trademarks, Trademark Applications and
Trademark Licenses

 

Federally Registered Trademarks:

 

 

 

 

 

Registration

 

Registration

 

 

 

Title

 

Status

 

Number

 

Date

 

Owner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pending Federal Applications for Trademark Registration:

 

 

 

 

 

App. Ser.

 

Filing

 

 

 

Title

 

Status

 

Number

 

Date

 

Owner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademark Licenses

 

 

 

Description of Trademark

 

Registration Number of

 

 

 

Grantor

 

License

 

underlying Trademark

 

Name of Licensor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

vii

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C.                                    Tangible Personal Property in Possession
of Warehousemen, Bailees and Other Third Parties.  Except as set forth below, no
persons (including, without limitation, warehousemen and bailees) other than the
Company or any other Grantor have possession of any material amount ($25,000 or
more) of tangible personal property of the Company or any other Grantor:

 

 

 

 

 

 

 

Description of Assets and

 

Grantor

 

Address/City/State/Zip Code

 

County

 

Estimated Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D.                                    Real Estate Related UCC Collateral

 

1.                                      Fixtures.  Set forth below are all the
locations where the Company or any other Grantor owns or leases any real
property:

 

 

 

 

 

 

 

Owned or

 

Grantor

 

Address/City/State/Zip Code

 

County

 

Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.                                      “As Extracted” Collateral.   Set forth
below are all the locations where the Company or any other Grantor owns, leases
or has an interest in any wellhead or minehead:

 

Grantor

 

Address/City/State/Zip Code

 

County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.                                      Timber to be Cut.  Set forth below are
all locations where the Company or any other Grantor owns goods that are timber
to be cut:

 

Grantor

 

Address/City/State/Zip Code

 

County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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E.                                    Commercial Tort Claims.  Set forth below
is a list of all commercial tort claims that exceed $10,000 held by the Company
or any other Grantor, including a brief description thereof:

 

Grantor

 

Description

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F.                                     Letter-of-Credit Rights.  Set forth below
is a list of all letters of credit issued in favor of the Company or any other
Grantor, as beneficiary thereunder, having a value or face amount in excess of
$10,000:

 

Grantor

 

Letter of Credit

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

G.                                   Other Assets. The Company or any other
Grantor owns the following kinds of assets:

 

Aircraft:

Yes

 

No

 

 

 

 

Vessels, boats or ships:

Yes

 

No

 

 

 

 

Railroad rolling stock:

Yes

 

No

 

 

 

 

Motor Vehicles or similar titled collateral.

Yes

 

No

 

If the answer is “Yes” to any of these other types of assets, please describe
below.

 

[Remainder of page intentionally left blank]

 

ix

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IN WITNESS WHEREOF, the undersigned hereto has caused this Perfection
Certificate to be executed as of this      day of                      ,
201      by its officer thereunto duly authorized.

 

 

 

ALlON SCIENCE AND TECHNOLOGY CORPORATION

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

x

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

 

EXHIBIT A

 

ORGANIZATIONAL CHART

 

xi

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