Exhibit 10.1
 
EXECUTION VERSION
 
 
 

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REVOLVING CREDIT
AND
SECURITY AGREEMENT
 

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PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
 

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WITH
 

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INTERCLOUD SYSTEMS, INC.
AW SOLUTIONS, INC.
AW SOLUTIONS PUERTO RICO, LLC
ADEX CORPORATION
ADEX PUERTO RICO LLC
T N S, INC.
(BORROWERS)
 
AND
 
ADEXCOMM CORPORATION
TROPICAL COMMUNICATIONS, INC.
RIVES-MONTEIRO ENGINEERING LLC
RIVES-MONTEIRO LEASING, LLC
ENVIRONMENTAL REMEDIATION AND FINANCIAL SERVICES, LLC
(GUARANTORS)
 

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September 20, 2013
 

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TABLE OF CONTENTS
 

   
Page
I.
DEFINITIONS.     
1
 
1.1
Accounting Terms         
1
 
1.2
General Terms           
2
 
1.3
Uniform Commercial Code Terms              
33
 
1.4
Certain Matters of Construction      
34
       
II.
ADVANCES, PAYMENTS.    
35
  2.1   Revolving Advances  35  
2.2
Procedures for Requesting Revolving Advances; Procedures for
     
Selection of Applicable Interest Rates for All Advances
36
 
2.3
[Reserved]   
38
 
2.4
Swing Loans   
38
 
2.5
Disbursement of Advance Proceeds   
39
 
2.6
Making and Settlement of Advances 
39
 
2.7
Maximum Advances 
41
 
2.8
Manner and Repayment of Advances   
41
 
2.9
Repayment of Excess Advances           
42
 
2.10
Statement of Account  
42
 
2.11
Letters of Credit   
43
 
2.12
Issuance of Letters of Credit   
43
 
2.13
Requirements For Issuance of Letters of Credit    
44
 
2.14
Disbursements, Reimbursement    
45
 
2.15
Repayment of Participation Advances  
46
 
2.16
Documentation  
47
 
2.17
Determination to Honor Drawing Request   
47
 
2.18
Nature of Participation and Reimbursement Obligations
47
 
2.19
Liability for Acts and Omissions  
49
 
2.20
Mandatory Prepayments   
50
 
2.21
Use of Proceeds     
50
 
2.22
Defaulting Lender    
51
 
2.23
Payment of Obligations   
53
     
III.
INTEREST AND FEES.    
54
 
3.1
Interest        
54
 
3.2
Letter of Credit Fees       
54
 
3.3
Closing Fee and Facility Fee           
56
 
3.4
Collateral Monitoring Fee and Collateral Evaluation Fee
56
 
3.5
Computation of Interest and Fees     
57
 
3.6
Maximum Charges    
57
 
3.7
Increased Costs    
57
 
3.8
Basis For Determining Interest Rate Inadequate or Unfair
58
 
3.9
Capital Adequacy    
59
 
3.10
Taxes  
60

 
 
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3.11
Replacement of Lenders 
62
 
 
 
 
IV.
COLLATERAL: GENERAL TERMS    
63
 
4.1
Security Interest in the Collateral 
63
  4.2 Perfection of Security Interest 
63
  4.3 Preservation of Collateral 
64
  4.4
Ownership and Location of Collateral  
64
  4.5
Defense of Agent’s and Lenders’ Interests 
65
 
4.6
Inspection of Premises 
65
  4.7
Appraisals
66
 
4.8
Receivables; Deposit Accounts and Securities Accounts    
66
  4.9
Inventory
69
 
4.10
Maintenance of Equipment
69
 
4.11
Exculpation of Liability  
69
 
4.12
Financing Statements 
69
 
 
 
 
V.
REPRESENTATIONS AND WARRANTIES.
69
 
5.1
Authority 
69
 
5.2
Formation and Qualification
70
  5.3
Survival of Representations and Warranties   
70
 
5.4
Tax Returns 
70
  5.5
Financial Statements  
70
 
5.6
Entity Names 
71
  5.7
O.S.H.A. Environmental Compliance; Flood Insurance      
71
 
5.8
Solvency; No Litigation, Violation, Indebtedness or Default; ERISA Compliance 
72
  5.9
Patents, Trademarks, Copyrights and Licenses 
73
 
5.10
Licenses and Permits  
74
 
5.11
Default of Indebtedness 
74
 
5.12
No Default 
74
  5.13 No Burdensome Restrictions  
74
 
5.14
No Labor Disputes 74  
5.15
Margin Regulations 74  
5.16
Investment Company Act 75  
5.17
Disclosure     75  
5.18
Delivery of Debt Documents 75  
5.19
Delivery of Acquisition Agreements  75  
5.20
Swaps  75  
5.21
Business and Property of Loan Parties  75  
5.22
Ineligible Securities  76  
5.23
[Reserved] 76  
5.24
Equity Interests 76  
5.25
Commercial Tort Claims  76  
5.26
Letter of Credit Rights  76  
5.27
Material Contracts 76

 
 
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VI.
AFFIRMATIVE COVENANTS.
76
 
6.1
Compliance with Laws 
76
  6.2
Conduct of Business and Maintenance of Existence and Assets
77
 
6.3
Books and Records 
77
  6.4 Payment of Taxes
77
  6.5 Financial Covenants 
77
  6.6
Insurance 
 78   6.7
Payment of Indebtedness and Leasehold Obligations 
79
 
6.8
Environmental Matters  
79
 
6.9
Standards of Financial Statements    
80
  6.10
Federal Securities Laws 
80
 
6.11
Execution of Supplemental Instruments
80
  6.12
Exercise of Rights 
81
 
6.13
Government Receivables 
81
  6.14
[Reserved]  
81
 
6.15
Keepwell 
81
  6.16
Post Closing Covenants 
81
 
 
 
 
VII.
NEGATIVE COVENANTS.  
81
 
7.1
Merger, Consolidation, Acquisition and Sale of Assets 
81
 
7.2
Creation of Liens
83
 
7.3
Guarantees 
83
 
7.4
Investments
83
 
7.5
Loans 
83
 
7.6
Capital Expenditures 
83
 
7.7
Dividends
83
 
7.8
Indebtedness 
84
  7.9 Nature of Business 
84
  7.10 Transactions with Affiliates
84
  7.11 Leases  84   7.12 Subsidiaries  
84
  7.13 Fiscal Year and Accounting Changes  84   7.14 Pledge of Credit   84  
7.15 Amendment of Organizational Documents 85   7.16 Compliance with ERISA   85
  7.17 Prepayment of Indebtedness  85   7.18 Term Loan and Restricted
Indebtedness   85  
7.19
Other Agreements 
86
  7.20 Membership/Partnership Interests 
86
        VIII. CONDITIONS PRECEDENT. 
86
  8.1 Conditions to Initial Advances
86
  8.2 Conditions to Each Advance   90         IX. INFORMATION AS TO BORROWERS. 
 91   9.1 Disclosure of Material Matters  91   9.2 Schedules  91

 
 
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9.3
Environmental Reports  
91
 
9.4
Litigation 
92
 
9.5
Material Occurrences
92
 
9.6
Government Receivables   
93
  9.7 Annual Financial Statements   
93
 
9.8
[Reserved]   93  
9.9
Monthly Financial Statements
93
  9.10
Other Reports
94
  9.11
Additional Information  
94
 
9.12
Projected Operating Budget 
94
 
9.13
Variances From Operating Budget 
94
 
9.14
Notice of Suits, Adverse Events   
94
  9.15
ERISA Notices and Requests  
95
 
9.16
Additional Documents  
95
  9.17
Updates to Certain Schedules  
95
 
9.18
Financial Disclosure   
95
 
 
 
 
X.
EVENTS OF DEFAULT. 
96
 
10.1
Nonpayment
96
 
10.2
Breach of Representation 
96
 
10.3
Financial Information  
96
 
10.4
Judicial Actions  
96
 
10.5
Noncompliance 
96
 
10.6
Judgments 
97
 
10.7
Bankruptcy 
97
 
10.8
Material Adverse Effect 
97
 
10.9
Lien Priority 
97
 
10.10
Term Loan Default, Subordinated Note Default, Acquisition Agreement Default    
97
 
10.11
Cross Default   
97
 
10.12
Termination of Guaranty or Pledge Agreement    
98
 
10.13
Change of Control  
98
 
10.14
Invalidity     
98
 
10.15
Seizures  
98
 
10.16
Operations  
98
 
10.17
Pension Plans
98
 
10.18
Anti-Money Laundering/International Trade Law Compliance
99
 
 
 
 
XI.
LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.
99
  11.1 Rights and Remedies
99
  11.2 Agent’s Discretion    100   11.3 Setoff   101   11.4 Rights and Remedies
not Exclusive 101   11.5 Allocation of Payments After Event of Default  101  
 
 
 
XII. WAIVERS AND JUDICIAL PROCEEDINGS.   102   12.1 Waiver of Notice   102

 
 
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12.2
Delay
103
  12.3
Jury Waiver
103
 
 
 
 
XIII. 
EFFECTIVE DATE AND TERMINATION.
103
  13.1 Term 
103
  13.2  Termination
104
 
 
 
  XIV. REGARDING AGENT.
104
 
14.1
Appointment 
104
 
14.2
Nature of Duties 
105
  14.3
Lack of Reliance on Agent 
105
 
14.4
Resignation of Agent; Successor Agent 
105
  14.5
Certain Rights of Agent 
106
  14.6
Reliance 
106
 
14.7
Notice of Default 
107
  14.8
Indemnification 
107
 
14.9
Agent in its Individual Capacity
107
  14.10
Delivery of Documents
107
 
14.11
Loan Parties’ Undertaking to Agent 
107
  14.12
No Reliance on Agent’s Customer Identification Program
108
 
14.13
Other Agreements 
108
 
 
 
 
XV. 
BORROWING AGENCY.
108
 
15.1
Borrowing Agency Provisions 
108
 
15.2
Waiver of Subrogation
109
 
 
 
 
XVI.
MISCELLANEOUS.
109
 
16.1
Governing Law
109
 
16.2
Entire Understanding 
110
  16.3
Successors and Assigns; Participations; New Lenders
113
 
16.4
Application of Payments 
115
  16.5
Indemnity 
115
 
16.6
Notice
117
  16.7
Survival 
119
 
16.8
Severability
119
  16.9
Expenses
119
 
16.10
Injunctive Relief
119
 
16.11
Consequential Damages
119
 
16.12
Captions
120
 
16.13
Counterparts; Facsimile Signatures  120  
16.14
Construction  120   16.15 Confidentiality; Sharing Information 121  
16.16
Publicity 121   16.17 Certifications From Banks and Participants; USA PATRIOT
Act  121  
16.18
Anti-Terrorism Laws  121

 
 
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XVII.
GUARANTY.
122
 
17.
Guaranty   
122
 
17.
Waivers 
122
 
17.
No Defense    
122
  17. Guaranty of Payment
122
  17. Liabilities Absolute 123  
17.
Waiver of Notice
 124   17.
Agent’s Discretion
124
 
17.
Reinstatement.  
124

 
 
 
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LIST OF EXHIBITS AND SCHEDULES
 

Exhibits       Exhibit 1.2  Borrowing Base Certificate Exhibit 1.2(a) 
Compliance Certificate Exhibit 2.1(a)  Revolving Credit Note Exhibit 8.1(d)  
Financial Condition Certificate Exhibit 16.3  Commitment Transfer Supplement    
Schedules       Schedule 1.2    Permitted Encumbrances Schedule 4.4   Equipment
and Inventory Locations; Place of Business, Chief Executive Office, Real
Property Schedule 4.8(j)  Deposit and Investment Accounts Schedule 5.1 Consents
Schedule 5.2(a)  States of Qualification and Good Standing Schedule 5.2(b)
Subsidiaries Schedule 5.4  Federal Tax Identification Number Schedule 5.6  Prior
Names Schedule 5.8(b)(i) Litigation Schedule 5.8(b)(ii) Indebtedness Schedule
5.8(d) Plans Schedule 5.9  Intellectual Property, Source Code Escrow Agreements
Schedule 5.10  Licenses and Permits Schedule 5.14   Labor Disputes Schedule
5.24  Equity Interests Schedule 5.25  Commercial Tort Claims Schedule 6.16 Post
Closing Covenants Schedule 7.3   Guarantees

                                                                                                             
 
vii

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REVOLVING CREDIT
 
AND
 
SECURITY AGREEMENT
 
Revolving Credit and Security Agreement dated as of September 20, 2013 among
INTERCLOUD SYSTEMS, INC., a corporation organized under the laws of the State of
Delaware (“Intercloud”), ADEX CORPORATION, a corporation organized under the
laws of the State of New York (“Adex Corp”), ADEX PUERTO RICO LLC, a limited
liability company formed under the laws of the Commonwealth of Puerto Rico
(“Adex  PR”), AW SOLUTIONS, INC., a corporation organized under the laws of the
State of Florida (“AW Solutions”), AW SOLUTIONS PUERTO RICO, LLC, a limited
liability company organized under the laws of the Commonwealth of Puerto Rico
(“AW PR”), T N S, INC., a corporation organized under the laws of the State of
Illinois (“TNS” and together with Intercloud, Adex Corp, Adex PR, AW Solutions,
AW PR, and each Person joined hereto as a borrower from time to time,
collectively “Borrowers” and each a “Borrower”), ADEXCOMM CORPORATION, a
corporation organized under the laws of the State of Florida (“Adex Comm”),
TROPICAL COMMUNICATIONS, INC., a corporation organized under the laws of the
State of Florida (“Tropical”), RIVES-MONTEIRO ENGINEERING LLC, a limited
liability company formed under the laws of the State of Alabama (“RM
Engineering”), RIVES-MONTEIRO LEASING, LLC, a limited liability company formed
under the laws of the State of Alabama (“RM Leasing”), ENVIRONMENTAL REMEDIATION
AND FINANCIAL SERVICES, LLC, a limited liability company formed under the laws
of the State of New Jersey (“ERFS”, and together with Adex Comm, Tropical, RM
Engineering and RM Leasing, and each Person joined hereto as a guarantor from
time to time, collectively, the “Guarantors”, and each a “Guarantor”), the
financial institutions which are now or which hereafter become a party hereto
(collectively, the “Lenders” and each individually a “Lender”) and PNC BANK,
NATIONAL ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity, the
“Agent”).
 
IN CONSIDERATION of the mutual covenants and undertakings herein contained, Loan
Parties, Lenders and Agent hereby agree as follows:
 
I.          DEFINITIONS.
 
1.1           Accounting Terms. As used in this Agreement, the Other Documents
or any certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined shall have the respective meanings given to them under GAAP; provided,
however that, whenever such accounting terms are used for the purposes of
determining compliance with financial covenants in this Agreement, such
accounting terms shall be defined in accordance with GAAP as applied in
preparation of the audited financial statements of Loan Parties for the fiscal
year ended December 31, 2012. If there occurs after the Closing Date any change
in GAAP that affects in any respect the calculation of any covenant contained in
this Agreement or the definition

 
 

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of any term defined under GAAP used in such calculations, Agent, Lenders and
Loan Parties shall negotiate in good faith to amend the provisions of this
Agreement that relate to the calculation of such covenants with the intent of
having the respective positions of Agent, Lenders and Loan Parties after such
change in GAAP conform as nearly as possible to their respective positions as of
the Closing Date, provided, that, until any such amendments have been agreed
upon, the covenants in this Agreement shall be calculated as if no such change
in GAAP had occurred and Loan Parties shall provide additional financial
statements or supplements thereto, attachments to Compliance Certificates and/or
calculations regarding financial covenants as Agent may reasonably require in
order to provide the appropriate financial information required hereunder with
respect to Loan Parties both reflecting any applicable changes in GAAP and as
necessary to demonstrate compliance with the financial covenants before giving
effect to the applicable changes in GAAP.
 
1.2           General Terms. For purposes of this Agreement the following terms
shall have the following meanings:
 
“2013 Equity Issuance” shall mean one or more issuances of Equity Interests by
Intercloud subsequent to the Closing Date and prior to December 31, 2013.
 
“Accountants” shall have the meaning set forth in Section 9.7 hereof.
 
“Acquisition Agreements” shall mean, collectively, the Pre Closing Acquisition
Agreements and the Post Closing Acquisition Agreements.
 
“Adex Acquisition Agreement” shall mean that certain Equity Purchase Agreement
dated as of September 17, 2012, among Intercloud, Adex Corp, Adex PR, Adex Comm
and the Adex Sellers.
 
“Adex Sellers” shall mean Peter Liebowitz, Garry McGuire, Marc Freedman and
Justin Liebowitz.
 
“Advance Rate” shall have the meaning set forth in Section 2.1(a)(z)(i) hereof.
 
“Advances” shall mean and include the Revolving Advances, Letters of Credit and
the Swing Loans.
 
“Affected Lender” shall have the meaning set forth in Section 3.11 hereof.
 
“Affiliate” of any Person shall mean (a) any Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director, manager, member, managing
member, general partner or officer (i) of such Person, (ii) of any Subsidiary of
such Person or (iii) of any Person described in clause (a) above. For purposes
of this definition, control of a Person shall mean the power, direct or
indirect, (x) to vote 5% or more of the Equity Interests having ordinary voting
power for the election of directors of such Person or other Persons performing
similar functions for any such Person, or (y) to direct or cause the direction
of the management and policies of such Person whether by ownership of Equity
Interests, contract or otherwise.

 
2

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“Agent” shall have the meaning set forth in the preamble to this Agreement and
shall include its successors and assigns.
 
“Agreement” shall mean this Revolving Credit and Security Agreement, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
 
“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
highest of (a) the Base Rate in effect on such day, (b) the sum of the Federal
Funds Open Rate in effect on such day plus one half of one percent (0.5%), and
(c) the sum of the Daily LIBOR Rate in effect on such day plus one percent
(1.0%), so long as a Daily LIBOR Rate is offered, ascertainable and not
unlawful.
 
“Alternate Source” shall have the meaning set forth in the definition of Federal
Funds Open Rate.
 
“Anti-Terrorism Laws” shall mean any Laws relating to terrorism, trade sanctions
programs and embargoes, import/export licensing, money laundering or bribery,
and any regulation, order, or directive promulgated, issued or enforced pursuant
to such Laws, all as amended, supplemented or replaced from time to time.
 
“Applicable Law” shall mean all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant, Other Document or contract in question,
including all applicable common law and equitable principles, all provisions of
all applicable state, federal and foreign constitutions, statutes, rules,
regulations, treaties, directives and orders of any Governmental Body, and all
orders, judgments and decrees of all courts and arbitrators.
 
“Applicable Margin” shall mean an amount equal to one-half of one percent
(0.50%) for Revolving Advances consisting of Domestic Rate Loans and an amount
equal to two and three-quarters percent (2.75%) for Revolving Advances
consisting of LIBOR Rate Loans.
 
“Application Date” shall have the meaning set forth in Section 2.8(b) hereof.
 
“Approvals” shall have the meaning set forth in Section 5.7(b) hereof.
 
“Approved Electronic Communication” shall mean each notice, demand,
communication, information, document and other material transmitted, posted or
otherwise made or communicated by e-mail, E-Fax, the StuckyNet System©, or any
other equivalent electronic service agreed to by Agent, whether owned, operated
or hosted by Agent, any Lender, any of their Affiliates or any other Person,
that any party is obligated to, or otherwise chooses to, provide to Agent
pursuant to this Agreement or any Other Document, including any financial
statement, financial and other report, notice, request, certificate and other
information material; provided that Approved Electronic Communications shall not
include any notice, demand, communication, information, document or other
material that Agent specifically instructs a Person to deliver in physical form.

 
3

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“Availability Block Release Date” shall mean the first date following September
30, 2014 on which each of the following conditions is satisfied: (a) Loan
Parties’ Fixed Charge Coverage Ratio is not less than 1.00 to 1.00 for the most
recently ended four fiscal quarter period, as evidenced by the Compliance
Certificate delivered for such period, (b) Average Modified Undrawn Availability
is not less than $3,000,000, calculated without giving effect to Section
2.1(a)(z)(iii) during the applicable thirty (30) day period, (c) Modified
Undrawn Availability is not less than $3,000,000, calculated without giving
effect to Section 2.1(a)(z)(iii), and (d) no Default or Event of Default has
occurred and is continuing.
 
“Average Modified Undrawn Availability” shall mean, as of any date of
determination, the sum of Modified Undrawn Availability for each of the previous
thirty (30) days, divided by thirty (30).
 
“AWS Acquisition Agreement” means that certain Purchase Agreement dated as of
April 3, 2013 by and among Intercloud, AW Solutions, AW PR and the AW Sellers.
 
“AWS Sellers” Keith W. Hayter, Bobby A. Varna, James Partridge, Emmanuel Poulin
and Jeffrey Dubay.
 
“Base Rate” shall mean the base commercial lending rate of PNC as publicly
announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from time to time by PNC as a means of
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by PNC to any particular class or category of customers of PNC.
 
“Benefited Lender” shall have the meaning set forth in Section 2.6(e) hereof.
 
“Blocked Account Bank” shall have the meaning set forth in Section 4.8(h)
hereof.
 
“Blocked Accounts” shall have the meaning set forth in Section 4.8(h) hereof.
 
“Borrower” or “Borrowers” shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such
Persons.
 
“Borrowers’ Account” shall have the meaning set forth in Section 2.10 hereof.
 
“Borrowing Agent” shall mean Intercloud.
 
“Borrowing Base Certificate” shall mean a certificate in substantially the form
of Exhibit 1.2 hereto duly executed by the President, Chief Financial Officer or
Controller of the Borrowing Agent and delivered to the Agent, appropriately
completed, by which such officer shall certify to Agent the Formula Amount and
calculation thereof as of the date of such certificate.
 
“Business Day” shall mean any day other than Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required by law to be closed
for business in East Brunswick, New Jersey and, if the applicable Business Day
relates to any LIBOR Rate Loans, such day must also be a day on which dealings
are carried on in the London interbank market.
 
 
4

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“Capital Expenditures” shall mean expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements (or of any replacements or
substitutions thereof or additions thereto) which have a useful life of more
than one year and which, in accordance with GAAP, would be classified as capital
expenditures. Capital Expenditures shall include the total principal portion of
Capitalized Lease Obligations.
 
“Capitalized Lease Obligation” shall mean any Indebtedness of any Loan Party
represented by obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
 
“Cash Management Products and Services” shall mean agreements or other
arrangements under which Agent or any Lender or any Affiliate of Agent or a
Lender provides any of the following products or services to any of the Loan
Parties: (a) credit cards; (b) credit card processing services; (c) debit cards
and stored value cards; (d) commercial cards; (e) ACH transactions; and (f) cash
management and treasury management services and products, including without
limitation controlled disbursement accounts or services, lockboxes, automated
clearinghouse transactions, overdrafts, interstate depository network services.
The indebtedness, obligations and liabilities of any Loan Party to the provider
of any Cash Management Products and Services (including all obligations and
liabilities owing to such provider in respect of any returned items deposited
with such provider) (the “Cash Management Liabilities”) shall be “Obligations”
hereunder, guaranteed obligations under the Guaranty and secured obligations
under any Guarantor Security Agreement, as applicable, and otherwise treated as
Obligations for purposes of each of the Other Documents. The Liens securing the
Cash Management Products and Services shall be pari passu with the Liens
securing all other Obligations under this Agreement and the Other Documents,
subject to the express provisions of Section 11.5.
 
“Cash Management Liabilities” shall have the meaning provided in the definition
of “Cash Management Products and Services.”
 
“CEA” shall mean the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended
from time to time, and any successor statute.
 
“CFTC” shall mean the Commodity Futures Trading Commission.
 
“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.
 
“Change in Law” shall mean the occurrence, after the Closing Date, of any of the
following: (a) the adoption or taking effect of any Applicable Law; (b) any
change in any Applicable Law or in the administration, implementation,
interpretation or application thereof by any Governmental Body; or (c) the
making or issuance of any request, rule, guideline or directive (whether or not
having the force of law) by any Governmental Body; provided that notwithstanding
anything herein to the contrary, (x) the Dodd-Frank Wall
 
 
5

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Street Reform and Consumer Protection Act and all requests, rules, regulations,
guidelines, interpretations or directives thereunder or issued in connection
therewith (whether or not having the force of Applicable Law) and (y) all
requests, rules, regulations, guidelines, interpretations or directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities (whether or not having the force of law), in
each case pursuant to Basel III, shall in each case be deemed to be a Change in
Law regardless of the date enacted, adopted, issued, promulgated or implemented.
 
“Change of Control” shall mean: (a) the occurrence of any event (whether in one
or more transactions) which results in (i) Intercloud owning less than one
hundred percent (100%) of the Equity Interests (on a fully diluted basis) of any
other Loan Party (other than (x) RM Engineering, (y) ERFS, or (z) any other Loan
Party to the extent the sale of Equity Interests therein is permitted by Section
7.1(b)), (ii) Intercloud owing less than forty nine percent (49%) of the Equity
Interests (on a fully diluted basis) of RM Engineering (except to the extent
Intercloud is permitted to sell such Equity Interests in accordance with Section
7.1(b)), or (iii) Adex Corp owning less than one hundred percent (100%) of the
Equity Interests (on a fully diluted basis) of ERFS (except to the extent Adex
Corp is permitted to sell such Equity Interests in accordance with Section
7.1(b)), (b) any person or group of persons (within the meaning of Section 13(d)
or 14(a) of the Exchange Act) shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the SEC under the Exchange Act) of
fifty percent (50%) or more of the voting Equity Interests of Intercloud; (c)
during any period of 12 consecutive months, a majority of the members of the
board of directors of Intercloud cease to be composed of individuals (i) who
were members of that board or equivalent governing body on the first day of such
period, (ii) whose election or nomination to that board was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board, or (iii) whose
election or nomination to that board was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of that board; (d) Mark Munro shall cease to hold
office as or perform the day-to-day duties of the Chief Executive Officer of
Intercloud, unless he is replaced within 60 days of such cessation by a Chief
Executive Officer who is acceptable to Agent as evidenced by written consent, or
(e) any merger, consolidation or sale of substantially all of the property or
assets of any Loan Party.
 
“Charges” shall mean all taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross income, gross receipts, sales, use,
ad valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation and property taxes, custom duties, fees,
assessments, liens, claims and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts, imposed by
any taxing or other authority, domestic or foreign (including the Pension
Benefit Guaranty Corporation or any environmental agency or superfund), upon the
Collateral, any Loan Party or any of its Affiliates.
 
“CIP Regulations” shall have the meaning set forth in Section 14.12 hereof.

 
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“Closing Date” shall mean September 20, 2013 or such other date as may be agreed
to in writing by the parties hereto.
 
“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended
or supplemented from time to time, and any successor statute of similar import,
and the rules and regulations thereunder, as from time to time in effect.
 
“Collateral” shall mean and include all right, title and interest of each Loan
Party in all of the following property and assets of such Loan Party, in each
case whether now existing or hereafter arising or created and whether now owned
or hereafter acquired and wherever located:
 
(a)           all Receivables and all supporting obligations relating thereto;
 
(b)           all equipment and fixtures;
 
(c)           all general intangibles (including all payment intangibles and all
software) and all supporting obligations related thereto;
 
(d)           all Inventory;
 
(e)           all Subsidiary Stock, securities, investment property, and
financial assets;
 
(f)           all contract rights, rights of payment which have been earned
under a contract rights, chattel paper (including electronic chattel paper and
tangible chattel paper), commercial tort claims (whether now existing or
hereafter arising); documents (including all warehouse receipts and bills of
lading), deposit accounts, goods, instruments (including promissory notes),
letters of credit (whether or not the respective letter of credit is evidenced
by a writing) and letter-of-credit rights, cash, certificates of deposit,
insurance proceeds (including hazard, flood and credit insurance), security
agreements, eminent domain proceeds, condemnation proceeds, tort claim proceeds
and all supporting obligations;
 
(g)           all ledger sheets, ledger cards, files, correspondence, records,
books of account, business papers, computers, computer software (owned by any
Loan Party or in which it has an interest), computer programs, tapes, disks and
documents, including all of such property relating to the property described in
clauses (a) through (f) of this definition; and
 
(h)           all proceeds and products of the property described in clauses (a)
through (g) of this definition, in whatever form. It is the intention of the
parties that if Agent shall fail to have a perfected Lien in any particular
property or assets of any Loan Party for any reason whatsoever, but the
provisions of this Agreement and/or of the Other Documents, together with all
financing statements and other public filings relating to Liens filed or
recorded by Agent against Loan Parties, would be sufficient to create a
perfected Lien in any property or assets that such Loan Party may receive upon
the sale, lease, license, exchange, transfer or disposition of such particular
property or assets, then all such “proceeds” of such particular property or
assets shall be included in the Collateral as original collateral that is the
subject of a direct and original grant of a security interest as provided for
herein and in the Other Documents (and not merely as proceeds (as defined in
Article 9 of the Uniform Commercial Code) in which a security interest is
created or arises solely pursuant to Section 9-315 of the Uniform Commercial
Code).
 
 
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“Commitment Transfer Supplement” shall mean a document in the form of Exhibit
16.3 hereto, properly completed and otherwise in form and substance satisfactory
to Agent by which the Purchasing Lender purchases and assumes a portion of the
obligation of Lenders to make Advances under this Agreement.
 
“Compliance Certificate” shall mean a compliance certificate substantially in
the form of Exhibit 1.2(a) hereto to be signed by the Chief Financial Officer or
Controller of Borrowing Agent.
 
“Consents” shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Bodies and
other third parties, domestic or foreign, necessary to carry on any Loan Party’s
business or necessary (including to avoid a conflict or breach under any
agreement, instrument, other document, license, permit or other authorization)
for the execution, delivery or performance of this Agreement, the Other
Documents, the Term Loan Documents, the Subordinated Note Documents or the
Acquisition Agreements, including any Consents required under all applicable
federal, state or other Applicable Law.
 
“Consigned Inventory” shall mean Inventory of any Borrower that is in the
possession of another Person on a consignment, sale or return, or other basis
that does not constitute a final sale and acceptance of such Inventory.
 
“Controlled Group” shall mean, at any time, each Loan Party and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
any Loan Party, are treated as a single employer under Section 414(b) or (c) of
the Code.
 
“Covered Entity” shall mean (a) each Borrower, each of Borrower’s Subsidiaries,
all Guarantors and all pledgors of Collateral and (b) each Person that, directly
or indirectly, is in control of a Person described in clause (a) above. For
purposes of this definition, control of a Person shall mean the direct or
indirect (x) ownership of, or power to vote, 25% or more of the issued and
outstanding equity interests having ordinary voting power for the election of
directors of such Person or other Persons performing similar functions for such
Person, or (y) power to direct or cause the direction of the management and
policies of such Person whether by ownership of equity interests, contract or
otherwise.
 
“Customer” shall mean and include the account debtor with respect to any
Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with any Loan Party,
pursuant to which such Loan Party is to deliver any personal property or perform
any services.

 
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“Customs” shall have the meaning set forth in Section 2.13(b) hereof.
 
“Daily LIBOR Rate” shall mean, for any day, the rate per annum determined by the
Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the
Reserve Percentage.
 
“Debt Payments” shall mean for any period, in each case, all cash actually
expended by any Loan Party to make: (a) interest payments on any Advances
hereunder, plus (b) payments for all fees, commissions and charges set forth
herein, plus (c) payments on Capitalized Lease Obligations, plus (d) payments
with respect to any other Indebtedness for borrowed money, including without
limitation, Term Loans and the Restricted Indebtedness (excluding non-cash
earn-out payments made pursuant to the Acquisition Agreements).
 
“Default” shall mean an event, circumstance or condition which, with the giving
of notice or passage of time or both, would constitute an Event of Default.
 
“Default Rate” shall have the meaning set forth in Section 3.1 hereof.
 
“Defaulting Lender” shall mean any Lender that: (a) has failed, within two (2)
Business Days of the date required to be funded or paid, to (i) fund any portion
of its Revolving Commitment Percentage of Advances, (ii) if applicable, fund any
portion of its Participation Commitment in Letters of Credit or Swing Loans or
(iii) pay over to Agent, Issuer, Swing Loan Lender or any Lender any other
amount required to be paid by it hereunder, unless, in the case of clause (i)
above, such Lender notifies Agent in writing that such failure is the result of
such Lender’s good faith determination that a condition precedent to funding
(specifically identified and including a particular Default or Event of Default,
if any) has not been satisfied; (b) has notified Borrowers or Agent in writing,
or has made a public statement to the effect, that it does not intend or expect
to comply with any of its funding obligations under this Agreement (unless such
writing or public statement indicates that such position is based on such
Lender’s good faith determination that a condition precedent (specifically
identified and including a particular Default or Event of Default, if any) to
funding a loan under this Agreement cannot be satisfied) or generally under
other agreements in which it commits to extend credit; (c) has failed, within
two (2) Business Days after request by Agent, acting in good faith, to provide a
certification in writing from an authorized officer of such Lender that it will
comply with its obligations (and is financially able to meet such obligations)
to fund prospective Advances and, if applicable, participations in then
outstanding Letters of Credit and Swing Loans under this Agreement, provided
that such Lender shall cease to be a Defaulting Lender pursuant to this clause
(c) upon Agent’s receipt of such certification in form and substance
satisfactory to the Agent; (d) has become the subject of an Insolvency Event; or
(e) has failed at any time to comply with the provisions of Section 2.6(e) with
respect to purchasing participations from the other Lenders, whereby such
Lender’s share of any payment received, whether by setoff or otherwise, is in
excess of its pro rata share of such payments due and payable to all of the
Lenders.
 
“Depository Accounts” shall have the meaning set forth in Section 4.8(h) hereof.

 
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“Designated Lender” shall have the meaning set forth in Section 16.2(d) hereof.
 
“Dilution” means, as of any date of determination, a percentage, based upon the
experience of the immediately prior 180 consecutive days, that is the result of
dividing the Dollar amount of (a) set-off, warranty claims, discounts,
advertising allowances, credits, or other similar items that are granted in the
Ordinary Course of Business with respect to the Borrowers' Receivables during
such period, by (b) the Borrowers' billings with respect to Receivables during
such period.
 
“Dilution Reserve” means, as of any date of determination, an amount sufficient
to reduce the Advance Rate by 1 percentage point for each percentage point by
which Dilution is in excess of 2.0%.
 
“Document” shall have the meaning given to the term “document” in the Uniform
Commercial Code.
 
“Dollar” and the sign “$” shall mean lawful money of the United States of
America.
 
“Domestic Rate Loan” shall mean any Advance that bears interest based upon the
Alternate Base Rate.
 
“Drawing Date” shall have the meaning set forth in Section 2.14(b) hereof.
 
“Early Termination Date” shall have the meaning set forth in Section 13.1
hereof.
 
“EBITDA” shall mean for any period with respect to Loan Parties on a
Consolidated Basis, the sum of (a) net income (or loss) for such period
(excluding extraordinary gains, plus (b) all interest expense for such period,
plus (c) all charges against income for such period for federal, state and local
taxes, plus (d) depreciation expenses for such period, plus (e) amortization
expenses for such period.
 
“Effective Date” means the date indicated in a document or agreement to be the
date on which such document or agreement becomes effective, or, if there is no
such indication, the date of execution of such document or agreement.
 
“Eligible Contract Participant” shall mean an “eligible contract participant” as
defined in the CEA and regulations thereunder.
 
“Eligibility Date” shall mean, with respect to each Borrower and Guarantor and
each Swap, the date on which this Agreement or any Other Document becomes
effective with respect to such Swap (for the avoidance of doubt, the Eligibility
Date shall be the Effective Date of such Swap if this Agreement or any Other
Document is then in effect with respect to such Borrower or Guarantor, and
otherwise it shall be the Effective Date of this Agreement and/or such Other
Document(s) to which such Borrower or Guarantor is a party).
 
“Eligible Insured Foreign Receivable or Receivables” shall mean Receivables that
meet the requirements of Eligible Receivables, except clause (f) of such
definition, provided that such Receivable is credit insured (the insurance
carrier, amount and terms of such insurance shall be reasonably acceptable to
Agent and shall name Agent as beneficiary or loss payee, as applicable).
 
 
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“Eligible Milestone Receivables” shall mean Receivables that would constitute
Eligible Receivables except that such Receivables are Milestone Receivables;
provided that no Receivables shall constitute Eligible Milestone Receivables if
(i) they are due or unpaid more than sixty (60) days after the original invoice
date or thirty (30) days after the original due date or (ii) fifty percent (50%)
or more of the Milestone Receivables from such Customer are not deemed Eligible
Milestone Receivables hereunder.
 
“Eligible Receivables” shall mean and include, each Receivable of a Borrower
arising in the Ordinary Course of Business and which Agent, in its reasonable
credit judgment, shall deem to be an Eligible Receivable, based on such
considerations as Agent may from time to time deem appropriate. A Receivable
shall not be deemed eligible unless such Receivable is subject to Agent’s first
priority perfected security interest and no other Lien (other than Permitted
Encumbrances), and is evidenced by an invoice or other documentary evidence
satisfactory to Agent. In addition, no Receivable shall be an Eligible
Receivable if:
 
(a)           it arises out of a sale made by any Borrower to an Affiliate of
any Borrower or to a Person controlled by an Affiliate of any Borrower;
 
(b)           it is due or unpaid more than one hundred twenty (120) days after
the original invoice date or sixty (60) days after the original due date;
 
(c)           fifty percent (50%) or more of the Receivables from such Customer
are not deemed Eligible Receivables hereunder (provided that Milestone
Receivables (as defined in clause (j) below) shall not be included in
determining such percentage). Such percentage may, in Agent’s reasonable
discretion, be increased or decreased from time to time;
 
(d)           any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;
 
(e)           an Insolvency Event shall have occurred with respect to such
Customer;
 
(f)           the sale is to a Customer outside the continental United States of
America, Puerto Rico or a province of Canada that has not adopted the Personal
Property Security Act of Canada, unless the sale is on letter of credit,
guaranty or acceptance terms, in each case acceptable to Agent in its sole
discretion or such Receivable constitutes an Eligible Insured Foreign
Receivable;
 
(g)           the sale to the Customer is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper;

 
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(h)           Agent believes, in its sole judgment, that collection of such
Receivable is insecure or that such Receivable may not be paid by reason of the
Customer’s financial inability to pay;
 
(i)           the Customer is the United States of America, any state or any
department, agency or instrumentality of any of them, unless the applicable
Borrower assigns its right to payment of such Receivable to Agent pursuant to
the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et
seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
applicable statutes or ordinances;
 
(j)           the goods giving rise to such Receivable have not been delivered
to and accepted by the Customer, or the services giving rise to such Receivable
have not been performed by the applicable Borrower and accepted by the Customer,
or the Receivable arose from a milestone or progress billing or percentage of
completion billing (such Receivables, “Milestone Receivables”), or the
Receivable otherwise does not represent a final sale;
 
(k)           the Receivables of the Customer exceed a credit limit determined
by Agent, in its reasonable discretion, to the extent such Receivable exceeds
such limit; provided that, in the case of Receivables due from Ericsson, Inc.,
such Receivables shall not be Eligible Receivables to the extent such
Receivables exceed 65% of the aggregate of all Receivables of Borrowers;
 
(l)           the Receivable is subject to any offset, deduction, defense,
dispute, credits or counterclaim (but such Receivable shall only be ineligible
to the extent of such offset, deduction, defense or counterclaim), the Customer
is also a creditor or supplier of a Borrower or the Receivable is contingent in
any respect or for any reason;
 
(m)           the applicable Borrower has made any agreement with any Customer
for any deduction therefrom, except for discounts or allowances made in the
Ordinary Course of Business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto;
 
(n)           any return, rejection or repossession of the merchandise has
occurred or the rendition of services has been disputed; or
 
(o)           such Receivable is not payable to a Borrower.
 
“Environmental Complaint” shall have the meaning set forth in Section 9.3(b)
hereof.
 
“Environmental Laws” shall mean all federal, state and local environmental, land
use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances and codes as well as common laws, relating to the protection of the
environment, human health and/or governing the use, storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Materials and the rules, regulations, policies, guidelines,
interpretations, decisions, orders and directives of federal, state,
international and local governmental agencies and authorities with respect
thereto.
 
 
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“Equity Interests” shall mean, with respect to any Person, any and all shares,
rights to purchase, options, warrants, general, limited or limited liability
partnership interests, member interests, participation or other equivalents of
or interest in (regardless of how designated) equity of such Person, whether
voting or nonvoting, including common stock, preferred stock, convertible
securities 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), including in each case all of the following rights relating to
such Equity Interests, whether arising under the Organizational Documents of the
Person issuing such Equity Interests (the “issuer”) or under the applicable laws
of such issuer’s jurisdiction of organization relating to the formation,
existence and governance of corporations, limited liability companies or
partnerships or business trusts or other legal entities, as the case may be: (i)
all economic rights (including all rights to receive dividends and
distributions) relating to such Equity Interests; (ii) all voting rights and
rights to consent to any particular action(s) by the applicable issuer; (iii)
all management rights with respect to such issuer; (iv) in the case of any
Equity Interests consisting of a general partner interest in a partnership, all
powers and rights as a general partner with respect to the management,
operations and control of the business and affairs of the applicable issuer; (v)
in the case of any Equity Interests consisting of the membership/limited
liability company interests of a managing member in a limited liability company,
all powers and rights as a managing member with respect to the management,
operations and control of the business and affairs of the applicable issuer;
(vi) all rights to designate or appoint or vote for or remove any officers,
directors, manager(s), general partner(s) or managing member(s) of such issuer
and/or any members of any board of members/managers/partners/directors that may
at any time have any rights to manage and direct the business and affairs of the
applicable issuer under its Organizational Documents as in effect from time to
time or under Applicable Law; (vii) all rights to amend the Organizational
Documents of such issuer, (viii) in the case of any Equity Interests in a
partnership or limited liability company, the status of the holder of such
Equity Interests as a “partner”, general or limited, or “member” (as applicable)
under the applicable Organizational Documents and/or Applicable Law; and (ix)
all certificates evidencing such Equity Interests.
 
“ERFS Acquisition Agreement” shall mean that certain Equity Purchase Agreement
dated as of November 30, 2012, between Adex Corp, ERFS and ERFS Seller.
 
“ERFS Seller” shall mean Mark Vigneri.
 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended or supplemented from time to time and the rules and
regulations promulgated thereunder.
 
“Event of Default” shall have the meaning set forth in Article X hereof.
 
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 
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“Excluded Hedge Liability or Liabilities” shall mean, with respect to each
Borrower and Guarantor, each of its Swap Obligations if, and only to the extent
that, all or any portion of this Agreement or any Other Document that relates to
such Swap Obligation is or becomes illegal under the CEA, or any rule,
regulation or order of the CFTC, solely by virtue of such Borrower’s and/or
Guarantor’s failure to qualify as an Eligible Contract Participant on the
Eligibility Date for such Swap. Notwithstanding anything to the contrary
contained in the foregoing or in any other provision of this Agreement or any
Other Document, the foregoing is subject to the following provisos: (a) if a
Swap Obligation arises under a master agreement governing more than one Swap,
this definition shall apply only to the portion of such Swap Obligation that is
attributable to Swaps for which such guaranty or security interest is or becomes
illegal under the CEA, or any rule, regulations or order of the CFTC, solely as
a result of the failure by such Borrower or Guarantor for any reason to qualify
as an Eligible Contract Participant on the Eligibility Date for such Swap; (b)
if a guarantee of a Swap Obligation would cause such obligation to be an
Excluded Hedge Liability but the grant of a security interest would not cause
such obligation to be an Excluded Hedge Liability, such Swap Obligation shall
constitute an Excluded Hedge Liability for purposes of the guaranty but not for
purposes of the grant of the security interest; and (c) if there is more than
one Borrower or Guarantor executing this Agreement or the Other Documents and a
Swap Obligation would be an Excluded Hedge Liability with respect to one or more
of such Persons, but not all of them, the definition of Excluded Hedge Liability
or Liabilities with respect to each such Person shall only be deemed applicable
to (i) the particular Swap Obligations that constitute Excluded Hedge
Liabilities with respect to such Person, and (ii) the particular Person with
respect to which such Swap Obligations constitute Excluded Hedge Liabilities.
 
“Excluded Taxes” shall mean, with respect to Agent, any Lender, Participant,
Swing Loan Lender Issuer or any other recipient of any payment to be made by or
on account of any Obligations, (a) taxes imposed on or measured by its overall
net income (however denominated), and franchise taxes imposed on it (in lieu of
net income taxes), by the jurisdiction (or any political subdivision thereof)
under the laws of which such recipient is organized or in which its principal
office or applicable lending office is located or, in the case of any Lender,
Participant, Swing Loan Lender or Issuer, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which any Borrower is
located, (c) any withholding tax that is imposed on amounts payable to a Lender
at the time such Lender becomes a party hereto (or designates a new lending
office) or is attributable to such Lender’s failure or inability (other than as
a result of a Change in Law) to comply with Section 3.10(e), except to the
extent that such Lender or Participant (or its assignor or seller of a
participation, if any) was entitled, at the time of designation of a new lending
office (or assignment or sale of a participation), to receive additional amounts
from Borrowers with respect to such withholding tax pursuant to Section 3.10(a),
or (d) any Taxes imposed under FATCA.
 
“Facility Fee” shall have the meaning set forth in Section 3.3(b) hereof.
 
“FATCA” shall mean Sections 1471 through 1474 of the 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) and any current or
future regulations thereunder or official interpretations thereof and any
agreements entered into pursuant to Section 1471(b)(1) of the Code.
 
 
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“Federal Funds Effective Rate” shall mean for any day the rate per annum (based
on a year of 360 days and actual days elapsed and rounded upward to the nearest
1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the “Federal Funds
Effective Rate” as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
“Federal Funds Effective Rate” for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
 
“Federal Funds Open Rate” shall mean for any day the rate per annum (based on a
year of 360 days and actual days elapsed) which is the daily federal funds open
rate as quoted by ICAP North America, Inc. (or any successor) as set forth on
the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such
other substitute Bloomberg Screen that displays such rate), or as set forth on
such other recognized electronic source used for the purpose of displaying such
rate as selected by PNC (an “Alternate Source”) (or if such rate for such day
does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on
any Alternate Source, or if there shall at any time, for any reason, no longer
exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate
Source, a comparable replacement rate determined by PNC at such time (which
determination shall be conclusive absent manifest error); provided however, that
if such day is not a Business Day, the Federal Funds Open Rate for such day
shall be the “open” rate on the immediately preceding Business Day. If and when
the Federal Funds Open Rate changes, the rate of interest with respect to any
advance to which the Federal Funds Open Rate applies will change automatically
without notice to the Loan Parties, effective on the date of any such change.
 
“Fixed Charge Coverage Ratio” shall mean, with respect to any fiscal period, the
ratio of (a) EBITDA, minus Unfunded Capital Expenditures made during such
period, minus cash taxes paid during such period, to (b) all Debt Payments made
during such period.
 
“Flood Laws” shall mean all Applicable Laws relating to policies and procedures
that address requirements placed on federally regulated lenders under the
National Flood Insurance Reform Act of 1994 and other Applicable Laws related
thereto.
 
“Foreign Currency Hedge” shall mean any foreign exchange transaction, including
spot and forward foreign currency purchases and sales, listed or
over-the-counter options on foreign currencies, non-deliverable forwards and
options, foreign currency swap agreements, currency exchange rate price hedging
arrangements, and any other similar transaction providing for the purchase of
one currency in exchange for the sale of another currency.

 
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“Foreign Currency Hedge Liabilities” shall have the meaning assigned in the
definition of Lender-Provided Foreign Currency Hedge.
 
“Foreign Lender” shall mean any Lender that is organized under the laws of a
jurisdiction other than that in which Borrowers are resident for tax purposes.
For purposes of this definition, the United States of America, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.
 
“Foreign Subsidiary” shall mean any Subsidiary of any Person that is not
organized or incorporated in the United States, any State or territory thereof
or the District of Columbia.
 
“Formula Amount” shall have the meaning set forth in Section 2.1(a) hereof.
 
“GAAP” shall mean generally accepted accounting principles in the United States
of America in effect from time to time.
 
“Governmental Acts” shall mean any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Body.
 
“Governmental Body” shall mean any nation or government, any state or other
political subdivision thereof or any entity, authority, agency, division or
department exercising the executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to a government
(including any supra-national bodies such as the European Union or the European
Central Bank) and any group or body charged with setting financial accounting or
regulatory capital rules or standards (including, without limitation, the
Financial Accounting Standards Board, the Bank for International Settlements or
the Basel Committee on Banking Supervision or any successor or similar authority
to any of the foregoing).
 
“Guarantor” or “Guarantors” shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such
Persons.
 
“Guarantor Security Agreement” shall mean any security agreement executed by any
Guarantor in favor of Agent securing the Obligations or the Guaranty of such
Guarantor, in form and substance satisfactory to Agent.
 
“Guaranty” shall mean any guaranty of the Obligations executed by a Guarantor in
favor of Agent for its benefit and for the ratable benefit of Lenders, in form
and substance satisfactory to Agent, including Article XVII hereof.
 
“Hazardous Discharge” shall have the meaning set forth in Section 9.3(b) hereof.
 
“Hazardous Materials” shall mean, without limitation, any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, Hazardous Wastes, hazardous or Toxic Substances or related materials
as defined in or subject to regulation under Environmental Laws.

 
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“Hazardous Wastes” shall mean all waste materials subject to regulation under
CERCLA, RCRA or applicable state law, and any other applicable Federal and state
laws now in force or hereafter enacted relating to hazardous waste disposal.
 
“Hedge Liabilities” shall mean the Interest Rate Hedge Liabilities.
 
“Indebtedness” shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (a) borrowed money; (b) amounts
received under or liabilities in respect of any note purchase or acceptance
credit facility, and all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (c) all Capitalized Lease
Obligations; (d) reimbursement obligations (contingent or otherwise) under any
letter of credit agreement, banker’s acceptance agreement or similar
arrangement; (e) obligations under any Interest Rate Hedge, Foreign Currency
Hedge, or other interest rate management device, foreign currency exchange
agreement, currency swap agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement;
(f) any other advances of credit made to or on behalf of such Person or other
transaction (including forward sale or purchase agreements, capitalized leases
and conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such Person to finance its operations or capital
requirements including to finance the purchase price of property or services and
all obligations of such Person to pay the deferred purchase price of property or
services (but not including trade payables and accrued expenses incurred in the
Ordinary Course of Business which are not represented by a promissory note or
other evidence of indebtedness); (g) all Equity Interests of such Person subject
to repurchase or redemption rights or obligations (excluding repurchases or
redemptions at the sole option of such Person); (h) all indebtedness,
obligations or liabilities secured by a Lien on any asset of such Person,
whether or not such indebtedness, obligations or liabilities are otherwise an
obligation of such Person; (i) all obligations of such Person for “earnouts”,
purchase price adjustments, profit sharing arrangements, deferred purchase money
amounts and similar payment obligations or continuing obligations of any nature
of such Person arising out of purchase and sale contracts; (j) off-balance sheet
liabilities and/or pension plan liabilities of such Person; (k) obligations
arising under bonus, deferred compensation, incentive compensation or similar
arrangements, other than those arising in the Ordinary Course of Business; and
(l) any guaranty of any indebtedness, obligations or liabilities of a type
described in the foregoing clauses (a) through (k).
 
“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.
 
“Ineligible Security” shall mean any security which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
 
 
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“Insolvency Event” shall mean, with respect to any Person, including without
limitation any Lender, such Person or such Person’s direct or indirect parent
company (a) becomes the subject of a bankruptcy or insolvency proceeding
(including any proceeding under Title 11 of the United States Code), or
regulatory restrictions, (b) has had a receiver, conservator, trustee,
administrator, custodian, assignee for the benefit of creditors or similar
Person charged with the reorganization or liquidation of its business appointed
for it or has called a meeting of its creditors, (c) admits in writing its
inability, or be generally unable, to pay its debts as they become due or cease
operations of its present business, (d) with respect to a Lender, such Lender is
unable to perform hereunder due to the application of Applicable Law, or (e) in
the good faith determination of Agent, has taken any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any such
proceeding or appointment of a type described in clauses (a) or (b), provided
that an Insolvency Event shall not result solely by virtue of any ownership
interest, or the acquisition of any ownership interest, in such Person or such
Person’s direct or indirect parent company by a Governmental Body or
instrumentality thereof if, and only if, such ownership interest does not result
in or provide such Person with immunity from the jurisdiction of courts within
the United States or from the enforcement of judgments or writs of attachment on
its assets or permit such Person (or such Governmental Body or instrumentality)
to reject, repudiate, disavow or disaffirm any contracts or agreements made by
such Person.
 
“Intellectual Property” shall mean property constituting a patent, copyright,
trademark (or any application in respect of the foregoing), service mark,
copyright, copyright application, trade name, mask work, trade secrets, design
right, assumed name or license or other right to use any of the foregoing under
Applicable Law.
 
“Intellectual Property Claim” shall mean the assertion, by any means, by any
Person of a claim that any Loan Party’s ownership, use, marketing, sale or
distribution of any Inventory, equipment, Intellectual Property or other
property or asset is violative of any ownership of or right to use any
Intellectual Property of such Person.
 
“Intercreditor Agreement” shall mean that certain Intercreditor Agreement dated
as of the Closing Date among Agent, Borrowers and Term Lender.
 
“Interest Period” shall mean the period provided for any LIBOR Rate Loan
pursuant to Section 2.2(b) hereof.
 
“Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap,
floor, adjustable strike cap, adjustable strike corridor, cross-currency swap or
similar agreements entered into by any Loan Party or its Subsidiaries in order
to provide protection to, or minimize the impact upon, such Loan Party and/or
their respective Subsidiaries of increasing floating rates of interest
applicable to Indebtedness.
 
“Interest Rate Hedge Liabilities” shall have the meaning assigned in the
definition of Lender-Provided Interest Rate Hedge.
 
“Inventory” shall mean and include as to each Loan Party all of such Loan
Party’s inventory (as defined in Article 9 of the Uniform Commercial Code) and
all of such Loan Party’s goods, merchandise and other personal property,
wherever located, to be furnished under any consignment arrangement, contract of
service or held for sale or lease, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or description which are or
might be used or consumed in such Loan Party’s business or used in selling or
furnishing such goods, merchandise and other personal property, and all
Documents.
 
 
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“IPC” shall mean International Partners-NY Corporation, a New Jersey
corporation.
 
“IPC Acquisition Agreement” shall mean the Stock Purchase Agreement including
all exhibits and schedules thereto dated as of November 20, 2012 by and among,
IPC, IPC Sellers and Intercloud.
 
“IPC Sellers” shall mean, collectively, Barton F. Graf, Jr., David C. Nahabedian
and Frank Jadevaia.
 
“Issuer” shall mean (i) Agent in its capacity as the issuer of Letters of Credit
under this Agreement and (ii) any other Lender which Agent in its discretion
shall designate as the issuer of and cause to issue any particular Letter of
Credit under this Agreement in place of Agent as issuer.
 
“Law” shall mean any law(s) (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling,
order, executive order, injunction, writ, decree, bond, judgment, authorization
or approval, lien or award of or any settlement arrangement, by agreement,
consent or otherwise, with any Governmental Body, foreign or domestic.
 
“Leasehold Interests” shall mean all of each Loan Party’s right, title and
interest in and to, and as lessee of, the premises identified as leased Real
Property on Schedule 4.4 hereto.
 
“Lender” and “Lenders” shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a
transferee, successor or assign of any Lender. For the purpose of provision of
this Agreement or any Other Document which provides for the granting of a
security interest or other Lien to the Agent for the benefit of Lenders as
security for the Obligations, “Lenders" shall include any Affiliate of a Lender
to which such Obligation (specifically including any Hedge Liabilities and any
Cash Management Liabilities) is owed.
 
“Lender-Provided Foreign Currency Hedge” shall mean a Foreign Currency Hedge
which is provided by any Lender and for which such Lender confirms to Agent in
writing prior to the execution thereof that it: (a) is documented in a standard
International Swap Dealers Association, Inc. Master Agreement or another
reasonable and customary manner; (b) provides for the method of calculating the
reimbursable amount of the provider’s credit exposure in a reasonable and
customary manner; and (c) is entered into for hedging (rather than speculative)
purposes. The liabilities owing to the provider of any Lender-Provided Foreign
Currency Hedge (the “Foreign Currency Hedge Liabilities”) by any Borrower,
Guarantor, or Subsidiary that is party to such Lender-Provided Foreign Currency
Hedge shall, for purposes of this Agreement and all Other Documents be
“Obligations” of such Person and of each other Borrower and Guarantor, be
guaranteed obligations under any Guaranty and secured obligations under any
Guarantor Security Agreement, as applicable, and otherwise treated as
Obligations for purposes of the Other Documents, except to the extent
constituting Excluded Hedge Liabilities of such Person. The Liens securing the
Foreign Currency Hedge Liabilities shall be pari passu with the Liens securing
all other Obligations under this Agreement and the Other Documents, subject to
the express provisions of Section 11.5 hereof.
 
 
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“Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is
provided by any Lender and with respect to which such Lender confirms to Agent
in writing prior to the execution thereof that it: (a) is documented in a
standard International Swap Dealers Association, Inc. Master Agreement or
another reasonable and customary manner; (b) provides for the method of
calculating the reimbursable amount of the provider’s credit exposure in a
reasonable and customary manner; and (c) is entered into for hedging (rather
than speculative) purposes. The liabilities owing to the provider of any
Lender-Provided Interest Rate Hedge (the “Interest Rate Hedge Liabilities”) by
any Borrower, Guarantor, or Subsidiary that is party to such Lender-Provided
Interest Rate Hedge shall, for purposes of this Agreement and all Other
Documents be “Obligations” of such Person and of each other Borrower and
Guarantor, be guaranteed obligations under any Guaranty and secured obligations
under any Guarantor Security Agreement, as applicable, and otherwise treated as
Obligations for purposes of the Other Documents, except to the extent
constituting Excluded Hedge Liabilities of such Person. The Liens securing the
Hedge Liabilities shall be pari passu with the Liens securing all other
Obligations under this Agreement and the Other Documents, subject to the express
provisions of Section 11.5 hereof.
 
“Letter of Credit Application” shall have the meaning set forth in Section
2.12(a) hereof.
 
“Letter of Credit Borrowing” shall have the meaning set forth in Section 2.14(d)
hereof.
 
“Letter of Credit Fees” shall have the meaning set forth in Section 3.2
hereof.“Letter of Credit Sublimit” shall mean $0.
 
“Letters of Credit” shall have the meaning set forth in Section 2.11 hereof.
 
“LIBOR Alternate Source” shall have the meaning set forth in the definition of
LIBOR Rate.
 
“LIBOR Rate” shall mean for any LIBOR Rate Loan for the then current Interest
Period relating thereto, the interest rate per annum determined by Agent by
dividing (the resulting quotient rounded upwards, if necessary, to the nearest
1/100th of 1% per annum) (a) the rate which appears on the Bloomberg Page BBAM1
(or on such other substitute Bloomberg page that displays rates at which U.S.
dollar deposits are offered by leading banks in the London interbank deposit
market), or the rate which is quoted by another source selected by Agent which
has been approved by the British Bankers’ Association as an

 
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authorized information vendor for the purpose of displaying rates at which U.S.
dollar deposits are offered by leading banks in the London interbank deposit
market (a “LIBOR Alternate Source”), at approximately 11:00 a.m., London time,
two (2) Business Days prior to the commencement of such Interest Period as the
London interbank offered rate for U.S. Dollars for an amount comparable to such
LIBOR Rate Loan and having a borrowing date and a maturity comparable to such
Interest Period (or if there shall at any time, for any reason, no longer exist
a Bloomberg Page BBAM1 (or any substitute page) or any LIBOR Alternate Source, a
comparable replacement rate determined by Agent at such time (which
determination shall be conclusive absent manifest error)), by (b) a number equal
1.00 minus  the Reserve Percentage. The LIBOR Rate may also be expressed by the
following formula:
 
                  Average of London interbank offered rates quoted by Bloomberg
                         or appropriate successor as shown on
 
         Bloomberg Page BBAM1
LIBOR Rate =                                                                   
1.00 – Reserve Percentage
 
The LIBOR Rate shall be adjusted with respect to any LIBOR Rate Loan that is
outstanding on the effective date of any change in the Reserve Percentage as of
such effective date. Agent shall give reasonably prompt notice to the Borrowing
Agent of the LIBOR Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
 
“LIBOR Rate Loan” shall mean any Advance that bears interest based on the LIBOR
Rate.
 
“License Agreement” shall mean any agreement between any Loan Party and a
Licensor pursuant to which such Loan Party is authorized to use any Intellectual
Property in connection with the manufacturing, marketing, sale or other
distribution of any Inventory of such Loan Party or otherwise in connection with
such Loan Party’s business operations.
 
“Licensor” shall mean any Person from whom any Loan Party obtains the right to
use (whether on an exclusive or non-exclusive basis) any Intellectual Property
in connection with such Loan Party’s manufacture, marketing, sale or other
distribution of any Inventory or otherwise in connection with such Loan Party’s
business operations.
 
“Licensor/Agent Agreement” shall mean an agreement between Agent and a Licensor,
in form and substance satisfactory to Agent, by which Agent is given the
unqualified right, vis-á-vis such Licensor, to enforce Agent’s Liens with
respect to and to dispose of any Loan Party’s Inventory with the benefit of any
Intellectual Property applicable thereto, irrespective of such Loan Party’s
default under any License Agreement with such Licensor.
 
“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including any conditional sale or other title retention
agreement, any lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
under the Uniform Commercial Code or comparable law of any jurisdiction.
 
 
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“Lien Waiver Agreement” shall mean an agreement which is executed in favor of
Agent by a Person who owns or occupies premises at which any Collateral may be
located from time to time in form and substance satisfactory to Agent.
 
“Loan Party” or “Loan Parties” shall mean, individually or collectively, as
applicable, Borrowers and Guarantors.
 
“Loan Parties on a Consolidated Basis” shall mean the consolidation in
accordance with GAAP of the accounts or other items of the Loan Parties and
their respective Subsidiaries.
 
“Material Adverse Effect” shall mean a material adverse effect on (a) the
condition (financial or otherwise), results of operations, assets, business,
properties or prospects of any Loan Party, (b) any Loan Party’s ability to duly
and punctually pay or perform the Obligations in accordance with the terms
thereof, (c) the value of the Collateral, or Agent’s Liens on the Collateral or
the priority of any such Lien or (d) the practical realization of the benefits
of Agent’s and each Lender’s rights and remedies under this Agreement and the
Other Documents.
 
“Material Contract” shall mean any contract, agreement, instrument, permit,
lease or license, written or oral, of any Loan Party, which is material to any
Loan Party’s business or which the failure to comply with could reasonably be
expected to result in a Material Adverse Effect.
 
“Maximum Swing Loan Advance Amount” shall mean $0.
 
“Maximum Revolving Advance Amount” shall mean $10,000,000.
 
“Maximum Undrawn Amount” shall mean, with respect to any outstanding Letter of
Credit as of any date, the amount of such Letter of Credit that is or may become
available to be drawn, including all automatic increases provided for in such
Letter of Credit, whether or not any such automatic increase has become
effective.
 
“Milestone Receivables” shall have the meaning set forth in clause (j) of the
definition of “Eligible Receivables”.
 
“Minimum Loan Amount” shall mean $5,000,000.
 
“Modified Commitment Transfer Supplement” shall have the meaning set forth in
Section 16.3(d) hereof.
 
“Modified Undrawn Availability” at a particular date shall mean an amount equal
to (a) Undrawn Availability, minus (b) an amount equal to the Loan Parties’
aggregate projected weekly payroll expense as of such date.
 
 
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“Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections
3(37) or 4001(a)(3) of ERISA to which contributions are required or, within the
preceding five plan years, were required by any Loan Party or any member of the
Controlled Group.
 
“Multiple Employer Plan” shall mean a Plan which has two or more contributing
sponsors (including any Loan Party or any member of the Controlled Group) at
least two of whom are not under common control, as such a plan is described in
Section 4064 of ERISA.
 
“Negotiable Document” shall mean a Document that is “negotiable” within the
meaning of Article 7 of the Uniform Commercial Code.
 
“Net Invoice Cost” shall mean, with respect to Equipment, the net invoice cost
of such Equipment (excluding taxes, shipping, delivery, handling, installation,
overhead and other so called “soft” costs).
 
“Non-Defaulting Lender” shall mean, at any time, any Lender holding a Revolving
Commitment that is not a Defaulting Lender at such time.
 
“Non-Qualifying Party” shall mean any Borrower or any Guarantor that on the
Eligibility Date fails for any reason to qualify as an Eligible Contract
Participant.
 
“Note” shall mean the Revolving Credit Note and the Swing Loan Note.
 
“Obligations” shall mean and include any and all loans (including without
limitation, all Advances and Swing Loans), advances, debts, liabilities,
obligations (including without limitation all reimbursement obligations and cash
collateralization obligations with respect to Letters of Credit issued
hereunder), covenants and duties owing by any Loan Party to Issuer, Swing Loan
Lender, Lenders or Agent (or to any other direct or indirect subsidiary or
affiliate of Issuer, Swing Loan Lender, any Lender or Agent) of any kind or
nature, present or future (including any interest or other amounts accruing
thereon, any fees accruing under or in connection therewith, any costs and
expenses of any Person payable by any Loan Party and any indemnification
obligations payable by any Loan Party arising or payable after maturity, or
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to any Loan Party,
whether or not a claim for post-filing or post-petition interest, fees or other
amounts is allowable or allowed in such proceeding), whether or not for the
payment of money, whether arising by reason of an extension of credit, opening
or issuance of a letter of credit, loan, equipment lease, establishment of any
commercial card or similar facility or guarantee, under any interest or currency
swap, future, option or other similar agreement, or in any other manner, whether
arising out of overdrafts or deposit or other accounts or electronic funds
transfers (whether through automated clearing houses or otherwise) or out of
Agent’s or any Lender’s non-receipt of or inability to collect funds or
otherwise not being made whole in connection with depository transfer check or
other similar arrangements, whether direct or indirect (including those acquired
by assignment or participation), absolute or contingent, joint or several, due
or to become due, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, in each case arising in connection with (i) this
Agreement, the Other Documents and any amendments, extensions, renewals or
increases thereto, including all costs and expenses of Agent, Issuer, Swing Loan
Lender and any Lender incurred in the documentation, negotiation, modification,
enforcement, collection or otherwise in connection with any of the foregoing,
including but not limited to reasonable attorneys’ fees and expenses and all
obligations of any Borrower to Agent, Issuer, Swing Loan Lender or Lenders to
perform acts or refrain from taking any action, (ii) all Hedge Liabilities and
(iii) all Cash Management Liabilities. Notwithstanding anything to the contrary
contained in the foregoing, the Obligations shall not include any Excluded Hedge
Liabilities.
 
 
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“Ordinary Course of Business” shall mean, with respect to any Loan Party, the
ordinary course of such Loan Party’s business as conducted on the Closing Date.
 
“Organizational Documents” shall mean, with respect to any Person, any charter,
articles or certificate of incorporation, certificate of organization,
registration or formation, certificate of partnership or limited partnership,
bylaws, operating agreement, limited liability company agreement, or partnership
agreement of such Person and any and all other applicable documents relating to
such Person’s formation, organization or entity governance matters (including
any shareholders’ or equity holders’ agreement or voting trust agreement) and
specifically includes, without limitation, any certificates of designation for
preferred stock or other forms of preferred equity.
 
“Other Documents” shall mean the Note, the Perfection Certificates, any
Guaranty, any Guarantor Security Agreement, any Pledge Agreement, any
Lender-Provided Interest Rate Hedge, any Lender-Provided Foreign Currency Hedge,
and any and all other agreements, instruments and documents, including the
Intercreditor Agreement, intercreditor agreements, guaranties, pledges, powers
of attorney, consents, interest or currency swap agreements or other similar
agreements and all other writings heretofore, now or hereafter executed by any
Loan Party and/or delivered to Agent or any Lender in respect of the
transactions contemplated by this Agreement, in each case together with all
extensions, renewals, amendments, supplements, modifications, substitutions and
replacements thereto and thereof.
 
“Other Taxes” shall mean all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any Other Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
Other Document.
 
“Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(e)
hereof.
 
“Parent” of any Person shall mean a corporation or other entity owning, directly
or indirectly, 50% or more of the Equity Interests issued by such Person having
ordinary voting power to elect a majority of the directors of such Person, or
other Persons performing similar functions for any such Person.
 
“Participant” shall mean each Person who shall be granted the right by any
Lender to participate in any of the Advances and who shall have entered into a
participation agreement in form and substance satisfactory to such Lender.
 
 
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“Participation Advance” shall have the meaning set forth in Section 2.14(d)
hereof.
 
“Participation Commitment” shall mean the obligation hereunder of each Lender
holding a Revolving Commitment to buy a participation equal to its Revolving
Commitment Percentage (subject to any reallocation pursuant to Section
2.22(b)(iii) hereof) in the Swing Loans made by Swing Loan Lender hereunder as
provided for in Section 2.4(c) hereof and in the Letters of Credit issued
hereunder as provided for in Section 2.14(a) hereof.
 
“Payment Office” shall mean initially Two Tower Center Boulevard, East
Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrowing Agent and to each Lender to be the
Payment Office.
 
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor.
 
“Pension Benefit Plan” shall mean at any time any “employee pension benefit
plan” as defined in Section 3(2) of ERISA (including a Multiple Employer Plan,
but not a Multiemployer Plan) which is covered by Title IV of ERISA or is
subject to the minimum funding standards under Sections 412, 430 or 436 of the
Code and either (i) is maintained or to which contributions are required by a
Loan Party or any member of the Controlled Group or (ii) has at any time within
the preceding five years been maintained or to which contributions have been
required by a Loan Party or any entity which was at such time a member of the
Controlled Group.
 
“Perfection Certificates” shall mean, collectively, the information
questionnaires and the responses thereto provided by each Loan Party and
delivered to Agent.
 
“Permitted Assignees” shall mean: (a) Agent, any Lender or any of their direct
or indirect Affiliates; (b) a federal or state chartered bank, a United States
branch of a foreign bank, an insurance company, or any finance company generally
engaged in the business of making commercial loans; (c) any fund that is
administered or managed by Agent or any Lender, an Affiliate of Agent or any
Lender or a related entity; and (d) any Person to whom Agent or any Lender
assigns its rights and obligations under this Agreement as part of an assignment
and transfer of such Agent’s or Lender’s rights in and to a material portion of
such Agent’s or Lender’s portfolio of asset-based credit facilities.
 
“Permitted Dividends” shall mean so long as: (a) a notice of termination with
regard to this Agreement shall not be outstanding; (b) no Event of Default or
Default shall have occurred or would occur after giving pro forma effect to such
dividends; and (c) the purpose for such dividend shall be as set forth in
writing to Agent at least ten (10) days prior to the making of such dividend and
such dividend shall in fact be used for such purpose, Loan Parties shall be
permitted to make cash payments to Intercloud Systems, Inc., the proceeds of
which shall be used to pay any Taxes imposed on Intercloud Systems, Inc. as the
common parent of a consolidated, combined, or other similar Tax group of which
any Borrower and/or its direct or indirect Subsidiaries are members.
 
 
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“Permitted Encumbrances” shall mean: (a) Liens in favor of Agent for the benefit
of Agent and Lenders, including without limitation, Liens securing Hedge
Liabilities and Cash Management Products and Services; (b) Liens for taxes,
assessments or other governmental charges not delinquent or being Properly
Contested; (c) deposits or pledges to secure obligations under worker’s
compensation, social security or similar laws, or under unemployment insurance;
(d) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), leases, statutory obligations, surety and appeal
bonds and other obligations of like nature arising in the Ordinary Course of
Business; (e) Liens arising by virtue of the rendition, entry or issuance
against any Loan Party or any Subsidiary, or any property of any Loan Party or
any Subsidiary, of any judgment, writ, order, or decree to the extent the
rendition, entry, issuance or continued existence of such judgment, writ, order
or decree (or any event or circumstance relating thereto) has not resulted in
the occurrence of an Event of Default under Section 10.6 hereof; (f) carriers’,
repairmens’, mechanics’, workers’, materialmen’s or other like Liens arising in
the Ordinary Course of Business with respect to obligations which are not due or
which are being Properly Contested; (g) Liens placed upon fixed assets hereafter
acquired to secure a portion of the purchase price thereof, provided that (I)
any such lien shall not encumber any other property of any Loan Party and (II)
the aggregate amount of Indebtedness secured by such Liens incurred as a result
of such purchases during any fiscal year shall not exceed the amount permitted
in Section 7.6 hereof; (h) Liens disclosed on Schedule 1.2; provided that  such
Liens shall secure only those obligations which they secure on the Closing Date
(and extensions, renewals and refinancing of such obligations permitted by
Section 7.8 hereof) and shall not subsequently apply to any other property or
assets of any Loan Party other than the property and assets to which they apply
as of the Closing Date; and (i) Liens granted by Loan Parties to Term Lender
under the Term Loan Documents, to the extent such Liens are subject to the
Intercreditor Agreement.
 
“Permitted Indebtedness” shall mean: (a) the Obligations; (b) Indebtedness
incurred for Capital Expenditures permitted in Section 7.6 hereof; (c) any
guarantees of Indebtedness permitted under Section 7.3 hereof; (d) any
Indebtedness listed on Schedule 5.8(b)(ii) hereof; (e) Indebtedness due under
the Term Loan Documents, in an aggregate principal amount outstanding not to
exceed (i) prior to the closing of the IPC Acquisition Agreement, $25,000,000 at
any time, and (ii) following the closing of the IPC Acquisition Agreement,
$35,000,000 at any time; (f) Indebtedness assumed under the Acquisition
Agreements; (g) Indebtedness incurred to refinance the Indebtedness under the
Term Loan Documents, so long as (i) the terms and conditions of such
Indebtedness shall be satisfactory to Agent, (ii) immediately upon the
incurrence thereof, the proceeds of such Indebtedness are used to repay in full
the Indebtedness due under the Term Loan Documents, (iii) the aggregate
principal amount outstanding thereunder does not exceed (A) prior to the closing
of the IPC Acquisition Agreement, $25,000,000 at any time, and (B) following the
closing of the IPC Acquisition Agreement, $35,000,000 at any time, (iv) (x) the
payment obligations with respect to such Indebtedness shall be subordinated to
the Obligations and (y) the Liens, if any, securing such Indebtedness shall be
subordinated to the Liens in favor of Agent and Lenders granted pursuant to this
Agreement, in each case, pursuant to a subordination and intercreditor agreement
in form and substance satisfactory to Agent in all respects, and (v) no Default
or Event of Default shall have occurred and be continuing or result from such
incurrence; (h) Indebtedness consisting of Permitted Loans made by one or more
Borrower(s) to any other Borrower(s); (i) Interest Rate Hedges and Foreign
Currency Hedges that are entered into by Loan Parties to hedge their risks with
respect to outstanding Indebtedness of Loan Parties and not for speculative or
investment purposes; and (j) intercompany Indebtedness owing from one or more
Loan Parties to any other one or more Loan Parties in accordance with clause (c)
of the definition of Permitted Loans.
 
 
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“Permitted Investments” shall mean investments in: (a) obligations issued or
guaranteed by the United States of America or any agency thereof; (b) commercial
paper with maturities of not more than 180 days and a published rating of not
less than A-1 or P-1 (or the equivalent rating); (c) certificates of time
deposit and bankers’ acceptances having maturities of not more than 180 days and
repurchase agreements backed by United States government securities of a
commercial bank if (i) such bank has a combined capital and surplus of at least
$500,000,000, or (ii) its debt obligations, or those of a holding company of
which it is a Subsidiary, are rated not less than A (or the equivalent rating)
by a nationally recognized investment rating agency; (d) U.S. money market funds
that invest solely in obligations issued or guaranteed by the United States of
America or an agency thereof; and (e) Permitted Loans.
 
“Permitted Loans” shall mean the extension of trade credit by a Loan Party to
its Customer(s), in the Ordinary Course of Business in connection with a sale of
Inventory or rendition of services, in each case on open account terms.
 
“Person” shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, limited liability
partnership, institution, public benefit corporation, joint venture, entity or
Governmental Body (whether federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).
 
“Plan” shall mean any employee benefit plan within the meaning of Section 3(3)
of ERISA (including a Pension Benefit Plan and a Multiemployer Plan, as defined
herein) maintained by any Loan Party or any member of the Controlled Group or to
which any Loan Party or any member of the Controlled Group is required to
contribute.
 
“Pledge Agreement” shall mean that certain Pledge Agreement executed by
Intercloud and Adex Corp in favor of Agent dated as of the Closing Date and any
other pledge agreements executed subsequent to the Closing Date by any other
Person to secure the Obligations.
 
“PNC” shall have the meaning set forth in the preamble to this Agreement and
shall extend to all of its successors and assigns.
 
“Post Closing Acquisition Agreements” shall mean, collectively, the IPC
Acquisition Agreement and the Telco Acquisition Agreement.
 
“Pre-Closing Acquisition Agreements” shall mean, collectively, the Adex
Acquisition Agreement, TNS Acquisition Agreement, ERFS Acquisition Agreement,
Tropical Acquisition Agreement, RM Acquisition Agreement and AWS Acquisition
Agreement.
 
 
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“Pro Forma Balance Sheet” shall have the meaning set forth in Section 5.5(a)
hereof.
 
“Pro Forma Financial Statements” shall have the meaning set forth in Section
5.5(b) hereof.
 
“Projections” shall have the meaning set forth in Section 5.5(b) hereof.
 
“Properly Contested” shall mean, in the case of any Indebtedness, Lien or Taxes,
as applicable, of any Person that are not paid as and when due or payable by
reason of such Person’s bona fide dispute concerning its liability to pay the
same or concerning the amount thereof: (a) such Indebtedness, Lien or Taxes, as
applicable, are being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; (b) such Person has
established appropriate reserves as shall be required in conformity with GAAP;
(c) the non-payment of such Indebtedness or Taxes will not have a Material
Adverse Effect or will not result in the forfeiture of any assets of such
Person; (d) no Lien is imposed upon any of such Person’s assets with respect to
such Indebtedness or taxes unless such Lien (x) does not attach to any
Receivables or Inventory, (y) is at all times junior and subordinate in priority
to the Liens in favor of the Agent (except only with respect to property Taxes
that have priority as a matter of applicable state law) and, (z) enforcement of
such Lien is stayed during the period prior to the final resolution or
disposition of such dispute; and (e) if such Indebtedness or Lien, as
applicable, results from, or is determined by the entry, rendition or issuance
against a Person or any of its assets of a judgment, writ, order or decree,
enforcement of such judgment, writ, order or decree is stayed pending a timely
appeal or other judicial review.
 
“Protective Advances” shall have the meaning set forth in Section 16.2(f)
hereof.
 
“Published Rate” shall mean the rate of interest published each Business Day in
the Wall Street Journal “Money Rates” listing under the caption “London
Interbank Offered Rates” for a one month period (or, if no such rate is
published therein for any reason, then the Published Rate shall be the LIBOR
Rate for a one month period as published in another publication selected by the
Agent).
 
“Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof.
 
“Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof.
 
“Qualified ECP Loan Party” shall mean each Borrower or Guarantor that on the
Eligibility Date is (a) a corporation, partnership, proprietorship,
organization, trust, or other entity other than a “commodity pool” as defined in
Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets
exceeding $10,000,000 or (b) an Eligible Contract Participant that can cause
another person to qualify as an Eligible Contract Participant on the Eligibility
Date under Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise
providing a “letter of credit or keepwell, support, or other agreement” for
purposes of Section 1a(18)(A)(v)(II) of the CEA.
 
 
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“RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901
et seq., as same may be amended from time to time.
 
“Real Property” shall mean all of the owned and leased premises identified on
Schedule 4.4 hereto or in and to any other premises or real property that are
hereafter owned or leased by any Loan Party.
 
“Receivables” shall mean and include, as to each Loan Party, all of such Loan
Party’s accounts (as defined in Article 9 of the Uniform Commercial Code) and
all of such Loan Party’s contract rights, instruments (including those
evidencing indebtedness owed to such Loan Party by its Affiliates), documents,
chattel paper (including electronic chattel paper), general intangibles relating
to accounts, contract rights, instruments, documents and chattel paper, and
drafts and acceptances, credit card receivables and all other forms of
obligations owing to such Loan Party arising out of or in connection with the
sale or lease of Inventory or the rendition of services, all supporting
obligations, guarantees and other security therefor, whether secured or
unsecured, now existing or hereafter created, and whether or not specifically
sold or assigned to Agent hereunder.
 
“Register” shall have the meaning set forth in Section 16.3(e) hereof.
 
“Reimbursement Obligation” shall have the meaning set forth in Section 2.14(b)
hereof.
 
“Release” shall have the meaning set forth in Section 5.7(c)(i) hereof.
 
“Reportable Compliance Event” shall mean that any Covered Entity becomes a
Sanctioned Person, or is charged by indictment, criminal complaint or similar
charging instrument, arraigned, or custodially detained in connection with any
Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has
knowledge of facts or circumstances to the effect that it is reasonably likely
that any aspect of its operations is in actual or probable violation of any
Anti-Terrorism Law.
 
“Reportable ERISA Event” shall mean a reportable event described in Section
4043(c) of ERISA or the regulations promulgated thereunder for which notice has
not been waived.
 
“Required Lenders” shall mean Lenders (not including Swing Loan Lender (in its
capacity as such Swing Loan Lender) or any Defaulting Lender) holding more than
fifty percent (50%) of either (a) the aggregate of the Revolving Commitment
Amounts of all Lenders (excluding any Defaulting Lender), or (b) after the
termination of all commitments of Lenders hereunder, the sum of (x) the
outstanding Revolving Advances, plus the Maximum Undrawn Amount of all
outstanding Letters of Credit; provided, however, if there are fewer than three
(3) Lenders, Required Lenders shall mean all Lenders (excluding any Defaulting
Lender).
 
 
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“Reserve Percentage” shall mean as of any day the maximum effective percentage
in effect on such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including supplemental, marginal and emergency reserve requirements) with
respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”.
 
“Restricted Cash” shall mean, on any date of determination, an amount equal to
the required Liquidity (as defined in the Term Loan Agreement as in effect on
the Closing Date) under the Term Loan Agreement on such date.
 
“Restricted Indebtedness” shall mean all Indebtedness owing by any Loan Party
(i) set forth on Schedule 5.8(b)(ii) and (ii) pursuant to the Acquisition
Agreements.
 
“Revolving Advances” shall mean Advances made other than Letters of Credit and
the Swing Loans.
 
“Revolving Commitment” shall mean, as to any Lender, the obligation of such
Lender (if applicable), to make Revolving Advances and participate in Swing
Loans and Letters of Credit, in an aggregate principal and/or face amount not to
exceed the Revolving Commitment Amount (if any) of such Lender.
 
“Revolving Commitment Amount” shall mean, for any Lender, the Revolving
Commitment amount (if any) set forth below such Lender’s name on the signature
page hereto (or, in the case of any Lender that became party to this Agreement
after the Closing Date pursuant to Section 16.3(c) or (d) hereof, the Revolving
Commitment amount (if any) of such Lender as set forth in the applicable
Commitment Transfer Supplement).
 
“Revolving Commitment Percentage” shall mean, for any Lender, the Revolving
Commitment Percentage (if any) set forth below such Lender’s name on the
signature page hereof (or, in the case of any Lender that became party to this
Agreement after the Closing Date pursuant to Section 16.3(c) or (d) hereof, the
Revolving Commitment Percentage (if any) of such Lender as set forth in the
applicable Commitment Transfer Supplement).
 
“Revolving Credit Note” shall mean the promissory note referred to in Section
2.1(a) hereof.
 
“Revolving Interest Rate” shall mean (a) with respect to Revolving Advances that
are Domestic Rate Loans and Swing Loans, an interest rate per annum equal to the
sum of the Applicable Margin plus the Alternate Base Rate and (b) with respect
to LIBOR Rate Loans, the sum of the Applicable Margin plus the LIBOR Rate.
 
“RM Acquisition Agreement” shall mean that certain Stock Purchase Agreement
dated as of November 15, 2011 by and among Intercloud and RM Sellers.
 
“RM Sellers” shall mean Margarida Monteiro and Carlos Monteiro.
 
“Sanctioned Country” shall mean a country subject to a sanctions program
maintained under any Anti-Terrorism Law.
 
 
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“Sanctioned Person” shall mean any individual person, group, regime, entity or
thing listed or otherwise recognized as a specially designated, prohibited,
sanctioned or debarred person, group, regime, entity or thing, or subject to any
limitations or prohibitions (including but not limited to the blocking of
property or rejection of transactions), under any Anti-Terrorism Law.
 
“SEC” shall mean the Securities and Exchange Commission or any successor
thereto.
 
“Secured Parties” shall mean, collectively, Agent, Issuer, Swing Loan Lender and
Lenders, together with any Affiliates of Agent or any Lender to whom any Hedge
Liabilities or Cash Management Liabilities are owed and with each other holder
of any of the Obligations, and the respective successors and assigns of each of
them.
 
      “Securities Act” shall mean the Securities Act of 1933, as amended.
 
      “Settlement” shall have the meaning set forth in Section 2.6(d) hereof.
 
      “Settlement Date” shall have the meaning set forth in Section 2.6(d)
hereof.
 
“Subsidiary” shall mean of any Person a corporation or other entity of whose
Equity Interests having ordinary voting power (other than Equity Interests
having such power only by reason of the happening of a contingency) to elect a
majority of the directors of such corporation, or other Persons performing
similar functions for such entity, are owned, directly or indirectly, by such
Person.
 
“Subsidiary Stock” shall mean (a) with respect to the Equity Interests issued to
a Loan Party by any Subsidiary (other than a Foreign Subsidiary), 100% of such
issued and outstanding Equity Interests, and (b) with respect to any Equity
Interests issued to a Loan Party by any Foreign Subsidiary (i) 100% of such
issued and outstanding Equity Interests not entitled to vote (within the meaning
of Treas. Reg. Section 1.956(c)(2)) and (ii) 66% (or such greater percentage
that, due to a change in an Applicable Law after the date hereof, (x) could not
reasonably be expected to cause the undistributed earnings of such Foreign
Subsidiary as determined for United States federal income tax purposes to be
treated as a deemed dividend to such Loan Party and (y) could not reasonably be
expected to cause any material adverse tax consequences) of such issued and
outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)).
 
“Swap” shall mean any “swap” as defined in Section 1a(47) of the CEA and
regulations thereunder, other than (a) a swap entered into, or subject to the
rules of, a board of trade designated as a contract market under Section 5 of
the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation
32.3(a).
 
“Swap Obligation” means any obligation to pay or perform under any agreement,
contract or transaction that constitutes a Swap which is also a Lender-Provided
Interest Rate Hedge, or a Lender-Provided Foreign Currency Hedge.
 
“Swing Loan Lender” shall mean PNC, in its capacity as lender of the Swing
Loans.
 
 
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“Swing Loan Note” shall mean the promissory note described in Section 2.4(a)
hereof.
 
“Swing Loans” shall mean the Advances made pursuant to Section 2.4 hereof.
 
“Taxes” shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Body, including any interest, additions to tax or penalties
applicable thereto.
 
“Telco Acquisition Agreement” shall mean the Asset Purchase Agreement including
all exhibits and schedules thereto dated as of November 19, 2012 between Telco
Sellers and Intercloud.
 
“Telco Sellers” shall mean, Tekmark Global Solutions, LLC, a New Jersey limited
liability company.
 
“Term” shall have the meaning set forth in Section 13.1 hereof.
 
“Term Lender” shall mean MidMarket Capital Partners, LLC.
 
“Term Loan” shall mean the loan and Indebtedness evidenced by the Term Loan
Documents.
 
“Term Loan Documents” shall mean the Loan and Security Agreement dated as of
September 17, 2012, between Intercloud, RM Leasing, Tropical and Term Lender and
all other instruments, agreements and documents executed in connection
therewith.
 
“Termination Event” shall mean: (a) a Reportable Event with respect to any
Pension Benefit Plan; (b) the withdrawal of any Loan Party or any member of the
Controlled Group from a Pension Benefit Plan during a plan year in which such
entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or
a cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) the providing of notice of intent to terminate a Plan in a
distress termination described in Section 4041(c) of ERISA; (d) the commencement
of proceedings by the PBGC to terminate a Plan; (e) any event or condition (i)
which could reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or (ii) that could reasonably be expected to result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; (f) the partial or
complete withdrawal within the meaning of Section 4203 or 4205 of ERISA, of any
Loan Party or any member of the Controlled Group from a Multiemployer Plan; or
(g) the imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not diligent, upon any Loan Party or any member of the
Controlled Group.
 
“TNS Acquisition Agreement” shall mean that certain Stock Purchase Agreement
dated as of September 17, 2012 among Intercloud, TNS and TNS Sellers.
 
“TNS Sellers” shall mean Joel Raven and Michael Roeske.
 
 
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      “Toxic Substance” shall mean and include any material present on the Real
Property (including the Leasehold Interests) which has been shown to have
significant adverse effect on human health or which is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq.,
applicable state law, or any other applicable Federal or state laws now in force
or hereafter enacted relating to toxic substances. “Toxic Substance” includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.
 
“Transactions” shall have the meaning set forth in Section 5.5(a) hereof.
 
“Transferee” shall have the meaning set forth in Section 16.3(d) hereof.
 
“Tropical Acquisition Agreement” shall mean that certain Stock Purchase
Agreement, dated as of August 15, 2011, among Intercloud and Tropical Seller.
 
“Tropical Seller” shall mean William DeVierno.
 
“Undrawn Availability” at a particular date shall mean an amount equal to (a)
the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance
Amount minus  the Maximum Undrawn Amount of all outstanding Letters of Credit,
minus (b) the sum of (i) the outstanding amount of Advances plus (ii) all
amounts due and owing to any Borrower’s trade creditors which are outstanding
sixty (60) days or more past their due date, plus (iii) fees and expenses
incurred in connection with this Agreement and the Other Documents for which
Borrowers are liable but which have not been paid or charged to Borrowers’
Account.
 
“Unfunded Capital Expenditures” shall mean, as to any Loan Party, without
duplication, a Capital Expenditure funded (a) from such Loan Party’s internally
generated cash flow or (b) with the proceeds of a Revolving Advance or Swing
Loan.
 
“Uniform Commercial Code” shall have the meaning set forth in Section 1.3
hereof.
 
“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.
 
      1.3   Uniform Commercial Code Terms. All terms used herein and defined in
the Uniform Commercial Code as adopted in the State of New York from time to
time (the “Uniform Commercial Code”) shall have the meaning given therein unless
otherwise defined herein. Without limiting the foregoing, the terms “accounts”,
“chattel paper” (and “electronic chattel paper” and “tangible chattel paper”),
“commercial tort claims”, “deposit accounts”, “documents”, “equipment”,
“financial asset”, “fixtures”, “general intangibles”, “goods”, “instruments”,
“inventory”, “investment property”, “letter-of-credit rights”, “payment
intangibles”, “proceeds”, “promissory note” “securities”, “software” and
“supporting obligations” as and when used in the description of Collateral shall
have the meanings given to such terms in Articles 8 or 9 of the Uniform
Commercial Code. To the extent the definition of any category or type of
collateral is expanded by any amendment, modification or revision to the Uniform
Commercial Code, such expanded definition will apply automatically as of the
date of such amendment, modification or revision.
 
 
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      1.4   Certain Matters of Construction. The terms “herein”, “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. All references
herein to Articles, Sections, Exhibits and Schedules shall be construed to refer
to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any
pronoun used shall be deemed to cover all genders. Wherever appropriate in the
context, terms used herein in the singular also include the plural and vice
versa. All references to statutes and related regulations shall include any
amendments of same and any successor statutes and regulations. Unless otherwise
provided, all references to any instruments or agreements to which Agent is a
party, including references to any of the Other Documents, shall include any and
all modifications, supplements or amendments thereto, any and all restatements
or replacements thereof and any and all extensions or renewals thereof. Except
as otherwise expressly provided for herein, all references herein to the time of
day shall mean the time in New York, New York. Unless otherwise provided, all
financial calculations shall be performed with Inventory valued at the lower of
cost or market determined on a first-in, first-out basis. Whenever the words
“including” or “include” shall be used, such words shall be understood to mean
“including, without limitation” or “include, without limitation”. A Default or
an Event of Default shall be deemed to exist at all times during the period
commencing on the date that such Default or Event of Default occurs to the date
on which such Default or Event of Default is waived in writing pursuant to this
Agreement or, in the case of a Default, is cured within any period of cure
expressly provided for in this Agreement; and an Event of Default shall
“continue” or be “continuing” until such Event of Default has been waived in
writing by Required Lenders. Any Lien referred to in this Agreement or any of
the Other Documents as having been created in favor of Agent, any agreement
entered into by Agent pursuant to this Agreement or any of the Other Documents,
any payment made by or to or funds received by Agent pursuant to or as
contemplated by this Agreement or any of the Other Documents, or any act taken
or omitted to be taken by Agent, shall, unless otherwise expressly provided, be
created, entered into, made or received, or taken or omitted, for the benefit or
account of Agent and Lenders. Wherever the phrase “to the best of Loan Parties’
knowledge” or words of similar import relating to the knowledge or the awareness
of any Loan Party are used in this Agreement or Other Documents, such phrase
shall mean and refer to (i) the actual knowledge of a senior officer of any Loan
Party or (ii) the knowledge that a senior officer would have obtained if he/she
had engaged in a good faith and diligent performance of his/her duties,
including the making of such reasonably specific inquiries as may be necessary
of the employees or agents of such Loan Party and a good faith attempt to
ascertain the existence or accuracy of the matter to which such phrase relates.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or otherwise within the
limitations of, another covenant shall not avoid the occurrence of a default if
such action is taken or condition exists. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached will not affect the incorrectness of a breach of a
representation or warranty hereunder.
 
 
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II.           ADVANCES, PAYMENTS.
 
  2.1           Revolving Advances.
 
          (a)           Amount of Revolving Advances. Subject to the terms and
conditions set forth in this Agreement, specifically including Section 2.1(b),
each Lender, severally and not jointly, will make Revolving Advances to
Borrowers in aggregate amounts outstanding at any time equal to such Lender’s
Revolving Commitment Percentage of the lesser of (x) the Maximum Revolving
Advance Amount, less the outstanding amount of Swing Loans, less the aggregate
Maximum Undrawn Amount of all outstanding Letters of Credit, (y) on any date of
determination, the aggregate amount of Obligations permitted to be outstanding
by the Term Loan Documents on such date, or (z) an amount equal to the sum of:
 
(i)          the sum of (A) up to 88% (the “Eligible Receivables Advance Rate”)
of Eligible Receivables, plus (B) the lesser of (I) up to 65% (the “Eligible
Milestone Receivables Advance Rate” and together with the Eligible Receivables
Advance Rate, collectively and individually, the “Advance Rate”) of Eligible
Milestone Receivables and (II) $500,000, minus
 
(ii)         the aggregate Maximum Undrawn Amount of all outstanding Letters of
Credit, minus
 
(iii)        at all times prior to the Availability Block Release Date,
$2,500,000, minus
 
(iv)         such reserves as Agent may reasonably deem proper and necessary
from time to time, including, without limitation, the Dilution Reserve.
 
The amount derived from (x) Section 2.1(a)(z)(i) minus (y) Sections 2.1
(a)(y)(ii), (iii) and (iv) at any time and from time to time shall be referred
to as the “Formula Amount”. The Revolving Advances shall be evidenced by one or
more secured promissory notes (collectively, the “Revolving Credit Note”)
substantially in the form attached hereto as Exhibit 2.1(a). Notwithstanding
anything to the contrary contained in the foregoing or otherwise in this
Agreement, the outstanding aggregate principal amount of Swing Loans and the
Revolving Advances at any one time outstanding shall not exceed an amount equal
to the lesser of (i) the Maximum Revolving Advance Amount less the Maximum
Undrawn Amount of all outstanding Letters of Credit or (ii) the Formula Amount.
 
          (b)           Discretionary Rights. The Advance Rate may be increased
or decreased by Agent at any time and from time to time in the exercise of its
reasonable discretion. Each Borrower consents to any such increases or decreases
and acknowledges that decreasing the Advance Rate or increasing or imposing
reserves may limit or restrict Advances requested by Borrowing Agent. The rights
of Agent under this subsection are subject to the provisions of Section 16.2(b).
 
 
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2.2           Procedures for Requesting Revolving Advances; Procedures for
Selection of Applicable Interest Rates for All Advances.
 
(a)           Borrowing Agent on behalf of any Borrower may notify Agent prior
to 11:00 a.m. on a Business Day of a Borrower’s request to incur, on that day, a
Revolving Advance hereunder. Should any amount required to be paid as interest
hereunder, or as fees or other charges under this Agreement or any other
agreement with Agent or Lenders, or with respect to any other Obligation under
this Agreement, become due, same shall be deemed a request for a Revolving
Advance maintained as a Domestic Rate Loan as of the date such payment is due,
in the amount required to pay in full such interest, fee, charge or Obligation,
and such request shall be irrevocable.
 
(b)           Notwithstanding the provisions of subsection (a) above, in the
event any Borrower desires to obtain a LIBOR Rate Loan for any Advance (other
than a Swing Loan), Borrowing Agent shall give Agent written notice by no later
than 11:00 a.m. on the day which is three (3) Business Days prior to the date
such LIBOR Rate Loan is to be borrowed, specifying (i) the date of the proposed
borrowing (which shall be a Business Day), (ii) the type of borrowing and the
amount of such Advance to be borrowed, which amount shall be in a minimum amount
of $500,000 and in integral multiples of $250,000 thereafter, and (iii) the
duration of the first Interest Period therefor. Interest Periods for LIBOR Rate
Loans shall be for one, two or three months; provided that, if an Interest
Period would end on a day that is not a Business Day, it shall end on the next
succeeding Business Day unless such day falls in the next succeeding calendar
month in which case the Interest Period shall end on the next preceding Business
Day. No LIBOR Rate Loan shall be made available to any Borrower during the
continuance of a Default or an Event of Default. After giving effect to each
requested LIBOR Rate Loan, including those which are converted from a Domestic
Rate Loan under Section 2.2(e), there shall not be outstanding more than ten
(10) LIBOR Rate Loans, in the aggregate.
 
(c)           Each Interest Period of a LIBOR Rate Loan shall commence on the
date such LIBOR Rate Loan is made and shall end on such date as Borrowing Agent
may elect as set forth in subsection (b)(iii) above, provided that the exact
length of each Interest Period shall be determined in accordance with the
practice of the interbank market for offshore Dollar deposits and no Interest
Period shall end after the last day of the Term.
 
(d)           Borrowing Agent shall elect the initial Interest Period applicable
to a LIBOR Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(e), as the case may be. Borrowing Agent shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not later than 10:00 a.m. on the day which is three (3) Business Days
prior to the last day of the then current Interest Period applicable to such
LIBOR Rate Loan. If Agent does not receive timely notice of the Interest Period
elected by Borrowing Agent, Borrowing Agent shall be deemed to have elected to
convert such LIBOR Rate Loan to a Domestic Rate Loan subject to Section 2.2(e)
below.
 
 
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(e)              Provided that no Default or Event of Default shall have
occurred and be continuing, Borrowing Agent may, on the last Business Day of the
then current Interest Period applicable to any outstanding LIBOR Rate Loan, or
on any Business Day with respect to Domestic Rate Loans, convert any such loan
into a loan of another type in the same aggregate principal amount provided that
any conversion of a LIBOR Rate Loan shall be made only on the last Business Day
of the then current Interest Period applicable to such LIBOR Rate Loan. If
Borrowing Agent desires to convert a loan, Borrowing Agent shall give Agent
written notice by no later than 10:00 a.m. (i) on the day which is three (3)
Business Days prior to the date on which such conversion is to occur with
respect to a conversion from a Domestic Rate Loan to a LIBOR Rate Loan, or (ii)
on the day which is one (1) Business Day prior to the date on which such
conversion is to occur (which date shall be the last Business Day of the
Interest Period for the applicable LIBOR Rate Loan) with respect to a conversion
from a LIBOR Rate Loan to a Domestic Rate Loan, specifying, in each case, the
date of such conversion, the loans to be converted and if the conversion is to a
LIBOR Rate Loan, the duration of the first Interest Period therefor.
 
(f)              At its option and upon written notice given prior to 10:00 a.m.
at least three (3) Business Days prior to the date of such prepayment, any
Borrower may, subject to Section 2.2(g) hereof, prepay the LIBOR Rate Loans in
whole at any time or in part from time to time with accrued interest on the
principal being prepaid to the date of such repayment. Such Borrower shall
specify the date of prepayment of Advances which are LIBOR Rate Loans and the
amount of such prepayment. In the event that any prepayment of a LIBOR Rate Loan
is required or permitted on a date other than the last Business Day of the then
current Interest Period with respect thereto, such Borrower shall indemnify
Agent and Lenders therefor in accordance with Section 2.2(g) hereof.
 
(g)              Each Borrower shall indemnify Agent and Lenders and hold Agent
and Lenders harmless from and against any and all losses or expenses that Agent
and Lenders may sustain or incur as a consequence of any prepayment, conversion
of or any default by any Borrower in the payment of the principal of or interest
on any LIBOR Rate Loan or failure by any Borrower to complete a borrowing of, a
prepayment of or conversion of or to a LIBOR Rate Loan after notice thereof has
been given, including, but not limited to, any interest payable by Agent or
Lenders to lenders of funds obtained by it in order to make or maintain its
LIBOR Rate Loans hereunder. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Agent or any Lender to Borrowing
Agent shall be conclusive absent manifest error.
 
(h)              Notwithstanding any other provision hereof, if any Applicable
Law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, including without limitation any Change
in Law, shall make it unlawful for Lenders or any Lender (for purposes of this
subsection (h), the term “Lender” shall include any Lender and the office or
branch where any Lender or any Person controlling such Lender makes or maintains
any LIBOR Rate Loans) to make or maintain its LIBOR Rate Loans, the obligation
of Lenders (or such affected Lender) to make LIBOR Rate Loans hereunder shall
forthwith be cancelled and Borrowers shall, if any affected LIBOR Rate Loans are
then outstanding, promptly upon request from Agent, either pay all such affected
LIBOR Rate Loans or convert such affected LIBOR Rate Loans into loans of another
type. If any such payment or conversion of any LIBOR Rate Loan is made on a day
that is not the last day of the Interest Period applicable to such LIBOR Rate
Loan, Borrowers shall pay Agent, upon Agent’s request, such amount or amounts
set forth in clause (g) above. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Lenders to Borrowing
Agent shall be conclusive absent manifest error.
 
 
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2.3           [Reserved].
 
2.4           Swing Loans.
 
(a)           Subject to the terms and conditions set forth in this Agreement,
and in order to minimize the transfer of funds between Lenders and Agent for
administrative convenience, Agent, Lenders holding Revolving Commitments and
Swing Loan Lender agree that in order to facilitate the administration of this
Agreement, Swing Loan Lender may, at its election and option made in its sole
discretion cancelable at any time for any reason whatsoever, make swing loan
advances (“Swing Loans”) available to Borrowers as provided for in this Section
2.4 at any time or from time to time after the date hereof to, but not
including, the expiration of the Term, in an aggregate principal amount up to
but not in excess of the Maximum Swing Loan Advance Amount, provided that the
outstanding aggregate principal amount of Swing Loans and the Revolving Advances
at any one time outstanding shall not exceed an amount equal to the lesser of
(i) the Maximum Revolving Advance Amount less the Maximum Undrawn Amount of all
outstanding Letters of Credit or (ii) the Formula Amount. All Swing Loans shall
be Domestic Rate Loans only. Borrowers may borrow (at the option and election of
Swing Loan Lender), repay and reborrow (at the option and election of Swing Loan
Lender) Swing Loans and Swing Loan Lender may make Swing Loans as provided in
this Section 2.4 during the period between Settlement Dates. All Swing Loans
shall be evidenced by a secured promissory note (the “Swing Loan Note”) in form
and substance satisfactory to Agent. Swing Loan Lender’s agreement to make Swing
Loans under this Agreement is cancelable at any time for any reason whatsoever
and the making of Swing Loans by Swing Loan Lender from time to time shall not
create any duty or obligation, or establish any course of conduct, pursuant to
which Swing Loan Lender shall thereafter be obligated to make Swing Loans in the
future
 
(b)           Upon either (i) any request by Borrowing Agent for a Revolving
Advance made pursuant to Section 2.2(a) hereof or (ii) the occurrence of any
deemed request by Borrowers for a Revolving Advance pursuant to the provisions
of the last sentence of Section 2.2(a) hereof, Swing Loan Lender may elect, in
its sole discretion, to have such request or deemed request treated as a request
for a Swing Loan, and may advance same day funds to Borrowers as a Swing Loan;
provided that notwithstanding anything to the contrary provided for herein,
Swing Loan Lender may not make Swing Loan Advances if Swing Loan Lender has been
notified by Agent or by Required Lenders that one or more of the applicable
conditions set forth in Section 8.2 of this Agreement have not been satisfied or
the Revolving Commitments have been terminated for any reason.
 
 
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(c)           Upon the making of a Swing Loan (whether before or after the
occurrence of a Default or an Event of Default and regardless of whether a
Settlement has been requested with respect to such Swing Loan), each Lender
holding a Revolving Commitment shall be deemed, without further action by any
party hereto, to have unconditionally and irrevocably purchased from Swing Loan
Lender, without recourse or warranty, an undivided interest and participation in
such Swing Loan in proportion to its Revolving Commitment Percentage. Swing Loan
Lender or Agent may, at any time, require the Lenders holding Revolving
Commitments to fund such participations by means of a Settlement as provided for
in Section 2.6(d) below. From and after the date, if any, on which any Lender
holding a Revolving Commitment is required to fund, and funds, its participation
in any Swing Loans purchased hereunder, Agent shall promptly distribute to such
Lender its Revolving Commitment Percentage of all payments of principal and
interest and all proceeds of Collateral received by Agent in respect of such
Swing Loan; provided that no Lender holding a Revolving Commitment shall be
obligated in any event to make Revolving Advances in an amount in excess of its
Revolving Commitment Amount minus its Participation Commitment (taking into
account any reallocations under Section 2.22) of the Maximum Undrawn Amount of
all outstanding Letters of Credit.
 
      2.5           Disbursement of Advance Proceeds. All Advances shall be
disbursed from whichever office or other place Agent may designate from time to
time and, together with any and all other Obligations of Borrowers to Agent or
Lenders, shall be charged to Borrowers’ Account on Agent’s books. The proceeds
of each Revolving Advance or Swing Loan requested by Borrowing Agent on behalf
of any Borrower or deemed to have been requested by any Borrower under Sections
2.2(a), 2.6(b) or 2.14 hereof shall, (i) with respect to requested Revolving
Advances, to the extent Lenders make such Revolving Advances in accordance with
Section 2.2(a), 2.6(b) or 2.14 hereof, and with respect to Swing Loans made upon
any request by Borrowing Agent for a Revolving Advance to the extent Swing Loan
Lender makes such Swing Loan in accordance with Section 2.4(b) hereof, be made
available to the applicable Borrower on the day so requested by way of credit to
such Borrower’s operating account at PNC, or such other bank as Borrowing Agent
may designate following notification to Agent, in immediately available federal
funds or other immediately available funds or, (ii) with respect to Revolving
Advances deemed to have been requested by any Borrower or Swing Loans made upon
any deemed request for a Revolving Advance by any Borrower, be disbursed to
Agent to be applied to the outstanding Obligations giving rise to such deemed
request. During the Term, Borrowers may use the Revolving Advances and Swing
Loans by borrowing, prepaying and reborrowing, all in accordance with the terms
and conditions hereof.
 
2.6           Making and Settlement of Advances.
 
(a)              Each borrowing of Revolving Advances shall be advanced
according to the applicable Revolving Commitment Percentages of Lenders holding
the Revolving Commitments (subject to any contrary terms of Section 2.22). Each
borrowing of Swing Loans shall be advanced by Swing Loan Lender alone.
 
 
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(b)             Promptly after receipt by Agent of a request or a deemed request
for a Revolving Advance pursuant to Section 2.2(a) and, with respect to
Revolving Advances, to the extent Agent elects not to provide a Swing Loan or
the making of a Swing Loan would result in the aggregate amount of all
outstanding Swing Loans exceeding the maximum amount permitted in Section
2.4(a), Agent shall notify Lenders holding the Revolving Commitments of its
receipt of such request specifying the information provided by Borrowing Agent
and the apportionment among Lenders of the requested Revolving Advance as
determined by Agent in accordance with the terms hereof. Each Lender shall remit
the principal amount of each Revolving Advance to Agent such that Agent is able
to, and Agent shall, to the extent the applicable Lenders have made funds
available to it for such purpose and subject to Section 8.2, fund such Revolving
Advance to Borrowers in U.S. Dollars and immediately available funds at the
Payment Office prior to the close of business, on the applicable borrowing date;
provided that if any applicable Lender fails to remit such funds to Agent in a
timely manner, Agent may elect in its sole discretion to fund with its own funds
the Revolving Advance of such Lender on such borrowing date, and such Lender
shall be subject to the repayment obligation in Section 2.6(c) hereof.
 
(c)             Unless Agent shall have been notified by telephone, confirmed in
writing, by any Lender holding a Revolving Commitment that such Lender will not
make the amount which would constitute its applicable Revolving Commitment
Percentage of the requested Revolving Advance available to Agent, Agent may (but
shall not be obligated to) assume that such Lender has made such amount
available to Agent on such date in accordance with Section 2.6(b) and may, in
reliance upon such assumption, make available to Borrowers a corresponding
amount. In such event, if a Lender has not in fact made its applicable Revolving
Commitment Percentage of the requested Revolving Advance available to Agent,
then the applicable Lender and Borrowers severally agree to pay to Agent on
demand such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to Borrowers through but
excluding the date of payment to Agent, at (i) in the case of a payment to be
made by such Lender, the greater of (A) (x) the daily average Federal Funds
Effective Rate (computed on the basis of a year of 360 days) during such period
as quoted by Agent, times (y) such amount or (B) a rate determined by Agent in
accordance with banking industry rules on interbank compensation, and (ii) in
the case of a payment to be made by Borrower, the Revolving Interest Rate for
Revolving Advances that are Domestic Rate Loans. If such Lender pays its share
of the applicable Revolving Advance to Agent, then the amount so paid shall
constitute such Lender’s Revolving Advance. Any payment by Borrowers shall be
without prejudice to any claim Borrowers may have against a Lender holding a
Revolving Commitment that shall have failed to make such payment to Agent. A
certificate of Agent submitted to any Lender or Borrower with respect to any
amounts owing under this paragraph (c) shall be conclusive, in the absence of
manifest error.
 
(d)             Agent, on behalf of Swing Loan Lender, shall demand settlement
(a “Settlement”) of all or any Swing Loans with Lenders holding the Revolving
Commitments on at least a weekly basis, or on any more frequent date that Agent
elects or that Swing Loan Lender at its option exercisable for any reason
whatsoever may request, by notifying Lenders holding the Revolving Commitments
of such requested Settlement by facsimile, telephonic or electronic transmission
no later than 3:00 p.m. on the date of such requested Settlement (the
“Settlement Date”). Subject to any contrary provisions of Section 2.22, each
Lender holding a Revolving Commitment shall transfer the amount of such Lender’s
Revolving Commitment Percentage of the outstanding principal amount (plus
interest accrued thereon to the extent requested by Agent) of the applicable
Swing Loan with respect to which Settlement is requested by Agent, to such
account of Agent as Agent may
 
 
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designate not later than 5:00 p.m. on such Settlement Date if requested by Agent
by 3:00 p.m., otherwise not later than 5:00 p.m. on the next Business Day.
Settlements may occur at any time notwithstanding that the conditions precedent
to making Revolving Advances set forth in Section 8.2 have not been satisfied or
the Revolving Commitments shall have otherwise been terminated at such time. All
amounts so transferred to Agent shall be applied against the amount of
outstanding Swing Loans and, when so applied shall constitute Revolving Advances
of such Lenders accruing interest as Domestic Rate Loans. If any such amount is
not transferred to Agent by any Lender holding a Revolving Commitment on such
Settlement Date, Agent shall be entitled to recover such amount on demand from
such Lender together with interest thereon as specified in Section 2.6(c).
        
                        (e)              If any Lender or Participant (a
“Benefited Lender”) shall at any time receive any payment of all or part of its
Advances, or interest thereon, or receive any Collateral in respect thereof
(whether voluntarily or involuntarily or by set-off) in a greater proportion
than any such payment to and Collateral received by any other Lender, if any, in
respect of such other Lender’s Advances, or interest thereon, and such greater
proportionate payment or receipt of Collateral is not expressly permitted
hereunder, such Benefited Lender shall purchase for cash from the other Lenders
a participation in such portion of each such other Lender’s Advances, or shall
provide such other Lender with the benefits of any such Collateral, or the
proceeds thereof, as shall be necessary to cause such Benefited Lender to share
the excess payment or benefits of such Collateral or proceeds ratably with each
of the other Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefited Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest. Each Borrower consents to
the foregoing and agrees, to the extent it may effectively do so under
Applicable Law, that each Lender so purchasing a portion of another Lender’s
Advances may exercise all rights of payment (including rights of set-off) with
respect to such portion as fully as if such Lender were the direct holder of
such portion, and the obligations owing to each such purchasing Lender in
respect of such participation and such purchased portion of any other Lender’s
Advances shall be part of the Obligations secured by the Collateral, and the
obligations owing to each such purchasing Lender in respect of such
participation and such purchased portion of any other Lender’s Advances shall be
part of the Obligations secured by the Collateral.
 
      2.7           Maximum Advances. The aggregate balance of Revolving
Advances plus Swing Loans outstanding at any time shall not exceed the lesser of
(a) the Maximum Revolving Advance Amount less the aggregate Maximum Undrawn
Amount of all issued and outstanding Letters of Credit or (b) the Formula
Amount.
 
2.8           Manner and Repayment of Advances.
 
            (a)             The Revolving Advances and Swing Loans shall be due
and payable infull on the last day of the Term subject to earlier prepayment as
herein provided. Notwithstanding the foregoing, all Advances shall be subject to
earlier repayment upon (x) acceleration upon the occurrence of an Event of
Default under this Agreement or (y) termination of this Agreement. Each payment
(including each prepayment) by any Borrower on account of the principal of and
interest on the Advances shall be applied, first to the outstanding Swing Loans
and next, pro rata according to the applicable Revolving Commitment Percentages
of Lenders, to the outstanding Revolving Advances (subject to any contrary
provisions of Section 2.22).
 
 
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(b)             Each Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received by Agent. Agent
shall conditionally credit Borrowers’ Account for each item of payment on the
next Business Day after the Business Day on which such item of payment is
received by Agent (and the Business Day on which each such item of payment is so
credited shall be referred to, with respect to such item, as the “Application
Date”). Agent is not, however, required to credit Borrowers’ Account for the
amount of any item of payment which is unsatisfactory to Agent and Agent may
charge Borrowers’ Account for the amount of any item of payment which is
returned, for any reason whatsoever, to Agent unpaid. Subject to the foregoing,
Borrowers agree that for purposes of computing the interest charges under this
Agreement, each item of payment received by Agent shall be deemed applied by
Agent on account of the Obligations on its respective Application Date.
Borrowers further agree that there is a monthly float charge payable to Agent
for Agent’s sole benefit, in an amount equal to (y) the face amount of all items
of payment received during the prior month (including items of payment received
by Agent as a wire transfer or electronic depository check) multiplied by (z)
the Revolving Interest Rate with respect to Domestic Rate Loans for one (1)
Business Day. All proceeds received by Agent shall be applied to the Obligations
in accordance with Section 4.8(h).
 
(c)             All payments of principal, interest and other amounts payable
hereunder, or under any of the Other Documents shall be made to Agent at the
Payment Office not later than 1:00 p.m. on the due date therefor in Dollars in
federal funds or other funds immediately available to Agent. Agent shall have
the right to effectuate payment of any and all Obligations due and owing
hereunder by charging Borrowers’ Account or by making Advances as provided in
Section 2.2 hereof.
 
(d)             Except as expressly provided herein, all payments (including
prepayments) to be made by any Borrower on account of principal, interest, fees
and other amounts payable hereunder shall be made without deduction, setoff or
counterclaim and shall be made to Agent on behalf of Lenders to the Payment
Office, in each case on or prior to 1:00 p.m., in Dollars and in immediately
available funds.
 
      2.9           Repayment of Excess Advances. If at any time the aggregate
balance of outstanding Revolving Advances, Swing Loans, and/or Advances taken as
a whole exceeds the maximum amount of such type of Advances and/or Advances
taken as a whole (as applicable) permitted hereunder, such excess Advances shall
be immediately due and payable without the necessity of any demand, at the
Payment Office, whether or not a Default or an Event of Default has occurred.
 
2.10   Statement of Account. Agent shall maintain, in accordance with its
customary procedures, a loan account (“Borrowers’ Account”) in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent or Lenders and the date and amount of each payment in respect thereof;
provided, however, the failure by Agent to record the date and amount of any
Advance shall not adversely affect Agent or any Lender. Each month, Agent shall
send to Borrowing Agent a statement showing the accounting for the Advances
made, payments made or credited in respect thereof, and other transactions
between Agent, Lenders and Borrowers during such month. The monthly statements
shall be deemed correct and binding upon Borrowers in the absence of manifest
error and shall constitute an account stated between Lenders and Borrowers
unless Agent receives a written statement of Borrowers’ specific exceptions
thereto within thirty (30) days after such statement is received by Borrowing
Agent. The records of Agent with respect to Borrowers’ Account shall be
conclusive evidence absent manifest error of the amounts of Advances and other
charges thereto and of payments applicable thereto.
 
 
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2.11   Letters of Credit.
 
(a)             Subject to the terms and conditions hereof, Issuer shall issue
or cause the issuance of standby and/or trade letters of credit denominated in
Dollars (“Letters of Credit”) for the account of any Borrower except to the
extent that the issuance thereof would then cause the sum of (i) the outstanding
Revolving Advances plus (ii) the outstanding Swing Loans, plus (iii) the Maximum
Undrawn Amount of all outstanding Letters of Credit, plus (iv) the Maximum
Undrawn Amount of the Letter of Credit to be issued to exceed the lesser of (x)
the Maximum Revolving Advance Amount or (y) the Formula Amount (calculated
without giving effect to the deductions provided for in Section 2.1(a)(z)(ii).
The Maximum Undrawn Amount of all outstanding Letters of Credit shall not exceed
in the aggregate at any time the Letter of Credit Sublimit. All disbursements or
payments related to Letters of Credit shall be deemed to be Domestic Rate Loans
consisting of Revolving Advances and shall bear interest at the Revolving
Interest Rate for Domestic Rate Loans. Letters of Credit that have not been
drawn upon shall not bear interest (but fees shall accrue in respect of
outstanding Letters of Credit as provided in Section 3.2 hereof).
 
(b)             Notwithstanding any provision of this Agreement, Issuer shall
not be under any obligation to issue any Letter of Credit if (i) any order,
judgment or decree of any Governmental Body or arbitrator shall by its terms
purport to enjoin or restrain Issuer from issuing any Letter of Credit, or any
Law applicable to Issuer or any request or directive (whether or not having the
force of law) from any Governmental Body with jurisdiction over Issuer shall
prohibit, or request that Issuer refrain from, the issuance of letters of credit
generally or the Letter of Credit in particular or shall impose upon Issuer with
respect to the Letter of Credit any restriction, reserve or capital requirement
(for which Issuer is not otherwise compensated hereunder) not in effect on the
date of this Agreement, or shall impose upon Issuer any unreimbursed loss, cost
or expense which was not applicable on the date of this Agreement, and which
Issuer in good faith deems material to it, or (ii) the issuance of the Letter of
Credit would violate one or more policies of Issuer applicable to letters of
credit generally.
 
2.12   Issuance of Letters of Credit.
 
           (a)             Borrowing Agent, on behalf of any Borrower, may
request Issuer to issue or cause the issuance of a Letter of Credit by
delivering to Issuer, with a copy to Agent at the Payment Office, prior to 10:00
a.m., at least five (5) Business Days prior to the proposed date of issuance,
such Issuer’s form of Letter of Credit Application (the “Letter of Credit
Application”) completed to the satisfaction of Agent and Issuer; and, such other
certificates, documents and other papers and information as Agent or Issuer may
reasonably request. Issuer shall not issue any requested Letter of Credit if
such Issuer has received notice from Agent or any Lender that one or more of the
applicable conditions set forth in Section 8.2 of this Agreement have not been
satisfied or the commitments of Lenders to make Revolving Advances hereunder
have been terminated for any reason.
 
 
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(b)             Each Letter of Credit shall, among other things, (i) provide for
the payment of sight drafts, other written demands for payment, or acceptances
of usance drafts when presented for honor thereunder in accordance with the
terms thereof and when accompanied by the documents described therein and (ii)
have an expiry date not later than twelve (12) months after such Letter of
Credit’s date of issuance and in no event later than the last day of the Term.
Each standby Letter of Credit shall be subject either to the Uniform Customs and
Practice for Documentary Credits as most recently published by the International
Chamber of Commerce at the time a Letter of Credit is issued (the “UCP”) or the
International Standby Practices (International Chamber of Commerce Publication
Number 590) (the “ISP98 Rules”), or any subsequent revision thereof at the time
a standby Letter of Credit is issued, as determined by Issuer, and each trade
Letter of Credit shall be subject to the UCP.
 
(c)             Agent shall use its reasonable efforts to notify Lenders of the
request by Borrowing Agent for a Letter of Credit hereunder.
 
2.13   Requirements For Issuance of Letters of Credit.
 
(a)             Borrowing Agent shall authorize and direct any Issuer to name
the applicable Borrower as the “Applicant” or “Account Party” of each Letter of
Credit. If Agent is not the Issuer of any Letter of Credit, Borrowing Agent
shall authorize and direct Issuer to deliver to Agent all instruments,
documents, and other writings and property received by Issuer pursuant to the
Letter of Credit and to accept and rely upon Agent’s instructions and agreements
with respect to all matters arising in connection with the Letter of Credit, the
application therefor.
 
(b)             In connection with all trade Letters of Credit issued or caused
to be issued by Issuer under this Agreement, each Borrower hereby appoints
Issuer, or its designee, as its attorney, with full power and authority if an
Event of Default shall have occurred: (i) to sign and/or endorse such Borrower’s
name upon any warehouse or other receipts, and acceptances; (ii) to sign such
Borrower’s name on bills of lading; (iii) to clear Inventory through the United
States of America Customs Department (“Customs”) in the name of such Borrower or
Issuer or Issuer’s designee, and to sign and deliver to Customs officials powers
of attorney in the name of such Borrower for such purpose; and (iv) to complete
in such Borrower’s name or Issuer’s, or in the name of Issuer’s designee, any
order, sale or transaction, obtain the necessary documents in connection
therewith, and collect the proceeds thereof. Neither Agent, Issuer nor their
attorneys will be liable for any acts or omissions nor for any error of judgment
or mistakes of fact or law, except for Agent’s, Issuer’s or their respective
attorney’s willful misconduct. This power, being coupled with an interest, is
irrevocable as long as any Letters of Credit remain outstanding.
 
 
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2.14   Disbursements, Reimbursement.
 
(a)             Immediately upon the issuance of each Letter of Credit, each
Lender holding a Revolving Commitment shall be deemed to, and hereby irrevocably
and unconditionally agrees to, purchase from Issuer a participation in each
Letter of Credit and each drawing thereunder in an amount equal to such Lender’s
Revolving Commitment Percentage of the Maximum Undrawn Amount of such Letter of
Credit (as in effect from time to time) and the amount of such drawing,
respectively.
 
(b)             In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, Issuer will promptly notify
Agent and Borrowing Agent. Regardless of whether Borrowing Agent shall have
received such notice, Borrowers shall reimburse (such obligation to reimburse
Issuer shall sometimes be referred to as a “Reimbursement Obligation”) Issuer
prior to 12:00 Noon, on each date that an amount is paid by Issuer under any
Letter of Credit (each such date, a “Drawing Date”) in an amount equal to the
amount so paid by Issuer. In the event Borrowers fail to reimburse Issuer for
the full amount of any drawing under any Letter of Credit by 12:00 Noon, on the
Drawing Date, Issuer will promptly notify Agent and each Lender holding a
Revolving Commitment thereof, and Borrowers shall be automatically deemed to
have requested that a Revolving Advance maintained as a Domestic Rate Loan be
made by Lenders to be disbursed on the Drawing Date under such Letter of Credit,
and Lenders holding the Revolving Commitments shall be unconditionally obligated
to fund such Revolving Advance (all whether or not the conditions specified in
Section 8.2 are then satisfied or the commitments of Lenders to make Revolving
Advances hereunder have been terminated for any reason) as provided for in
Section 2.14(c) immediately below. Any notice given by Issuer pursuant to this
Section 2.14(b) may be oral if promptly confirmed in writing; provided that the
lack of such a confirmation shall not affect the conclusiveness or binding
effect of such notice.
 
(c)             Each Lender holding a Revolving Commitment shall upon any notice
pursuant to Section 2.14(b) make available to Issuer through Agent at the
Payment Office an amount in immediately available funds equal to its Revolving
Commitment Percentage (subject to any contrary provisions of Section 2.22) of
the amount of the drawing, whereupon the participating Lenders shall (subject to
Section 2.14(d)) each be deemed to have made a Revolving Advance maintained as a
Domestic Rate Loan to Borrowers in that amount. If any Lender holding a
Revolving Commitment so notified fails to make available to Agent, for the
benefit of Issuer, the amount of such Lender’s Revolving Commitment Percentage
of such amount by 2:00 p.m. on the Drawing Date, then interest shall accrue on
such Lender’s obligation to make such payment, from the Drawing Date to the date
on which such Lender makes such payment (i) at a rate per annum equal to the
Federal Funds Effective Rate during the first three (3) days following the
Drawing Date and (ii) at a rate per annum equal to the rate applicable to
Revolving Advances maintained as a Domestic Rate Loan on and after the fourth
day following the Drawing Date. Agent and Issuer will promptly give notice of
the occurrence of the Drawing Date, but failure of Agent or Issuer to give any
such notice on the Drawing Date or in sufficient time to enable any Lender
holding a Revolving Commitment to effect such payment on such date shall not
relieve such Lender from its obligations under this Section 2.14(c), provided
that such Lender shall not be obligated to pay interest as provided in Section
2.14(c)(i) and (ii) until and commencing from the date of receipt of notice from
Agent or Issuer of a drawing.
 
 
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(d)           With respect to any unreimbursed drawing that is not converted
into a Revolving Advance maintained as a Domestic Rate Loan to Borrowers in
whole or in part as contemplated by Section 2.14(b), because of Borrowers’
failure to satisfy the conditions set forth in Section 8.2 hereof (other than
any notice requirements) or for any other reason, Borrowers shall be deemed to
have incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in
the amount of such drawing. Such Letter of Credit Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at the rate
per annum applicable to a Revolving Advance maintained as a Domestic Rate Loan.
Each applicable Lender’s payment to Agent pursuant to Section 2.14(c) shall be
deemed to be a payment in respect of its participation in such Letter of Credit
Borrowing and shall constitute a “Participation Advance” from such Lender in
satisfaction of its Participation Commitment in respect of the applicable Letter
of Credit under this Section 2.14.
 
(e)           Each applicable Lender’s Participation Commitment in respect of
the Letters of Credit shall continue until the last to occur of any of the
following events: (x) Issuer ceases to be obligated to issue or cause to be
issued Letters of Credit hereunder; (y) no Letter of Credit issued or created
hereunder remains outstanding and uncancelled; and (z) all Persons (other than
Borrowers) have been fully reimbursed for all payments made under or relating to
Letters of Credit.
 
2.15   Repayment of Participation Advances.
 
(a)             Upon (and only upon) receipt by Agent for the account of Issuer
of immediately available funds from Borrowers (i) in reimbursement of any
payment made by Issuer or Agent under the Letter of Credit with respect to which
any Lender has made a Participation Advance to Agent, or (ii) in payment of
interest on such a payment made by Issuer or Agent under such a Letter of
Credit, Agent will pay to each Lender holding a Revolving Commitment, in the
same funds as those received by Agent, the amount of such Lender’s Revolving
Commitment Percentage of such funds, except Agent shall retain the amount of the
Revolving Commitment Percentage of such funds of any Lender holding a Revolving
Commitment that did not make a Participation Advance in respect of such payment
by Agent (and, to the extent that any of the other Lender(s) holding the
Revolving Commitment have funded any portion such Defaulting Lender’s
Participation Advance in accordance with the provisions of Section 2.22, Agent
will pay over to such Non-Defaulting Lenders a pro rata portion of the funds so
withheld from such Defaulting Lender).
 
(b)             If Issuer or Agent is required at any time to return to any
Borrower, or to a trustee, receiver, liquidator, custodian, or any official in
any insolvency proceeding, any portion of the payments made by Borrowers to
Issuer or Agent pursuant to Section 2.15(a) in reimbursement of a payment made
under the Letter of Credit or interest or fee thereon, each applicable Lender
shall, on demand of Agent, forthwith return to Issuer or Agent the amount of its
Revolving Commitment Percentage of any amounts so returned by Issuer or Agent
plus interest at the Federal Funds Effective Rate.
 
 
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2.16   Documentation. Each Borrower agrees to be bound by the terms of the
Letter of Credit Application and by Issuer’s interpretations of any Letter of
Credit issued on behalf of such Borrower and by Issuer’s written regulations and
customary practices relating to letters of credit, though Issuer’s
interpretations may be different from such Borrower’s own. In the event of a
conflict between the Letter of Credit Application and this Agreement, this
Agreement shall govern. It is understood and agreed that, except in the case of
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment), Issuer shall not be liable for
any error, negligence and/or mistakes, whether of omission or commission, in
following Borrowing Agent’s or any Borrower’s instructions or those contained in
the Letters of Credit or any modifications, amendments or supplements thereto.
 
2.17   Determination to Honor Drawing Request. In determining whether to honor
any request for drawing under any Letter of Credit by the beneficiary thereof,
Issuer shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit and that any other drawing condition appearing on the face of
such Letter of Credit has been satisfied in the manner so set forth.
 
2.18   Nature of Participation and Reimbursement Obligations. The obligation of
each Lender holding a Revolving Commitment in accordance with this Agreement to
make the Revolving Advances or Participation Advances as a result of a drawing
under a Letter of Credit, and the obligations of Borrowers to reimburse Issuer
upon a draw under a Letter of Credit, shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Section 2.18 under all circumstances, including the following
circumstances:
 
(i)            any set-off, counterclaim, recoupment, defense or other right
which such Lender or any Borrower, as the case may be, may have against Issuer,
Agent, any Borrower or Lender, as the case may be, or any other Person for any
reason whatsoever;
 
(ii)           the failure of any Borrower or any other Person to comply, in
connection with a Letter of Credit Borrowing, with the conditions set forth in
this Agreement for the making of a Revolving Advance, it being acknowledged that
such conditions are not required for the making of a Letter of Credit Borrowing
and the obligation of Lenders to make Participation Advances under Section 2.14;
 
(iii)          any lack of validity or enforceability of any Letter of Credit;
 
(iv)          any claim of breach of warranty that might be made by any
Borrower, Agent, Issuer or any Lender against the beneficiary of a Letter of
Credit, or the existence of any claim, set-off, recoupment, counterclaim,
cross-claim, defense or other right which any Borrower, Agent, Issuer or any
Lender may have at any time against a beneficiary, any successor beneficiary or
any transferee of any Letter of Credit or assignee of the proceeds thereof (or
any Persons for whom any such transferee or assignee may be acting), Issuer,
Agent or any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction
(including any underlying transaction between any Borrower or any Subsidiaries
of such Borrower and the beneficiary for which any Letter of Credit was
procured);
 
 
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(v)           the lack of power or authority of any signer of (or any defect in
or forgery of any signature or endorsement on) or the form of or lack of
validity, sufficiency, accuracy, enforceability or genuineness of any draft,
demand, instrument, certificate or other document presented under or in
connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or
provision of services relating to a Letter of Credit, in each case even if
Issuer or any of Issuer’s Affiliates has been notified thereof;
 
(vi)          payment by Issuer under any Letter of Credit against presentation
of a demand, draft or certificate or other document which is forged or does not
fully comply with the terms of such Letter of Credit (provided that the
foregoing shall not excuse Issuer from any obligation under the terms of any
applicable Letter of Credit to require the presentation of documents that on
their face appear to satisfy any applicable requirements for drawing under such
Letter of Credit prior to honoring or paying any such draw);
 
(vii)         the solvency of, or any acts or omissions by, any beneficiary of
any Letter of Credit, or any other Person having a role in any transaction or
obligation relating to a Letter of Credit, or the existence, nature, quality,
quantity, condition, value or other characteristic of any property or services
relating to a Letter of Credit;
 
(viii)        any failure by Issuer or any of Issuer’s Affiliates to issue any
Letter of Credit in the form requested by Borrowing Agent, unless Agent and
Issuer have each received written notice from Borrowing Agent of such failure
within three (3) Business Days after Issuer shall have furnished Agent and
Borrowing Agent a copy of such Letter of Credit and such error is material and
no drawing has been made thereon prior to receipt of such notice;
 
(ix)          the occurrence of any Material Adverse Effect;
 
(x)           any breach of this Agreement or any Other Document by any party
thereto;
 
(xi)          the occurrence or continuance of an insolvency proceeding with
respect to any Borrower or any Guarantor;
 
(xii)         the fact that a Default or an Event of Default shall have occurred
and be continuing;
 
 
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(xiii)        the fact that the Term shall have expired or this Agreement or the
obligations of Lenders to make Advances have been terminated; and
 
(xiv)        any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
 
2.19   Liability for Acts and Omissions.
 
(a)           As between Borrowers and Issuer, Swing Loan Lender, Agent and
Lenders, each Borrower assumes all risks of the acts and omissions of, or misuse
of the Letters of Credit by, the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, Issuer shall not
be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with the
application for an issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged (even if Issuer or any of its Affiliates shall have been
notified thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) the
failure of the beneficiary of any such Letter of Credit, or any other party to
which such Letter of Credit may be transferred, to comply fully with any
conditions required in order to draw upon such Letter of Credit or any other
claim of any Borrower against any beneficiary of such Letter of Credit, or any
such transferee, or any dispute between or among any Borrower and any
beneficiary of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of Issuer, including any Governmental Acts, and
none of the above shall affect or impair, or prevent the vesting of, any of
Issuer’s rights or powers hereunder. Nothing in the preceding sentence shall
relieve Issuer from liability for Issuer’s gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final
non-appealable judgment) in connection with actions or omissions described in
such clauses (i) through (viii) of such sentence. In no event shall Issuer or
Issuer’s Affiliates be liable to any Borrower for any indirect, consequential,
incidental, punitive, exemplary or special damages or expenses (including
without limitation attorneys’ fees), or for any damages resulting from any
change in the value of any property relating to a Letter of Credit.
 
 
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(b)           Without limiting the generality of the foregoing, Issuer and each
of its Affiliates: (i) may rely on any oral or other communication believed in
good faith by Issuer or such Affiliate to have been authorized or given by or on
behalf of the applicant for a Letter of Credit; (ii) may honor any presentation
if the documents presented appear on their face substantially to comply with the
terms and conditions of the relevant Letter of Credit; (iii) may honor a
previously dishonored presentation under a Letter of Credit, whether such
dishonor was pursuant to a court order, to settle or compromise any claim of
wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the
same extent as if such presentation had initially been honored, together with
any interest paid by Issuer or its Affiliates; (iv) may honor any drawing that
is payable upon presentation of a statement advising negotiation or payment,
upon receipt of such statement (even if such statement indicates that a draft or
other document is being delivered separately), and shall not be liable for any
failure of any such draft or other document to arrive, or to conform in any way
with the relevant Letter of Credit; (v) may pay any paying or negotiating bank
claiming that it rightfully honored under the laws or practices of the place
where such bank is located; and (vi) may settle or adjust any claim or demand
made on Issuer or its Affiliate in any way related to any order issued at the
applicant’s request to an air carrier, a letter of guarantee or of indemnity
issued to a steamship agent or carrier or any document or instrument of like
import (each an “Order”) and honor any drawing in connection with any Letter of
Credit that is the subject of such Order, notwithstanding that any drafts or
other documents presented in connection with such Letter of Credit fail to
conform in any way with such Letter of Credit.
 
(c)           In furtherance and extension and not in limitation of the specific
provisions set forth above, any action taken or omitted by Issuer under or in
connection with the Letters of Credit issued by it or any documents and
certificates delivered thereunder, if taken or omitted in good faith and without
gross negligence (as determined by a court of competent jurisdiction in a final
non-appealable judgment), shall not put Issuer under any resulting liability to
any Borrower, Agent or any Lender.
 
2.20   Mandatory Prepayments.
 
(a)           Subject to Section 7.1 hereof and the Intercreditor Agreement,
when any Borrower sells or otherwise disposes of any Collateral other than
Inventory in the Ordinary Course of Business, Borrowers shall repay the Advances
in an amount equal to the net proceeds of such sale (i.e., gross proceeds less
the reasonable direct costs of such sales or other dispositions), such
repayments to be made promptly but in no event more than one (1) Business Day
following receipt of such net proceeds, and until the date of payment, such
proceeds shall be held in trust for Agent. The foregoing shall not be deemed to
be implied consent to any such sale otherwise prohibited by the terms and
conditions hereof. Such repayments shall be applied to the Advances (including
cash collateralization of all Obligations relating to any outstanding Letters of
Credit in accordance with the provisions of Section 3.2(b), provided however
that if no Default or Event of Default has occurred and is continuing, such
repayments shall be applied to cash collateralize any Obligations related to
outstanding Letters of Credit last) in such order as Agent may determine,
subject to Borrowers’ ability to reborrow Revolving Advances in accordance with
the terms hereof.
 
(b)           Subject to the Intercreditor Agreement, all proceeds received by
Loan Parties or Agent (i) under any insurance policy on account of damage or
destruction of any assets or property of any Loan Parties, or (ii) as a result
of any taking or condemnation of any assets or property shall be applied in
accordance with Section 6.6 hereof.
 
 
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      2.21     Use of Proceeds.
 
(a)           Borrowers shall apply the proceeds of Advances to (i) pay fees and
expenses relating to this transaction, and (ii) provide for its working capital
needs and reimburse drawings under Letters of Credit.
 
(b)           Without limiting the generality of Section 2.21(a) above, neither
the Borrowers, the Guarantors nor any other Person which may in the future
become party to this Agreement or the Other Documents as a Borrower or
Guarantor, intends to use nor shall they use any portion of the proceeds of the
Advances, directly or indirectly, for any purpose in violation of Applicable
Law.
 
2.22     Defaulting Lender.
 
(a)           Notwithstanding anything to the contrary contained herein, in the
event any Lender is a Defaulting Lender, all rights and obligations hereunder of
such Defaulting Lender and of the other parties hereto shall be modified to the
extent of the express provisions of this Section 2.22 so long as such Lender is
a Defaulting Lender.
 
(b)           (1) except as otherwise expressly provided for in this Section
2.22, Revolving Advances shall be made pro rata from Lenders holding Revolving
Commitments which are not Defaulting Lenders based on their respective Revolving
Commitment Percentages, and no Revolving Commitment Percentage of any Lender or
any pro rata share of any Revolving Advances required to be advanced by any
Lender shall be increased as a result of any Lender being a Defaulting Lender.
Amounts received in respect of principal of any type of Revolving Advances shall
be applied to reduce such type of Revolving Advances of each Lender (other than
any Defaulting Lender) holding a Revolving Commitment in accordance with their
Revolving Commitment Percentages; provided, that, Agent shall not be obligated
to transfer to a Defaulting Lender any payments received by Agent for Defaulting
Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of
any payments hereunder (including any principal, interest or fees). Amounts
payable to a Defaulting Lender shall instead be paid to or retained by Agent.
Agent may hold and, in its discretion, re-lend to a Borrower the amount of such
payments received or retained by it for the account of such Defaulting Lender.
 
     (i)           fees pursuant to Section 3.3(b) hereof shall cease to accrue
in favor of such Defaulting Lender.
 
     (ii)          if any Swing Loans are outstanding or any Letter of Credit
Obligations (or drawings under any Letter of Credit for which Issuer has not
been reimbursed) are outstanding or exist at the time any such Lender holding a
Revolving Commitment becomes a Defaulting Lender, then:
 
(A)           Defaulting Lender’s Participation Commitment in theoutstanding
Swing Loans and of the Maximum Undrawn Amount of all outstanding Letters of
Credit shall be reallocated among Non-Defaulting Lenders holding Revolving
Commitments in proportion to the respective Revolving Commitment Percentages of
such Non-Defaulting Lenders to the extent (but only to the extent) that (x) such
reallocation does not cause the aggregate sum of outstanding Revolving Advances
made by any such Non-Defaulting Lender holding a Revolving Commitment plus such
Lender’s reallocated Participation Commitment in the outstanding Swing Loans
plus such Lender’s reallocated Participation Commitment in the aggregate Maximum
Undrawn Amount of all outstanding Letters of Credit to exceed the Revolving
Commitment Amount of any such Non-Defaulting Lender, and (y) no Default or Event
of Default has occurred and is continuing at such time;
 
 
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(B)           if the reallocation described in clause (A) above cannot, or can
only partially, be effected, Borrowers shall within one Business Day following
notice by Agent (x) first, prepay any outstanding Swing Loans that cannot be
reallocated, and (y) second, cash collateralize for the benefit of Issuer,
Borrowers’ obligations corresponding to such Defaulting Lender’s Participation
Commitment in the Maximum Undrawn Amount of all Letters of Credit (after giving
effect to any partial reallocation pursuant to clause (A) above) in accordance
with Section 3.2(b) for so long as such Obligations are outstanding;
 
(C)           if Borrowers cash collateralize any portion of such Defaulting
Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters
of Credit pursuant to clause (B) above, Borrowers shall not be required to pay
any fees to such Defaulting Lender pursuant to Section 3.2(a) with respect to
such Defaulting Lender’s Revolving Commitment Percentage of Maximum Undrawn
Amount of all Letters of Credit during the period such Defaulting Lender’s
Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit
are cash collateralized;
 
(D)           if Defaulting Lender’s Participation Commitment in the Maximum
Undrawn Amount of all Letters of Credit is reallocated pursuant to clause (A)
above, then the fees payable to Lenders holding Revolving Commitments pursuant
to Section 3.2(a) shall be adjusted and reallocated to Non-Defaulting Lenders
holding Revolving Commitments in accordance with such reallocation; and
 
(E)           if all or any portion of such Defaulting Lender’s Participation
Commitment in the Maximum Undrawn Amount of all Letters of Credit is neither
reallocated nor cash collateralized pursuant to clauses (A) or (B) above, then,
without prejudice to any rights or remedies of Issuer or any other Lender
hereunder, all Letter of Credit Fees payable under Section 3.2(a) with respect
to such Defaulting Lender’s Revolving Commitment Percentage of the Maximum
Undrawn Amount of all Letters of Credit shall be payable to the Issuer (and not
to such Defaulting Lender) until (and then only to the extent that) such
Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit
is reallocated and/or cash collateralized; and
 
    (iii)         so long as any Lender holding a Revolving Commitment is a
Defaulting Lender, Swing Loan Lender shall not be required to fund any Swing
Loans and Issuer shall not be required to issue, amend or increase any Letter of
Credit, unless such Issuer is satisfied that the related exposure and Defaulting
Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters
of Credit and all Swing Loans (after giving effect to any such issuance,
amendment, increase or funding) will be fully allocated to Non-Defaulting
Lenders holding Revolving Commitments and/or cash collateral for such Letters of
Credit will be provided by Borrowers in accordance with clause (A) and (B)
above, and participating interests in any newly made Swing Loan or any newly
issued or increased Letter of Credit shall be allocated among Non-Defaulting
Lenders in a manner consistent with Section 2.22(b)(iii)(A) above (and such
Defaulting Lender shall not participate therein).
 
 
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(c)           A Defaulting Lender shall not be entitled to give instructions to
Agent or to approve, disapprove, consent to or vote on any matters relating to
this Agreement and the Other Documents, and all amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall not be deemed to be a Lender, to have any
outstanding Advances or a Revolving Commitment Percentage.
 
(d)           Other than as expressly set forth in this Section 2.22, the rights
and obligations of a Defaulting Lender (including the obligation to indemnify
Agent) and the other parties hereto shall remain unchanged. Nothing in this
Section 2.22 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
 
(e)           In the event that Agent, Borrowers, Swing Loan Lender and Issuer
agree in writing that a Defaulting Lender has adequately remedied all matters
that caused such Lender to be a Defaulting Lender, then Agent will so notify the
parties hereto, and, if such cured Defaulting Lender is a Lender holding a
Revolving Commitment, then Participation Commitments of Lenders holding
Revolving Commitments (including such cured Defaulting Lender) of the Swing
Loans and Maximum Undrawn Amount of all outstanding Letters of Credit shall be
reallocated to reflect the inclusion of such Lender’s Revolving Commitment, and
on such date such Lender shall purchase at par such of the Revolving Advances of
the other Lenders as Agent shall determine may be necessary in order for such
Lender to hold such Revolving Advances in accordance with its Revolving
Commitment Percentage.
 
(f)           If Swing Loan Lender or Issuer has a good faith belief that any
Lender holding a Revolving Commitment has defaulted in fulfilling its
obligations under one or more other agreements in which such Lender commits to
extend credit, Swing Loan Lender shall not be required to fund any Swing Loans
and Issuer shall not be required to issue, amend or increase any Letter of
Credit, unless Swing Loan Lender or Issuer, as the case may be, shall have
entered into arrangements with Borrowers or such Lender, satisfactory to Swing
Loan Lender or Issuer, as the case may be, to defease any risk to it in respect
of such Lender hereunder.
 
 
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2.23   Payment of Obligations. Agent may charge to Borrowers’ Account as a
Revolving Advance or, at the discretion of Swing Loan Lender, as a Swing Loan
(i) all payments with respect to any of the Obligations required hereunder
(including without limitation principal payments, payments of interest, payments
of Letter of Credit Fees and all other fees provided for hereunder and payments
under Sections 16.5 and 16.9) as and when each such payment shall become due and
payable (whether as regularly scheduled, upon or after acceleration, upon
maturity or otherwise), (ii) without limiting the generality of the foregoing
clause (i), (a) all amounts expended by Agent or any Lender pursuant to Sections
4.2 or 4.3 hereof and (b) all expenses which Agent incurs in connection with the
forwarding of Advance proceeds and the establishment and maintenance of any
Blocked Accounts or Depository Accounts as provided for in Section 4.8(h), and
(iii) any sums expended by Agent or any Lender due to any Borrower’s failure to
perform or comply with its obligations under this Agreement or any Other
Document including any Borrower’s obligations under Sections 3.3, 3.4, 4.4, 4.7,
6.4, 6.6, 6.7 and 6.8 hereof, and all amounts so charged shall be added to the
Obligations and shall be secured by the Collateral. To the extent Revolving
Advances are not actually funded by the other Lenders in respect of any such
amounts so charged, all such amounts so charged shall be deemed to be Revolving
Advances made by and owing to Agent and Agent shall be entitled to all rights
(including accrual of interest) and remedies of a Lender under this Agreement
and the Other Documents with respect to such Revolving Advances.
 
III.        INTEREST AND FEES.
 
3.1     Interest. Interest on Advances shall be payable in arrears on the first
day ofeach month with respect to Domestic Rate Loans and, with respect to LIBOR
Rate Loans, at the end of each Interest Period, provided further that all
accrued and unpaid interest shall be due and payable at the end of the Term.
Interest charges shall be computed on the greater of (x) the Minimum Loan Amount
or (y) the actual principal amount of Advances outstanding during the month at a
rate per annum equal to (i) with respect to Revolving Advances, the applicable
Revolving Interest Rate and (ii) with respect to Swing Loans, the Revolving
Interest Rate for Domestic Rate Loans. Except as expressly provided otherwise in
this Agreement, any Obligations other than the Advances that are not paid when
due shall accrue interest at the Revolving Interest Rate for Domestic Rate
Loans, subject to the provision of the final sentence of this Section 3.1
regarding the Default Rate. Whenever, subsequent to the date of this Agreement,
the Alternate Base Rate is increased or decreased, the Revolving Interest Rate
for Domestic Rate Loans shall be similarly changed without notice or demand of
any kind by an amount equal to the amount of such change in the Alternate Base
Rate during the time such change or changes remain in effect. The LIBOR Rate
shall be adjusted with respect to LIBOR Rate Loans without notice or demand of
any kind on the effective date of any change in the Reserve Percentage as of
such effective date. Upon and after the occurrence of an Event of Default, and
during the continuation thereof, at the option of Agent or at the direction of
Required Lenders (or, in the case of any Event of Default under Section 10.7,
immediately and automatically upon the occurrence of any such Event of Default
without the requirement of any affirmative action by any party), the Obligations
shall bear interest at the applicable Revolving Interest Rate plus two percent
(2%) per annum (the “Default Rate”).
 
 
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3.2    Letter of Credit Fees.
 
         (a)           Borrowers shall pay (x) to Agent, for the ratable benefit
of Lenders holding Revolving Commitments, fees for each Letter of Credit for the
period from and excluding the date of issuance of same to and including the date
of expiration or termination, equal to the average daily face amount of each
outstanding Letter of Credit multiplied by the Applicable Margin for Revolving
Advances consisting of LIBOR Rate Loans, such fees to be calculated on the basis
of a 360-day year for the actual number of days elapsed and to be payable
quarterly in arrears on the first day of each calendar quarter and on the last
day of the Term, and (y) to Issuer, a fronting fee of one quarter of one percent
(0.25%) per annum times the average daily face amount of each outstanding Letter
of Credit for the period from and excluding the date of issuance of same to and
including the date of expiration or termination, to be payable quarterly in
arrears on the first day of each calendar quarter and on the last day of the
Term (all of the foregoing fees, the “Letter of Credit Fees”). In addition,
Borrowers shall pay to Agent, for the benefit of Issuer, any and all
administrative, issuance, amendment, payment and negotiation charges with
respect to Letters of Credit and all fees and expenses as agreed upon by Issuer
and the Borrowing Agent in connection with any Letter of Credit, including in
connection with the opening, amendment or renewal of any such Letter of Credit
and any acceptances created thereunder, all such charges, fees and expenses, if
any, to be payable on demand. All such charges shall be deemed earned in full on
the date when the same are due and payable hereunder and shall not be subject to
rebate or pro-ration upon the termination of this Agreement for any reason. Any
such charge in effect at the time of a particular transaction shall be the
charge for that transaction, notwithstanding any subsequent change in Issuer’s
prevailing charges for that type of transaction. Upon and after the occurrence
of an Event of Default, and during the continuation thereof, at the option of
Agent or at the direction of Required Lenders (or, in the case of any Event of
Default under Section 10.7, immediately and automatically upon the occurrence of
any such Event of Default without the requirement of any affirmative action by
any party), the Letter of Credit Fees described in clause (x) of this Section
3.2(a) shall be increased by an additional two percent (2.0%) per annum.
 
         (b)     At any time following the occurrence of an Event of Default, at
the option of Agent or at the direction of Required Lenders (or, in the case of
any Event of Default under Section 10.7, immediately and automatically upon the
occurrence of such Event of Default, without the requirement of any affirmative
action by any party), or upon the expiration of the Term or any other
termination of this Agreement (and also, if applicable, in connection with any
mandatory prepayment under Section 2.20), Borrowers will cause cash to be
deposited and maintained in an account with Agent, as cash collateral, in an
amount equal to one hundred and five percent (105%) of the Maximum Undrawn
Amount of all outstanding Letters of Credit, and each Borrower hereby
irrevocably authorizes Agent, in its discretion, on such Borrower’s behalf and
in such Borrower’s name, to open such an account and to make and maintain
deposits therein, or in an account opened by such Borrower, in the amounts
required to be made by such Borrower, out of the proceeds of Receivables or
other Collateral or out of any other funds of such Borrower coming into any
Lender’s possession at any time. Agent may, in its discretion, invest such cash
collateral (less applicable reserves) in such short-term money-market items as
to which Agent and such Borrower mutually agree (or, in the absence of such
agreement, as Agent may reasonably select) and the net return on such
investments shall be credited to such account and constitute additional cash
collateral, or Agent may (notwithstanding the
 
 
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foregoing) establish the account provided for under this Section 3.2(b) as a
non-interest bearing account and in such case Agent shall have no obligation
(and Borrowers hereby waive any claim) under Article 9 of the Uniform Commercial
Code or under any other Applicable Law to pay interest on such cash collateral
being held by Agent. No Borrower may withdraw amounts credited to any such
account except upon the occurrence of all of the following: (x) payment and
performance in full of all Obligations; (y) expiration of all Letters of Credit;
and (z) termination of this Agreement. Borrowers hereby assign, pledge and grant
to Agent, for its benefit and the ratable benefit of Issuer, Lenders and each
other Secured Party, a continuing security interest in and to and Lien on any
such cash collateral and any right, title and interest of Borrowers in any
deposit account, securities account or investment account into which such cash
collateral may be deposited from time to time to secure the Obligations,
specifically including all Obligations with respect to any Letters of Credit.
Borrowers agree that upon the coming due of any Reimbursement Obligations (or
any other Obligations, including Obligations for Letter of Credit Fees) with
respect to the Letters of Credit, Agent may use such cash collateral to pay and
satisfy such Obligations.
 
3.3      Closing Fee and Facility Fee.
 
(a)           Upon the execution of this Agreement, Borrowers shall pay to Agent
a closing fee equal to $100,000 less that portion of the deposit of $50,000
heretofore paid by Borrowers to Agent remaining after application of such
deposit to out of pocket costs and expenses.
 
(b)           Facility Fee.
 
If, for any calendar quarter during the Term, the average daily unpaid balance
of the sum of (i) Revolving Advances plus (ii) Swing Loans plus (iii) the
Maximum Undrawn Amount of all outstanding Letters of Credit, in each case, for
each day of such calendar quarter (the sum of the foregoing clauses (i), (ii)
and (iii), the “Average Usage Amount”) does not equal the Maximum Revolving
Advance Amount, then Borrowers shall pay to Agent, for the ratable benefit of
Lenders holding the Revolving Commitments based on their Revolving Commitment
Percentages, a fee at a rate equal to three-eighths of one percent (0.375%) per
annum of the amount by which the Maximum Revolving Advance Amount exceeds the
greater of (x) the Minimum Loan Amount and (y) the Average Usage Amount (the
“Facility Fee”). Such Facility Fee shall be payable to Agent in arrears on the
first day of each calendar quarter with respect to the previous calendar
quarter.
 
3.4     Collateral Monitoring Fee and Collateral Evaluation Fee.
 
(a)           Borrowers shall pay Agent a collateral monitoring fee equal to
$3,500 per month commencing on the first day of the month following the Closing
Date and on the first day of each month thereafter during the Term. The
collateral monitoring fee shall be deemed earned in full on the date when same
is due and payable hereunder and shall not be subject to rebate or proration
upon termination of this Agreement for any reason.
 
 
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(b)           Borrowers shall pay to Agent promptly at the conclusion of any
collateral evaluation performed by or for the benefit of Agent - namely any
field examination, collateral analysis or other business analysis, the need for
which is to be determined by Agent and which evaluation is undertaken by Agent
or for Agent’s benefit - a collateral evaluation fee in an amount equal to $850
(or such other amount customarily charged by Agent to its customers) per day for
each person employed to perform such evaluation, plus all costs and
disbursements incurred by Agent in the performance of such examination or
analysis, and further provided that if third parties are retained to perform
such collateral evaluations, either at the request of another Lender or for
extenuating reasons determined by Agent in its sole discretion, then such fees
charged by such third parties plus all costs and disbursements incurred by such
third party, shall be the responsibility of Borrower and shall not be subject to
the foregoing limits; provided that the foregoing fees (exclusive of any such
fees incurred while a Default or Event of Default was continuing) shall not
exceed $75,000 in any calendar year. Agent shall perform, at Borrowers’ expense,
the number of such field examinations required by Agent during each calendar
year based upon Agent’s risk rating of Borrowers, which, as of the Closing Date,
is three (3) field examinations during each calendar year; provided that Agent
shall be permitted in its reasonable discretion to perform additional field
examinations from time to time at the expense of Lenders (if such additional
field examinations are not based upon an adverse change to Agent’s risk rating
of Borrowers); and provided, further, that following the occurrence of an Event
of Default, Borrowers shall be obligated to pay for any number of such
additional field examinations as Agent may require in its reasonable discretion.
 
(c)           All of the fees and out-of-pocket costs and expenses of any
appraisals conducted pursuant to Section 4.7 hereof shall be paid for when due,
in full and without deduction, off-set or counterclaim by Borrowers.
 
3.5      Computation of Interest and Fees. Interest and fees hereunder shall be
computed on the basis of a year of 360 days and for the actual number of days
elapsed. If any payment to be made hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the Revolving
Interest Rate for Domestic Rate Loans during such extension.
 
3.6      Maximum Charges. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under Applicable
Law. In the event interest and other charges as computed hereunder would
otherwise exceed the highest rate permitted under Applicable Law: (i) the
interest rates hereunder will be reduced to the maximum rate permitted under
Applicable Law; (ii) such excess amount shall be first applied to any unpaid
principal balance owed by Borrowers; and (iii) if the then remaining excess
amount is greater than the previously unpaid principal balance, Lenders shall
promptly refund such excess amount to Borrowers and the provisions hereof shall
be deemed amended to provide for such permissible rate.
 
 
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3.7      Increased Costs. In the event that any Applicable Law or any Change in
Law or compliance by any Lender (for purposes of this Section 3.7, the term
“Lender” shall include Agent, Swing Loan Lender, any Issuer or Lender and any
corporation or bank controlling Agent, Swing Loan Lender, any Lender or Issuer
and the office or branch where Agent, Swing Loan Lender, any Lender or Issuer
(as so defined) makes or maintains any LIBOR Rate Loans) with any request or
directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority, shall:
 
(a)           subject Agent, Swing Loan Lender, any Lender or Issuer to any tax
of any kind whatsoever with respect to this Agreement, any Letter of Credit, any
participation in a Letter of Credit or any LIBOR Rate Loan, or change the basis
of taxation of payments to Agent, Swing Loan Lender, such Lender or Issuer in
respect thereof (except for Indemnified Taxes or Other Taxes covered by Section
3.10 and the imposition of, or any change in the rate of, any Excluded Tax
payable by Agent, Swing Loan Lender, such Lender or the Issuer);
 
(b)           impose, modify or deem applicable any reserve, special deposit,
assessment, special deposit, compulsory loan, insurance charge or similar
requirement against assets held by, or deposits in or for the account of,
advances or loans by, or other credit extended by, any office of Agent, Swing
Loan Lender, Issuer or any Lender, including pursuant to Regulation D of the
Board of Governors of the Federal Reserve System; or
 
(c)           impose on Agent, Swing Loan Lender, any Lender or Issuer or the
London interbank LIBOR market any other condition, loss or expense (other than
Taxes) affecting this Agreement or any Other Document or any Advance made by any
Lender, or any Letter of Credit or participation therein;
 
and the result of any of the foregoing is to increase the cost to Agent, Swing
Loan Lender, any Lender or Issuer of making, converting to, continuing, renewing
or maintaining its Advances hereunder by an amount that Agent, Swing Loan
Lender, such Lender or Issuer deems to be material or to reduce the amount of
any payment (whether of principal, interest or otherwise) in respect of any of
the Advances by an amount that Agent, Swing Loan Lender or such Lender or Issuer
deems to be material, then, in any case Borrowers shall promptly pay Agent,
Swing Loan Lender, such Lender or Issuer, upon its demand, such additional
amount as will compensate Agent, Swing Loan Lender or such Lender or Issuer for
such additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the LIBOR
Rate, as the case may be. Agent, Swing Loan Lender, such Lender or Issuer shall
certify the amount of such additional cost or reduced amount to Borrowing Agent,
and such certification shall be conclusive absent manifest error.
 
3.8      Basis For Determining Interest Rate Inadequate or Unfair. In the event
that Agent or any Lender shall have determined that:
 
(a)           reasonable means do not exist for ascertaining the LIBOR Rate
applicable pursuant to Section 2.2 hereof for any Interest Period; or
 
(b)           Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank LIBOR market, with respect to
an outstanding LIBOR Rate Loan, a proposed LIBOR Rate Loan, or a proposed
conversion of a Domestic Rate Loan into a LIBOR Rate Loan; or
 
 
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(c)           the making, maintenance or funding of any LIBOR Rate Loan has been
made impracticable or unlawful by compliance by Agent or such Lender in good
faith with any Applicable Law or any interpretation or application thereof by
any Governmental Body or with any request or directive of any such Governmental
Body (whether or not having the force of law),
 
then Agent shall give Borrowing Agent prompt written or telephonic notice of
such determination. If such notice is given, (i) any such requested LIBOR Rate
Loan shall be made as a Domestic Rate Loan, unless Borrowing Agent shall notify
Agent no later than 10:00 a.m. two (2) Business Days prior to the date of such
proposed borrowing, that its request for such borrowing shall be cancelled or
made as an unaffected type of LIBOR Rate Loan, (ii) any Domestic Rate Loan or
LIBOR Rate Loan which was to have been converted to an affected type of LIBOR
Rate Loan shall be continued as or converted into a Domestic Rate Loan, or, if
Borrowing Agent shall notify Agent, no later than 10:00 a.m. two (2) Business
Days prior to the proposed conversion, shall be maintained as an unaffected type
of LIBOR Rate Loan, and (iii) any outstanding affected LIBOR Rate Loans shall be
converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent,
no later than 10:00 a.m. two (2) Business Days prior to the last Business Day of
the then current Interest Period applicable to such affected LIBOR Rate Loan,
shall be converted into an unaffected type of LIBOR Rate Loan, on the last
Business Day of the then current Interest Period for such affected LIBOR Rate
Loans (or sooner, if any Lender cannot continue to lawfully maintain such
affected LIBOR Rate Loan). Until such notice has been withdrawn, Lenders shall
have no obligation to make an affected type of LIBOR Rate Loan or maintain
outstanding affected LIBOR Rate Loans and no Borrower shall have the right to
convert a Domestic Rate Loan or an unaffected type of LIBOR Rate Loan into an
affected type of LIBOR Rate Loan.
 
3.9      Capital Adequacy.
 
(a)           In the event that Agent, Swing Loan Lender or any Lender shall
have determined that any Applicable Law or guideline regarding capital adequacy
or liquidity, or any Change in Law or any change in the interpretation or
administration thereof by any Governmental Body, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent, Swing Loan Lender, Issuer or any Lender (for purposes of this Section
3.9, the term “Lender” shall include Agent, Swing Loan Lender, Issuer or any
Lender and any corporation or bank controlling Agent , Swing Loan Lender or any
Lender and the office or branch where Agent , Swing Loan Lender or any Lender
(as so defined) makes or maintains any LIBOR Rate Loans) with any request or
directive regarding capital adequacy or liquidity (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on Agent, Swing Loan Lender
or any Lender’s capital as a consequence of its obligations hereunder (including
the making of any Swing Loans) to a level below that which Agent , Swing Loan
Lender or such Lender could have achieved but for such adoption, change or
compliance (taking into consideration Agent’s, Swing Loan Lender’s and each
Lender’s policies with respect to capital adequacy) by an amount deemed by
Agent, Swing Loan Lender or any Lender to be material, then, from time to time,
Borrowers shall pay upon demand to Agent , Swing Loan Lender or such Lender such
additional amount or amounts as will compensate Agent , Swing Loan Lender or
such Lender for such reduction. In determining such amount or amounts, Agent,
Swing Loan Lender or such Lender may use any reasonable averaging or attribution
methods. The protection of this Section 3.9 shall be available to Agent, Swing
Loan Lender and each Lender regardless of any possible contention of invalidity
or inapplicability with respect to the Applicable Law, rule, regulation,
guideline or condition.
 
 
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(b)           A certificate of Agent, Swing Loan Lender or such Lender setting
forth such amount or amounts as shall be necessary to compensate Agent , Swing
Loan Lender or such Lender with respect to Section 3.9(a) hereof when delivered
to Borrowing Agent shall be conclusive absent manifest error.
 
3.10   Taxes.
 
(a)           Any and all payments by or on account of any Obligations hereunder
or under any Other Document shall be made free and clear of and without
reduction or withholding for any Indemnified Taxes or Other Taxes; provided that
if Borrowers shall be required by Applicable Law to deduct any Indemnified Taxes
(including any Other Taxes) from such payments, then (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
Agent, Swing Loan Lender, Lender, Issuer or Participant, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrowers shall make such deductions and (iii)
Borrowers shall timely pay the full amount deducted to the relevant Governmental
Body in accordance with Applicable Law.
 
(b)           Without limiting the provisions of Section 3.10(a) above,
Borrowers shall timely pay any Other Taxes to the relevant Governmental Body in
accordance with Applicable Law.
 
(c)           Each Borrower shall indemnify Agent, Swing Loan Lender, each
Lender, Issuer and any Participant, within ten (10) days after demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by Agent, Swing Loan Lender, such
Lender, Issuer, or such Participant, as the case may be, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Body. A certificate as to the
amount of such payment or liability delivered to Borrowers by any Lender, Swing
Loan Lender, Participant, or Issuer (with a copy to Agent), or by Agent on its
own behalf or on behalf of Swing Loan Lender, a Lender or Issuer, shall be
conclusive absent manifest error.
 
(d)           As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by any Borrower to a Governmental Body, Borrowers shall deliver to
Agent the original or a certified copy of a receipt issued by such Governmental
Body evidencing such payment, a copy of the return reporting such payment or
other evidence of such payment reasonably satisfactory to Agent.
 
 
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(e)         Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which any
Borrower is resident for tax purposes, or under any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any Other
Document shall deliver to Borrowers (with a copy to Agent), at the time or times
prescribed by Applicable Law or reasonably requested by Borrowers or Agent, such
properly completed and executed documentation prescribed by Applicable Law as
will permit such payments to be made without withholding or at a reduced rate of
withholding. Notwithstanding the submission of such documentation claiming a
reduced rate of or exemption from U.S. withholding tax, Agent shall be entitled
to withhold United States federal income taxes at the full 30% withholding rate
if in its reasonable judgment it is required to do so under the due diligence
requirements imposed upon a withholding agent under § 1.1441-7(b) of the United
States Income Tax Regulations or other Applicable Law. Further, Agent is
indemnified under § 1.1461-1(e) of the United States Income Tax Regulations
against any claims and demands of any Lender, Issuer or assignee or participant
of a Lender or Issuer for the amount of any tax it deducts and withholds in
accordance with regulations under § 1441 of the Code. In addition, any Lender,
if requested by Borrowers or Agent, shall deliver such other documentation
prescribed by Applicable Law or reasonably requested by the Borrowers or Agent
as will enable Borrowers or Agent to determine whether or not such Lender is
subject to backup withholding or information reporting requirements. Without
limiting the generality of the foregoing, in the event that any Borrower is
resident for tax purposes in the United States of America, any Foreign Lender
(or other Lender) shall deliver to Borrowers and Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender (or other Lender) becomes a Lender under this Agreement (and from
time to time thereafter upon the request of Borrowers or Agent, but only if such
Foreign Lender (or other Lender) is legally entitled to do so), whichever of the
following is applicable: two (2) duly completed valid originals of IRS Form
W-8BEN claiming eligibility for benefits of an income tax treaty to which the
United States of America is a party,
 
(i)           two (2) duly completed valid originals of IRS Form W-8ECI,
 
(ii)         in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a “bank” within
the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder”
of Borrowers within the meaning of section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation” described in section 881(c)(3)(C) of the Code
and (y) two duly completed valid originals of IRS Form W-8BEN,
 
(iii)        any other form prescribed by Applicable Law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
Applicable Law to permit the Borrowers to determine the withholding or deduction
required to be made, or
 
 
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 (iv)    To the extent that any Lender is not a Foreign Lender, such Lender
shall submit to Agent two (2) originals of an IRS Form W-9 or any other form
prescribed by Applicable Law demonstrating that such Lender is not a Foreign
Lender.
 
(f)           If a payment made to a Lender, Swing Loan Lender, Participant,
Issuer, or Agent under this Agreement or any Other Document would be subject to
U.S. Federal withholding Tax imposed by FATCA if such Person fails to comply
with the applicable reporting requirements of FATCA (including those contained
in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender, Swing
Loan Lender, Participant, Issuer, or Agent shall deliver to the Agent (in the
case of Swing Loan Lender, a Lender, Participant or Issuer) and Borrowers (A) a
certification signed by the chief financial officer, principal accounting
officer, treasurer or controller of such Person, and (B) other documentation
reasonably requested by Agent or any Borrower sufficient for Agent and Borrowers
to comply with their obligations under FATCA and to determine that Swing Loan
Lender, such Lender, Participant, Issuer, or Agent has complied with such
applicable reporting requirements or to determine the amount to deduct and
withhold from such payment.
 
(g)           If any party determines, in its sole discretion exercised in good
faith, that it has received a refund of any Taxes as to which it has been
indemnified pursuant to this Section 3.10 (including by the payment of
additional amounts pursuant to this Section 3.10), it shall pay to the
indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section 3.10 with respect to the Taxes giving
rise to such refund), net of all out-of-pocket expenses (including Taxes) of
such indemnified party and without interest (other than any interest paid by the
relevant Governmental Body with respect to such refund). Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this paragraph (g) (plus any
penalties, interest or other charges imposed by the relevant Governmental Body)
in the event that such indemnified party is required to repay such refund to
such Governmental Body. Notwithstanding anything to the contrary in this
paragraph (g), in no event will the indemnified party be required to pay any
amount to an indemnifying party pursuant to this paragraph (g) the payment of
which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This paragraph shall not be construed
to require any indemnified party to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.
 
3.11    Replacement of Lenders. If any Lender (an “Affected Lender”) (a) makes
demand upon Borrowers for (or if Borrowers are otherwise required to pay)
amounts pursuant to Section 3.7, 3.9, or 3.10 hereof, (b) is unable to make or
maintain LIBOR Rate Loans as a result of a condition described in Section 2.2(h)
hereof, (c) is a Defaulting Lender, or (d) denies any consent requested by the
Agent pursuant to Section 16.2(b) hereof, Borrowers may, within ninety (90) days
of receipt of such demand, notice (or the occurrence of such other event causing
Borrowers to be required to pay such compensation or causing Section 2.2(h)
hereof to be applicable), or such Lender becoming a Defaulting Lender or
 
 
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denial of a request by Agent pursuant to Section 16.2(b) hereof, as the case may
be, by notice in writing to the Agent and such Affected Lender (i) request the
Affected Lender to cooperate with Borrowers in obtaining a replacement Lender
satisfactory to Agent and Borrowers (the “Replacement Lender”); (ii) request the
non-Affected Lenders to acquire and assume all of the Affected Lender’s Advances
and its Revolving Commitment Percentage, as provided herein, but none of such
Lenders shall be under any obligation to do so; or (iii) propose a Replacement
Lender subject to approval by Agent in its good faith business judgment. If any
satisfactory Replacement Lender shall be obtained, and/or if any one or more of
the non-Affected Lenders shall agree to acquire and assume all of the Affected
Lender’s Advances and its Revolving Commitment Percentage, then such Affected
Lender shall assign, in accordance with Section 16.3 hereof, all of its Advances
and its Revolving Commitment Percentage, and other rights and obligations under
this Loan Agreement and the Other Documents to such Replacement Lender or
non-Affected Lenders, as the case may be, in exchange for payment of the
principal amount so assigned and all interest and fees accrued on the amount so
assigned, plus all other Obligations then due and payable to the Affected
Lender.
 
IV.        COLLATERAL: GENERAL TERMS
 
4.1     Security Interest in the Collateral. To secure the prompt payment and
performance to Agent, Issuer and each Lender (and each other holder of any
Obligations) of the Obligations, each Loan Party hereby assigns, pledges and
grants to Agent for its benefit and for the ratable benefit of each Lender,
Issuer and each other Secured Party, a continuing security interest in and to
and Lien on all of its Collateral, whether now owned or existing or hereafter
created, acquired or arising and wheresoever located. Each Loan Party shall mark
its books and records as may be necessary or appropriate to evidence, protect
and perfect Agent’s security interest and shall cause its financial statements
to reflect such security interest. Each Loan Party shall provide Agent with
written notice of all commercial tort claims promptly upon the occurrence of any
events giving rise to any such claim(s) (regardless of whether legal proceedings
have yet been commenced), such notice to contain a brief description of the
claim(s), the events out of which such claim(s) arose and the parties against
which such claims may be asserted and, if applicable in any case where legal
proceedings regarding such claim(s) have been commenced, the case title together
with the applicable court and docket number. Upon delivery of each such notice,
such Loan Party shall be deemed to thereby grant to Agent a security interest
and lien in and to such commercial tort claims described therein and all
proceeds thereof. Each Loan Party shall provide Agent with written notice
promptly upon becoming the beneficiary under any letter of credit or otherwise
obtaining any right, title or interest in any letter of credit rights, and at
Agent’s request shall take such actions as Agent may reasonably request for the
perfection of Agent’s security interest therein.
 
 
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4.2      Perfection of Security Interest. Each Loan Party shall take all action
that may be necessary or desirable, or that Agent may request, so as at all
times to maintain the validity, perfection, enforceability and priority of
Agent’s security interest in and Lien on the Collateral or to enable Agent to
protect, exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to, (i) immediately discharging all Liens other than
Permitted Encumbrances, (ii) obtaining Lien Waiver Agreements, (iii) delivering
to Agent, endorsed or accompanied by such instruments of assignment as Agent may
specify, and stamping or marking, in such manner as Agent may specify, any and
all chattel paper, instruments, letters of credits and advices thereof and
documents evidencing or forming a part of the Collateral, (iv) entering into
warehousing, deposit account control agreements, customs and freight agreements
and other custodial arrangements satisfactory to Agent, and (v) executing and
delivering financing statements, control agreements, instruments of pledge,
mortgages, notices and assignments, in each case in form and substance
satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent’s security interest and Lien under the
Uniform Commercial Code or other Applicable Law. By its signature hereto, each
Loan Party hereby authorizes Agent to file against such Loan Party, one or more
financing, continuation or amendment statements pursuant to the Uniform
Commercial Code in form and substance satisfactory to Agent (which statements
may have a description of collateral which is broader than that set forth
herein, including without limitation a description of Collateral as “all assets”
and/or “all personal property” of any Loan Party). All charges, expenses and
fees Agent may incur in doing any of the foregoing, and any local taxes relating
thereto, shall be charged to Loan Parties’ Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations, or, at Agent’s option, shall be
paid by Loan Parties to Agent for its benefit and for the ratable benefit of
Lenders immediately upon demand.
 
4.3      Preservation of Collateral. Following the occurrence of a Default or
Event of Default, in addition to the rights and remedies set forth in Section
11.1 hereof, Agent: (a) may at any time take such steps as Agent deems necessary
to protect Agent’s interest in and to preserve the Collateral, including the
hiring of security guards or the placing of other security protection measures
as Agent may deem appropriate; (b) may employ and maintain at any of any Loan
Party’s premises a custodian who shall have full authority to do all acts
necessary to protect Agent’s interests in the Collateral; (c) may lease
warehouse facilities to which Agent may move all or part of the Collateral; (d)
may use any Loan Party’s owned or leased lifts, hoists, trucks and other
facilities or equipment for handling or removing the Collateral; and (e) shall
have, and is hereby granted, a right of ingress and egress to the places where
the Collateral is located, and may proceed over and through any of Loan Parties’
owned or leased property. Each Loan Party shall cooperate fully with all of
Agent’s efforts to preserve the Collateral and will take such actions to
preserve the Collateral as Agent may direct. All of Agent’s expenses of
preserving the Collateral, including any expenses relating to the bonding of a
custodian, shall be charged to Borrowers’ Account as a Revolving Advance
maintained as a Domestic Rate Loan and added to the Obligations.
 
4.4      Ownership and Location of Collateral.
 
(a)           With respect to the Collateral, at the time the Collateral becomes
subject to Agent’s security interest: (i) each Loan Party shall be the sole
owner of and fully authorized and able to sell, transfer, pledge and/or grant a
first priority security interest in each and every item of its respective
Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall
be free and clear of all Liens whatsoever; (ii) each document and agreement
executed by each Loan Party or delivered to Agent or any Lender in connection
with this Agreement shall be true and correct in all respects; (iii) all
signatures and endorsements of each Loan Party that appear on such documents and
agreements shall be genuine and each Loan Party shall have full capacity to
execute same; and (iv) each Loan Party’s equipment and Inventory shall be
located as set forth on Schedule 4.4 and shall not be removed from such
location(s) without the prior written consent of Agent except with respect to
the sale of Inventory in the Ordinary Course of Business and equipment to the
extent permitted in Section 7.1(b) hereof.
 
 
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(b)           (i) There is no location at which any Loan Party has any Inventory
(except for Inventory in transit) or other Collateral other than those locations
listed on Schedule 4.4(b)(i); (ii) Schedule 4.4(b)(ii) hereto contains a correct
and complete list, as of the Closing Date, of the legal names and addresses of
each warehouse at which Inventory of any Loan Party is stored; none of the
receipts received by any Loan Party from any warehouse states that the goods
covered thereby are to be delivered to bearer or to the order of a named Person
or to a named Person and such named Person’s assigns; (iii) Schedule 4.4(b)(iii)
hereto sets forth a correct and complete list as of the Closing Date of (A) each
place of business of each Loan Party and (B) the chief executive office of each
Loan Party; and (iv) Schedule 4.4(b)(iv) hereto sets forth a correct and
complete list as of the Closing Date of the location, by state and street
address, of all Real Property owned or leased by each Loan Party, identifying
which properties are owned and which are leased, together with the names and
addresses of any landlords.
 
4.5      Defense of Agent’s and Lenders’ Interests. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent’s interests in the Collateral shall continue in full force and
effect. During such period no Loan Party shall, without Agent’s prior written
consent, pledge, sell (except for sales or other dispositions otherwise
permitted in Section 7.1(b) hereof), assign, transfer, create or suffer to exist
a Lien upon or encumber or allow or suffer to be encumbered in any way except
for Permitted Encumbrances, any part of the Collateral. Each Loan Party shall
defend Agent’s interests in the Collateral against any and all Persons
whatsoever. At any time following demand by Agent for payment of all
Obligations, Agent shall have the right to take possession of the indicia of the
Collateral and the Collateral in whatever physical form contained, including:
labels, stationery, documents, instruments and advertising materials. If Agent
exercises this right to take possession of the Collateral, Loan Parties shall,
upon demand, assemble it in the best manner possible and make it available to
Agent at a place reasonably convenient to Agent. In addition, with respect to
all Collateral, Agent and Lenders shall be entitled to all of the rights and
remedies set forth herein and further provided by the Uniform Commercial Code or
other Applicable Law. Each Loan Party shall, and Agent may, at its option,
instruct all suppliers, carriers, forwarders, warehousers or others receiving or
holding cash, checks, Inventory, documents or instruments in which Agent holds a
security interest to deliver same to Agent and/or subject to Agent’s order and
if they shall come into any Loan Party’s possession, they, and each of them,
shall be held by such Loan Party in trust as Agent’s trustee, and such Loan
Party will immediately deliver them to Agent in their original form together
with any necessary endorsement.
 
4.6      Inspection of Premises. At all reasonable times and from time to time
as often as Agent shall elect in its sole discretion, Agent and each Lender
shall have full access to and the right to audit, check, inspect and make
abstracts and copies from each Loan Party’s books, records, audits,
correspondence and all other papers relating to the Collateral and the operation
of each Loan Party’s business. Agent, any Lender and their agents may enter upon
any premises of any Loan Party at any time during business hours and at any
other reasonable time, and from time to time as often as Agent shall elect in
its sole discretion, for the purpose of inspecting the Collateral and any and
all records pertaining thereto and the operation of such Loan Party’s business.
 
 
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4.7      Appraisals. Agent may, in its sole discretion, exercised in a
commercially reasonable manner, at any time after the Closing Date and from time
to time, engage the services of an independent appraisal firm or firms of
reputable standing, satisfactory to Agent, for the purpose of appraising the
then current values of Borrowers’ assets. Absent the occurrence and continuance
of an Event of Default at such time, Agent shall consult with Borrowers as to
the identity of any such firm.
 
4.8      Receivables; Deposit Accounts and Securities Accounts.
 
(a)           Each of the Receivables shall be a bona fide and valid account
representing a bona fide indebtedness incurred by the Customer therein named,
for a fixed sum as set forth in the invoice relating thereto (provided
immaterial or unintentional invoice errors shall not be deemed to be a breach
hereof) with respect to an absolute sale or lease and delivery of goods upon
stated terms of a Loan Party, or work, labor or services theretofore rendered by
a Loan Party as of the date each Receivable is created. Same shall be due and
owing in accordance with the applicable Loan Party’s standard terms of sale
without dispute, setoff or counterclaim except as may be stated on the accounts
receivable schedules delivered by Loan Parties to Agent.
 
(b)           Each Customer, to the best of each Loan Party’s knowledge, as of
the date each Receivable is created, is and will be solvent and able to pay all
Receivables on which the Customer is obligated in full when due. With respect to
such Customers of any Loan Party who are not solvent, such Loan Party has set up
on its books and in its financial records bad debt reserves adequate to cover
such Receivables.
 
(c)           Each Loan Party’s chief executive office is located as set forth
on Schedule 4.4(b)(iii). Until written notice is given to Agent by Borrowing
Agent of any other office at which any Loan Party keeps its records pertaining
to Receivables, all such records shall be kept at such executive office.
 
(d)           Loan Parties shall instruct their Customers to deliver all
remittances upon Receivables (whether paid by check or by wire transfer of
funds) to such Blocked Account(s) and/or Depository Accounts (and any associated
lockboxes) as Agent shall designate from time to time as contemplated by Section
4.8(h) or as otherwise agreed to from time to time by Agent. Notwithstanding the
foregoing, to the extent any Loan Party directly receives any remittances upon
Receivables, such Loan Party shall, at such Loan Party’s sole cost and expense,
but on Agent’s behalf and for Agent’s account, collect as Agent’s property and
in trust for Agent all amounts received on Receivables, and shall not commingle
such collections with any Loan Party’s funds or use the same except to pay
Obligations, and shall as soon as possible and in any event no later than one
(1) Business Day after the receipt thereof (i) in the case of remittances paid
by check, deposit all such remittances in their original form (after supplying
any necessary endorsements) and (ii) in the case of remittances paid by wire
transfer of funds, transfer all such remittances, in each case, into such
Blocked Accounts(s) and/or Depository Account(s). Each Loan Party shall deposit
in the Blocked Account and/or Depository Account or, upon request by Agent,
deliver to Agent, in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness.
 
 
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(e)           At any time following the occurrence of an Event of Default, Agent
shall have the right to send notice of the assignment of, and Agent’s security
interest in and Lien on, the Receivables to any and all Customers or any third
party holding or otherwise concerned with any of the Collateral. Thereafter,
Agent shall have the sole right to collect the Receivables, take possession of
the Collateral, or both. Agent’s actual collection expenses, including, but not
limited to, stationery and postage, telephone, facsimile, telegraph, secretarial
and clerical expenses and the salaries of any collection personnel used for
collection, may be charged to Borrowers’ Account and added to the Obligations.
 
(f)           Agent shall have the right to receive, endorse, assign and/or
deliver in the name of Agent or any Loan Party any and all checks, drafts and
other instruments for the payment of money relating to the Receivables, and each
Loan Party hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed. Each Loan Party hereby constitutes Agent or Agent’s
designee as such Loan Party’s attorney with power (i) at any time: (A) to
endorse such Loan Party’s name upon any notes, acceptances, checks, drafts,
money orders or other evidences of payment or Collateral; (B) to sign such Loan
Party’s name on any invoice or bill of lading relating to any of the
Receivables, drafts against Customers, assignments and verifications of
Receivables; and (C) to send verifications of Receivables to any Customer; and
(ii) at any time following the occurrence of a Default or an Event of Default:
(A) to demand payment of the Receivables; (B) to enforce payment of the
Receivables by legal proceedings or otherwise; (C) to exercise all of such Loan
Party’s rights and remedies with respect to the collection of the Receivables
and any other Collateral; (D) to sue upon or otherwise collect, extend the time
of payment of, settle, adjust, compromise, extend or renew the Receivables; (E)
to settle, adjust or compromise any legal proceedings brought to collect
Receivables; (F) to prepare, file and sign such Loan Party’s name on a proof of
claim in bankruptcy or similar document against any Customer; (G) to prepare,
file and sign such Loan Party’s name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables; (H)
to accept the return of goods represented by any of the Receivables; (I) to
change the address for delivery of mail addressed to any Loan Party to such
address as Agent may designate; (J) to do all other acts and things necessary to
carry out this Agreement; (K) to sign such Loan Party’s name on all financing
statements or any other documents or instruments deemed necessary or appropriate
by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and
to file same; and (L) to receive, open and dispose of all mail addressed to any
Loan Party at any post office box/lockbox maintained by Agent for Loan Parties
or at any other business premises of Agent. All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission nor for any error of
judgment or mistake of fact or of law, unless done maliciously or with gross
(not mere) negligence (as determined by a court of competent jurisdiction in a
final non-appealable judgment); this power being coupled with an interest is
irrevocable while any of the Obligations remain unpaid.
 
 
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(g)           Neither Agent nor any Lender shall, under any circumstances or in
any event whatsoever, have any liability for any error or omission or delay of
any kind occurring in the settlement, collection or payment of any of the
Receivables or any instrument received in payment thereof, or for any damage
resulting therefrom.
 
(h)           All proceeds of Collateral shall be deposited by Loan Parties into
either (i) a lockbox account, dominion account or such other “blocked account”
(“Blocked Accounts”) established at a bank or banks (each such bank, a “Blocked
Account Bank”) pursuant to an arrangement with such Blocked Account Bank as may
be acceptable to Agent or (ii) depository accounts (“Depository Accounts”)
established at Agent for the deposit of such proceeds. Each applicable Loan
Party, Agent and each Blocked Account Bank shall enter into a deposit account
control agreement in form and substance satisfactory to Agent that is sufficient
to give Agent “control” (for purposes of Articles 8 and 9 of the Uniform
Commercial Code) over such account and which directs such Blocked Account Bank
to transfer such funds so deposited on a daily basis to Agent, either to any
account maintained by Agent at said Blocked Account Bank or by wire transfer to
appropriate account(s) at Agent. All funds deposited in such Blocked Accounts or
Depository Accounts shall immediately become subject to the security interest of
Agent for its own benefit and the ratable benefit of Issuer, Lenders and all
other holders of the Obligations, and Borrowing Agent shall obtain the agreement
by such Blocked Account Bank to waive any offset rights against the funds so
deposited. Neither Agent nor any Lender assumes any responsibility for such
blocked account arrangement, including any claim of accord and satisfaction or
release with respect to deposits accepted by any Blocked Account Bank
thereunder. Agent shall apply all funds received by it from the Blocked Accounts
and/or Depository Accounts to the satisfaction of the Obligations (including the
cash collateralization of the Letters of Credit) in such order as Agent shall
determine in its sole discretion, provided that, in the absence of any Event of
Default, Agent shall apply all such funds representing collection of Receivables
first to the prepayment of the principal amount of the Swing Loans, if any, and
then to the Revolving Advances.
 
(i)           No Loan Party will, without Agent’s consent, compromise or adjust
any material amount of the Receivables (or extend the time for payment thereof)
or accept any material returns of merchandise or grant any additional discounts,
allowances or credits thereon except for those compromises, adjustments,
returns, discounts, credits and allowances as have been heretofore customary in
the Ordinary Course of Business of such Loan Party.
 
(j)           All deposit accounts (including all Blocked Accounts and
Depository Accounts), securities accounts and investment accounts of each Loan
Party and its Subsidiaries as of the Closing Date are set forth on Schedule
4.8(j). No Loan Party shall open any new deposit account, securities account or
investment account unless (i) Loan Parties shall have given at least thirty (30)
days prior written notice to Agent and (ii) if such account is to be maintained
with a bank, depository institution or securities intermediary that is not the
Agent, such bank, depository institution or securities intermediary, each
applicable Loan Party and Agent shall first have entered into an account control
agreement in form and substance satisfactory to Agent sufficient to give Agent
“control” (for purposes of Articles 8 and 9 of the Uniform Commercial Code) over
such account.
 
 
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4.9      Inventory. To the extent Inventory held for sale or lease has been
produced by any Loan Party, it has been and will be produced by such Loan Party
in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder.
 
4.10   Maintenance of Equipment. The equipment shall be maintained in good
operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the equipment shall be maintained and preserved. No
Loan Party shall use or operate the equipment in violation of any law, statute,
ordinance, code, rule or regulation.
 
4.11   Exculpation of Liability. Nothing herein contained shall be construed to
constitute Agent or any Lender as any Loan Party’s agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof. Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of any Loan Party’s obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender
shall be responsible in any way for the performance by any Loan Party of any of
the terms and conditions thereof.
 
4.12   Financing Statements. Except as respects the financing statements filed
by Agent, financing statements described on Schedule 1.2, and financing
statements filed in connection with Permitted Encumbrances, no financing
statement covering any of the Collateral or any proceeds thereof is or will be
on file in any public office.
 
V.         REPRESENTATIONS AND WARRANTIES.
 
Each Loan Party represents and warrants as follows:
 
5.1     Authority. Each Loan Party has full power, authority and legal right to
enter into this Agreement and the Other Documents to which it is a party and to
perform all its respective Obligations hereunder and thereunder. This Agreement
and the Other Documents to which it is a party have been duly executed and
delivered by each Loan Party, and this Agreement and the Other Documents to
which it is a party constitute the legal, valid and binding obligation of such
Loan Party enforceable in accordance with their terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors’ rights generally. The execution,
delivery and performance of this Agreement and of the Other Documents to which
it is a party (a) are within such Loan Party’s corporate or company powers, as
applicable, have been duly authorized by all necessary corporate or company
action, as applicable, are not in contravention of law or the terms of such Loan
Party’s Organizational Documents or to the conduct of such Loan Party’s business
or of any Material Contract or undertaking to which
 
 
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such Loan Party is a party or by which such Loan Party is bound, including the
Term Loan Documents, the Acquisition Agreements or the Subordinated Note
Documents, (b) will not conflict with or violate any law or regulation, or any
judgment, order or decree of any Governmental Body, (c) will not require the
Consent of any Governmental Body, any party to a Material Contract or any other
Person, except those Consents set forth on Schedule 5.1 hereto, all of which
will have been duly obtained, made or compiled prior to the Closing Date and
which are in full force and effect and (d) will not conflict with, nor result in
any breach in any of the provisions of or constitute a default under or result
in the creation of any Lien except Permitted Encumbrances upon any asset of such
Loan Party under the provisions of any agreement, instrument, or other document
to which such Loan Party is a party or by which it or its property is a party or
by which it may be bound, including the Term Loan Documents, the Acquisition
Agreements or the Subordinated Note Documents.
 
5.2       Formation and Qualification.
 
(a)           Each Loan Party is duly incorporated or formed, as applicable, and
in good standing under the laws of the state listed on Schedule 5.2(a) and is
qualified to do business and is in good standing in the states listed on
Schedule 5.2(a) which constitute all states in which qualification and good
standing are necessary for such Loan Party to conduct its business and own its
property and where the failure to so qualify could reasonably be expected to
have a Material Adverse Effect on such Loan Party. Each Loan Party has delivered
to Agent true and complete copies of its Organizational Documents and will
promptly notify Agent of any amendment or changes thereto.
 
(b)           The only Subsidiaries of each Loan Party are listed on Schedule
5.2(b).
 
5.3       Survival of Representations and Warranties. All representations and
warranties of such Loan Party contained in this Agreement and the Other
Documents to which it is a party shall be true at the time of such Loan Party’s
execution of this Agreement and the Other Documents to which it is a party, and
shall survive the execution, delivery and acceptance thereof by the parties
thereto and the closing of the transactions described therein or related
thereto.
 
5.4       Tax Returns. Each Loan Party’s federal tax identification number is
set forth on Schedule 5.4. Each Loan Party has filed all federal, state and
local tax returns and other reports each is required by law to file and has paid
all taxes, assessments, fees and other governmental charges that are due and
payable. The provision for taxes on the books of each Loan Party is adequate for
all years not closed by applicable statutes, and for its current fiscal year,
and no Loan Party has any knowledge of any deficiency or additional assessment
in connection therewith not provided for on its books.
 
 
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5.5       Financial Statements.
 
(a)           The pro forma balance sheet of Loan Parties on a Consolidated
Basis (the “Pro Forma Balance Sheet”) furnished to Agent on the Closing Date
reflects the consummation of the transactions contemplated by the Acquisition
Agreements, and under this Agreement (collectively, the “Transactions”) and is
accurate, complete and correct and fairly reflects the financial condition of
Loan Parties on a Consolidated Basis as of the Closing Date after giving effect
to the Transactions, and has been prepared in accordance with GAAP, consistently
applied. The Pro Forma Balance Sheet has been certified as accurate, complete
and correct in all material respects by the President and Chief Financial
Officer of Borrowing Agent. All financial statements referred to in this
subsection 5.5(a), including the related schedules and notes thereto, have been
prepared in accordance with GAAP, except as may be disclosed in such financial
statements.
 
(b)           The twelve-month cash flow and balance sheet projections of Loan
Parties on a Consolidated Basis, copies of which are attached to the Financial
Condition Certificate delivered to Agent pursuant to Section 8.1(d) (the
“Projections”), were prepared by the Chief Financial Officer of Intercloud, are
based on underlying assumptions which provide a reasonable basis for the
projections contained therein and reflect Loan Parties’ judgment based on
present circumstances of the most likely set of conditions and course of action
for the projected period. The cash flow Projections together with the Pro Forma
Balance Sheet are referred to as the “Pro Forma Financial Statements”.
 
(c)           The consolidated and consolidating balance sheets of Loan Parties,
and such other Persons described therein, as of December 31, 2012, and the
related statements of income, changes in stockholder’s equity, and changes in
cash flow for the period ended on such date, all accompanied by reports thereon
containing opinions without qualification by independent certified public
accountants, copies of which have been delivered to Agent, have been prepared in
accordance with GAAP, consistently applied (except for changes in application to
which such accountants concur and present fairly the financial position of Loan
Parties at such date and the results of their operations for such period. Since
December 31, 2012 there has been no change in the condition, financial or
otherwise, of Loan Parties as shown on the consolidated balance sheet as of such
date and no change in the aggregate value of machinery, equipment and Real
Property owned by Loan Parties, except changes in the Ordinary Course of
Business, none of which individually or in the aggregate has been materially
adverse.
 
5.6       Entity Names. No Loan Party has been known by any other company or
corporate name, as applicable, in the past five (5) years and does not sell
Inventory under any other name except as set forth on Schedule 5.6, nor has any
Loan Party been the surviving corporation or company, as applicable, of a merger
or consolidation or acquired all or substantially all of the assets of any
Person during the preceding five (5) years.
 
5.7       O.S.H.A. Environmental Compliance; Flood Insurance.
 
(a)           Except as could not reasonably be expected to cause a Material
Adverse Effect, each Loan Party is in compliance with, and its facilities,
business, assets, property, leaseholds, Real Property and Equipment are in
compliance with the Federal Occupational Safety and Health Act, and
Environmental Laws and there are no outstanding citations, notices or orders of
non-compliance issued to any Loan Party or relating to its business, assets,
property, leaseholds or Equipment under any such laws, rules or regulations.
 
 
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(b)           Each Loan Party has been issued all required federal, state and
local licenses, certificates or permits (collectively, “Approvals”) relating to
all applicable Environmental Laws and all such Approvals are current and in full
force and effect, except for such Approvals as to which a Loan Party’s failure
to maintain or comply with could not reasonably be expected to have a Material
Adverse Effect.
 
(c)           To the knowledge of each Loan Party: (i) there have been no
releases, spills, discharges, leaks or disposal (collectively referred to as
“Releases”) of Hazardous Materials at, upon, under or migrating from or onto any
Real Property owned, leased or occupied by any Loan Party, except for those
Releases which are in full compliance with Environmental Laws or which could not
reasonably be expected to have a Material Adverse Effect; (ii) there are no
underground storage tanks or polychlorinated biphenyls on any Real Property,
except for such underground storage tanks or polychlorinated biphenyls that are
present in material compliance with Environmental Laws; (iii) the Real Property
has never been used by any Loan Party to dispose of Hazardous Materials, except
as authorized by Environmental Laws; and (iv) no Hazardous Materials are handled
or disposed of by any Loan Party on any Real Property, excepting such Hazardous
Materials as are handled or disposed of in material compliance with all
applicable manufacturer’s instructions and in material compliance with
Environmental Laws and as are necessary for the operation of the commercial
business of any Loan Party or of its tenants.
 
(d)           All Real Property owned by Loan Parties is insured pursuant to
policies and other bonds which are valid and in full force and effect and which
provide adequate coverage from reputable and financially sound insurers in
amounts sufficient to insure the assets and risks of each such Loan Party in
accordance with prudent business practice in the industry of such Loan Party.
Each Loan Party has taken all actions required under the Flood Laws and/or
requested by Agent to assist in ensuring that each Lender is in compliance with
the Flood Laws applicable to the Collateral, including, but not limited to,
providing Agent with the address and/or GPS coordinates of each structure
located upon any Real Property that will be subject to a Mortgage in favor of
Agent, for the benefit of Lenders, and, to the extent required, obtaining flood
insurance for such property, structures and contents prior to such property,
structures and contents becoming Collateral.
 
5.8       Solvency; No Litigation, Violation, Indebtedness or Default; ERISA
Compliance.
 
(a)           (i) Each Loan Party is solvent, able to pay its debts as they
mature, has capital sufficient to carry on its business and all businesses in
which it is about to engage, (ii) as of the Closing Date, the fair present
saleable value of each Loan Party’s assets, calculated on a going concern basis,
is in excess of the amount of its liabilities, and (iii) subsequent to the
Closing Date, the fair saleable value of each Loan Party’s assets (calculated on
a going concern basis) will be in excess of the amount of its liabilities.
 
(b)           Except as disclosed in Schedule 5.8(b)(i), no Loan Party has any
pending or threatened litigation, arbitration, actions or proceedings. No Loan
Party has any outstanding Indebtedness other than the Obligations, except for
(i) Indebtedness disclosed in Schedule 5.8(b)(ii) and (ii) Indebtedness
otherwise permitted under Section 7.8 hereof.
 
 
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(c)           No Loan Party is in violation of any applicable statute, law,
rule, regulation or ordinance in any respect which could reasonably be expected
to have a Material Adverse Effect, nor is any Loan Party in violation of any
order of any court, Governmental Body or arbitration board or tribunal. Each
Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state laws except where such failure could
not reasonably be expected to have a Material Adverse Effect.
 
(d)           No Loan Party or any member of the Controlled Group maintains or
is required to contribute to any Pension Benefit Plan other than those listed on
Schedule 5.8(d) hereto. (i) Each Loan Party and each member of the Controlled
Group has met all applicable minimum funding requirements under Section 302 of
ERISA and Section 412 of the Code in respect of each Pension Benefit Plan; (ii)
each Plan which is intended to be a qualified plan under Section 401(a) of the
Code as currently in effect has been determined by the Internal Revenue Service
to be qualified under Section 401(a) of the Code and the trust related thereto
is exempt from federal income tax under Section 501(a) of the Code or an
application for such a determination is currently being processed by the
Internal Revenue Code (or in the case of a prototype plan, the form of plan has
been determined to be qualified); (iii) neither any Loan Party nor any member of
the Controlled Group has incurred any liability to the PBGC other than for the
payment of premiums, and there are no premium payments which have become due
which are unpaid; (iv) no Pension Benefit Plan has been terminated by the plan
administrator thereof nor by the PBGC, and there is no occurrence which would
cause the PBGC to institute proceedings under Title IV of ERISA to terminate any
Plan; (v) neither any Loan Party nor any member of a Controlled Group has
incurred any liability for any excise tax arising under Section 4971, 4972 or
4980B of the Code, and no fact exists which could give rise to any such
liability which, in either case, could reasonably be expected to result in a
Material Adverse Effect; (vi) neither any Loan Party nor any member of the
Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged
in a “prohibited transaction” described in Section 406 of the ERISA or Section
4975 of the Code which could reasonably be expected to result in a Material
Adverse Effect; (vii) no Termination Event has occurred which could reasonably
be expected to result in a Material Adverse Effect; (viii) neither any Loan
Party nor any member of the Controlled Group maintains or is required to
contribute to any Plan which provides health, accident or life insurance
benefits to former employees, their spouses or dependents, other than in
accordance with Section 4980B of the Code, except where the liability
attributable thereto could not reasonably be expected to result in a Material
Adverse Effect; and (ix) neither any Loan Party nor any member of the Controlled
Group has withdrawn, completely or partially, within the meaning of Section 4203
or 4205 of ERISA, from any Multiemployer Plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact
which, in either case, would reasonably be expected to result in any such
liability which could reasonably be expected to result in a Material Adverse
Effect.
 
 
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5.9     Patents, Trademarks, Copyrights and Licenses. All Intellectual Property
owned or utilized by any Loan Party: (i) is set forth on Schedule 5.9; (ii) is
valid and has been duly registered or filed with all appropriate Governmental
Bodies; and (iii) constitutes all of the intellectual property rights which are
necessary for the operation of its business. There is no objection to, pending
challenge to the validity of, or proceeding by any Governmental Body to suspend,
revoke, terminate or adversely modify, any such Intellectual Property and no
Loan Party is aware of any grounds for any challenge or proceedings, except as
set forth in Schedule 5.9 hereto. All Intellectual Property owned or held by any
Loan Party consists of original material or property developed by such Loan
Party or was lawfully acquired by such Loan Party from the proper and lawful
owner thereof. Each of such items has been maintained so as to preserve the
value thereof from the date of creation or acquisition thereof.
 
5.10   Licenses and Permits. Except as set forth in Schedule 5.10, each Loan
Party (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state
or local law, rule or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits could reasonably be
expected to have a Material Adverse Effect.
 
5.11   Default of Indebtedness. No Loan Party is in default in the payment of
the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
 
5.12   No Default. No Loan Party is in default in the payment or performance of
any of its contractual obligations and no Default or Event of Default has
occurred.
 
5.13   No Burdensome Restrictions. No Loan Party is party to any contract or
agreement the performance of which could reasonably be expected to have a
Material Adverse Effect. Each Loan Party has heretofore delivered to Agent true
and complete copies of all Material Contracts to which it is a party or to which
it or any of its properties is subject. No Loan Party has agreed or consented to
cause or permit in the future (upon the happening of a contingency or otherwise)
any of its property, whether now owned or hereafter acquired, to be subject to a
Lien which is not a Permitted Encumbrance.
 
5.14   No Labor Disputes. No Loan Party is involved in any labor dispute; there
are no strikes or walkouts or union organization of any Loan Party’s employees
threatened or in existence and no labor contract is scheduled to expire during
the Term other than as set forth on Schedule 5.14 hereto.
 
5.15   Margin Regulations. No Loan Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be used for
“purchasing” or “carrying” “margin stock” as defined in Regulation U of such
Board of Governors.
 
 
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5.16   Investment Company Act. No Loan Party is an “investment company”
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
 
5.17  Disclosure. No representation or warranty made by any Loan Party in this
Agreement, the Term Loan Documents, the Acquisition Agreements or the
Subordinated Note Documents, or in any financial statement, report, certificate
or any other document furnished in connection herewith or therewith contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading. There is no
fact known to any Loan Party or which reasonably should be known to such Loan
Party which such Loan Party has not disclosed to Agent in writing with respect
to the transactions contemplated by the Acquisition Agreements, the Term Loan
Documents, the Subordinated Note Documents or this Agreement which could
reasonably be expected to have a Material Adverse Effect.
 
5.18  Delivery of Debt Documents. Agent has received complete copies of the Term
Loan Documents, the Subordinated Note Documents and related documents (including
all exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any) and all amendments thereto, waivers relating thereto
and other side letters or agreements affecting the terms thereof. None of such
documents and agreements has been amended or supplemented, nor have any of the
provisions thereof been waived, except pursuant to a written agreement or
instrument which has heretofore been delivered to Agent.
 
5.19   Delivery of Acquisition Agreements. Agent has received complete copies of
the Acquisition Agreements and related documents (including all exhibits,
schedules and disclosure letters referred to therein or delivered pursuant
thereto, if any) and all amendments thereto, waivers relating thereto and other
side letters or agreements affecting the terms thereof. None of such documents
and agreements has been amended or supplemented, nor have any of the provisions
thereof been waived, except pursuant to a written agreement or instrument which
has heretofore been delivered to Agent. Each of the representations made by each
Person party thereto is true and correct in all respects.
 
5.20  Swaps. No Loan Party is a party to, nor will it be a party to, any swap
agreement whereby such Loan Party has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited “two-way basis”
without regard to fault on the part of either party.
 
5.21  Business and Property of Loan Parties. Upon and after the Closing Date,
Loan Parties do not propose to engage in any business other than providing cloud
and managed services, professional consulting services, and voice, data and
optical solutions and activities necessary to conduct the foregoing. On the
Closing Date, each Loan Party will own all the property and possess all of the
rights and Consents necessary for the conduct of the business of such Loan
Party.
 
 
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5.22  Ineligible Securities. Loan Parties do not intend to use and shall not use
any portion of the proceeds of the Advances, directly or indirectly, to purchase
during the underwriting period, or for 30 days thereafter, Ineligible Securities
being underwritten by a securities Affiliate of Agent or any Lender.
 
5.23  [Reserved].
 
5.24  Equity Interests. The authorized and outstanding Equity Interests of each
Loan Party (other than Intercloud), and each legal and beneficial holder thereof
as of the Closing Date, are as set forth on Schedule 5.24(a) hereto. All of the
Equity Interests of each Loan Party have been duly and validly authorized and
issued and are fully paid and non-assessable and have been sold and delivered to
the holders hereof in compliance with, or under valid exemption from, all
federal and state laws and the rules and regulations of each Governmental Body
governing the sale and delivery of securities. Except for the rights and
obligations set forth on Schedule 5.24(b) and except with respect to the Equity
Interests of Intercloud, there are no subscriptions, warrants, options, calls,
commitments, rights or agreement by which any Loan Party or any of the
shareholders of any Loan Party is bound relating to the issuance, transfer,
voting or redemption of shares of its Equity Interests or any pre-emptive rights
held by any Person with respect to the Equity Interests of Loan Parties. Except
as set forth on Schedule 5.24(c) and except for with respect to the Equity
Interests of Intercloud, Loan Parties have not issued any securities convertible
into or exchangeable for shares of its Equity Interests or any options, warrants
or other rights to acquire such shares or securities convertible into or
exchangeable for such shares.
 
5.25   Commercial Tort Claims. No Loan Party has any commercial tort claims
except as set forth on Schedule 5.25.
 
5.26  Letter of Credit Rights. As of the Closing Date, no Loan Party has any
letter of credit rights.
 
5.27  Material Contracts. All Material Contracts of the Loan Parties have been
filed as exhibits to Intercloud’s Registration Statement on Form S-1 (File No.
333-185293), as amended. All Material Contracts are in full force and effect and
no material defaults currently exist thereunder.
 
VI.        AFFIRMATIVE COVENANTS.
 
 Each Loan Party shall, until payment in full of the Obligations and termination
of this Agreement:
 
6.1     Compliance with Laws. Comply with all Applicable Laws with respect to
the Collateral or any part thereof or to the operation of such Loan Party’s
business the non­compliance with which could reasonably be expected to have a
Material Adverse Effect (except to the extent any separate provision of this
Agreement shall expressly require compliance with any particular Applicable
Law(s) pursuant to another standard).
 
 
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 6.2    Conduct of Business and Maintenance of Existence and Assets. (a) Conduct
continuously and operate actively its business according to good business
practices and maintain all of its properties useful or necessary in its business
in good working order and condition (reasonable wear and tear excepted and
except as may be disposed of in accordance with the terms of this Agreement),
including all Intellectual Property and take all actions necessary to enforce
and protect the validity of any intellectual property right or other right
included in the Collateral; (b) keep in full force and effect its existence and
comply in all material respects with the laws and regulations governing the
conduct of its business where the failure to do so could reasonably be expected
to have a Material Adverse Effect; and (c) make all such reports and pay all
such franchise and other taxes and license fees and do all such other acts and
things as may be lawfully required to maintain its rights, licenses, leases,
powers and franchises under the laws of the United States or any political
subdivision thereof where the failure to do so could reasonably be expected to
have a Material Adverse Effect.
 
6.3     Books and Records. Keep proper books of record and account in which
full, true and correct entries will be made of all dealings or transactions of
or in relation to its business and affairs (including without limitation
accruals for taxes, assessments, Charges, levies and claims, allowances against
doubtful Receivables and accruals for depreciation, obsolescence or amortization
of assets), all in accordance with, or as required by, GAAP consistently applied
in the opinion of such independent public accountant as shall then be regularly
engaged by Loan Parties.
 
6.4         Payment of Taxes. Pay, when due, all taxes, assessments and other
Charges lawfully levied or assessed upon such Loan Party or any of the
Collateral, including real and personal property taxes, assessments and charges
and all franchise, income, employment, social security benefits, withholding,
and sales taxes. If any tax by any Governmental Body is or may be imposed on or
as a result of any transaction between any Loan Party and Agent or any Lender
which Agent or any Lender may be required to withhold or pay or if any taxes,
assessments, or other Charges remain unpaid after the date fixed for their
payment, or if any claim shall be made which, in Agent’s or any Lender’s
opinion, may possibly create a valid Lien on the Collateral, Agent may without
notice to Loan Parties pay the taxes, assessments or other Charges and each Loan
Party hereby indemnifies and holds Agent and each Lender harmless in respect
thereof. The amount of any payment by Agent under this Section 6.4 shall be
charged to Borrowers’ Account as a Revolving Advance maintained as a Domestic
Rate Loan and added to the Obligations and, until Loan Parties shall furnish
Agent with an indemnity therefor (or supply Agent with evidence satisfactory to
Agent that due provision for the payment thereof has been made), Agent may hold
without interest any balance standing to Loan Parties’ credit and Agent shall
retain its security interest in and Lien on any and all Collateral held by
Agent.
 
 
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6.5      Financial Covenants.
 
(a)           Fixed Charge Coverage Ratio. Cause to be maintained as of the end
of each period set forth in the table below a Fixed Charge Coverage Ratio of not
less than the Fixed Charge Coverage Ratio corresponding to the applicable period
in the table below:

Period
 
Fixed Charge Coverage Ratio
 
One fiscal quarter ending December 31, 2013
  0.60:1.00  
Two fiscal quarters ending March 31, 2014
  0.80:1.00
Three fiscal quarters ending June 30, 2014
  0.90:1.00  
Four fiscal quarters ending September 30, 2014 and each four fiscal quarter
period ending thereafter
  1.00:1.00  

 
(b)    Minimum EBITDA. Cause to be maintained for each period set forth in the
table below EBITDA of not less than the amount corresponding to the applicable
period in the table below; provided that, following the acquisition of IPC and
Telco in accordance with Section 7.1, compliance with this Section 6.5(b) shall
no longer be required:
 
Period
 
Minimum EBITDA
 
For the fiscal quarter ending December 31, 2013
  $ 1,380,000  
For the fiscal quarter ending March 31, 2014 and for each fiscal quarter ending
thereafter
  $ 1,837,000  

 
6.6      Insurance.
 
(a)      (i) Keep all its insurable properties and properties in which such Loan
Party has an interest insured against the hazards of fire, flood, sprinkler
leakage, those hazards covered by extended coverage insurance and such other
hazards, and for such amounts, as is customary in the case of companies engaged
in businesses similar to such Loan Party’s including business interruption
insurance; (ii) maintain a bond in such amounts as is customary in the case of
companies engaged in businesses similar to such Loan Party insuring against
larceny, embezzlement or other criminal misappropriation of insured’s officers
and employees who may either singly or jointly with others at any time have
access to the assets or funds of such Loan Party either directly or through
authority to draw upon such funds or to direct generally the disposition of such
assets; (iii) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others; (iv) maintain all
such worker’s compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which such Loan Party is engaged in
business; and (v) furnish Agent with (A) copies of all policies and evidence of
the maintenance of such policies by the renewal thereof at least thirty (30)
days
 
 
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before any expiration date, and (B) appropriate loss payable endorsements in
form and substance satisfactory to Agent, naming Agent as an additional insured
and mortgagee and/or lender loss payee (as applicable) as its interests may
appear with respect to all insurance coverage referred to in clauses (i) and
(iii) above, and providing (I) that all proceeds thereunder shall be payable to
Agent, (II) no such insurance shall be affected by any act or neglect of the
insured or owner of the property described in such policy, and (III) that such
policy and loss payable clauses may not be cancelled, amended or terminated
unless at least thirty (30) days prior written notice is given to Agent (or in
the case of non­payment, at least ten (10) days prior written notice). In the
event of any loss thereunder, the carriers named therein hereby are directed by
Agent and the applicable Loan Party to make payment for such loss to Agent and
not to such Loan Party and Agent jointly. If any insurance losses are paid by
check, draft or other instrument payable to any Loan Party and Agent jointly,
Agent may endorse such Loan Party’s name thereon and do such other things as
Agent may deem advisable to reduce the same to cash.
 
(b)           Each Loan Party shall take all actions required under the Flood
Laws and/or requested by Agent to assist in ensuring that each Lender is in
compliance with the Flood Laws applicable to the Collateral, including, but not
limited to, providing Agent with the address and/or GPS coordinates of each
structure on any real property that will be subject to a mortgage in favor of
Agent, for the benefit of Lenders, and, to the extent required, obtaining flood
insurance for such property, structures and contents prior to such property,
structures and contents becoming Collateral, and thereafter maintaining such
flood insurance in full force and effect for so long as required by the Flood
Laws.
 
(c)           Agent is hereby authorized to adjust and compromise claims under
insurance coverage referred to in Sections 6.6(a)(i) and (iii) and 6.6(b) above.
All loss recoveries received by Agent under any such insurance may be applied to
the Obligations, in such order as Agent in its sole discretion shall determine.
Any surplus shall be paid by Agent to Loan Parties or applied as may be
otherwise required by law. Any deficiency thereon shall be paid by Loan Parties
to Agent, on demand. If any Loan Party fails to obtain insurance as hereinabove
provided, or to keep the same in force, Agent, if Agent so elects, may obtain
such insurance and pay the premium therefor on behalf of such Loan Party, which
payments shall be charged to Borrowers’ Account and constitute part of the
obligations.
 
6.7       Payment of Indebtedness and Leasehold Obligations. Pay, discharge or
otherwise satisfy (i) at or before maturity (subject, where applicable, to
specified grace periods) all its Indebtedness, except when the failure to do so
could not reasonably be expected to have a Material Adverse Effect or when the
amount or validity thereof is currently being Properly Contested, subject at all
times to any applicable subordination arrangement in favor of Lenders and (ii)
when due its rental obligations under all leases under which it is a tenant, and
shall otherwise comply, in all material respects, with all other terms of such
leases and keep them in full force and effect.
 
 
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6.8       Environmental Matters.
 
(a)           Ensure that the Real Property and all operations and businesses
conducted thereon are in compliance and remain in compliance with all
Environmental Laws and it shall manage any and all Hazardous Materials on any
Real Property in compliance with Environmental Laws, except, in each case, to
the extent any failure to comply could not reasonably be expected to have a
Material Adverse Effect.
 
(b)           [Reserved].
 
(c)           Respond promptly to any Release of Hazardous Materials or
Environmental Complaint and take such responsive action as required by
Environmental Law. If any Loan Party shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint as required by Environmental Laws
or any Loan Party shall fail to comply materially with any of the requirements
of any Environmental Laws, upon written notice from Agent to Loan Party, Agent
on behalf of Lenders may, but without the obligation to do so, for the sole
purpose of protecting Agent’s interest in the Collateral: (i) give such notices
or (ii) enter onto the Real Property (or authorize third parties to enter onto
the Real Property) and take such actions as Agent (or such third parties as
directed by Agent) deem reasonably necessary to comply with Environmental Laws.
All reasonable costs and expenses incurred by Agent and Lenders (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by Loan Parties, and until paid shall be added to and become
a part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and any Loan Party.
 
(d)           [Reserved].
 
6.9      Standards of Financial Statements. Cause all financial statements
referred to in Sections 9.7, 9.9, 9.10, 9.11, 9.12, and 9.13 as to which GAAP is
applicable to be complete and correct in all material respects (subject, in the
case of interim financial statements, to normal year-end audit adjustments) and
to be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as disclosed
therein and agreed to by such reporting accountants or officer, as applicable).
 
6.10   Federal Securities Laws. Promptly notify Agent in writing if any Loan
Party (other than Intercloud) or any of their Subsidiaries (i) is required to
file periodic reports under the Exchange Act, (ii) registers any securities
under the Exchange Act or (iii) files a registration statement under the
Securities Act.
 
6.11   Execution of Supplemental Instruments. Execute and deliver to Agent from
time to time, upon demand, such supplemental agreements, statements, assignments
and transfers, or instructions or documents relating to the Collateral, and such
other instruments as Agent may request, in order that the full intent of this
Agreement may be carried into effect.
 
 
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6.12  Exercise of Rights. Enforce all of its rights under the Acquisition
Agreements and any indemnification agreement executed in connection therewith
including, but not limited to, all indemnification rights and pursue all
remedies available to it with diligence and in good faith in connection with the
enforcement of any such rights.
 
6.13  Government Receivables. Take all steps necessary to protect Agent’s
interest in the Collateral under the Federal Assignment of Claims Act, the
Uniform Commercial Code and all other applicable state or local statutes or
ordinances and deliver to Agent appropriately endorsed, any instrument or
chattel paper connected with any Receivable arising out of any contract between
any Loan Party and the United States, any state or any department, agency or
instrumentality of any of them.
 
6.14  [Reserved].
 
6.15  Keepwell. If it is a Qualified ECP Loan Party, then jointly and severally,
together with each other Qualified ECP Loan Party, hereby absolutely
unconditionally and irrevocably (a) guarantees the prompt payment and
performance of all Swap Obligations owing by each Non-Qualifying Party (it being
understood and agreed that this guarantee is a guaranty of payment and not of
collection), and (b) undertakes to provide such funds or other support as may be
needed from time to time by any Non-Qualifying Party to honor all of such
Non-Qualifying Party’s obligations under this Agreement or any Other Document in
respect of Swap Obligations (provided, however, that each Qualified ECP Loan
Party shall only be liable under this Section 6.15 for the maximum amount of
such liability that can be hereby incurred without rendering its obligations
under this Section 6.15, or otherwise under this Agreement or any Other
Document, voidable under applicable law, including applicable law relating to
fraudulent conveyance or fraudulent transfer, and not for any greater amount).
The obligations of each Qualified ECP Loan Party under this Section 6.15 shall
remain in full force and effect until payment in full of the Obligations and
termination of this Agreement and the Other Documents. Each Qualified ECP Loan
Party intends that this Section 6.15 constitute, and this Section 6.15 shall be
deemed to constitute, a guarantee of the obligations of, and a “keepwell,
support, or other agreement” for the benefit of each other Borrower and
Guarantor for all purposes of Section 1a(18(A)(v)(II) of the CEA.
 
6.16  Post Closing Covenants. Without limiting and notwithstanding any other
provision of this Agreement or any Other Document, execute and deliver, or cause
to be executed and delivered, such agreements and documents, and take or cause
to be taken such actions, and otherwise perform, observe and comply with such
obligations, as are set forth on Schedule 6.16.
 
 
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VII.   NEGATIVE COVENANTS.
 
No Loan Party shall, until satisfaction in full of the Obligations and
termination of this Agreement:
 
7.1     Merger, Consolidation, Acquisition and Sale of Assets.
 
  (a)           Enter into any merger, consolidation or other reorganization
with or into any other Person or acquire all or a substantial portion of the
assets or Equity Interests of any Person or permit any other Person to
consolidate with or merge with it, except:
 
(i)          any Loan Party may merge, consolidate or reorganize with another
Loan Party or acquire the assets or Equity Interests of another Loan Party so
long as such Loan Party provides Agent with ten (10) days’ prior written notice
of such merger, consolidation, reorganization or acquisition and delivers to
Agent all of the relevant documents evidencing such merger, consolidation,
reorganization or acquisition; provided  that, if a Borrower is a party to such
transaction, a Borrower shall be the surviving entity of such merger,
consolidation or reorganization, and
 
(ii)          Intercloud may complete the acquisitions contemplated by the Post
Closing Acquisition Agreements, so long as no Default or Event of Default is
continuing, or would result therefrom and:
 
(A)          in the case of the IPC Acquisition Agreement, (I) Intercloud shall
have received cash proceeds (before expenses) from the 2013 Equity Issuance in
an aggregate amount not less than $20,000,000 (exclusive of cash proceeds
included in Section 7.1(a)(ii)(B) below), (II) IPC shall have (y) been joined to
this Agreement as a Borrower and be jointly and severally liable for the
Obligations, and (z) granted to Agent a first priority Lien in all of its
assets, (III) Agent shall have received a first-priority Lien in all Equity
Interests issued by IPC, subject to documentation satisfactory to Agent, (IV)
Undrawn Availability (provided that for purposes of calculating Undrawn
Availability in this Section 7.1(a)(ii)(A), clause (b)(ii) of the definition of
Undrawn Availability shall be deemed to be equal to all amounts due and owing to
any Borrower’s trade creditors which are outstanding thirty (30) days or more
past their due date) immediately following such acquisition is not less than
$3,000,000, (V) Loan Parties’ Fixed Charge Coverage Ratio is not less than 1.05
to 1.00 on a pro forma basis for the most recently ended four fiscal quarter
period for which financial statements have been delivered under this Agreement,
as if such acquisition occurred on the first day of such period and (VI) Agent
shall have (y) received complete copies of the IPC Acquisition Agreement, all
related documents, including all exhibits and schedules thereto and financial
statements of IPC, each of which shall be satisfactory to Agent, and (z) been
satisfied that the transactions contemplated by the IPC Acquisition Agreement
and this Section 7.1(a)(ii)(A) do not violate any Anti-Terrorism Laws; provided,
that, no assets of IPC shall be included in the Formula Amount until Agent shall
have received a field examination and/or appraisal of such assets, in form and
substance satisfactory to Agent, and
 
(B)          in the case of the Telco Acquisition Agreement, (I) Intercloud
shall have received cash proceeds (before expenses) from the 2013 Equity
Issuance in an aggregate amount not less than $20,000,000 (exclusive of cash
proceeds included in Section 7.1(a)(ii)(A)(I) above), (II) Undrawn Availability
(provided that for purposes of calculating Undrawn Availability in this Section
7.1(a)(ii)(B), clause (b)(ii) of the definition of Undrawn Availability shall be
deemed to be equal to all amounts due and owing to any Borrower’s trade
creditors which are outstanding thirty (30) days or more past their due date)
immediately following such acquisition is not less than $3,000,000, (III)
 
 
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Loan Parties’ Fixed Charge Coverage Ratio is not less than 1.05 to 1.00 on a pro
forma basis for the most recently ended four fiscal quarter period for which
financial statements have been delivered under this Agreement, as if such
acquisition occurred on the first day of such period, and (IV) Agent shall have
(y) received complete copies of the Telco Acquisition Agreement, all related
documents, including all exhibits and schedules thereto and financial statements
of Telco, each of which shall be satisfactory to Agent, and (z) been satisfied
that the transactions contemplated by the Telco Acquisition Agreement and this
Section 7.1(a)(ii)(B) do not violate any Anti-Terrorism Laws; provided, that, no
assets acquired by any Borrower in connection with the Telco Acquisition
Agreement shall be included in the Formula Amount until Agent shall have
received a field examination and/or appraisal of such assets, in form and
substance satisfactory to Agent.
 
(b)           Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except (i) (a) the sale of Inventory in the Ordinary
Course of Business and (b) the disposition or transfer of obsolete and worn-out
equipment in the Ordinary Course of Business during any fiscal year having an
aggregate fair market value of not more than $50,000 and only to the extent that
(x) the proceeds of any such disposition are used to acquire replacement
equipment which is subject to Agent’s first priority security interest or (y)
the proceeds of which are remitted to Agent to be applied pursuant to Section
2.20, (ii) the sale by Intercloud or Adex Corp of Equity Interests in any other
Loan Party to the extent such sale is consented to in writing by Agent in its
sole discretion, and (iii) any other sales or dispositions expressly permitted
by this Agreement.
 
7.2      Creation of Liens. Create or suffer to exist any Lien or transfer upon
or against any of its property or assets now owned or hereafter created or
acquired, except Permitted Encumbrances.
 
7.3     Guarantees. Become liable upon the obligations or liabilities of any
Person by assumption, endorsement or guaranty thereof or otherwise (other than
to Lenders) except (a) as disclosed on Schedule 7.3, (b) guarantees made in the
Ordinary Course of Business up to an aggregate amount of $50,000, (c) guarantees
by one or more Loan Party(s) of the Indebtedness or obligations of any other
Loan Party(s) to the extent such Indebtedness or obligations are permitted to be
incurred and/or outstanding pursuant to the provisions of this Agreement and (d)
the endorsement of checks in the Ordinary Course of Business.
 
7.4     Investments. Purchase or acquire obligations or Equity Interests of, or
any other interest in, any Person, other than Permitted Investments.
 
7.5     Loans. Make advances, loans or extensions of credit to any Person,
including any Parent, Subsidiary or Affiliate other than Permitted Loans.
 
7.6   Capital Expenditures. Contract for, purchase or make any expenditure or
commitments for Capital Expenditures in any fiscal year in an aggregate amount
for all Borrowers in excess of $300,000.
 
7.7   Dividends. Declare, pay or make any dividend or distribution on any Equity
Interests of any Loan Party (other than dividends or distributions payable in
its stock, or split-ups or reclassifications of its stock) or apply any of its
funds, property or assets to the purchase, redemption or other retirement of any
Equity Interest, or of any options to purchase or acquire any Equity Interest of
any Loan Party other than Permitted Dividends.
 
 
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7.8   Indebtedness. Create, incur, assume or suffer to exist any Indebtedness
other than Permitted Indebtedness.
 
7.9   Nature of Business. Substantially change the nature of the business in
which it is presently engaged, nor except as specifically permitted hereby
purchase or invest, directly or indirectly, in any assets or property other than
in the Ordinary Course of Business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted.
 
7.10   Transactions with Affiliates. Directly or indirectly, purchase, acquire
or lease any property from, or sell, transfer or lease any property to, or
otherwise enter into any transaction or deal with, any Affiliate, except for (i)
transactions among Loan Parties which are not expressly prohibited by the terms
of this Agreement and which are in the Ordinary Course of Business, (ii) payment
by Loan Parties of dividends and distributions permitted under Section 7.7
hereof, and (iii) transactions disclosed to Agent in writing, which are in the
Ordinary Course of Business, on an arm’s-length basis on terms and conditions no
less favorable than terms and conditions which would have been obtainable from a
Person other than an Affiliate.
 
7.11   Leases. Enter as lessee into any lease arrangement for real or personal
property (unless capitalized and permitted under Section 7.6 hereof) if after
giving effect thereto, aggregate annual rental payments for all leased property
would exceed $750,000 in any one fiscal year in the aggregate for all Loan
Parties.
 
7.12   Subsidiaries.
 
 (a)         Form any Subsidiary unless such Subsidiary (i) is not a Foreign
Subsidiary, (ii) at Agent’s discretion, expressly joins in this Agreement as a
borrower or a guarantor and becomes jointly and severally liable for the
Obligations of Borrowers hereunder and under any other agreement between any
Borrower and Lenders, and (iii) Agent shall have received all documents,
including without limitation, legal opinions and appraisals it may reasonably
require to establish compliance with each of the foregoing conditions in
connection therewith.
 
 (b)        Enter into any partnership, joint venture or similar arrangement.
 
7.13   Fiscal Year and Accounting Changes. Change its fiscal year from December
31 or make any change (i) in accounting treatment and reporting practices except
as required by GAAP or (ii) in tax reporting treatment except as required by
law.
 
7.14   Pledge of Credit. Now or hereafter pledge Agent’s or any Lender’s credit
on any purchases, commitments or contracts or for any purpose whatsoever or use
any portion of any Advance in or for any business other than such Loan Party’s
business operations as conducted on the Closing Date.
 
 
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7.15   Amendment of Organizational Documents. (i) Change its legal name, (ii)
change its form of legal entity (e.g., converting from a corporation to a
limited liability company or vice versa), (iii) change its jurisdiction of
organization or become (or attempt or purport to become) organized in more than
one jurisdiction, or (iv) otherwise amend, modify or waive any term or material
provision of its Organizational Documents unless required by law, in any such
case without (x) giving at least thirty (30) days prior written notice of such
intended change to Agent, (y) having received from Agent confirmation that Agent
has taken all steps necessary for Agent to continue the perfection of and
protect the enforceability and priority of its Liens in the Collateral belonging
to such Loan Party and in the Equity Interests of such Loan Party and (z) in any
case under clause (iv), having received the prior written consent of Agent and
Required Lenders to such amendment, modification or waiver.
 
7.16   Compliance with ERISA. Except as could not reasonably be expected to have
a Material Adverse Effect: (i) (x) Maintain, or permit any member of the
Controlled Group to maintain, or (y) become obligated to contribute, or permit
any member of the Controlled Group to become obligated to contribute, to any
Plan, other than those Plans disclosed on Schedule 5.8(d), (ii) engage, or
permit any member of the Controlled Group to engage, in any non-exempt
“prohibited transaction”, as that term is defined in Section 406 of ERISA or
Section 4975 of the Code, (iii) terminate, or permit any member of the
Controlled Group to terminate, any Plan where such event could result in any
liability of any Loan Party or any member of the Controlled Group or the
imposition of a lien on the property of any Loan Party or any member of the
Controlled Group pursuant to Section 4068 of ERISA, (iv) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; or (v) fail to meet, permit any member of the Controlled
Group to fail to meet, or permit any Plan to fail to meet all minimum funding
requirements under ERISA and the Code.
 
7.17   Prepayment of Indebtedness. Except as permitted pursuant to Section 7.18
hereof, at any time, directly or indirectly, prepay any Indebtedness (other than
to Lenders), or repurchase, redeem, retire or otherwise acquire any Indebtedness
of any Borrower.
 
7.18   Term Loan and Restricted Indebtedness.
 
 (a)          At any time, directly or indirectly, pay, prepay, repurchase,
redeem, retire or otherwise acquire, or make any payment on account of any
principal of, interest on or premium payable in connection with the repayment or
redemption of the Term Loan, except as expressly permitted by the Term Loan
Documents as in effect on the Closing Date.
 
 
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(b)         At any time, use proceeds of Advances to directly or indirectly,
pay, prepay, repurchase, redeem, retire or otherwise acquire, or make any
payment on account of any principal of, interest on or premium payable in
connection with the repayment or redemption of the Restricted Indebtedness,
except that, so long as no Default or Event of Default has occurred and is
continuing, proceeds of Advances may be used to pay:
 
(i)           Indebtedness owing by a Loan Party pursuant to the Acquisition
Agreements, so long as on the date such payment is made (I) Average Modified
Undrawn Availability minus Restricted Cash is not less than $3,000,000 and (II)
after giving effect to such payment, Modified Undrawn Availability minus
Restricted Cash is not less than $3,000,000 on such date, and
 
(ii)          Restricted Indebtedness (other than Indebtedness owing by a Loan
Party pursuant to the Acquisition Agreements) on and after September 30, 2014,
so long as (A) after giving effect to such payment, Modified Undrawn
Availability minus Restricted Cash is not less than $3,000,000, and (ii) Loan
Parties’ Fixed Charge Coverage Ratio is not less than 1.00 to 1.00 on a pro
forma basis for the most recently ended four fiscal quarter period for which
financial statements have been delivered under this Agreement, as if such
payment was made on the first day of such period, as evidenced by the Compliance
Certificate delivered for such period.
 
7.19   Other Agreements. Enter into any material amendment, waiver or
modification of the Acquisition Agreements, the Term Loan Documents, the
Subordinated Note Documents or any related agreements.
 
7.20   Membership/Partnership Interests. Designate or permit any of their
Subsidiaries to (a) treat their limited liability company membership interests
or partnership interests, as the case may be, as securities as contemplated by
the definition of “security” in Section 8-102(15) and by Section 8-103 of
Article 8 of the Uniform Commercial Code or (b) certificate their limited
liability membership interests or partnership interests, as applicable.
 
VIII.     CONDITIONS PRECEDENT.
 
8.1   Conditions to Initial Advances. The agreement of Lenders to make the
initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Agent, immediately prior to or concurrently with the
making of such Advances, of the following conditions precedent:
 
(a)   Note. Agent shall have received the Note duly executed and delivered by an
authorized officer of each Borrower;
 
(b)   Other Documents. Agent shall have received each of the executed Other
Documents, as applicable;
 
(c)   Intercreditor Agreement. Agent shall have entered into the Intercreditor
Agreement;
 
(d)   Financial Condition Certificates. Agent shall have received an executed
Financial Condition Certificate in the form of Exhibit 8.1(d).
 
 
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(e)      Closing Certificate. Agent shall have received a closing certificate
signed by the Chief Financial Officer of each Loan Party dated as of the date
hereof, stating that (i) all representations and warranties set forth in this
Agreement and the Other Documents are true and correct on and as of such date,
and (ii) on such date no Default or Event of Default has occurred or is
continuing;
 
(f)       Borrowing Base. Agent shall have received evidence from Borrowers that
the aggregate amount of Eligible Receivables is sufficient in value and amount
to support Advances in the amount requested by Borrowers on the Closing Date;
 
(g)       Undrawn Availability. After giving effect to the initial Advances
hereunder, the sum of (i) Undrawn Availability plus (ii) cash on Borrowers’
consolidated balance sheet as of September 13, 2013 shall be not less than
$1,500,000;
 
       Blocked Accounts. Loan Parties shall have opened the Depository Accounts
with Agent or Agent shall have received duly executed agreements establishing
the Blocked Accounts with financial institutions acceptable to Agent for the
collection or servicing of the Receivables and proceeds of the Collateral and
Agent shall have entered into control agreements with the applicable financial
institutions in form and substance satisfactory to Agent with respect to such
Blocked Accounts;
 
(i)        Collection Accounts. Loan Parties shall have established separate
collection accounts and operating accounts, which, in each case, shall be either
Depositary Accounts or Blocked Accounts;
 
(j)        [Reserved];
 
(k)      Term Loan Documents, Subordinated Note Documents and Acquisition
Agreements. Agent shall have received final executed copies of the Term Loan
Documents, the Acquisition Agreements and the Subordinated Note Documents, and
all related agreements, documents and instruments as in effect on the Closing
Date all of which shall be satisfactory in form and substance to Agent;
 
(l)        Filings, Registrations and Recordings. Each document (including any
Uniform Commercial Code financing statement) required by this Agreement, any
related agreement or under law or reasonably requested by Agent to be filed,
registered or recorded in order to create, in favor of Agent, a perfected
security interest in or lien upon the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received
an acknowledgment copy, or other evidence satisfactory to it, of each such
filing, registration or recordation and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto;
 
(m)     Lien Waiver Agreements. Agent shall have received Lien Waiver Agreements
with respect to all locations or places at which Inventory, Equipment and books
and records are located;
 
 
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(n)          Secretary’s Certificates, Authorizing Resolutions and Good
Standings  of Borrowers. Agent shall have received a certificate of the
Secretary or Assistant Secretary (or other equivalent officer, partner or
manager) of each Borrower in form and substance satisfactory to Agent dated as
of the Closing Date which shall certify (i) copies of resolutions in form and
substance reasonably satisfactory to Agent, of the board of directors (or other
equivalent governing body, member or partner) of such Borrower authorizing (x)
the execution, delivery and performance of this Agreement, the Notes and each
Other Document to which such Borrower is a party (including authorization of the
incurrence of indebtedness, borrowing of Revolving Advances and Swing Loans and
requesting of Letters of Credit on a joint and several basis with all Borrowers
as provided for herein), and (y) the granting by such Borrower of the security
interests in and liens upon the Collateral to secure all of the joint and
several Obligations of Borrowers (and such certificate shall state that such
resolutions have not been amended, modified, revoked or rescinded as of the date
of such certificate), (ii) the incumbency and signature of the officers of such
Borrower authorized to execute this Agreement and the Other Documents, (iii)
copies of the Organizational Documents of such Borrower as in effect on such
date, complete with all amendments thereto, and (iv) the good standing (or
equivalent status) of such Borrower in its jurisdiction of organization and each
applicable jurisdiction where the conduct of such Borrower’s business activities
or the ownership of its properties necessitates qualification, as evidenced by
good standing certificate(s) (or the equivalent thereof issued by any applicable
jurisdiction) dated not more than 30 days prior to the Closing Date, issued by
the Secretary of State or other appropriate official of each such jurisdiction;
 
(o)          Secretary’s Certificates, Authorizing Resolutions and Good
Standings  of Guarantors. Agent shall have received a certificate of the
Secretary or Assistant Secretary (or other equivalent officer, partner or
manager) of each Guarantor in form and substance satisfactory to Agent dated as
of the Closing Date which shall certify (i) copies of resolutions in form and
substance reasonably satisfactory to Agent, of the board of directors (or other
equivalent governing body, member or partner) of each Guarantor authorizing (x)
the execution, delivery and performance of such Guarantor’s Guaranty and each
Other Loan Document to which such Guarantor is a party and (y) the granting by
such Guarantor of the security interests in and liens upon the Collateral to
secure its obligations under its Guaranty (and such certificate shall state that
such resolutions have not been amended, modified, revoked or rescinded as of the
date of such certificate), (ii) the incumbency and signature of the officers of
such Guarantor authorized to execute this Agreement and the Other Documents,
(iii) copies of the Organizational Documents of such Guarantor as in effect on
such date, complete with all amendments thereto, and (iv) the good standing (or
equivalent status) of such Guarantor in its jurisdiction of organization and
each applicable jurisdiction where the conduct of such Guarantor’s business
activities or the ownership of its properties necessitates qualification, as
evidenced by good standing certificate(s) (or the equivalent thereof issued by
any applicable jurisdiction) dated not more than 30 days prior to the Closing
Date, issued by the Secretary of State or other appropriate official of each
such jurisdiction;
 
(p)          Legal Opinion. Agent shall have received the executed legal opinion
of Pryor Cashman LLP in form and substance satisfactory to Agent which shall
cover such matters incident to the transactions contemplated by this Agreement,
the Notes, the Other Documents, and related agreements as Agent may reasonably
require and each Loan Party hereby authorizes and directs such counsel to
deliver such opinions to Agent and Lenders;
 
 
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(q)          No Litigation. No litigation, investigation or proceeding before or
by any arbitrator or Governmental Body shall be continuing or threatened against
any Loan Party or against the officers or directors of any Loan Party (A) in
connection with this Agreement, the Other Documents, the Term Loan Documents,
the Acquisition Agreements, the Subordinated Note Documents or any of the
transactions contemplated thereby and which, in the reasonable opinion of Agent,
is deemed material or (B) which could, in the reasonable opinion of Agent, have
a Material Adverse Effect; and (ii) no injunction, writ, restraining order or
other order of any nature materially adverse to any Loan Party or the conduct of
its business or inconsistent with the due consummation of the Transactions shall
have been issued by any Governmental Body;
 
(r)           Collateral Examination. Agent shall have completed Collateral
examinations (including an analysis of customer deposits and the establishment
of such reserves against the Formula Amount therefor that are deemed appropriate
by Agent) and received appraisals, the results of which shall be satisfactory in
form and substance to Agent, of the Receivables, Inventory, General Intangibles,
and equipment of each Borrower and all books and records in connection
therewith;
 
(s)            Fees. Agent shall have received all fees payable to Agent and
Lenders on or prior to the Closing Date hereunder, including pursuant to Article
III hereof;
 
(t)           Pro Forma Financial Statements. Agent shall have received a copy
of the Pro Forma Financial Statements which shall be satisfactory in all
respects to Agent;
 
(u)          Insurance. Agent shall have received in form and substance
satisfactory to Agent, (i) evidence that adequate insurance, including without
limitation, casualty and liability insurance, required to be maintained under
this Agreement is in full force and effect, (ii) insurance certificates issued
by Loan Parties’ insurance broker containing such information regarding Loan
Parties’ casualty and liability insurance policies as Agent shall request and
naming Agent as an additional insured and/or lenders loss payee, as applicable,
and (iii) loss payable endorsements issued by Loan Parties’ insurer naming Agent
as lenders loss payee and mortgagee, as applicable;
 
(v)           Payment Instructions. Agent shall have received written
instructions from Borrowing Agent directing the application of proceeds of the
initial Advances made pursuant to this Agreement;
 
(w)           Consents. Agent shall have received any and all Consents necessary
to permit the effectuation of the transactions contemplated by this Agreement
and the Other Documents; and, Agent shall have received such Consents and
waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary;
 
 
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(x)          No Adverse Material Change. (i) Since December 31, 2012, there
shall not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect and (ii) no
representations made or information supplied to Agent or Lenders shall have been
proven to be inaccurate or misleading in any material respect;
 
(y)           Contract Review. Agent shall have received and reviewed all
Material Contracts of Loan Parties including leases, union contracts, labor
contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory in all
respects to Agent;
 
(z)           Compliance with Laws. Agent shall be reasonably satisfied that
each Loan Party is in compliance with all pertinent federal, state, local or
territorial regulations, including those with respect to the Federal
Occupational Safety and Health Act, the Environmental Protection Act, ERISA and
the Anti-Terrorism Laws; and
 
(aa)    Other. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the Transactions shall be
satisfactory in form and substance to Agent and its counsel.
 
8.2   Conditions to Each Advance. The agreement of Lenders to make any Advance
requested to be made on any date (including the initial Advance), is subject to
the satisfaction of the following conditions precedent as of the date such
Advance is made:
 
(a)           Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to this Agreement, the Other
Documents and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement, the Other Documents or any related agreement shall be true and
correct in all respects on and as of such date as if made on and as of such date
(except to the extent any such representation or warranty expressly relates only
to any earlier and/or specified date);
 
(b)           No Default. No Event of Default or Default shall have occurred and
be continuing on such date, or would exist after giving effect to the Advances
requested to be made, on such date; provided, however that Agent, in its sole
discretion, may continue to make Advances notwithstanding the existence of an
Event of Default or Default and that any Advances so made shall not be deemed a
waiver of any such Event of Default or Default;
 
(c)          Maximum Advances. In the case of any type of Advance requested to
be made, after giving effect thereto, the aggregate amount of such type of
Advance shall not exceed the maximum amount of such type of Advance permitted
under this Agreement; and
 
(d)           Casualty Events. No Borrower has the right to make a claim under
its business interruption insurance policy based on the occurrence of an event
which interrupts the business of any Borrower(s) who, individually or in the
aggregate, accounted for twenty percent (20%) or more of the total revenue of
Borrowers taken as a whole during the twelve (12) month period most recently
ended; provided that Lenders shall not be obligated to make Advances at any time
any Borrower has the right to make a claim under its business interruption
insurance policy based upon the occurrence of an event which interrupts the
business of any Borrower if Undrawn Availability is less than $2,500,000.
 
 
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Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
 
IX.       INFORMATION AS TO BORROWERS.
 
Each Loan Party shall, or (except with respect to Section 9.11) shall cause
Borrowing Agent on its behalf to, until satisfaction in full of the Obligations
and the termination of this Agreement:
 
9.1           Disclosure of Material Matters. Immediately upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectability of any portion of the Collateral, including any Loan Party’s
reclamation or repossession of, or the return to any Loan Party of, a material
amount of goods or claims or disputes asserted by any Customer or other obligor.
 
9.2           Schedules. Deliver to Agent (i) on or before the fifteenth (15th)
day of each month as and for the prior month (a) accounts receivable ageings
inclusive of reconciliations to the general ledger, (b) accounts payable
schedules inclusive of reconciliations to the general ledger and (c) Inventory
reports, and (ii) on or before Tuesday of each week, (a) a Borrowing Base
Certificate in form and substance satisfactory to Agent (which shall be
calculated as of the last day of the prior week and which shall not be binding
on Agent or restrictive of Agent’s rights under this Agreement, it being
understood that ineligibility will be calculated by Borrowers on a monthly basis
notwithstanding the delivery of weekly Borrowing Base Certificates) and (b) a
sales report / roll forward for the prior week setting forth sales, collections
and credits during such week. In addition, each Borrower will deliver to Agent
at such intervals as Agent may require: (i) confirmatory assignment schedules;
(ii) copies of Customer’s invoices; (iii) evidence of shipment or delivery; and
(iv) such further schedules, documents and/or information regarding the
Collateral as Agent may require including trial balances and test verifications.
Agent shall have the right to confirm and verify all Receivables by any manner
and through any medium it considers advisable and do whatever it may deem
reasonably necessary to protect its interests hereunder. The items to be
provided under this Section are to be in form satisfactory to Agent and executed
by each Loan Party and delivered to Agent from time to time solely for Agent’s
convenience in maintaining records of the Collateral, and any Loan Party’s
failure to deliver any of such items to Agent shall not affect, terminate,
modify or otherwise limit Agent’s Lien with respect to the Collateral. Unless
otherwise agreed to by Agent, the items to be provided under this Section 9.2
shall be delivered to Agent by the specific method of Approved Electronic
Communication designated by Agent.
 
 
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9.3   Environmental Reports.
 
(a)           Furnish Agent, concurrently with the delivery of the financial
statements referred to in Sections 9.7 and 9.8, with a certificate signed by the
President of Borrowing Agent stating, to the best of his knowledge, that each
Loan Party is in compliance in all material respects with all applicable
Environmental Laws. To the extent any Loan Party is not in compliance with the
foregoing laws, the certificate shall set forth with specificity all areas of
non-compliance and the proposed action such Loan Party will implement in order
to achieve full compliance.
 
(b)           In the event any Loan Party obtains, gives or receives notice of
any Release or threat of Release of a reportable quantity of any Hazardous
Materials at the Real Property (any such event being hereinafter referred to as
a “Hazardous Discharge”) or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions at the Real Property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental Laws affecting the Real Property or any
Loan Party’s interest therein or the operations or the business (any of the
foregoing is referred to herein as an “Environmental Complaint”) from any
Person, including any Governmental Body, then Borrowing Agent shall, within five
(5) Business Days, give written notice of same to Agent detailing facts and
circumstances of which any Loan Party is aware giving rise to the Hazardous
Discharge or Environmental Complaint. Such information is to be provided to
allow Agent to protect its security interest in and Lien on the Collateral and
is not intended to create nor shall it create any obligation upon Agent or any
Lender with respect thereto.
 
(c)           Borrowing Agent shall promptly forward to Agent copies of any
request for information, notification of potential liability, demand letter
relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Materials at any other site owned, operated or used by any
Loan Party to manage of Hazardous Materials and shall continue to forward copies
of correspondence between any Loan Party and the Governmental Body regarding
such claims to Agent until the claim is settled. Borrowing Agent shall promptly
forward to Agent copies of all documents and reports concerning a Hazardous
Discharge or Environmental Complaint at the Real Property, operations or
business that any Loan Party is required to file under any Environmental Laws.
Such information is to be provided solely to allow Agent to protect Agent’s
security interest in and Lien on the Collateral.
 
9.4   Litigation. Promptly notify Agent in writing of any claim, litigation,
suit or administrative proceeding affecting any Loan Party, whether or not the
claim is covered by insurance, and of any litigation, suit or administrative
proceeding, which in any such case affects the Collateral or which could
reasonably be expected to have a Material Adverse Effect.
 
 
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9.5   Material Occurrences. Immediately notify Agent in writing upon the
occurrence of: (a) any Event of Default or Default; (b) any event of default
under the Term Loan Documents or the Subordinated Note Documents or the
termination of any Post Closing Acquisition Agreement; (c) any event which with
the giving of notice or lapse of time, or both, would constitute an event of
default under the Term Loan Documents, the Subordinated Note Documents or any
Acquisition Agreement; (d) any event, development or circumstance whereby any
financial statements or other reports furnished to Agent fail in any material
respect to present fairly, in accordance with GAAP consistently applied, the
financial condition or operating results of any Loan Party as of the date of
such statements; (e) any accumulated retirement plan funding deficiency which,
if such deficiency continued for two plan years and was not corrected as
provided in Section 4971 of the Code, could subject any Loan Party to a tax
imposed by Section 4971 of the Code; (f) each and every default by any Loan
Party which might result in the acceleration of the maturity of any
Indebtedness, including the names and addresses of the holders of such
Indebtedness with respect to which there is a default existing or with respect
to which the maturity has been or could be accelerated, and the amount of such
Indebtedness; and (g) any other development in the business or affairs of any
Loan Party, which could reasonably be expected to have a Material Adverse
Effect; in each case describing the nature thereof and the action Loan Parties
propose to take with respect thereto.
 
9.6   Government Receivables. Notify Agent immediately if any of its Receivables
arise out of contracts between any Loan Party and the United States, any state,
or any department, agency or instrumentality of any of them.
 
9.7   Annual Financial Statements. Furnish Agent within one hundred twenty (120)
days after the end of each fiscal year of Loan Parties, financial statements of
Loan Parties on a Consolidated Basis and Loan Parties on a consolidating basis
including, but not limited to, statements of income and stockholders’ equity and
cash flow from the beginning of the current fiscal year to the end of such
fiscal year and the balance sheet as at the end of such fiscal year, all
prepared in accordance with GAAP applied on a basis consistent with prior
practices, and in reasonable detail and reported upon without qualification by
an independent certified public accounting firm selected by Loan Parties and
satisfactory to Agent (the “Accountants”). The report of the Accountants shall
be accompanied by a statement of the Accountants certifying that (i) they have
caused this Agreement to be reviewed, (ii) in making the examination upon which
such report was based either no information came to their attention which to
their knowledge constituted an Event of Default or a Default under this
Agreement or any related agreement or, if such information came to their
attention, specifying any such Default or Event of Default, its nature, when it
occurred and whether it is continuing, and such report shall contain or have
appended thereto calculations which set forth Loan Parties’ compliance with the
requirements or restrictions imposed by Section 6.5, 7.6 and 7.11 hereof. In
addition, the reports shall be accompanied by a Compliance Certificate.
 
9.8   [Reserved].
 
9.9   Monthly Financial Statements. Furnish Agent within thirty (30) days after
the end of each month, an unaudited balance sheet of Loan Parties on a
Consolidated Basis and Loan Parties on a consolidating basis and unaudited
statements of income and stockholders’ equity and cash flow of Loan Parties on a
Consolidated Basis and Loan Parties on a consolidating basis reflecting results
of operations from the beginning of the fiscal year to the end of such month and
for such month, prepared on a basis consistent with prior practices and complete
and correct in all material respects, subject to normal and recurring year-end
adjustments that individually and in the aggregate are not material to Loan
Parties’ business operations and setting forth in comparative form the
respective financial statements for the corresponding date and period in the
previous fiscal year. The reports shall be accompanied by a Compliance
Certificate.
 
 
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9.10   Other Reports. Furnish Agent as soon as available, but in any event
within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as each Loan Party shall send to its
stockholders or members, as applicable and (ii) copies of all notices, reports,
financial statements and other materials sent pursuant to the Term Loan
Documents, the Subordinated Note Documents and the Acquisition Agreements.
 
9.11   Additional Information. Furnish Agent with such additional information as
Agent shall reasonably request in order to enable Agent to determine whether the
terms, covenants, provisions and conditions of this Agreement have been complied
with by Loan Parties including, without the necessity of any request by Agent,
(a) copies of all environmental audits and reviews, (b) at least thirty (30)
days prior thereto, notice of any Loan Party’s opening of any new office or
place of business or any Loan Party’s closing of any existing office or place of
business, and (c) promptly upon any Loan Party’s learning thereof, notice of any
labor dispute to which any Loan Party may become a party, any strikes or
walkouts relating to any of its plants or other facilities, and the expiration
of any labor contract to which any Loan Party is a party or by which any Loan
Party is bound.
 
9.12   Projected Operating Budget. Furnish Agent, no later than thirty (30)
prior to the beginning of each Loan Party’s fiscal years commencing with fiscal
year 2014, a month by month projected operating budget and cash flow of Loan
Parties on a Consolidated Basis and Loan Parties on a consolidating basis for
such fiscal year (including an income statement for each month and a balance
sheet as at the end of the last month in each fiscal quarter), such projections
to be accompanied by a certificate signed by the President or Chief Financial
Officer of each Loan Party to the effect that such projections have been
prepared on the basis of sound financial planning practice consistent with past
budgets and financial statements and that such officer has no reason to question
the reasonableness of any material assumptions on which such projections were
prepared.
 
9.13   Variances From Operating Budget. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.9, a
written report summarizing all material variances from budgets submitted by Loan
Parties pursuant to Section 9.12 and a discussion and analysis by management
with respect to such variances.
 
9.14   Notice of Suits, Adverse Events. Furnish Agent with prompt written notice
of (i) any lapse or other termination of any Consent issued to any Loan Party by
any Governmental Body or any other Person that is material to the operation of
any Loan Party’s business, (ii) any refusal by any Governmental Body or any
other Person to renew or extend any such Consent; and (iii) copies of any
periodic or special reports filed by any Loan Party or any Guarantor with any
Governmental Body or Person, if such reports indicate any material change in the
business, operations, affairs or condition of any Loan Party or any Guarantor,
or if copies thereof are requested by Lender, and (iv) copies of any material
notices and other communications from any Governmental Body or Person which
specifically relate to any Loan Party or any Guarantor.
 
 
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9.15   ERISA Notices and Requests. Furnish Agent with immediate written notice
in the event that (i) any Loan Party or any member of the Controlled Group knows
or has reason to know that a Termination Event which is reasonably expected to
result in a Material Adverse Effect has occurred, together with a written
statement describing such Termination Event and the action, if any, which such
Loan Party or any member of the Controlled Group has taken, is taking, or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) a funding waiver request has been filed with respect to
any Pension Benefit Plan together with all communications received by any Loan
Party or any member of the Controlled Group with respect to such request, (iii)
the establishment of any new Pension Benefit Plan or the commencement of
contributions to any Pension Benefit Plan or Multiemployer to which any Loan
Party or any member of the Controlled Group was not previously contributing
shall occur, (iv) any Loan Party or any member of the Controlled Group shall
receive from the PBGC a notice of intention to terminate a Plan or to have a
trustee appointed to administer a Plan, together with copies of each such
notice, (v) any Loan Party or any member of the Controlled Group shall receive
any unfavorable determination letter from the Internal Revenue Service regarding
the qualification of a Plan under Section 401(a) of the Code, together with
copies of each such letter; (vi) any Loan Party or any member of the Controlled
Group shall receive a notice regarding the imposition of withdrawal liability,
together with copies of each such notice; or (vii) any Loan Party or any member
of the Controlled Group knows that (a) a Multiemployer Plan has been terminated,
(b) the administrator or plan sponsor of a Multiemployer Plan intends to
terminate a Multiemployer Plan, (c) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.
 
9.16   Additional Documents. Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time, reasonably request to
carry out the purposes, terms or conditions of this Agreement.
 
9.17   Updates to Certain Schedules. Deliver to Agent promptly as shall be
required to maintain the related representations and warranties as true and
correct, updates to Schedules 4.4 (Locations of equipment and Inventory), 5.9
(Intellectual Property, Source Code Escrow Agreements), 5.24 (Equity Interests),
and 5.25 (Commercial Tort Claims); provided, that absent the occurrence and
continuance of any Event of Default, Loan Party shall only be required to
provide such updates on a monthly basis in connection with delivery of a
Compliance Certificate with respect to the applicable month. Any such updated
Schedules delivered by Loan Parties to Agent in accordance with this Section
9.17 shall automatically and immediately be deemed to amend and restate the
prior version of such Schedule previously delivered to Agent and attached to and
made part of this Agreement.
 
 
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9.18   Financial Disclosure. Each Loan Party hereby irrevocably authorizes and
directs all accountants and auditors employed by such Loan Party at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
such Loan Party’s financial statements, trial balances or other accounting
records of any sort in the accountant’s or auditor’s possession, and to disclose
to Agent and each Lender any information such accountants may have concerning
such Loan Party’s financial status and business operations. Each Loan Party
hereby authorizes all Governmental Bodies to furnish to Agent and each Lender
copies of reports or examinations relating to such Loan Party, whether made by
such Loan Party or otherwise; however, Agent and each Lender will attempt to
obtain such information or materials directly from such Loan Party prior to
obtaining such information or materials from such accountants or Governmental
Bodies.
 
X.         EVENTS OF DEFAULT.
 
The occurrence of any one or more of the following events shall constitute an
“Event of Default”:
 
10.1   Nonpayment. Failure by any Loan Party to pay (a) when due, any principal
or interest on the Obligations (including without limitation pursuant to Section
2.9), or (b) within three (3) Business Days after the same becomes due (if not
charged to Borrowers’ Account), any other fee, charge, amount or liability
provided for herein or in any Other Document, in each case whether at maturity,
by reason of acceleration pursuant to the terms of this Agreement, by notice of
intention to prepay or by required prepayment.
 
10.2   Breach of Representation. Any representation or warranty made or deemed
made by any Loan Party in this Agreement, any Other Document or any related
agreement or in any certificate, document or financial or other statement
furnished at any time in connection herewith or therewith shall prove to have
been incorrect or misleading in any material respect (or, in the case of a
representation or warranty that is qualified by “materiality” or “Material
Adverse Effect,” in any respect) on the date when made or deemed to have been
made;
 
10.3   Financial Information. Failure by any Loan Party to (i) furnish financial
information when due or when requested, or (ii) permit the inspection of its
books or records or access to its premises for audits and appraisals in
accordance with the terms hereof;
 
10.4   Judicial Actions. Issuance of a notice of Lien, levy, assessment,
injunction or attachment (a) against any Loan Party’s Inventory or Receivables
or (b) against a material portion of any Loan Party’s other property which is
not stayed or lifted within thirty (30) days;
 
10.5   Noncompliance. Except as otherwise provided for in Sections 10.1, 10.3
and 10.5(ii), (i) failure or neglect of any Loan Party or any Person to perform,
keep or observe any term, provision, condition, covenant herein contained, or
contained in any Other Document or any other agreement or arrangement, now or
hereafter entered into between any Loan Party or such Person, and Agent or any
Lender, or (ii) failure or neglect of any Loan Party to perform, keep or observe
any term, provision, condition or covenant, contained in Sections 4.5, 6.1, 6.3,
6.11, 6.13, 9.4 or 9.6 hereof which is not cured within ten (10) days from the
occurrence of such failure or neglect;
 
 
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10.6   Judgments. Any (a) judgment or judgments, writ(s), order(s) or decree(s)
for the payment of money are rendered against any Loan Party for an aggregate
amount in excess of $100,000 or against all Loan Parties for an aggregate amount
in excess of $250,000 and (b) (i) action shall be legally taken by any judgment
creditor to levy upon assets or properties of any Loan Party to enforce any such
judgment, (ii) such judgment shall remain undischarged for a period of thirty
(30) consecutive days during which a stay of enforcement of such judgment, by
reason of a pending appeal or otherwise, shall not be in effect, or (iii) any
Liens arising by virtue of the rendition, entry or issuance of such judgment
upon assets or properties of any Loan Party shall be senior to any Liens in
favor of Agent on such assets or properties;
 
10.7    Bankruptcy. Any Loan Party or any Subsidiary or Affiliate of any Loan
Party shall (i) apply for, consent to or suffer the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator or similar
fiduciary of itself or of all or a substantial part of its property, (ii) admit
in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business, (iii) make a general
assignment for the benefit of creditors, (iv) commence a voluntary case under
any state or federal bankruptcy or receivership laws (as now or hereafter in
effect), (v) be adjudicated a bankrupt or insolvent (including by entry of any
order for relief in any involuntary bankruptcy or insolvency proceeding
commenced against it), (vi) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vii) acquiesce to, or fail to
have dismissed, within sixty (60) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
 
10.8    Material Adverse Effect. The occurrence of any event or development
which could reasonably be expected to have a Material Adverse Effect;
 
10.9    Lien Priority. Any Lien created hereunder or provided for hereby or
under any related agreement for any reason ceases to be or is not a valid and
perfected Lien having a first priority interest (subject only to Permitted
Encumbrances that have priority as a matter of Applicable Law to the extent such
Liens only attach to Collateral other than Receivables or Inventory);
 
10.10   Term Loan Default, Subordinated Note Default, Acquisition Agreement
Default. An event of default has occurred under the Term Loan Documents, the
Restricted Indebtedness or any Acquisition Agreement, which default shall not
have been cured or waived within any applicable grace period, or if any Person
party to the Intercreditor Agreement breaches or violates, or attempts to
terminate or challenge the validity of, such agreement;
 
 
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10.11   Cross Default. Either (x) any specified “event of default” under any
Indebtedness (other than the Obligations) of any Loan Party with a
then-outstanding principal balance (or, in the case of any Indebtedness not so
denominated, with a then-outstanding total obligation amount) of $250,000 or
more, or any other event or circumstance which would permit the holder of any
such Indebtedness of any Loan Party to accelerate such Indebtedness (and/or the
obligations of Loan Party thereunder) prior to the scheduled maturity or
termination thereof, shall occur (regardless of whether the holder of such
Indebtedness shall actually accelerate, terminate or otherwise exercise any
rights or remedies with respect to such Indebtedness) or (y) a default of the
obligations of any Loan Party under any other agreement to which it is a party
shall occur which has or is reasonably likely to have a Material Adverse Effect;
 
10.12   Termination of Guaranty or Pledge Agreement. Termination of any
Guaranty, Guarantor Security Agreement, Pledge Agreement or similar agreement
executed and delivered to Agent in connection with the Obligations of any Loan
Party, or if any Guarantor or pledgor attempts to terminate, challenges the
validity of, or its liability under, any such Guaranty, Guarantor Security
Agreement, Pledge Agreement or similar agreement;
 
10.13   Change of Control. Any Change of Control shall occur;
 
10.14   Invalidity. Any material provision of this Agreement or any Other
Document shall, for any reason, cease to be valid and binding on any Loan Party,
or any Loan Party shall so claim in writing to Agent or any Lender or any Loan
Party challenges the validity of or its liability under this Agreement or any
Other Document;
 
10.15   Seizures. Any (a) portion of the Collateral shall be seized, subject to
garnishment or taken by a Governmental Body, or any Loan Party, or (b) the title
and rights of any Loan Party which is the owner of any material portion of the
Collateral shall have become the subject matter of claim, litigation, suit,
garnishment or other proceeding which might, in the opinion of Agent, upon final
determination, result in impairment or loss of the security provided by this
Agreement or the Other Documents;
 
10.16   Operations. The operations of any Loan Party’s manufacturing facility
are interrupted (other than in connection with any regularly scheduled shutdown
for employee vacations and/or maintenance in the Ordinary Course of Business) at
any time for more than five (5) consecutive days, unless such Loan Party shall
(i) be entitled to receive for such period of interruption, proceeds of business
interruption insurance sufficient to assure that its per diem cash needs during
such period is at least equal to its average per diem cash needs for the
consecutive three month period immediately preceding the initial date of
interruption and (ii) receive such proceeds in the amount described in clause
(i) preceding not later than thirty (30) days following the initial date of any
such interruption; provided, however, that notwithstanding the provisions of
clauses (i) and (ii) of this section, an Event of Default shall be deemed to
have occurred if such Loan Party shall be receiving the proceeds of business
interruption insurance for a period of thirty (30) consecutive days;
 
10.17   Pension Plans. An event or condition specified in Sections 7.16 or 9.15
hereof shall occur or exist with respect to any Plan and, as a result of such
event or condition, together with all other such events or conditions, any Loan
Party or any member of the Controlled Group shall incur a liability to a Plan or
the PBGC (or both) which could reasonably be expected to have a Material Adverse
Effect; or the occurrence of any Termination Event; or
 
 
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10.18   Anti-Money Laundering/International Trade Law Compliance. Any
representation or warranty contained in Section 16.18 is or becomes false or
misleading at any time.
 
XI.      LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.
 
11.1    Rights and Remedies.
 
(a)           Upon the occurrence of: (i) an Event of Default pursuant to
Section 10.7 (other than Section 10.7(vii)), all Obligations shall be
immediately due and payable and this Agreement and the obligation of Lenders to
make Advances shall be deemed terminated, (ii) any of the other Events of
Default and at any time thereafter, at the option of Agent or at the direction
of Required Lenders all Obligations shall be immediately due and payable and
Agent or Required Lenders shall have the right to terminate this Agreement and
to terminate the obligation of Lenders to make Advances; and (iii) without
limiting Section 8.2 hereof, any Default under Sections 10.7(vii) hereof, the
obligation of Lenders to make Advances hereunder shall be suspended until such
time as such involuntary petition shall be dismissed. Upon the occurrence of any
Event of Default, Agent shall have the right to exercise any and all rights and
remedies provided for herein, under the Other Documents, under the Uniform
Commercial Code and at law or equity generally, including the right to foreclose
the security interests granted herein and to realize upon any Collateral by any
available judicial procedure and/or to take possession of and sell any or all of
the Collateral with or without judicial process. Agent may enter any of any Loan
Party’s premises or other premises without legal process and without incurring
liability to any Loan Party therefor, and Agent may thereupon, or at any time
thereafter, in its discretion without notice or demand, take the Collateral and
remove the same to such place as Agent may deem advisable and Agent may require
Loan Parties to make the Collateral available to Agent at a convenient place.
With or without having the Collateral at the time or place of sale, Agent may
sell the Collateral, or any part thereof, at public or private sale, at any time
or place, in one or more sales, at such price or prices, and upon such terms,
either for cash, credit or future delivery, as Agent may elect. Except as to
that part of the Collateral which is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Agent shall
give Loan Parties reasonable notification of such sale or sales, it being agreed
that in all events written notice mailed to Borrowing Agent at least ten (10)
days prior to such sale or sales is reasonable notification. At any public sale
Agent or any Lender may bid (including credit bid) for and become the purchaser,
and Agent, any Lender or any other purchaser at any such sale thereafter shall
hold the Collateral sold absolutely free from any claim or right of whatsoever
kind, including any equity of redemption and all such claims, rights and
equities are hereby expressly waived and released by each Loan Party. In
connection with the exercise of the foregoing remedies, including the sale of
Inventory, Agent is granted a perpetual nonrevocable, royalty free, nonexclusive
license and Agent is granted permission to use all of each Loan Party’s (a)
Intellectual Property which is used or useful in connection with Inventory for
the purpose of marketing, advertising for sale and selling or otherwise
disposing of such Inventory and (b) equipment for the purpose of completing the
manufacture of unfinished goods. The cash proceeds realized from the sale of any
Collateral shall be applied to the Obligations in the order set forth in Section
11.5 hereof. Noncash proceeds will only be applied to the Obligations as they
are converted into cash. If any deficiency shall arise, Loan Parties shall
remain liable to Agent and Lenders therefor.
 
 
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(b) To the extent that Applicable Law imposes duties on Agent to exercise
remedies in a commercially reasonable manner, each Loan Party acknowledges and
agrees that it is not commercially unreasonable for Agent: (i) to fail to incur
expenses reasonably deemed significant by Agent to prepare Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition; (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of; (iii) to fail to exercise collection remedies against Customers
or other Persons obligated on Collateral or to remove Liens on or any adverse
claims against Collateral; (iv) to exercise collection remedies against
Customers and other Persons obligated on Collateral directly or through the use
of collection agencies and other collection specialists; (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature; (vi) to contact other
Persons, whether or not in the same business as any Loan Party, for expressions
of interest in acquiring all or any portion of such Collateral; (vii) to hire
one or more professional auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature; (viii) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capacity of
doing so, or that match buyers and sellers of assets; (ix) to dispose of assets
in wholesale rather than retail markets; (x) to disclaim disposition warranties,
such as title, possession or quiet enjoyment, (xi) to purchase insurance or
credit enhancements to insure Agent against risks of loss, collection or
disposition of Collateral or to provide to Agent a guaranteed return from the
collection or disposition of Collateral; or (xii) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Each Loan Party acknowledges that the
purpose of this Section 11.1(b) is to provide non-exhaustive indications of what
actions or omissions by Agent would not be commercially unreasonable in Agent’s
exercise of remedies against the Collateral and that other actions or omissions
by Agent shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section 11.1(b). Without limitation upon the foregoing,
nothing contained in this Section 11.1(b) shall be construed to grant any rights
to any Loan Party or to impose any duties on Agent that would not have been
granted or imposed by this Agreement or by Applicable Law in the absence of this
Section 11.1(b).
 
11.2   Agent’s Discretion. Agent shall have the right in its sole discretion to
determine which rights, Liens, security interests or remedies Agent may at any
time pursue, relinquish, subordinate, or modify, which procedures, timing and
methodologies to employ, and what any other action to take with respect to any
or all of the Collateral and in what order, thereto and such determination will
not in any way modify or affect any of Agent’s or Lenders’ rights hereunder as
against Loan Parties or each other.
 
 
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     11.3   Setoff. Subject to Section 14.13, in addition to any other rights
which Agent or any Lender may have under Applicable Law, upon the occurrence of
an Event of Default hereunder, Agent and such Lender shall have a right,
immediately and without notice of any kind, to apply any Loan Party’s property
held by Agent and such Lender or any of their affiliates to reduce the
Obligations and to exercise any and all rights of setoff which may be available
to Agent and such Lender with respect to any deposits held by Agent or such
Lender.
 
     11.4   Rights and Remedies not Exclusive. The enumeration of the foregoing
rights and remedies is not intended to be exhaustive and the exercise of any
rights or remedy shall not preclude the exercise of any other right or remedies
provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
 
           11.5   Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Agreement to the contrary, after the occurrence and
during the continuance of an Event of Default, all amounts collected or received
by Agent on account of the Obligations (including without limitation any amounts
on account of any of Cash Management Liabilities or Hedge Liabilities), or in
respect of the Collateral may, at Agent’s discretion, be paid over or delivered
as follows:
 
         FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including reasonable attorneys’ fees) of Agent in connection with
enforcing its rights and the rights of Lenders under this Agreement and the
Other Documents, and any Out-of-Formula Loans and Protective Advances funded by
Agent with respect to the Collateral under or pursuant to the terms of this
Agreement;
 
SECOND, to payment of any fees owed to Agent;
 
THIRD, to the payment of all reasonable out-of-pocket costs and expenses
(including reasonable attorneys’ fees) of each of the Lenders to the extent
owing to such Lender pursuant to the terms of this Agreement;
 
FOURTH, to the payment of all of the Obligations consisting of accrued interest
on account of the Swing Loans;
 
FIFTH, to the payment of the outstanding principal amount of the Obligations
consisting of Swing Loans;
 
               SIXTH, to the payment of all Obligations arising under this
Agreement and the Other Documents consisting of accrued fees and interest (other
than interest in respect of Swing Loans paid pursuant to clause FOURTH above);
 
         SEVENTH, to the payment of the outstanding principal amount of the
Obligations (other than principal in respect of Swing Loans paid pursuant to
clause FIFTH above) arising under this Agreement (other than Cash Management
Liabilities and Hedge Liabilities) (including the payment or cash
collateralization of any outstanding Letters of Credit in accordance with
Section 3.2(b) hereof);
 
 
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          EIGHTH, to all other Obligations arising under this Agreement (other
than Cash Management Liabilities and Hedge Liabilities) which shall have become
due and payable (hereunder, under the Other Documents or otherwise) and not
repaid pursuant to clauses “FIRST” through “SEVENTH” above;
 
         NINTH, to any Cash Management Liabilities and Hedge Liabilities which
shall have become due and payable or otherwise and not repaid pursuant to
Clauses “FIRST” through “EIGHTH” above
 
         TENTH, to all other Obligations which shall have become due and payable
and not repaid pursuant to clauses “FIRST” through “NINTH”; and
 
               ELEVENTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
 
           In carrying out the foregoing, (i) amounts received shall be applied
in the numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses “SIXTH”, “SEVENTH”, “EIGHTH” and “TENTH” above and, with respect to
clause “NINTH” above, an amount equal to its pro rata share (based on the
proportion that the then outstanding Cash Management Liabilities and Hedge
Liabilities held by such Lender bears to the aggregate then outstanding Cash
Management Liabilities and Hedge Liabilities); and (iii) notwithstanding
anything to the contrary in this Section 11.5, no Swap Obligations of any
Non-Qualifying Party shall be paid with amounts received from such
Non-Qualifying Party under its Guaranty (including sums received as a result of
the exercise of remedies with respect to such Guaranty) or from the proceeds of
such Non-Qualifying Party’s Collateral if such Swap Obligations would constitute
Excluded Hedge Liabilities, provided, however, that to the extent possible
appropriate adjustments shall be made with respect to payments and/or the
proceeds of Collateral from other Borrowers and/or Guarantors that are Eligible
Contract Participants with respect to such Swap Obligations to preserve the
allocation to Obligations otherwise set forth above in this Section 11.5; and
(iv) to the extent that any amounts available for distribution pursuant to
clause “SEVENTH” above are attributable to the issued but undrawn amount of
outstanding Letters of Credit, such amounts shall be held by Agent as cash
collateral for the Letters of Credit pursuant to Section 3.2(b) hereof and
applied (A) first, to reimburse Issuer from time to time for any drawings under
such Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses “SEVENTH,”
“EIGHTH”, and “TENTH” above in the manner provided in this Section 11.5.
 
XII.        WAIVERS AND JUDICIAL PROCEEDINGS.
 
        12.1   Waiver of Notice. Each Borrower hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
 
 
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12.2   Delay. No delay or omission on Agent’s or any Lender’s part in exercising
any right, remedy or option shall operate as a waiver of such or any other
right, remedy or option or of any Default or Event of Default.
 
         12.3   Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, COUNTERCLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT, ANY OTHER DOCUMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT,
ANY OTHER DOCUMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH
CLAIM, COUNTERCLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
 
XIII.       EFFECTIVE DATE AND TERMINATION.
 
         13.1   Term. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
Loan Party, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until June 17, 2014 (the “Term”) unless
sooner terminated as herein provided; provided that, if, prior to June 17, 2014,
(i) the “Maturity Date” in the Term Loan Agreement is extended to a date on or
after September 17, 2017, or (ii) the Term Loan has been refinanced by a senior
credit facility constituting Permitted Indebtedness whose maturity date is on or
after September 17, 2017, then the Term shall continue until September 17, 2017.
Loan Parties may terminate this Agreement at any time upon ninety (90) days
prior written notice to Agent upon payment in full of the Obligations. In the
event the Obligations are prepaid in full (whether voluntary or involuntary,
including after acceleration thereof) and this Agreement is terminated prior to
the last day of the Term (the date of such prepayment hereinafter referred to as
the “Early Termination Date”), Borrowers shall concurrently pay to Agent for the
benefit of Lenders an early termination fee in an amount equal to (x) $200,000
if the Early Termination Date occurs on or after the Closing Date to and
including the date immediately preceding the first
 
 
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anniversary of the Closing Date, (y) $100,000 if the Early Termination Date
occurs on or after the first anniversary of the Closing Date to and including
the date immediately preceding the second anniversary of the Closing Date, and
(z) $50,000 if the Early Termination Date occurs on or after the second
anniversary of the Closing Date to and including the date immediately preceding
the third anniversary of the Closing Date. For the avoidance of doubt, the
parties acknowledge and agree that the early termination fee set forth above
shall be due and payable if repayment is made on December 17, 2013 even if such
date is the last date of the Term, as PNC is entering into this Agreement based
on the expectation that the maturity date of the Term Loan Agreement (or
permitted refinancing thereof) will be extended.
 
         13.2   Termination. The termination of the Agreement shall not affect
Agent’s or any Lender’s rights, or any of the Obligations having their inception
prior to the effective date of such termination or any Obligations which
pursuant to the terms hereof continue to accrue after such date, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created and Obligations have been fully and
indefeasibly paid, disposed of, concluded or liquidated. The security interests,
Liens and rights granted to Agent and Lenders hereunder and the financing
statements filed hereunder shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that Borrowers’
Account may from time to time be temporarily in a zero or credit position, until
all of the Obligations of each Loan Party have been indefeasibly paid and
performed in full after the termination of this Agreement or each Loan Party has
furnished Agent and Lenders with an indemnification satisfactory to Agent and
Lenders with respect thereto. Accordingly, each Loan Party waives any rights
which it may have under the Uniform Commercial Code to demand the filing of
termination statements with respect to the Collateral, and Agent shall not be
required to send such termination statements to each Loan Party, or to file them
with any filing office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations have been
indefeasibly paid in full in immediately available funds. All representations,
warranties, covenants, waivers and agreements contained herein shall survive
termination hereof until all Obligations are indefeasibly paid and performed in
full.
 
XIV.       REGARDING AGENT.
 
         14.1   Appointment. Each Lender hereby designates PNC to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Sections
2.8(b), 3.3(a) and 3.4), charges and collections received pursuant to this
Agreement, for the ratable benefit of Lenders. Agent may perform any of its
duties hereunder by or through its agents or employees. As to any matters not
expressly provided for by this Agreement (including collection of the Note)
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of Required
Lenders, and such instructions shall be binding; provided, however, that Agent
shall not be required to take any action which, in Agent’s discretion, exposes
Agent to liability or which is contrary to this Agreement or the Other Documents
or Applicable Law unless Agent is furnished with an indemnification reasonably
satisfactory to Agent with respect thereto.
 
 
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         14.2   Nature of Duties. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment), or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by any Loan Party or
any officer thereof contained in this Agreement, or in any of the Other
Documents 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 of the Other Documents or for the value, validity,
effectiveness, genuineness, due execution, enforceability or sufficiency of this
Agreement, or any of the Other Documents or for any failure of any Loan Party to
perform its obligations hereunder. Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Agreement or any of the
Other Documents, or to inspect the properties, books or records of any Loan
Party. The duties of Agent as respects the Advances to Borrowers shall be
mechanical and administrative in nature; Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon Agent any obligations in respect of this Agreement or the
transactions described herein except as expressly set forth herein.
 
         14.3   Lack of Reliance on Agent. Independently and without reliance
upon Agent or any other Lender, each Lender has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
each Loan Party in connection with the making and the continuance of the
Advances hereunder and the taking or not taking of any action in connection
herewith, and (ii) its own appraisal of the creditworthiness of each Loan Party.
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before making of the Advances or at
any time or times thereafter except as shall be provided by any Loan Party
pursuant to the terms hereof. Agent shall not be responsible to any Lender for
any recitals, statements, information, representations or warranties herein or
in any agreement, document, certificate or a statement delivered in connection
with or for the execution, effectiveness, genuineness, validity, enforceability,
collectability or sufficiency of this Agreement or any Other Document, or of the
financial condition of any Loan Party, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement, the Note, the Other Documents or the financial
condition or prospects of any Loan Party, or the existence of any Event of
Default or any Default.
 
 
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         14.4   Resignation of Agent; Successor Agent. Agent may resign on sixty
(60) days written notice to each Lender and Borrowing Agent and upon such
resignation, Required Lenders will promptly designate a successor Agent
reasonably satisfactory to Loan Parties (provided that no such approval by Loan
Parties shall be required (i) in any case where the successor Agent is one of
the Lenders or (ii) after the occurrence and during the continuance of any Event
of Default). Any such successor Agent shall succeed to the rights, powers and
duties of Agent, and shall in particular succeed to all of Agent’s right, title
and interest in and to all of the Liens in the Collateral securing the
Obligations created hereunder or any Other Document (including the Pledge
Agreement and all account control agreements), and the term “Agent” shall mean
such successor agent effective upon its appointment, and the former Agent’s
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent. However, notwithstanding
the foregoing, if at the time of the effectiveness of the new Agent’s
appointment, any further actions need to be taken in order to provide for the
legally binding and valid transfer of any Liens in the Collateral from former
Agent to new Agent and/or for the perfection of any Liens in the Collateral as
held by new Agent or it is otherwise not then possible for new Agent to become
the holder of a fully valid, enforceable and perfected Lien as to any of the
Collateral, former Agent shall continue to hold such Liens solely as agent for
perfection of such Liens on behalf of new Agent until such time as new Agent can
obtain a fully valid, enforceable and perfected Lien on all Collateral, provided
that Agent shall not be required to or have any liability or responsibility to
take any further actions after such date as such agent for perfection to
continue the perfection of any such Liens (other than to forego from taking any
affirmative action to release any such Liens). After any Agent’s resignation as
Agent, the provisions of this Article XIV, and any indemnification rights under
this Agreement, including without limitation, rights arising under Section 16.5
hereof, shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement (and in the event resigning
Agent continues to hold any Liens pursuant to the provisions of the immediately
preceding sentence, the provisions of this Article XIV and any indemnification
rights under this Agreement, including without limitation, rights arising under
Section 16.5 hereof, shall inure to its benefit as to any actions taken or
omitted to be taken by it in connection with such Liens).
 
         14.5   Certain Rights of Agent. If Agent shall request instructions
from Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from Required Lenders; and Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing,
Lenders shall not have any right of action whatsoever against Agent as a result
of its acting or refraining from acting hereunder in accordance with the
instructions of Required Lenders.
 
         14.6   Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, email, facsimile, telex, teletype or telecopier message, cablegram,
order or other document or telephone message believed by it to be genuine and
correct and to have been signed, sent or made by the proper person or entity,
and, with respect to all legal matters pertaining to this Agreement and the
Other Documents and its duties hereunder, upon advice of counsel selected by it.
Agent may employ agents and attorneys-in-fact and shall not be liable for the
default or misconduct of any such agents or attorneys-in-fact selected by Agent
with reasonable care.
 
 
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         14.7   Notice of Default. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder or
under the Other Documents, unless Agent has received notice from a Lender or
Borrowing Agent referring to this Agreement or the Other Documents, describing
such Default or Event of Default and stating that such notice is a “notice of
default”. In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by Required Lenders;
provided, that, unless and until Agent shall have received such directions,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of Lenders.
 
         14.8   Indemnification. To the extent Agent is not reimbursed and
indemnified by Loan Parties, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the outstanding Advances and its
respective Participation Commitments in the outstanding Letters of Credit and
outstanding Swing Loans (or, if no Advances are outstanding, pro rata according
to the percentage that its Revolving Commitment Amount constitutes of the total
aggregate Revolving Commitment Amounts), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against Agent in performing its duties
hereunder, or in any way relating to or arising out of this Agreement or any
Other Document; provided that Lenders shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent’s gross (not mere)
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment).
 
         14.9   Agent in its Individual Capacity. With respect to the obligation
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term “Lender” or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
any Loan Party as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Loan Party for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders.
 
         14.10   Delivery of Documents. To the extent Agent receives financial
statements required under Sections 9.7, 9.9, 9.12 and 9.13 or Borrowing Base
Certificates from any Loan Party pursuant to the terms of this Agreement which
any Loan Party is not obligated to deliver to each Lender, Agent will promptly
furnish such documents and information to Lenders.
 
         14.11   Loan Parties’ Undertaking to Agent. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
each Loan Party hereby undertakes with Agent to pay to Agent from time to time
on demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro tanto
satisfy the relevant Loan Party’s obligations to make payments for the account
of Lenders or the relevant one or more of them pursuant to this Agreement.
 
 
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         14.12   No Reliance on Agent’s Customer Identification Program. To the
extent the Advances or this Agreement is, or becomes, syndicated in cooperation
with other Lenders, each Lender acknowledges and agrees that neither such
Lender, nor any of its Affiliates, participants or assignees, may rely on Agent
to carry out such Lender's, Affiliate's, participant's or assignee's customer
identification program, or other obligations required or imposed under or
pursuant to the USA PATRIOT Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the
“CIP Regulations”), or any other Anti-Terrorism Law, including any programs
involving any of the following items relating to or in connection with any of
Loan Parties, their Affiliates or their agents, the Other Documents or the
transactions hereunder or contemplated hereby: (i) any identity verification
procedures, (ii) any recordkeeping, (iii) comparisons with government lists,
(iv) customer notices or (v) other procedures required under the CIP Regulations
or such Anti-Terrorism Laws.
 
         14.13   Other Agreements. Each of the Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to any Loan Party or any deposit
accounts of any Loan Party now or hereafter maintained with such Lender.
Anything in this Agreement to the contrary notwithstanding, each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take any action to protect or enforce its rights arising out of this
Agreement or the Other Documents, it being the intent of Lenders that any such
action to protect or enforce rights under this Agreement and the Other Documents
shall be taken in concert and at the direction or with the consent of Agent or
Required Lenders.
 
XV.          BORROWING AGENCY.
 
           15.1   Borrowing Agency Provisions.
 
            (a)    Each Borrower hereby irrevocably designates Borrowing Agent
to be its attorney and agent and in such capacity to (i) borrow, (ii) request
advances, (iii) request the issuance of Letters of Credit, (iv) sign and endorse
notes, (v) execute and deliver all instruments, documents, applications,
security agreements, reimbursement agreements and letter of credit agreements
for Letters of Credit and all other certificates, notice, writings and further
assurances now or hereafter required hereunder, (vi) make elections regarding
interest rates, (vii) give instructions regarding Letters of Credit and agree
with Issuer upon any amendment, extension or renewal of any Letter of Credit and
(viii) otherwise take action under and in connection with this Agreement and the
Other Documents, all on behalf of and in the name such Borrower or Borrowers,
and hereby authorizes Agent to pay over or credit all loan proceeds hereunder in
accordance with the request of Borrowing Agent.
 
 
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          (b)           The handling of this credit facility as a co-borrowing
facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. Neither Agent nor
any Lender shall incur liability to Borrowers as a result thereof. To induce
Agent and Lenders to do so and in consideration thereof, each Borrower hereby
indemnifies Agent and each Lender and holds Agent and each Lender harmless from
and against any and all liabilities, expenses, losses, damages and claims of
damage or injury asserted against Agent or any Lender by any Person arising from
or incurred by reason of the handling of the financing arrangements of Borrowers
as provided herein, reliance by Agent or any Lender on any request or
instruction from Borrowing Agent or any other action taken by Agent or any
Lender with respect to this Section 15.1 except due to willful misconduct or
gross (not mere) negligence by the indemnified party (as determined by a court
of competent jurisdiction in a final and non-appealable judgment).
 
             (c)           All Obligations shall be joint and several, and each
Borrower shall make payment upon the maturity of the Obligations by acceleration
or otherwise, and such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and forbearance granted
by Agent or any Lender to any Borrower, failure of Agent or any Lender to give
any Borrower notice of borrowing or any other notice, any failure of Agent or
any Lender to pursue or preserve its rights against any Borrower, the release by
Agent or any Lender of any Collateral now or thereafter acquired from any
Borrower, and such agreement by each Borrower to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrowers or any Collateral for such Borrower’s
Obligations or the lack thereof. Each Borrower waives all suretyship defenses.
 
     15.2   Waiver of Subrogation. Each Borrower expressly waives any and all
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which such Borrower may now or hereafter have against the other
Borrowers or any other Person directly or contingently liable for the
Obligations hereunder, or against or with respect to any other Borrowers’
property (including, without limitation, any property which is Collateral for
the Obligations), arising from the existence or performance of this Agreement,
until termination of this Agreement and repayment in full of the Obligations.
 
XVI.       MISCELLANEOUS.
 
     16.1   Governing Law. This Agreement and each Other Document (unless and
except to the extent expressly provided otherwise in any such Other Document),
and all matters relating hereto or thereto or arising herefrom or therefrom
(whether arising under contract law, tort law or otherwise) shall, in accordance
with Section 5-1401 of the General Obligations Law of the State of New York, be
governed by and construed in accordance with the laws of the State of New York.
Any judicial proceeding brought by or against any Loan Party with respect to any
of the Obligations, this Agreement, the Other Documents or any related agreement
may be brought in any court of competent jurisdiction in the State of New York,
United States of America, and, by execution and delivery of this Agreement, each
Loan Party accepts for itself and in connection with its properties, generally
and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and
irrevocably
 
 
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agrees to be bound by any judgment rendered thereby in connection with this
Agreement. Each Loan Party hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified
or registered mail (return receipt requested) directed to Borrowing Agent at its
address set forth in Section 16.6 and service so made shall be deemed completed
five (5) days after the same shall have been so deposited in the mails of the
United States of America, or, at Agent’s option, by service upon Borrowing Agent
which each Loan Party irrevocably appoints as such Loan Party’s Agent for the
purpose of accepting service within the State of New York. Nothing herein shall
affect the right to serve process in any manner permitted by law or shall limit
the right of Agent or any Lender to bring proceedings against any Loan Party in
the courts of any other jurisdiction. Each Loan Party waives any objection to
jurisdiction and venue of any action instituted hereunder and shall not assert
any defense based on lack of jurisdiction or venue or based upon forum non
conveniens. Each Loan Party waives the right to remove any judicial proceeding
brought against such Loan Party in any state court to any federal court. Any
judicial proceeding by any Loan Party against Agent or any Lender involving,
directly or indirectly, any matter or claim in any way arising out of, related
to or connected with this Agreement or any related agreement, shall be brought
only in a federal or state court located in the County of New York, State of New
York.
 
     16.2   Entire Understanding.
 
            (a)           This Agreement and the documents executed concurrently
herewith contain the entire understanding between each Loan Party, Agent and
each Lender and supersedes all prior agreements and understandings, if any,
relating to the subject matter hereof. Any promises, representations, warranties
or guarantees not herein contained and hereinafter made shall have no force and
effect unless in writing, signed by each Loan Party’s, Agent’s and each Lender’s
respective officers. Neither this Agreement nor any portion or provisions hereof
may be changed, modified, amended, waived, supplemented, discharged, cancelled
or terminated orally or by any course of dealing, or in any manner other than by
an agreement in writing, signed by the party to be charged. Each Loan Party
acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.
 
            (b)           Required Lenders, Agent with the consent in writing of
Required Lenders, and Loan Parties may, subject to the provisions of this
Section 16.2(b), from time to time enter into written supplemental agreements to
this Agreement or the Other Documents executed by Loan Parties, for the purpose
of adding or deleting any provisions or otherwise changing, varying or waiving
in any manner the rights of Lenders, Agent or Loan Parties thereunder or the
conditions, provisions or terms thereof or waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall:
 
            (i)          increase the Revolving Commitment Percentage or the
maximum dollar amount of the Revolving Commitment Amount of any Lender without
the consent of such Lender directly affected thereby;
 
 
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                   (ii)         whether or not any Advances are outstanding,
extend the Term or the time for payment of principal or interest of any Advance
(excluding the due date of any mandatory prepayment of an Advance), or any fee
payable to any Lender, or reduce the principal amount of or the rate of interest
borne by any Advances or reduce any fee payable to any Lender, without the
consent of each Lender directly affected thereby (except that Required Lenders
may elect to waive or rescind any imposition of the Default Rate under Section
3.1 or of default rates of Letter of Credit fees under Section 3.2 (unless
imposed by Agent));
 
            (iii)        increase the Maximum Revolving Advance Amount without
the consent of all Lenders holding a Revolving Commitment;
 
            (iv)         alter the definition of the term Required Lenders or
alter, amend or modify this Section 16.2(b) without the consent of all Lenders;
 
            (v)          alter, amend or modify the provisions of Section 11.5
without the consent of all Lenders;
 
            (vi)         release any Collateral during any calendar year (other
than in accordance with the provisions of this Agreement) having an aggregate
value in excess of $5,000,000 without the consent of all Lenders;
 
            (vii)       change the rights and duties of Agent without the
consent of all Lenders;
 
            (viii)      subject to clause (e) below, permit any Revolving
Advance to be made if after giving effect thereto the total of Revolving
Advances outstanding hereunder would exceed the Formula Amount for more than
sixty (60) consecutive Business Days or exceed one hundred and ten percent
(110%) of the Formula Amount without the consent of all Lenders holding a
Revolving Commitment;
 
            (ix)        increase the Advance Rate above the Advance Rate in
effect on the Closing Date without the consent of all Lenders holding a
Revolving Commitment; or
 
            (x)          release any Guarantor or Borrower without the consent
of all Lenders.
 
        (c)           Any such supplemental agreement shall apply equally to
each Lender and shall be binding upon Loan Parties, Lenders and Agent and all
future holders of the Obligations. In the case of any waiver, Loan Parties,
Agent and Lenders shall be restored to their former positions and rights, and
any Event of Default waived shall be deemed to be cured and not continuing, but
no waiver of a specific Event of Default shall extend to any subsequent Event of
Default (whether or not the subsequent Event of Default is the same as the Event
of Default which was waived), or impair any right consequent thereon.
 
 
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        (d)           In the event that Agent requests the consent of a Lender
pursuant to this Section 16.2 and such consent is denied, then Agent may, at its
option, require such Lender to assign its interest in the Advances to Agent or
to another Lender or to any other Person designated by Agent (the “Designated
Lender”), for a price equal to (i) the then outstanding principal amount thereof
plus (ii) accrued and unpaid interest and fees due such Lender, which interest
and fees shall be paid when collected from Loan Parties. In the event Agent
elects to require any Lender to assign its interest to Agent or to the
Designated Lender, Agent will so notify such Lender in writing within forty five
(45) days following such Lender’s denial, and such Lender will assign its
interest to Agent or the Designated Lender no later than five (5) days following
receipt of such notice pursuant to a Commitment Transfer Supplement executed by
such Lender, Agent or the Designated Lender, as appropriate, and Agent.
 
           (e)           Notwithstanding (i) the existence of a Default or an
Event of Default, (ii) that any of the other applicable conditions precedent set
forth in Section 8.2 hereof have not been satisfied or the commitments of
Lenders to make Revolving Advances hereunder have been terminated for any
reason, or (iii) any other contrary provision of this Agreement, Agent may at
its discretion and without the consent of any Lender, voluntarily permit the
outstanding Revolving Advances at any time to exceed the Formula Amount by up to
ten percent (10%) of the Formula Amount for up to sixty (60) consecutive
Business Days (the “Out-of-Formula Loans”). If Agent is willing in its sole and
absolute discretion to permit such Out-of-Formula Loans, Lenders holding the
Revolving Commitments shall be obligated to fund such Out-of-Formula Loans in
accordance with their respective Revolving Commitment Percentages, and such
Out-of-Formula Loans shall be payable on demand and shall bear interest at the
Default Rate for Revolving Advances consisting of Domestic Rate Loans; provided
that, if Agent does permit Out-of-Formula Loans, neither Agent nor Lenders shall
be deemed thereby to have changed the limits of Section 2.1(a) nor shall any
Lender be obligated to fund Revolving Advances in excess of its Revolving
Commitment Amount. For purposes of this paragraph, the discretion granted to
Agent hereunder shall not preclude involuntary overadvances that may result from
time to time due to the fact that the Formula Amount was unintentionally
exceeded for any reason, including, but not limited to, Collateral previously
deemed to be “Eligible Receivables” becomes ineligible, collections of
Receivables applied to reduce outstanding Revolving Advances are thereafter
returned for insufficient funds or overadvances are made to protect or preserve
the Collateral. In the event Agent involuntarily permits the outstanding
Revolving Advances to exceed the Formula Amount by more than ten percent (10%),
Agent shall use its efforts to have Borrowers decrease such excess in as
expeditious a manner as is practicable under the circumstances and not
inconsistent with the reason for such excess. Revolving Advances made after
Agent has determined the existence of involuntary overadvances shall be deemed
to be involuntary overadvances and shall be decreased in accordance with the
preceding sentence. To the extent any Out-of-Formula Loans are not actually
funded by the other Lenders as provided for in this Section 16.2(e), Agent may
elect in its discretion to fund such Out-of-Formula Loans and any such
Out-of-Formula Loans so funded by Agent shall be deemed to be Revolving Advances
made by and owing to Agent, and Agent shall be entitled to all rights (including
accrual of interest) and remedies of a Lender holding a Revolving Commitment
under this Agreement and the Other Documents with respect to such Revolving
Advances.
 
 
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           (f)           In addition to (and not in substitution of) the
discretionary Revolving Advances permitted above in this Section 16.2, Agent is
hereby authorized by Borrowers and Lenders, at any time in Agent’s sole
discretion, regardless of (i) the existence of a Default or an Event of Default,
(ii) whether any of the other applicable conditions precedent set forth in
Section 8.2 hereof have not been satisfied or the commitments of Lenders to make
Revolving Advances hereunder have been terminated for any reason, or (iii) any
other contrary provision of this Agreement, to make Revolving Advances
(“Protective Advances”) to Borrowers on behalf of Lenders which Agent, in its
reasonable business judgment, deems necessary or desirable (a) to preserve or
protect the Collateral, or any portion thereof, (b) to enhance the likelihood
of, or maximize the amount of, repayment of the Advances and other Obligations,
or (c) to pay any other amount chargeable to Loan Parties pursuant to the terms
of this Agreement (the “Protective Advances”). Lenders holding the Revolving
Commitments shall be obligated to fund such Protective Advances and effect a
settlement with Agent therefor upon demand of Agent in accordance with their
respective Revolving Commitment Percentages. To the extent any Protective
Advances are not actually funded by the other Lenders as provided for in this
Section 16.2(f), any such Protective Advances funded by Agent shall be deemed to
be Revolving Advances made by and owing to Agent, and Agent shall be entitled to
all rights (including accrual of interest) and remedies of a Lender holding a
Revolving Commitment under this Agreement and the Other Documents with respect
to such Revolving Advances.
 
     16.3   Successors and Assigns; Participations; New Lenders.
 
          (a)           This Agreement shall be binding upon and inure to the
benefit of Loan Parties, Agent, each Lender, all future holders of the
Obligations and their respective successors and assigns, except that no Loan
Party may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of Agent and each Lender.
 
          (b)           Each Loan Party acknowledges that in the regular course
of commercial banking business one or more Lenders may at any time and from time
to time sell participating interests in the Advances to other Persons (each such
transferee or purchaser of a participating interest, a “Participant”). Each
Participant may exercise all rights of payment (including rights of set-off)
with respect to the portion of such Advances held by it or other Obligations
payable hereunder as fully as if such Participant were the direct holder thereof
provided that (i) Borrowers shall not be required to pay to any Participant more
than the amount which it would have been required to pay to Lender which granted
an interest in its Advances or other Obligations payable hereunder to such
Participant had such Lender retained such interest in the Advances hereunder or
other Obligations payable hereunder unless the sale of the participation to such
Participant is made with Borrower’s prior written consent, and (ii) in no event
shall Borrowers be required to pay any such amount arising from the same
circumstances and with respect to the same Advances or other Obligations payable
hereunder to both such Lender and such Participant. Each Loan Party hereby
grants to any Participant a continuing security interest in any deposits, moneys
or other property actually or constructively held by such Participant as
security for the Participant’s interest in the Advances.
 
 
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                 (c)           Any Lender, with the consent of Agent, may sell,
assign or transfer all or any part of its rights and obligations under or
relating to Revolving Advances under this Agreement and the Other Documents to
one or more additional Persons and one or more additional Persons may commit to
make Advances hereunder (each a “Purchasing Lender”), in minimum amounts of not
less than $2,000,000, pursuant to a Commitment Transfer Supplement, executed by
a Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for
recording. Upon such execution, delivery, acceptance and recording, from and
after the transfer effective date determined pursuant to such Commitment
Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement, have the
rights and obligations of a Lender thereunder with a Revolving Commitment
Percentage as set forth therein, and (ii) the transferor Lender thereunder
shall, to the extent provided in such Commitment Transfer Supplement, be
released from its obligations under this Agreement, the Commitment Transfer
Supplement creating a novation for that purpose. Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the Revolving Commitment Percentages arising from the
purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Each Loan Party hereby consents to the addition of such Purchasing
Lender and the resulting adjustment of the Revolving Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Loan Parties shall execute and deliver such further documents
and do such further acts and things in order to effectuate the foregoing;
provided, however, that the consent of Borrowing Agent (such consent not to be
unreasonably withheld or delayed) shall be required with respect to assignments
pursuant to this Section 16.3(c) unless (x) an Event of Default has occurred and
is continuing at the time of such assignment or (y) such assignment is to a
Permitted Assignee; provided that Borrowing Agent shall be deemed to have
consented to any such assignment unless it shall object thereto by written
notice to Agent within five (5) Business Days after having received prior notice
thereof.
 
          (d)    Any Lender, with the consent of Agent which shall not be
unreasonably withheld or delayed, may directly or indirectly sell, assign or
transfer all or any portion of its rights and obligations under or relating to
Revolving Advances under this Agreement and the Other Documents to an entity,
whether a corporation, partnership, trust, limited liability company or other
entity that (i) is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and (ii) is administered, serviced or managed by the assigning Lender
or an Affiliate of such Lender (a “Purchasing CLO” and together with each
Participant and Purchasing Lender, each a “Transferee” and collectively the
“Transferees”), pursuant to a Commitment Transfer Supplement modified as
appropriate to reflect the interest being assigned (“Modified Commitment
Transfer Supplement”), executed by any intermediate purchaser, the Purchasing
CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for
recording. Upon such execution and delivery, from and after the transfer
effective date determined pursuant to such Modified Commitment Transfer
Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the
extent provided in such Modified Commitment Transfer Supplement, have the rights
and obligations of a Lender thereunder and (ii) the transferor Lender thereunder
shall, to the extent provided in such Modified Commitment Transfer Supplement,
be released from its obligations under this Agreement, the Modified Commitment
Transfer Supplement creating a novation for that purpose. Such Modified
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing CLO. Each Loan Party hereby consents to the addition of such
Purchasing CLO. Loan Parties shall execute and deliver such further documents
and do such further acts and things in order to effectuate the foregoing.
 
 
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          (e)           Agent shall maintain at its address a copy of each
Commitment Transfer Supplement and Modified Commitment Transfer Supplement
delivered to it and a register (the “Register”) for the recordation of the names
and addresses of each Lender and the outstanding principal, accrued and unpaid
interest and other fees due hereunder. The entries in the Register shall be
conclusive, in the absence of manifest error, and each Loan Party, Agent and
Lenders may treat each Person whose name is recorded in the Register as the
owner of the Advance recorded therein for the purposes of this Agreement. The
Register shall be available for inspection by Borrowing Agent or any Lender at
any reasonable time and from time to time upon reasonable prior notice. Agent
shall receive a fee in the amount of $3,500 payable by the applicable Purchasing
Lender and/or Purchasing CLO upon the effective date of each transfer or
assignment (other than to an intermediate purchaser) to such Purchasing Lender
and/or Purchasing CLO.
 
          (f)           Each Loan Party authorizes each Lender to disclose to
any Transferee and any prospective Transferee any and all financial information
in such Lender’s possession concerning such Loan Party which has been delivered
to such Lender by or on behalf of such Loan Party pursuant to this Agreement or
in connection with such Lender’s credit evaluation of such Loan Party.
 
          (g)           Notwithstanding anything to the contrary contained in
this Agreement, any Lender may at any time and from time to time pledge or
assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
 
     16.4   Application of Payments. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any
Loan Party makes a payment or Agent or any Lender receives any payment or
proceeds of the Collateral for any Loan Party’s benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
 
 
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     16.5   Indemnity. Each Loan Party shall defend, protect, indemnify, pay and
save harmless Agent, Issuer, each Lender and each of their respective officers,
directors, Affiliates, attorneys, employees and agents (each an “Indemnified
Party”) for and from and against any and all claims, demands, liabilities,
obligations, losses, damages, penalties, fines, actions, judgments, suits,
costs, charges, expenses and disbursements of any kind or nature whatsoever
(including fees and disbursements of counsel (including allocated costs of
internal counsel)) (collectively, “Claims”) which may be imposed on, incurred
by, or asserted against any Indemnified Party in arising out of or in any way
relating to or as a consequence, direct or indirect, of: (i) this Agreement, the
Other Documents, the Advances and other Obligations and/or the transactions
contemplated hereby including the Transactions, (ii) any action or failure to
act or action taken only after delay or the satisfaction of any conditions by
any Indemnified Party in connection with and/or relating to the negotiation,
execution, delivery or administration of the Agreement and the Other Documents,
the credit facilities established hereunder and thereunder and/or the
transactions contemplated hereby including the Transactions, (iii) any Loan
Party’s failure to observe, perform or discharge any of its covenants,
obligations, agreements or duties under or breach of any of the representations
or warranties made in this Agreement and the Other Documents, (iv) the
enforcement of any of the rights and remedies of Agent, Issuer or any Lender
under the Agreement and the Other Documents, (v) any threatened or actual
imposition of fines or penalties, or disgorgement of benefits, for violation of
any Anti-Terrorism Law by any Loan Party, any Affiliate or Subsidiary of any
Loan Parties, or any Guarantor, and (vi) any claim, litigation, proceeding or
investigation instituted or conducted by any Governmental Body or
instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the Other Documents, whether or not Agent or any Lender is a party
thereto. Without limiting the generality of any of the foregoing, each Loan
Party shall defend, protect, indemnify, pay and save harmless each Indemnified
Party from (x) any Claims which may be imposed on, incurred by, or asserted
against any Indemnified Party arising out of or in any way relating to or as a
consequence, direct or indirect, of the issuance of any Letter of Credit
hereunder and (y) any Claims which may be imposed on, incurred by, or asserted
against any Indemnified Party under any Environmental Laws with respect to or in
connection with the Real Property, any Hazardous Discharge, the presence of any
Hazardous Materials affecting the Real Property (whether or not the same
originates or emerges from the Real Property or any contiguous real estate),
including any Claims consisting of or relating to the imposition or assertion of
any Lien on any of the Real Property under any Environmental Laws and any loss
of value of the Real Property as a result of the foregoing except to the extent
such loss, liability, damage and expense is attributable to any Hazardous
Discharge resulting from actions on the part of Agent or any Lender. Loan
Parties’ obligations under this Section 16.5 shall arise upon the discovery of
the presence of any Hazardous Materials at the Real Property, whether or not any
federal, state, or local environmental agency has taken or threatened any action
in connection with the presence of any Hazardous Materials, in each such case
except to the extent that any of the foregoing arises out of the gross
negligence or willful misconduct of the Indemnified Party (as determined by a
court of competent jurisdiction in a final and non-appealable judgment). Without
limiting the generality of the foregoing, this indemnity shall extend to any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever (including
fees and disbursements of counsel) asserted against or incurred by any of the
Indemnified Parties by
 
 
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any Person under any Environmental Laws or similar laws by reason of any Loan
Party’s or any other Person’s failure to comply with laws applicable to solid or
hazardous waste materials, including Hazardous Materials and Hazardous Waste, or
other Toxic Substances. Additionally, if any taxes (excluding taxes imposed upon
or measured solely by the net income of Agent and Lenders, but including any
intangibles taxes, stamp tax, recording tax or franchise tax) shall be payable
by Agent, Lenders or Loan Parties on account of the execution or delivery of
this Agreement, or the execution, delivery, issuance or recording of any of the
Other Documents, or the creation or repayment of any of the Obligations
hereunder, by reason of any Applicable Law now or hereafter in effect, Loan
Parties will pay (or will promptly reimburse Agent and Lenders for payment of)
all such taxes, including interest and penalties thereon, and will indemnify and
hold the Indemnified Parties harmless from and against all liability in
connection therewith. This Section 16.5 shall not apply to the extent that the
losses, claims or damages relate to any Taxes described in Section 3.10.
 
     16.6   Notice. Any notice or request hereunder may be given to Borrowing
Agent or any Loan Party or to Agent or any Lender at their respective addresses
set forth below or at such other address as may hereafter be specified in a
notice designated as a notice of change of address under this Section. Any
notice, request, demand, direction or other communication (for purposes of this
Section 16.6 only, a “Notice”) to be given to or made upon any party hereto
under any provision of this Agreement shall be given or made by telephone or in
writing (which includes by means of electronic transmission (i.e., “e-mail”) or
facsimile transmission or by setting forth such Notice on a website to which
Loan Parties are directed (an “Internet Posting”) if Notice of such Internet
Posting (including the information necessary to access such site) has previously
been delivered to the applicable parties hereto by another means set forth in
this Section 16.6) in accordance with this Section 16.6. Any such Notice must be
delivered to the applicable parties hereto at the addresses and numbers set
forth under their respective names on Section 16.6 hereof or in accordance with
any subsequent unrevoked Notice from any such party that is given in accordance
with this Section 16.6. Any Notice shall be effective:
 
          (a)          In the case of hand-delivery, when delivered;
 
          (b)          If given by mail, four (4) days after such Notice is
deposited with the United States Postal Service, with first-class postage
prepaid, return receipt requested;
 
          (c)          In the case of a telephonic Notice, when a party is
contacted by telephone, if delivery of such telephonic Notice is confirmed no
later than the next Business Day by hand delivery, a facsimile or electronic
transmission, an Internet Posting or an overnight courier delivery of a
confirmatory Notice (received at or before noon on such next Business Day);
 
          (d)          In the case of a facsimile transmission, when sent to the
applicable party’s facsimile machine’s telephone number, if the party sending
such Notice receives confirmation of the delivery thereof from its own facsimile
machine;
 
          (e)          In the case of electronic transmission, when actually
received;
 
 
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          (f)           In the case of an Internet Posting, upon delivery of a
Notice of such posting (including the information necessary to access such site)
by another means set forth in this Section 16.6; and
 
          (g)           If given by any other means (including by overnight
courier), when actually received.
 
       Any Lender giving a Notice to Borrowing Agent or any Loan Party shall
concurrently send a copy thereof to Agent, and Agent shall promptly notify the
other Lenders of its receipt of such Notice.
 
             (A)        If to Agent or PNC at:
 

  PNC Bank, National Association   340 Madison Avenue   New York, New York 10173
  Attention:   Patrick McConnell   Telephone:   (212) 752-6086   Facsimile:     
(212) 303-0060      
with a copy to:
     
Hahn & Hessen LLP
 
488 Madison Avenue
 
New York, New York 10022
 
Attention:   Steven J. Seif
 
Telephone:   (212) 478-7200
 
Facsimile:    (212) 478-7400

 
          (B)        If to a Lender other than Agent, as specified on the
signature pages hereof
 
          (C)        If to Borrowing Agent or any Loan Party:
 

  InterCloud Systems Inc.   331 Newman Springs Road   Red Bank, NJ 07701  
Attention:     Mr. Daniel Sullivan
 
Telephone:   (732) 383-1284
 
E-mail:     daniel@sullivanssite.com
     
with a copy to:
     
Pryor Cashman LLP
 
7 Times Square
  New York, New York 10036  
Attention:   M. Ali Panjwani
 
Telephone:    212-326-0820
 
Facsimile:     212-798-6319

 
 
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   16.7   Survival. The obligations of Loan Parties under Sections 2.2(f),
2.2(g), 2.2(h), 3.7, 3.8, 3.9, 3.10, 16.5 and 16.9 and the obligations of
Lenders under Sections 2.2, 2.15(b), 2.16, 2.18, 2.19, 14.8 and 16.5 shall
survive termination of this Agreement and the Other Documents and payment in
full of the Obligations.
 
     16.8   Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under Applicable Laws, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible.
 
     16.9   Expenses. The Loan Parties shall pay (i) all out-of-pocket expenses
incurred by Agent and its Affiliates (including the reasonable fees, charges and
disbursements of counsel for Agent (provided that Loan Parties’ obligation under
this Section 16.9 to pay fees of counsel for services provided to Agent through
the Closing Date shall not exceed $100,000)), and shall pay all fees and time
charges and disbursements for attorneys who may be employees of Agent, in
connection with the syndication of the credit facilities provided for herein,
the preparation, negotiation, execution, delivery and administration of this
Agreement and the Other Documents or any amendments, modifications or waivers of
the provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all out-of-pocket expenses
incurred by Issuer in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder, (iii)
all out-of-pocket expenses incurred by Agent, any Lender or Issuer (including
the fees, charges and disbursements of any counsel for Agent, any Lender or
Issuer), and shall pay all fees and time charges for attorneys who may be
employees of Agent, any Lender or Issuer, in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the Other
Documents, including its rights under this Section, or (B) in connection with
the Advances made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit, and (iv) all
reasonable out-of-pocket expenses of Agent’s regular employees and agents
engaged periodically to perform audits of any Loan Party’s (or any Affiliate of
such Person) books, records and business properties.
 
     16.10  Injunctive Relief. Each Loan Party recognizes that, in the event any
Loan Party fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, or threatens to fail to perform, observe or
discharge such obligations or liabilities, any remedy at law may prove to be
inadequate relief to Lenders; therefor, Agent, if Agent so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that actual damages are not an adequate remedy.
 
     16.11  Consequential Damages. Neither Agent nor any Lender, nor any agent
or attorney for any of them, shall be liable to any Loan Party (or any Affiliate
of any such Person) for indirect, punitive, exemplary or consequential damages
arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations or as a result of
any transaction contemplated under this Agreement or any Other Document.
 
 
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     16.12   Captions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
 
     16.13   Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of and by different parties hereto on separate counterparts, all
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile or electronic transmission (including email
transmission of a PDF image) shall be deemed to be an original signature hereto.
 
     16.14   Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
 
     16.15   Confidentiality; Sharing Information. Agent, each Lender and each
Transferee shall hold all non-public information obtained by Agent, such Lender
or such Transferee pursuant to the requirements of this Agreement in accordance
with Agent’s, such Lender’s and such Transferee’s customary procedures for
handling confidential information of this nature; provided, however, Agent, each
Lender and each Transferee may disclose such confidential information (a) to its
examiners, Affiliates, outside auditors, counsel and other professional
advisors, (b) to Agent, any Lender or to any prospective Transferees, and (c) as
required or requested by any Governmental Body or representative thereof or
pursuant to legal process; provided, further that (i) unless specifically
prohibited by Applicable Law, Agent, each Lender and each Transferee shall use
its reasonable best efforts prior to disclosure thereof, to notify the
applicable Loan Party of the applicable request for disclosure of such
non-public information (A) by a Governmental Body or representative thereof
(other than any such request in connection with an examination of the financial
condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant
to legal process and (ii) in no event shall Agent, any Lender or any Transferee
be obligated to return any materials furnished by any Loan Party other than
those documents and instruments in possession of Agent or any Lender in order to
perfect its Lien on the Collateral once the Obligations have been paid in full
and this Agreement has been terminated. Each Loan Party acknowledges that from
time to time financial advisory, investment banking and other services may be
offered or provided to such Loan Party or one or more of its Affiliates (in
connection with this Agreement or otherwise) by any Lender or by one or more
Subsidiaries or Affiliates of such Lender and each Loan Party hereby authorizes
each Lender to share any information delivered to such Lender by such Loan Party
and its Subsidiaries pursuant to this Agreement, or in connection with the
decision of such Lender to enter into this Agreement, to any such Subsidiary or
Affiliate of such Lender, it being understood that any such Subsidiary or
Affiliate of any Lender receiving such information shall be bound by the
provisions of this Section 16.15 as if it were a Lender hereunder. Such
authorization shall survive the repayment of the other Obligations and the
termination of this Agreement. Notwithstanding any non-disclosure agreement or
similar document executed by Agent in favor of any Loan Party or any of any Loan
Party’s affiliates, the provisions of this Agreement shall supersede such
agreements.
 
 
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     16.16   Publicity. Each Loan Party and each Lender hereby authorizes Agent
to make appropriate announcements of the financial arrangement entered into
among Loan Parties, Agent and Lenders, including announcements which are
commonly known as tombstones, in such publications and to such selected parties
as Agent shall in its sole and absolute discretion deem appropriate.
 
     16.17   Certifications From Banks and Participants; USA PATRIOT Act.
 
           (a)           Each Lender or assignee or participant of a Lender that
is not incorporated under the Laws of the United States of America or a state
thereof (and is not excepted from the certification requirement contained in
Section 313 of the USA PATRIOT Act and the applicable regulations because it is
both (i) an affiliate of a depository institution or foreign bank that maintains
a physical presence in the United States or foreign country, and (ii) subject to
supervision by a banking authority regulating such affiliated depository
institution or foreign bank) shall deliver to the Agent the certification, or,
if applicable, recertification, certifying that such Lender is not a “shell” and
certifying to other matters as required by Section 313 of the USA PATRIOT Act
and the applicable regulations: (1) within ten (10) days after the Closing Date,
and (2) as such other times as are required under the USA PATRIOT Act.
 
           (b)           The USA PATRIOT Act requires all financial institutions
to obtain, verify and record certain information that identifies individuals or
business entities which open an "account" with such financial institution.
Consequently, Lender may from time to time request, and each Loan Party shall
provide to Lender, such Loan Party's name, address, tax identification number
and/or such other identifying information as shall be necessary for Lender to
comply with the USA PATRIOT Act and any other Anti-Terrorism Law.
 
     16.18   Anti-Terrorism Laws.
 
           (a)           Each Loan Party represents and warrants that (i) no
Covered Entity is a Sanctioned Person and (ii) no Covered Entity, either in its
own right or through any third party, (A) has any of its assets in a Sanctioned
Country or in the possession, custody or control of a Sanctioned Person in
violation of any Anti-Terrorism Law; (B) does business in or with, or derives
any of its income from investments in or transactions with, any Sanctioned
Country or Sanctioned Person in violation of any Anti-Terrorism Law; or (C)
engages in any dealings or transactions prohibited by any Anti-Terrorism Law.
 
           (b)           Each Loan Party covenants and agrees that (i) no
Covered Entity will become a Sanctioned Person, (ii) no Covered Entity, either
in its own right or through any third party, will (B) have any of its assets in
a Sanctioned Country or in the possession, custody or control of a Sanctioned
Person in violation of any Anti-Terrorism Law; (B) do business in or with, or
derive any of its income from investments in or transactions with, any
Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law;
(C) engage in any dealings or transactions prohibited by any Anti-Terrorism Law
or (D) use the Advances to fund any operations in, finance any investments or
activities in, or, make any payments to, a Sanctioned Country or Sanctioned
Person in violation of any Anti-Terrorism Law, (iii) the funds used to repay the
Obligations will not be derived from any unlawful activity, (iv) each Covered
Entity shall comply with all Anti-Terrorism Laws and (v) the Borrowers shall
promptly notify the Agent in writing upon the occurrence of a Reportable
Compliance Event.
 
 
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XVII.     GUARANTY.
 
     17.1   Guaranty. Each Guarantor hereby unconditionally guarantees, as a
primary obligor and not merely as a surety, jointly and severally with each
other Guarantor when and as due, whether at maturity, by acceleration, by notice
of prepayment or otherwise, the due and punctual performance of all Obligations;
provided that with respect to Obligations under or in respect of any Swap
Obligation, the foregoing guarantee shall only be effective to the extent that
such Guarantor is an Eligible Party at the time such Swap Obligation is entered
into and such Obligations and such guarantee thereof are not Excluded Swap
Obligations). Each payment made by any Guarantor pursuant to this Guaranty shall
be made in lawful money of the United States in immediately available funds.
 
     17.2   Waivers. Each Guarantor hereby absolutely, unconditionally and
irrevocably waives (i) promptness, diligence, notice of acceptance, notice of
presentment of payment and any other notice hereunder, (ii) demand of payment,
protest, notice of dishonor or nonpayment, notice of the present and future
amount of the Obligations and any other notice with respect to the Obligations,
(iii) any requirement that Agent, any Lender protect, secure, perfect or insure
any security interest or Lien on any property subject thereto or exhaust any
right or take any action against any other Loan Party, or any Person or any
Collateral, (iv) any other action, event or precondition to the enforcement
hereof or the performance by each such Guarantor of the Obligations, and (v) any
defense arising by any lack of capacity or authority or any other defense of any
Loan Party or any notice, demand or defense by reason of cessation from any
cause of Obligations other than payment and performance in full of the
Obligations by the Loan Parties and any defense that any other guarantee or
security was or was to be obtained by Agent.
 
     17.3   No Defense. No invalidity, irregularity, voidableness, voidness or
unenforceability of this Agreement or any Other Document or any other agreement
or instrument relating thereto, or of all or any part of the Obligations or of
any collateral security therefor shall affect, impair or be a defense hereunder.
 
     17.4   Guaranty of Payment. The Guaranty hereunder is one of payment and
performance, not collection, and the obligations of each Guarantor hereunder are
independent of the Obligations of the other Loan Parties, and a separate action
or actions may be brought and prosecuted against any Guarantor to enforce the
terms and conditions of this Article XVII, irrespective of whether any action is
brought against any other Loan Party or other Persons or whether any other Loan
Party or other Persons are joined in any such action or actions. Each Guarantor
waives any right to require that any resort be had
 
 
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by Agent or any Lender to any security held for payment of the Obligations or to
any balance of any deposit account or credit on the books of Agent or any Lender
in favor of any Loan Party or any other Person. No election to proceed in one
form of action or proceedings, or against any Person, or on any Obligations,
shall constitute a waiver of Agent’s right to proceed in any other form of
action or proceeding or against any other Person unless Agent has expressed any
such right in writing. Without limiting the generality of the foregoing, no
action or proceeding by Agent against any Loan Party under any document
evidencing or securing indebtedness of any Loan Party to Agent shall diminish
the liability of any Guarantor hereunder, except to the extent Agent receives
actual payment on account of Obligations by such action or proceeding,
notwithstanding the effect of any such election, action or proceeding upon the
right of subrogation of any Guarantor in respect of any Loan Party.
 
     17.5   Liabilities Absolute. The liability of each Guarantor hereunder
shall be absolute, unlimited and unconditional and shall not be subject to any
reduction, limitation, impairment, discharge or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any claim, defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of any other Obligation or otherwise.
Without limiting the generality of the foregoing, the obligations of each
Guarantor shall not be discharged or impaired, released, limited or otherwise
affected by:
 
          (a)           any change in the manner, place or terms of payment or
performance, and/or any change or extension of the time of payment or
performance of, release, renewal or alteration of, or any new agreements
relating to any Obligation, any security therefor, or any liability incurred
directly or indirectly in respect thereof, or any rescission of, or amendment,
waiver or other modification of, or any consent to departure from, this
Agreement or any Other Document, including any increase in the Obligations
resulting from the extension of additional credit to any Borrower or otherwise;
 
          (b)           any sale, exchange, release, surrender, loss,
abandonment, realization upon any property by whomsoever at any time pledged or
mortgaged to secure, or howsoever securing, all or any of the Obligations,
and/or any offset there against, or failure to perfect, or continue the
perfection of, any Lien in any such property, or delay in the perfection of any
such Lien, or any amendment or waiver of or consent to departure from any other
guaranty for all or any of the Obligations;
 
          (c)           the failure of Agent or any Lender to assert any claim
or demand or to enforce any right or remedy against any Borrower or any other
Loan Party or any other Person under the provisions of this Agreement or any
Other Document or any other document or instrument executed and delivered in
connection herewith or therewith;
 
          (d)           any settlement or compromise of any Obligation, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and any subordination of
the payment of all or any part thereof to the payment of any obligation (whether
due or not) of any Loan Party to creditors of any Loan Party other than any
other Loan Party;
 
 
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          (e)           any manner of application of Collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Obligations or any other
assets of any Loan Party; and
 
          (f)           any other agreements or circumstance of any nature
whatsoever that may or might in any manner or to any extent vary the risk of any
Guarantor, or that might otherwise at law or in equity constitute a defense
available to, or a discharge of, the Guaranty hereunder and/or the obligations
of any Guarantor, or a defense to, or discharge of, any Loan Party or any other
Person or party hereto or the Obligations or otherwise with respect to the
Advances or other financial accommodations to Borrowers pursuant to this
Agreement and/or the Other Documents.
 
     17.6   Waiver of Notice. Agent shall have the right to do any of the above
without notice to or the consent of any Guarantor and each Guarantor expressly
waives any right to notice of, consent to, knowledge of and participation in any
agreements relating to any of the above or any other present or future event
relating to Obligations whether under this Agreement or otherwise or any right
to challenge or question any of the above and waives any defenses of such
Guarantor which might arise as a result of such actions.
 
     17.7   Agent’s Discretion. Agent may at any time and from time to time
(whether prior to or after the revocation or termination of this Agreement)
without the consent of, or notice to, any Guarantor, and without incurring
responsibility to any Guarantor or impairing or releasing the Obligations, apply
any sums by whomsoever paid or howsoever realized to any Obligations regardless
of what Obligations remain unpaid.
 
     17.8   Reinstatement.
 
            (a)           The Guaranty provisions herein contained shall
continue to be effective or be reinstated, as the case may be, if claim is ever
made upon Agent or any Lender for repayment or recovery of any amount or amounts
received by such Person in payment or on account of any of the Obligations and
such Person repays all or part of said amount for any reason whatsoever,
including, without limitation, by reason of any judgment, decree or order of any
court or administrative body having jurisdiction over such Person or the
respective property of each, or any settlement or compromise of any claim
effected by such Person with any such claimant (including any Loan Party); and
in such event each Guarantor hereby agrees that any such judgment, decree,
order, settlement or compromise or other circumstances shall be binding upon
such Guarantor, notwithstanding any revocation hereof or the cancellation of any
note or other instrument evidencing any Obligation, and each Guarantor shall be
and remain liable to Agent and/or Lenders for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by such
Person(s).
 
           (b)           Agent shall not be re    quired to marshal any assets
in favor of any Guarantor, or against or in payment of Obligations.
 
           (c)           No Guarantor shall be entitled to claim against any
present or future security held by Agent from any Person for Obligations in
priority to or equally with any claim of Agent, or assert any claim for any
liability of any Loan Party to any Guarantor in priority to or equally with
claims of Agent for Obligations, and no Guarantor shall be entitled to compete
with Agent with respect to, or to advance any equal or prior claim to any
security held by Agent for Obligations.
 
 
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           (d)           If any Loan Party makes any payment to Agent, which
payment is wholly or partly subsequently invalidated, declared to be fraudulent
or preferential, set aside or required to be repaid to any Person under any
federal or provincial statute or at common law or under equitable principles,
then to the extent of such payment, the Obligation intended to be paid shall be
revived and continued in full force and effect as if the payment had not been
made, and the resulting revived Obligation shall continue to be guaranteed,
uninterrupted, by each Guarantor hereunder.
 
          (e)           All present and future monies payable by any Loan Party
to any Guarantor, whether arising out of a right of subrogation or otherwise,
are assigned to Agent for its benefit and for the ratable benefit of Lenders as
security for such Guarantor’s liability to Agent and Lenders hereunder and are
postponed and subordinated to Agent’s prior right to payment in full of
Obligations. Except to the extent prohibited otherwise by this Agreement, all
monies received by any Guarantor from any Loan Party shall be held by such
Guarantor as agent and trustee for Agent. This assignment, postponement and
subordination shall only terminate when the Obligations are paid in full in cash
and this Agreement is irrevocably terminated.
 
          (f)           Each Loan Party acknowledges this assignment,
postponement and subordination and, except as otherwise set forth herein, agrees
to make no payments to any Guarantor without the prior written consent of Agent.
Each Loan Party agrees to give full effect to the provisions hereof.
 
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]
 
 
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Each of the parties has signed this Agreement as of the day and year first above
written.
 
 

  INTERCLOUD SYSTEMS, INC.          
 
By:
/s/ Lawrence Sands     Name:  Lawrence Sands     Title: Senior Vice President  

 
 
 

  ADEX CORPORATION          
 
By:
/s/ Lawrence Sands     Name:  Lawrence Sands     Title: Vice President  

 
 
 

  ADEXCOMM CORPORATION          
 
By:
/s/ Lawrence Sands     Name:  Lawrence Sands     Title: Vice President  

 
 
 

  ADEX PUERTO RICO LLC          
 
By:
/s/ Lawrence Sands     Name:  Lawrence Sands     Title: Vice President  

 
 
 

  AW SOLUTIONS, INC.          
 
By:
/s/ Lawrence Sands     Name:  Lawrence Sands     Title: Vice President  

 
Signature Page to Revolving Credit and Security Agreement - 4328358
 
 
 

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  AW SOLUTIONS PUERTO RICO, LLC          
 
By:
/s/ Lawrence Sands     Name:  Lawrence Sands     Title: Vice President  

 
 
 

  TNS, INC.          
 
By:
/s/ Lawrence Sands     Name:  Lawrence Sands     Title: Vice President  

 
 
 

  TROPICAL COMMUNICATIONS, INC.          
 
By:
/s/ Lawrence Sands     Name:  Lawrence Sands     Title: Vice President  

 
 
 

  RIVES-MONTEIRO ENGINEERING LLC          
 
By:
/s/ Lawrence Sands     Name:  Lawrence Sands     Title: Vice President  

 
 
 

  RIVES-MONTEIRO LEASING, LLC          
 
By:
/s/ Lawrence Sands     Name:  Lawrence Sands     Title: Vice President  

 
 

 
ENVIRONMENTAL REMEDIATION
AND FINANCIAL SERVICES, LLC
         
 
By:
/s/ Lawrence Sands     Name:  Lawrence Sands     Title: Vice President  

 
Signature Page to Revolving Credit and Security Agreement - 4328358
 
 
 

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PNC BANK, NATIONAL ASSOCIATION,
As Lender and as Agent
         
 
By:
/s/ Kevin Madigan      Name:  Kevin Madigan     Title: Senior Vice President    
                Revolving Commitment Percentage: 100%
Revolving Commitment Amount $10,000,000

 
 
 

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

 
 
Exhibit 1.2 - Borrowing Base Certificate

 
 

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

 
 
 
Exhibit 1.2(a) - Compliance Certificate
 
 
 

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

 
 
EXHIBIT 1.2(a)
 
Form of Compliance Certificate
 
____________ __, 20_
 
PNC Bank, National Association, as Agent 340 Madison Avenue
New York, New York 10173
Attention:     Portfolio Manager — Intercloud Systems, Inc.
 
Re:    Compliance Certificate
 
Ladies and Gentlemen:
 
This Compliance Certificate (this "Certificate") is executed and delivered
pursuant to Sections 9.3, 9.7 and 9.9 of the Revolving Credit and Security
Agreement dated as of September [ ], 2013 (as the same may be amended,
supplemented, restated or modified from time to time, collectively, the "Loan
Agreement") among Intercloud Systems, Inc., a corporation formed under the laws
of the State of Delaware ("Intercloud", and together with any other Person which
is now, or may from time to time be joined as a Borrower thereunder, each a
"Borrower", and collectively "Borrowers"), the Guarantors party thereto
(together with the Borrowers, each a "Loan Party", and collectively "Loan
Parties"), the financial institutions which are now or which hereafter become a
party thereto (collectively, the "Lenders" and each individually a "Lender") and
PNC BANK, NATIONAL ASSOCIATION ("PNC"), as agent for Lenders (PNC, in such
capacity, the "Agent"). All capitalized terms used herein without definition
shall have the meanings given to them in the Loan Agreement.
 
The undersigned, , solely in [his,her] capacity as [Chief Financial Officer]
[Controller] of Borrowing Agent hereby gives this Certificate to Agent as
required by Sections 9.3, 9.7 and 9.9 of the Loan Agreement. I have attached
hereto the applicable financial statements of Loan Parties on a Consolidated
Basis and Loan Parties on a consolidating basis for the [month] fiscal year]
ended , 20_. To the best of  my knowledge, each Loan Party is in compliance in
all material respects with all applicable Environmental Laws, except as set
forth in a schedule ("Schedule 1") attached hereto setting forth with
specificity all such areas of non-compliance and the proposed action the
applicable Loan Party will implement in order to achieve full compliance. The
undersigned hereby certifies to Agent and Lenders that, based upon an
examination sufficient to permit me to make an informed statement, as of the
date hereof:
 
1.           [No Default or Event of Default has occurred or is continuing as of
the date hereof.] or [The following Default or Event of Default has occurred, is
continuing and the following steps have been taken to correct the aforementioned
Default or Event of Default.]
 
2.           Loan Parties are in compliance with the requirements or
restrictions imposed by Sections 6.5, 7.6 and 7.11 of the Loan Agreement. To the
extent applicable, attachedhereto are the calculations and information necessary
to determine the foregoing covenant values.
 
 
2 

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

 
 
The undersigned has reviewed the terms of the Loan Agreement and has made, or
caused to be made under his supervision, a review in reasonable detail of the
transactions and financial condition of the Loan Parties during the fiscal
period covered by this Certificate sufficient to permit the undersigned to make
an informed statement with respect to the matters set forth in this Certificate.
 

     
By:
 
Title: [Chief Financial Officer] [Controller]

 
 
 

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

 
 
Exhibit 2.1(a) - Revolving Credit Note
 
 
 

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

 
 
REVOLVING CREDIT NOTE
 
$10,000,000
New York, New York
 
September 20, 2013

 
This Revolving Credit Note (this "Note") is executed and delivered under and
pursuant to the terms of that certain Revolving Credit and Security Agreement
dated as of the date hereof (as amended, modified, supplemented or restated from
time to time, the "Loan Agreement") by and among INTERCLOUD SYSTEMS, INC., a
corporation organized under the laws of the State of Delaware ("Intercloud"),
ADEX CORPORATION, a corporation organized under the laws of the State of New
York ("Adex Corp"), ADEX PUERTO RICO LLC, a limited liability company formed
under the laws of the Commonwealth of Puerto Rico ("Adex PR"), AW SOLUTIONS,
INC., a corporation organized under the laws of the State of Florida ("AW
Solutions"), AW SOLUTIONS PUERTO RICO, LLC, a limited liability company
organized under the laws of the Commonwealth of Puerto Rico ("AW PR"), and T N
S, INC., a corporation organized under the laws of the State of Illinois
("TNS"), together with Intercloud, Adex Corp, Adex PR, AW Solutions, AW PR, TNS
and each Person joined to the Loan Agreement as a borrower from time to time,
collectively "Borrowers" and each a "Borrower"), the other Loan Parties, PNC
BANK, NATIONAL ASSOCIATION ("PNC"), the various other financial institutions
named therein or which hereafter become a party thereto (together with PNC,
collectively, the "Lenders") and PNC as agent for the Lenders (PNC, in such
capacity, "Agent"). Capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Loan Agreement.
 
FOR VALUE RECEIVED, Borrowers jointly and severally promise to pay to the order
of Agent, for its benefit and for the ratable benefit of the Lenders, at Agent's
offices located at Two Tower Center Boulevard, East Brunswick, NJ 08816 or at
such other place as the holder hereof may from time to time designate to
Borrowing Agent in writing:
 
the principal sum of TEN MILLION AND 00/100 DOLLARS ($10,000,000), or if
different from such amount, the unpaid principal balance of Revolving Advances
as may be due and owing from time to time under the Loan Agreement, payable in
accordance with the provisions of the Loan Agreement, subject to acceleration
upon the occurrence of an Event of Default under the Loan Agreement, or earlier
termination of the Loan Agreement pursuant to the terms thereof; and
 
interest on the principal amount of this Note from time to time outstanding,
payable at the applicable Revolving Interest Rate in accordance with the
provisions of the Loan Agreement. Upon and after the occurrence of an Event of
Default, and during the continuation thereof, interest shall be payable at the
applicable Default Rate. In no event, however, shall interest hereunder exceed
the maximum interest rate permitted by law.
 
This Note is the Revolving Credit Note referred to in the Loan Agreement and is
secured, inter alia, by the liens granted pursuant to the Loan Agreement and the
Other Documents, is entitled to the benefits of the Loan Agreement and the Other
Documents, and is subject to all of the agreements, terms and conditions therein
contained.
 
 
 

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

 
 
This Note may be voluntarily prepaid, in whole or in part, on the terms and
conditions set forth in the Loan Agreement.
 
If an Event of Default under Section 10.7 of the Loan Agreement shall occur,
then this Note shall immediately become due and payable, without notice,
together with attorneys' fees if the collection hereof is placed in the hands of
an attorney to obtain or enforce payment hereof. If any other Event of Default
shall occur under the Loan Agreement or any of the Other Documents which is not
waived by Agent in writing, then this Note may, as provided in the Loan
Agreement, be declared to be immediately due and payable, without notice,
together with attorneys' fees, if the collection hereof is placed in the hands
of an attorney to obtain or enforce payment hereof.
 
This Note shall be governed by and construed in accordance with the laws of the
State of New York.
 
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]
 
 
2

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

 
 
Each Borrower expressly waives any presentment, demand, protest, notice of
protest, or notice of any kind except as expressly provided in the Loan
Agreement.
 

 
INTERCLOUD SYSTEMS, INC.
       
By:
   
Name:
   
Title:
         
ADEX CORPORATION
       
By:
   
Name:
   
Title:
         
ADEX PUERTO RICO LLC
       
By:
   
Name:
   
Title:
         
AW SOLUTIONS, INC.
       
By:
   
Name:
   
Title:
 

 
 
 

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AW SOLUTIONS PUERTO RICO, INC.
       
By:
   
Name:
   
Title:
         
T N 5, INC.
       
By:
   
Name:
   
Title:
 

 
 
 

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

 
 
Exhibit 8.1(d) - Financial Condition Certificate
 
 
 

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

 
 
FINANCIAL CONDITION CERTIFICATE
 
Dated: _________ __, 2013
 
The undersigned, Daniel J. Sullivan, being first duly sworn on oath, does hereby
depose and say, solely in his capacity as Chief Financial Officer ("CFO") of
Intecloud Systems, Inc., a corporation organized under the laws of the State of
Delaware ("Intercloud"), that:
 
1.           The undersigned is the duly elected, qualified and acting CFO of
Intercloud. Intercloud is a corporation duly organized, existing and in good
standing under the laws of the State of Delaware.
 
2.           As CFO, the undersigned is familiar in all material respects with
the business and financial affairs of each Loan Party (as defined below),
including, without limiting the generality of the foregoing, all of the matters
hereinafter described.
 
3.           This Financial Condition Certificate (this "Certificate") is made
and delivered to PNC Bank, National Association ("PNC"), each of the other
financial institutions (together with PNC, collectively, the "Lenders") named in
or which hereafter become a party to the Loan Agreement (as hereinafter defined)
and PNC, as agent for Lenders (in such capacity, "Agent") pursuant to the terms
of a Revolving Credit and Security Agreement among Intercloud, the other
Borrowers and Guarantors (each as defined in the Loan Agreement) party thereto
(Intercloud, together with such other Borrowers and Guarantors, collectively
"Loan Parties" and each a "Loan Party"), Agent and Lenders (as amended,
modified, restated or supplemented from time to time, the "Loan Agreement"), for
the purpose of inducing Agent and Lenders, now and from time to time hereafter,
to advance monies and extend credit and other financial accommodations to
Borrowers pursuant to the Loan Agreement (the Loan Agreement, together with all
notes, security agreements, mortgages, agreements, guarantees, instruments and
documents heretofore, now and from time to time hereafter executed by one or
more Loan Parties and delivered to Agent and/or any Lender, collectively, the
"Loan Documents"). The undersigned understands that the Agent and Lenders are
relying on this Certificate in entering into the Loan Documents and providing
the financial accommodations stated therein. All capitalized terms used and not
otherwise defined herein shall have the meanings set forth in the Loan
Agreement.
 
4.           As CFO, the undersigned has reviewed the following documents and is
fully familiar with the process pursuant to which they were generated:
 
 
a.
Balance Sheet of Loan Parties on a Consolidated Basis attached hereto as Exhibit
A (the "Balance Sheet").

 
 
b.
Cash Flow Projections for Loan Parties on a Consolidated Basis] attached hereto
as Exhibit B (the "Projections").

 
 
 

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

 
 
The Balance Sheet is accurate, complete and correct and fairly reflects the
assets, liabilities and financial condition of Loan Parties on a Consolidated
Basis as of the date prepared. The Projections are based on underlying
assumptions which provide a reasonable basis for the Projections and which
reflect each Loan Party's judgment, based on present circumstances, of the most
likely set of conditions and each Loan Party's most likely course of action for
the period projected. The Projections project that each Loan Party should have
sufficient cash flow to enable such Loan Party to pay its debts as they mature.
 
5.            Immediately following the execution of the Loan Documents and the
consummation of the transactions contemplated in connection therewith, the
assets of each Loan Party at a fair valuation and at their present fair saleable
value, will be in excess of the total amount of the liabilities of such Loan
Party (including contingent and unmatured liabilities), each Loan Party will be
able to pay its debts as they become due and no Borrower will have unreasonably
small capital in order to carry on its business. All undisputed debts owing to
third parties by each Loan Party are current and not past due.
 
6.            The Loan Documents were and are executed and delivered by Loan
Parties to Agent and Lenders in good faith and in exchange for reasonably
equivalent value and fair consideration.
 
7.            As CFO, the undersigned has reviewed the relevant terms of the
Loan Documents and have made or have caused to be made under his supervision a
review of the transactions and conditions of each Loan Party from the beginning
of the accounting period covered by the documents set forth in Paragraph 4
hereof to the date of this Certificate in order to permit the undersigned to
make an informed statement with respect to the matters set forth in this
Certificate, and such review has not disclosed the existence during such period
of any condition or event which constitutes or would constitute a Default or
Event of Default.
 

     
Name: Daniel J. Sullivan
 
Title: Chief Financial Officer

 
 
2

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

 
 
STATE OF NEW YORK   )
                  ss.:
COUNTY OF NEW YORK    )

 
On this ___  day of  __________, 2013 before me personally appearedand
___________ to me known to be the individual(s) described in and who
executed  the foregoing instrument and acknowledged that they executed the same
as their free act and deed.
 
In testimony whereof I have hereunto set my hand and affixed my official seal at
my office in said County and State the day and year last above written.
 

     
Notary Public

 
 
 

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

 
 
EXHIBIT A
 
BALANCE SHEET
 
 
Exhibit A - I

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

 
 
EXHIBIT B
 
PROJECTIONS
 
 
Exhibit B - I

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

 
 
Exhibit 16.3 - Commitment Transfer Supplement
 
 
 

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

 
 
EXHIBIT 16.3
 
COMMITMENT TRANSFER SUPPLEMENT
 
COMMITMENT TRANSFER SUPPLEMENT, dated as of ________, 20__ among (the
"Transferor Lender"), each Purchasing Lender executing this Commitment Transfer
Supplement (each, a "Purchasing Lender"), and PNC Bank, National Association
("PNC") as agent for the Lenders (as defined below) under the Loan Agreement (as
defined below).
 
WITNESSETH:
 
WHEREAS, this Commitment Transfer Supplement is being executed and delivered in
accordance with Section 16.3 of the Revolving Credit and Security Agreement
dated as of September [ 1, 2013 (as from time to time amended, supplemented or
otherwise modified in accordance with the terms thereof, the "Loan Agreement")
by and among INTERCLOUD SYSTEMS, INC., a corporation organized under the laws of
the State of Delaware ("Intercloud"), ADEX CORPORATION, a corporation organized
under the laws of the State of New York ("Adex Corp"), ADEX PUERTO RICO LLC, a
limited liability company formed under the laws of the Commonwealth of Puerto
Rico ("Adex PR"), AW SOLUTIONS, INC., a corporation organized under the laws of
the State of Florida ("AW Solutions"), AW SOLUTIONS PUERTO RICO, LLC, a limited
liability company organized under the laws of the Commonwealth of Puerto Rico
("AW PR"), and T N S, INC., a corporation organized under the laws of the State
of Illinois ("TNS") together with Intercloud, Adex Corp, Adex PR, AW Solutions,
AW PR, TNS and each Person joined to the Loan Agreement as a borrower from time
to time, collectively "Borrowers" and each a "Borrower"), the other Loan
Parties, PNC BANK, NATIONAL ASSOCIATION ("PNC"), the various other financial
institutions named in or which hereafter become a party to the Loan Agreement
(and together with PNC, collectively, the "Lenders") and PNC, as agent for the
Lenders (PNC, together with its successors and assigns in such capacity, the
"Agent");
 
WHEREAS, each Purchasing Lender wishes to become a Lender party to the Loan
Agreement; and
 
WHEREAS, the Transferor Lender is selling and assigning to each Purchasing
Lender its rights and obligations under the Loan Agreement;
 
NOW, THEREFORE, the parties hereto hereby agree as follows:
 
1.            All capitalized terms used which are not defined herein shall have
the meanings given to them in the Loan Agreement.
 
2.            Upon receipt by the Agent of four (4) counterparts of this
Commitment Transfer Supplement, to each of which is attached a fully completed
Schedule I, and each of which has been executed by the Transferor Lender and
Agent, Agent will transmit to Transferor Lender and each Purchasing Lender a
Transfer Effective Notice, substantially in the form of Schedule II to this
Commitment Transfer Supplement (a "Transfer Effective Notice"). Such Transfer
Effective Notice shall set forth, inter alia, the date on which the transfer
effected by this Commitment Transfer Supplement shall become effective (the
"Transfer Effective Date"), which date shall not be earlier than the first
Business Day following the date such Transfer Effective Notice is received. From
and after the Transfer Effective Date, each Purchasing Lender shall be a Lender
party to the Loan Agreement for all purposes thereof
 
 
 

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

 
 
3.          At or before 12:00 Noon (New York City time) on the Transfer
Effective Date each Purchasing Lender shall pay to Transferor Lender, in
immediately available funds, an amount equal to the purchase price, as agreed
between Transferor Lender and such Purchasing Lender (the "Purchase Price"), of
the portion of the Advances being purchased by such Purchasing Lender (such
Purchasing Lender's "Purchased Percentage") and other amounts owing to the
Transferor Lender under the Loan Agreement and the Note(s). Effective upon
receipt by Transferor Lender of the Purchase Price from a Purchasing Lender,
Transferor Lender hereby irrevocably sells, assigns and transfers to such
Purchasing Lender, without recourse, representation or warranty, and each
Purchasing Lender hereby irrevocably purchases, takes and assumes from
Transferor Lender, such Purchasing Lender's Purchased Percentage of the Advances
and other amounts owing to the Transferor Lender under the Loan Agreement and
the Note(s) together with all instruments, documents and collateral security
pertaining thereto.
 
4.          Transferor Lender has made arrangements with each Purchasing Lender
with respect to (i) the portion, if any, to be paid, and the date or dates for
payment, by Transferor Lender to such Purchasing Lender of any fees heretofore
received by Transferor Lender pursuant to the Loan Agreement prior to the
Transfer Effective Date and (ii) the portion, if any, to be paid, and the date
or dates for payment, by such Purchasing Lender to Transferor Lender of fees or
interest received by such Purchasing Lender pursuant to the Loan Agreement from
and after the Transfer Effective Date.
 
5.          (a)           All principal payments that would otherwise be payable
from and after the Transfer Effective Date to or for the account of Transferor
Lender pursuant to the Loan Agreement and the Note(s) shall, instead, be payable
to or for the account of Transferor Lender and Purchasing Lender, as the case
may be, in accordance with their respective interests as reflected in this
Commitment Transfer Supplement.
 
(b)           All interest, fees and other amounts that would otherwise accrue
for the
account of Transferor Lender from and after the Transfer Effective Date pursuant
to the Loan Agreement and the Note(s) shall, instead, accrue for the account of,
and be payable to, Transferor Lender and Purchasing Lender, as the case may be,
in accordance with their respective interests as reflected in this Commitment
Transfer Supplement. In the event that any amount of interest, fees or other
amounts accruing prior to the Transfer Effective Date was included in the
Purchase Price paid by any Purchasing Lender, Transferor Lender and such
Purchasing Lender will make appropriate arrangements for payment by Transferor
Lender to such Purchasing Lender of such amount upon receipt thereof from
Borrowers.
 
6.          Concurrently with the execution and delivery hereof, Transferor
Lender will provide to each Purchasing Lender conformed copies of the Loan
Agreement and all related documents delivered to Transferor Lender.
 
 
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7.           Each of the parties to this Commitment Transfer Supplement agrees
that at any time and from time to time upon the written request of any other
party, it will execute and deliver such further documents and do such further
acts and things as such other party may reasonably request in order to effect
the purposes of this Commitment Transfer Supplement.
 
8.           By executing and delivering this Commitment Transfer Supplement,
Transferor Lender and each Purchasing Lender confirm to and agree with each
other and Agent and the other Lenders as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned hereby free and clear of any adverse claim, Transferor
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Loan Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Agreement, the
Note(s) or any other instrument or document furnished pursuant thereto; (ii)
Transferor Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or the
performance or observance by the Borrowers of any of its Obligations under the
Loan Agreement, the Note(s) or any other instrument or document furnished
pursuant hereto; (iii) each Purchasing Lender confirms that it has received a
copy of the Loan Agreement, together with copies of such financial statements
and such Other Documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Commitment Transfer
Supplement; (iv) each Purchasing Lender will, independently and without reliance
upon Agent, Transferor Lender or any other Lenders and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Agreement;
(v) each Purchasing Lender appoints and authorizes Agent to take such action as
agent on its behalf and to exercise such powers under the Loan Agreement as are
delegated to the Agent by the terms thereof; (vi) each Purchasing Lender agrees
that it will perform all of its respective obligations as set forth in the Loan
Agreement to be performed by each as a Lender; and (vii) each Purchasing Lender
represents and warrants to Transferor Lender, Lenders, Agent and the Borrowers
that it is either (x) entitled to the benefits of an income tax treaty with the
United States of America that provides for an exemption from the United States
withholding tax on interest and other payments made by the Borrowers under the
Loan Agreement and the Other Documents or (y) is engaged in trade or business
within the United States of America.
 
9.           Schedule I hereto sets forth the revised commitments and Commitment
Percentage of Transferor Lender and the commitments and Commitment Percentage of
each Purchasing Lender as well as administrative information with respect to
each Purchasing Lender.
 
10.           Purchasing Lender hereby agrees to pay to Agent for its own
benefit the $3,500 fee set forth in Section 16.3(e) of the Loan Agreement on the
Transfer Effective Date.
 
 
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11.           Transferor Lender shall deliver the Note(s) held by it and shall
cause Borrowers to promptly, after a request has been made to Borrowing Agent in
writing, exchange such Note(s) for new Note(s) payable to Purchasing Lender
(and, if applicable, to Transferor Lender) in the amount which reflects the
transfer being made hereby and after giving effect to any other assignments
which have become effective on the Transfer Effective Date, which amounts shall
in any case be clearly set forth in the written request being furnished to
Borrowing Agent by Transferor Lender and acknowledged by Purchasing Lender
(including, by way of example and not by limitation, the portion of the
"Revolving Commitment" referenced in Schedule I hereto which should be used as
the appropriate figure and principal amount and the appropriate issuance date of
the new Note(s) to be executed and delivered by Borrowers in favor of such
Purchasing Lender and, if applicable, Transferor Lender).
 
12.    This Commitment Transfer Supplement shall be governed by, and construed
in accordance with, the laws of the State of New York.
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer
Supplement to be executed by their respective duly authorized officers on the
date set forth above.
 

     
as Transferor Lender
       
By:
   
Name:
   
Title:
         
 
  as a Purchasing Lender        
By:
   
Name:
   
Title:
         
PNC BANK, NATIONAL ASSOCIATION,
as Agent
       
By:
   
Name:
   
Title:
 

 
CONSENTED TO:*
 
INTERCLOUD SYSTEMS, INC.,
As Borrowing Agent
 
By:                                                                              
 
Name:
Title:
 
*Consent required unless an Event of Default has occurred and is continuing or
assignment is made to a Permitted Assignee.
 
 
 

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SCHEDULE I TO COMMITMENT TRANSFER SUPPLEMENT
 
LIST OF OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AMOUNTS
 
[Transferor Lender]
Revised Revolving Commitment:
$ ___________
       
Revised Commitment Percentage:
_____________%
     
[Purchasing Lender]
Revolving Commitment:
$ ____________
       
Commitment Percentage:
_____________%

 
Addresses for Notices
 
Attention: Telephone: Telecopier:
 
[INSERT LOAN INFORMATION HERE AS OF THE TRANSFER EFFECTIVE DATE]
 
Outstanding principal balance of the Advances
$____________

 
 
Schedule I - 1

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SCHEDULE II TO COMMITMENT TRANSFER SUPPLEMENT
 
To:
_______________________, as Transferor Lender and
 
______________________, as Purchasing Lender:

 
The undersigned, as Agent under the Revolving Credit and Security Agreement
dated as of September , 2013 (the "Loan Agreement") by and among INTERCLOUD
SYSTEMS, INC., a corporation organized under the laws of the State of Delaware
("Intercloud"), ADEX CORPORATION, a corporation organized under the laws of the
State of New York ("Adex Corp"), ADEX PUERTO RICO LLC, a limited liability
company formed under the laws of the Commonwealth of Puerto Rico ("Adex PR"), AW
SOLUTIONS, INC., a corporation organized under the laws of the State of Florida
("AW Solutions"), AW SOLUTIONS PUERTO RICO, LLC, a limited liability company
organized under the laws of the Commonwealth of Puerto Rico ("AW PR"), and T N
S, INC., a corporation organized under the laws of the State of Illinois ("TNS")
together with Intercloud, Adex Corp, Adex PR, AW Solutions, AW PR, TNS and each
Person joined to the Loan Agreement as a borrower from time to time,
collectively "Borrowers" and each a "Borrower"), the other Loan Parties (as
defined in the Loan Agreement), PNC BANK, NATIONAL ASSOCIATION ("PNC"), the
various other financial institutions named in or which hereafter become a party
to the Loan Agreement (together with PNC, collectively, the "Lenders") and PNC,
as agent for the Lenders (PNC, together with its successors and assigns in such
capacity, "Agent"), acknowledges receipt of four (4) executed counterparts of a
completed Commitment Transfer Supplement in the form attached hereto. Terms
defined in such Commitment Transfer Supplement are used herein as therein
defined.
 
Pursuant to such Commitment Transfer Supplement, you are advised that the
Transfer Effective Date will be [Insert date of Transfer Effective Notice.]
 

 
PNC BANK, NATIONAL ASSOCIATION,
as Agent
       
By:
   
Name:
   
Title:
 

 
ACCEPTED FOR RECORDATION
IN REGISTER:
 
 
 
 
 
Schedule II - 1

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Schedule 1.2
 
PERMITTED ENCUMBRANCES
 
The following UCC liens:
 
Debtor
Secured Party
File Date
 
File Number
 
Tropical Communications, Inc.
Bank of America, N.A.
11/18/2011 (continuation)
   201105691207                
Rives Monteiro
Capstone Bank
07/29/2009 (original)
   09-0382491  
Engineering, LLC
                         
Rives Monteiro
Capstone Bank
09/01/2009 (original)
   09-0382491  
Engineering, LLC
                         
AW Solutions Puerto
Keith Hayter
04/23/2013 (original)
   2013002127  
Rico, LLC
                         
AW Solutions, Inc.
Keith Hayter
04/17/2013 (original)
   201308858408  

 
 
 

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Schedule 4.4
 
OWNERSHIP AND LOCATION OF COLLATERAL
 
Schedule 4.4(b)(i):
 
InterCloud Systems, Inc.
 
 
-
331 Newman Springs Road Building 1, Suite 104, Red Bank, NJ 07701 (principal

 
 
executive office)

 
-      238 NE 1st Avenue, Suite 209, Delray Beach, Florida 33444 (office)
 
Tropical Communications, Inc.
 
-      6937 N.W. 82 Street, Miami, FL 33166 (office and inventory)
 
Rives-Monteiro Leasing, LLC and Rives-Monteiro Engineering, LLC
 
-      2736 Southside Drive, Tuscaloosa, AL 3540 (office and inventory)
 
ADEX Corporation , ADEX Puerto Rico LLC, ADEXCOMM Corporation and Environmental
Remediation and Financial Services, LLC
 
-      1035 Windward Ridge Parkway, Suite #500, Alpharetta, GA 30005 (office)
 
-      13083 Telecom Parkway North, Temple Terrace, FL 33637 (books and records)
 
T N S, Inc.
 
-      1225 Rand Road, Des Plains, Cook County, IL 60016 (office)
 
AW Solutions, Inc. and AW Solutions Puerto Rico, LLC
 
-      300 Crown Oak Centre Drive, Longwood, FL 32750 (office)
 
Schedule 4.4(b)(ii):
 
None.
 
Schedule 4.4(b)(iii):
 
InterCloud Systems, Inc.
 
 
-
331 Newman Springs Road Building 1, Suite 104, Red Bank, NJ 07701 (principal

 
 
executive office)

 
-      238 NE 1st Avenue, Suite 209, Delray Beach, Florida 33444 (office)
 
Tropical Communications, Inc.
 
-      6937 N.W. 82 Street, Miami, FL 33166 (office and inventory)
 
Rives-Monteiro Leasing, LLC and Rives-Monteiro Engineering, LLC
 
-      2736 Southside Drive, Tuscaloosa, AL 3540 (office and inventory)
 
 
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ADEX Corporation , ADEX Puerto Rico LLC, ADEXCOMM Corporation and Environmental
Remediation and Financial Services, LLC
 
-      1035 Windward Ridge Parkway, Suite #500, Alpharetta, GA 30005 (office)
 
-      13083 Telecom Parkway North, Temple Terrace, FL 33637 (books and records)
 
T N S, Inc.
 
-      1225 Rand Road, Des Plains, Cook County, IL 60016 (office)
 
AW Solutions, Inc. and AW Solutions Puerto Rico, LLC
 
-      300 Crown Oak Centre Drive, Longwood, FL 32750 (office)
 
Schedule 4.4(b)(iv):  InterCloud Systems, Inc.
 
Location
Owned or Leased
User
 
Size (Sq Ft)
 
Tuscaloosa, AL
Leased(1)
Rives-Monteiro Engineering, LLC
    5,000  
Miami, FL
Leased(2)
Tropical Communications, Inc.
    6,000  
Temple Terrace, FL
Leased(3)
Adex Corporation
    2,500  
Alpharetta, GA
Leased(4)
Adex Corporation
    9,000  
Des Plaines, IL
Leased(5)
T N S, Inc.
    1,500  
Upland, CA
Leased(6)
Adex Corporation
    2,047  
Naperville, IL
Leased(7)
Adex Corporation
    1,085  
Alpharetta, GA
Licensed(8)
Adex Corporation
    1,000  
Longwood, FL
Leased(9)
AW Solutions
    7,750  
Puerto Rico
Leased(10)
AW Solutions
    1,575  
Delray Beach, FL
Leased(11)
InterCloud Systems, Inc.
    700  

 
 
(1)
This facility is leased pursuant to a month-to-month lease that provides for
monthly rental payments of $1,500 for the lease term. Landlord: E & S
Properties, 4440 Hargrove Road East, Tuscaloosa, AL 35405.

 
(2)
This facility is leased pursuant to a one-year lease that expires in September
2013 and provides for aggregate rental payments of $1,792.25 per month for the
lease term. This lease is expected to continue on a month-to-month basis after
its expiration. Landlord: W & M Holdings, Inc., 14100 S. W. 31 St., Davie, FL
33330.

 
(3)
This facility is leased pursuant to a 38-month lease that expires in December
2015 and provides for aggregate rental payments of $3,645.83 per month for the
lease term.

(4)
This facility is leased pursuant to a 36-month lease that expires in April 2014
and provides for aggregate rental payments of $8,440.00 per month for the first
12 months, $8,695.26 for the following 12 months and $8,956.12 for the final 12
months. Landlord: McDonald Windward Partners V, LLC, c/o McDonald Development
Company, 3715 Northside Parkway, Bldg 200, Suite 700, Atlanta, GA 30327.

 
(5)
This facility is leased pursuant to one-year lease that expired in August 2013
and provides for monthly payments of $1,163.75 for the lease term. This lease is
expected to be renewed for an additional two-year teram. Landlord: Joseph
Development Co., as Agent for Rand Center, LLC, 666 Dundee Road, Suite 303,
Northbrook, Illinois 60062.

 
(6)
This facility is leased pursuant to a one-year lease that expires in August 2014
and provides for aggregate rental payments of $2,251.70 per month for the lease
term. Landlord: Village Plaza Associates, LLC, c/o Orton Development, 3049
Research Drive, Richmond, CA 94806.

 
(7)
This facility is leased pursuant to a two-year lease that expires in July 2014
and provides for aggregate rental payments of $1,627.50 per month for the first
12 months and $1,672.71 for the next 12 months. Landlord: 280 Shuman BLVD, LLC,
c/o Prime Group Realty Trust, 330 North Wabash Avenue, Suite 2800, Chicago, IL
60611.

 
(8)
This facility is licensed pursuant to a temporary license terminable by either
party upon 30 days prior written notice and provides for aggregate payments of
$200.00 per month. ADEX is also required to reimburse the licensor for its pro
rata share of all utilities.

 
(9)
This facility is leased pursuant to a three-year lease that expires in February
2015 and provides for monthly rental payments of $13,245 for the first year and
for a 5% increase in the monthly rental payments in each of the second of third
years.

 
(10)
This facility is leased under a two-year lease that expires on January 1, 2015
and provides for monthly payments of $1,500 for the first year and a 3% increase
in the monthly rental payments in the second year.

 
(11)
This facility is leased pursuant to a 12-month lease that expires in July 2014
and provides for aggregate rental payments of $1,828.50 per month for the term
of the lease.

 
 
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6

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Schedule 5.1
 
CONSENTS
 
Consent of the Term Lender is requird under the Term Loan Documents.
 
 
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Schedule 5.2(a)
 
FORMATION AND QUALIFICATION
 
InterCloud Systems, Inc., a Delaware corporation.
 
ADEX Corporation, a New York corporation.
 
ADEX Puerto Rico LLC, a Puerto Rico limited liability company.
 
ADEXCOMM Corporation, a Florida corporation.
 
AW Solutions, Inc., a Florida corporation.
 
AW Solutions Puerto Rico, LLC, a Puerto Rico limited liability company.
 
Environmental Remediation and Financial Services, LLC, a New Jersey limited
liability company.
 
Rives-Monteiro Engineering, LLC, an Alabama limited liability company.
Rives-Monteiro Leasing, LLC, an Alabama limited liability company. T N S, Inc.,
an Illinois corporation.
 
Tropical Communications, Inc., a Florida corporation.
 
 
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Schedule 5.2(b)  SUBSIDIARIES
 
Subsidiaries owned by Intercloud Systems, Inc.:
 
Rives-Monteiro Engineering, LLC, an Alabama limited liability company.
 
Rives-Monteiro Leasing, LLC, an Alabama limited liability company.
 
Tropical Communications, Inc., a Florida corporation.
 
ADEX Corporation, a New York corporation.
 
ADEX Puerto Rico LLC, a Puerto Rico limited liability company.
 
ADEXCOMM Corporation, a Florida corporation.
 
T N S, Inc., an Illinois corporation.
 
AW Solutions, Inc., a Florida corporation.
 
AW Solutions Puerto Rico, LLC, a Puerto Rico limited liability company.
 
Subsidiaries owned by ADEX Corporation:
 
Environmental Remediation and Financial Services, LLC, a New Jersey limited
liability company.
 
 
9

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Schedule 5.4
 
FEDERAL TAX IDENTIFICATION NUMBERS
 
InterCloud Systems, Inc., a Delaware corporation: 65-0908171
 
ADEX Corporation, a New York corporation: 13-3741300
 
ADEX Puerto Rico LLC, a Puerto Rico limited liability company: 66-0711500
 
ADEXCOMM Corporation, a Florida corporation: 13-3741300
 
AW Solutions, Inc., a Florida corporation: 20-4709198
 
AW Solutions Puerto Rico, LLC, a Puerto Rico limited liability company:
66-0761546 Rives-Monteiro Engineering, LLC, an Alabama limited liability
company: 26-2097262 Rives-Monteiro Leasing, LLC, an Alabama limited liability
company: 26-2097262 T N S, Inc., an Illinois corporation: 04-3702683
 
Tropical Communications, Inc., a Florida corporation: 59-2405537
 
Environmental Remediation and Financial Services, LLC, a New Jersey limited
liability company: 20-0321720
 
 
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Schedule 5.6
 
ENTITY NAMES
 
InterCloud Systems, Inc. was formed under the name “I-Realtyauction.com, Inc.”,
and changed its name to (i) “Genesis Realty Group, Inc.” on August 1, 2001, (ii)
“Genesis Group Holdings, Inc.” on September 4, 2008, and (iii) to “InterCloud
Systems, Inc.” in January 2013.
 
ADEX Corporation was formed under the name “ADEX Corp.”, and changed its name to
“ADEX Corporation” on October 7, 1997.
 
Rives Monteiro Leasing, LLC was formed under the name “Rives Monteiro, Eng.,
LLC” and changed its name to “Rives Monteiro Leasing, LLC” in February 2008.
 
 
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Schedule 5.8(b)(i)
 
 
LITIGATION, ARBITRATION, ACTIONS OR PROCEEDINGS
 
None.
 
 
12

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[img006.jpg]
 
 
13

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[img007.jpg]
 
 
14

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Schedule 5.8(d)
 
PLANS
  
None.
 
 
15

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Schedule 5.9
 
INTELLECTUAL PROPERTY
 
ADEX Corporation owns the trademarks “Advancing Technology Through People”,
“Today’s Solutions for Tomorrow’s Technology” and “ADEX.”
 
 
16

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Schedule 5.10
 
 
LICENSES AND PERMITS
 
None.
 
 
17

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Schedule 5.14
 
LABOR DISPUTES
 
None.
 
 
18

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Schedule 5.24(a)
 
EQUITY INTERESTS
 
Rives-Monteiro Engineering, LLC
 
49% of membership interest owned by Intercloud Systems, Inc.
 
Rives-Monteiro Leasing, LLC
 
100% of membership interest owned by Intercloud Systems, Inc.
 
Tropical Communications, Inc.
 
Shares of Common Stock authorized: 300; Outstanding: 100
100% of Common Stock equity interests owned by Intercloud Systems, Inc.
 
ADEX Corporation
 
Shares of Common Stock authorized: 200; Outstanding: 100
100% of Common Stock equity interests owned by Intercloud Systems, Inc.
 
ADEXCOMM Corporation
 
Shares of Common Stock authorized: 100; Outstanding: 10
100% of Common Stock equity interests owned by Intercloud Systems, Inc.
 
ADEX Puerto Rico, LLC
 
100% of membership interest owned by Intercloud Systems, Inc.
 
T N S, Inc.
 
Shares of Common Stock authorized: 5,000; Outstanding: 1,000
 
100% of Common Stock equity interests owned by Intercloud Systems, Inc.
 
AW Solutions, Inc.
 
Shares of Common Stock authorized: 10,000; Outstanding: 5,000
100% of Common Stock equity interests owned by Intercloud Systems, Inc.
 
AW Solutions Puerto Rico, LLC
 
100% of membership interest owned by Intercloud Systems, Inc.
 
Environmental Remediation and Financial Services, LLC 100% of membership
interest owned by ADEX Corporation.
 
 
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Schedule 5.24(b)
 
SUBSCRIPTIONS, WARRANTS, OPTIONS, CALLS, COMMITMENTS, RIGHTS OR
 
AGREEMENTS
 
InterCloud has the right to acquire the remaining 51% of the membership
interests of Rives-Monteiro Engineering, LLC pursuant to its Acquisition
Agreement with Margarida Monteiro.
 
 
20

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Schedule 5.24(c)
 
CONVERTIBLE SECURITIES
 
InterCloud has the right to acquire the remaining 51% of the membership
interests of Rives-Monteiro Engineering, LLC pursuant to its Acquisition
Agreement with Margarida Monteiro.
 
 
21

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Schedule 5.25
 
COMMERCIAL TORT CLAIMS
 
None.
 
 
22

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Schedule 6.16
 
POST CLOSING COVENANTS
 
[H&H to provide.]
 
 
23

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Schedule 7.3 GUARANTEES
 
Guaranties of certain Loan Parties in favor of the Term Lender pursuant to the
Term Loan Documents.
 
 
24 

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