Exhibit 10.1

SECOND AMENDMENT TO LOAN AGREEMENT

THIS SECOND AMENDMENT TO LOAN AGREEMENT (the “Amendment”) is made and entered
into effective as of June 30, 2009, by and between AMERICAN ELECTIC
TECHNOLOGIES, INC., a Florida corporation (“Borrower”), and JPMORGAN CHASE BANK,
N.A., a national association (“Lender”).

R E C I T A L S:

WHEREAS, Borrower and Lender entered into a Letter Loan Agreement dated
October 31, 2007 (which as the same may have been or may hereafter be amended
from time to time is herein called the “Loan Agreement”; the terms defined
therein being used herein as therein defined unless otherwise defined herein);
and

WHEREAS, Borrower and Lender desire to amend the Loan Agreement to extend the
Maturity Date and amend certain terms and provisions of the Loan Agreement.

A G R E E M E N T:

1. Amendments to the Loan Agreement. The Loan Agreement is, effective the date
hereof, and subject to the satisfaction of the conditions precedent set forth in
Section 2 hereof, hereby amended as follows:

(a) Section 1 of the Loan Agreement is hereby amended in its entirety to read as
follows:

“(a) Commitment. Subject to the terms and conditions set forth herein, Lender
agrees to make loans (each of which is a “Loan”, and collectively the “Loans”)
to Borrower, on a revolving basis (the “Borrowing Base Facility”) from time to
time during the period commencing on the date hereof and continuing through
July 1, 2011 (the “Maturity Date”), the maturity date of the promissory note
evidencing the Borrowing Base Facility, such amounts as Borrower may request
hereunder; provided, however, the total principal amount (the “Borrower’s Loan
Limit”) outstanding at any time shall not exceed the lesser of (i) an amount
equal to the Borrowing Base and (ii) $10,000,000 minus the aggregate face amount
of any Letters of Credit. Subject to the terms and conditions hereof, Borrower
may borrow, repay and reborrow hereunder. If at any time the outstanding
advances under the Borrowing Base Facility exceed the Borrower’s Loan Limit as
shown on any reports delivered to Lender under Section 6(d)(ii) or as indicated
by Lender’s own records, Borrower shall, on the date of the delivery of such
report to Lender or on the date of notice from Lender as to Lender’s records,
prepay on the Borrowing Base Facility such amount as may be necessary to
eliminate such excess, plus all accrued but unpaid interest thereon. The sums
advanced under the Borrowing Base Facility shall be used for general corporate
purposes and working capital. As used in this Agreement, the term “Borrowing
Base” shall have the meaning set forth in Exhibit A attached hereto.

(b) Interest Rates. The Advance(s) evidenced by this Agreement may be drawn down
and remain outstanding as up to five (5) LIBOR Rate Advances

 

Second Amendment to Loan Agreement – Page 1

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

and/or a CB Floating Rate Advance. Borrower shall pay interest to Lender on the
outstanding and unpaid principal amount of each CB Floating Rate Advance at the
CB Floating Rate plus the Applicable Margin and each LIBOR Rate Advance at the
Adjusted LIBOR Rate. Interest shall be calculated on the basis of the actual
number of days elapsed in a year of 360 days, unless that calculation would
result in a usurious interest rate, in which case interest will be calculated on
the basis of a 365 or 366 day year, as the case may be. In no event shall the
interest rate applicable to any Advance exceed the maximum rate allowed by law.
Any interest payment which would for any reason be deemed unlawful under
applicable law shall be applied to principal.

(c) Notice and Manner of Electing Interest Rates on Advances. Borrower shall
give Lender written notice (effective upon receipt) of Borrower’s intent to draw
down an Advance under this Agreement no later than 2:00 p.m. Central time, on
the date of disbursement, if the full amount of the drawn Advance is to be
disbursed as a CB Floating Rate Advance and no later than 11:00 a.m. Central
time three (3) Business Days before disbursement, if any part of such Advance is
to be disbursed as a LIBOR Rate Advance. Borrower’s notice must specify: (i) the
disbursement date, (ii) the amount of each Advance, (iii) the type of each
Advance (CB Floating Rate Advance or LIBOR Rate Advance), and (iv) for each
LIBOR Rate Advance, the duration of the applicable Interest Period; provided,
however, that Borrower may not elect an Interest Period ending after the
Maturity Date. Each LIBOR Rate Advance shall be in a minimum amount of $100,000.
All notices under this subparagraph are irrevocable. By Lender’s close of
business on the disbursement date and upon fulfillment of the conditions set
forth herein and in any other of the Loan Documents, Lender shall disburse the
requested Advances in immediately available funds by crediting the amount of
such Advances to Borrower’s account with Lender.

(d) Conversion and Renewals. Borrower may elect from time to time to convert one
type of Advance into another or to renew any Advance by giving Lender written
notice no later than 2:00 p.m. Central time, on the date of the conversion into
or renewal of a CB Floating Rate Advance and 11 a.m. Central time three
(3) Business Days before conversion into or renewal of a LIBOR Rate Advance,
specifying: (i) the renewal or conversion date, (ii) the amount of the Advance
to be converted or renewed, (iii) in the case of conversion, the type of Advance
to be converted into (CB Floating Rate Advance or LIBOR Rate Advance), and
(iv) in the case of renewals of or conversion into a LIBOR Rate Advance, the
applicable Interest Period, provided that (1) the minimum principal amount of
each LIBOR Rate Advance outstanding after a renewal or conversion shall be
$100,000; (2) a LIBOR Rate Advance can only be converted on the last day of the
Interest Period for the Advance; and (3) Borrower may not elect an Interest
Period ending after the Maturity Date. All notices given under this subparagraph
are irrevocable. If Borrower fails to give Lender the notice specified above for
the renewal or conversion of a LIBOR Rate Advance by 11:00 a.m. Central time
three (3) Business Days before the end of the Interest Period for that Advance,
the Advance shall automatically be converted to a CB Floating Rate Advance on
the last day of the Interest Period for the Advance.

 

Second Amendment to Loan Agreement – Page 2

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

(e) Interest Payments. Interest on the Advances shall be paid as follows:

(i) For each CB Floating Rate Advance, on the last day of each month beginning
with the first month following disbursement of the Advance or following
conversion of an Advance into a CB Floating Rate Advance, and at the maturity or
conversion of the Advance into a LIBOR Rate Advance; and

(ii) For each LIBOR Rate Advance, on the last day of the Interest Period for the
Advance and, if the Interest Period is longer than three (3) months, at
three-month intervals beginning with the day three (3) months from the date the
Advance is disbursed.

(f) Prepayments and Funding Loss Indemnification. Borrower may prepay all or any
part of any CB Floating Rate Advance at any time without premium or penalty.
Borrower shall pay Lender amounts sufficient (in Lender’s reasonable opinion) to
compensate Lender for any loss, cost, or expense incurred as a result of:

(i) Any payment of a LIBOR Rate Advance on a date other than the last day of the
Interest Period for the Advance, including, without limitation, acceleration of
the Advances by Lender pursuant to this Agreement or the other Loan Documents;
or

(ii) Any failure by Borrower to borrow or renew a LIBOR Rate Advance on the date
specified in the relevant notice from Borrower to Lender.

(g) Principal Payments. Borrower promises to pay all Advances then outstanding
on the Maturity Date.

(h) Default Rate of Interest. After an Event of Default has occurred, whether or
not Lender elects to accelerate the maturity of the Note because of such Event
of Default, all Advances outstanding under this Agreement shall bear interest at
a per annum rate equal to the interest rate being charged on the Advance plus 3%
(the “Default Rate”) from the date Lender elects to impose such rate. Imposition
of such rate shall not affect any limitations contained in this Agreement on
Borrower’s right to repay principal on any LIBOR Rate Advance before the
expiration of the Interest Period for that Advance.

(i) Additional Costs. If any applicable domestic or foreign law, treaty,
government rule or regulation now or later in effect (whether or not it now
applies to Lender) or the interpretation or administration thereof by a
governmental authority charged with such interpretation or administration, or
compliance by Lender with any guideline, request or directive of such an
authority (whether or not having the force of law), shall (1) affect the basis
of taxation of payments to Lender of any amounts payable by Borrower under this
Agreement or the other Loan Documents (other than taxes imposed on the overall
net income of Lender

 

Second Amendment to Loan Agreement – Page 3

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

by the jurisdiction or by any political subdivision or taxing authority of the
jurisdiction in which Lender has its principal office), or (2) impose, modify or
deem applicable any reserve, special deposit or similar requirement (including,
without limitation, Federal Deposit Insurance Corporation deposit insurance
premiums or assessments) against assets of, deposits with or for the account of,
or credit extended by Lender, or (3) impose any other condition with respect to
this Agreement or the other Loan Documents and the result of any of the
foregoing is to increase the cost to Lender of extending, maintaining or funding
any Advance or to reduce the amount of any sum receivable by Lender on any
Advance, or (4) affect the amount of capital required or expected to be
maintained by Lender (or any corporation controlling Lender) and Lender
determines that the amount of such capital is increased by or based upon the
existence of Lender’s obligations under this Agreement or the other Loan
Documents and the increase has the effect of reducing the rate of return on
Lender’s (or its controlling corporation’s) capital as a consequence of the
obligations under this Agreement or the other Loan Documents to a level below
that which Lender (or its controlling corporation) could have achieved but for
such circumstances (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by Lender to be material, then Borrower
shall pay to Lender, from time to time, upon request by Lender, additional
amounts sufficient to compensate Lender for the increased cost or reduced sum
receivable. Whenever Lender shall learn of circumstances described in this
section which are likely to result in additional costs to Borrower, Lender shall
give prompt written notice to Borrower of the basis for and the estimated amount
of any such anticipated additional costs. A statement as to the amount of the
increased cost or reduced sum receivable, prepared in good faith and in
reasonable detail by Lender and submitted by Lender to Borrower, shall be
conclusive and binding for all purposes absent manifest error in computation.

(j) Illegality. If any applicable domestic or foreign law, treaty, rule or
regulation now or later in effect (whether or not it now applies to Lender) or
the interpretation or administration thereof by a governmental authority charged
with such interpretation or administration, or compliance by Lender with any
guideline, request or directive of such an authority (whether or not having the
force of law), shall make it unlawful or impossible for Lender to maintain or
fund the LIBOR Rate Advances, then, upon notice to Borrower by Lender, the
outstanding principal amount of the LIBOR Rate Advances, together with accrued
interest and any other amounts payable to Lender under this Agreement or the
other Loan Documents on account of the LIBOR Rate Advances shall be repaid
(i) immediately upon Lender’s demand if such change or compliance with such
requests, in Lender’s judgment, requires immediate repayment, or (ii) at the
expiration of the last Interest Period to expire before the effective date of
any such change or request provided, however, that subject to the terms and
conditions of this Agreement and the other Loan Documents Borrower shall be
entitled to simultaneously replace the entire outstanding balance of any LIBOR
Rate Advance repaid in accordance with this section with a CB Floating Rate
Advance in the same amount.

 

Second Amendment to Loan Agreement – Page 4

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

(k) Inability to Determine Interest Rate. If Lender determines that
(i) quotations of interest rates for the relevant deposits referred to in the
definition of Adjusted LIBOR Rate are not being provided in the relevant amounts
or for the relevant maturities for purposes of determining the interest rate on
a LIBOR Rate Advance as provided in this Agreement, or (ii) the relevant
interest rates referred to in the definition of Adjusted LIBOR Rate do not
accurately cover the cost to Lender of making, funding or maintaining LIBOR Rate
Advances, then Lender shall, at Lender’s option, give notice of such
circumstances to Borrower, whereupon (1) the obligation of Lender to make LIBOR
Rate Advances shall be suspended until Lender notifies Borrower that the
circumstances giving rise to the suspension no longer exists and (2) Borrower
shall repay in full the then outstanding principal amount of each LIBOR Rate
Advance, together with accrued interest, on the last day of the then current
Interest Period applicable to the LIBOR Rate Advance; provided, however, that,
subject to the terms and conditions of this Agreement and the other Loan
Documents, Borrower shall be entitled to simultaneously replace the entire
outstanding balance of any LIBOR Rate Advance repaid in accordance with this
section with an Advance bearing interest at the CB Floating Rate plus the
Applicable Margin for CB Floating Rate Advances in the same amount. If the
Lender determines on any day that quotations of interest rates for the relevant
deposits referred to in the definition of Adjusted One Month LIBOR Rate are not
being provided for purposes of determining the interest rate on any CB Floating
Rate Advance on any day, then each CB Floating Rate Advance shall hear interest
at the Prime Rate plus the Applicable Margin for CB Floating Rate Advances until
Lender determines that quotations of interest rates for the relevant deposits
referred to in the definition of Adjusted One Month LIBOR Rate are being
provided.

(l) Obligations Due on Non-Business Day. Whenever any payment under this
Agreement becomes due and payable on a day that is not a Business Day, if no
Event of Default then exists, the maturity of the payment shall be extended to
the next succeeding Business Day, except, in the case of a LIBOR Rate Advance,
if the result of the extension would be to extend the payment into another
calendar month, the payment must be made on the immediately preceding Business
Day.

(m) Application of Payments. Payments shall be allocated among principal,
interest and fees at the discretion of Lender unless otherwise agreed or
required by applicable law. Acceptance by Lender of any payment which is less
than the payment due at the time shall not constitute a waiver of Lender’s right
to receive payment in full at that time or any other time.

(n) Commitment Fee. In consideration of Lender’s commitment to make Advances,
Borrower will pay to Lender a commitment fee (the “Commitment Fee”) determined
on a daily basis by applying 0.30% per annum to the unused portion of the
Borrower’s Loan Limit on each day during the term of the Borrowing Base
Facility, determined for each such day by deducting from the amount of the
Borrower’s Loan Limit at the end of such day the Facility Usage. For the
purposes of this subparagraph (n), the term “Facility Usage” mean the

 

Second Amendment to Loan Agreement – Page 5

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

aggregate amount of outstanding Advances under the Borrowing Base Facility. The
Commitment Fee shall be due and payable quarterly in arrears on the last day of
each March, June, September and December, commencing on June 30, 2009, and at
the Maturity Date.”

(b) The definition of “Consolidated Tangible Net Worth” in Section 8(a) of the
Loan Agreement is hereby amended in its entirety to read as follows:

“Consolidated Tangible Net Worth” means all of Borrower’s and its Subsidiaries’
assets less the sum of (i) the aggregate book value of Consolidated Intangible
Assets, (ii) advances to and investments in joint ventures, (iii) accounts
receivable from the holders of equity interests and Borrower’s Affiliates and
(iv) Consolidated Total Liabilities.”

(c) Subparagraph (ii) of Section 8(b) of the Loan Agreement is hereby amended in
its entirety to read as follows:

“(ii) Total Liabilities to Tangible Net Worth Ratio. Permit, as of the end of
each calendar quarter, the ratio of its Consolidated Total Liabilities
(excluding any Subordinated Debt) to Consolidated Tangible Net Worth to be more
than 1.50 to 1.”

(d) Exhibit A - Definitions. Exhibit A to the Loan Agreement is hereby amended
in its entirety and replaced to read as set forth on Exhibit A attached hereto.

2. Conditions of Effectiveness. This Amendment shall become effective when, and
only when, Lender shall have received counterparts of this Amendment executed by
Borrower and Section 1 hereof shall become effective when, and only when, Lender
shall have additionally received any and all other documentation as Lender may
reasonably require.

3. Representations and Warranties of Borrower. Borrower represents and warrants
as follows:

(a) Borrower is duly authorized and empowered to execute, deliver and perform
this Amendment and all other instruments referred to or mentioned herein to
which it is a party, and all action on its part requisite for the due execution,
delivery and the performance of this Amendment has been duly and effectively
taken. This Amendment, when executed and delivered, will constitute valid and
binding obligations of Borrower enforceable in accordance with its terms. This
Amendment does not violate any provisions of Borrower’s Articles of
Incorporation, By-Laws, or any contract, agreement, law or regulation to which
Borrower is subject, and does not require the consent or approval of any
regulatory authority or governmental body of the United States or any state.

(b) The representations and warranties made by Borrower in the Loan Agreement
are true and correct as of the date of this Amendment.

(c) No event has occurred and is continuing which constitutes an Event of
Default or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.

 

Second Amendment to Loan Agreement – Page 6

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

4. Reference to and Effect on the Loan Documents.

(a) Upon the effectiveness of Section 1 hereof, on and after the date hereof,
each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”,
“herein” or words of like import, and each reference in the Loan Documents shall
mean and be a reference to the Loan Agreement as amended hereby.

(b) Except as specifically amended above, the Loan Agreement and the Note(s),
and all other instruments securing or guaranteeing Borrower’s obligations to
Lender (collectively, the “Loan Documents”) shall remain in full force and
effect and are hereby ratified and confirmed. Without limiting the generality of
the foregoing, the Loan Documents and all collateral described therein do and
shall continue to secure the payment of all obligations of Borrower under the
Loan Agreement and the Note(s), as amended hereby, and under the other Loan
Documents.

(c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of Lender under any of the Loan Documents, nor constitute a waiver of any
provision of any of the Loan Documents.

5. Costs and Expenses. Borrower agrees to pay on demand all costs and expenses
of Lender in connection with the preparation, reproduction, execution and
delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including the reasonable fees and out-of-pocket expenses of
counsel for Lender. In addition, Borrower shall pay any and all fees payable or
determined to be payable in connection with the execution and delivery, filing
or recording of this Amendment and the other instruments and documents to be
delivered hereunder, and agrees to save Lender harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such fees.

6. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.

7. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Texas.

8. Facsimile Documents and Signatures. For purposes of negotiating and
finalizing this Amendment, if this document or any document executed in
connection with it is transmitted by facsimile machine, it shall be treated for
all purposes as an original document. Additionally, the signature of any party
on this document transmitted by way of a facsimile machine shall be considered
for all purposes as an original signature. Any such faxed document shall be
considered to have the same binding legal effect as an original document. At the
request of any party, any faxed document shall be re-executed by each signatory
party in an original form.

9. Joinder of Guarantor. M & I Electric Industries, Inc. and American Access
Technologies, Inc., Guarantor as defined in the Loan Agreement, join in the
execution of this Amendment to evidence Guarantor’s consent to the terms hereof,
to confirm Guarantor’s continuing obligations under the terms of the Guaranty
Agreement, and to acknowledge that without such consent and confirmation, Lender
would not enter into this Amendment or

 

Second Amendment to Loan Agreement – Page 7

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

otherwise consent to the terms hereof. Additionally, Guarantor represents to
Lender that Guarantor is duly authorized and empowered to execute, deliver and
perform this Amendment, and all action on its part requisite for the due
execution, delivery and the performance of this Amendment has been duly and
effectively taken. This Amendment, when executed and delivered, will constitute
valid and binding obligations of Guarantor enforceable in accordance with its
terms.

10. Final Agreement. THIS WRITTEN AMENDMENT OF LOAN AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed in multiple counterparts, each of which is an original instrument for
all purposes, all as of the day and year first above written.

 

BORROWER: AMERICAN ELECTRIC TECHNOLOGIES, INC. By:  

 

  John H. Untereker,   Senior Vice President and CFO LENDER: JPMORGAN CHASE
BANK, N.A. By:  

 

  Carlos Valdez, Jr.,   Senior Vice President

 

GUARANTOR: M & I ELECTRIC INDUSTRIES, INC. By:  

 

  John H. Untereker,   Senior Vice President and CFO AMERICAN ACCESS
TECHNOLOGIES, INC. By:  

 

  Arthur Dauber, CEO

 

Second Amendment to Loan Agreement – Page 8

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

EXHIBIT A

DEFINITIONS

“Adjusted LIBOR Rate” means, with respect to a LIBOR Rate Advance for the
relevant Interest Period, the sum of (i) the Applicable Margin plus (ii) the
quotient of (a) the LIBOR Rate applicable to such Interest Period, divided by
(b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Interest Period.

“Adjusted One Month LIBOR Rate” means, with respect to a CB Floating Rate
Advance for any day, the sum of (i) 2.50% per annum plus (ii) the quotient of
(a) the interest rate determined by Lender by reference to the Page to be the
rate at approximately 11:00 a.m. London time, on such date or, if such date is
not a Business. Day, on the immediately preceding Business Day for dollar
deposits with a maturity equal to one (1) month divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to dollar deposits in
the London interbank market with a maturity equal to one (1) month.

“Advance” means a LIBOR Rate Advance or a CB Floating Rate Advance and
“Advances” means all LIBOR Rate Advances and all CB Floating Rate Advances under
this Agreement.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the Person specified.

“Applicable Margin” means with respect to any CB Floating Rate Advance, zero,
and with respect to any LIBOR Rate Advance, 2.25% per annum.

“Borrowing Base” means, for Borrower and each Subsidiary which is a Guarantor,
the amount determined as of a particular date equal to the sum of (a) 80% of
Eligible Accounts and (b) 40% of Eligible Inventory up to an amount not to
exceed $1,000,000; provided, however, that (i) only Collateral for which the
representations and warranties under this Agreement and the other Loan Documents
are true and correct at the time of calculation shall be included in the
aggregate Borrowing Base, (ii) upon notice to Borrower, Lender at any time and
from time to time may adjust the preceding percentage(s) or modify or add
categories of eligibility, (iii) if Lender at any time determines any method of
valuation overstates the actual fair market value at the time, upon notice to
Borrower, Lender may recalculate those values to fair market value, and (iv) in
no event shall the Borrowing Base ever exceed the Borrower’s Loan Limit.”

“Borrowing Base Report” means a report in the form attached hereto as Exhibit C,
appropriately completed, together with the following attachments: a detailed
aged schedule of all Eligible Accounts as of the date specified in such report,
listing face amounts and dates of invoices of each such Eligible Account and the
name of each account debtor obligated on such Eligible Account (and, upon
request of Lender, the address of an account debtor, copies of invoices, credit
reports, and any other matters and information relating to the Eligible
Accounts), a schedule of Eligible Inventory, setting forth the location of all
such Eligible Inventory (other than Eligible Inventory in transit), including
Eligible Inventory not in the possession of Borrower and the name of the person
in possession thereof and whether and how much of such Eligible Inventory
consists of raw material, finished goods or otherwise and a summary aged listing
of Borrower’s and Guarantor’s accounts payable and an aged list of the ten
largest accounts payable.

 

Exhibit A – Page 1

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

“Business Day” means (i) with respect to the Adjusted One Month LIBOR Rate and
any borrowing, payment or rate selection of LIBOR Rate Advances, a day (other
than a Saturday or Sunday) on which banks generally are open in Texas and/or New
York for the conduct of substantially all of their commercial lending activities
and on which dealings in United States dollars are carried on in the London
interbank market and (ii) for all other purposes, a day other than a Saturday,
Sunday or any other day on which national banking associations are authorized to
be closed.

“CB Floating Rate” means the Prime Rate; provided that the CB Floating Rate
shall, on any day, not be less than the Adjusted One Month LIBOR Rate. The CB
Floating Rate is a variable rate and any change in the CB Floating Rate due to
any change in the Prime Rate or the Adjusted One Month LIBOR Rate is effective
from and including the effective date of such change in the Prime Rate or the
Adjusted One Month LIBOR Rate, respectively.

“CB Floating Rate Advance” means any Advance under this Agreement when and to
the extent that its interest rate is determined by reference to the CB Floating
Rate.

“Change of Control” means the occurrence of any of the following events: (a) any
Person or two or more Persons acting as a group shall acquire beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Act of 1934, as amended, and including holding
proxies to vote for the election of directors other than proxies held by
Borrower’s management or their designees to be voted in favor of Persons
nominated by Borrower’s Board of Directors) of 35% or more of the outstanding
voting securities of Borrower, measured by voting power (including both common
stock and any preferred stock or other equity securities entitling the holders
thereof to vote with the holders of common stock in elections for directors of
Borrower) or (b) one-third or more of the directors of Borrower shall consist of
Persons not nominated by Borrower’s Board of Directors (not including as Board
nominees any directors which the Board is obligated to nominate pursuant to
shareholders agreements, voting trust arrangements or similar arrangements).

“Consolidated” refers to the consolidation of any Person, in accordance with
GAAP, with its properly consolidated subsidiaries. References herein to a
Person’s Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.

“Default Rate” has the meaning specified in Section 1(h) of this Agreement,
provided in any case that no Default Rate charged by Lender shall ever exceed
the Maximum Rate.

“Disclosure Schedule” means Exhibit D attached hereto.

“Dividend” means (a) any dividend or other distribution made by Borrower or a
Subsidiary on or in respect of any equity interests in Borrower or such
Subsidiary, or (b) any payment made by Borrower or a Subsidiary to purchase,
redeem, acquire or retire any equity interest in Borrower or such Subsidiary.

 

Exhibit A – Page 2

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

“Eligible Accounts” means all Accounts except the following:

(a) any Account which arises out of a sale to an Account Debtor which is an
Affiliate of Borrower.

(b) any Account which has not yet been invoiced or any Account the goods giving
rise to which have not been delivered or the services giving rise to which have
not been performed, or which otherwise does not represent a completed sale or
performance.

(c) any Account balances due or unpaid more than 90 days after its original
invoice date or which has an original due date which is more than 90 days after
its original invoice date.

(d) any Account owed by an Account Debtor which is also a creditor or supplier
of Borrower or by an Account Debtor which has asserted any defense or contested
any liability with respect to such Account, or any Account which otherwise is or
may become subject to any right of set off by the Account Debtor thereof
provided that to the extent the Account exceeds the amount of the right of set
off, the positive balance shall be included as an Eligible Account.

(e) any Account owed by an Account Debtor more than 25% (in dollar amount) of
whose Accounts are not Eligible Accounts on account of paragraphs (c) or
(d) above.

(f) any Account owed by an Account Debtor which has commenced a voluntary case
under the bankruptcy or insolvency laws of any jurisdiction, or made an
assignment for the benefit of creditors, or against which a decree or order for
relief has been entered by a court in an involuntary case under any bankruptcy
or insolvency laws of any jurisdiction, or against which any other petition or
other application for relief under any bankruptcy or insolvency laws of any
jurisdiction has been filed, or which has suspended business or consented to or
suffered a receiver, trustee, liquidator or custodian to be appointed for it or
for all or a significant portion of its assets or affairs.

(g) except for an amount of up to $100,000 in respect of foreign Eligible
Accounts approved by Lender, any Account which (i) arises out of a sale made or
services performed outside of the United States or which is owed by an Account
Debtor located outside the United States and (ii) is not either secured by a
commercial letter of credit satisfactory, in all respects, to Lender or such
Account Debtor has not otherwise been approved by Lender.

(h) any Account the sale for which is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or otherwise contingent on or subject to the fulfillment of any condition.

(i) any Account the Account Debtor of which is the United States or any
department, agency or instrumentality thereof.

 

Exhibit A – Page 3

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

(j) any Account to the extent that, but for this paragraph (j), the Eligible
Accounts owed by any Account Debtor and its Affiliates would exceed 10% of the
outstanding aggregate principal balance of all Eligible Accounts.

(k) any Account owed by an Account Debtor which is also an employee or sales
agent or independent contractor of Borrower or any of Borrower’s Affiliates.

(l) any Account subject to a lien or security interest other than one permitted
under this Agreement.

(m) any Account not valid, binding and enforceable against the Account Debtor
thereof in accordance with its terms.

(n) any Account not subject to an enforceable and duly perfected first priority
security interest in favor of Lender.

As used in this definition, “Accounts” means all present and future rights of
Borrower to payment for goods sold or leased or for services rendered (except
those evidenced by instruments or chattel paper), whether now existing or
hereafter arising and wherever arising and whether or not earned by performance,
and “Account Debtor” means the person which is obligated on any Account.

“Eligible Inventory” means any Inventory which:

(a) is owned by Borrower or a Subsidiary which is a Guarantor free and clear of
all liens and security interests other than those permitted under this Agreement
and, if held or stored on leased premises, is subject to the terms of a lien
waiver letter acceptable to Lender executed by the landlord of such premises if
deemed necessary by Lender in its sole discretion; and

(b) is fully and adequately insured with Lender named as loss payee; and

(c) is not on lease or consignment or furnished under any contract of service
from or to any person; and

(d) is finished Inventory, ready for sale, and is not, in the opinion of Lender
damaged, obsolete, or otherwise not readily saleable at full value; and

(e) is subject to an enforceable security interest in favor of Lender which is
duly perfected and of first priority, or, if in transit, will be duly perfected
and of first priority immediately upon reaching its destination.

As used in this definition, “Inventory” means all goods, now owned or hereafter
acquired by Borrower and wherever located, which are held for sale or lease or
are to be furnished under any contract of service, excluding work in process or
raw materials in the business of Borrower or a Subsidiary which is a Guarantor,
and including goods the sale or other disposition of which has given rise to
accounts receivable and which have been returned to or repossessed or stopped in
transit by Borrower or any such Subsidiary.

 

Exhibit A – Page 4

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

“Interest Period” means, with respect to a LIBOR Rate Advance, a period of one
(1), two (2) or three (3) month(s) commencing on a Business Day selected by
Borrower pursuant to this Agreement. Such Interest Period shall end on the day
which corresponds numerically to such date one (1), two (2) or three
(3) month(s) thereafter, as applicable, provided, however, that if there is no
such numerically corresponding day in such first, second or third succeeding
month(s), as applicable, such Interest Period shall end on the last Business Day
of such first, second or third succeeding month(s), as applicable. If an
Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day, provided,
however, that if said next succeeding Business Day falls in a new calendar
month, such Interest Period shall end on the immediately preceding Business Day.

“LIBOR Rate” means with respect to any LIBOR Rate Advance for any Interest
Period, the interest rate determined by Lender by reference to Reuters Screen
LIBOR01, formerly known as Page 3750 of the Moneyline Telerate Service (together
with any successor or substitute, the “Service”) or any successor or substitute
page of the Service providing rate quotations comparable to those currently
provided on such page of the Service, as determined by Lender from time to time
for purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market (the “Page”), to be the rate at
approximately 11:00 a.m. London time, two (2) Business Days prior to the
commencement of the Interest Period for dollar deposits with a maturity equal to
such Interest Period. If no LIBOR Rate is available to Lender, the applicable
LIBOR Rate for the relevant Interest Period shall instead be the rate determined
by Lender to be the rate at which Lender offers to place U.S. dollar deposits
having a maturity equal to such Interest Period with first-class banks in the
London interbank market at approximately 11:00 a.m. (London time) two
(2) Business Days prior to the first day of such Interest Period.

“LIBOR Rate Advance” means any borrowing under this Agreement when and to the
extent that its interest rate is determined by reference to the Adjusted LIBOR
Rate.

“Maximum Rate” means the maximum nonusurious rate of interest that Lender is
permitted under applicable law to contract for, take, charge or receive.

“Person” means any natural person, corporation, limited liability company,
trust, joint stock company, association, company, partnership, governmental
authority or other entity.

“Prime Rate” means the rate of interest per annum announced from time to time by
Lender as its prime rate. The Prime Rate is a variable rate and each change in
the Prime Rate is effective from and including the date the change is announced
as being effective. The prime rate is a reference rate and may not be Lender’s
lowest rate.

“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.

“Reserve Requirement” means the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves) which is imposed under
Regulation D.

 

Exhibit A – Page 5

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

“Subsidiary” means, with respect to any Person, any corporation, association,
partnership, limited liability company, joint venture, or other business or
corporate entity, enterprise or organization which is directly or indirectly
(through one or more intermediaries) controlled by or owned fifty percent or
more by such Person.

 

Exhibit A – Page 6

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

EXHIBIT C

BORROWING BASE REPORT

[TO BE ATTACHED]

 

Exhibit A – Page 7