Exhibit 10.1

FIFTH AMENDMENT TO

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

THIS FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AND SECURITY
AGREEMENT (this “Amendment”), dated September 6, 2019, is made and entered into
by and among IES HOLDINGS, INC., a Delaware corporation, on behalf of itself and
each other Borrower and Guarantor (the “Administrative Borrower”), and WELLS
FARGO BANK, NATIONAL ASSOCIATION (“Lender”).

RECITALS

A. WHEREAS, Borrowers, Guarantors and Lender have entered into that certain
Second Amended and Restated Credit and Security Agreement dated as of April 10,
2017 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”). Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in the Credit Agreement.

B. WHEREAS, Administrative Borrower, on behalf of itself and each other Borrower
and Guarantor, has requested that Lender amend certain provisions in the Credit
Agreement as set forth herein.

C. WHEREAS, Lender has agreed to amend the Credit Agreement on the terms and
conditions as set forth herein.

NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound agree as follows:

ARTICLE I

AMENDMENT

Effective as of the Effective Date (as defined below), the Credit Agreement is
hereby amended (a) to delete red or green stricken text (indicated textually in
the same manner as the following examples: stricken text and stricken text) and
(b) to add the blue or green double-underlined text (indicated textually in the
same manner as the following examples: double-underlined text and
double-underlined text), in each case, as set forth in the conformed copy of the
Credit Agreement (and to the extent provided in Exhibit A hereto, the exhibits,
schedules and annexes to the Credit Agreement) attached hereto as Exhibit A and
made a part hereof for all purposes.

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ARTICLE II

NO WAIVER

2.01 No Waiver. Other than as set forth above in Article I hereof, nothing
contained in this Amendment shall be construed as an amendment of, consent to,
or waiver by, Lender of any covenant or provision of the Credit Agreement, the
other Loan Documents, this Amendment, or of any other contract or instrument
between any Loan Party and Lender, and the failure of Lender at any time or
times hereafter to require strict performance by the Loan Parties of any
provision thereof shall not waive, affect or diminish any right of Lender to
thereafter demand strict compliance therewith. Lender hereby reserves all rights
granted under the Credit Agreement, the other Loan Documents, this Amendment and
any other contract or instrument between any Loan Party and Lender.

ARTICLE III

CONDITIONS PRECEDENT

3.01 Conditions to Effectiveness. This Amendment shall become effective only
upon the satisfaction in full, in a manner satisfactory to Lender, of the
following conditions precedent (the first date upon which all such conditions
have been satisfied being herein called the “Effective Date”):

(a) Lender shall have received the following documents or items, each in form
and substance satisfactory to Lender and its legal counsel (unless such
conditions are waived by Lender in its sole discretion):

(i) an executed copy of this Amendment;

(ii) each of the documents set forth on the Closing Checklist attached hereto as
Exhibit B; and

(iii) (x) payment of a nonrefundable amendment fee of $125,000 to Lender, which
shall be fully earned and payable on the date hereof, (y) all other documents
Lender may reasonably request with respect to any matter relevant to this
Amendment or the transactions contemplated hereby, and (z) Borrowers shall have
paid Lender, or made arrangements satisfactory to Lender to pay, all Lender
Expenses, incurred prior to or in connection with the preparation of this
Amendment.

(b) After giving effect to this Amendment, the representations and warranties
made by each Loan Party contained herein and in the Credit Agreement, as amended
hereby, and the other Loan Documents, shall be true and correct in all material
respects as of the date hereof, as if those representations and warranties were
made for the first time on such date, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and correct
in all material respects on such earlier date).

(c) After giving effect to this Amendment, each Loan Party is in compliance with
all applicable covenants and agreements contained in the Credit Agreement and
the other Loan Documents.

(d) No Default or Event of Default shall exist under any of the Loan Documents
(as amended hereby), and no Default or Event of Default will result under any of
the Loan Documents from the execution, delivery or performance of this
Amendment.

 

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(e) All corporate and other proceedings, and all documents instruments and other
legal matters in connection with the transactions contemplated by this Amendment
shall be satisfactory in form and substance to Lender and its counsel.

(f) Lender shall have received final credit approval for the Credit Facility and
the transactions described in this Amendment.

ARTICLE IV

RATIFICATIONS, REPRESENTATIONS AND WARRANTIES

4.01 Ratifications. The terms and provisions set forth in this Amendment shall
modify and supersede all inconsistent terms and provisions set forth in the
Credit Agreement and the other Loan Documents, and, except as expressly modified
and superseded by this Amendment, the terms and provisions of the Credit
Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect. Administrative Borrower, on behalf of itself
and each other Loan Party, hereby agrees that all liens and security interest
securing payment of the Obligations under the Credit Agreement are hereby
collectively renewed, ratified and brought forward as security for the payment
and performance of the Obligations. Administrative Borrower, on behalf of itself
and each other Loan Party, and Lender agree that the Credit Agreement and the
other Loan Documents, as amended hereby, shall continue to be legal, valid,
binding and enforceable in accordance with their respective terms.

4.02 Representations and Warranties. Administrative Borrower, on behalf of
itself and each other Loan Party, hereby represents and warrants, jointly and
severally, to Lender as of the date hereof as follows: (a) it is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization; (b) the execution, delivery and performance by it of this
Amendment, the Credit Agreement and all other Loan Documents executed and/or
delivered in connection herewith are within its powers, have been duly
authorized, and do not contravene (i) its Governing Documents or (ii) any
applicable law; (c) no consent, license, permit, approval or authorization of,
or registration, filing or declaration with any governmental body or other
Person, is required in connection with the execution, delivery, performance,
validity or enforceability of this Amendment, the Credit Agreement or any of the
other Loan Documents executed and/or delivered in connection herewith by or
against it, except for those consents, approvals or authorizations which
(i) will have been duly obtained, made or compiled prior to the Effective Date
and which are in full force and effect or (ii) the failure to obtain could not
individually or in the aggregate reasonably be expected to cause a Material
Adverse Change; (d) this Amendment, the Credit Agreement and all other Loan
Documents executed and/or delivered in connection herewith have been duly
executed and delivered by it; (e) this Amendment, the Credit Agreement and all
other Loan Documents executed and/or delivered in connection herewith constitute
its legal, valid and binding obligation enforceable against it in accordance
with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally or by general principles of equity;
(f) no Default or Event of Default exists, has occurred and is continuing or
would result by the execution, delivery or performance of this Amendment;
(g) each Loan Party is in compliance with all applicable covenants and
agreements contained in the Credit Agreement and the other Loan Documents, as
amended hereby; and (h) the representations and warranties contained in the
Credit Agreement and the other Loan

 

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Documents are true and correct in all material respects on and as of the date
hereof as though made on and as of each such date, except to the extent that
such representations and warranties expressly relate solely to an earlier date
(in which case such representations and warranties shall have been true and
complete on and as of such earlier date).

ARTICLE V

MISCELLANEOUS PROVISIONS

5.01 Survival of Representations and Warranties. All representations and
warranties made in the Credit Agreement or the other Loan Documents, including,
without limitation, any document furnished in connection with this Amendment,
shall survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Lender shall affect the representations and
warranties or the right of Lender to rely upon them.

5.02 Reference to Credit Agreement. Each of the Credit Agreement and the other
Loan Documents, and any and all other agreements, documents or instruments now
or hereafter executed and delivered pursuant to the terms hereof or pursuant to
the terms of the Credit Agreement, as amended hereby, are hereby amended so that
any reference in the Credit Agreement and such other Loan Documents to the
Credit Agreement shall mean a reference to the Credit Agreement as amended
hereby.

5.03 Expenses of Lender. Administrative Borrower, on behalf of itself and each
other Borrower and Guarantor, agrees to pay on demand all reasonable costs and
expenses incurred by Lender in connection with any and all amendments,
modifications, and supplements to the other Loan Documents, including, without
limitation, the reasonable costs and fees of Lender’s legal counsel, and all
costs and expenses incurred by Lender in connection with the enforcement or
preservation of any rights under the Credit Agreement, as amended hereby, or any
other Loan Documents, including, without, limitation, the costs and fees of
Lender’s legal counsel.

5.04 Severability. Any provision of this Amendment held by a court of competent
jurisdiction to be invalid or unenforceable shall not impair or invalidate the
remainder of this Amendment and the effect thereof shall be confined to the
provision so held to be invalid or unenforceable.

5.05 Successors and Assigns. This Amendment is binding upon and shall inure to
the benefit of Lender and each Loan Party and their respective successors and
assigns, except that no Loan Party may assign or transfer any of its respective
rights or obligations hereunder without the prior written consent of Lender.

5.06 Counterparts. This Amendment may be executed in one or more counterparts
(including by electronic .pdf), each of which when so executed shall be deemed
to be an original, but all of which when taken together shall constitute one and
the same instrument.

5.07 Effect of Waiver. No consent or waiver, express or implied, by Lender to or
for any breach of or deviation from any covenant or condition by any Loan Party
shall be deemed a consent to or waiver of any other breach of the same or any
other covenant, condition or duty.

 

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5.08 Headings. The headings, captions, and arrangements used in this Amendment
are for convenience only and shall not affect the interpretation of this
Amendment.

5.09 Applicable Law. THIS AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED PURSUANT
HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

5.10 Final Agreement. THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS, EACH AS
MODIFIED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS MODIFIED HEREBY, 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. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AGREEMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY THE BORROWERS
AND LENDER.

5.11 Release. ADMINISTRATIVE BORROWER, ON BEHALF OF ITSELF AND EACH LOAN PARTY,
HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS
COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED
TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY ANY LOANS OR
EXTENSIONS OF CREDIT FROM LENDER TO THE BORROWERS UNDER THE CREDIT AGREEMENT OR
THE OTHER LOAN DOCUMENTS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR
NATURE FROM LENDER. ADMINISTRATIVE BORROWER, ON BEHALF OF ITSELF AND EACH LOAN
PARTY, HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER,
ITS PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE
CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND
LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN
EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS
EXECUTED, WHICH ANY LOAN PARTY MAY NOW OR HEREAFTER HAVE AGAINST LENDER, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND
IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY LOANS OR EXTENSIONS OF
CREDIT FROM LENDER TO THE BORROWERS UNDER THE CREDIT AGREEMENT OR THE OTHER LOAN
DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING,
RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE
APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE CREDIT AGREEMENT
OR LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.

 

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5.12 Consent of Guarantors. The Administrative Borrower, on behalf of each
Guarantor, hereby (a) consents to the transactions contemplated by this
Amendment; and (b) agrees that the Credit Agreement and the other Loan Documents
(as amended, restated, supplemented or otherwise modified from time to time) are
and shall remain in full force and effect. Although each Guarantor has been
informed of the matters set forth herein and Administrative Borrower, on behalf
of the Guarantors, has acknowledged and agreed to same, it understands that the
Lender has no obligation to inform it of such matters in the future or to seek
its acknowledgment or agreement to future amendments, and nothing herein shall
create such a duty. Administrative Borrower, on behalf of each Guarantor,
acknowledges that its Guaranty is in full force and effect and ratifies the
same, acknowledges that the undersigned has no defense, counterclaim, set-off or
any other claim to diminish the undersigned’s liability under such documents,
that the undersigned’s consent is not required to the effectiveness of the
Credit Agreement and that no consent by it is required for the effectiveness of
any future amendment, modification, forbearance or other action with respect to
the Collateral, the Advances, the Credit Agreement or any of the other Loan
Documents.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date
first above written.

 

ADMINISTRATIVE BORROWER: IES HOLDINGS, INC. By:  

/s/ Tracy A. McLauchlin

Name: Tracy A. McLauchlin Title: Senior Vice President, CFO & Treasurer

Signature Page to Fifth Amendment to Second Amended and Restated Credit and
Security Agreement

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WELLS FARGO BANK, NATIONAL ASSOCIATION By:  

/s/ Michael L. Gerard

Name: Michael L. Gerard Title: Authorized Signatory

Signature Page to Fifth Amendment to Second Amended and Restated Credit and
Security Agreement

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Exhibit A

Restated Credit Agreement

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CONFORMED THRU

Fourth Amendment dated May 20, 2019

 

 

 

 

LOGO [g801022dsp10.jpg]   

SECOND AMENDED AND RESTATED

CREDIT AND SECURITY AGREEMENT

     

 

by and among

 

IES HOLDINGS, INC.

 

IES COMMUNICATIONS, LLC

 

IES COMMERCIAL, INC.

 

IES MANAGEMENT LP

 

IES MANAGEMENT ROO, LP

 

<IES PURCHASING & MATERIALS, INC.>

 

IES RESIDENTIAL, INC.

 

INTEGRATED ELECTRICAL FINANCE, INC.

 

IES SUBSIDIARY HOLDINGS, INC.

 

MAGNETECH INDUSTRIAL SERVICES, INC.

 

<HK ENGINE COMPONENTS, LLC>

 

<IES RENEWABLE ENERGY, LLC>

 

SOUTHERN INDUSTRIAL SALES AND SERVICES, INC.

 

CALUMET ARMATURE AND ELECTRIC, L.L.C.

 

<SHANAHAN MECHANICAL AND ELECTRICAL, INC.>

 

IES INFRASTRUCTURE SOLUTIONS, LLC

 

TECHNIBUS, INC.

 

FREEMAN ENCLOSURE SYSTEMS, LLC

 

STRATEGIC EDGE LLC

 

as Borrowers,

 

and

 

IES CONSOLIDATION, LLC

 

<IES PROPERTIES, INC.>

 

IES SHARED SERVICES, INC.

 

<IES TANGIBLE PROPERTIES, INC.>

 

KEY ELECTRICAL SUPPLY, INC.

 

IES OPERATIONS GROUP, INC.

 

ICS HOLDINGS LLC

 

as Guarantors,

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Lender

 

Dated as of April 10, 2017

                                   

 

 

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Table of Contents

 

 

         Page  

1.    DEFINITIONS AND CONSTRUCTION

     2  

1.1.

  Definitions, Code Terms, Accounting Terms and Construction      2  

2.    LOANS AND TERMS OF PAYMENT

     2  

2.1.

  Revolving Loan Advances      2  

2.2.

  [Reserved]      3  

2.3.

  Borrowing Procedures      3  

2.4.

  Payments; Prepayments      4  

2.5.

  Clearance Charge      6  

2.6.

  Interest Rates: Rates, Payments, and Calculations      6  

2.7.

  Designated Account      8  

2.8.

  Maintenance of Loan Account; Statements of Obligations      8  

2.9.

  Maturity Termination Dates      <7>8  

2.10.

  Effect of Maturity      8  

2.11.

  Termination or Reduction by Borrowers      9  

2.12.

  Fees      9  

2.13.

  Letters of Credit      9  

2.14.

  <Illegality; Impracticability; Increased Costs 13>Special Provisions
Applicable to Daily Three Month LIBOR      19  

2.15.

  Capital Requirements      <13>21  

2.16.

  Extent of Each Borrower’s Liability, Contribution      <14>22  

2.17.

  Parent as Agent for each Loan Party      <15>23  

3.    SECURITY INTEREST

     <16>23  

3.1.

  Grant of Security Interest      <16>23  

3.2.

  Borrowers Remain Liable      <16>24  

3.3.

  Assignment of Insurance      <16>24  

3.4.

  Financing Statements      <17>24  

4.    CONDITIONS.

     <17>25  

4.1.

  Conditions Precedent to the Initial Extension of Credit      <17>25  

4.2.

  Conditions Precedent to all Extensions of Credit      <17>25  

4.3.

  Conditions Subsequent      <18>25  

 

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5.    REPRESENTATIONS AND WARRANTIES

     <18>25  

6.    AFFIRMATIVE COVENANTS

     <18>26  

6.1.

  Financial Statements, Reports, Certificates      <18>26  

6.2.

  Collateral Reporting      <18>26  

6.3.

  Existence      <18>26  

6.4.

  Maintenance of Properties      <19>26  

6.5.

  Taxes      <19>27  

6.6.

  Insurance      <19>27  

6.7.

  Inspections, Exams, Audits and Appraisals      <20>28  

6.8.

  Account Verification      <20>28  

6.9.

  Compliance with Laws      <20>28  

6.10.

  Environmental      <20>28  

6.11.

  Disclosure Updates      <21>29  

6.12.

  Collateral Covenants      <22>30  

6.13.

  Material Contracts      <26>34  

6.14.

  Location of Inventory, Equipment and Books      <27>34  

6.15.

  Further Assurances      <27>35  

6.16.

  Formation of Subsidiaries      <28>35  

6.17.

  Post-Closing Covenants      <28>36  

6.18.

  OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws      36  

7.    NEGATIVE COVENANTS

     <29>36  

7.1.

  Indebtedness      <29>36  

7.2.

  Liens      <29>37  

7.3.

  Restrictions on Fundamental Changes      <29>37  

7.4.

  Disposal of Assets      <29>37  

7.5.

  Change Name      <30>37  

7.6.

  Nature of Business      <30>37  

7.7.

  Prepayments and Amendments      <30>38  

7.8.

  Change of Control      <30>38  

7.9.

  Restricted Junior Payments      <30>38  

7.10.

  Accounting Methods      <31>38  

7.11.

  Investments; Controlled Investments      <31>38  

7.12.

  Transactions with Affiliates      <31>39  

7.13.

  Use of Proceeds      <32>39  

 

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7.14.

  Limitation on Issuance of Stock      <32>40  

7.15.

  Consignments      <32>40  

7.16.

  Inventory and Equipment with Bailees      <32>40  

7.17.

  Use of Proceeds in Connection with Bonded Contracts      <32>40  

7.18.

  Surety Bonds      <33>41  

8.    FINANCIAL COVENANTS

     <33>41  

9.    EVENTS OF DEFAULT

     <34>41  

10.   RIGHTS AND REMEDIES

     <37>45  

10.1.

  Rights and Remedies      <37>45  

10.2.

  Additional Rights and Remedies      <38>46  

10.3.

  Disposition of Pledged Interests by Lender      <39>47  

10.4.

  Voting and Other Rights in Respect of Pledged Interests      <39>47  

10.5.

  Lender Appointed Attorney in Fact      <40>48  

10.6.

  Remedies Cumulative      <41>49  

10.7.

  Crediting of Payments and Proceeds      <41>49  

10.8.

  Marshaling      <41>49  

10.9.

  License      <42>49  

11.   WAIVERS; INDEMNIFICATION

     <42>50  

11.1.

  Demand; Protest; etc.      <42>50  

11.2.

  The Lender’s Liability for Collateral      <42>50  

11.3.

  Indemnification      <42>50  

12.   NOTICES

     <43>51  

13.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

     <44>52  

14.   ASSIGNMENTS; SUCCESSORS

     <46>54  

15.   AMENDMENTS; WAIVERS

     <46>54  

16.   TAXES

     <46>54  

17.   GENERAL PROVISIONS

     <47>55  

17.1.

  Effectiveness      <47>55  

17.2.

  Section Headings      <47>55  

17.3.

  Interpretation      <47>55  

17.4.

  Severability of Provisions      <47>55  

17.5.

  Debtor-Creditor Relationship      <47>55  

17.6.

  Counterparts; Electronic Execution      <47>55  

17.7.

  Revival and Reinstatement of Obligations      <47>55  

 

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17.8.

  Confidentiality      <48>56  

17.9.

  Lender Expenses      <49>57  

17.10.

  Setoff      <49>57  

17.11.

  Survival      <49>57  

17.12.

  Patriot Act      <49>57  

17.13.

  Integration      <49>58  

17.14.

  Bank Product Providers      <50>58  

17.15.

  Non-Applicability of Chapter 346      <50>59  

17.16.

  Waiver of Rights under Texas Deceptive Trade Practices Act      <50>59  

17.17.

  Amendment and Restatement      <51>59  

EXHIBITS AND SCHEDULES

 

Schedule 1.1    Definitions Schedule 2.12    Fees Schedule 6.1    Financial
Statement, Reports, Certificates Schedule 6.2    Collateral Reporting Exhibit A
   Form of Compliance Certificate Exhibit B    Conditions Precedent Exhibit C   
Conditions Subsequent Exhibit D    Representations and Warranties Exhibit E   
Information Certificate Exhibit E-1    Supplement to Information Certificate
Exhibit F    Pledged Interest Addendum Schedule A-1    Collection Account
Schedule A-2    Authorized Person Schedule D-1    Designated Account Schedule
P-1    Permitted Investments Schedule P-2    Permitted Liens

 

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SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

THIS SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT (this
“Agreement”), is entered into as of April 10, 2017, by and among WELLS FARGO
BANK, NATIONAL ASSOCIATION (“Lender”), IES HOLDINGS, INC., a Delaware
corporation; IES COMMUNICATIONS, LLC, a Delaware limited liability company; IES
COMMERCIAL, INC., a Delaware corporation; IES MANAGEMENT LP, a Texas limited
partnership; IES MANAGEMENT ROO, LP, a Texas limited partnership; IES
<PURCHASING & MATERIALS, INC., a Delaware corporation; IES >RESIDENTIAL, INC., a
Delaware corporation; INTEGRATED ELECTRICAL FINANCE, INC., a Delaware
corporation; IES SUBSIDIARY HOLDINGS, INC., a Delaware corporation; MAGNETECH
INDUSTRIAL SERVICES, INC., an Indiana corporation; <HK ENGINE COMPONENTS, LLC,
an Indiana limited liability company; IES RENEWABLE ENERGY, LLC, a Delaware
limited liability company >SOUTHERN INDUSTRIAL SALES AND SERVICES, INC., a
Georgia corporation d/b/a Southern Rewinding and Sales; CALUMET ARMATURE AND
ELECTRIC, L.L.C., an Illinois limited liability company; <SHANAHAN MECHANICAL
AND ELECTRICAL, INC., a Nebraska corporation; >IES INFRASTRUCTURE SOLUTIONS,
LLC, a Delaware limited liability company; TECHNIBUS, INC., a Delaware
corporation; FREEMAN ENCLOSURE SYSTEMS, LLC, an Ohio limited liability company;
STRATEGIC EDGE LLC, an Ohio limited liability company (each, individually a
“Borrower”, and collectively, the “Borrowers”); IES CONSOLIDATION, LLC, a
Delaware limited liability company; IES <PROPERTIES, INC., a Delaware
corporation; IES >SHARED SERVICES<, INC., a Delaware corporation; IES TANGIBLE
PROPERTIES>, INC., a Delaware corporation; KEY ELECTRICAL SUPPLY, INC., a Texas
corporation; IES OPERATIONS GROUP, INC., a Delaware corporation; and ICS
HOLDINGS LLC, an Arizona limited liability company (each, individually a
(“Guarantor”), and collectively, the “Guarantors”).

RECITALS:

Borrower and Lender are parties to that certain Amended and Restated Credit and
Security Agreement dated as of September 24, 2014, executed by and among certain
Borrowers, Guarantors, and Lender as the same has been amended, restated,
modified or supplemented from time to time prior to the date hereof (the
“Existing Credit Agreement”) pursuant to which Lender made certain revolving
loans and other financial accommodations to Borrower (the “Existing Loans”), and
Borrower granted to Lender a security interest in all of the Collateral (as
described in the Existing Credit Agreement, the “Existing Collateral”) as
security for all of the Indebtedness (as defined therein, the “Existing
Obligations”). Pursuant to the Existing Credit Agreement, Lender and Borrower
entered into various other Loan Documents (as defined in the Existing Credit
Agreement) (collectively, including the Existing Credit Agreement, the “Existing
Loan Documents”).

Borrower has requested that Lender agree to increase, extend, and continue to
provide the Existing Loans, as well as make certain additional financial
accommodations to Borrower.

The parties have agreed (i) to amend and restate the Existing Credit Agreement
in its entirety as set forth herein, (ii) that, from and after the date hereof,
the Existing Loans and the other Existing Obligations outstanding under the
Existing Credit Agreement shall be governed by and deemed to be outstanding
under the amended and restated terms set forth in this Agreement and the other
Loan Documents, and (iii) that the Existing Obligations are and shall continue
to be (and all Obligations incurred pursuant hereto shall be) secured by, among
other things, the Existing Collateral as well as the other Collateral (as
defined herein).

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It is the intent of the parties that the execution and delivery of this
Agreement, which is made for the purposes described in the foregoing recitals,
shall not effectuate a novation of any of the Existing Loan Documents, or except
as set forth herein constitute a release or discharge of the Existing
Obligations or the Existing Collateral, but rather as a substitution of certain
terms governing the payment and performance of such obligations and
indebtedness.

NOW, THEREFORE, for valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

1.1. Definitions, Code Terms, Accounting Terms and Construction. Capitalized
terms used in this Agreement shall have the meanings specified therefor on
Schedule 1.1. Additionally, matters of (i) interpretation of terms defined in
the Code, (ii) interpretation of accounting terms and (iii) construction are set
forth in Schedule 1.1.

2. LOANS AND TERMS OF PAYMENT.

2.1. Revolving Loan Advances.

(a) Subject to the terms and conditions of this Agreement, and during the term
of this Agreement, Lender agrees to make revolving loans (“Advances”) to
Borrowers in an amount at any one time outstanding not to exceed the lesser of:

(i) the Maximum Revolver Amount less the Letter of Credit Usage at such time,
and

(ii) the Borrowing Base at such time less the Letter of Credit Usage, other than
Letter of Credit Usage in respect of Cash Collateralized Letters of Credit, at
such time.

(b) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement. The outstanding principal amount of the Advances,
together with interest accrued and unpaid thereon, shall be due and payable on
the Termination Date. Lender has no obligation to make an Advance at any time
following the occurrence and during the continuance of a Default or an Event of
Default.

(c) If at any time the Maximum Revolver Amount is less than the amount of the
Borrowing Base, the amount of Advances available under Section 2.1(a) above
shall be reduced by any Reserves established by Lender with respect to amounts
that may be payable by any Borrower to third parties. Lender agrees it shall use
reasonable efforts to promptly notify Borrowers upon establishing any new
Reserves; provided, however, Lender’s failure to do so shall not impact the
amount of Advances available hereunder or impose any liability upon Lender
whatsoever.

 

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(d) Lender may request that any portion of its Obligations or the Advances made
by it be evidenced by one or more promissory notes. In such event, Borrowers
shall execute and deliver to such Lender the requested promissory notes payable
to the order of such Lender in a form reasonably satisfactory to Borrowers.
Thereafter, the portion of the Obligations and Advances evidenced by such
promissory notes and interest thereon shall at all times be represented by one
or more promissory notes in such form payable to the order of the payee named
therein; provided that on the Closing Date, this Agreement shall evidence the
Advances and other Obligations owing to Lender regardless of whether the notes
(which are solely at the option and at the request of Lender pursuant to this
Section 2.1(d)) are issued. On the Closing Date, the Existing Note shall be
deemed cancelled and any and all Advances and Obligations with respect thereto
shall remain outstanding in all respects and evidenced by this Agreement. The
cancellation of the Existing Note should not be deemed a repayment or a novation
of the Existing Note, a forgiveness of the Advances and other Obligations owing
to Lender under the Existing Note, the Existing Credit Agreement, or this
Agreement, or as an intent for the Advances and other Obligations owing to
Lender to be affected in any way (it being the express intent of Lender that the
Advances and other Obligations owing to Lender shall remain in full force and
effect in all respects and evidenced by this Agreement).

2.2. [Reserved].

2.3. Borrowing Procedures.

(a) Procedure for Borrowing. Provided Lender has not separately agreed that
Borrowers may use the Loan Management Service, each Borrowing shall be made by a
written request by an Authorized Person of Administrative Borrower delivered to
Lender (which may be delivered through Lender’s electronic platform or portal).
Such written request must be received by Lender no later than 1:00 p.m.
(<Eastern>eastern time) on the Business Day that is the requested Funding Date
specifying (i) the amount of such Borrowing, and (ii) the requested Funding
Date, which shall be a Business Day. <At Lender’s election, in lieu of
delivering the above-described written request, any Authorized Person may give
Lender telephonic notice of such request by the required time. Lender is
authorized to make the Advances, and to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person.>All Borrowing requests which are not made
on-line via Lender’s electronic platform or portal shall be subject to (and
unless Lender elects otherwise in the exercise of its sole discretion, such
Borrowings shall not be made until the completion of) Lender’s authentication
process (with results satisfactory to Lender) prior to the funding of any such
requested Advance.

(b) Making of Loans. Promptly after receipt of a request for a Borrowing
pursuant to Section 2.3(a), Lender shall make the proceeds thereof available to
Borrowers on the applicable Funding Date by transferring immediately available
funds equal to such amount to the Designated Account; provided, however, that,
Lender shall not have the obligation to make any Advance, if (i) one (1) or more
of the applicable conditions precedent set forth in Section 4 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless such
condition has been waived by Lender, or (ii) the requested Borrowing would
exceed the Availability on such Funding Date.

 

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(c) Loan Management Service. If Lender has separately agreed that Borrowers may
use the Loan Management Service, Borrowers shall not request and Lender shall no
longer honor a request for an Advance made in accordance with Section 2.3(a) and
all Advances will instead be initiated by Lender and credited to the Designated
Account as Advances as of the end of each Business Day in an amount sufficient
to maintain an agreed upon ledger balance in the Designated Account, subject
only to Availability as provided in Section 2.1. If Lender terminates Borrowers’
access to the Loan Management Service, Borrowers may continue to request
Advances as provided in Section 2.3(a), subject to the other terms and
conditions of this Agreement. Lender shall have no obligation to make an Advance
through the Loan Management Service after the occurrence and during the
continuance of a Default or an Event of Default, or in an amount in excess of
Availability, and may terminate the Loan Management Service at any time in its
sole discretion.

(d) Protective Advances. Lender may make an Advance for any reason at any time
in its Permitted Discretion, without Borrowers’ compliance with any of the
conditions of this Agreement, and (i) disburse the proceeds directly to third
Persons in order to protect Lender’s interest in the Collateral or to perform
any obligation of Borrowers under this Agreement or otherwise to enhance the
likelihood of repayment of the Obligations, or (ii) apply the proceeds to
outstanding Obligations then due and payable (such Advance, a “Protective
Advance”). Lender agrees it shall use reasonable efforts to promptly notify
Borrowers upon making any Protective Advance (other than during the continuance
of an Event of Default); provided, however, Lender’s failure to do so shall not
impact Borrowers’ obligation to repay such Protective Advance or otherwise
impose any liability upon Lender whatsoever.

2.4. Payments; Prepayments.

(a) Payments by Borrowers. Except as otherwise expressly provided herein, all
payments by Borrowers shall be made <as directed by Lender or>(i) to the
Collection Account for the account of Lender and shall be made in immediately
available funds, no later than 4:30 p.m. (Eastern time) on the date specified
herein, or (ii) as otherwise specified in the applicable Cash Management
Documents. Any payment received by Lender later than 4:30 p.m. (Eastern time)
shall be deemed to have been received (unless Lender, in its sole discretion,
elects to credit it on the date received) on the following Business Day and any
applicable interest or fee shall continue to accrue until such following
Business Day.

(b) Payments by Account Debtors. From and after the date on which (i) an Event
of Default has occurred or (ii) Borrowers’ Liquidity is less than thirty percent
(30%) of the Maximum Revolver Amount (with at least fifty percent (50%) of such
Liquidity comprised of Excess Availability) as set forth on the monthly
calculation delivered to Lender pursuant to Section 6.1 of the Agreement (a
“Springing Lockbox Event”), Borrowers shall, unless otherwise notified by Lender
in writing, instruct all Account Debtors to make payments either directly to the
Lockbox for deposit by Lender directly to the Collection Account, or instruct
them to deliver such payments to Lender by wire transfer, ACH, or other means as
Lender may direct for deposit to the Lockbox or Collection Account or for direct
application to reduce the outstanding Advances. If any Borrower receives a
payment of the Proceeds of Collateral directly (whether before or after the
occurrence of a Springing Lockbox Event), such Borrower will promptly deposit
the payment or Proceeds into the Collection Account. Until so deposited, such
Borrower will hold all such payments and Proceeds in trust for Lender without
commingling with other funds or property.

 

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(c) Crediting Payments. <For >The receipt of any payment item by Lender shall
not be required to be considered a payment on account unless such payment item
is a wire transfer of immediately available funds made to the Collection Account
or unless and until such payment item is honored when presented for payment.
Should any payment item not be honored when presented for payment, then
Borrowers shall be deemed not to have made such payment. Anything to the
contrary contained herein notwithstanding, for purposes of calculating
Availability and the accrual of interest on outstanding Obligations<, unless
otherwise provided in the applicable Cash Management Documents or as otherwise
agreed between Administrative Borrower and Lender>, each payment shall be
applied to the Obligations as of the first Business Day following the Business
Day of deposit to the Collection Account of immediately available funds or other
receipt of immediately available funds by Lender provided such payment is
received in accordance with Lender’s usual and customary practices as in effect
from time to time. Any payment received by Lender that is not a transfer of
immediately available funds shall be considered provisional until the item or
items representing such payment have been finally paid under applicable law.
Should any payment item not be honored when presented for payment, then
Borrowers shall be deemed not to have made such payment<, and that portion of
Borrowers’ outstanding Obligations corresponding to the amount of such
dishonored payment item shall be deemed to bear interest as if the dishonored
payment item had never been received by Lender. >Each reduction in outstanding
Advances resulting from the application of such payment to the outstanding
Advances shall be accompanied by an equal reduction in the amount of outstanding
Accounts. In the event of any inconsistency between the provisions of this
Section 2.4(c) and the provisions of any Cash Management Document, the
provisions of this Section 2.4(c) shall control.

(d) Application of Payments. All Collections and all Proceeds of Collateral
received by Lender shall be applied to reduce the outstanding Obligations in the
following manner: (i) so long as no Event of Default has occurred and is
continuing and no Advances are outstanding, as requested by Administrative
Borrower, and (ii) otherwise as Lender shall determine in its discretion. For
the avoidance of doubt, to the extent Administrative Borrower does not designate
its preferred application of Collection and Proceeds in writing to Lender under
clause (i) above, Lender shall apply such Collections and Proceeds in such
manner as determined in its sole discretion. After payment in full in cash of
all Obligations, any remaining balance shall be transferred to the Designated
Account or otherwise to such other Person entitled thereto under applicable law.

(e) [Reserved].

(f) Mandatory Prepayments. If, at any time, (i) the Revolver Usage exceeds
(A) the Borrowing Base or (B) the Maximum Revolver Amount, less Reserves (in
accordance with Section 2.1(c)) at such time or (ii) (A) the Revolver Usage on
such date exceeds (B) the Maximum Credit, less Reserves (in accordance with
Section 2.1(c)) at such time (such excess amount described in clauses (i) and
(ii) being referred to as the “Overadvance Amount”), then Borrowers shall
immediately upon demand prepay the Obligations in an aggregate amount equal to
the

 

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Overadvance Amount. If payment in full of the outstanding revolving loans is
insufficient to eliminate the Overadvance Amount and Letter of Credit Usage
continues to exceed the Borrowing Base, Borrowers shall maintain Letter of
Credit Collateralization of the outstanding Letter of Credit Usage sufficient to
eliminate the Overadvance Amount. Lender shall not be obligated to provide any
Advances during any period that an Overadvance Amount is outstanding.

2.5. Clearance Charge . Collections received by Lender shall be applied as
provided in Sections 2.4(c) and (d), but the Obligations paid with such
Collections shall continue to accrue interest at the rate then applicable to
Advances as provided under Section 2.6 through the end of the first Business Day
following the Business Day that such Collections were applied to the
Obligations. This one (1) Business Day clearance charge on all Collections is
acknowledged by the parties to constitute an integral aspect of the pricing of
the financing of Borrowers and shall apply irrespective of whether or not there
are any outstanding monetary Obligations. The parties acknowledge and agree that
the economic benefit of the foregoing provisions of this Section 2.5 shall
accrue exclusively to Lender.

2.6. Interest Rates: Rates, Payments, and Calculations.

(a) Interest Rates. Except as provided in Section 2.6(b), the principal amount
of all Obligations (except for the undrawn Letters of Credit and Bank Products)
that have been charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum rate equal to the
Interest Rate plus the applicable Interest Rate Margin.

(b) Default Rate. Upon the occurrence and during the continuation of an Event of
Default and at any time following the Termination Date,

(i) the principal amount of all Obligations (except for undrawn Letters of
Credit and Bank Products) that have been charged to the Loan Account pursuant to
the terms hereof shall bear interest on the Daily Balance thereof at a per annum
rate equal to three (3) percentage points above the per annum rate otherwise
applicable thereunder, and

(ii) the Letter of Credit fee provided for in Section 2.12 shall be increased by
three (3) percentage points above the per annum rate otherwise applicable
hereunder.

(c) Payment. Except to the extent provided to the contrary in Section 2.12,
Section 2.13(j) or Section 2.14(a), (i) all interest<, all Letter of Credit
fees,> and all other fees payable hereunder or under any of the other Loan
Documents<,> (other than Letter of Credit Fees) shall be due and payable, in
arrears, on the first day of each month, (ii) all Letter of Credit Fees payable
hereunder, and all commissions, other fees, charges and expenses provided for in
Section 2.13(j) shall be due and payable, in arrears, on the first Business Day
of each month, and (iii) all costs and expenses payable hereunder or under any
of the other Loan Documents, and all other Lender Expenses shall be due and
payable<, in arrears, on> on (x) with respect to Lender Group Expenses
outstanding as of the Closing Date, the Closing Date, and (y) otherwise, the
earlier of (A) the first day of <each>the month<. Each Borrower hereby
authorizes> following the date on which the applicable costs, expenses, or
Lender Expenses were first incurred, or (B) the date on which demand therefor is
made by Lender (it being acknowledged and agreed that any charging of such
costs, expenses or Lender Expenses to the Loan Account pursuant to the
provisions of the

 

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following sentence shall be deemed to constitute a demand for payment thereof
for the purposes of this subclause (y)). Borrowers hereby authorize Lender, from
time to time without prior notice to Borrowers, to charge <all interest, Letter
of Credit fees, and >to the Loan Account (A) on the first day of each month, all
interest accrued during the prior month on Advances hereunder, (B) on the first
Business Day of each month, all Letter of Credit Fees accrued or chargeable
hereunder during the prior month, (C) as and when incurred or accrued, all fees
and costs provided for in Section 2.12, (D) on the first day of each month, the
Unused Line Fee accrued during the prior month pursuant to Section 2.12, (E) as
and when due and payable, all other fees payable hereunder or under any of the
other Loan Documents< (in each case, >as and when due and payable<), all costs
and expenses payable hereunder or under any of the other Loan Documents (in each
case, as and when accrued or incurred), all Lender Expenses (as and when accrued
or incurred), and >all fees and costs provided for in Section 2.12 <(as and when
accrued or incurred), and>, (F) on the Closing and thereafter as and when
incurred or accrued, all other Lender Expenses, and (G) as and when due and
payable all other payment obligations <as and when due and >payable under any
Loan Document or any Bank Product Agreement (including any amounts due and
payable to <any>the Bank Product <Provider>Providers in respect of Bank
Products)< to the Loan Account, which>. All amounts <shall thereupon constitute
Advances hereunder and, shall accrue>(including interest at the rate then
applicable to Advances<. Any interest>, fees, costs, expenses, Lender Expenses,
or other amounts payable hereunder or under any other Loan Document or under any
Bank Product Agreement< that are>) charged to the Loan Account shall
<thereafter>thereupon constitute Advances hereunder, shall constitute
Obligations hereunder, and shall accrue interest at the rate then applicable to
Advances.

(d) Computation. All interest and fees chargeable under the Loan Documents shall
be computed on the basis of a 360 day year, in each case, for the actual number
of days elapsed in the period during which the interest or fees accrue. In the
event the Interest Rate is changed from time to time hereafter, the rates of
interest hereunder based upon the Interest Rate automatically and immediately
shall be increased or decreased by an amount equal to such change in the
Interest Rate.

(e) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and Lender, in executing and delivering this Agreement,
intend legally to agree upon the rate or rates of interest and manner of payment
stated within it; provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law (including, without
limitation, the “weekly ceiling” from time to time in effect under Chapter 303
of the Texas Finance Code (Vernon’s Texas Code Annotated), as amended from time
to time, unless preempted by federal law), then, as of the date of this
Agreement, Borrowers are and shall be liable only for the payment of such
maximum amount as is allowed by law, and payment received from Borrowers in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.

 

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2.7. Designated Account . Borrowers agree to establish and maintain one or more
Designated Accounts, each in the name of a single Borrower, for the purpose of
receiving the proceeds of the Advances requested by Borrowers and made by Lender
hereunder. Unless otherwise agreed by Lender and Administrative Borrower, any
Advance requested by Administrative Borrower and made by Lender hereunder shall
be made to the applicable Designated Account.

2.8. Maintenance of Loan Account; Statements of Obligations . Lender shall
maintain an account on its books in the name of Borrowers (the “Loan Account”)
<in>on which Borrowers will be <recorded>charged with all Advances (including
Protective Advances) made by Lender to Borrowers or for Borrowers’ account, the
Letters of Credit issued or arranged by Lender for Borrowers’ account, and with
all other payment Obligations hereunder or under the other Loan Documents,
including, accrued interest, fees and expenses, and Lender Expenses. In
accordance with Section 2.4< and Section 2.5>(c), the Loan Account will be
credited with all payments received by Lender from <Administrative
Borrower>Borrowers or for Borrowers’ account. <All>Lender shall make available
to Borrowers monthly statements <delivered by Lender to the Borrowers >regarding
the Loan Account, including <with respect to>the principal amount of Advances,
interest<, fees, and including an> accrued hereunder, fees accrued or charged
hereunder or under the other Loan Documents, and a summary itemization of all
charges and expenses constituting Lender Expenses <owing, shall be subject to
subsequent adjustment by Lender but shall>accrued hereunder or under the other
Loan Documents, and each such statement, absent manifest error, shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and Lender unless, within <thirty (>30<)> days after
<receipt thereof by Administrative Borrower, Administrative Borrower>Lender
first makes such a statement available to Borrowers, Borrowers shall deliver to
Lender written objection thereto describing the error or errors contained in
<any >such <statements>statement.

2.9. Maturity Termination Dates . Lender’s obligations under this Agreement
shall continue in full force and effect for a term ending on the earliest of
(i) <August 9>September 30, <2021>2024 (the “Maturity Date”) or (ii) the date
Borrowers terminate the Revolving Credit Facility, or (iii) the date the
Revolving Credit Facility terminates pursuant to Sections 10.1 and 10.2
following an Event of Default (the earliest of these dates, the “Termination
Date”). The foregoing notwithstanding, Lender shall have the right to terminate
its obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default. Each Borrower
jointly and severally promises to pay the Obligations (including principal,
interest, fees, costs, and expenses, including Lender Expenses) in full on the
Termination Date (other than the Hedge Obligations, which shall be paid in
accordance with the applicable Hedge Agreement).

2.10. Effect of Maturity . On the Termination Date, all obligations of Lender to
provide additional credit hereunder shall automatically be terminated and all of
the Obligations (other than Hedge Obligations which shall be terminated in
accordance with the applicable Hedge Agreement) shall immediately become due and
payable without notice or demand and Borrowers shall immediately repay all of
the Obligations in full. No termination of the obligations of Lender (other than
cash payment in full of the Obligations and termination of the obligations of
Lender to provide additional credit hereunder) shall relieve or discharge any
Loan Party of its duties, obligations, or covenants hereunder or under any other
Loan Document and Lender’s Liens in the Collateral shall continue to secure the
Obligations and shall remain in effect until all Obligations have been paid in
full in cash and Lender’s obligations to provide additional credit hereunder
shall

 

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have been terminated. Provided that there are no suits, actions, proceedings or
claims pending or threatened against any Indemnified Person under this Agreement
with respect to any Indemnified Liabilities, Lender shall, at Borrowers’
expense, release or terminate any filings or other agreements that perfect the
Lender’s Liens in the Collateral, upon Lender’s receipt of each of the
following, in form and content satisfactory to Lender: (i) cash payment in full
of all Obligations and completed performance by Borrowers with respect to their
other obligations under this Agreement (including Letter of Credit
Collateralization with respect to all outstanding Letter of Credit Usage),
(ii) evidence that any obligation of Lender to make Advances to any Borrower or
provide any further credit to any Borrower has been terminated, (iii) a general
release of all claims against Lender and its Affiliates by each Borrower and
each Loan Party relating to Lender’s performance and obligations under the Loan
Documents, and (iv) an agreement by each Borrower, each Guarantor, and any new
lender to any Borrower to indemnify Lender and its Affiliates for any payments
received by Lender or its Affiliates that are applied to the Obligations as a
final payoff that may subsequently be returned or otherwise not paid for any
reason. With respect to any outstanding Hedge Obligations which are not so paid
in full, the Bank Product Provider may require Borrowers to cash collateralize
the then existing Hedge Obligations in an amount acceptable to Lender prior to
releasing or terminating any filings or other agreements that perfect the
Lender’s Liens in the Collateral.

2.11. Termination or Reduction by Borrowers . Administrative Borrower may
terminate the Credit Facility or reduce the Maximum Revolver Amount at any time
prior to the Maturity Date, if (i) it delivers a notice to Lender of their
intentions at least ten (10) days prior to the proposed action and
(ii) Borrowers pay the Obligations (other than the outstanding Hedge
Obligations, which shall be paid in accordance with the applicable Hedge
Agreement) in full or down to the reduced Maximum Revolver Amount. Any reduction
in the Maximum Revolver Amount shall be in multiples of $100,000, with a minimum
reduction of at least $1,000,000; provided that the aggregate amount of
reductions in the Maximum Revolver Amount may not exceed $5,000,000. Each such
termination, reduction or prepayment shall be irrevocable. Once reduced, the
Maximum Revolver Amount may not be increased. In connection with any reduction
in the Maximum Revolver Amount prior to the Maturity Date, if any Loan Party or
any of its Subsidiaries owns any Margin Stock, Borrowers shall deliver to Lender
an updated Form U-1 (with sufficient additional originals thereof for each
Lender), duly executed and delivered by the Borrowers, together with such other
documentation as Lender shall reasonably request, in order to enable Lender to
comply with any of the requirements under Regulations T, U or X of the Federal
Reserve Board.

2.12. Fees . Borrowers shall pay to Lender the fees set forth on Schedule 2.12
attached hereto.

2.13. Letters of Credit.

(a) Subject to the terms and conditions of this Agreement, upon the request of
Administrative Borrower made in accordance herewith, and prior to the Maturity
Date, Lender agrees to issue a requested standby Letter of Credit or a sight
commercial Letter of Credit for the account of <any Borrower>Borrowers. By
submitting a request to Lender for the issuance of a Letter of Credit,
Administrative Borrower shall be deemed to have requested that Lender issue the
requested Letter of Credit. Each request for the issuance of a Letter of Credit,
or the amendment,

 

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renewal, or extension of any outstanding Letter of Credit, shall be
(i) irrevocable and made in writing by an Authorized Person of Administrative
Borrower< and>, (ii) delivered to Lender via <hand delivery, >telefacsimile<,>
or other electronic method of transmission reasonably acceptable to Lender and
reasonably in advance of the requested date of issuance, amendment, renewal, or
extension, and (iii) subject to Lender’s authentication procedures with results
satisfactory to Lender. Each such request shall be in form and substance
reasonably satisfactory to Lender<,> and (i) shall specify (A) the amount of
such Letter of Credit, (B) the date of issuance, amendment, renewal, or
extension of such Letter of Credit, (C) the proposed expiration date of such
Letter of Credit, (D) the name and address of the beneficiary of the Letter of
Credit, and (E) such other information (including, the conditions to drawing,
and, in the case of an amendment, renewal, or extension, identification of the
Letter of Credit to be so amended, renewed, or extended) as shall be necessary
to prepare, amend, renew, or extend such Letter of Credit, and (ii) shall be
accompanied by such Letter of Credit <Agreements>Agreement as Lender may request
or require, to the extent that such requests or requirements are consistent with
the Letter of Credit Agreements that Lender generally requests for Letters of
Credit in similar circumstances. Lender’s records of the content of any such
request will be conclusive. Anything contained herein to the contrary
notwithstanding, Lender may, but shall not be obligated to, issue a Letter of
Credit that supports the obligations of a Loan Party or one of its Subsidiaries
in respect of (x) a lease of real property, or (y) an employment contract.

(b) Lender shall have no obligation to issue<, amend, renew or extend> a Letter
of Credit if<,> any of the following would result after giving effect to the
requested issuance<, amendment, renewal, or extension,>:

(i) the Letter of Credit Usage would exceed $15,000,000, or

(ii) the Letter of Credit Usage would exceed the <lesser of (x) the >Maximum
Revolver Amount less the outstanding <amount of>principal balance of the
Advances<, less Reserves (in accordance with Section 2.1(c))> at such time, or<
(ii) $15,000,000.>

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

(c) Lender shall have no obligation to issue or extend a Letter of Credit if
(i) any order, judgment, or decree of any Governmental Authority or arbitrator
shall, by its terms, purport to enjoin or restrain Lender from issuing such
Letter of Credit, or any law applicable to Lender or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over Lender shall prohibit or request that Lender refrain from the
issuance of letters of credit generally or such Letter of Credit in particular,
or (ii) the issuance of such Letter of Credit would violate one or more policies
of Lender applicable to letters of credit generally.

(d) Each Letter of Credit shall be in form and substance reasonably acceptable
to Lender, including the requirement that the amounts payable thereunder must be
payable in Dollars<, and shall expire on a date no more than >12 months after
the date of <issuance or last renewal >of such Letter of Credit, <which date
shall be no later than the Maturity Date>. If Lender makes a payment under a
Letter of Credit, Borrowers shall pay <the>to Lender an amount equal

 

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to the applicable Letter of Credit Disbursement on the <date>Business Day such
Letter of Credit Disbursement is made and, in the absence of such payment, the
amount of the Letter of Credit Disbursement immediately and automatically shall
be deemed to be an Advance hereunder (notwithstanding any failure to satisfy any
condition precedent set forth in Section 4< or this Section 2.13>) and,
initially, shall bear interest at the rate then applicable to Advances. If a
Letter of Credit Disbursement is deemed to be an Advance hereunder, Borrowers’
obligation to pay the amount of such Letter of Credit Disbursement to Lender
shall be automatically converted into an obligation to pay <Lender such>the
resulting Advance.

(e) Each Borrower <hereby >agrees to indemnify, <save, >defend<,> and hold
<Lender harmless from any damage, loss, cost, expense, or liability, and
reasonable attorneys’ fees and expenses incurred by Lender arising out of or >in
connection with any Letter of Credit; <provided, that Borrowers shall not be
obligated hereunder to indemnify Lender for any damage, loss, cost, expense, or
liability that >a court of competent jurisdiction <finally determines to have
resulted >from the gross negligence or willful misconduct of <Lender.>harmless
Lender (including its branches, Affiliates, and correspondents) and each such
Person’s respective directors, officers, employees, attorneys and agents (each,
including Lender, a “Letter of Credit Related Person”) (to the fullest extent
permitted by law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, fines, costs, penalties, and damages,
and all reasonable fees and disbursements of attorneys, experts, or consultants
and all other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), which may be incurred by
or awarded against any such Letter of Credit Related Person (other than Taxes,
which shall be governed by Section 16) (the “Letter of Credit Indemnified
Costs”), and which arise out of or in connection with, or as a result of:

(f) <Lender and each Borrower agree that, in paying any drawing under a Letter
of Credit, Lender shall not have any responsibility to obtain any document
(other than any sight draft, certificates and documents expressly required by
the Letter of Credit) or to ascertain or inquire as to the validity or accuracy
of any such document or the authority of the Person executing or delivering any
such document. Neither Lender nor any correspondent, participant or assignee of
Lender shall be liable to any Loan Party for any of the following absent gross
negligence or willful misconduct: (i) any action taken or omitted; (ii) any
error, omission, interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any Letter of Credit
or any error in interpretation of technical terms; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Letter of Credit Agreement. Each Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, that this assumption is
not intended to, and shall not, preclude Borrowers from pursuing such rights and
remedies as they may have against the beneficiary or transferee at law or under
any other agreement. Neither Lender nor any correspondent, participant or
assignee of Lender shall be liable or responsible for any of the matters
described in clauses (i) through (vi) of Section 2.13(g) or for any action,
neglect or omission under or in connection with any Letter of Credit or Letter
of Credit Agreement, including in connection with the issuance or any amendment
of any Letter of Credit, the failure to issue or amend any Letter of Credit, the
honoring or dishonoring of any demand under any Letter of Credit, or the
following of any Borrower’s instructions or those contained in the Letter of
Credit or any modifications, amendments, or supplements thereto, and such action
or

 

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neglect or omission will bind Borrowers. In furtherance and not in limitation of
the foregoing, Lender may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary (or Lender may refuse to accept and make
payment upon such documents if such documents are not in strict compliance with
the terms of such Letter of Credit and may disregard any requirement in a Letter
of Credit that notice of dishonor be given in a particular manner and any
requirement that presentation be made at a particular place or by a particular
time of day), and Lender shall not be responsible for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a 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. Lender shall not be responsible for the wording of
any Letter of Credit (including any drawing conditions or any terms or
conditions that are ineffective, ambiguous, inconsistent, unduly complicated or
reasonably impossible to satisfy), notwithstanding any assistance Lender may
provide to Borrowers with drafting or recommending text for any letter of credit
application or with the structuring of any transaction related to any Letter of
Credit, and each Borrower hereby acknowledges and agrees that any such
assistance will not constitute legal or other advice by Lender or any
representation or warranty by Lender that any such wording or such Letter of
Credit will be effective. Without limiting the foregoing, Lender may, as it
deems appropriate, use in any Letter of Credit any portion of the language
prepared by any Borrower and contained in the Letter of Credit Agreements
relative to drawings under such Letter of Credit. Each Borrower hereby
acknowledges and agrees that Lender shall not be responsible for delays, errors,
or omissions resulting from the malfunction of equipment in connection with any
Letter of Credit.>

(i) any Letter of Credit or any pre-advice of its issuance;

(ii) any transfer, sale, delivery, surrender or endorsement (or lack thereof) of
any Drawing Document at any time(s) held by any such Letter of Credit Related
Person in connection with any Letter of Credit;

(iii) any action or proceeding arising out of, or in connection with, any Letter
of Credit (whether administrative, judicial or in connection with arbitration),
including any action or proceeding to compel or restrain any presentation or
payment under any Letter of Credit, or for the wrongful dishonor of, or honoring
a presentation under, any Letter of Credit;

(iv) any independent undertakings issued by the beneficiary of any Letter of
Credit;

(v) any unauthorized instruction or request made to Lender in connection with
any Letter of Credit or requested Letter of Credit, or any error, omission,
interruption or delay in such instruction or request, whether transmitted by
mail, courier, electronic transmission, SWIFT, or any other telecommunication,
including communications through a correspondent;

(vi) an adviser, confirmer or other nominated person seeking to be reimbursed,
indemnified or compensated;

 

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(vii) any third party seeking to enforce the rights of an applicant,
beneficiary, nominated person, transferee, assignee of Letter of Credit proceeds
or holder of an instrument or document;

(viii) the fraud, forgery or illegal action of parties other than the Letter of
Credit Related Person;

(ix) any prohibition on payment or delay in payment of any amount payable by
Lender to a beneficiary or transferee beneficiary of a Letter of Credit arising
out of Anti-Corruption Laws, Anti-Money Laundering Laws, or Sanctions;

(x) Lender’s performance of the obligations of a confirming institution or
entity that wrongfully dishonors a confirmation;

(xi) any foreign language translation provided to Lender in connection with any
Letter of Credit;

(xii) any foreign law or usage as it relates to Lender’s issuance of a Letter of
Credit in support of a foreign guaranty, including, without limitation, the
expiration of such guaranty after the related Letter of Credit expiration date
and any resulting drawing paid by Lender in connection therewith;

(xiii) the acts or omissions, whether rightful or wrongful, of any present or
future de jure or de facto governmental or regulatory authority or cause or
event beyond the control of the Letter of Credit Related Person;

provided, that such indemnity shall not be available to any Letter of Credit
Related Person claiming indemnification under clauses (i) through (x) above to
the extent that such Letter of Credit Indemnified Costs may be finally
determined in a final, non-appealable judgment of a court of competent
jurisdiction to have resulted directly from the gross negligence or willful
misconduct of the Letter of Credit Related Person claiming indemnity. Borrowers
hereby agree to pay the Letter of Credit Related Person claiming indemnity on
demand from time to time all amounts owing under this Section 2.13(e). If and to
the extent that the obligations of Borrowers under this Section 2.13(e) are
unenforceable for any reason, Borrowers agree to make the maximum contribution
to the Letter of Credit Indemnified Costs permissible under applicable law. This
indemnification provision shall survive termination of this Agreement and all
Letters of Credit.

(f) The liability of Lender (or any other Letter of Credit Related Person)
under, in connection with or arising out of any Letter of Credit (or
pre-advice), regardless of the form or legal grounds of the action or
proceeding, shall be limited to direct damages suffered by Borrowers that are
caused directly by Lender’s gross negligence or willful misconduct in
(i) honoring a presentation under a Letter of Credit that on its face does not
at least substantially comply with the terms and conditions of such Letter of
Credit, (ii) failing to honor a presentation under a Letter of Credit that
strictly complies with the terms and conditions of such Letter of Credit, or
(iii) retaining Drawing Documents presented under a Letter of Credit. Borrowers’
aggregate remedies against Lender and any Letter of Credit Related Person for
wrongfully honoring a presentation under any Letter of Credit or wrongfully
retaining honored Drawing Documents shall in no event exceed the aggregate
amount paid by Borrowers to Lender in respect of the honored presentation in

 

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connection with such Letter of Credit under Section 2.13(d), plus interest at
the rate then applicable to Advances hereunder. Borrowers shall take action to
avoid and mitigate the amount of any damages claimed against Lender or any other
Letter of Credit Related Person, including by enforcing its rights against the
beneficiaries of the Letters of Credit. Any claim by Borrowers under or in
connection with any Letter of Credit shall be reduced by an amount equal to the
sum of (x) the amount (if any) saved by Borrowers as a result of the breach or
alleged wrongful conduct complained of, and (y) the amount (if any) of the loss
that would have been avoided had Borrowers taken all reasonable steps to
mitigate any loss, and in case of a claim of wrongful dishonor, by specifically
and timely authorizing Lender to effect a cure.

(g) Borrowers are responsible for the final text of the Letter of Credit as
issued by Lender, irrespective of any assistance Lender may provide such as
drafting or recommending text or by Lender’s use or refusal to use text
submitted by Borrowers. Borrowers understand that the final form of any Letter
of Credit may be subject to such revisions and changes as are deemed necessary
or appropriate by Lender, and Borrowers hereby consent to such revisions and
changes not materially different from the application executed in connection
therewith. Borrowers are solely responsible for the suitability of the Letter of
Credit for Borrowers’ purposes. If Borrowers request Issuing Bank to issue a
Letter of Credit for an affiliated or unaffiliated third party (an “Account
Party”), (i) such Account Party shall have no rights against Lender;
(ii) Borrowers shall be responsible for the application and obligations under
this Agreement; and (iii) communications (including notices) related to the
respective Letter of Credit shall be among Lender and Borrowers. Borrowers will
examine the copy of the Letter of Credit and any other documents sent by Lender
in connection therewith and shall promptly notify Lender (not later than three
(3) Business Days following Borrowers’ receipt of documents from Lender) of any
non-compliance with Borrowers’ instructions and of any discrepancy in any
document under any presentment or other irregularity. Borrowers understand and
agree that Lender is not required to extend the expiration date of any Letter of
Credit for any reason. With respect to any Letter of Credit containing an
“automatic amendment” to extend the expiration date of such Letter of Credit,
Lender, in its sole and absolute discretion, may give notice of nonrenewal of
such Letter of Credit and, if Borrowers do not at any time want the then current
expiration date of such Letter of Credit to be extended, Borrowers will so
notify Lender at least 30 calendar days before Lender is required to notify the
beneficiary of such Letter of Credit or any advising bank of such non-extension
pursuant to the terms of such Letter of Credit.

(h) (g) <The obligation of each Borrower >to reimburse Lender for each drawing
under each Letter of Credit shall <be>Borrowers’ reimbursement and payment
obligations under this Section 2.13 are absolute, unconditional and
irrevocable<,> and shall be <paid>performed strictly in accordance with the
terms of this Agreement under any and all circumstances whatsoever, including<
the following>:

(i) any lack of validity< or>, enforceability or legal effect of <such>any
Letter of Credit, <this>any Letter of Credit Agreement, this Agreement or any
<other >Loan Document<,> or any term or provision therein or herein;

(ii) payment against presentation of any draft, demand or claim for payment
under any Drawing Document that does not comply in whole or in part with the
terms of the applicable Letter of Credit or which proves to be fraudulent,
forged or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, or which is signed, issued or presented by a Person
or a transferee of such Person purporting to be a successor or transferee of the
beneficiary of such Letter of Credit;

 

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(iii) Lender or any of its branches or Affiliates being the beneficiary of any
Letter of Credit;

(iv) Lender or any correspondent honoring a drawing against a Drawing Document
up to the amount available under any Letter of Credit even if such Drawing
Document claims an amount in excess of the amount available under the Letter of
Credit;

(v) (ii) the existence of any claim, <counterclaim, setoff>set-off, defense or
other right that any <Borrower>Loan Party or any of its Subsidiaries <or any
other Loan Party >may have at any time against any beneficiary or <any
>transferee of such Letter of Credit <(or any Person for whom any such
>beneficiary< or>, any <such transferee may be acting)>assignee of proceeds,
Lender or any other Person<, whether in connection with this Agreement, the
transactions contemplated hereby or by >such Letter of Credit or any <agreement
or instrument relating thereto, or any unrelated transaction,>;

(vi) Lender or any correspondent honoring a drawing upon receipt of an
electronic presentation under a Letter of Credit requiring the same, regardless
of whether the original Drawing Documents arrive at Lender’s counters or are
different from the electronic presentation;

(vii) any other event, circumstance or conduct whatsoever, whether or not
similar to any of the foregoing that might, but for this Section 2.13(h),
constitute a legal or equitable defense to or discharge of, or provide a right
of set-off against, any Borrower’s or any of its Subsidiaries’ reimbursement and
other payment obligations and liabilities, arising under, or in connection with,
any Letter of Credit, whether against Lender, the beneficiary or any other
Person; or

(viii) the fact that any Default or Event of Default shall have occurred and be
continuing;

provided, that subject to Section 2.13(f) above, the foregoing shall not release
Lender from such liability to Borrowers as may be finally determined in a final,
non-appealable judgment of a court of competent jurisdiction against Lender
following reimbursement or payment of the obligations and liabilities, including
reimbursement and other payment obligations, of Borrowers to Lender arising
under, or in connection with, this Section 2.13 or any Letter of Credit.

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

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

 

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

(iii) <any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient >in
any respect or any statement therein being untrue or inaccurate in any respect,
or <any loss or delay in the transmission or otherwise of any document required
in order to make a drawing>acceptance as a draft of any written or electronic
demand or request for payment under <such>a Letter of Credit, even if
nonnegotiable or not in the form of a draft or notwithstanding any requirement
that such draft, demand or request bear any or adequate reference to the Letter
of Credit;

(iv) <any payment by Lender under such Letter of Credit against presentation of
a draft or certificate that does not>the identity or authority of any presenter
or signer of any Drawing Document or the form, accuracy, genuineness or legal
effect of any Drawing Document (other than Lender’s determination that such
Drawing Document appears on its face substantially <or strictly>to comply with
the terms and conditions of <such>the Letter of Credit< (including, without
limitation, any requirement that presentation be made at a particular place or
by a particular time of day), or any payment made by Lender under such Letter of
Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit,>);

(v) <any other circumstance or happening >whatsoever, whether or not similar to
any of the foregoing<, including any other circumstance that might otherwise
constitute a defense available to, or discharge of, any Borrower, any of its
Subsidiaries, or any other Loan Party, or>

(vi) the fact that any Default or Event of Default shall have occurred and be
continuing<.>

(h) <Each Borrower acknowledges and agrees that any and all fees, charges,
costs, or commissions in effect from time to time, of Lender relating to Letters
of Credit, upon the payment or negotiation of any drawing under any Letter of
Credit, or upon the occurrence of any other activity with respect to any Letter
of Credit (including the transfer, amendment, or cancellation of any Letter of
Credit), shall be Lender Expenses for purposes of this Agreement and shall be
reimbursable immediately by Borrowers to Lender.>

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

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

 

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

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

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

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

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

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

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

(j) Borrowers shall pay immediately upon demand to Lender for the account of
Lender as non-refundable fees, commissions, and charges (it being acknowledged
and agreed that any charging of such fees, commissions, and charges to the Loan
Account pursuant to the provisions of Section 2.6(c) shall be deemed to
constitute a demand for payment thereof for the purposes of this
Section 2.13(j)) any and all customary commissions, fees and charges then in
effect imposed by, and any and all expenses incurred by, Lender, or by any
adviser, confirming institution or entity or other nominated person, relating to
Letters of Credit, at the time of issuance of any Letter of Credit and upon the
occurrence of any other activity with respect to any Letter of Credit (including
transfers, assignments of proceeds, amendments, drawings, renewals or
cancellations).

(k) (i) If by reason of (<i>x) any <change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority>Change in Law, or
(<ii>y) compliance by Lender with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Board of Governors as from
time to time in effect (and any successor thereto):

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

 

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(ii) there shall be imposed on Lender any other condition regarding any Letter
of Credit, Advances, or obligations to make Advances hereunder,

and the result of the foregoing is to increase, directly or indirectly, the cost
to Lender of issuing, making, participating in, or maintaining any Letter of
Credit or to reduce the amount receivable in respect thereof, then, and in any
such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify Borrowers,
and Borrowers shall pay within <thirty (>30<)> days after demand therefor, such
amounts as Lender may specify to be necessary to compensate Lender for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Advances hereunder; provided, that (A) Borrowers shall not be
required to provide any compensation pursuant to this Section 2.13(<i>k) for any
such amounts incurred more than <one hundred and eighty (>180<)> days prior to
the date on which the demand for payment of such amounts is first made to
Borrowers, and (B) if an event or circumstance giving rise to such amounts is
retroactive, then the <one hundred and eighty (>180<)>- day period referred to
above shall be extended to include the period of retroactive effect thereof. The
determination by Lender of any amount due pursuant to this Section 2.13(<i>k),
as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.

(l) Each standby Letter of Credit shall expire not later than the date that is
12 months after the date of the issuance of such Letter of Credit; provided,
that any standby Letter of Credit may provide for the automatic extension
thereof for any number of additional periods each of up to one year in duration;
provided further, that with respect to any Letter of Credit which extends beyond
the Maturity Date, Letter of Credit Collateralization shall be provided therefor
on or before the date that is five Business Days prior to the Maturity Date.
Each commercial Letter of Credit shall expire on the earlier of (i) 120 days
after the date of the issuance of such commercial Letter of Credit and (ii) five
Business Days prior to the Maturity Date.

(m) If (i) any Event of Default shall occur and be continuing, or
(ii) Availability shall at any time be less than zero, then on the Business Day
following the date when the Administrative Borrower receives notice from Lender
demanding Letter of Credit Collateralization pursuant to this Section 2.13(m)
upon such demand, Borrowers shall provide Letter of Credit Collateralization
with respect to the then existing Letter of Credit Usage. If Borrowers fail to
provide Letter of Credit Collateralization as required by this Section 2.13(m),
Lender may advance as Advances the amount of the cash collateral required
pursuant to the Letter of Credit Collateralization provision so that the then
existing Letter of Credit Usage is cash collateralized in accordance with the
Letter of Credit Collateralization provision (whether or not the funding
obligations of Lender under this Agreement have terminated, an Overadvance
exists or the conditions in Section 4 are satisfied).

 

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(n) (j) Unless otherwise expressly agreed by Lender and Borrowers<,> when a
Letter of Credit is issued, (i) the rules of the ISP<98> shall apply to each
standby Letter of Credit, and (ii) the rules of the UCP <600 >shall apply to
each commercial Letter of Credit.

(o) Lender shall be deemed to have acted with due diligence and reasonable care
if Lender’s conduct is in accordance with Standard Letter of Credit Practice or
in accordance with this Agreement.

(p) (k) In the event of a direct conflict between the provisions of this
Section 2.13 and any provision contained in any Letter of Credit Agreement, it
is the intention of the parties hereto that such provisions be read together and
construed, to the fullest extent possible, to be in concert with each other. In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.13 shall control and
govern.

(q) The provisions of this Section 2.13 shall survive the termination of this
Agreement and the repayment in full of the Obligations with respect to any
Letters of Credit that remain outstanding.

(r) At Borrowers’ cost and expense, Borrowers shall execute and deliver to
Lender such additional certificates, instruments and/or documents and take such
additional action as may be reasonably requested by Lender to enable Lender to
issue any Letter of Credit pursuant to this Agreement and related Letter of
Credit Agreement, to protect, exercise and/or enforce Lender’s rights and
interests under this Agreement or to give effect to the terms and provisions of
this Agreement or any Letter of Credit Agreement. Each Borrower irrevocably
appoints Lender as its attorney-in-fact and authorizes Lender, without notice to
Borrowers, to execute and deliver ancillary documents and letters customary in
the letter of credit business that may include but are not limited to
advisements, indemnities, checks, bills of exchange and issuance documents. The
power of attorney granted by Borrowers is limited solely to such actions related
to the issuance, confirmation or amendment of any Letter of Credit and to
ancillary documents or letters customary in the letter of credit business. This
appointment is coupled with an interest.

2.14. Special Provisions Applicable to Daily Three Month LIBOR.

(a) Daily Three Month LIBOR may be adjusted by Lender on a prospective basis to
take into account any additional or increased costs to Lender of maintaining or
obtaining any eurodollar deposits or increased costs (other than Taxes which
shall be governed by Section 16), in each case, due to changes in applicable
law, including any Changes in Law and changes in the reserve requirements
imposed by the Board of Governors, which additional or increased costs would
increase the cost of funding or maintaining loans bearing interest at Daily
Three Month LIBOR. In any such event, Lender shall give Borrowers notice of such
a determination and adjustment.

(b) 2.14. <Illegality; Impracticability; Increased Costs . In the>Subject to the
provisions set forth in Section 2.14(c) below, in the event that (i) any change
in market conditions or any <law, regulation, treaty, or directive, or any
change therein or in the interpretation or application thereof>Change in Law
shall at any time after the date hereof, in the reasonable opinion of Lender,
make it unlawful or impractical for Lender to fund or maintain

 

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<extensions of credit>Advances with interest based <upon>on Daily Three Month
LIBOR or to continue such funding or maintaining, or to determine or charge
interest rates based <upon Daily Three Month LIBOR, (ii) Lender determines that
by reasons affecting the London interbank Eurodollar market, adequate and
reasonable means do not exist for ascertaining>on Daily Three Month LIBOR, or
(<iii>ii) Lender determines that the interest rate hereunder based on <the
>Daily Three Month LIBOR will not adequately and fairly reflect the cost to
Lender of maintaining or funding any Advances <at the interest rate >based upon
Daily Three Month LIBOR, Lender shall give notice of such changed circumstances
to Borrowers and (<i>y) <interest on the principal amount of such extensions of
credit>such Advances shall thereafter <shall accrue>bear interest at a per annum
rate equal to the Prime Rate plus the Interest Rate Margin, and (<ii>z)
<Borrowers shall not be entitled to elect>interest based on Daily Three Month
LIBOR shall not be available until Lender determines that it <would no longer be
unlawful or impractical to do so or that such increased costs would no longer be
applicable>is again available.

(c) Effect of Benchmark Transition Event.

(i) Benchmark Replacement.

(A) Notwithstanding anything to the contrary herein or in any other Loan
Document, upon the occurrence of a Benchmark Transition Event or an Early Opt-in
Election, as applicable, Lender and Administrative Borrower may amend this
Agreement to replace Daily Three Month LIBOR, with a Benchmark Replacement,
together with any Benchmark Replacement Conforming Changes.

(B) Any such amendment with respect to a Benchmark Transition Event will become
effective at 5:00 p.m. on the fifth (5th) Business Day after Lender has posted
such proposed amendment to Administrative Borrower. Any such amendment with
respect to an Early Opt-In Election will become effective on the date that
Lender accepts such amendment. No replacement of Daily Three Month LIBOR, with a
Benchmark Replacement pursuant to this Section 2.14(c) will occur prior to the
applicable Benchmark Transition Start Date.

(ii) Benchmark Replacement Conforming Changes. In connection with the
implementation of a Benchmark Replacement, Lender will have the right to amend
this Agreement to make Benchmark Replacement Conforming Changes from time to
time and, notwithstanding anything to the contrary herein or in any other Loan
Document, any amendments implementing such Benchmark Replacement Conforming
Changes will become effective without any further action or consent of any other
party to this Agreement.

(iii) Notices; Standards for Decisions and Determinations. Lender will promptly
notify Administrative Borrower and the Lenders of (1) any occurrence of a
Benchmark Transition Event or Early Opt-in Election, as applicable and its
related Benchmark Replacement Date and Benchmark Transition Start Date, (2) the
implementation of any Benchmark Replacement, (3) the effectiveness of any
Benchmark Replacement Conforming Changes and (4) the commencement or conclusion
of any Benchmark Unavailability Period. Any determination, decision or election
that may be made by Lender pursuant to this Section 2.14(c), including any
determination with respect to a tenor, rate or adjustment or of the occurrence
or non-occurrence of an event, circumstance or date and any decision to take or
refrain from taking any action, will be conclusive and binding absent manifest
error and may be made in its sole discretion and without consent from any other
party hereto, except, in each case, as expressly required pursuant to this
Section 2.14(c).

 

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(iv) Benchmark Unavailability Period. Upon Administrative Borrower’s receipt of
notice of the commencement of a Benchmark Unavailability Period, Administrative
Borrower may revoke any request for a Borrowing of Advances with interest based
on Daily Three Month LIBOR, conversion to or continuation of Advances with
interest based on Daily Three Month LIBOR to be made, converted or continued
during any Benchmark Unavailability Period and, failing that, Administrative
Borrower will be deemed to have converted any such request into a request for a
Borrowing of or conversion to Advances with interest based on the Prime Rate.

(d) No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, Lender is not required actually to acquire eurodollar deposits
to fund or otherwise match fund any Obligation which bears interest based on
Daily Three Month LIBOR.

2.15. Capital Requirements. If, after the date hereof, Lender determines that
(i) the adoption of or change in any law, rule, regulation or guideline
regarding capital or reserve requirements for lenders, banks or bank holding
companies, or any change in the interpretation, implementation, or application
thereof by any Governmental Authority charged with the administration thereof,
including those changes resulting from the enactment of the Dodd-Frank Wall
Street Reform and Consumer Protection Act and Basel III, regardless of the date
enacted, adopted or issued, or (ii) compliance by Lender or its parent bank
holding company with any guideline, request or directive of any such entity
regarding capital adequacy (whether or not having the force of law), has the
effect of reducing the return on Lender’s or such holding company’s capital as a
consequence of Lender’s loan commitments hereunder to a level below that which
such Lender or such holding company could have achieved but for such adoption,
change, or compliance (taking into consideration such Lender’s or such holding
company’s then existing policies with respect to capital adequacy and assuming
the full utilization of such entity’s capital) by any amount deemed by Lender to
be material, then Lender may notify Borrowers thereof. Following receipt of such
notice, Borrowers agree to pay Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within
thirty (30) days after presentation by Lender of a statement of the amount and
setting forth in reasonable detail Lender’s calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount,
Lender may use any reasonable averaging and attribution methods. Failure or
delay on the part of Lender to demand compensation pursuant to this Section
shall not constitute a waiver of Lender’s right to demand such compensation;
provided that Borrowers shall not be required to compensate Lender pursuant to
this Section for any reductions in return incurred more than one hundred and
eighty (180) days prior to the date that Lender notifies Borrowers of such law,
rule, regulation or guideline giving rise to such reductions and of Lender’s
intention to claim compensation therefor; provided further that if such claim
arises by reason of the adoption of or change in any law, rule, regulation or
guideline that is retroactive, then the one hundred and eighty (180) day period
referred to above shall be extended to include the period of retroactive effect
thereof.

 

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2.16. Extent of Each Borrower’s Liability, Contribution.

(a) Joint and Several Liability. Each Borrower agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to Lender
the prompt payment and performance of, all Obligations under this Agreement and
all agreements under the Loan Documents. Each Borrower agrees that its guaranty
obligations hereunder constitute a continuing guaranty of payment and not of
collection, that such obligations shall not be discharged until cash payment in
full of the Obligations, and that such obligations are absolute and
unconditional, irrespective of (i) the genuineness, validity, regularity,
enforceability, subordination or any future modification of, or change in, any
Obligations or Loan Document, or any other document, instrument or agreement to
which any Borrower is or may become a party or be bound; (ii) the absence of any
action to enforce this Agreement (including this Section) or any other Loan
Document, or any waiver, consent or indulgence of any kind by Lender with
respect thereto; (iii) the existence, value or condition of, or failure to
perfect any of Lender’s Liens or to preserve rights against, any security or
guaranty for the Obligations or any action, or the absence of any action, by
Lender in respect thereof (including the release of any security or guaranty);
(iv) the insolvency of any Borrower; (v) any election by Lender in an Insolvency
Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code;
(vi) any borrowing or grant of a Lien by any other Borrower, as
debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise;
(vii) the disallowance of any claims of Lender against any Borrower for the
repayment of any Obligations under Section 502 of the Bankruptcy Code or
otherwise; or (viii) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
except cash payment in full of all Obligations.

(b) Contribution. Each Borrower hereby agrees that it will not enforce any of
its rights of contribution or subrogation against any other Borrower with
respect to any liability incurred by it hereunder or under any of the other Loan
Documents, any payments made by it to Lender with respect to any of the
Obligations or any collateral security therefor until such time as all of the
Obligations have been paid in full in cash. Any claim which any Borrower may
have against any other Borrower with respect to any payments to Lender hereunder
or under any of the Bank Product Agreements are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Borrower therefor.

(c) No Limitation on Liability. Nothing contained in this Section 2.16 shall
limit the liability of any Borrower to pay extensions of credit made directly or
indirectly to that Borrower (including revolving loans advanced to any other
Borrower and then re-loaned or otherwise transferred to, or for the benefit of,
such Borrower), Obligations relating to Letters of Credit issued to support such
Borrower’s business, and all accrued interest, fees, expenses and other related
Obligations with respect thereto, for which such Borrower shall be primarily
liable for all purposes hereunder. Lender shall have the right, at any time in
its discretion, to condition an extension of credit hereunder upon a separate
calculation of borrowing availability for each Borrower and to restrict the
disbursement and use of such extensions of credit to such Borrower.

 

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2.17. Parent as Agent for each Loan Party. Each Loan Party hereby irrevocably
appoints Parent as the borrowing agent, agent under the Loan Documents, and
attorney-in-fact for all Loan Parties (the “Administrative Borrower”) which
appointment shall remain in full force and effect unless and until Lender shall
have received prior written notice signed by each Loan Party that such
appointment has been revoked and that another Loan Party has been appointed
Administrative Borrower. Each Loan Party hereby irrevocably appoints and
authorizes the Administrative Borrower (a) to provide Lender with all notices
with respect to Advances, Letters of Credit and other extensions of credit
obtained for the benefit of any Loan Party and all other notices and
instructions under this Agreement, (b) to take such action as the Administrative
Borrower deems appropriate on its behalf to obtain Advances, Letters of Credit
and other extensions of credit, (c) to execute waivers, amendments, and other
modifications of this Agreement and the other Loan Documents on such Loan
Party’s behalf, and (d) to exercise such other powers as are reasonably
incidental thereto to carry out the purposes of this Agreement and the Loan
Documents. It is understood that the handling of the Loan Account and Collateral
in a combined fashion, as more fully set forth herein, is done solely as an
accommodation to Loan Parties in order to utilize the collective borrowing
powers of Loan Parties in the most efficient and economical manner and at their
request, and that Lender shall not incur liability to any Loan Party as a result
hereof. Each Loan Party expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since
the successful operation of each Loan Party is dependent on the continued
successful performance of the integrated group. To induce Lender to do so, and
in consideration thereof, each Loan Party hereby jointly and severally agrees to
indemnify Lender and hold Lender harmless against any and all liability,
expense, loss or claim of damage or injury, made against Lender by any Loan
Party or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Loan Parties as herein
provided, or (b) Lender’s relying on any instructions, signatories, or actions
of the Administrative Borrower, except that Loan Parties will have no liability
to Lender under this Section 2.17 with respect to any liability that has been
finally determined by a court of competent jurisdiction to have resulted solely
from the gross negligence or willful misconduct of Lender.

3. SECURITY INTEREST.

3.1. Grant of Security Interest. Each Loan Party hereby unconditionally grants,
assigns, and pledges to Lender for the benefit of Lender and each Bank Product
Provider, to secure payment and performance of the Obligations, a continuing
security interest (hereinafter referred to as the “Security Interest”) in all of
such Loan Party’s right, title, and interest in and to the Collateral, as
security for the payment and performance of all Obligations. Following request
by Lender, each Loan Party shall grant Lender a Lien and security interest in
all Commercial Tort Claims that it may have against any Person. The Security
Interest created hereby secures the payment and performance of the Obligations,
whether now existing or arising hereafter. Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts which
constitute part of the Obligations and would be owed by any Loan Party to Lender
or any other Bank Product Provider, but for the fact that they are unenforceable
or not allowable (in whole or in part) as a claim in an Insolvency Proceeding
involving any Borrower due to the existence of such Insolvency Proceeding.

 

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3.2. Borrowers Remain Liable. Anything herein to the contrary notwithstanding,
(a) each Loan Party shall remain liable under the contracts and agreements
included in the Collateral, including the Pledged Operating Agreements and the
Pledged Partnership Agreements, to perform all of the duties and obligations
thereunder to the same extent as if this Agreement had not been executed,
(b) the exercise by Lender of any of the rights hereunder shall not release any
Loan Party from any of its duties or obligations under such contracts and
agreements included in the Collateral, and (c) Lender shall not have any
obligation or liability under such contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Lender be obligated to perform
any of the obligations or duties of any Loan Party thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder. Until an
Event of Default shall occur, except as otherwise provided in this Agreement or
any other Loan Document, the Loan Parties shall have the right to possession and
enjoyment of the Collateral for the purpose of conducting the ordinary course of
their respective businesses, subject to and upon the terms hereof and of this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, it is the intention of the parties hereto that record and beneficial
ownership of the Pledged Interests, including all voting, consensual, dividend,
and distribution rights, shall remain in the Loan Parties until (i) the
occurrence and continuance of an Event of Default and (ii) Lender has notified
Loan Parties of Lender’s election to exercise such rights with respect to the
Pledged Interests pursuant to Sections 10.3 and/or 10.4.

3.3. Assignment of Insurance. As additional security for the Obligations, each
Loan Party hereby assigns to Lender for the benefit of Lender and each Bank
Product Provider all rights of such Loan Party under every policy of insurance
covering the Collateral and all other assets and property of each Loan Party
(including, without limitation business interruption insurance and proceeds
thereof) and all business records and other documents relating to it, and all
monies (including proceeds and refunds) that may be payable under any policy,
and each Loan Party hereby directs the issuer of each policy to pay all such
monies directly and solely to Lender. At any time, (i) upon the occurrence and
during the continuance of a Default or an Event of Default, or (ii) otherwise
upon Lender’s request, Lender may (but need not), in Lender’s or any Loan
Party’s name, execute and deliver proofs of claim, receive payment of proceeds
and endorse checks and other instruments representing payment of the policy of
insurance, and adjust, litigate, compromise or release claims against the issuer
of any policy. Any monies received under any insurance policy assigned to
Lender, other than liability insurance policies, or received as payment of any
award or compensation for condemnation or taking by eminent domain, in each
case, in excess of $250,000, shall be paid to Lender and, as determined by
Lender in its sole discretion, either be applied to prepayment of the
Obligations or disbursed to Loan Parties under payment terms reasonably
satisfactory to Lender for application to the cost of repairs, replacements, or
restorations of the affected Collateral which shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items or
property destroyed.

3.4. Financing Statements. Each Loan Party authorizes Lender to file financing
statements describing Collateral to perfect Lender’s and each Bank Product
Provider’s Security Interest in the Collateral, and Lender may describe the
Collateral as “all personal property” or “all assets” or describe specific items
of Collateral including without limitation any Commercial Tort Claims. All
financing statements filed before the date of this Agreement to perfect the
Security Interest were authorized by such Loan Party and are hereby ratified.

 

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4. CONDITIONS.

4.1. Conditions Precedent to the Initial Extension of Credit. The obligation of
Lender to make the additional extension of credit provided for hereunder is
subject to the fulfillment, to the satisfaction of Lender, of each of the
conditions precedent set forth on Exhibit B.

4.2. Conditions Precedent to all Extensions of Credit. The obligation of Lender
to make any Advances hereunder (or to extend any other credit hereunder) at any
time shall be subject to the following conditions precedent:

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

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

Any request for an extension of credit shall be deemed to be a representation by
each Borrower and each other Loan Party that the statements set forth in this
Section 4.2 are correct as of the time of such request and if such extension of
credit is a request for an Advance or a Letter of Credit, sufficient
Availability exists for such Advance or Letter of Credit pursuant to
Section 2.1(a) and Section 2.13.

4.3. Conditions Subsequent. The obligation of Lender to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of the conditions subsequent set forth
on Exhibit C (the failure by any Borrower or any other Loan Party to so perform
or cause to be performed such conditions subsequent as and when required by the
terms thereof, shall constitute an Event of Default).

5. REPRESENTATIONS AND WARRANTIES.

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

 

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6. AFFIRMATIVE COVENANTS.

Each Borrower and each other Loan Party covenants and agrees that, until
termination of all of the commitments of Lender hereunder to provide any further
extensions of credit and payment in full of the Obligations, each Borrower and
each other Loan Party shall and shall cause each of their respective
Subsidiaries to comply with each of the following:

6.1. Financial Statements, Reports, Certificates. Deliver to Lender copies of
each of the financial statements, reports, and other items set forth on Schedule
6.1 no later than the times specified therein. In addition, each Borrower agrees
that no Subsidiary of a Borrower will have a fiscal year different from that of
Borrowers. Each Borrower agrees to maintain a system of accounting that enables
such Borrower to produce financial statements in accordance with GAAP. Each Loan
Party shall also (a) keep a reporting system that shows all additions, sales,
claims, returns, and allowances with respect to the sales of such Loan Party and
its Subsidiaries, and (b) maintain its billing systems/practices substantially
as in effect as of the Closing Date and shall only make material modifications
following prior notice to Lender.

6.2. Collateral Reporting. Provide Lender with each of the reports set forth on
Schedule 6.2 at the times specified therein. In addition, each Borrower agrees
to use commercially reasonable efforts in cooperation with Lender to facilitate
and implement a system of electronic collateral reporting in order to provide
electronic reporting of each of the items set forth on such Schedule.

6.3. Existence. Except as otherwise permitted under Section 7.3 or Section 7.4,
at all times maintain and preserve in full force and effect (a) its existence
(including being in good standing in its jurisdiction of organization) and
(b) all rights and franchises, licenses and permits material to its business;
provided, however, that no Loan Party nor any of its Subsidiaries shall be
required to preserve any such right or franchise, licenses or permits if such
Person’s senior management shall determine that the preservation thereof is no
longer desirable in the conduct of the business of such Person, and that the
loss thereof is not disadvantageous in any material respect to such Person or to
the Lender; provided that Borrowers deliver at least ten (10) days prior written
notice to Lender of the election of such Loan Party or such Subsidiary not to
preserve any such right or franchise, license or permit.

6.4. Maintenance of Properties. Maintain and preserve all of its assets that are
necessary or useful in the proper conduct of its business in good working order
and condition, ordinary wear, tear and casualty excepted and Permitted
Dispositions excepted (and except where the failure to so maintain and preserve
such assets could not reasonably be expected to result in a Material Adverse
Change), and comply with the material provisions of all material leases to which
it is a party as lessee, so as to prevent the loss or forfeiture thereof, unless
such provisions are the subject of a Permitted Protest.

 

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6.5. Taxes.

(a) Cause all assessments and taxes imposed, levied, or assessed against any
Loan Party or its Subsidiaries, or any of their respective assets or in respect
of any of its income, businesses, or franchises to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest.

(b) Make timely payment or deposit of all tax payments and withholding taxes
required of it and them by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Lender with proof reasonably satisfactory
to Lender indicating that such Loan Party and its Subsidiaries have made such
payments or deposits.

6.6. Insurance. At Borrowers’ expense, maintain insurance with respect to the
assets of each Loan Party and each of its Subsidiaries wherever located,
covering loss or damage by fire, theft, explosion, and all other hazards and
risks as ordinarily are insured against by other Persons engaged in the same or
similar businesses. Borrowers also shall maintain, with respect to each Loan
Party and each of its Subsidiaries, business interruption insurance, general
liability insurance, flood insurance for Collateral located in a flood plain,
product liability insurance, director’s and officer’s liability insurance,
fiduciary liability insurance, and employment practices liability insurance, as
well as insurance against larceny, embezzlement, and criminal misappropriation.
All such policies of insurance shall be with responsible and reputable insurance
companies acceptable to Lender in its Permitted Discretion and in such amounts
as is carried generally in accordance with sound business practice by companies
in similar businesses similarly situated and located and in any event in amount,
adequacy and scope reasonably satisfactory to Lender. All property insurance
policies covering the Collateral are to be made payable to Lender for the
benefit of Lender, as its interests may appear, in case of loss, pursuant to a
lender loss payable endorsement acceptable to Lender in its Permitted Discretion
and are to contain such other provisions as Lender may reasonably require to
fully protect the Lender’s interest in the Collateral and to any payments to be
made under such policies. Such evidence of property and general liability
insurance shall be delivered to Lender, with the lender loss payable
endorsements (but only in respect of Collateral) and additional insured
endorsements (with respect to general liability coverage) in favor of Lender and
shall provide for not less than thirty (30) days (ten (10) days in the case of
non-payment) prior written notice to Lender of the exercise of any right of
cancellation. If Borrowers fail to maintain such insurance, Lender may arrange
for such insurance, but at Borrowers’ expense and without any responsibility on
Lender’s part for obtaining the insurance, the solvency of the insurance
companies, the adequacy of the coverage, or the collection of claims. Borrowers
shall give Lender prompt notice of any loss exceeding $100,000 covered by their
casualty or business interruption insurance. Upon the occurrence and during the
continuance of an Event of Default, unless otherwise agreed to by Lender in its
sole discretion, Lender shall have the sole right to file claims under any
property and general liability insurance policies in respect of the Collateral,
to receive and give acquittance for any payments that may be payable thereunder,
and to execute any and all endorsements, receipts, releases, assignments,
reassignments or other documents that may be necessary to effect the collection,
compromise or settlement of any claims under any such insurance policies.

 

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6.7. Inspections, Exams, Audits and Appraisals. Permit Lender and each of
Lender’s duly authorized representatives to visit any of its properties and
inspect any of its assets or books and records, to conduct inspections, exams,
audits and appraisals of the Collateral, to examine and make copies of its books
and records, and to discuss its affairs, finances, and accounts with, and to be
advised as to the same by, its officers and employees at such reasonable times
and intervals as Lender may designate and, so long as no Default or Event of
Default exists, with reasonable prior notice to Borrowers. Borrower shall
reimburse Lender in connection with such inspections, exams, audits and
appraisals in accordance with Section 2.12.

6.8. Account Verification. In the event either (i) any Advances are outstanding,
or (ii) a Default or an Event of Default has occurred and is continuing, permit
Lender, in Lender’s name or in the name of a nominee of Lender, to verify the
validity, amount or any other matter relating to any Account, by mail,
telephone, facsimile transmission or otherwise. Further, at the request of
Lender, Borrowers shall send requests for verification of Accounts or send
notices of assignment of Accounts to Account Debtors and other obligors.

6.9. Compliance with Laws. Comply with the requirements of all applicable laws,
rules, regulations, and orders of any Governmental Authority, other than laws,
rules, regulations, and orders the non-compliance with which, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Change.

6.10. Environmental.

(a) Keep any property either owned or operated by any Borrower or any other Loan
Party or its Subsidiaries free of any Environmental Liens or post bonds or other
financial assurances satisfactory to Lender and in an amount sufficient to
satisfy the obligations or liability evidenced by such Environmental Liens;

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

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

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

 

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6.11. Disclosure Updates.

(a) Promptly and in no event later than five (5) Business Days after obtaining
knowledge thereof or after the occurrence thereof, whichever is earlier, notify
Lender:

(i) if any written information, exhibit, or report furnished to Lender
contained, at the time it was furnished, any untrue statement of a material fact
or omitted to state any material fact necessary to make the statements contained
therein, when taken as a whole, not misleading in light of the circumstances in
which made. Any notification pursuant to the foregoing provision will not cure
or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the effect of
amending or modifying this Agreement or any of the Schedules hereto;

(ii) of all actions, suits, or proceedings brought by or against any Loan Party
or any of its Subsidiaries before any court or Governmental Authority which
reasonably could be expected to result in a Material Adverse Change, provided
that, in any event, such notification shall not be later than five (5) days
after service of process with respect thereto on any Loan Party or any of its
Subsidiaries;

(iii) of (i) any disputes or claims by any Borrower’s customers exceeding
$1,000,000, individually or $2,000,000 in the aggregate during any fiscal year;
or (ii) Goods returned to or recovered by any Borrower outside of the ordinary
course of business, with a fair market value exceeding $1,000,000 individually
or $2,000,000;

(iv) of any material loss or damage to any Collateral or any substantial adverse
change in the Collateral; or

(v) of a violation of any law, rule or regulation, the non-compliance with which
reasonably could be expected to result in a Material Adverse Change.

(vi) (A) with respect to any Account included in the Borrowing Base that would
become a Bonded Account upon the issuance of a proposed Surety Bond, at least
five (5) days prior to any request by any Loan Party for the issuance of a
Surety Bond from any Surety, notice of such Loan Party’s intent to request the
issuance of such Surety Bond from such Surety, which notice shall be in form and
substance satisfactory to Lender, and in any event shall include, without
limitation, (a) the name of the Loan Party requesting such Surety Bond, (b) the
project related to such proposed Surety Bond, (c) the name and address of the
obligee under such proposed Surety Bond, and (d) a certification by a senior
officer of the Parent that (i) the information contained in such notice is true
and correct and (ii) no Account included in the Borrowing Base at the time of
such notice would become a Bonded Account upon the issuance of such proposed
Surety Bond; provided, however, if any Account included in the Borrowing Base at
the time of such notice would become a Bonded Account upon the issuance of such
proposed Surety Bond, then, in lieu of providing the certification described in
clause (d)(ii) above, such senior officer of the Parent may provide an updated
Borrowing Base Certificate that reflects the exclusion of such Account from the
Borrowing Base and certifies that the sum of all outstanding Advances at the
time of such notice does not exceed the Borrowing Base as calculated pursuant to
such updated Borrowing Base Certificate and (B) on the last day of each month,
notice of all Surety Bonds issued at the request of any Loan Party during the
month then ending. Further, with respect to each Surety, Borrowers shall deliver
to Lender a fully executed intercreditor agreement, in form and substance
satisfactory to Lender in its sole discretion.

 

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(vii) Promptly and in no event later than five (5) Business Days after obtaining
knowledge thereof or after the occurrence thereof, whichever is earlier, provide
Lender with a supplement to Schedules 5.1(b), 5.1(d), 5.3, 5.6(d), 5.7(b), 5.12,
5.15, 5.19, 5.26(a), 5.29, 5.31, 5.32, 5.33, and 7.15 of the Information
Certificate for the updates to the information required pursuant to such
Sections to reflect changes resulting from transactions expressly permitted
under this Agreement; or

(b) Immediately upon obtaining knowledge thereof or after the occurrence
thereof, notify Lender of any event or condition which constitutes a Default or
an Event of Default and provide a statement of the action that such Borrower
proposes to take with respect to such Default or Event of Default.

Upon request of Lender, each Loan Party shall deliver to Lender any other
materials, reports, records or information reasonably requested relating to the
operations, business affairs, financial condition of any Loan Party or its
Subsidiaries or the Collateral.

6.12. Collateral Covenants.

(a) Possession of Collateral. In the event that any Collateral, including
Proceeds, is evidenced by or consists of Negotiable Collateral, Investment
Related Property, or Chattel Paper, in each case, having an aggregate value or
face amount of $250,000 or more for all such Negotiable Collateral, Investment
Related Property, or Chattel Paper, the Loan Parties shall promptly (and in any
event within two (2) Business Days after receipt thereof), notify Lender
thereof, and if and to the extent that perfection or priority of Lender’s Liens
is dependent on or enhanced by possession, the applicable Loan Party, promptly
(and in any event within two (2) Business Days) after request by Lender, shall
execute such other documents and instruments as shall be requested by Lender or,
if applicable, endorse and deliver physical possession of such Negotiable
Collateral, Investment Related Property, or Chattel Paper to Lender, together
with such undated powers (or other relevant document of assignment or transfer
acceptable to Lender) endorsed in blank as shall be requested by Lender, and
shall do such other acts or things deemed necessary or desirable by Lender to
enhance, perfect and protect Lender’s Liens therein.

(b) Chattel Paper.

(i) Promptly (and in any event within two (2) Business Days) after request by
Lender, each Loan Party shall take all steps reasonably necessary to grant
Lender control of all electronic Chattel Paper of any Loan Party in accordance
with the Code and all “transferable records” as that term is defined in
Section 16 of the Uniform Electronic Transaction Act and Section 201 of the
federal Electronic Signatures in Global and National Commerce Act as in effect
in any relevant jurisdiction, to the extent that the individual or aggregate
value or face amount of such electronic Chattel Paper equals or exceeds
$100,000; and

 

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(ii) If any Loan Party retains possession of any Chattel Paper or instruments
(which retention of possession shall be subject to the extent permitted hereby),
promptly upon the request of Lender, such Chattel Paper and instruments shall be
marked with the following legend: “This writing and the obligations evidenced or
secured hereby are subject to the Security Interest of Wells Fargo Bank,
National Association, as Lender”.

(c) Control Agreements.

(i) Except to the extent otherwise provided by Section 7.11, each Loan Party
shall obtain a Control Agreement, from each bank (other than Lender) maintaining
a Deposit Account for such Loan Party;

(ii) Except to the extent otherwise provided by Section 7.11, each Loan Party
shall obtain a Control Agreement, from each issuer of uncertificated securities,
securities intermediary, or commodities intermediary issuing or holding any
financial assets or commodities to or for any Loan Party; and

(iii) Except to the extent otherwise provided by Section 7.11, each Loan Party
shall cause Lender to obtain “control”, as such term is defined in the Code,
with respect to all of such Loan Party’s investment property.

(d) Letter-of-Credit Rights. If the Loan Parties (or any of them) are or become
the beneficiary of letters of credit having a face amount or value of $250,000
or more in the aggregate, then the applicable Loan Party or Loan Parties shall
promptly (and in any event within five (5) Business Days after becoming a
beneficiary), notify Lender thereof and, promptly (and in any event within
twenty (20) Business Days) after request by Lender, enter into a tri-party
agreement with Lender and the issuer or confirming bank with respect to
letter-of-credit rights assigning such letter-of-credit rights to Lender and
directing all payments thereunder to the Collection Account unless otherwise
directed by Lender, all in form and substance satisfactory to Lender.

(e) Commercial Tort Claims. If the Loan Parties (or any of them) obtain
Commercial Tort Claims having a value, or involving an asserted claim, in the
amount of $500,000 or more in the aggregate for all Commercial Tort Claims, then
the applicable Loan Party or Loan Parties shall promptly (and in any event
within two (2) Business Days of obtaining such Commercial Tort Claim), notify
Lender upon incurring or otherwise obtaining such Commercial Tort Claims and,
promptly (and in any event within two (2) Business Days) after request by
Lender, amend Schedule 5.6(d) to the Information Certificate to describe such
Commercial Tort Claims in a manner that reasonably identifies such Commercial
Tort Claims and which is otherwise reasonably satisfactory to Lender, and hereby
authorizes the filing of additional financing statements or amendments to
existing financing statements describing such Commercial Tort Claims, and agrees
to do such other acts or things deemed necessary or desirable by Lender to give
Lender a first priority, perfected security interest in any such Commercial Tort
Claim, which Commercial Tort Claim shall not be subject to any other Liens;

 

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(f) Government Contracts. Other than Accounts and Chattel Paper the aggregate
value of which does not at any one time exceed $2,000,000, if any Account or
Chattel Paper of any Loan Party arises out of a contract or contracts with the
United States of America or any State or any department, agency, or
instrumentality thereof, Loan Parties shall promptly (and in any event within
two (2) Business Days of the creation thereof) notify Lender thereof and,
promptly (and in any event within two (2) Business Days) after request by
Lender, execute any instruments or take any steps reasonably required by Lender
in order that all moneys due or to become due under such contract or contracts
shall be assigned to Lender, for the benefit of Lender and each Bank Product
Provider, and shall provide written notice thereof under the Assignment of
Claims Act or other applicable law.

(g) Intellectual Property.

(i) Upon the request of Lender, in order to facilitate filings with the PTO and
the United States Copyright Office, each Loan Party shall execute and deliver to
Lender one or more Copyright Security Agreements or Patent and Trademark
Security Agreements to further evidence Lender’s Lien on such Loan Party’s
Patents, Trademarks, or Copyrights, and the General Intangibles of such Loan
Party relating thereto or represented thereby;

(ii) Each Loan Party shall have the duty, with respect to Intellectual Property
that is necessary in the conduct of such Loan Party’s business, to protect and
diligently enforce and defend at such Loan Party’s expense its Intellectual
Property, including using commercially reasonable efforts to (A) to diligently
enforce and defend, including promptly suing for infringement, misappropriation,
or dilution and to recover any and all damages for such infringement,
misappropriation, or dilution, and filing for opposition, interference, and
cancellation against conflicting Intellectual Property rights of any Person,
(B) to prosecute diligently any trademark application or service mark
application that is part of the Trademarks pending as of the date hereof or
hereafter, (C) to prosecute diligently any patent application that is part of
the Patents pending as of the date hereof or hereafter, (D) to take all
reasonable and necessary action to preserve and maintain all of such Loan
Party’s Trademarks, Patents, Copyrights, Intellectual Property Licenses, and its
rights therein, including paying all maintenance fees and filing of applications
for renewal, affidavits of use, and affidavits of noncontestability, and (E) to
require all employees, consultants, and contractors of each Loan Party who were
involved in the creation or development of such Intellectual Property to sign
agreements containing assignment to such Loan Party of Intellectual Property
rights created or developed and obligations of confidentiality. No Loan Party
shall abandon any Intellectual Property or Intellectual Property License that is
necessary in the conduct of such Loan Party’s business. Each Loan Party shall
take the steps described in this Section 6.12(g)(ii) with respect to all new or
acquired Intellectual Property to which it or any of its Subsidiaries is now or
later becomes entitled that is necessary in the conduct of such Loan Party’s or
Subsidiary’s business;

(iii) Each Loan Party acknowledges and agrees that Lender shall have no duties
with respect to any Intellectual Property or Intellectual Property Licenses of
any Loan Party. Without limiting the generality of this Section 6.12(g)(iii),
each Loan Party acknowledges and agrees that Lender shall not be under any
obligation to take any steps necessary to preserve rights in the Collateral
consisting of Intellectual Property or Intellectual Property Licenses against
any other Person, but Lender may do so at its option from and after the
occurrence and during the continuance of an Event of Default, and all expenses
incurred in connection therewith (including reasonable fees and expenses of
attorneys and other professionals) shall be for the sole account of Borrowers
and shall be chargeable to the Loan Account;

 

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(iv) Each Loan Party shall promptly file an application with the United States
Copyright Office for any Copyright that has not been registered with the United
States Copyright Office if such Copyright is necessary in connection with the
conduct of such Loan Party’s business. Any expenses incurred in connection with
the foregoing shall be borne by the Loan Parties; and

(v) No Loan Party shall enter into any Intellectual Property License to receive
any license or rights in any Intellectual Property of any other Person unless
such Loan Party has used commercially reasonable efforts to permit the
assignment of or grant of a Lien in such Intellectual Property License (and all
rights of such Loan Party thereunder) to Lender (and any transferees of Lender).

(h) Investment Related Property.

(i) Upon the occurrence and during the continuance of an Event of Default,
following the request of Lender, all sums of money and property paid or
distributed in respect of the Investment Related Property that are received by
any Loan Party shall be held by such Loan Party in trust for the benefit of
Lender segregated from such Loan Party’s other property, and such Loan Party
shall deliver it promptly to Lender in the exact form received; and

(ii) Each Loan Party shall cooperate with Lender in obtaining all necessary
approvals and making all necessary filings under federal, state, local, or
foreign law to effect the perfection of the Security Interest on the Investment
Related Property or to effect any sale or transfer thereof.

(iii) If any Loan Party shall acquire, obtain, receive or become entitled to
receive any Pledged Interests after the Closing Date, it shall promptly (and in
any event within two (2) Business Days of acquiring or obtaining such
Collateral) deliver to Lender a duly executed Pledged Interests Addendum
identifying such Pledged Interests;

(iv) Each Loan Party shall promptly deliver to Lender a copy of each material
notice or other material communication received by it in respect of any Pledged
Interests;

(v) No Loan Party shall make or consent to any amendment or other modification
or waiver with respect to any Pledged Interests, Pledged Operating Agreement or
Pledged Partnership Agreement, or enter into any agreement or permit to exist
any restriction with respect to any Pledged Interests in each case if the same
is prohibited pursuant to the Loan Documents;

(vi) As to all limited liability company or partnership interests, issued under
any Pledged Operating Agreement or Pledged Partnership Agreement, each Loan
Party hereby covenants that the Pledged Interests issued pursuant to such
agreement (A) are not and shall not be dealt in or traded on securities
exchanges or in securities markets, (B) do not and will not constitute
investment company securities, and (C) are not and will not be held by such Loan
Party in a securities account. In addition, none of the Pledged Operating
Agreements, the Pledged Partnership Agreements, or any other agreements
governing any of the Pledged Interests issued under any Pledged Operating
Agreement or Pledged Partnership Agreement, provide or shall provide that such
Pledged Interests are securities governed by Section 8 of the Uniform Commercial
Code as in effect in any relevant jurisdiction.

 

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(i) Controlled Accounts. Each Loan Party shall establish and maintain at Lender
all Cash Management Services, including all deposit accounts (other than the
Permitted Petty Cash Account), and to the extent required hereunder or otherwise
utilized by Borrowers, lockbox services. Such Cash Management Services
maintained by each Loan Party shall be of a type and on terms reasonably
satisfactory to Lender.

(j) Equipment. Promptly, and in any event within five (5) Business Days of the
acquisition of any Eligible Equipment (including Borrowers’ receipt of a clean
certificate of title in respect of Eligible Equipment formerly subject to
third-party financing) subject to a certificate of title under applicable law
(i.e. any item of rolling stock), the applicable Borrower shall deliver to
Lender (or a service or processor designated by Lender from time to time), a
certificate of title for each such item of titled Eligible Equipment owned or
acquired by such Borrower together with either (i) a duly completed and signed
motor vehicle title application naming Lender as first lien holder with respect
to such motor vehicle (subject to Permitted Liens) or (ii) a signed and
notarized power or attorney in appropriate form to permit Lender (or a servicer
or processor designated by Lender from time to time) to cause such title
certificates to be submitted to the appropriate state motor vehicle filing
office for notation of Lender’s first-priority Lien (subject to Permitted
Liens). Borrowers shall take such other and additional actions as may be
required to cause Lender’s first-Lien (subject to Permitted Liens) to be duly
noted on each certificate of title evidencing Borrowers’ ownership of Eligible
Equipment.

6.13. Material Contracts . Contemporaneously with the delivery of each
Compliance Certificate pursuant to Section 6.1, provide Lender with copies of
(a) each Material Contract entered into since the delivery of the previous
Compliance Certificate, (b) each material amendment or modification of any
Material Contract entered into since the delivery of the previous Compliance
Certificate; provided, that public filing of such contracts with the SEC shall
satisfy any such delivery requirement. Borrowers shall maintain all Material
Contracts in full force and effect and shall not default in any material respect
in the payment or performance of any obligations thereunder.

6.14. Location of Inventory, Equipment and Books . Keep the Inventory and
Equipment (other than vehicles and Equipment out for repair) and Books of each
Loan Party and each of its Subsidiaries only at the locations identified on
Schedule 5.29 to the Information Certificate or on any Job Site and keep the
chief executive office of each Loan Party and each of its Subsidiaries only at
the locations identified on Schedule 5.6(b) to the Information Certificate;
provided, however, that Borrowers may amend Schedule 5.29 to the Information
Certificate so long as such amendment occurs by written notice to Lender not
less than ten (10) days prior to the date on which such Inventory, Equipment or
Books are moved to such new location, and, if Lender so requires, so long as, at
the time of such written notification, the applicable Loan Party or Subsidiary
provides Lender a Collateral Access Agreement with respect thereto if such
location is not owned by such Loan Party.

 

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6.15. Further Assurances.

(a) At any time upon the reasonable request of Lender, execute or deliver to
Lender any and all financing statements, fixture filings, security agreements,
pledges, assignments, endorsements of certificates of title, mortgages, deeds of
trust, opinions of counsel, and all other documents (the “Additional Documents”)
that Lender may reasonably request and in form and substance reasonably
satisfactory to Lender, to create, perfect, and continue perfection or to better
perfect Lender’s Liens in all of the assets of each Loan Party (whether now
owned or hereafter arising or acquired, tangible or intangible, real or
personal), and in order to fully consummate all of the transactions contemplated
hereby and under the other Loan Documents. To the maximum extent permitted by
applicable law, if a Borrower or any other Loan Party refuses or fails to
execute or deliver any reasonably requested Additional Documents within a
reasonable period of time, not to exceed thirty (30) days following the request
to do so such Borrower and such other Loan Party hereby authorizes Lender to
execute any such Additional Documents in the applicable Loan Party’s name, as
applicable, and authorizes Lender to file such executed Additional Documents in
any appropriate filing office. In furtherance and not in limitation of the
foregoing, each Loan Party shall take such actions as Lender may reasonably
request from time to time to ensure that the Obligations are guaranteed by the
Guarantors and are secured by substantially all of the assets of each Loan
Party.

(b) Each Loan Party authorizes the filing by Lender of financing or continuation
statements, or amendments thereto, and such Loan Party will execute and deliver
to Lender such other instruments or notices, as Lender may reasonably request,
in order to perfect and preserve the Security Interest granted or purported to
be granted hereby.

(c) Each Loan Party authorizes Lender at any time and from time to time to file,
transmit, or communicate, as applicable, financing statements and amendments
(i) describing the Collateral as “all personal property of debtor” or “all
assets of debtor” or words of similar effect, (ii) describing the Collateral as
being of equal or lesser scope or with greater detail, or (iii) that contain any
information required by Part 5 of Article 9 of the Code for the sufficiency or
filing office acceptance of such financing statement. Each Loan Party also
hereby ratifies any and all financing statements or amendments previously filed
by Lender in any jurisdiction.

(d) Each Loan Party acknowledges that no Loan Party is authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement filed in connection with this Agreement without the prior
written consent of Lender, subject to such Loan Party’s rights under
Section 9-509(d)(2) of the Code.

6.16. Formation of Subsidiaries. At the time that any Loan Party forms any
direct or indirect Subsidiary or acquires any direct or indirect Subsidiary
after the Closing Date, such Loan Party shall (a) within ten (10) days of such
formation or acquisition (or such later date as permitted by Lender in its sole
discretion) cause any such new Subsidiary and Administrative Borrower, on behalf
of each Loan Party, to provide to Lender a joinder to this Agreement, together
with a supplement to the Information Certificate in the form of Exhibit E-1 such
other security documents, as well as appropriate financing statements, all in
form and substance reasonably satisfactory to Lender (including being sufficient
to grant Lender a first priority Lien (subject to Permitted Liens) in and to the
assets of such newly formed or acquired Subsidiary), (b) within ten

 

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(10) days of such formation or acquisition (or such later date as permitted by
Lender in its sole discretion) provide to Lender a pledge agreement and
appropriate certificates and powers or financing statements, pledging all of the
direct or beneficial ownership interest in such new Subsidiary reasonably
satisfactory to Lender, and (c) within ten (10) days of such formation or
acquisition (or such later date as permitted by Lender in its sole discretion)
provide to Lender all other documentation, including if requested by Lender one
or more opinions of counsel reasonably satisfactory to Lender, which in its
opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above. Any document, agreement, or
instrument executed or issued pursuant to this Section 6.16 shall be a Loan
Document.

6.17. Post-Closing Covenants.

(a) Within 10 days of the Closing Date (or such later date as Lender may agree
to in its sole discretion), Administrative Borrower will deliver to Lender the
following items with respect to insurance: (i) Certificates of insurance with
respect to liability insurance policies (including products liability
insurance), showing Lender as certificate holder and additional insured,
together with additional insured endorsement and notice of cancellation
endorsement attached to each certificate, and (ii) certificates of property
insurance covering inventory and other personal property, showing Lender as
certificate holder and loss payee, with lender’s loss payable endorsement
attached to each certificates.

(b) Within 30 days of the Closing Date (or such later date as Lender may agree
to in its sole discretion), Administrative Borrower will deliver to Lender
amended limited liability company agreements and limited partner agreements,
each in form and substance satisfactory to Lender.

(c) Within 30 days of the Closing Date (or such later date as Lender may agree
to in its sole discretion), Administrative Borrower will deliver to Lender
Governing Documents for each Loan Party certified by the applicable Loan Party’s
Secretary of State, each in form and substance satisfactory to <Agent>Lender.

6.18. OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws. Each
Loan Party will, and will cause each of its Subsidiaries to, comply with all
Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Loan
Parties and its Subsidiaries will implement and maintain in effect policies and
procedures designed to ensure compliance by the Loan Parties and their
Subsidiaries and their respective directors, officers, employees, agents and
Affiliates with, and each of the Loan Parties and their respective Subsidiaries
and Affiliates will comply with, all Sanctions, Anti-Corruption Laws and
Anti-Money Laundering Laws.

7. NEGATIVE COVENANTS.

Each Borrower and each Loan Party covenants and agrees that, until termination
of all of the commitments of Lender hereunder to provide any further extensions
of credit and payment in full of the Obligations, no Borrower and no other Loan
Party will do, nor will any Borrower or any other Loan Party permit any of its
Subsidiaries to do any of the following:

7.1. Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except for Permitted Indebtedness.

 

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7.2. Liens. Create, incur, assume, or suffer to exist, directly or indirectly,
any Lien on or with respect to any of its assets, of any kind, whether now owned
or hereafter acquired, or any income or profits therefrom, except for Permitted
Liens.

7.3. Restrictions on Fundamental Changes.

(a) Enter into any merger, consolidation, reorganization, or recapitalization,
or reclassify its Stock, except for (i) any merger between Loan Parties,
provided that a Borrower must be the surviving entity of any such merger to
which it is a party, and (ii) any merger between Subsidiaries of a Borrower that
are not Loan Parties.

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

(c) Suspend or cease operation of a substantial portion of its or their
business, except as permitted pursuant to Sections 7.3(a) or (b) above or in
connection with the transactions permitted pursuant to Section 7.4.

7.4. Disposal of Assets. Other than Permitted Dispositions or transactions
expressly permitted by Sections 7.3 or 7.12, sell, assign (by operation of law
or otherwise) or otherwise dispose of, or grant any option with respect to
(including by an allocation of assets among newly divided limited liability
companies or partnerships pursuant to a “plan of division” if any assets become
the assets of a different Person as a result of such allocation), any of the
Collateral or any other asset except as expressly permitted by this Agreement.
Lender shall not be deemed to have consented to any sale or other disposition of
any of the Collateral or any other asset except as expressly permitted in this
Agreement or the other Loan Documents.

7.5. Change Name. Change the name, organizational identification number, state
of organization, organizational identity or “location” for purposes of
Section 9-307 of the Code of any Loan Party or any of its Subsidiaries.

7.6. Nature of Business. Make any change in the nature of its or their business
as conducted on the date of this Agreement or acquire any properties or assets
that are not reasonably related to the conduct of such business activities;
provided, however, that the foregoing shall not prevent any Borrower or any
other Loan Party or any of its Subsidiaries from engaging in any business that
is reasonably related or ancillary to its business.

 

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7.7. Prepayments and Amendments.

(a) Except in connection with Refinancing Indebtedness permitted by Section 7.1,

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

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

(b) Directly or indirectly, amend, modify, or change any of the terms or
provisions of

(i) any agreement, instrument, document, indenture, or other writing evidencing
or concerning Permitted Indebtedness other than (A) the Obligations in
accordance with this Agreement, (B) Permitted Intercompany Advances, and
(C) Indebtedness permitted under clauses (c), (e), (f) and (k) of the definition
of Permitted Indebtedness;

(ii) any Material Contract except to the extent that such amendment,
modification, or change could not, individually or in the aggregate, reasonably
be expected to be materially adverse to the interests of Lender; or

(iii) the Governing Documents of any Loan Party or any of its Subsidiaries if
the effect thereof, either individually or in the aggregate, could reasonably be
expected to be materially adverse to the interests of Lender.

7.8. Change of Control. Cause, permit, or suffer, directly or indirectly, any
Change of Control.

7.9. Restricted Junior Payments . Make any Restricted Junior Payment; provided,
however, that, so long as it is permitted by law, and so long as no Default or
Event of Default shall have occurred and be continuing or would result therefrom
and so long as such Borrower is a “pass-through” tax entity for United States
federal income tax purposes, and after first providing such supporting
documentation as Lender may request (including the state and federal tax returns
(and all related schedules) of each owner of Stock in such Borrower, such
Borrower may declare and pay Pass-Through Tax Liabilities, net of any prior year
loss carry-forwards.

7.10. Accounting Methods . Modify or change its fiscal year or its method of
accounting (other than as may be required to conform to GAAP).

7.11. Investments; Controlled Investments.

(a) Except for Permitted Investments, directly or indirectly, make or acquire
any Investment or incur any liabilities (including contingent obligations) for
or in connection with any Investment.

 

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(b) Other than (i) the Permitted Petty Cash Account, and (ii) amounts deposited
into Deposit Accounts identified on Schedule 5.15 to the Information Certificate
which are specially and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the employees of any Loan Party or
its Subsidiaries, make, acquire, or permit to exist Permitted Investments
consisting of cash, Cash Equivalents, or amounts credited to Deposit Accounts or
Securities Accounts unless such Borrower and such other Loan Party or its
Subsidiaries, as applicable, and the applicable bank (or as permitted solely
pursuant to Section 6.12(i) or securities intermediary have entered into Control
Agreements with Lender governing such Permitted Investments in order to perfect
(and further establish) Lender’s Liens in such Permitted Investments. Except as
provided in Section 6.12(i) and this Sections 7.11(b), Borrowers and such Loan
Parties shall not, and shall not permit their Subsidiaries to, establish or
maintain any Deposit Account or Securities Account with a banking institution
other than Lender.

7.12. Transactions with Affiliates. Directly or indirectly enter into or permit
to exist any transaction with any Affiliate of any Borrower, any other Loan
Party or any of their Subsidiaries except for:

(a) transactions contemplated by the Loan Documents or transactions with any
Affiliates of any Borrower or any Loan Party in the ordinary course of business
of such Borrower or Loan Party, consistent with past practices and undertaken in
good faith, upon fair and reasonable terms fully disclosed to Lender and no less
favorable than would be obtained in a comparable arm’s length transaction with a
non-Affiliate;

(b) so long as it has been approved by a Loan Party’s board of directors (or
comparable governing body) in accordance with applicable law, any customary
indemnities provided for the benefit of directors (or comparable managers) of
such Loan Party;

(c) so long as it has been approved by a Loan Party’s board of directors (or
comparable governing body) in accordance with applicable law, the payment of
reasonable compensation, severance, or employee benefit arrangements to
employees, officers, and outside directors of a Loan Party in the ordinary
course of business and consistent with industry practice;

(d) transactions permitted by Section 7.3 or Section 7.9, or any Permitted
Intercompany Advance;

(e) so long as no Default or Event of Default has occurred and is continuing,
IES Commercial may make additional capital contributions to STR Mechanical in an
aggregate amount not to exceed $750,000; and

(f) so long as no Default or Event of Default has occurred and is continuing,
IES Commercial may make additional capital contributions to NEXT in an aggregate
amount not to exceed $750,000.

7.13. Use of Proceeds. Use the proceeds of any loan made hereunder for any
purpose other than (a) to pay fees, costs, and expenses, including Lender
Expenses, incurred in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby, and (b) consistent with
the terms and conditions hereof, for general corporate and working capital
purposes for their lawful and permitted purposes (provided that (x) no part of
the proceeds

 

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of the loans made to Borrowers will be used to purchase or carry any such Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any such Margin Stock or for any purpose that violates the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve
System<).>, (y) no part of the proceeds of any Loan or Letter of Credit will be
used, directly or indirectly, to make any payments to a Sanctioned Entity or a
Sanctioned Person, to fund any investments, loans or contributions in, or
otherwise make such proceeds available to, a Sanctioned Entity or a Sanctioned
Person, to fund any operations, activities or business of a Sanctioned Entity or
a Sanctioned Person), or in any other manner that would result in a violation of
Sanctions by any Person, and (z) no part of the proceeds of any Advance or
Letter of Credit will be used, directly or indirectly, in furtherance of an
offer, payment, promise to pay, or authorization of the payment or giving of
money, or anything else of value, to any Person in violation of any Sanctions,
Anti-Corruption Laws or Anti Money Laundering Laws).

7.14. Limitation on Issuance of Stock. Except for the issuance or sale of common
stock, Permitted Preferred Stock by a Borrower or other Loan Party, issue or
sell or enter into any agreement or arrangement for the issuance and sale of any
of their Stock.

7.15. Consignments. Consign any of its Inventory or sell any of its Inventory on
bill and hold, sale or return, sale on approval, or other conditional terms of
sale, except as set forth on Schedule 7.15 to the Information Certificate.

7.16. Inventory and Equipment with Bailees. Store the Inventory or Equipment of
any Loan Party or any of its Subsidiaries at any time now or hereafter with a
bailee, warehouseman, or similar party, except as set forth on Schedule 7.16 to
the Information Certificate (as such Schedule may be updated from time to time
to reflect changes resulting from transactions permitted under this Agreement).

7.17. Use of Proceeds in Connection with Bonded Contracts. Use proceeds of the
<Loans> Advances in connection with funding work related to the Bonded Contracts
unless such use is upon terms, provisions and conditions acceptable to Lender,
in its good faith discretion (such as, without limitation, Lender being
satisfied with its Lien priority and right to proceeds relating to Borrowers’
assets and restrictions on when payments may be made by Borrowers in connection
with Bonded Contracts); provided, however, except as otherwise provided in the
Federal Insurance Company and Liberty Mutual Intercreditor and the Chartis
Intercreditor, the Everest Intercreditor, or any intercreditor agreement entered
into after the Third Amendment Closing Date in form and substance satisfactory
to Lender, Lender agrees that the foregoing shall not be construed to prevent
any ability of Federal Insurance Company, Liberty Mutual, Chartis, Everest, or
any other Surety (so long as such Surety has entered into an intercreditor
agreement with lender in form and substance satisfactory to Lender), as
applicable, to receive payment out of any assets of any Borrower in which
Federal Insurance Company, Liberty Mutual, Chartis Everest, or such other Surety
has a first priority Lien in a circumstance where Federal Insurance Company,
Liberty Mutual, Chartis, Everest, or such other Surety has made a payment on a
Surety Bond and Federal Insurance Company, Liberty Mutual, Chartis, Everest, or
such other Surety is seeking reimbursement for such payment from such Borrower.

 

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7.18. Surety Bonds. Request the issuance of a Surety Bond from any Surety after
the Closing Date without (i) providing prior written notice thereof to Lender in
accordance with Section 6.11(a)(vi) and (ii) (A) if no Event of Default has
occurred and is continuing, obtaining the prior written consent of Lender to the
issuance of such Surety Bond if such Surety Bond would cause any Account
included in the Borrowing Base to become a Bonded Account upon the issuance of
such Surety Bond, which such consent shall be in Lender’s sole discretion or
(B) if an Event of Default has occurred and is continuing, obtaining the prior
written consent of Lender to the issuance of such Surety Bond, which such
consent shall be in Lender’s sole discretion.

8. FINANCIAL COVENANTS.

Each Borrower covenants and agrees that, until termination of all obligations of
Lender to provide extensions of credit hereunder and payment in full of the
Obligations, Borrowers will comply with each of the following financial
covenants:

(a) Fixed Charge Coverage Ratio. Borrowers shall maintain a Fixed Charge
Coverage Ratio, measured quarterly on a trailing four-quarter basis at the end
of each quarter, of at least 1.1 to 1.0.

(b) Minimum Liquidity. Borrowers shall, at all times, maintain a minimum
Liquidity of at least <thirty>twenty percent (<30>20%) of the Maximum Revolver
Amount; provided, that, for purposes of compliance with this clause (b), at
least fifty percent (50%) of Borrowers’ Liquidity shall be comprised of Excess
Availability.

(c) <Minimum EBITDA. During an EBITDA Covenant Testing Period, Borrower shall
achieve EBITDA, measured at the end of each quarter, of at least the required
amount set forth in the following table for the applicable period set forth
opposite thereto:>

 

Applicable Amount    Applicable Period $30,000,000   

For each four quarter period

ending March 31, 2017, June 30, 2017, September 30, 2017, and December 31, 2017

$32,500,000   

For the four quarter period

ending March 31, 2018

$35,000,000   

For the four quarter period

ending June 30, 2018 and each quarter-end thereafter

9. EVENTS OF DEFAULT.

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

9.1. If any Borrower fails to pay when due and payable, or when declared due and
payable, all or any portion of the Obligations consisting of principal,
interest, fees, charges or other amounts due Lender or any Bank Product
Provider, reimbursement of Lender Expenses, or other amounts constituting
Obligations (including any portion thereof that accrues after the commencement
of an Insolvency Proceeding, regardless of whether allowed or allowable in whole
or in part as a claim in any such Insolvency Proceeding);

 

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9.2. If any Loan Party or any of its Subsidiaries:

(a) fails to perform or observe any covenant or other agreement contained in any
of (i) Sections 4.3, 6.1, 6.2, 6.3 (solely if any Loan Party or any of its
Subsidiaries is not in good standing in its jurisdiction of organization),
6.5(a) (solely with respect to F.I.C.A., F.U.T.A., federal income taxes and any
other taxes or assessments the non-payment of which may result in a Lien having
priority over Lender’s Liens), 6.5(b), 6.6, 6.7 (solely if any Loan Party or any
of its Subsidiaries refuses to allow Lender or its representatives or agents to
visit its properties, inspect its assets or books or records, examine and make
copies of its books and records, or discuss its affairs, finances, and accounts
with its officers and employees), 6.8, 6.11, 6.12, 6.13, 6.14 or 6.17
(ii) Section 7 or (iii) Section 8;

(b) fails to perform or observe any covenant or other agreement contained in any
of Sections 6.3 (other than if a Loan Party is not in good standing in its
jurisdiction of organization), 6.4, 6.5(a) (other than F.I.C.A., F.U.T.A.,
federal income taxes and any other taxes or assessments the non-payment of which
may result in a Lien having priority over Lender’s Liens), 6.7 (other than if
any Loan Party or any of its Subsidiaries refuses to allow Lender or its
representatives or agents to visit its properties, inspect its assets or books
or records, examine and make copies of its books or records or disclose it
affairs, finances and accounts with its officers and employees), 6.9, 6.10, and
6.15 and such failure continues for a period of twenty (20) days after the
earlier of (i) the date on which such failure shall first become known to or
should have been known by any officer of any Loan Party or (ii) the date on
which written notice thereof is given to any Loan Party by Lender; or

(c) fails to perform or observe any covenant or other agreement contained in
this Agreement, or in any of the other Loan Documents, in each case, other than
any such covenant or agreement that is unable to be cured or is the subject of
another provision of this Section 9 (in which event such other provision of this
Section 9 shall govern), and such failure continues for a period of thirty
(30) days after the earlier of (i) the date on which such failure shall first
become known to or should have been known by any officer of any Loan Party or
(ii) the date on which written notice thereof is given to any Loan Party by
Lender;

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

 

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9.4. If an Insolvency Proceeding is commenced by a Loan Party or any of its
Subsidiaries;

9.5. If an Insolvency Proceeding is commenced against a Loan Party or any of its
Subsidiaries and any of the following events occur: (a) such Loan Party or such
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within sixty (60) calendar days of the date of the filing thereof,
(d) an interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, such Loan Party or its Subsidiary, or (e) an order
for relief shall have been issued or entered therein; provided that Lender shall
have no obligation to provide any extension of credit to Borrowers during such
60 calendar day period specified in subsection (c);

9.6. If any Loan Party is enjoined, restrained, or in any way prevented by court
order from continuing to conduct all or any material part of the business
affairs of such Loan Party and its Subsidiaries, taken as a whole;

9.7. If there is (a) a default in one or more agreements to which a Loan Party
is a party with one or more third Persons relative to the Indebtedness of such
Loan Party or such Subsidiary involving an aggregate amount of $250,000 or more,
and such default (i) occurs at the final maturity of the obligations thereunder,
or (ii) results in a right by such third Person, irrespective of whether
exercised, to accelerate the maturity of such Loan Party’s or its Subsidiary’s
obligations thereunder, or (b) a default in or an involuntary early termination
of one or more Hedge Agreements to which a Loan Party or any of its Subsidiaries
is a party involving an aggregate amount of $250,000 or more;

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

9.9. If the obligation of any Guarantor under its Guaranty or any other Loan
Document to which any Guarantor is a party is limited or terminated by operation
of law or by such Guarantor (other than in accordance with the terms of this
Agreement), or if any Guarantor fails to perform any obligation under its
Guaranty or under any such Loan Document, or repudiates or revokes or purports
to repudiate or revoke any obligation under its Guaranty, or under any such Loan
Document, or any Guarantor ceases to exist for any reason;

9.10. If this Agreement or any other Loan Document that purports to create a
Lien, shall, for any reason, fail or cease to create a valid and perfected and,
except to the extent of Permitted Liens which are permitted purchase money
Liens, tax Liens subject to a Permitted Protest or the interests of lessors
under Capital Leases, first priority Lien on the Collateral covered thereby,
except in each case, (a) as a result of a disposition of the applicable
Collateral in a transaction permitted under this Agreement, or (b) with respect
to Collateral the aggregate value of which, for all such Collateral, does not
exceed at any time, $1,500,000;

 

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9.11. If any Material Adverse Change occurs;

9.12. If any event or circumstance shall occur which, in the Permitted
Discretion of Lender exercised in good faith, would be reasonably likely to
cause Lender to suspect that any Loan Party has engaged in fraudulent activity
with respect to the Collateral or other material matters;

9.13. Any director, officer, or owner of at least twenty percent (20%) of the
issued and outstanding ownership interests of a Loan Party is indicted for a
felony offense under state or federal law, or, without performing commercially
reasonable due diligence and/or background checks, a Loan Party knowingly hires
an officer or appoints a director who has been convicted of any such felony
offense, or a Person becomes an owner of at least twenty percent (20%) of the
issued and outstanding ownership interests of a Loan Party who has been
convicted of any such felony offense;

9.14. If any Loan Party (a) fails to pay any indebtedness or obligation owed to
Lender or its Affiliates which is unrelated to the Credit Facility or this
Agreement as it becomes due and payable (other than indebtedness or obligations
involving an aggregate amount of $100,000 unless such failure continues for a
period of thirty (30) days), or (b) the occurrence of any default or event of
default under any agreement between any Loan Party and Lender or its Affiliates
unrelated to the Loan Documents (other than agreements involving an aggregate
amount less than $100,000, unless such default or event of default continues for
a period of thirty (30) days);

9.15. The validity or enforceability of any Loan Document shall at any time for
any reason be declared to be null and void, or a proceeding shall be commenced
by a Loan Party or any of its Subsidiaries, or by any Governmental Authority
having jurisdiction over a Loan Party or any of its Subsidiaries, seeking to
establish the invalidity or unenforceability thereof, or a Loan Party or any of
its Subsidiaries shall deny that such Loan Party or such Subsidiary has any
liability or obligation purported to be created under any Loan Document;

9.16. If there shall occur any default or event of default under any of the
agreements or documentation among any Surety and any Loan Parties relating to
such Surety’s bonding program with such Loan Parties, and, as a result thereof,
such Surety has ceased issuing Surety Bonds on behalf of any Loan Party (other
than a temporary cessation not arising from a violation or termination of the
applicable Surety Bond documentation; provided that other Sureties are then
issuing requested Surety Bonds on behalf of such Loan Party) and such Surety has
not been replaced within thirty (30) days, or has made demand on any Loan Party
for performance thereunder or has otherwise commenced exercising any remedies
thereunder (including, without limitation, attempting to segregate funds as to
its Surety Collateral), or any unreimbursed claim is made on such Surety related
to any Bonded Contract against the issuer of any Surety Bond; or

9.17. If there shall occur any default or event of default under (a) the
agreements entered into in connection with any Permitted Insurance Premium
Financing Indebtedness, or (b) the Subordinated Debt Documentation.

 

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10. RIGHTS AND REMEDIES.

10.1. Rights and Remedies. Upon the occurrence and during the continuation of an
Event of Default, Lender may, in addition to any other rights or remedies
provided for hereunder or under any other Loan Document or by applicable law, do
any one or more of the following:

(a) declare the Obligations (other than the Hedge Obligations, which may be
accelerated in accordance with the terms of the applicable Hedge Agreement),
whether evidenced by this Agreement or by any of the other Loan Documents
immediately due and payable, whereupon the same shall become and be immediately
due and payable and Borrowers shall be obligated to repay all of such
Obligations in full, without presentment, demand, protest, or further notice or
other requirements of any kind, all of which are hereby expressly waived by each
Borrower and each other Loan Party;

(b) declare the funding obligations of Lender under this Agreement terminated,
whereupon such funding obligations shall immediately be terminated together with
any obligation of Lender hereunder to make Advances, extend any other credit
hereunder or issue Letters of Credit;

(c) give notice to an Account Debtor or other Person obligated to pay an
Account, a General Intangible, Negotiable Collateral, or other amount due,
notice that the Account, General Intangible, Negotiable Collateral or other
amount due has been assigned to Lender for security and must be paid directly to
Lender and Lender may collect the Accounts, General Intangible and Negotiable
Collateral of each Borrower and each other Loan Party directly, and any
collection costs and expenses shall constitute part of the Obligations under the
Loan Documents;

(d) in Lender’s name or in each Loan Party’s name, as such Loan Party’s agent
and attorney-in-fact, notify the United States Postal Service to change the
address for delivery of mail to any address designated by Lender, otherwise
intercept mail, and receive, open and dispose of such Loan Party’s mail,
applying all Collateral as permitted under this Agreement and holding all other
mail for such Loan Party’s account or forwarding such mail to such Loan Party’s
last known address;

(e) without notice to or consent from any Loan Party or any of its Subsidiaries,
and without any obligation to pay rent or other compensation, take exclusive
possession of all locations where any Loan Party or any of its Subsidiaries
conduct its business or has any rights of possession and use the locations to
store, process, manufacture, sell, use, and liquidate or otherwise dispose of
items that are Collateral, and for any other incidental purposes deemed
appropriate by Lender in good faith; and

(f) exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein, in the other Loan Documents, or otherwise
available to it, all the rights and remedies of a secured party on default under
the Code or any other applicable law.

 

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10.2. Additional Rights and Remedies. Without limiting the generality of the
foregoing, each Borrower expressly agrees that upon the occurrence and during
the continuation of an Event of Default:

(a) Lender, without demand of performance or other demand, advertisement or
notice of any kind (except a notice specified below of time and place of public
or private sale) to or upon any Borrower, any other Loan Party or any other
Person (all and each of which demands, advertisements and notices are hereby
expressly waived to the maximum extent permitted by the Code or any other
applicable law), may take immediate possession of all or any portion of the
Collateral and (i) require Loan Parties to, and each Borrower and each other
Loan Party hereby agrees that it will at its own expense and upon request of
Lender forthwith, assemble all or part of the Collateral as directed by Lender
and make it available to Lender at one or more locations designated by Lender
where such Borrower or other Loan Party conducts business, and (ii) without
notice except as specified below, sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any of Lender’s or Loan Party’s
offices or elsewhere, for cash, on credit, and upon such other terms as Lender
may deem commercially reasonable. Each Borrower and each other Loan Party agrees
that, to the extent notice of sale shall be required by law, at least ten
(10) days’ notice to such Borrower or such other Loan Party of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification and such notice shall constitute a
reasonable “authenticated notification of disposition” within the meaning of
Section 9-611 of the Code. Lender shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Lender may adjourn
any public or private sale from time to time, and such sale may be made at the
time and place to which it was so adjourned. Each Borrower and each other Loan
Party agrees that the internet shall constitute a “place” for purposes of
Section 9-610(b) of the Code. Each Borrower and each other Loan Party agrees
that any sale of Collateral to a licensor pursuant to the terms of a license
agreement between such licensor and such Borrower or such other Loan Party is
sufficient to constitute a commercially reasonable sale (including as to method,
terms, manner, and time) within the meaning of Section 9-610 of the Code;

(b) Lender may, in addition to other rights and remedies provided for herein, in
the other Loan Documents, or otherwise available to it under applicable law and
without the requirement of notice to or upon any Loan Party or any other Person
(which notice is hereby expressly waived to the maximum extent permitted by the
Code or any other applicable law), (i) with respect to any Loan Party’s Deposit
Accounts in which Lender’s Liens are perfected by control under Section 9-104 of
the Code, instruct the bank maintaining such Deposit Account for the applicable
Loan Party to pay the balance of such Deposit Account to or for the benefit of
Lender, and (ii) with respect to any Loan Party’s Securities Accounts in which
Lender’s Liens are perfected by control under Section 9-106 of the Code,
instruct the securities intermediary maintaining such Securities Account for the
applicable Loan Party to (A) transfer any cash in such Securities Account to or
for the benefit of Lender, or (B) liquidate any financial assets in such
Securities Account that are customarily sold on a recognized market and transfer
the cash proceeds thereof to or for the benefit of Lender;

(c) any cash held by Lender as Collateral and all cash proceeds received by
Lender in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral shall be applied against the Obligations in the
order set forth in Section 10.5. In the event the proceeds of Collateral are
insufficient to satisfy all of the Obligations in full, each Borrower and each
other Loan Party shall remain jointly and severally liable for any such
deficiency; and

 

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(d) the Obligations arise out of a commercial transaction, and that if an Event
of Default shall occur, Lender shall have the right to an immediate writ of
possession without notice of a hearing. Lender shall have the right to the
appointment of a receiver for each Loan Party or for the properties and assets
of each Loan Party, and each Borrower and each other Loan Party hereby consents
to such rights and such appointment and hereby waives any objection such
Borrower or such Loan Party may have thereto or the right to have a bond or
other security posted by Lender.

Notwithstanding the foregoing or anything to the contrary contained in
Section 10.1, upon the occurrence of any Default or Event of Default described
in Section 9.4 or Section 9.5, in addition to the remedies set forth above,
without any notice to any Borrower or any other Person or any act by Lender, all
obligations of Lender to provide any further extensions of credit hereunder
shall automatically terminate and the Obligations (other than the Hedge
Obligations), shall automatically and immediately become due and payable and
each Borrower shall be obligated to repay all of such Obligations in full,
without presentment, demand, protest, or notice of any kind, all of which are
expressly waived by each Borrower.

10.3. Disposition of Pledged Interests by Lender. None of the Pledged Interests
existing as of the date of this Agreement are, and none of the Pledged Interests
hereafter acquired on the date of acquisition thereof will be, registered or
qualified under the various federal or state securities laws of the United
States and disposition thereof after an Event of Default may be restricted to
one or more private (instead of public) sales in view of the lack of such
registration. Each Loan Party understands that in connection with such
disposition, Lender may approach only a restricted number of potential
purchasers and further understands that a sale under such circumstances may
yield a lower price for the Pledged Interests than if the Pledged Interests were
registered and qualified pursuant to federal and state securities laws and sold
on the open market. Each Loan Party, therefore, agrees that: (a) if Lender
shall, pursuant to the terms of this Agreement, sell or cause the Pledged
Interests or any portion thereof to be sold at a private sale, Lender shall have
the right to rely upon the advice and opinion of any nationally recognized
brokerage or investment firm (but shall not be obligated to seek such advice and
the failure to do so shall not be considered in determining the commercial
reasonableness of such action) as to the best manner in which to offer the
Pledged Interest or any portion thereof for sale and as to the best price
reasonably obtainable at the private sale thereof; and (b) such reliance shall
be conclusive evidence that Lender has handled the disposition in a commercially
reasonable manner.

10.4. Voting and Other Rights in Respect of Pledged Interests.

(a) Upon the occurrence and during the continuation of an Event of Default,
(i) Lender may, at its option, and with two (2) Business Days prior notice to
such Borrower or such other Loan Party, and in addition to all rights and
remedies available to Lender under any other agreement, at law, in equity, or
otherwise, exercise all voting rights, or any other ownership or consensual
rights (including any dividend or distribution rights) in respect of the Pledged
Interests owned by any Borrower or any other Loan Party, but under no
circumstances is Lender obligated by the terms of this Agreement to exercise
such rights, and (ii) if Lender duly exercises its right to vote any of such
Pledged Interests, each Borrower and each other Loan Party hereby appoints
Lender, such Borrower’s and such Loan Party’s true and lawful attorney-in-fact
and IRREVOCABLE PROXY to vote such Pledged Interests in any manner Lender deems
advisable for or against all matters submitted or which may be submitted to a
vote of shareholders, partners or members, as the case may be. The
power-of-attorney and proxy granted hereby is coupled with an interest and shall
be irrevocable.

 

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(b) For so long as such Borrower or such other Loan Party shall have the right
to vote the Pledged Interests owned by it, such Borrower and such other Loan
Party covenants and agrees that it will not, without the prior written consent
of Lender, vote or take any consensual action with respect to such Pledged
Interests which would materially adversely affect the rights of Lender or the
value of the Pledged Interests.

10.5. Lender Appointed Attorney in Fact. Each Borrower and each other Loan Party
hereby irrevocably appoints Lender its attorney-in-fact, with full authority in
the place and stead of such Borrower and such Loan Party and in the name of such
Borrower or such Loan Party or otherwise, at such time as an Event of Default
has occurred and is continuing, to take any action and to execute any instrument
which Lender may reasonably deem necessary or advisable to accomplish the
purposes of this Agreement, including:

(a) to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in connection
with the Accounts or any other Collateral of such Borrower or such other Loan
Party;

(b) to receive, indorse, and collect any drafts or other instruments, documents,
Negotiable Collateral or Chattel Paper;

(c) to file any claims or take any action or institute any proceedings which
Lender may deem necessary or desirable for the collection of any of the
Collateral of such Borrower or such other Loan Party or otherwise to enforce the
rights of Lender with respect to any of the Collateral;

(d) to repair, alter, or supply Goods, if any, necessary to fulfill in whole or
in part the purchase order of any Person obligated to Borrower or such other
Loan Party in respect of any Account of such Borrower or such other Loan Party;

(e) to use any Intellectual Property or Intellectual Property Licenses of such
Borrower or such other Loan Party including but not limited to any labels,
Patents, Trademarks, trade names, URLs, domain names, industrial designs,
Copyrights, or advertising matter, in preparing for sale, advertising for sale,
or selling Inventory or other Collateral and to collect any amounts due under
Accounts, contracts or Negotiable Collateral of such Borrower or such other Loan
Party;

(f) to take exclusive possession of all locations where each Borrower or other
Loan Party conducts its business or has rights of possession, without notice to
or consent of any Borrower or any Loan Party and to use such locations to store,
process, manufacture, sell, use, and liquidate or otherwise dispose of items
that are Collateral, without obligation to pay rent or other compensation for
the possession or use of any location;

 

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(g) Lender shall have the right, but shall not be obligated, to bring suit in
its own name or in the applicable Loan Party’s name, to enforce the Intellectual
Property and Intellectual Property Licenses and, if Lender shall commence any
such suit, the appropriate Borrower or such other Loan Party shall, at the
request of Lender, do any and all lawful acts and execute any and all proper
documents reasonably required by Lender in aid of such enforcement; and

(h) to the extent permitted by law, such Borrower and each other Loan Party
hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be
done by virtue hereof. This power of attorney is coupled with an interest and
shall be irrevocable until all commitments of Lender under this Agreement to
provide extensions of credit are terminated and all Obligations have been paid
in full in cash.

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

10.7. Crediting of Payments and Proceeds. In the event that the Obligations
(other than the Hedge Obligations, which may be accelerated in accordance with
the terms of the applicable Hedge Agreement) have been accelerated pursuant to
Section 10.1 or the Lender has exercised any remedy set forth in this Agreement
or any other Loan Document, all payments received by Lender upon the Obligations
and all net proceeds from the enforcement of the Obligations shall be applied in
such manner as Lender shall determine in its discretion and, thereafter, to
Borrowers (to be wired to the Designated Account) or such other Person entitled
thereto under applicable law.

10.8. Marshaling. Lender shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of its rights and remedies under this Agreement and under the other Loan
Documents and in respect of such collateral security and other assurances of
payment shall be cumulative and in addition to all other rights and remedies,
however existing or arising. To the extent that it lawfully may, each Borrower
and each other Loan Party hereby agrees that it will not invoke any law relating
to the marshaling of collateral which might cause delay in or impede the
enforcement of Lender’s rights and remedies under this Agreement or under any
other Loan Document or instrument creating or evidencing any of the Obligations
or under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, each Borrower hereby irrevocably waives the
benefits of all such laws.

10.9. License. Each Loan Party hereby grants to Lender a non-exclusive,
worldwide and royalty-free license to use or otherwise exploit all Intellectual
Property rights of such Loan Party for the purpose of: (a) completing the
manufacture of any in-process materials following any Event of Default so that
such materials become saleable Inventory, all in accordance with the same
quality standards previously adopted by such Borrower for its own manufacturing;
and (b) selling, leasing or otherwise disposing of any or all Collateral
following any Event of Default.

 

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11. WAIVERS; INDEMNIFICATION.

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

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

11.3. Indemnification. Each Borrower and each other Loan Party shall pay,
indemnify, defend, and hold the Lender-Related Persons (each, an “Indemnified
Person”) harmless (to the fullest extent permitted by applicable law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution and delivery, enforcement, performance, or
administration (including any restructuring, forbearance or workout with respect
hereto) of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of compliance by each Borrower
and each other Loan Party and each of its Subsidiaries with the terms of the
Loan Documents, (b) with respect to any investigation, litigation, or proceeding
related to this Agreement, any other Loan Document, or the use of the proceeds
of the credit provided hereunder (irrespective of whether any Indemnified Person
is a party thereto), or any act, omission, event, or circumstance in any manner
related thereto, (c) in connection with the custody, preservation, use or
operation of, or, upon an Event of Default, the sale of, collection from, or
other realization upon, any of the Collateral in accordance with this Agreement
and the other Loan Documents, (d) with respect to the failure by any Borrower or
any other Loan Party to perform or observe any of the provisions hereof or any
other Loan Document, (e) in connection with the exercise or enforcement of any
of the rights of Lender hereunder or under any other Loan Document, and (f) in
connection with or arising out of any presence or release of Hazardous Materials
at, on, under, to or from any assets or properties owned, leased or operated by
any Borrower or any other Loan Party or any Subsidiary of a Borrower or any
other Loan Party or any Environmental Actions, Environmental Liabilities or
Remedial Actions related in any way to any such assets or properties of such
Loan Party or any of its Subsidiaries (each and all of the foregoing, the
“Indemnified Liabilities”). The foregoing to the contrary notwithstanding, no
Borrower or any other Loan Party shall have any obligation to any Indemnified
Person under this Section 11.3 with respect to any Indemnified Liability that
(i) a court of competent jurisdiction finally determines to have resulted from
the gross negligence or willful misconduct of such Indemnified Person or its
officers, directors, employees, or attorneys or (ii) arises solely from disputes
between or among

 

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Indemnified Persons. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. If any Indemnified Person makes
any payment to any other Indemnified Person with respect to an Indemnified
Liability as to which a Borrower or any other Loan Party was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by such
Borrower or such other Loan Party with respect thereto. WITHOUT LIMITATION, THE
FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
ANY STRICT LIABILITY OR NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR
OF ANY OTHER PERSON.

12. NOTICES.

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

 

If to any Loan Party:   

c/o IES Holdings, Inc.

5433 Westheimer, Suite 500

Houston, TX 77056

Attn: Tracy McLauchlin and Gail Makode

Fax No. (713) 860-1599

Email: tracy.mclauchlin@ies-co.com

gail.makode@ies-co.com

with courtesy copies to

(which shall not constitute Notice for purposes of this Section 12):

  

Dinsmore & Shohl LLP

255 East Fifth Street, Suite 1900

Cincinnati, Ohio 45202

Attn: Mary Newman, Esq.

Fax No.: (513) 977-8141

Email: mary.newman@dinsmore.com

 

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If to Lender:   

MAC S4101-158

100 W Washington St

15th Floor

Phoenix, AZ

85003-1808

Attn: <Howard I. Handman>Michael L. Gerard

Fax No.: (<602>866)<378> 670 -<6215>1619

Email: <howard.i.handman@wellsfargo.com>michael.l.gerard@wellsfargo.com

with courtesy copies to

(which shall not constitute Notice for purposes of this Section 12)

  

Goldberg Kohn Ltd.

55 East Monroe, Suite 3300

Chicago, Illinois 60603

Attn: William Starshak, Esq.

Fax No. (312) 863-7426

Email: William.Starshak@goldbergkohn.com

Any party hereto may change the address at which it is to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
parties. All notices or demands sent in accordance with this Section 12 shall be
deemed received on the earlier of the date of actual receipt or three
(3) Business Days after the deposit thereof in the mail; provided, that
(a) notices sent by overnight courier service shall be deemed to have been given
when received, (b) notices by facsimile shall be deemed to have been given when
sent (except that, if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next
Business Day for the recipient) and (c) notices by electronic mail shall be
deemed received upon the sender’s receipt of an acknowledgment from the intended
recipient (such as by the “return receipt requested” function, as available,
return email or other written acknowledgment). Any notice given by Lender to any
Borrower as provided in this Section 12 shall be deemed sufficient notice as to
all Loan Parties, regardless of whether each Loan Party is sent a separate copy
of such notice or whether each Loan Party is specifically identified in such
notice.

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR

 

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THERETO AS WELL AS ALL CLAIMS, CONTROVERSIES OR DISPUTES ARISING UNDER OR
RELATED TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE TRIED AND LITIGATED IN THE
STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN
THE CITY OF DALLAS AND THE COUNTY OF DALLAS, STATE OF TEXAS; PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT, AT LENDER’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER
ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. EACH LOAN PARTY AND LENDER WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13(b).

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

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

 

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14. ASSIGNMENTS; SUCCESSORS

This Agreement shall bind and inure to the benefit of the respective successors
and assigns of each of the parties; provided, however, that no Borrower or any
other Loan Party may assign this Agreement or any rights or duties hereunder
without Lender’s prior written consent and any prohibited assignment shall be
absolutely void ab initio. No consent to assignment by the Lender shall release
any Borrower or any other Loan Party from its Obligations. Lender may assign
this Agreement and the other Loan Documents in whole or in part and its rights
and duties hereunder or grant participations in the Obligations hereunder and
thereunder and no consent or approval by any Borrower or any other Loan Party is
required in connection with any such assignment or participation.

15. AMENDMENTS; WAIVERS

No amendment or modification of this Agreement or any other Loan Document or any
other document or agreement described in or related to this Agreement shall be
effective unless it has been agreed to by Lender and Administrative Borrower (on
behalf of itself and each other applicable Loan Party) in a writing that
specifically states that it is intended to amend or modify specific Loan
Documents, or any other document or agreement described in or related to this
Agreement; provided that any amendment contemplated by Section 2.14(c) in
connection with a Benchmark Transition Event or an Early Opt-in Election shall
be effective as contemplated by such Section 2.14(c). No failure by Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Lender in exercising the same, will operate as a waiver
thereof. No waiver by Lender will be effective unless it is in writing, and then
only to the extent specifically stated. No waiver by Lender on any occasion
shall affect or diminish Lender’s rights thereafter to require strict
performance by Borrowers or any other Loan Party of any provision of this
Agreement. Lender’s rights under this Agreement and the other Loan Documents
will be cumulative and not exclusive of any other right or remedy that Lender
may have.

16. TAXES.

(a) All payments made by any Borrower or any other Loan Party hereunder or under
any note or other Loan Document will be made without setoff, counterclaim, or
other defense. In addition, all such payments will be made free and clear of,
and without deduction or withholding for, any present or future Taxes, and in
the event any deduction or withholding of Taxes is required, each Borrower shall
comply with the next sentence of this Section 16(a). If any Taxes are so levied
or imposed, each Borrower and each other Loan Party agrees to pay the full
amount of such Taxes and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement, any note, or Loan
Document, including any amount paid pursuant to this Section 16(a) after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein; provided, however, that Borrowers or Loan
Parties shall not be required to increase any such amounts if the increase in
such amount payable results from Lender’s willful misconduct or gross negligence
(as finally determined by a court of competent jurisdiction). Each Borrower and
each other Loan Party will furnish to Lender as promptly as possible after the
date the payment of any Tax is due pursuant to applicable law, certified copies
of tax receipts evidencing such payment by such Borrower.

 

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(b) Each Borrower agrees to pay any present or future stamp, value added or
documentary taxes or any other excise or property taxes, charges, or similar
levies that arise from any payment made hereunder or from the execution,
delivery, performance, recordation, or filing of, or otherwise with respect to
this Agreement or any other Loan Document.

17. GENERAL PROVISIONS.

17.1. Effectiveness. This Agreement shall be binding and deemed effective when
executed by each Borrower, each other Loan Party and Lender.

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

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

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

17.5. Debtor-Creditor Relationship. The relationship between the Lender, on the
one hand, and the Loan Parties, on the other hand, is solely that of creditor
and debtor. Lender shall not have (and shall not be deemed to have) any
fiduciary relationship or duty to any Loan Party arising out of or in connection
with the Loan Documents or the transactions contemplated thereby, and there is
no agency or joint venture relationship between Lender, on the one hand, and the
Loan Parties, on the other hand, by virtue of any Loan Document or any
transaction contemplated therein.

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

17.7. Revival and Reinstatement of Obligations. If the incurrence or payment of
the Obligations by any Borrower or any other Loan Party or the transfer to
Lender of any property should for any reason subsequently be asserted, or
declared, to be void or voidable under any state or federal law relating to
creditors’ rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or

 

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transfers of property (each, a “Voidable Transfer”), and if Lender is required
to repay or restore, in whole or in part, any such Voidable Transfer, or elects
to do so upon the reasonable advice of its counsel, then, as to any such
Voidable Transfer, or the amount thereof that Lender is required or elects to
repay or restore, and as to all reasonable costs, expenses, and attorneys’ fees
of Lender related thereto, the liability of such Borrower or such other Loan
Party automatically shall be revived, reinstated, and restored and shall exist
as though such Voidable Transfer had never been made and all of Lender’s Liens
in the Collateral shall be automatically reinstated without further action.

17.8. Confidentiality.

(a) Lender agrees that material, non-public information regarding the Loan
Parties and their Subsidiaries, their operations, assets, and existing and
contemplated business plans (“Confidential Information”) shall be treated by
Lender in a confidential manner, and shall not be disclosed by Lender to Persons
who are not parties to this Agreement, except: (i) to attorneys for and other
advisors, accountants, auditors, and consultants to Lender and to employees,
directors and officers of Lender (the Persons in this clause (i), “Lender
Representatives”) on a “need to know” basis in connection with this Agreement
and the transactions contemplated hereby and on a confidential basis, (ii) to
Subsidiaries and Affiliates of Lender<,> (including the Bank Product Providers);
provided, that any such Subsidiary or Affiliate shall have agreed to receive
such information hereunder subject to the terms of this Section 17.8, (iii) as
may be required by regulatory authorities so long as such authorities are
informed of the confidential nature of such information, (iv) as may be required
by statute, decision, or judicial or administrative order, rule, or regulation;
provided, that (x) prior to any disclosure under this clause (iv), the
disclosing party agrees to provide Borrowers with prior notice thereof, to the
extent that it is practicable to do so and to the extent that the disclosing
party is permitted to provide such prior notice to Borrowers pursuant to the
terms of the applicable statute, decision, or judicial or administrative order,
rule, or regulation and (y) any disclosure under this clause (iv) shall be
limited to the portion of the Confidential Information as may be required by
such statute, decision, or judicial or administrative order, rule, or
regulation, (v) as may be agreed to in advance in writing by Borrowers, (vi) as
requested or required by any Governmental Authority pursuant to any subpoena or
other legal process<,>; provided, that<,> (x) prior to any disclosure under this
clause (vi) the disclosing party agrees to provide Borrowers with prior written
notice thereof, to the extent that it is practicable to do so and to the extent
that the disclosing party is permitted to provide such prior written notice to
Borrowers pursuant to the terms of the subpoena or other legal process and
(y) any disclosure under this clause (vi) shall be limited to the portion of the
Confidential Information as may be required by such Governmental Authority
pursuant to such subpoena or other legal process, (vii) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Lender or the Lender Representatives),
(viii) in connection with any assignment, participation or pledge of <any
>Lender’s interest under this Agreement<,>; provided, that prior to receipt of
Confidential Information any such assignee, participant, or pledgee shall have
agreed in writing to receive such Confidential Information <hereunder>either
subject to the terms of this Section 17.8 or pursuant to confidentiality
requirements substantially similar to those contained in this Section 17.8 (and
such Person may disclose such Confidential Information to Persons employed or
engaged by them as described in clause (i) above), (ix) in connection with any
litigation or other adversary proceeding involving parties hereto which such
litigation or adversary proceeding involves claims related to the rights

 

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or duties of such parties under this Agreement or the other Loan Documents; <(x)
to equity owners of each Loan Party>provided, that prior to any disclosure to
any Person (other than any Loan Party, Lender, any of their respective
Affiliates, or their respective counsel) under this clause (ix) with respect to
litigation involving any Person (other than any Borrower, Lender, any of their
respective Affiliates, or their respective counsel), the disclosing party agrees
to provide Borrowers with prior written notice thereof, and (<xi>x) in
connection with, and to the extent reasonably necessary for, the exercise of any
secured creditor remedy under this Agreement or under any other Loan Document.

(b) Anything in this Agreement to the contrary notwithstanding, Lender may
disclose information concerning the terms and conditions of this Agreement and
the other Loan Documents in its marketing or promotional materials, with such
information to consist of deal terms and other information customarily found in
such marketing or promotional materials and may otherwise use the name, logos,
and other insignia of any Borrower or the other Loan Parties and the Maximum
Credit provided hereunder in any “tombstone” or <comparable advertising>other
advertisements, on its website or in other marketing materials of Lender.

17.9. Lender Expenses. Each Borrower and each other Loan Party agrees to pay the
Lender Expenses on the earlier of (a) the first day of the month following the
date on which such Lender Expenses were first incurred, or (b) the date on which
demand therefor is made by Lender and each Borrower and each other Loan Party
agrees that its obligations contained in this Section 17.9 shall survive payment
or satisfaction in full of all other Obligations.

17.10. Setoff. Lender may at any time, in its sole discretion and without demand
or notice to anyone, setoff any liability owed to any Borrower or any Guarantor
or any other Loan Party by Lender against any of the Obligations, whether or not
due.

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

17.12. Patriot Act. Lender hereby notifies <the >Loan Parties that pursuant to
the requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies each Loan Party, which information includes the name
and address of each Loan Party and other information that will allow <such
>Lender to identify each Loan Party in accordance with the Patriot Act. In
addition, <if >Lender <is required by law or regulation or internal policies to
do so, it >shall have the right to periodically conduct <(a) Patriot Act
searches, OFAC/PEP searches, and customary individual background checks for
the>due diligence on all Loan Parties, <and (b) OFAC/PEP searches and customary
individual background checks of the Loan Parties’>their

 

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senior management and key principals<,> and <each Borrower and each other>legal
and beneficial owners. Each Loan Party agrees to cooperate in respect of the
conduct of such <searches>due diligence and further agrees that the reasonable
costs and charges for <such searches>any such due diligence by Lender shall
constitute Lender Expenses hereunder and be for the account of Borrowers.

17.13. Integration. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
REFLECTS THE ENTIRE UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY AND SHALL NOT BE CONTRADICTED OR QUALIFIED BY
ANY OTHER AGREEMENT, ORAL OR WRITTEN, BEFORE THE CLOSING DATE. THE FOREGOING TO
THE CONTRARY NOTWITHSTANDING, ALL BANK PRODUCT AGREEMENTS, IF ANY, ARE
INDEPENDENT AGREEMENTS GOVERNED BY THE WRITTEN PROVISIONS OF SUCH BANK PRODUCT
AGREEMENTS, WHICH WILL REMAIN IN FULL FORCE AND EFFECT, UNAFFECTED BY ANY
REPAYMENT, PREPAYMENTS, ACCELERATION, REDUCTION, INCREASE, OR CHANGE IN THE
TERMS OF ANY CREDIT EXTENDED HEREUNDER, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN SUCH BANK PRODUCT AGREEMENT.

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

 

-58-

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

17.15. Non-Applicability of Chapter 346. Each Loan Party and Lender hereby agree
that except for Section 346.004 thereof, the provisions of Chapter 346 of the
Texas Finance Code (Vernon’s Texas Code Annotated), as amended from time to time
(regulating certain revolving credit loans and revolving tri-party accounts)
shall not apply to this Agreement or any of the other Loan Documents.

17.16. Waiver of Rights under Texas Deceptive Trade Practices Act. EACH LOAN
PARTY HEREBY WAIVES ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES—CONSUMER
PROTECTION ACT, SECTION § 17.41 ET SEQ. TEXAS BUSINESS & COMMERCE CODE, A LAW
THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN
ATTORNEY OF EACH LOAN PARTY’S OWN SELECTION, EACH LOAN PARTY VOLUNTARILY
CONSENTS TO THIS WAIVER. EACH LOAN PARTY EXPRESSLY WARRANTS AND REPRESENTS THAT
IT (A) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO
LENDER, AND (B) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

17.17. Amendment and Restatement. This Agreement amends and restates the
Existing Credit Agreement in its entirety. The Existing Loans and the other
Existing Obligations (including the Obligations identified on the Existing Note)
outstanding under the Existing Credit Agreement shall be governed by and deemed
to be outstanding under the amended and restated terms set forth in this
Agreement and the other Loan Documents, and the Existing Obligations are and
shall continue to be (and all Obligations incurred pursuant hereto shall be)
secured by, among other things, the Existing Collateral as well as the other
Collateral. The execution and delivery of this Agreement, which is made for the
purposes described in the foregoing recitals, shall not effectuate a novation of
any of the Existing Loan Documents, or, except as set forth below, constitute a
release or discharge of the Existing Obligations or the Existing Collateral, but
rather as a substitution of certain terms governing the payment and performance
of such obligations and indebtedness.

[Signature pages to follow]

 

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

 

BORROWERS:

IES HOLDINGS, INC.

IES COMMUNICATIONS, LLC

IES COMMERCIAL, INC.

<IES PURCHASING & MATERIALS, INC.>

IES RESIDENTIAL, INC.

INTEGRATED ELECTRICAL FINANCE, INC.

<IES RENEWABLE ENERGY, LLC>

IES SUBSIDIARY HOLDINGS, INC.

<HK ENGINE COMPONENTS, LLC>

MAGNETECH INDUSTRIAL SERVICES, INC.

SOUTHERN INDUSTRIAL SALES AND SERVICES, INC.

CALUMET ARMATURE AND ELECTRIC, L.L.C.

<SHANAHAN MECHANICAL AND ELECTRICAL, INC.>

IES INFRASTRUCTURE SOLUTIONS, LLC

TECHNIBUS, INC.

FREEMAN ENCLOSURE SYSTEMS, LLC

STRATEGIC EDGE LLC

Each By:  

 

Name: Tracy A. McLauchlin Title: Senior Vice President, CFO & Treasurer

Signature Page to Second Amended and Restated Credit and Security Agreement

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

IES MANAGEMENT LP By:  

INTEGRATED ELECTRICAL FINANCE,

INC., its General Partner

By:  

 

Name:  

<Robert W. Lewey>

Title:  

<President>

 

IES MANAGEMENT ROO, LP

 

By: IES OPERATIONS GROUP, INC.,

       its General Partner

By:  

 

Name:  

<Robert W. Lewey>

Title:  

<President>

 

GUARANTORS:

 

IES CONSOLIDATION, LLC

IES SHARED SERVICES, INC.

<IES PROPERTIES, INC.>

KEY ELECTRICAL SUPPLY, INC.

<IES TANGIBLE PROPERTIES, INC.>

IES OPERATIONS GROUP, INC.

ICS HOLDINGS LLC

Each By:  

 

Name: Tracy A. McLauchlin Title: Senior Vice President, CFO & Treasurer

Signature Page to Second Amended and Restated Credit and Security Agreement

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

LENDER:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

By:  

                              

Name: <Howard I. Handman>Michael L. Gerard Title: Authorized Signatory

Signature Page to Second Amended and Restated Credit and Security Agreement

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

Schedule 1.1

a. Definitions. As used in this Agreement, the following terms shall have the
following definitions:

“Account” means an account (as that term is defined in Article 9 of the Code).

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

“Account Party” has the meaning specified therefor in Section 2.13(g) of this
Agreement.

“Accounts Availability Amount” means, as of any date of determination, the sum
of:

(a). ninety percent (90%) (less the amount, if any, of the Dilution Reserve
applicable to Eligible Accounts, if applicable) of the amount of Eligible
Accounts, plus

(b). the lesser of (x) seventy-five percent (75%) (less the amount, if any, of
the Dilution Reserve applicable to Eligible Progress Billing Accounts, if
applicable) of the amount of Eligible Progress Billing Accounts,
(y) $40,000,000, or (z) sixty percent (60%) of an amount equal to the sum of
clause (a) above plus clause (b) (x) above (after giving effect to any
Reserves).

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

“Additional Documents” has the meaning specified therefor in Section 6.15.

“Advances” has the meaning specified therefor in Section 2.1(a).

“Administrative Borrower” shall mean Parent in its capacity as Administrative
Borrower on behalf of itself and the other Loan Parties pursuant to Section 2.17
hereof and its successors and assigns in such capacity.

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of the definition of Eligible Accounts and
Section 7.12: (a) any Person which owns directly or indirectly ten percent
(10%) or more of the Stock having ordinary voting power for the election of the
board of directors or equivalent governing body of a Person or ten percent
(10%) or more of the partnership or other ownership interests of a Person (other
than as a limited partner of such Person) shall be deemed an Affiliate of such
Person, (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such Person, and (c) each partnership in which a Person is a
general partner shall be deemed an Affiliate of such Person.

 

Schedule 1.1

Page 1

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“Aged Payables Reserve” shall mean an amount equal to the aggregate amount of
Borrowers’ accounts payable that are outstanding more than sixty (60) days past
the due date or more than ninety (90) days past the original invoice date.

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

“Anti-Corruption Laws” means the FCPA, the U.K. Bribery Act of 2010, as amended,
and all other applicable laws and regulations or ordinances concerning or
relating to bribery, money laundering or corruption in any jurisdiction in which
any Loan Party or any of its Subsidiaries or Affiliates is located or is doing
business.

“Anti-Money Laundering Laws” means the applicable laws or regulations in any
jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is
located or is doing business that relates to money laundering, any predicate
crime to money laundering, or any financial record keeping and reporting
requirements related thereto.

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

“Availability” means, as of any date of determination, the amount that Borrowers
are entitled to borrow as Advances under Section 2.1 (after giving effect to all
then outstanding Obligations).

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

“Bank Product Agreements” means those agreements entered into from time to time
by <a>any Loan Party or any of its Subsidiaries with a Bank Product Provider in
connection with the obtaining of any of the Bank Products, including all Cash
Management Documents.

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

 

Schedule 1.1

Page 2

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“Bank Product Obligations” means (a) all obligations<, indebtedness>,
liabilities, reimbursement obligations, fees, or expenses owing by <a>each Loan
Party <or any of>and its Subsidiaries to <Lender or another>any Bank Product
Provider pursuant to or evidenced by a Bank Product Agreement and irrespective
of whether for the payment of money, whether direct or indirect, absolute or
contingent, <liquidated or unliquidated, determined or undetermined, voluntary
or involuntary, due, not >due or to become due, <incurred in the past or >now
existing or hereafter arising, <however arising >and (b) all Hedge
Obligations<.>

, and (c) all amounts that Lender is obligated to pay to a <”>Bank Product
Provider” means Lender or any of its Affiliates <that provide>as a result of
Lender purchasing participations from, or executing guarantees or indemnities or
reimbursement obligations to, a Bank Product Provider with respect to the Bank
Products provided by such Bank Product Provider to a Loan Party or <any of >its
Subsidiaries.

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

“Bank Product Reserve Amount” means, as of any date of determination, the Dollar
amount of reserves that Lender has determined it is necessary or appropriate to
establish (based upon Lender’s reasonable determination of the credit and
operating risk exposure to a Loan Party or any of its Subsidiaries in respect of
Bank Product Obligations) in respect of Bank Products then provided or
outstanding.

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

“Batavia Real Property” means that certain Real Property located at 4160 Half
Acre Road, Batavia, Ohio 45103.

“Benchmark Replacement” means the sum of: (a) the alternate benchmark rate
(which may include Term SOFR) that has been selected by Lender and
Administrative Borrower giving due consideration to (i) any selection or
recommendation of a replacement rate or the mechanism for determining such a
rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing
market convention for determining a rate of interest as a replacement to Daily
Three Month LIBOR for similar United States dollar-denominated syndicated credit
facilities and (b) the Benchmark Replacement Adjustment; provided that, if the
Benchmark Replacement as so determined would be less than zero, the Benchmark
Replacement shall be deemed to be zero for the purposes of this Agreement.

“Benchmark Replacement Adjustment” means, with respect to any replacement of
Daily Three Month LIBOR with an Unadjusted Benchmark Replacement, the spread
adjustment, or method for calculating or determining such spread adjustment,
(which may be a positive or negative value or zero) as may be agreed between
Lender and Administrative Borrower, in each case giving due consideration to
(i) any selection or recommendation of a spread adjustment, or method for
calculating or determining such spread adjustment, for the replacement of Daily
Three Month LIBOR, with the applicable Unadjusted Benchmark Replacement by the
relevant governmental body or (ii) any evolving or then-prevailing market
convention for determining a spread adjustment, or method for calculating or
determining such spread adjustment, for the replacement of Daily Three Month
LIBOR, with the applicable Unadjusted Benchmark Replacement for similar United
States dollar-denominated syndicated credit facilities, at such time.

 

Schedule 1.1

Page 3

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

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark
Replacement, any technical, administrative or operational changes (including
changes to the definition of “Prime Rate”, timing and frequency of determining
rates and making payments of interest and other administrative matters) that
Lender decides may be appropriate to reflect the adoption and implementation of
such Benchmark Replacement and to permit the administration thereof by Lender in
a manner substantially consistent with market practice (or, if Lender decides
that adoption of any portion of such market practice is not administratively
feasible or if Lender determines that no market practice for the administration
of the Benchmark Replacement exists, in such other manner of administration as
Lender decides in consultation with Administrative Borrower is reasonably
necessary in connection with the administration of this Agreement).

“Benchmark Replacement Date” means the earlier to occur of the following events
with respect to Daily Three Month LIBOR:

(a) in the case of clause (a) or (b) of the definition of “Benchmark Transition
Event,” the later of (i) the date of the public statement or publication of
information referenced therein and (ii) the date on which the administrator of
Daily Three Month LIBOR permanently or indefinitely ceases to provide Daily
Three Month LIBOR; or

(b) in the case of clause (c) of the definition of “Benchmark Transition Event,”
the date specified by Lender by notice to Administrative Borrower and Lenders.

“Benchmark Transition Event” means the occurrence of one or more of the
following events with respect to Daily Three Month LIBOR:

(a) a public statement or publication of information by or on behalf of the
administrator of Daily Three Month LIBOR, announcing that such administrator has
ceased or will cease to provide Daily Three Month LIBOR, permanently or
indefinitely, provided that, at the time of such statement or publication, there
is no successor administrator that will continue to provide Daily Three Month
LIBOR;

(b) a public statement or publication of information by the regulatory
supervisor for the administrator of Daily Three Month LIBOR, the Federal Reserve
System of the United States (or any successor), or an insolvency official with
jurisdiction over the administrator for Daily Three Month LIBOR or any court or
an entity with similar insolvency or resolution authority over the administrator
for Daily Three Month LIBOR, which states that such administrator has ceased or
will cease on a specified date to provide Daily Three Month LIBOR permanently or
indefinitely; provided that, at the time of such statement or publication, there
is no successor administrator that will continue to provide Daily Three Month
LIBOR; or

(c) a public statement or publication of information by the regulatory
supervisor for the administrator of Daily Three Month LIBOR announcing that
Daily Three Month LIBOR is no longer representative.

 

Schedule 1.1

Page 4

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

“Benchmark Transition Start Date” means (a) in the case of a Benchmark
Transition Event, the earlier of (i) the applicable Benchmark Replacement Date
and (ii) if such Benchmark Transition Event is a public statement or publication
of information of a prospective event, the 90th day prior to the expected date
of such event as of such public statement or publication of information (or if
the expected date of such prospective event is fewer than 90 days after such
statement or publication, the date of such statement or publication) and (b) in
the case of an Early Opt-in Election, the date specified by Lender by notice to
Administrative Borrower.

“Benchmark Unavailability Period” means, if a Benchmark Transition Event and its
related Benchmark Replacement Date have occurred with respect to Daily Three
Month LIBOR, and solely to the extent that such rate has not been replaced with
a Benchmark Replacement, the period (x) beginning at the time that such
Benchmark Replacement Date has occurred if, at such time, no Benchmark
Replacement has replaced such rate for all purposes hereunder in accordance with
Section 2.14(c) and (y) ending at the time that a Benchmark Replacement has
replaced such rate for all purposes hereunder pursuant to Section 2.14(c).

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

“Board of Directors” means the board of directors (or comparable managers) of a
Borrower or any other Loan Party or any committee thereof duly authorized to act
on behalf of the board of directors (or comparable managers).

“Books” means books and records (including a Borrower’s or any other Loan
Party’s Records indicating, summarizing, or evidencing such Borrower’s or such
other Loan Party’s assets (including the Collateral) or liabilities, such
Borrower’s or such other Loan Party’s Records relating to such Borrower’s or
such other Loan Party’s business operations or financial condition, or such
Borrower’s or such other Loan Party’s Goods or General Intangibles related to
such information).

“Bonded Accounts” as to any Borrower, all now owned or hereafter acquired
accounts (as defined in the UCC) and (whether included in such definition)
accounts receivable; and proceeds (other than such proceeds which are negotiable
instruments or cash or Cash Equivalents in the possession or control of Lender),
including without limitation, all insurance proceeds and letter of credit
proceeds, in each case solely to the extent such accounts, accounts receivable,
and proceeds arise out of a Bonded Contract, including, but not limited to,
Bonded Retainage, and all forms of obligations whatsoever owing to any Loan
Party under instruments and documents of title constituting the foregoing or
proceeds thereof; and all rights, securities, and guarantees with respect to
each of the foregoing.

“Bonded Contract” the contracts listed on Schedule 5.33 to the Information
Certificate on the Closing Date and any future contract in respect of which any
Surety Bond is issued on behalf of any Borrower and Lender receives written
notice of such Surety Bond from Borrower prior to any Account related thereto
being included in the Borrowing Base or reported on a Borrowing Base
Certificate.

 

Schedule 1.1

Page 5

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

“Bonded Equipment” all now owned or hereafter acquired right, title and interest
with respect to Equipment (as defined in the UCC), owned by a Borrower and
(whether or not included in such definition) all other personal property in each
case which is delivered to, prefabricated for or specifically ordered for a
Bonded Job Site, whether or not the same will be deemed to be affixed to, arise
out of or relate to any real property, together with all accessions thereto.

“Bonded Inventory” all now owned and hereafter acquired inventory of Borrowers,
including, without limitation, goods, merchandise and other personal property in
each case which is furnished under any Bonded Contract, all raw materials, work
in process, finished goods and materials and supplies of any kind, nature or
description in each case which is delivered to, prefabricated for or
specifically ordered for a Bonded Job Site.

“Bonded Job Site” the site specified in a Bonded Contract where any Borrower is
to perform the specialized electrical and communication services required
thereunder, including all other labor, materials, equipment and services
provided or to be provided to fulfill its obligations thereunder.

“Bonded Retainage” contract proceeds periodically withheld by an account debtor
to provide further security for the performance by any Borrower of a Bonded
Contract, and as such are payable to it only upon a clear demonstration of
compliance with terms of the Bonded Contract.

“Borrowers” means, jointly and severally, Parent; IES Communications, LLC, a
Delaware limited liability company; IES Commercial, Inc., a Delaware
corporation; IES Management LP, a Texas limited partnership; IES Management ROO,
LP, a Texas limited partnership; IES <Purchasing & Materials, Inc., a Delaware
corporation; IES >Residential, Inc., a Delaware corporation; Integrated
Electrical Finance, Inc., a Delaware corporation; IES Subsidiary Holdings, Inc.,
a Delaware corporation; Magnetech Industrial Services, Inc., an Indiana
corporation; <HK Engine Components, LLC, an Indiana limited liability company;
IES Renewable Energy, LLC, a Delaware limited liability company; >Southern
Industrial Sales and Services, Inc., a Georgia corporation d/b/a Southern
Rewinding and Sales; Calumet Armature and Electric, L.L.C., an Illinois limited
liability company; <Shanahan Mechanical and Electrical, Inc., a Nebraska
corporation; >IES Infrastructure Solutions, LLC, a Delaware limited liability
company; Technibus, Inc., a Delaware corporation; Freeman Enclosure Systems,
LLC, an Ohio limited liability company; Strategic Edge, LLC, an Ohio limited
liability company; and any other Person that becomes a Borrower pursuant to a
joinder agreement entered into pursuant to Section 6.16 hereof.

“Borrowing” means a borrowing consisting of Advances (i) requested by Borrowers,
(ii) made automatically pursuant to Section 2.3(c) without the request of
Borrowers, (iii) made by Lender pursuant to Section 2.6(c), or (iv) a Protective
Advance.

 

Schedule 1.1

Page 6

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

(a) the Accounts Availability Amount, plus:

(b) the lowest of

(i) $5,000,000,

(ii) sixty-five percent (65%) of the Value of Eligible Inventory, or

(iii) eighty-five percent (85%) times the most recently determined Net
Liquidation Percentage times the Value of Eligible Inventory, plus

(c) Existing Fixed Asset Availability, plus

(d) Fixed Asset Availability, plus

(e) <Real Estate Availability>[Reserved]; minus

(f) the Aged Payables Reserve, minus

(g) the aggregate amount of Reserves, if any, established by Lender.

“Borrowing Base Certificate” means a form of borrowing base certificate in form
and substance acceptable to Lender.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close pursuant to the rules and
regulations of the Federal Reserve System.

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP,
whether such expenditures are paid in cash or financed.

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

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

“Cash Collateralized Letter of Credit” means a Letter of Credit for which cash
collateral has been provided pursuant to clause (a) of the definition of “Letter
of Credit Collateralization.”

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and having
one of the two highest ratings obtainable from either Standard & Poor’s Rating
Group (“S&P”) or Moody’s Investors

 

Schedule 1.1

Page 7

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Service, Inc. (“Moody’s”), (c) commercial paper maturing no more than two
hundred seventy (270) days from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody’s, (d) certificates of deposit, time deposits, overnight bank deposits or
bankers’ acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof or the District of Columbia or any United States branch of a foreign
bank having combined capital and surplus of not less than $250,000,000,
(e) Deposit Accounts maintained with (i) any bank that satisfies the criteria
described in clause (d) above, or (ii) any other bank organized under the laws
of the United States or any state thereof so long as the full amount maintained
with any such other bank is insured by the Federal Deposit Insurance
Corporation, (f) repurchase obligations of any commercial bank satisfying the
requirements of clause (d) of this definition or recognized securities dealer
having combined capital and surplus of not less than $250,000,000, having a term
of not more than seven (7) days, with respect to securities satisfying the
criteria in clauses (a) or (d) above, (g) debt securities with maturities of six
months or less from the date of acquisition backed by standby letters of credit
issued by any commercial bank satisfying the criteria described in clause
(d) above, and (h) Investments in money market funds substantially all of whose
assets are invested in the types of assets described in clauses (a) through
(g) above.

“Cash Management Documents” means the agreements governing each of the Cash
Management Services of Lender utilized by a Borrower which agreements shall
currently include the Master Agreement for Treasury Management Services or other
applicable treasury management services agreement, the “Acceptance of Services”,
the “Service Description” governing each such treasury management service used
by a Borrower, and all replacement or successor agreements which govern such
Cash Management Services of Lender.

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

“Cash Management Transition Period” has the meaning specified in
Section 6.12(j)(i).

“CFC” means a controlled foreign corporation (as that term is defined in the
IRC).

“Change in Law” means the occurrence after the date of this Agreement of:
(a) the adoption or effectiveness of any law, rule, regulation, judicial ruling,
judgment or treaty, (b) any change in any law, rule, regulation, judicial
ruling, judgment or treaty or in the administration, interpretation,
implementation or application by any Governmental Authority of any law, rule,
regulation, guideline or treaty, or (c) the making or issuance by any
Governmental Authority of any request, rule, guideline or directive, whether or
not having the force of law; provided, that notwithstanding anything in this
Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives thereunder or
issued in connection therewith, and (ii) all requests, rules, guidelines or
directives concerning capital adequacy 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 shall,
in each case, be deemed to be a “Change in Law,” regardless of the date enacted,
adopted or issued.

 

Schedule 1.1

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“Change of Control” means that (a) Permitted Holders fail to own and control,
directly or indirectly, fifty percent (50%), or more, of the Stock of Parent
having the right to vote for the election of members of the board of directors
of Parent, (b) a majority of the members of the board of directors of Parent do
not constitute Continuing Directors, (c) each Borrower fails to own and control,
directly or indirectly, one hundred percent (100%) of the Stock of each of its
Subsidiaries (other than STR Mechanical), (d) IES Commercial or another Loan
Party (subject to execution of a Pledged Interests Addendum pursuant to
Section 6.12(h)(iii)) ceases to own eighty percent (80%) (or such greater amount
that IES Commercial or another Loan Party may own from time to time following
the Closing Date) of the membership interests of STR Mechanical, or (e) IES
Commercial or another Loan Party (subject to execution of a Pledged Interests
Addendum pursuant to Section 6.12(h)(iii)) ceases to own eighty percent
(80%) (or such greater amount that IES Commercial or another Loan Party may own
from time to time following the Closing Date) of the membership interests of
NEXT. <.>

“Chattel Paper” means chattel paper (as that term is defined in the Code), and
includes tangible chattel paper and electronic chattel paper.

“Chartis” means Chartis Property Casualty Company or any of its Affiliates or
Subsidiaries, including, without limitation, National Union Fire Insurance
Company of Pittsburgh, Pa.

“Chartis Intercreditor” means an Intercreditor Agreement entered into after
August 9, 2012 by and among Lender, Chartis and certain Loan Parties, in form
and substance satisfactory to Lender in its sole and absolute discretion, as the
same may be amended, amended and restated or otherwise modified from time to
time.

“Closing Date” means April 10, 2017.

“Code” means the Texas Uniform Commercial Code, as in effect from time to time;
provided, however, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, priority, or remedies with
respect to Lender’s Lien on any Collateral is governed by the Uniform Commercial
Code as enacted and in effect in a jurisdiction other than the State of Texas,
the term “Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority, or remedies. To the extent
that defined terms set forth herein shall have different meanings under
different Articles under the Uniform Commercial Code, the meaning assigned to
such defined term under Article 9 of the Uniform Commercial Code shall control.

“Collateral” means, other than the Excluded Collateral, all of each Loan Party’s
now owned or hereafter acquired:

(a) Accounts;

 

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(b) Books;

(c) Chattel Paper;

(d) Deposit Accounts;

(e) Goods, including Equipment and Fixtures;

(f) General Intangibles, including, without limitation, Intellectual Property
and Intellectual Property Licenses;

(g) Inventory;

(h) Investment Related Property;

(i) Negotiable Collateral;

(j) Supporting Obligations;

(k) Commercial Tort Claims;

(l) money, Cash Equivalents, or other assets of such Loan Party that now or
hereafter come into the possession, custody, or control of Lender (or its agent
or designee); and

(m) all of the proceeds (as such term is defined in the Code) and products,
whether tangible or intangible, of any of the foregoing, including proceeds of
insurance or Commercial Tort Claims covering or relating to any or all of the
foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts,
Equipment, Fixtures, General Intangibles (including, without limitation,
Intellectual Property and Intellectual Property Licenses), Inventory, Investment
Related Property, Negotiable Collateral, Supporting Obligations, money, or other
tangible or intangible property resulting from the sale, lease, license,
exchange, collection, or other disposition of any of the foregoing, the proceeds
of any award in condemnation with respect to any of the foregoing, any rebates
or refunds, whether for taxes or otherwise, and all proceeds of any such
proceeds, or any portion thereof or interest therein, and the proceeds thereof,
and all proceeds of any loss of, damage to, or destruction of the above, whether
insured or not insured, and, to the extent not otherwise included, any
indemnity, warranty, or guaranty payable by reason of loss or damage to, or
otherwise with respect to any of the foregoing (collectively, the “Proceeds”).
Without limiting the generality of the foregoing, the term “Proceeds” includes
whatever is receivable or received when Investment Related Property or proceeds
are sold, exchanged, collected, or otherwise disposed of, whether such
disposition is voluntary or involuntary, and includes proceeds of any indemnity
or guaranty payable to such Loan Party or Lender from time to time with respect
to any of the Investment Related Property.

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in the Books, Equipment, Accounts or Inventory of any Loan Party or any of its
Subsidiaries, in each case, in favor of Lender with respect to the Collateral at
such premises or otherwise in the custody, control or possession of such lessor,
warehouseman, processor, consignee or other Person and in form and substance
reasonably satisfactory to Lender.

 

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“Collection Account” means the Deposit Account identified on Schedule A-1.

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

“Commercial Tort Claims” means commercial tort claims (as that term is defined
in the Code), and includes those commercial tort claims listed on Schedule
5.6(d) to the Information Certificate (as such Schedule may be updated from time
to time pursuant to Section 6.12(e)).

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1, et
seq., as in effect from time to time).

“Compliance Certificate” means a certificate substantially in the form of
Exhibit A delivered by the chief financial officer of each Borrower to Lender.

“Confidential Information” has the meaning specified therefor in Section 17.8.

“Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Parent on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors Parent after the
Closing Date if such individual was approved, appointed or nominated for
election to the Board of Directors by either the Permitted Holders or a majority
of the Continuing Directors, but excluding any such individual originally
proposed for election in opposition to the Board of Directors in office at the
Closing Date in an actual or threatened election contest relating to the
election of the directors (or comparable managers) of Parent and whose initial
assumption of office resulted from such contest or the settlement thereof.

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Lender, executed and delivered by a Loan Party or any Subsidiary
of a Loan Party, Lender, and the applicable securities intermediary (with
respect to a Securities Account) or bank (with respect to a Deposit Account) or
issuer, (with respect to uncertificated securities).

“Copyrights” means any and all rights in any works of authorship, including
(i) copyrights and moral rights, (ii) copyright registrations and recordings
thereof and all applications in connection therewith including those listed on
Schedule 5.26(b) to the Information Certificate (as such Schedule may be updated
from time to time to reflect changes resulting from transactions permitted under
this Agreement), (iii) income, license fees, royalties, damages, and payments
now and hereafter due or payable under and with respect thereto, including
payments under all licenses entered into in connection therewith and damages and
payments for past, present, or future infringements thereof, (iv) the right to
sue for past, present, and future infringements thereof, and (v) all of each
Borrower’s and each other Loan Party’s rights corresponding thereto throughout
the world.

 

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“Copyright Security Agreement” means each Copyright Security Agreement executed
and delivered by a Borrower or another Loan Party and Lender, in form and
substance acceptable to Lender.

“Credit Facility” means the Revolving Credit Facility.

“Daily Balance” means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed at the end of such day.

“Daily Three Month LIBOR” means, for any day the rate per annum <(rounded upward
to the nearest whole 1/8th of 1%) >for United States dollar deposits
<quoted>determined by Lender for the purpose of calculating the effective
<Interest Rate>interest rate for loans that reference Daily Three Month LIBOR as
the Inter-Bank Market Offered Rate in effect from time to time for the 3 month
delivery of funds in amounts approximately equal to the principal amount of such
loans (and, if such rate is below zero, Daily Three Month LIBOR shall be deemed
to be zero). Borrowers understand and agree that Lender may base its
<quotation>determination of the Inter-Bank Market Offered Rate upon such offers
or other market indicators of the Inter-Bank Market as Lender in its discretion
deems appropriate, including but not limited to the rate offered for U.S. dollar
deposits on the London Inter-Bank Market. When interest is determined hereunder
in relation to Daily Three Month LIBOR, each change in the interest rate
hereunder shall become effective each Business Day that Lender determines that
Daily Three Month LIBOR has changed.

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

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

“Designated Account” means the operating Deposit Account of Borrowers at Lender
identified on Schedule D-1.

“Dilution” means, as of any date of determination, a percentage that is, for the
trailing twelve months, the result of dividing the Dollar amount of (a) bad debt
write-downs, discounts, credits, deductions, or other dilutive items as
determined by Lender with respect to Borrowers’ Accounts by (b) Borrowers’
billings with respect to accounts.

“Dilution Reserve” means, as of any date of determination, an amount sufficient
to reduce the advance rate against (i) Eligible Accounts by one (1) percentage
point for each percentage point by which Dilution is in excess of two and
one-half of one percent (2.5%) and (ii) Eligible Progress Billing Accounts by
one (1) percentage point for each percentage point by which Dilution is in
excess of five percent (5.0%).

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

“Drawing Document” means any Letter of Credit or other document presented for
purposes of drawing under any Letter of Credit, including by electronic
transmission such as SWIFT, electronic mail, facsimile or computer generated
communication.

 

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“Early Opt-in Election” means the occurrence of: (a) a determination by Lender
that United States dollar-denominated syndicated credit facilities being
executed at such time, or that include language similar to that contained in
Section 2.14(c) are being executed or amended, as applicable, to incorporate or
adopt a new benchmark interest rate to replace Daily Three Month LIBOR and
(b) the election by Lender to declare that an Early Opt-in Election has occurred
and the provision by Lender of written notice of such election to Administrative
Borrower.

“EBITDA” means, with respect to any fiscal period, the consolidated net income
(or loss), of Borrowers and their Subsidiaries, minus (a) extraordinary gains,
(b) interest income, and (c) non-operating income and income tax benefits and
decreases in any change in LIFO reserves, plus (a) stock compensation expense,
(b) non-cash extraordinary losses (including, but not limited to, a non-cash
impairment charge or write-down), (c) Interest Expense, (d) income taxes,
(e) depreciation and amortization and increases in any change in LIFO reserves
for such period, and (f) net operating losses and expenses associated with
winding down IES Commercial Inc.’s commercial and industrial branches in Denver,
Colorado and Roanoke, Virginia, not to exceed $5,000,000 in the aggregate , in
each case, determined on a consolidated basis in accordance with GAAP; provided,
that if any Loan Party makes an Acquisition after the Closing Date consented to
by Lender, EBITDA for such fiscal period shall be calculated after giving pro
forma effect thereto assuming that such transaction has occurred on the first
day of such period (including pro forma adjustments arising out of events which
are directly attributable to such Acquisition, are factually supportable, and
are expected to have a continuing impact, in each case to be reasonably agreed
to by Lender).

<”EBITDA Covenant Testing Period” means a period (a) commencing on the last day
of the Borrowers most recently ended fiscal quarter prior to an EBITDA Covenant
Trigger Event and (b) continuing through and including the first day after such
EBITDA Covenant Trigger Event that Excess Availability has equaled or exceeded
the greater of (i) 30% of the Maximum Revolver Amount, and (ii) $30,000,000 for
the prior 30 consecutive days as set forth on any applicable Compliance
Certificate delivered pursuant to Schedule 6.1 of this Agreement or as
calculated by Borrower in the Borrowing Base Certificate provided on the 23rd
day of each month pursuant to Schedule 6.2 of the Agreement.>

<”EBITDA Covenant Trigger Event” means if Excess Availability, after giving
effect to the applicable Borrowing Base Certificate delivered pursuant to
Schedule 6.2 of this Agreement, is >less than the greater of (<i) 30>% of the
Maximum Revolver Amount, and (<ii) $30,000,000.>

“Eligible Accounts” means those Accounts, other than Eligible Progress Billing
Accounts, created by each Borrower in the ordinary course of its business, that
arise out of such Borrower’s sale of Goods or rendition of services, that comply
with each of the representations and warranties respecting Eligible Accounts
made in the Loan Documents, and that are not excluded as ineligible by virtue of
one or more of the excluding criteria set forth below. In determining the amount
to be included, Eligible Accounts shall be calculated net of customer deposits,
credits and unapplied cash. Eligible Accounts shall not include the following:

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

 

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(b) Accounts with selling terms of more than thirty (30) days;

(c) Accounts owed by an Account Debtor (or its Affiliates) where fifty percent
(50%) or more of all Accounts owed by that Account Debtor (or its Affiliates)
are deemed ineligible under clauses (a) or (b) above or clauses (i) or
(s) below;

(d) Accounts with respect to which the Account Debtor is an Affiliate, agent or
equity owner of such Borrower or an employee or agent of such Borrower or any
Affiliate of such Borrower;

(e) Accounts arising in a transaction wherein Goods are placed on consignment or
are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, or
any other terms by reason of which the payment by the Account Debtor may be
conditional or contingent;

(f) Accounts that are not payable in Dollars;

(g) Accounts with respect to which the Account Debtor either (i) does not
maintain its chief executive office in the United States or Canada, or (ii) is
not organized under the laws of the United States or any state thereof or
Canada, or (iii) is the government of any foreign country or sovereign state, or
of any state, province, municipality, or other political subdivision thereof, or
of any department, agency, public corporation, or other instrumentality thereof,
unless (x) the Account is supported by an irrevocable letter of credit
reasonably satisfactory to Lender (as to form, substance, and issuer or domestic
confirming bank) that has been delivered to Lender and is directly drawable by
Lender (or Lender is otherwise satisfied in its sole discretion that in can
enforce same or cause Borrower to enforce same for Lender’s benefit), (y) the
Account is covered by credit insurance in form, substance, and amount, and by an
insurer, reasonably satisfactory to Lender, or (z) the Account is guaranteed
pursuant to an approved working capital guarantee from the Export-Import Bank of
the United States in favor of Lender (or Lender is otherwise satisfied in its
sole discretion that in can enforce same or cause Borrower to enforce same for
Lender’s benefit) and acceptable to Lender in all respects;

(h) [reserved];

(i) Accounts with respect to which the Account Debtor is a creditor of such
Borrower (unless such Account Debtor has delivered Lender a “non-offset” letter
acceptable to Lender), has or has asserted a right of setoff, or has disputed
its obligation to pay all or any portion of the Account, to the extent of such
claim, right of setoff, or dispute;

(j) That portion of Accounts which reflect a reasonable reserve for warranty
claims or returns or amounts which are owed to Account Debtors, including those
for rebates, allowances, co-op advertising, new store allowances or other
deductions;

(k) Accounts owing by a single Account Debtor or group of Affiliated Account
Debtors whose total obligations owing to Borrower exceed fifteen (15%) percent
of the aggregate amount of all otherwise Eligible Accounts and Eligible Progress
Billing Accounts (but the portion of the Accounts not in excess of the foregoing
applicable percentages may be deemed Eligible Accounts), such percentages being
subject to reduction in Lenders Permitted Discretion if the creditworthiness of
such Account Debtor deteriorates;

 

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

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

(n) Accounts representing credit card sales or “C.O.D.” sales;

(o) Accounts that are not subject to a valid and perfected first priority Lien
in favor of Lender or that are subject to any other Lien;

(p) Accounts that consist of progress billings (such that the services giving
rise to such receivables have not been fully performed by the applicable
Borrower) or retainage invoices;

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

(r) that portion of Accounts which represent finance charges, service charges,
sales taxes or excise taxes;

(s) that portion of Accounts which has been restructured, extended, amended or
otherwise modified, other than in connection with a change order in the ordinary
course of business;

(t) bill and hold invoices, except those with respect to which Lender shall have
received an agreement in writing from the Account Debtor, in form and substance
satisfactory to Lender, confirming the unconditional obligation of the Account
Debtor to take the Goods related thereto and pay such invoice, so long as such
Accounts satisfy all other criteria for Eligible Accounts hereunder;

(u) Accounts which have not been invoiced;

(v) Accounts constituting (i) Proceeds of copyrightable material unless such
copyrightable material shall have been registered with the United States
Copyright Office, or (ii) Proceeds of patentable inventions unless such
patentable inventions have been registered with the United States Patent and
Trademark Office;

(w) Accounts acquired in connection with the Permitted Acquisition, until the
completion of an examination of such Accounts, in each case, reasonably
satisfactory to Lender;

(x) Accounts that constitute Bonded Accounts;

(y) that portion of Accounts that represent billings in excess of cost; and

 

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(z) Accounts or that portion of Accounts otherwise deemed ineligible by Lender
in its Permitted Discretion.

Any Accounts which are not Eligible Accounts shall nonetheless constitute
Collateral.

“Eligible Equipment” means Equipment owned by a Borrower designated by Lender as
eligible from time to time in its sole discretion, but excluding Equipment
having any of the following characteristics:

(a) Equipment at premises other than those owned by any Borrower, unless Lender
shall have entered into a Collateral Access Agreement with the owner, operator
or lessor of such premises and shall have received such other documents,
instruments and agreements as Lender may request;

(b) Equipment that is subject to any Lien other than in favor of Lender;

(c) Equipment located outside the United States of America;

(d) Equipment that is not subject to the first priority, valid and perfected
security interest of Lender;

(e) damaged or defective Equipment or Equipment not used or usable in the
ordinary course of Borrowers’ business as presently conducted or Equipment which
is obsolete or not currently saleable or has been removed from service;

(f) Equipment that is not covered by “all risk” hazard insurance for an amount
equal to its replacement cost;

(g) Equipment that requires proprietary software in order to operate in the
manner in which it is intended when such software is not freely assignable to
Lender or any potential purchaser of such Equipment;

(h) Equipment consisting of computer hardware or software,; or

(i) Equipment otherwise deemed unacceptable by Lender in its Permitted
Discretion.

Any Equipment which is not Eligible Equipment shall nonetheless constitute
Collateral.

“Eligible Inventory” means Inventory consisting of first quality finished goods
held for sale in the ordinary course of each Borrower’s business, that complies
with each of the representations and warranties respecting Eligible Inventory
made in the Loan Documents, and that is not excluded as ineligible by virtue of
one or more of the excluding criteria set forth below. An item of Inventory
shall not be included in Eligible Inventory if:

(a) such Borrower does not have good, valid, and marketable title thereto;

 

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(b) it consists of work-in-process Inventory, components which are not part of
finished goods, supplies used or consumed in such Borrower’s business, or Goods
that constitute spare parts, maintenance parts, packaging and shipping
materials, or sample inventory or customer supplied parts or Inventory;

(c) it consists of Inventory that is perishable or live or where less than 8
weeks remain until the Inventory’s stated expiration or “sell-by” or “use by”
date;

(d) such Borrower does not have actual and exclusive possession thereof (either
directly or through a bailee or agent of such Borrower);

(e) it is not located at one of the locations in the continental United States
set forth on Schedule 5.29 to the Information Certificate (as such Schedule may
be updated from time to time to reflect changes resulting from transactions
permitted under this Agreement);

(f) it is stored at locations holding less than $50,000 of the aggregate value
of such Borrower’s Inventory;

(g) it is in-transit to or from a location of such Borrower (other than in
transit from one location set forth on Schedule 5.29 to the Information
Certificate (as such Schedule may be updated from time to time to reflect
changes resulting from transactions permitted under this Agreement)to another
location set forth on Schedule 5.29 to the Information Certificate (as such
Schedule may be updated from time to time to reflect changes resulting from
transactions permitted under this Agreement));

(h) it is located on real property leased by such Borrower or in a contract
warehouse, in each case, unless it is subject to a Collateral Access Agreement
executed by the lessor or warehouseman, as the case may be, and unless it is
segregated or otherwise separately identifiable from Goods of others, if any,
stored on the premises;

(i) it is the subject of a bill of lading or other document of title;

(j) it is on consignment from any consignor; or on consignment to any consignee
or subject to any bailment unless the consignee or bailee has (i) executed an
agreement with Lender, and (ii) provided evidence acceptable to Lender that the
applicable Borrower has properly perfected a first priority security interest in
such consigned Inventory and has properly notified in writing the other
creditors of consignee who hold an interest in such Inventory of Borrower’s
security interest in such Inventory, and (iii) the applicable Borrower has taken
such other actions with respect to such consigned Inventory as Lender may
reasonably request;

(k) it is not subject to a valid and perfected first priority Lender’s Lien;

(l) it consists of goods returned or rejected by such Borrower’s customers;

(m) it consists of Goods that are damaged, defective, obsolete or slow moving;

(n) Inventory that such Borrower has returned, has attempted to return, is in
the process of returning or intends to return to the vendor of such Inventory;

 

Schedule 1.1

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(o) it consists of Goods that are restricted or controlled, or regulated items;

(p) it consists of Goods that are bill and hold Goods;

(q) it consists of damaged or defective Goods or “seconds”;

(r) it is subject to third party trademark, licensing or other proprietary
rights, unless Lender is satisfied that such Inventory can be freely sold by
Lender on and after the occurrence of an Event of a Default despite such third
party rights;

(s) it consists of customer-specific Inventory not supported by purchase orders;

(t) it consists of Bonded Inventory;

(u) Lender has not completed an initial appraisal and field examination of such
Inventory, in each case, reasonably satisfactory to Lender; or

(v) Inventory otherwise deemed ineligible by Lender in its Permitted Discretion.

Any Inventory which is not Eligible Inventory shall nonetheless constitute
Collateral.

“Eligible Progress Billing Accounts” means those Accounts, other than Eligible
Accounts, created by each Borrower in the ordinary course of its business, which
represent progress or milestone billings or which are otherwise conditioned upon
the applicable Borrower’s completion of any further performance or service, that
(a) are in accordance with the applicable billing procedures, performance
thresholds and other provisions of an executed contract or other documentation
satisfactory to Lender in its Permitted Discretion with the applicable Account
Debtor, (b) do not require a period of more than forty-eight (48) months for the
applicable Borrower to start and complete performance or service, (c) have been
verified to Lender’s satisfaction pursuant to field examinations and other
verifications from time to time performed on behalf of Lender pursuant to the
terms of this Agreement, (d) are otherwise satisfactory to Lender in its sole
discretion and (e) would otherwise constitute Eligible Accounts in all respects
but for clause (p) of such definition. Without limiting the foregoing, an
Account shall not be deemed an Eligible Progress Billing Account unless (a) such
receivable is subject to Lender’s first priority perfected Lien and is not
subject to any other Lien or (b) if such Account (i) would be deemed ineligible
under any of clauses (a) through (o) or clauses (q) through (z) of the
definition of “Eligible Accounts, (ii) consists of a retainage invoice or
represents billings in excess of cost, (iii) does not comply with each of the
representations and warranties respecting Eligible Accounts (without regard to
whether such Account is an Eligible Account), or (iv) is otherwise deemed
ineligible by Lender in its Permitted Discretion. Notwithstanding anything in
this Agreement to the contrary, until such time that Borrowers have demonstrated
an ability to reliably distinguish Accounts representing progress billings from
other Accounts in their Collateral reporting in a manner satisfactory to Lender
in its sole discretion, each Account that would otherwise constitute an Eligible
Account under this Agreement shall be deemed an Eligible Progress Billing
Account.

 

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

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

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

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

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

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of any Loan Party or
its Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of any Loan Party or its Subsidiaries under IRC Section 414(c),
(c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which any Loan Party or any of its Subsidiaries is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 and 430 of the IRC, any Person subject to ERISA that is a party to
an arrangement with any Loan Party or any of its Subsidiaries and whose
employees are aggregated with the employees of a Loan Party or its Subsidiaries
under IRC Section 414(o).

“Everest” means Everest Reinsurance Company, Everest National Insurance Company
or any of their Affiliates or Subsidiaries.

“Everest Intercreditor” means an Intercreditor Agreement entered into as of
September 9, 2016 by and among Lender, Everest and certain Loan Parties, in form
and substance satisfactory to Lender in its sole and absolute discretion, as the
same may be amended, amended and restated or otherwise modified from time to
time.

 

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“Event of Default” has the meaning specified therefor in Section 9.

“Excess Availability” means, as of any date of determination, the amount equal
to Availability minus the aggregate amount, if any, of all trade payables and
other obligations each Borrower and its Subsidiaries aged in excess of sixty
(60) days beyond their terms as of the end of the immediately preceding month,
and all book overdrafts and fees of each Borrower and its Subsidiaries, in each
case as determined by Lender in its Permitted Discretion.

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

“Excluded Collateral” means (a) the Surety Collateral to the extent (i) the
issuer of the Surety Bond is Chartis, Everest, Liberty Mutual Federal Insurance
Company, or other Surety (so long as such Surety has entered into an
intercreditor agreement with Lender in form and substance satisfactory to
Lender) or a co-surety of such Person under the Specified Surety Agreements in
effect on the Third Amendment Closing Date, provided that the Chartis
Intercreditor, Everest Intercreditor, the Federal Insurance Company and Liberty
Mutual Intercreditor, or an intercreditor agreement entered into after the Third
Amendment Closing Date in form and substance satisfactory to Lender, as
applicable, is in full force and effect and (ii) such Surety Collateral has not
previously been included in a Borrowing Base Certificate delivered to Lender,
(b) all cash collateral pledged to Federal Insurance Company, Everest, Liberty
Mutual, Chartis or such other Surety pursuant to the Specified Surety Agreements
that is in the possession or under the control of Federal Insurance Company,
Everest, Liberty Mutual, Chartis or such other Surety, as applicable, provided
that the Chartis Intercreditor, Everest Intercreditor, the Federal Insurance
Company and Liberty Mutual Intercreditor, or an intercreditor agreement entered
into after the Third Amendment Closing Date in form and substance satisfactory
to Lender, as applicable, is in full force and effect and (c) cash collateral
pledged to Sureties (other than Federal Insurance Company, Everest, Liberty
Mutual, Chartis or any other Surety (so long as such Surety has entered into an
intercreditor agreement with Lender in form and substance satisfactory to
Lender)) up to an aggregate amount of $2,000,000 (exclusive of any drawings
under letters of credit issued for the benefit of such Surety) that is in the
possession or under the control of such Surety; provided, however, that in no
event shall Excluded Collateral include any amounts which from time to time may
be in the Collection Account or any Deposit Account in which cash collateral or
Qualified Cash is held.

“Excluded Hedge Obligation” means, with respect to any Borrower or any other
Loan Party, any Hedge Obligation if, and to the extent that, all or a portion of
the agreement of such Loan Party to be jointly and severally liable for such
Hedge Obligation of another Loan Party or any guaranty of such Loan Party of, or
the grant by such Loan Party of a security interest to secure, such Hedge
Obligation (or any guaranty thereof) is or becomes illegal under the Commodity
Exchange Act or any rule, regulation or order of the Commodity Futures Trading
Commission (or the application or official interpretation of any thereof) by
virtue of such Loan Party’s failure for any reason to constitute an “eligible
contract participant” as defined in the Commodity Exchange Act and the
regulations thereunder at the time the agreement of such Loan

 

Schedule 1.1

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Party to be jointly and severally liable for such Hedge Obligation or guaranty
of such Hedge Obligation or the grant of such security interest becomes
effective with respect to such Hedge Obligation. If a Hedge Obligation arises
under a master agreement governing more than one swap, such exclusion shall
apply only to the portion of such Hedge Obligation that is attributable to swaps
for which such joint and several liability or guaranty or security interest is
or becomes illegal.

“Existing Collateral” shall have the meaning set forth in the Recitals.

“Existing Fixed Asset Availability” means $5,100,000 as of any date of
determination; which amount shall be reduced by $100,000 on the first day of
each month beginning on May 1, 2017.

“Existing Loan Documents” shall have the meaning set forth in the Recitals.

“Existing Loans” shall have the meaning set forth in the Recitals.

“Existing Note” means that certain Tenth Amended and Restate Revolving Note,
dated as of March 16, 2017 by and among Lender, each Borrower, and each
Guarantor.

“Existing Obligations” shall have the meaning set forth in the Recitals.

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended, and the
rules and regulations thereunder.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal to, for each day during such period, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by Lender from three federal funds brokers of recognized
standing selected by it (and, if any such rate is below zero, then the rate
determined pursuant to this definition shall be deemed to be zero).

“Federal Insurance Company” means Federal Insurance Company, an Indiana
corporation, or any of its Affiliates or Subsidiaries.

“Federal Insurance Company and Liberty Mutual Intercreditor” means an
Intercreditor Agreement entered into after August 9, 2012 by and among Lender,
Federal Insurance Company, Liberty Mutual and certain Loan Parties, in form and
substance satisfactory to Lender in its sole and absolute discretion, as the
same may be amended, amended and restated or otherwise modified from time to
time.

“Federal Reserve Bank of New York’s Website” means the website of the Federal
Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

“First Amendment Effective Date” means July 14, 2017.

 

Schedule 1.1

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“Fixed Asset Availability” means, as of any date of determination, the lesser of
(a) $4,000,000, (b) the amount that Administrative Borrower elects to include as
Fixed Asset Availability on the first Borrowing Base Certificate delivered after
the Closing Date that includes an amount for “Fixed Asset Availability”, or
(c) eighty- five percent (85%) of the Net Orderly Liquidation Value of all
Eligible Equipment as set forth in the NOLV Appraisal most recently delivered to
Lender prior to the first inclusion of an amount for “Fixed Asset Availability”
on the first Borrower Base Certificate after the Closing Date that includes an
amount for “Fixed Asset Availability”, which amount shall be reduced by 1/60 on
a monthly basis beginning on the first day of the first month after the first
inclusion of any amount for “Fixed Asset Availability” on the first Borrowing
Base Certificate after the Closing Date; provided, that “Fixed Asset
Availability” shall be $0.00 at all times either (a) Administrative Borrower has
not yet elected after the Closing Date to include an amount for “Fixed Asset
Availability” on a Borrowing Base Certificate or (b) after March 31, 2018, if
Administrative Borrower has not elected to include an amount for “Fixed Asset
Availability” on a Borrowing Base Certificate prior to such date.

“Fixed Charge Coverage Ratio” means, with respect to Borrowers and their
Subsidiaries on a consolidated basis, for the trailing twelve-month period
preceding any date of determination, the ratio of (i) EBITDA for such period,
minus (a) Non-Financed Capital Expenditures made (to the extent not already
incurred in a prior period) or incurred during such period, (b) cash taxes paid
during such period, to the extent greater than zero, and (c) all Restricted
Junior Payments consisting of Pass-Through Tax Liabilities to (ii) Fixed Charges
for such period; provided, that if any Loan Party makes an Acquisition after the
Closing Date consented to by Lender, the components of this Fixed Charge
Coverage Ratio shall be calculated for such fiscal period after giving pro forma
effect thereto assuming that such transaction has occurred on the first day of
such period (including pro forma adjustments arising out of events which are
directly attributable to such Acquisition, are factually supportable, and are
expected to have a continuing impact, in each case to be reasonably agreed to by
Lender).

“Fixed Charges” means, with respect to any fiscal period and with respect to
Borrowers and their Subsidiaries determined on a consolidated basis in
accordance with GAAP, the sum, without duplication, of (a) cash Interest Expense
paid during such period (other than interest paid-in-kind, amortization of
financing fees, and other non-cash Interest Expense), (b) principal payments
paid in cash in respect of Indebtedness (other than Advances) paid during such
period, including cash payments with respect to Capital Leases, (c) any
management, consulting, monitoring, and advisory fees paid to an Affiliate
(whether or not permitted hereunder), and (d) all Restricted Junior Payments
(other than Pass-Through Tax Liabilities) and other distributions paid in cash
during such period.

“Fixtures” means fixtures (as that term is defined in the Code).

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

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied; provided, however, that all
calculations relative to liabilities shall be made without giving effect to
Statement of Financial Accounting Standards No. 159.

 

Schedule 1.1

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“General Intangibles” means general intangibles (as that term is defined in the
Code), and includes payment intangibles, contract rights, rights to payment,
rights under Hedge Agreements (including the right to receive payment on account
of the termination (voluntarily or involuntarily) of any such Hedge Agreements),
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, Intellectual Property, Intellectual Property Licenses,
purchase orders, customer lists, monies due or recoverable from pension funds,
route lists, rights to payment and other rights under any royalty or licensing
agreements, including Intellectual Property Licenses, infringement claims,
pension plan refunds, pension plan refund claims, insurance premium rebates, tax
refunds, and tax refund claims, interests in a partnership or limited liability
company which do not constitute a security under Article 8 of the Code, and any
other personal property other than Commercial Tort Claims, money, Accounts,
Chattel Paper, Deposit Accounts, Goods, Investment Related Property, Negotiable
Collateral, and oil, gas, or other minerals before extraction.

“General Reserve” shall mean an amount equal to $4,000,000, which amount shall
be reduced by $1,000,000 upon Borrowers’ Fixed Charge Coverage Ratio exceeding
1.0 to 1.0 as of the last day of any fiscal year (as demonstrated in audited
financial statements delivered in accordance with Schedule 6.1 hereof),
effective as of five (5) Business Days after delivery of such financial
statements.

“Goods” means goods (as that term is defined in the Code).

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

“Governmental Authority” means any federal, state, local, or other governmental
or administrative body, instrumentality, board, department, or agency or any
court, tribunal, administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body.

“Guarantors” means IES Shared Services<, Inc., a Delaware corporation; IES
Tangible Properties>, Inc., a Delaware corporation; IES Consolidation, LLC, a
Delaware limited liability company; <IES Properties, Inc., a Delaware
corporation; >Key Electrical Supply, Inc., a Texas corporation; IES Operations
Group, Inc., a Delaware corporation; ICS Holdings LLC, an Arizona limited
liability company; and each other Person that becomes a guarantor after the
Closing Date or otherwise executes and delivers a Guaranty pursuant to
Section 6.16, and each of them is a “Guarantor”.

“Guaranty” means that certain general continuing guaranty, dated as of even date
with this Agreement, executed and delivered by each Guarantor in favor of Lender
in form and substance reasonably satisfactory to Lender and any other guaranty
agreement delivered at any time by a Guarantor in favor of Lender, and all of
such guaranties are, collectively, the “Guaranties”.

<”HK Engine” means HK ENGINE COMPONENTS, LLC, an Indiana limited liability
company.>

 

Schedule 1.1

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

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

“Hedge Obligations” means any and all obligations or liabilities, whether
<direct or indirect, >absolute or contingent, <liquidated or unliquidated,
determined or undetermined, voluntary or involuntary, due, not >due or to become
due, <incurred in the past or >now existing or hereafter arising, <however
arising of >any Borrower or any of of each Loan Party and its Subsidiaries
arising under, owing pursuant to, or existing in respect of Hedge Agreements
entered into with <Lender or another Bank Product Provider>one or more of the
Hedge Providers.

“Hedge Provider” means Lender or any of its Affiliates.

“IES Commercial” means IES Commercial, Inc., a Delaware corporation.

<”IES Renewable” means IES Renewable Energy, LLC, a Delaware limited liability
company.>

“IES Residential” means IES Residential Inc., a Delaware corporation.

“IES Subsidiary” means IES Subsidiary Holdings, Inc., a Delaware corporation.

“Indebtedness” as to any Person means, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes, or other similar instruments and all reimbursement
or other obligations in respect of letters of credit, bankers acceptances, or
other financial products, (c) all obligations of such Person as a lessee under
Capital Leases, (d) all obligations or liabilities of others secured by a Lien
on any asset of such Person, irrespective of whether such obligation or
liability is assumed, (e) all obligations of such Person to pay the deferred
purchase price of assets (other than trade payables incurred in the ordinary
course of business and repayable in accordance with customary trade practices),
(f) all obligations of such Person owing under Hedge Agreements (which amount
shall be calculated based on the amount that would be payable by such Person if
the Hedge Agreement were terminated on the date of determination), (g) any
Prohibited Preferred Stock of such Person, and (h) any obligation of such Person
guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation
of any other Person that constitutes Indebtedness under any of clauses
(a) through (g) above. For purposes of this definition, (i) the amount of any
Indebtedness represented by a guaranty or other similar instrument shall be the
lesser of the principal amount of the obligations

 

Schedule 1.1

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guaranteed and still outstanding and the maximum amount for which the
guaranteeing Person may be liable pursuant to the terms of the instrument
embodying such Indebtedness, and (ii) the amount of any Indebtedness described
in clause (d) above shall be the lower of the amount of the obligation and the
fair market value of the assets of such Person securing such obligation.

“Indemnified Liabilities” has the meaning specified therefor in Section 11.3.

“Indemnified Person” has the meaning specified therefor in Section 11.3.

“Information Certificate” means the Information Certificate completed and
executed by the Loan Parties attached hereto as Exhibit E.

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

“Insurance Premium Lender” shall have the meaning set forth in the definition of
Permitted Insurance Premium Indebtedness.

“Insurance Premium Loan Documents” shall have the meaning set forth in the
definition of Permitted Insurance Premium Indebtedness.

“Intellectual Property” means any and all Patents, Copyrights, Trademarks, trade
secrets, know-how, inventions (whether or not patentable), algorithms, software
programs (including source code and object code), processes, product designs,
industrial designs, blueprints, drawings, data, customer lists, URLs and domain
names, specifications, documentations, reports, catalogs, literature, and any
other forms of technology or proprietary information of any kind, including all
rights therein and all applications for registration or registrations thereof.

“Intellectual Property Licenses” means, with respect to any Person (the
“Specified Party”), (a) any licenses or other similar rights provided to the
Specified Party in or with respect to Intellectual Property owned or controlled
by any other Person, and (b) any licenses or other similar rights provided to
any other Person in or with respect to Intellectual Property owned or controlled
by the Specified Party, in each case, including (i) any software license
agreements (other than license agreements for commercially available
off-the-shelf software that is generally available to the public which have been
licensed to the Specified Party pursuant to end-user licenses), (ii) the license
agreements listed on Schedule 5.26(b) to the Information Certificate (as such
Schedule may be updated from time to time to reflect changes resulting from
transactions permitted under this Agreement), and (iii) the right to use any of
the licenses or other similar rights described in this definition in connection
with the enforcement of the Lender’s rights under the Loan Documents.

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

 

Schedule 1.1

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“Interest Rate” means an interest rate equal to Daily Three Month LIBOR, which
interest rate shall change whenever Daily Three Month LIBOR changes.

“Interest Rate Margin” means,

(a) As of any date of determination (with respect to any portion of the
outstanding Advances on such date), the applicable margin set forth in the
following table that corresponds to the most recent Liquidity calculations
delivered to Lender pursuant to Section 6.1 and accepted by Lender in its
Permitted Discretion; provided, however, upon the occurrence and during the
continuation of an Event of Default, the Interest Rate Margin shall be the
margin set forth below as “Level I” until the next Interest Rate Margin
Redetermination Date (as defined below) after the existence of such Event of
Default.

 

Level

  

Liquidity/Excess Availability/

Fixed Charge Coverage Ratio

  

Interest Rate Margin

I    If Liquidity is less than thirty-five percent (35%) of the Maximum Revolver
Amount at any time during such period    <2.25>1.75 percentage points II    If
Liquidity is greater than or equal to thirty-five percent (35%) of the Maximum
Revolver Amount at all times during such period and less than fifty percent
(50%) of the Maximum Revolver Amount at any time during such period   
<2.00>1.50 percentage points III    If Liquidity is greater than or equal to
fifty percent (50%) of the Maximum Revolver Amount at all times during such
period    <1.75>1.25 percentage points

Except as set forth in the foregoing proviso, the Interest Rate Margin shall be
re-determined quarterly on the first Business Day of each calendar quarter (such
date being the “Interest Rate Margin Redetermination Date”) based upon the
Liquidity for the immediately preceding calendar quarter. In the event that the
information contained in any certificate delivered pursuant to Section 6.1 of
the Agreement is shown to be inaccurate, and such inaccuracy, if corrected,
would have led to the application of a higher Interest Rate Margin for any
period than the Interest Rate Margin actually applied for such interest rate
period, then (a) Borrowers shall immediately deliver to Lender a correct
certificate for such period, (b) the Interest Rate Margin shall be determined as
if the correct Interest Rate Margin (as set forth in the table above) were
applicable for such period, and (c) Borrowers shall immediately deliver to
Lender full payment in respect of the accrued additional interest as a result of
such increased Interest Rate Margin for such interest rate period, which payment
shall be promptly applied by Lender to the affected Obligations. In the event
that the information contained in any certificate delivered pursuant to
Section 6.1 of the Agreement reflects that an Event of Default existed as of the
Interest Rate Margin Redetermination Date, (a) the Interest Rate Margin shall be
determined as if the Interest Rate Margin set forth above as “Level I” were
applicable as the first date of the existence of such Event of Default and
(b) Borrowers shall immediately deliver to Lender full payment in respect of the
accrued additional interest as a result of such increased Interest Rate Margin
for such interest rate period, which payment shall be promptly applied by Lender
to the affected Obligations. In the event the Borrowers fail to timely deliver
any certificate, report or other documentation necessary for determination of
the Interest Rate Margin, the Interest Rate Margin shall be the margin set forth
above as “Level I” from the date of such failure until the next Interest Rate
Margin Redetermination Date.

 

Schedule 1.1

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

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course of
business not to exceed $250,000 in the aggregate during any fiscal year of
Borrowers, and (b) bona fide Accounts arising in the ordinary course of
business), or acquisitions of Indebtedness, Stock, or all or substantially all
of the assets of such other Person (or of any division or business line of such
other Person), and any other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.

“Investment Related Property” means (a) any and all investment property (as that
term is defined in the Code), and (b) any and all of the following (regardless
of whether classified as investment property under the Code): all Pledged
Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

“ISP<98>” means, with respect to any Letter of Credit, the International Standby
Practices <(>1998 <Revision, effective January 1, 1999),>(International Chamber
of Commerce Publication No. 590) and any version or revision thereof accepted by
Lender for such use.

“Job Site” any site specified in a contract where any Borrower is to perform the
specialized electrical and communication services required thereunder, including
all other labor, materials, equipment and services provided or to be provided to
fulfill its obligations thereunder.

“Lender” has the meaning specified therefor in the preamble to this Agreement
and its successors and assigns.

“Lender Expenses” means all (a) reasonable costs or expenses (including taxes<,>
and insurance premiums) required to be paid by any Loan Party or <any of >its
Subsidiaries <or any Guarantor >under any of the Loan Documents that are paid,
advanced, or incurred by Lender, (b) reasonable out-of-pocket fees or charges
paid or incurred by Lender in connection with Lender’s transactions with
<any>each Loan Party <or any of>and its Subsidiaries under any of the Loan
Documents, including, <fees or charges for >photocopying, notarization, couriers
and messengers, telecommunication, public record searches< (including tax lien,
judgment lien, litigation, bankruptcy and Code searches and including searches
with the patent and trademark office, the copyright office, or the department of
motor vehicles)>, filing fees, recording fees, publication, <appraisal
(including periodic collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation contained in
this Agreement), >real estate surveys, real estate title <insurance >policies
and endorsements, and environmental audits, (c) Lender’s customary fees and
charges imposed or incurred in connection with any background checks or OFAC/PEP
searches related to any Loan Party or its Subsidiaries, (d) Lender’s customary
fees and charges (as adjusted from time to time) with respect to the
disbursement of funds (or the receipt of funds) to or for the account of
<Borrowers>any Borrower (whether by wire

 

Schedule 1.1

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transfer or otherwise), together with any <out of pocket>out-of-pocket costs and
expenses incurred in connection therewith, (<d>e) out-of-pocket charges
<paid>imposed or incurred by Lender resulting from the dishonor of checks
payable by or to any Loan Party or its Subsidiaries, (<e>f) reasonable,
documented out-of-pocket costs and expenses paid or incurred by Lender to
correct any default or enforce any provision of the Loan Documents, or during
the continuance of an Event of Default, in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (<f>g) field examination, appraisal, and
valuation fees and expenses <to initiate electronic reporting by Borrowers to
Lender, (g) reasonable out-of-pocket examination fees and expenses (including
reasonable travel, meals, and lodging) >of Lender related to any
<inspections,>field examinations, <audits or >appraisals, or valuation to the
extent of the fees and charges (and up to the amount of any limitation)
<contained in>provided in Section 2.10 of this Agreement, (h) Lender’s
reasonable< out-of-pocket>, documented costs and expenses <of>(including
reasonable and documented attorneys’ fees and expenses) relative to third party
claims or any other <suit>lawsuit or adverse proceeding paid or incurred< by
Lender>, whether in enforcing or defending the Loan Documents or otherwise in
connection with the transactions contemplated by the Loan Documents< or>,
Lender’s Liens in and to the Collateral, or Lender’s relationship with any Loan
Party or any of its Subsidiaries, (i) Lender’s reasonable costs and expenses
(including reasonable attorneys’ fees and due diligence expenses) incurred in
advising, structuring, drafting, reviewing, administering (including <reasonable
>travel, meals, and lodging), or amending, waiving, or modifying the Loan
Documents, and (j) Lender’s reasonable and documented costs and expenses
(including reasonable and documented attorneys, accountants, consultants, and
other advisors fees and expenses) incurred in terminating, enforcing (including
<reasonable >attorneys, accountants, consultants, and other advisors fees and
expenses incurred in connection with a “workout,” a “restructuring,” or an
Insolvency Proceeding concerning any Loan Party or any of its Subsidiaries or in
exercising rights or remedies under the Loan Documents), or defending the Loan
Documents, irrespective of whether <suit>a lawsuit or other adverse proceeding
is brought, or in taking any enforcement action or any Remedial Action
<concerning>with respect to the Collateral<, and (k) usage charges, charges,
fees, costs and expenses for amendments, renewals, extensions, transfers, or
drawings from time to time imposed by Lender in respect of Letters of Credit and
out-of-pocket charges, fees, costs and expenses paid or incurred by Lender in
connection with the issuance, amendment, renewal, extension, or transfer of, or
drawing >under, any Letter of Credit <or any demand for payment thereunder.>.

“Lender Representatives” has the meaning specified therefor in Section 17.8(a).

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

“Lender’s Liens” mean the Liens granted by Borrowers and their Subsidiaries to
Lender under the Loan Documents.

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

 

Schedule 1.1

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“Letter of Credit Agreements” means a Letter of Credit Application, together
with any and all related letter of credit agreements pursuant to which Lender
agrees to issue, amend, or extend a Letter of Credit, or pursuant to which
Borrowers agree to reimburse Lender for all Letter of Credit Disbursements, each
such application and related agreement to be in the form specified by Lender
from time to time.

“Letter of Credit Application” means an application requesting Lender to issue,
amend, or extend a Letter of Credit, each such application to be in the form
specified by Lender from time to time.

“Letter of Credit Collateralization” means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Lender, including
provisions that specify that the Letter of Credit fee and all usage charges set
forth in this Agreement and the Letter of Credit Agreements will continue to
accrue while the Letters of Credit are outstanding) to be held by Lender for the
benefit of Lender in an amount equal to one hundred five percent (105%) of the
then existing Letter of Credit Usage, (b) delivering to Lender the original of
each Letter of Credit, together with documentation executed by all beneficiaries
under each Letter of Credit in form and substance acceptable to Lender
terminating all of such beneficiaries’ rights under such Letters of Credit, or
(c) providing Lender with a standby letter of credit, in form and substance
reasonably satisfactory to Lender, from a commercial bank acceptable to Lender
(in its sole discretion) in an amount equal to one hundred five percent
(105%) of the then existing Letter of Credit Usage (it being understood that the
Letter of Credit fee and all usage charges set forth in this Agreement will
continue to accrue while the Letters of Credit are outstanding and that any such
fees that accrue must be an amount that can be drawn under any such standby
letter of credit).

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

“Letter of Credit Indemnified Costs” has the meaning specified therefor in
Section 2.13(e) of this Agreement.

“Letter of Credit Related Person” has the meaning specified therefor in
Section 2.13(e) of this Agreement.

“Letter of Credit Usage” means, as of any date of determination, the sum of
(i) the aggregate undrawn amount of all outstanding Letters of Credit, and
(ii) the aggregate amount of outstanding reimbursement obligations with respect
to Letters of Credit which remain unreimbursed or which have not been paid
through an Advance under the Revolving Credit Facility.

“Liberty Mutual” means Safeco Insurance Company of America, a Washington
corporation or any of its Affiliates or Subsidiaries.

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

 

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“Liquidity” means, as of any date of determination, the sum of (a) Borrowers’
Qualified Cash and (b) Excess Availability.

“Loan Account” has the meaning specified therefor in Section 2.8.

“Loan Documents” means this Agreement, any Borrowing Base Certificate, the
Control Agreements, the Cash Management Documents, the Guaranty, the Federal
Insurance and Liberty Mutual Intercreditor, the Everest Intercreditor, the
Chartis Intercreditor, any intercreditor agreement entered into after the Third
Amendment Closing Date in form and substance satisfactory to Lender, the Letters
of Credit, each Patent and Trademark Security Agreement, any Copyright Security
Agreement, the Omnibus Reaffirmation, any Letter of Credit Applications and
other Letter of Credit Agreements entered into by any Borrower in connection
with the Existing Credit Agreement, and any other instrument or agreement
entered into, now or in the future, by any Loan Party or any of its Subsidiaries
and Lender in connection with this Agreement, but specifically excluding all
Hedge Agreements.

“Loan Management Service” means Lender’s proprietary automated loan management
program currently known as “Loan Manager” and any successor service or product
of Lender which performs similar services.

“Loan Parties” means collectively, each Borrower and each Guarantor and each of
them is a “Loan Party”.

“Lockbox” means “Lockbox” as defined and described in the Cash Management
Documents.

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

“Material Adverse Change” means (a) a material adverse change in the business,
operations, results of operations, assets, liabilities or condition (financial
or otherwise) of the Borrowers, Loan Parties and their Subsidiaries taken as a
whole, (b) a material impairment of the ability of any Borrower or any Loan
Party to perform its obligations under the Loan Documents to which it is a party
or of the Lender’s ability to enforce the Obligations or realize upon the
Collateral, (c) a material impairment of the enforceability or priority of
Lender’s Liens with respect to the Collateral as a result of an action or
failure to act on the part of any Borrower any Loan Party or its Subsidiaries,
or (d) any claim is made against any Borrower or any Loan Party which if
determined adversely to any Borrower any Loan Party or any of its Subsidiaries,
would result in the occurrence of an event described in clauses (a), (b) or
(c) above.

“Material Contract” means, an agreement to which a Loan Party is a party (other
than the Loan Documents (i) which is deemed to be a material contract as
provided in Regulation S-K promulgated by the SEC under the Securities Act of
1933 or (ii) for which breach, termination, cancellation, nonperformance or
failure to renew could reasonably be expected to result in a Material Adverse
Change.

“Maturity Date” has the meaning specified therefor in Section 2.9.

 

Schedule 1.1

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“Maximum Credit” means $100,000,000.

“Maximum Revolver Amount” means mean $100,000,000, less permanent reductions in
such amount made in accordance with Section 2.11.

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

“Negotiable Collateral” means letters of credit, letter-of-credit rights,
instruments, promissory notes, drafts and documents (as each such term is
defined in the Code).

“Net Forced Liquidation Value” shall mean, as to Eligible Equipment, at any
time, the value of such Eligible Equipment, determined on a forced liquidation
basis, reduced by such commissions, fees, costs and expenses as may be
reasonably expected in connection with the liquidation thereof, as set forth in
the most recent appraisal delivered, at the sole cost and expense of Borrowers,
to Lender, as to the Eligible Equipment, in form, scope, and methodology
acceptable to Lender in its Permitted Discretion and performed by an appraiser
acceptable to Lender in its Permitted Discretion, addressed to Lender and upon
which Lender is permitted to rely.

“Net Liquidation Percentage” means the percentage of the Value of a Borrower’s
Inventory that is estimated to be recoverable in an orderly liquidation of such
Inventory as set forth in the most recent acceptable appraisal received by
Lender and upon which Lender may rely, net of all operating expenses and
associated costs and expenses of such liquidation, such percentage to be as
determined from time to time by an appraisal company selected or approved by
Lender with such most recent acceptable appraisal to be in form, scope,
methodology and content acceptable to Lender.

“Net Loss” means fiscal year-to-date after-tax net loss from continuing
operations as determined in accordance with GAAP.

“Net Orderly Liquidation Value” means dollar amount that is estimated to be
recoverable in an orderly liquidation of Borrowers’ Eligible Equipment as set
forth in the most recent acceptable NOLV Appraisal received by Lender and upon
which Lender may rely, such value to be calculated net of all operating expenses
and associated costs and expenses of such liquidation.

“NEXT” means NEXT Electric, LLC, a Wisconsin limited liability company.

“NOLV Appraisal” means an on-site appraisal or desk-top update to such an
appraisal, as applicable, conducted to determine the Net Orderly Liquidation
Value of the Borrowers’ Eligible Equipment; such appraisal to be conducted
(whether on-site or through desk-top update) from time to time by an appraisal
company acceptable to Lender in its sole discretion, which appraisal shall be
conducted in accordance with Lender’s requirements and otherwise in form, scope,
methodology and content acceptable to Lender.

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

 

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“Obligations” means (a) all loans (including the Advances), debts, principal,
interest (including any interest that accrues after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), reimbursement or
indemnification obligations with respect to Letters of Credit (irrespective of
whether contingent), premiums, liabilities (including all amounts charged to the
Loan Account pursuant to this Agreement), obligations (including indemnification
obligations), fees, Lender Expenses (including any fees or expenses that accrue
after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding), guaranties, and all covenants and duties of any other kind and
description in each case owing by any Loan Party to Lender or its Affiliates or
any Bank Product Provider or its Affiliates pursuant to or evidenced by this
Agreement or any of the other Loan Documents and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, liquidated
or unliquidated, determined or undetermined, voluntary or involuntary, due, not
due or to become due, sole, joint, several or joint and several, incurred in the
past or now existing or hereafter arising, however arising, and including all
interest not paid when due, and all other expenses or other amounts that any
Borrower or any other Loan Party is required to pay or reimburse by the Loan
Documents or by law or otherwise in connection with the Loan Documents, and
(b) all Bank Product Obligations. Any reference in this Agreement or in the Loan
Documents to the Obligations shall include all or any portion thereof and any
extensions, modifications, renewals, or alterations thereof, both prior and
subsequent to any Insolvency Proceeding. Notwithstanding the foregoing,
“Obligations” shall not include any Excluded Hedge Obligations.

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

“Omnibus Reaffirmation” means that certain Omnibus Reaffirmation of Loan
Documents dated as of the Closing Date, by and among each of the Loan Parties
party thereto and Lender.

“Original Closing Date” means September 24, 2014.

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

“Overadvance Amount” has the meaning specified therefor in Section 2.4(f).

“Parent” means IES Holdings, Inc., a Delaware corporation.

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

 

Schedule 1.1

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“Patents” means patents and patent applications, including (i) the patents and
patent applications listed on Schedule 5.26(b) to the Information Certificate
(as such Schedule may be updated from time to time to reflect changes resulting
from transactions permitted under this Agreement), (ii) all continuations,
divisionals, continuations-in-part, re-examinations, reissues, and renewals
thereof and improvements thereon, (iii) all income, royalties, damages and
payments now and hereafter due or payable under and with respect thereto,
including payments under all licenses entered into in connection therewith and
damages and payments for past, present, or future infringements thereof,
(iv) the right to sue for past, present, and future infringements thereof, and
(v) all of each Loan Party’s rights corresponding thereto throughout the world.

“Patent and Trademark Security Agreement” means each Patent and Trademark
Security Agreement executed and delivered by the applicable Loan Party in favor
of Lender, in form and substance acceptable to Lender.

“Patriot Act” has the meaning specified therefor in Section 5.18 of Exhibit D to
this Agreement.

“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA)
maintained for employees of any Borrower or any of its Subsidiaries or any ERISA
Affiliate and covered by Title IV of ERISA.

“Permitted Acquisition” means any Acquisition so long as:

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

(b) no Indebtedness (other than Borrowings or Advances made pursuant to this
Agreement and other than Permitted Indebtedness) will be incurred, assumed, or
would exist with respect to any Loan Party or its Subsidiaries as a result of
such Acquisition, and no Liens will be incurred, assumed, or would exist with
respect to the assets of any Loan Party or its Subsidiaries as a result of such
Acquisition,

(c) Borrowers have provided Lender with written confirmation, supported by
reasonably detailed calculations, that on a pro forma basis (including pro forma
adjustments arising out of events which are directly attributable to such
proposed Acquisition, are factually supportable, and are expected to have a
continuing impact, in each case, determined as if the combination had been
accomplished at the beginning of the relevant period; such eliminations and
inclusions to be mutually and reasonably agreed upon by Parent, Borrowers and
Lender) created by adding the historical combined financial statements of Parent
(including the combined financial statements of any other Person or assets that
were the subject of a prior Permitted Acquisition during the relevant period) to
the historical consolidated financial statements of the Person to be acquired
(or the historical financial statements related to the assets to be acquired)
pursuant to the proposed Acquisition, the Loan Parties and their Subsidiaries
(i) would have been in compliance with the financial covenant(s) in Section 8 of
this Agreement for the fiscal quarter ended immediately prior to the proposed
date of consummation of such proposed Acquisition, and (ii) are projected to be
in compliance with the financial covenant(s) in Section 7 of this Agreement for
each of the four fiscal quarters in the period ended one year after the proposed
date of consummation of such proposed Acquisition,

 

Schedule 1.1

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

(e) Borrowers have Liquidity (i) at all times during the 30 consecutive days
immediately prior to the date of the consummation of such Acquisition,
calculated on a pro forma basis as if such Acquisition was consummated on the
first day of such period, and (ii) after giving effect to such Acquisition, in
each case is not less than the greater of (A) 25% of the Maximum Revolver
Amount, and (B) $25,000,000; provided, that, for purposes of compliance with
this clause (ii), at least fifty percent (50%) of Borrowers’ Liquidity shall be
comprised of Excess Availability,

(f) the assets being acquired or the Person whose Equity Interests are being
acquired did not have negative EBITDA during the 12 consecutive month period
most recently concluded prior to the date of the proposed Acquisition,

(g) Borrowers have provided Lender with written notice of the proposed
Acquisition at least 15 Business Days prior to the anticipated closing date of
the proposed Acquisition and, not later than 5 Business Days prior to the
anticipated closing date of the proposed Acquisition, copies of the Acquisition
Agreement and other material documents relative to the proposed Acquisition to
the extent and in the form available at such time, which agreement and documents
must be reasonably acceptable to Lender,

(h) the assets being acquired (other than a de minimis amount of assets in
relation to Parent’s and their Subsidiaries’ total assets), or the Person whose
Equity Interests are being acquired, are useful in or engaged in, as applicable,
the business of the Loan Parties and their Subsidiaries or a business reasonably
related thereto,

(i) the assets being acquired (other than a de minimis amount of assets in
relation to the assets being acquired) are located within the United States or
the Person whose Equity Interests are being acquired is organized in a
jurisdiction located within the United States,

(j) the subject assets or Equity Interests, as applicable, are being acquired
directly by a Borrower or one of its Subsidiaries that is a Loan Party, and, in
connection therewith, such Borrower or the applicable Loan Party shall have
complied with Section 6.15 or Section 6.16 of this Agreement, as applicable,
and, in the case of an acquisition of Equity Interests, the applicable Loan
Party shall have demonstrated to Lender that the new Loan Parties have received
consideration sufficient to make the joinder documents binding and enforceable
against such new Loan Parties, and

 

Schedule 1.1

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(k) the purchase consideration payable in respect of all Permitted Acquisitions
(including the proposed Acquisition and including deferred payment obligations)
shall not exceed $25,000,000 in the aggregate during any fiscal year.

“Permitted Discretion” means a determination made in the exercise of the good
faith judgment of Lender.

“Permitted Dispositions” means:

(a) sales, abandonment, or other dispositions of Equipment that is substantially
worn, damaged, or obsolete in the ordinary course of business or no longer
required in the ordinary course of business;

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

(c) the granting of Permitted Liens;

(d) the making of a Restricted Junior Payment that is expressly permitted to be
made pursuant to this Agreement;

(e) the making of a Permitted Investment; <and>

(f) any disposition of the Batavia Real Property pursuant to a sale-leaseback
transaction;

(g) dispositions of assets acquired by Loan Parties and their Subsidiaries
pursuant to a Permitted Acquisition consummated within 12 months of the date of
the proposed disposition so long as (i) the consideration received for the
assets to be so disposed is at least equal to the fair market value thereof,
(ii) the assets to be so disposed are not necessary or economically desirable in
connection with the business of the Loan Parties and its Subsidiaries, and
(iii) the assets to be so disposed are readily identifiable as assets acquired
pursuant to the subject Permitted Acquisition; and

(h) (f) other dispositions which do not exceed $500,000 in any fiscal year in
the aggregate.

“Permitted Earnout Indebtedness” shall mean unsecured liabilities of a Loan
Party arising under an agreement to make any deferred payment as a part of the
purchase price for an Acquisition, including performance bonuses or consulting
payments in any related services, employment or similar agreement, in an amount
that is subject to or contingent upon the revenues, income, cash flow or profits
(or the like) of the target of such Acquisition.

“Permitted Holdback Indebtedness” shall mean unsecured liabilities of a Loan
Party, arising under an Acquisition agreement to pay the seller on a deferred
basis the residual value of any portion of the purchase price that was held back
in the agreement, in a fixed amount over a defined period, in order to support
the seller’s indemnification or other obligations over that period.

 

Schedule 1.1

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“Permitted Holder” means Tontine.

“Permitted Indebtedness” means:

(a) Indebtedness evidenced by this Agreement or the other Loan Documents;

(b) Indebtedness set forth on Schedule 5.19 to the Information Certificate and
any Refinancing Indebtedness in respect of such Indebtedness;

(c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in
respect of such Indebtedness;

(d) endorsement of instruments or other payment items for deposit;

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

(f) Indebtedness incurred in respect of Bank Products other than pursuant to
Hedge Agreements;

(g) Indebtedness constituting Permitted Investments;

(h) Indebtedness in the form of reimbursement obligations for Surety Bonds
procured in ordinary course of business consistent with past practices, provided
such Surety Bonds are issued pursuant to a bonding program acceptable to Lender;

(i) Indebtedness consisting of Permitted Insurance Premium Financing
Indebtedness;

(j) Permitted Earnout Indebtedness;

(k) Permitted Holdback Indebtedness; and

(l) other unsecured Indebtedness in an amount that shall not exceed $500,000 in
the aggregate at any time.

“Permitted Insurance Premium Financing Indebtedness” means (a) Indebtedness
evidenced by that certain insurance premium financing agreement with Aon Premium
Finance, LLC dated as of November 1, 2011 and (b) Indebtedness arising under or
in connection with the financing by any Loan Party of any insurance premiums, in
which the insurance premium financier (the “Insurance Premium Lender”) has
agreed in writing for the benefit of Lender that (i) the Insurance Premium
Lender shall provide Lender with thirty (30) days prior written notice of any
intended cancellation of a financed insurance policy (such notice to include a
brief description of the grounds for cancellation and the actions necessary to
cure any breach or default), (ii) Lender shall have the right, but not the
obligation, to cure any breach or default by the Loan Parties under the
insurance premium financing arrangement (the “Insurance Premium Loan Documents”)
(and any fees, expenses, costs, or other sums paid by Lender to effectuate such
a cure shall constitute a

 

Schedule 1.1

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Protective Advance), (iii) any Lien of such Insurance Premium Lender is at all
times junior in priority to the Liens in favor of Lender (except with respect to
unearned premiums or otherwise to the extent such Liens have priority under
applicable law), and (iv) if the Insurance Premium Lender sells, assigns, or
otherwise transfers the Insurance Premium Loan Documents or the loan represented
by the Insurance Premium Loan Documents, whether in whole or in part, the
Insurance Premium Lender shall require that any such purchaser, assignee, or
transferee agrees (in writing) to be bound by the foregoing terms and
conditions.

“Permitted Intercompany Advances” means loans made by (a) a Loan Party to a
Borrower, (b) a Borrower to a Loan Party in an amount of up to $500,000 in the
aggregate at any time, (c) a Subsidiary of a Loan Party which is not a Loan
Party to another Subsidiary of a Loan Party which is not a Loan Party, or (c) a
Subsidiary of a Loan Party which is not a Loan Party to a Loan Party, in each
case, unless Lender otherwise agrees, so long as the parties thereto are party
to an intercompany subordination agreement with Lender and/or the rights of the
lending party with respect thereto have been collaterally assigned to Lender, in
each case, in form and substance satisfactory to Lender in its Permitted
Discretion.

“Permitted Investments” means:

(a) Investments in cash and Cash Equivalents;

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

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

(d) Investments owned by any Loan Party or any of its Subsidiaries on the
Closing Date and set forth on Schedule P-1;

(e) Permitted Intercompany Advances;

(f) Investments resulting from entering into Bank Product Agreements;

(g) Investments in an original amount not to exceed $20,000,000 in the aggregate
for all Loan Parties in marketable securities, subject to limitations imposed by
the board of directors of Parent from time to time (provided, that for the
avoidance of doubt, no Investment by any Loan Party made pursuant to this clause
(g) shall be included in the calculation of “Liquidity” unless such Investment
meets the definition of Cash Equivalent);

(h) Investments in an original amount not to exceed $10,000,000 in the aggregate
for all Loan Parties in non-marketable securities, subject to limitations
imposed by the board of directors of Parent from time to time (provided, that
for the avoidance of doubt, no Investment by any Loan Party made pursuant to
this clause (h) shall be included in the calculation of “Liquidity” unless such
Investment meets the definition of Cash Equivalent), and provide that the sum of
Investments in marketable and non-marketable securities in clauses (g) and
(h) do not exceed $ 20,000,000 in the aggregate;

 

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(i) Investments (including contributions pursuant to Section 7.12(e)), by IES
Commercial or another Loan Party consisting of eighty percent (80%) of the
membership interests of STR Mechanical, or such greater amount owned by IES
Commercial or another Loan Party from time to time (provided, that IES
Commercial or another Loan Party shall deliver an updated Pledged Interest
Addendum pursuant to Section 5.26(d) of Exhibit D for any additional interest
held in STR Mechanical following the Closing Date); <and>

(j) Investments (subject to the limitations in Section 7.12(f)) by IES
Commercial or another Loan Party consisting of eighty percent (80%) of the
membership interests of NEXT, or such greater amount owned by IES Commercial or
another Loan Party from time to time in NEXT (provided, that IES Commercial or
another Loan Party shall deliver an updated Pledged Interest Addendum pursuant
to Section 5.26(d) of Exhibit D for any additional interest held in NEXT
following the First Amendment Effective Date).

“Permitted Liens” means

(a) Liens granted to, or for the benefit of, Lender to secure the Obligations;

(b) Liens for unpaid taxes, assessments, or other governmental charges or levies
that either (i) are not yet delinquent, or (ii) the underlying taxes,
assessments, or charges or levies are the subject of Permitted Protests;

(c) judgment Liens arising solely as a result of the existence of judgments,
orders, or awards that do not constitute an Event of Default under Section 9.3;

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

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

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

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

(h) [Reserved],

(i) Liens in favor of Sureties in the Surety Collateral securing reimbursement
obligations for Surety Bonds procured by a Borrower in the ordinary course of
business consistent with past practices pursuant to a bonding program acceptable
to Lender; provided, that such Surety has, pursuant to documentation
satisfactory to Lender in the good faith exercise of its credit

 

Schedule 1.1

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judgment: (a) agreed not to require segregation of funds as to its Bonded
Collateral without the prior written consent of Lender (though Federal Insurance
Company, Everest, Liberty Mutual, Chartis, and any other Surety (so long as such
Surety has entered into an intercreditor agreement with Lender in form and
substance satisfactory to Lender) will be permitted such segregation upon a
default under the Bonded Contract and notice to Lender from Federal Insurance
Company, Everest, Liberty Mutual, Chartis, or such other Surety, as applicable;
provided, that the Federal Insurance and Liberty Mutual Intercreditor, the
Everest Intercreditor, the Chartis Intercreditor, or other intercreditor
agreement entered into after the Third Amendment Closing Date in form and
substance satisfactory to Lender, as applicable, is in full force and effect)
and (b) (i) acknowledged and agreed that pursuant to the Loan Parties’ cash
management system established in connection with this Agreement, proceeds of the
Surety Collateral, including Accounts arising from the Bonded Contracts
(collectively, “Bonded Contract Proceeds”) may be commingled with proceeds of
other Accounts and other Property of Borrowers in the Collection Account and
other Deposit Accounts in which Lender has, or in the future may have, security
interests, Liens or other rights, and (ii) consented to such commingling and to
security interests, Liens or other rights in the Collection Account and such
other Deposit Accounts, and (iii) released and waived any and all security
interests and other legal and equitable rights and interests that it may then or
thereafter have (as secured party, subrogee, trust fund beneficiary, or
otherwise) in or to (A) the Collection Account and such other Deposit Accounts
and (B) Bonded Account Proceeds that from time to time are in the Collection
Account and such other Deposit Accounts are in the possession of Lender, that
have been applied to indebtedness, liabilities or obligations from time to time
owing to Lender by Borrowers, or have otherwise been removed from, set off
against or applied from the Collection Account and such other Deposit Accounts.

(j) Liens granted to an Insurance Premium Lender as security for Permitted
Insurance Premium Financing Indebtedness;

(k) statutory Liens (excluding any Lien imposed pursuant to any of the
provisions of ERISA or any tax lien) arising in the ordinary course of business
of a Loan Party or a Subsidiary, but only if and for long as (x) payment in
respect of any such Lien is not yet delinquent or any such Lien is subject to a
Permitted Protest and (y) such Liens do not materially detract from the value of
the assets of such Loan Party or Subsidiary and do not materially impair the use
thereof in the operation of such Loan Party’s or such Subsidiary’s business;

(l) Liens securing Indebtedness under clauses (b) and (c) of the definition of
Permitted Intercompany Advances;

(m) Liens incurred or deposits made in the ordinary course of business to secure
the performance of tenders, bids, leases, contracts (other than for the
repayment of borrowed Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts, provided that, to the extent any such Liens attach to any of the
Collateral, such Liens are at all times subordinate and junior to the Liens upon
the Collateral in favor of Lender;

(n) general exceptions to title consisting of easements, rights-of-way,
restrictions, covenants or other agreements of record and other similar charges
or encumbrances that are on real property of such Loan Party that do not
materially interfere with the ordinary conduct of the business of such Loan
Party or such Subsidiary;

 

Schedule 1.1

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(o) normal and customary rights of setoff upon deposits of cash in favor of
banks and other depository institutions and Liens of a collection bank arising
under the Code on checks, drafts, or other items of payment in the course of
collection; and

(p) such other Liens as Lender in its sole discretion may hereafter approve in
writing.

“Permitted Petty Cash Account” means Borrowers’ Petty Cash Account #264267 at
Bruning State Bank, provided that the balance in such account at no time exceeds
$100,000.

“Permitted Preferred Stock” means and refers to any Preferred Stock issued by a
Borrower (and not by one or more of its Subsidiaries) that is not Prohibited
Preferred Stock.

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

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
(i) Purchase Money Indebtedness arising as a result of a sale-leaseback
transaction for the Batavia Real Property, and (ii) all other Purchase Money
Indebtedness in an aggregate principal amount outstanding at any one time not in
excess of $750,000.

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

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA)
maintained for employees of any Borrower or any of its Subsidiaries or any ERISA
Affiliate.

“Pledged Companies” means each Person listed on Schedule 5.1(c) to the
Information Certificate (as such Schedule may be updated from time to time to
reflect changes resulting from transactions permitted under this Agreement) a
“Pledged Company”, together with each other Person, all or a portion of whose
Stock is acquired or otherwise owned by a Loan Party.

“Pledged Interests” means all of each Loan Party’s right, title and interest in
and to all of the Stock now owned or hereafter acquired by such Loan Party,
regardless of class or designation, including in each of the Pledged Companies,
and all substitutions therefor and replacements thereof, all proceeds thereof
and all rights relating thereto, also including any

 

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certificates representing the Stock, the right to receive any certificates
representing any of the Stock, all warrants, options, share appreciation rights
and other rights, contractual or otherwise, in respect thereof and the right to
receive all dividends, distributions of income, profits, surplus, or other
compensation by way of income or liquidating distributions, in cash or in kind,
and all cash, instruments, and other property from time to time received,
receivable, or otherwise distributed in respect of or in addition to, in
substitution of, on account of, or in exchange for any or all of the foregoing.

“Pledged Interests Addendum” means a Pledged Interests Addendum substantially in
the form of Exhibit F.

“Pledged Operating Agreements” means all of each Loan Party’s rights, powers,
and remedies under the limited liability company agreements of each of the
Pledged Companies that are limited liability companies.

“Pledged Partnership Agreements” means all of each Borrower’s rights, powers,
and remedies under the partnership agreements of each of the Pledged Companies
that are partnerships.

“Preferred Stock” means, as applied to the Stock of any Person, the Stock of any
class or classes (however designated) that is preferred with respect to the
payment of dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over shares of Stock of
any other class of such Person.

“Prime Rate” means <at any time>the greatest of (a) the Federal Funds Rate plus
1⁄2%, (b) the Interest Rate, plus one percentage point, and (c) the rate of
interest <most recently >announced< by Lender>, from time to time, within Wells
Fargo at its principal office in San Francisco as its <Prime Rate>“prime rate”,
with the understanding that the <Prime Rate>“prime rate” is one of
<Lender’s>Wells Fargo’s base rates<,> (not necessarily the lowest of such rates)
and serves as the basis upon which effective rates of interest are calculated
for those loans making reference <to it,>thereto and is evidenced by <its>the
recording thereof after its announcement in such internal <publication or
>publications as <Lender>Wells Fargo may designate<. Each change in the rate of
interest shall> become effective on the date <each Prime Rate change is
announced by Lender.>(and, if any such announced rate is below zero, then the
rate determined pursuant to this clause (c) shall be deemed to be zero).

“Proceeds” has the meaning specified therefor in the definition of “Collateral”
set forth in Schedule 1.1.

“Prohibited Preferred Stock” means any Preferred Stock that by its terms is
mandatorily redeemable or subject to any other payment obligation (including any
obligation to pay dividends, other than dividends of shares of Preferred Stock
of the same class and series payable in kind or dividends of shares of common
stock) on or before a date that is less than 1 year after the Maturity Date, or,
on or before the date that is less than 1 year after the Maturity Date, is
redeemable at the option of the holder thereof for cash or assets or securities
(other than distributions in kind of shares of Preferred Stock of the same class
and series or of shares of common stock).

 

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

“Protective Advance” has the meaning specified therefor in Section 2.3(d).

“PTO” means the United States Patent and Trademark Office.

“Purchase Money Indebtedness” means Indebtedness (other than the Obligations,
but including Capitalized Lease Obligations), incurred at the time of, or within
twenty (20) days after, the acquisition of any fixed assets for the purpose of
financing all or any part of the acquisition cost thereof.

“Qualified Cash” means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of each Borrower and its Subsidiaries
that is in Deposit Accounts or in Securities Accounts, or any combination
thereof, and which such Deposit Account or Securities Account is maintained by
Lender and accordingly under the “control” Lender in accordance with
Section 9-104(a)(1) of the Code.

<”Real Estate Availability” means, as of any date of determination, the lesser
of (a) $6,000,000, (b) the amount that Administrative Borrower elects to include
as Real Estate Availability on the first Borrowing Base Certificate delivered
after the Closing Date that includes an amount for “Real Estate Availability”,
or (c) sixty percent (60%) of the most recently appraised fair market value of
all Real Property subject to a Lien of Lender prior to the first inclusion of an
amount for “ Real Estate Availability” on the first Borrower Base Certificate
after the Closing Date that includes an amount for “Real Estate Availability”,
which amount shall be reduced by 1/120 on a monthly basis beginning on the first
day of the first month after the first inclusion of any amount for “ Real Estate
Availability” on the first Borrowing Base Certificate after the Closing Date;
provided, that “Real Estate Availability” shall be $0.00 at all times either
(a) Administrative Borrower has not yet elected after the Closing Date to
include an amount for “Real Estate Availability” on a Borrowing Base Certificate
or (b) after March 31, 2018, if Administrative Borrower has not elected to
include an amount for “Real Estate Availability” on a Borrowing Base Certificate
prior to such date. >

“Real Property” means any estates or interests in real property now owned or
hereafter acquired by a Loan Party and the improvements thereto.

“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as:

(a) such refinancings, renewals, or extensions do not result in an increase in
the principal amount of the Indebtedness so refinanced, renewed, or extended,
other than by the amount of premiums paid thereon and the fees and expenses
incurred in connection therewith and by the amount of unfunded commitments with
respect thereto,

 

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(b) such refinancings, renewals, or extensions do not result in a shortening of
the average weighted maturity (measured as of the refinancing, renewal, or
extension) of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are or could reasonably be
expected to be materially adverse to the interests of Lender,

(c) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension must include subordination
terms and conditions that are at least as favorable to the Lender as those that
were applicable to the refinanced, renewed, or extended Indebtedness, and

(d) the Indebtedness that is refinanced, renewed, or extended is not recourse to
any Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended.

“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal
Reserve Bank of New York, or a committee officially endorsed or convened by the
Federal Reserve Board and/or the Federal Reserve Bank of New York or any
successor thereto.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials in each case as required by
Environmental Laws.

“Reporting Date” means the date on which the Borrowers and their Subsidiaries
are required to deliver to Lender certain financial information as required
pursuant to Section 6.1 of the Credit Agreement.

“Reserves” means, as of any date of determination, the sum of (a) an amount or
percent of a specified item or category of items that Lender establishes from
time to time in its Permitted Discretion to reduce Availability under the
Borrowing Base or the Maximum Revolver Amount to reflect (i) such matters,
events, conditions, contingencies or risks which affect or which may reasonably
be expected to affect the assets, business or prospects of a Borrower, any other
Loan Party or the Collateral or its value or the enforceability, perfection or
priority of Lender’s Liens in the Collateral, or (ii) Lender’s judgment that any
collateral report or financial information relating to a Borrower or any other
Loan Party delivered to Lender is incomplete, inaccurate or misleading in any
material respect, plus (b) the Dilution Reserve and the Bank Product Reserve
Amount.

“Restricted Junior Payment” means (a) any declaration or payment of any dividend
or the making of any other payment or distribution on account of Stock issued by
any Loan Party (including any payment in connection with any merger or
consolidation involving any Loan Party) or to the direct or indirect holders of
Stock issued by any Loan Party in their capacity as such (other

 

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than dividends or distributions payable in Stock (other than Prohibited
Preferred Stock) issued by any Loan Party), or (b) any purchase, redemption, or
other acquisition or retirement for value (including in connection with any
merger or consolidation involving any Loan Party) of any Stock issued by any
Loan Party; provided so long as no Default or Event of Default exists or would
result therefrom, (i) repurchases of Stock issued by Parent solely to satisfy
federal income tax withholding obligations of employees with respect to
stock-based compensation issued to them in accordance with applicable
compensation plans shall not be deemed a Restricted Junior Payment so long as
such repurchases are made in the ordinary course of business and in an aggregate
amount not to exceed $<1,500,000>10,000,000 in any fiscal year of Borrowers,
(ii) Parent may repurchase Stock issued by Parent for an aggregate purchase
price not to exceed $7,500,000, in the aggregate, on or before January 31, 2019
with respect to any vesting of performance based phantom stock units granted by
Parent on October 2, 2015 and June 6, 2016, (iii) NEXT may make distributions of
excess cash to the direct or indirect holders of Stock issued by NEXT, (iv) NEXT
may make distributions to certain equity owners thereof with respect to an
exercise of any such equity owner’s put rights pursuant to Section 10.3 of that
certain Operating Agreement of NEXT Electric LLC dated as of July 14, 2017,
among NEXT and the equity owners of NEXT as in effect as of such date, <and >(v)
in addition to the repurchase of 1,500,000 shares of Stock issued by Parent,
which repurchase was approved by Lender as of December 10, 2015 pursuant to a
Limited Consent and Waiver entered into as of such date (the “Original
Repurchase Amount”), Parent may repurchase 1,000,000 shares of Stock issued by
Parent for an aggregate purchase price (including the purchase price for any
remaining shares of Parent Stock available for repurchase under the Original
Repurchase Amount, which available shares shall not exceed 465,061 shares of
Stock issued by Parent as of the date hereof) not to exceed $25,000,000, in the
aggregate, and (vi) in a single transaction and within 180 days following the
Closing Date, IES Commercial may repurchase any Stock issued by STR Mechanical
to STR Holdings, Inc. for an aggregate purchase price not to exceed $1,000,000.

“Revolver Usage” means, as of any date of determination, the sum of (a) the
amount of outstanding Advances, plus (b) the amount of the Letter of Credit
Usage.

“Revolving Credit Facility” means the revolving line of credit facility
described in Section 2.1 pursuant to which Lender provides Advances to Borrowers
and issues Letters of Credit for the account of Borrowers.

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case<, that is subject to a>
of clauses (a) through (d) that is a target of Sanctions, including a target of
any country sanctions program administered and enforced by OFAC.

“Sanctioned Person” means< a person>, at any time, (a) any a Person named on the
list of Specially Designated Nationals and Blocked Persons maintained by
OFAC<.>, OFAC’s consolidated Non-SDN list or any other Sanctions-related list
maintained by any relevant Governmental Authority, (b) a Person or legal entity
that is a target of Sanctions, (c) any Person operating, organized or resident
in a Sanctioned Entity, or (d) any Person directly or indirectly owned or
controlled (individually or in the aggregate) by or acting on behalf of any such
Person or Persons described in clauses (a) through (c) above.

 

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“Sanctions” means individually and collectively, respectively, any and all
economic sanctions, trade sanctions, financial sanctions, sectoral sanctions,
secondary sanctions, trade embargoes anti-terrorism laws and other sanctions
laws, regulations or embargoes, including those imposed, administered or
enforced from time to time by: (a) the United States of America, including those
administered by OFAC, the U.S. Department of State, the U.S. Department of
Commerce, or through any existing or future executive order, (b) the United
Nations Security Council, (c) the European Union or any European Union member
state, (d) Her Majesty’s Treasury of the United Kingdom, or (d) any other
Governmental Authority with jurisdiction over Lender or any Loan Party or any of
their respective Subsidiaries or Affiliates.

“S&P” has the meaning specified therefor in the definition of Cash Equivalents.

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

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

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Security Interest” has the meaning specified therefor in Section 3.1.

“SOFR” with respect to any day means the secured overnight financing rate
published for such day by the Federal Reserve Bank of New York, as the
administrator of the benchmark, (or a successor administrator) on the Federal
Reserve Bank of New York’s Website.

“Solvent” means, with respect to any Person on a particular date, that, (i) at
fair valuations, the sum of such Person’s assets (and including as assets for
this purpose all rights of subrogation, contribution or indemnification arising
pursuant to any guarantees given by such Person) is greater than all of such
Person’s debts and including subordinated and contingent liabilities computed at
the amount which, such Person has a reasonable basis to believe, represents an
amount which can reasonably be expected to become an actual or matured liability
(and including as to contingent liabilities arising pursuant to any guarantee
the face amount of such liability as reduced to reflect the probability of it
becoming a matured liability); and (ii) such Person is able to pay its debts as
they mature and has (and has a reasonable basis to believe it will continue to
have) sufficient capital (and not unreasonably small capital) to carry on its
business consistent with its practices as of the date hereof.

“Specified Surety Agreements” means the agreements with Chartis, Everest,
Federal Insurance Company, Liberty Mutual and/or any other Surety listed on
Schedule 5.31 to the Information Certificate.

“Springing Lockbox Event” has the meaning specified therefor in Section 2.4(b).

“Stock” means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

 

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“Standard Letter of Credit Practice” means, for Lender, any domestic or foreign
law or letter of credit practices applicable in the city in which Lender issued
the applicable Letter of Credit or, for its branch or correspondent, such laws
and practices applicable in the city in which it has advised, confirmed or
negotiated such Letter of Credit, as the case may be, in each case, (a) which
letter of credit practices are of banks that regularly issue letters of credit
in the particular city, and (b) which laws or letter of credit practices are
required or permitted under ISP or UCP, as chosen in the applicable Letter of
Credit.

“STR Mechanical” means STR Mechanical, LLC a North Carolina limited liability
company.

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.

“Supporting Obligations” means supporting obligations (as such term is defined
in the Code), and includes letters of credit and guaranties issued in support of
Accounts, Chattel Paper, documents, General Intangibles, instruments or
Investment Related Property.

“Surety” means any Person that issues a Surety Bond.

“Surety Bond” means any surety bond, insurance policy, indemnity agreement,
guaranty, letter or credit or other instrument provided by a third party (i.e.,
excluding an Affiliate of the obligor) to an oblige to assure the payment by
and/or performance of an obligor.

“Surety Collateral” (a) all of the right, title and interest of the Borrowers in
and to all existing and future Bonded Contracts and associated contract rights;
(b) Bonded Accounts; (c) all claims, rights and choses in action against any
account debtor on any Surety Bond or against any other Person with respect to
any Surety Bond or Bonded Contract; (d) to the extent assignable (other than to
the extent that any such prohibition and assignment term would be rendered
ineffective pursuant to applicable law) all rights and actions that any Borrower
may have or acquire in any subcontract, purchase order or other agreement in
connection with any Bonded Contract, and against any subcontract, purchase order
or other agreement with any Person furnishing or agreeing to furnish or supply
vehicles, labor, supplies, machinery or other inventory or equipment in
connection with or on account of any Bonded Contract, and against any surety or
sureties of any such subcontractor, laborer or other Person; (e) Bonded
Equipment; (f) Bonded Inventory; (g) any and all books, accounts, computer
software and other computer-stored information, and any and all drawings, plans,
specifications, shop and as-built drawings, in each case, used in or necessary
to fully perform all obligations and services required of any Borrower under the
Bonded Contracts; (h) all progress schedules, work in process schedules
(including, but not limited to, estimates of completion costs), accounts
receivable ledgers, accounts payable ledgers and estimates of completion costs
relating to any and all Bonded Contracts, and (i) any and all proceeds (other
than such proceeds which are negotiable instruments or cash or Cash Equivalents
in the possession or control of Lender) remaining due to Borrowers and products
arising with respect thereto.

 

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“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein with respect to
such payments and all interest, penalties or similar liabilities with respect
thereto; provided, however, that Taxes shall exclude any tax imposed on the net
income or net profits of Lender (including any branch profits taxes), in each
case imposed by the jurisdiction (or by any political subdivision or taxing
authority thereof in which Lender is organized or the jurisdiction (or by any
political subdivision or taxing authority thereof) in which Lender’s principal
office is located in each case as a result of a present or former connection
between Lender and the jurisdiction or taxing authority imposing the tax (other
than any such connection arising solely from Lender having executed, delivered
or performed its obligations or received payment under, or enforced its rights
or remedies under this Agreement or any other Loan Document).

“Termination Date” has the meaning specified therefor in Section 2.9.

“Term SOFR” means the forward-looking term rate based on SOFR that has been
selected or recommended by the Relevant Governmental Body.

“Third Amendment Closing Date” shall mean September 9, 2016.

“Tontine” means Tontine Capital Partners L.P. and its respective Affiliates

“Trademarks” means any and all trademarks, trade names, registered trademarks,
trademark applications, service marks, registered service marks and service mark
applications, including (i) the trade names, registered trademarks, trademark
applications, registered service marks and service mark applications listed on
Schedule 5.26(b) to the Information Certificate (as such Schedule may be updated
from time to time to reflect changes resulting from transactions permitted under
this Agreement), (ii) all renewals thereof, (iii) all income, royalties, damages
and payments now and hereafter due or payable under and with respect thereto,
including payments under all licenses entered into in connection therewith and
damages and payments for past or future infringements or dilutions thereof,
(iv) the right to sue for past, present and future infringements and dilutions
thereof, (v) the goodwill of each Loan Party’s business symbolized by the
foregoing or connected therewith, and (vi) all of each Loan Party’s rights
corresponding thereto throughout the world.

“UCP” means, with respect to any Letter of Credit, the Uniform Customs and
Practice for Documentary Credits 2007 Revision, International Chamber of
Commerce Publication No. 600 and any version or revision thereof accepted by
Lender for use.

“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the
Benchmark Replacement Adjustment.

“Uniform Customs” means the Uniform Customs and Practice for Documentary Credits
(2007 Revision), effective July, 2007 International Chamber of Commerce
Publication No. 600.

 

Schedule 1.1

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“United States” means the United States of America.

“Unused Amount” has the meaning specified therefor in Schedule 2.12 of this
Agreement.

“URL” means “uniform resource locator,” an internet web address.

“Value” means, as determined by Lender in good faith, with respect to Inventory,
the lower of (a) cost computed on a first-in first-out basis in accordance with
GAAP or (b) market value, provided that for purposes of the calculation of the
Borrowing Base, (i) the Value of the Inventory shall not include: (A) the
portion of the value of Inventory equal to the profit earned by any Affiliate on
the sale thereof to any Borrower or (B) write-ups or write-downs in value with
respect to currency exchange rates and (ii) notwithstanding anything to the
contrary contained herein, the cost of the Inventory shall be computed in the
same manner and consistent with the most recent appraisal of the Inventory
received and accepted by Lender, if any.

“Voidable Transfer” has the meaning specified therefor in Section 17.7.

“Wells Fargo” means Wells Fargo Bank, National Association, a national banking
association.

b. Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP; provided, however, that if any Borrower
notifies Lender that such Borrower requests an amendment to any provision hereof
to eliminate the effect of any change in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions) (an
“Accounting Change”) occurring after the Closing Date, or in the application
thereof (or if Lender notifies any Borrower that Lender requests an amendment to
any provision hereof for such purpose), regardless of whether any such notice is
given before or after such Accounting Change or in the application thereof, then
Lender and Borrowers agree that they will negotiate in good faith amendments to
the provisions of this Agreement that are directly affected by such Accounting
Change with the intent of having the respective positions of the Lender and each
Borrower after such Accounting Change conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon, the provisions in this Agreement shall be
calculated as if no such Accounting Change had occurred; provided, further, that
if any Accounting Change resulting from the effectiveness of ASC 842 that
requires that all leases be capitalized on the balance sheet, (i) all financial
statements delivered hereunder shall be prepared in accordance with GAAP, giving
effect to such Accounting Change, (ii) the calculations performed to determine
compliance with the covenants set forth in Article 8 (and all related
definitions) and all other relevant covenants, baskets and other provisions
relating to Indebtedness or interest expense shall be calculated without giving
effect to such Accounting Change, and (iii) the Administrative Borrower shall
provide reconciliations, in form and substance reasonably satisfactory to the
Lender, reflecting such calculations that disregard such Accounting Change,
together with each Compliance Certificate. Whenever used herein, the term
“financial statements” shall include the footnotes and schedules thereto.
Whenever the term “Borrower” is used in respect of a financial covenant or a
related definition, it shall be understood to mean Borrowers and their
respective Subsidiaries on a consolidated basis, unless the context clearly
requires otherwise.

 

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c. Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein.
The meaning of any term defined herein by reference to the Code will not be
limited by reason of any limitation set forth on the scope of the Code, whether
under Section 9-109 of the Code, by reason of federal preemption or otherwise.

d. Construction. Unless the context of this Agreement or any other Loan Document
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the terms “includes” and
“including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). The words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts, and contract rights. Any reference herein or in any other Loan
Document to the satisfaction, repayment, or payment in full of the Obligations
shall mean the repayment in full in cash or immediately available funds (or,
(a) in the case of contingent reimbursement obligations with respect to Letters
of Credit, providing Letter of Credit Collateralization, and (b) in the case of
obligations with respect to Bank Products (other than Hedge Obligations),
providing Bank Product Collateralization) of all of the Obligations (including
the payment of any Lender Expenses that have accrued irrespective of whether
demand has been made therefor and the payment of any termination amount then
applicable (or which would or could become applicable as a result of the
repayment of the other Obligations) under Hedge Agreements) other than
unasserted contingent indemnification Obligations. Any reference herein to any
Person shall be construed to include such Person’s successors and assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record. References herein to any statute or
any provision thereof include such statute or provision (and all rules,
regulations and interpretations thereunder) as amended, revised, re-enacted, and
/or consolidated from time to time and any successor statute thereto.

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

f. Divisions. For all purposes under the Loan Documents, in connection with any
division or plan of division under Delaware law (or any comparable event under a
different jurisdiction’s laws): (a) if any asset, right, obligation or liability
of any Person becomes the asset, right, obligation or liability of a different
Person, then it shall be deemed to have been transferred from the original
Person to the subsequent Person, and (b) if any new Person comes into existence,
such new Person shall be deemed to have been organized on the first date of its
existence by the holders of its Equity Interests at such time.

 

Schedule 1.1

Page 49

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Schedule 2.12

TO SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

Borrowers shall pay to Lender each of the following fees:

On the Closing Date:

Amendment Fee. A one-time amendment fee of $150,000 in connection with the
increase to the Maximum Revolver Amount which shall be fully earned and payable
upon the execution of this Agreement.

Monthly:

(a) Unused Fee. An unused line fee of one-quarter of one percent (0.25%) per
annum of the daily average of the Maximum Revolver Amount reduced by outstanding
Advances (the “Unused Amount”), from the date of this Agreement to and including
the Termination Date, which unused line fee shall be payable monthly in arrears
on the first day of each month and on the Termination Date.

(b) Cash Management and Other Service Fees. Service fees to Lender for Cash
Management Services provided pursuant to the Cash Management Documents, Bank
Product Agreements or any other agreement entered into by the parties, including
Lender’s customary fees and charges (as adjusted from time to time) with respect
to the disbursement of funds (or the receipt of funds) to or for the account of
Borrowers (whether by wire transfer or otherwise) in the amount prescribed in
Lender’s current service fee schedule.

(c) Letter of Credit Fees. A Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.13(e)) which shall accrue at
a per annum rate equal to the applicable Interest Rate Margin times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit, payable in
arrears on the first day of each month and on the Termination Date and
continuing until all undrawn Letters of Credit have expired or been returned for
cancellation. All fees upon the occurrence of any other activity with respect to
any Letter of Credit (including, without limitation, the issuance, transfer,
amendment, extension or cancellation of any Letter of Credit and honoring of
draws under any Letter of Credit) determined in accordance with Lender’s
standard fees and charges then in effect for such activity.

Quarterly:

Collateral Monitoring Fee. A collateral monitoring fee of five thousand ($5,000)
is due and payable on the Closing Date, and thereafter quarterly in arrears on
the first (1st) day of each quarter and on the Termination Date.

 

Schedule 2.12

Page 1

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Upon demand by Lender or as otherwise specified in this Agreement:

(a) Collateral Exam Fees, Costs and Expenses. Lender’s fees, costs and expenses
in connection with any collateral exams, audits or inspections conducted by or
on behalf of Lender at the current rates established from time to time by Lender
as its fee for collateral exams, audits or inspections (which fees are currently
$125 per hour per collateral examiner), together with all actual out-of-pocket
costs and expenses incurred in conducting any collateral exam, audit, or
inspection; provided, however, (i) so long as no Default or Event of Default
shall have occurred and be continuing, Borrowers shall be obligated to reimburse
Lender for fees, costs and expenses related to no more than <three>one (<3>1 )
such collateral exams, audits and inspections per location, per fiscal year, and
(ii) <after the first anniversary of the Original Closing Date, so long as
(x) no Default or Event of Default shall have occurred and be continuing during
such fiscal year and (y) the applicable Interest Rate Margin has been designated
at “Level 2” or “Level 3” (as described in the definition of Interest Rate
Margin) at all times during such fiscal year>if Liquidity is less than twenty
percent (20%) of the Maximum Revolver Amount at any time, Borrowers shall be
obligated to reimburse Lender for fees, costs and expenses related to not more
than two (2) such collateral exams, audits and inspections, per location, for
such fiscal year; provided that for purposes of calculating Liquidity under this
clause (ii), no more than 50% of Liquidity shall be comprised of Qualified Cash.
In addition, Borrowers shall be obligated to reimburse Lender for all fees,
costs and expenses related to any collateral exams, audits or inspections
obtained prior to the Original Closing Date.

(b) Appraisal Fees, Costs and Expenses. Lender’s fees, costs and expenses
(including any fees, costs and expenses incurred by any appraiser) in connection
with any appraisal of all or any part of the Collateral conducted at the request
of Lender; provided, however, so long as no Default or Event of Default shall
have occurred and be continuing, Borrowers shall be obligated to reimburse
Lender for fees, costs and expenses related to not more than one (1) appraisal
of Borrowers’ Inventory during each fiscal year.

 

Schedule 2.12

Page 2

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Schedule 6.1

TO SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

Deliver to Lender, each of the financial statements, reports, or other items set
forth below at the following times in form satisfactory to Lender:

 

as soon as available, but in any event within thirty (30) days after the end of
each month    (a) a Compliance Certificate along with the underlying
calculations, including the calculations to establish compliance with the
financial covenants set forth in Section 8 and certain other covenants under
this Agreement, as well as calculations of Liquidity, Excess Availability and,
if required, Fixed Charge Coverage Ratio. as soon as available, but in any event
within forty-five (45) days after the end of each fiscal quarter, which, with
respect to term (a), shall be deemed to be delivered to Lender upon filing of
the same with the SEC on EDGAR, or as otherwise described in the adjacent
column, as applicable   

(a) an unaudited consolidated balance sheet, income statement, statement of cash
flow, and statement of shareholder’s equity with respect to the Borrowers and
their respective Subsidiaries during such period and compared to the prior
period and plan, prepared in accordance with GAAP, subject to year-end audit
adjustments and the absence of footnotes, together with a corresponding
discussion and analysis of results from management; provided, however, that if,
at any time, Liquidity is less than twenty-five percent (25%) of the Maximum
Revolver Amount (or at least fifty percent (50%) of such Liquidity is not
comprised of Excess Availability) then the items listed under this clause (a)
shall be delivered to Lender as soon as available, but in any event within
thirty (30) days after the end of each month until such time as until such time
as Borrowers have demonstrated Liquidity in excess of twenty-five percent (25%)
of the Maximum Revolver Amount (with at least fifty percent (50%) of such
Liquidity comprised of Excess Availability) for thirty (30) consecutive days;
and

 

(b) a Compliance Certificate along with the underlying calculations, including
the calculations to establish compliance with the financial covenants set forth
in Section 8 and certain other covenants under this Agreement, as well as
calculations of Liquidity, Excess Availability and Fixed Charge Coverage Ratio.

as soon as available, but in any event within one hundred twenty (120) days
after the end of each fiscal year, which, with respect to term (a), shall be
deemed to be delivered to Lender upon    (a) consolidated financial statements
of Borrowers and their respective Subsidiaries for such fiscal year, audited by
Ernst & Young or another independent certified public accountant reasonably
acceptable to Lender, prepared in accordance with GAAP, and certified, without
any qualifications (including any (A) “going concern” or like qualification or
exception, (B) qualification or exception as to the scope of such audit, or

 

Schedule 6.1

Page 1

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filing of the same with the SEC on EDGAR   

(C) qualification which relates to the treatment or classification of any item
and which, as a condition to the removal of such qualification, would require an
adjustment to such item), by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a balance
sheet, income statement, statement of cash flow, and statement of shareholder’s
equity and, if prepared, such accountants’ letter to management); and

 

(b) a Compliance Certificate along with the underlying calculations, including
the calculations to establish compliance with the financial covenants set forth
in Section 8 and certain other covenants under this Agreement, as well as
calculations of Liquidity, Excess Availability and Fixed Charge Coverage Ratio.

as soon as available, but in any event on or before the last day of each fiscal
year,    (a) copies of Borrowers’ Projections, in form and substance (including
as to scope and underlying assumptions) satisfactory to Lender, in its Permitted
Discretion, for the forthcoming fiscal year, on a monthly basis. if and when
filed by any Borrower, all of which shall be deemed to be delivered to Lender
upon filing of the same with the SEC on EDGAR.   

(a) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current
reports;

 

(b) any other filings made by any Borrower with the SEC; and

 

(c) any other information that is provided by any Borrower to its shareholders
generally.

 

Schedule 6.1

Page 2

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Schedule 6.2

TO SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

Provide Lender with each of the documents and information set forth below at the
following times in form and substance satisfactory to Lender:

 

On or prior to the twenty-third (23rd) day of each month or more frequently if
Lender requests   

(a) a Borrowing Base Certificate; provided, that if, at any time, Liquidity is
less than thirty-five percent (35%) of the Maximum Revolver Amount (or at least
fifty percent (50%) of such Liquidity is not comprised of Excess Availability),
then a Borrowing Base Certificate shall be delivered to Lender on Friday of each
calendar week until such time as Borrowers have demonstrated Liquidity in excess
of twenty percent (20%) of the Maximum Revolver Amount (with at least fifty
percent (50%) of such Liquidity comprised of Excess Availability) for thirty
(30) consecutive days;

 

(b) an Account roll-forward with supporting details to the extent requested by
Lender;

 

(c) to the extent requested by Lender, notice of all claims, offsets, or
disputes asserted by Account Debtors with respect to each Borrower’s and its
Subsidiaries’ Accounts; and

 

(d) to the extent requested by Lender, copies of invoices together with
corresponding shipping and delivery documents and credit memos together with
corresponding supporting documentation with respect to invoices and credit memos
in excess of an amount determined in the sole discretion of Lender from time to
time.

Upon request by Lender    (a) to the extent Borrowers have requested that Lender
make any Advances on its Inventory, Inventory system/perpetual reports
specifying the cost of each Borrower’s and its Subsidiaries’ Inventory, by
location and by category, with additional detail showing additions to and
deletions therefrom (delivered electronically in an acceptable format, if a
Borrower has implemented electronic reporting). Upon request by Lender   

(a) a monthly Account roll-forward, in a format acceptable to Lender in its
discretion;

 

(b) a detailed aging of each Borrower’s Accounts, together with a reconciliation
to the monthly Account roll-forward and supporting documentation for any
reconciling items noted (delivered electronically in an acceptable format, if a
Borrower has implemented electronic reporting);

 

Schedule 6.2

Page 1

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(c) a detailed calculation of those Accounts that are not eligible for the
Borrowing Base;

 

(d) to the extent Borrowers have requested that Lender make any Advances on its
Inventory, a detailed Inventory system/perpetual report (delivered
electronically in an acceptable format, if a Borrower has implemented electronic
reporting);

 

(e) to the extent Borrowers have requested that Lender make any Advances on its
Inventory, a detailed calculation of Inventory categories that are not eligible
for the Borrowing Base;

 

(f) a summary aging, by vendor, of each Borrower’s and its Subsidiaries’
accounts payable (delivered electronically in an acceptable format, if a
Borrower has implemented electronic reporting); and

 

(g) a detailed report regarding each Borrower’s and its Subsidiaries’ cash and
Cash Equivalents, including an indication of which amounts constitute Qualified
Cash.

Upon request by Lender    (a) a reconciliation of Accounts aging, trade accounts
payable aging, and Inventory perpetual of each Borrower to the general ledger
and the monthly financial statements, including any book reserves related to
each category. Upon request by Lender    (a) a detailed list of each Borrower’s
and its Subsidiaries’ customers, with address and contact information. Upon
request by Lender   

(a) copies of purchase orders and invoices for Inventory and Equipment acquired
by each Borrower or its Subsidiaries, and

 

(b) such other reports and information as to the Collateral and as to each as
Lender may reasonably request.

 

Schedule 6.2

Page 2

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EXHIBIT A

TO SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

FORM OF COMPLIANCE CERTIFICATE

[on Borrower’s letterhead]

 

To:

Wells Fargo Bank, National Association

MAC S4101-158

100 W. Washington St. 15th Floor

Phoenix, AZ 85003-1808

Attention: <Howard I. Handman>Michael L. Gerard

 

Re:

Compliance Certificate dated [                ]

Ladies and Gentlemen:

Reference is made to that certain Second Amended and Restated Credit and
Security Agreement (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”) dated as of April 10, 2017, by and
among WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”), IES HOLDINGS, INC., a
Delaware corporation; IES COMMUNICATIONS, LLC, a Delaware limited liability
company; IES COMMERCIAL, INC., a Delaware corporation; IES MANAGEMENT LP, a
Texas limited partnership; IES MANAGEMENT ROO, LP, a Texas limited partnership;
IES <PURCHASING & MATERIALS, INC., a Delaware corporation; IES >RESIDENTIAL,
INC., a Delaware corporation; INTEGRATED ELECTRICAL FINANCE, INC., a Delaware
corporation; IES SUBSIDIARY HOLDINGS, INC., a Delaware corporation; MAGNETECH
INDUSTRIAL SERVICES, INC., an Indiana corporation; <HK ENGINE COMPONENTS, LLC,
an Indiana limited liability company; IES RENEWABLE ENERGY, LLC, a Delaware
limited liability company >SOUTHERN INDUSTRIAL SALES AND SERVICES, INC., a
Georgia corporation d/b/a Southern Rewinding and Sales, CALUMET ARMATURE AND
ELECTRIC, L.L.C., an Illinois limited liability company, <SHANAHAN MECHANICAL
AND ELECTRICAL, INC., a Nebraska corporation, >IES INFRASTRUCTURE SOLUTIONS,
LLC, a Delaware limited liability company, TECHNIBUS, INC., a Delaware
corporation, FREEMAN ENCLOSURE SYSTEMS, LLC, an Ohio limited liability company,
STRATEGIC EDGE LLC, an Ohio limited liability company (each, individually a
“Borrower”, and collectively, the “Borrowers”), IES CONSOLIDATION, LLC, a
Delaware limited liability company; IES <PROPERTIES, INC., a Delaware
corporation; IES >SHARED SERVICES, INC., a Delaware corporation<; IES TANGIBLE
PROPERTIES, INC., a Delaware corporation>; KEY ELECTRICAL SUPPLY, INC., a Texas
corporation; IES OPERATIONS GROUP, INC., a Delaware corporation and ICS HOLDINGS
LLC, an Arizona limited liability company (each, individually a (“Guarantor”),
and collectively, the “Guarantors”). Capitalized terms used in this Compliance
Certificate have the meanings set forth in the Credit Agreement unless
specifically defined herein.

 

Exhibit A

Page 2

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Pursuant to Schedule 6.1 of the Credit Agreement, the undersigned officer of
Parent, or Administrative Borrower, hereby certifies that:

1. Attached is the financial information of Borrowers and their Subsidiaries
which is required to be furnished to Lender pursuant to Section 6.1 of the
Credit Agreement for the period ended             ,             (the “Reporting
Date”). Such financial information has been prepared in accordance with GAAP
[(except for year-end adjustments and the lack of footnotes)]1, and fairly
presents in all material respects the financial condition of Borrowers and their
Subsidiaries.

2. Such officer has reviewed the terms of the Credit Agreement and has made, or
caused to be made under his/her supervision, a review in reasonable detail of
the transactions and condition of each Borrower and its Subsidiaries during the
accounting period covered by the financial statements delivered pursuant to
Schedule 6.1 of the Credit Agreement.

3. Such review has not disclosed the existence on and as of the date hereof, and
the undersigned does not have knowledge of the existence as of the date hereof,
of any event or condition that constitutes a Default or Event of Default.

4. The representations and warranties of each Loan Party and its Subsidiaries
set forth in the Credit Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date hereof (except to the
extent they relate to a specified date).

5. Borrowers’ Liquidity, Excess Availability and Fixed Charge Coverage Ratio
calculations are demonstrated on Schedule 1 hereof.

6. As of the Reporting Date, the Borrowers and their respective Subsidiaries are
in compliance with the applicable covenants contained in Section 8 of the Credit
Agreement, if applicable, as demonstrated on Schedule 1 hereof.

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned
this [            ] day of [            ], [            ].

 

IES HOLDINGS, INC.

By:  

 

Name:  

 

Title:  

 

 

 

1 

Exclude bracketed language with annual audits

 

Exhibit A

Page 3

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SCHEDULE 1 TO COMPLIANCE CERTIFICATE

Financial Covenants

I further certify that (Please check and complete each of the following):

1. Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio of the Borrowers
and their Subsidiaries, measured on a trailing four-quarter basis, for the
applicable quarter-end is              to 1.0 which [does/does not] satisfy the
requirement set forth in Section 8(a) of the Credit Agreement that the Fixed
Charge Coverage Ratio be not less than 1.1 to 1.0. Attached to this Schedule 1
are calculations supporting the foregoing calculation with respect to the Fixed
Charge Coverage Ratio.

2. Minimum Liquidity. The Liquidity of the Borrowers during the recent month was
no less than $             which [does/does not] satisfy the requirement set
forth in Section 8(b) of the Credit Agreement that the Borrowers maintain a
minimum Liquidity of at least thirty percent (30%) of the Maximum Revolver
Amount. The Borrower’s Excess Availability during the recent month was no less
than $            which [does/does not] satisfy the requirement set forth in
Section 8(b) of the Credit Agreement that at least fifty percent (50%) of the
Borrowers’ Liquidity be comprised of Excess Availability. Attached to this
Schedule 1 are calculations supporting the foregoing calculation with respect to
the Liquidity and Excess Availability.

<3. Minimum EBITDA. The EBITDA of Borrowers, measured on a trailing four-quarter
period for the applicable quarter-end is $            [ which [does/does not]
satisfy the requirement set forth in Section 8(c) of the Credit Agreement that
the Borrowers maintain a minimum EBITDA for the applicable period set forth
therein].><2>

 

<2 Minimum EBITDA will be included with the delivery of each Compliance
Certificate, but it will only be tested during a EBITDA Covenant Testing
Period.>

 

Exhibit A

Page 4

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EXHIBIT B

TO SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

CONDITIONS PRECEDENT

The obligation of Lender to make its initial extension of credit provided for in
this Agreement is subject to the fulfillment, to the satisfaction of Lender, of
each of the following conditions precedent:

(a) Lender shall have received each of the following documents, in form and
substance satisfactory to Lender, duly executed, and each such document shall be
in full force and effect:

(i) This Agreement;

(ii) Omnibus Reaffirmation of Loan Documents;

(iii) Intercompany Subordination Agreement; and

(iv) Any other Loan Documents requested by Lender;

(b) Lender shall have received a certificate from the Secretary of each Loan
Party (i) attesting to the resolutions of such Loan Party’s Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Loan Party is a party, (ii) authorizing
specific officers of such Loan Party to execute the same, and (iii) attesting to
the incumbency and signatures of such specific officers of such Loan Party;

(c) Lender shall have received copies of each Loan Party’s Governing Documents,
as amended, modified, or supplemented to the Closing Date, certified as true,
correct and complete by the Secretary of such Loan Party, each in form and
substance reasonably satisfactory to Lender;

(d) Lender shall have received a certificate of status with respect to each Loan
Party, dated within thirty (30) days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of each
Loan Party, which certificate shall indicate that such Loan Party is in good
standing in such jurisdiction;

(e) Lender shall have received copies of the policies of insurance and
certificates of insurance, together with the endorsements thereto, as are
required by Section 6.6, the form and substance of which shall be satisfactory
to Lender;

(f) Lender shall have received an opinion of each Loan Party’s counsel in form
and substance satisfactory to Lender;

(g) Borrowers’ and their Subsidiaries’ Liquidity is not less than $40,000,000,
and Excess Availability is not less than $20,000,000.

 

Exhibit B

Page 1

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

(h) Lender shall have completed its business, legal, and collateral due
diligence, including (i) a collateral examination and review of each Borrower’s
and its Subsidiaries Books and verification of each Loan Party’s representations
and warranties to Lender, the results of which must be satisfactory to Lender,
and (ii) an inspection of each of the locations where the Inventory of each Loan
Party and its Subsidiaries is located, the results of which must be satisfactory
to Lender;

(i) Borrowers shall have paid all Lender Expenses incurred in connection with
the transactions evidenced by this Agreement;

(j) since the date of the most recent financial statements delivered to Lender,
no event, circumstance, or change shall have occurred that has or could
reasonably be expected to result in a Material Adverse Change with respect to
the Loan Parties and their Subsidiaries;

(k) all other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded
and shall be in form and substance satisfactory to Lender; and

(l) Lender shall have received final credit approval for the Credit Facility and
the transactions described in this Agreement.

 

Exhibit B

Page 2

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EXHIBIT C

TO SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

CONDITIONS SUBSEQUENT

[Except as set forth in Credit Agreement, none.]

 

Exhibit C

Page 1

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EXHIBIT D

TO SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

REPRESENTATIONS AND WARRANTIES

5.1 Due Organization and Qualification; Subsidiaries.

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

(b) Set forth on Schedule 5.1(b) to the Information Certificate is a complete
and accurate description of the authorized capital Stock of each Loan Party, by
class, and, as of the Closing Date, a description of the number of shares of
each such class that are issued and outstanding. Other than as described on
Schedule 5.1(b) to the Information Certificate, there are no subscriptions,
options, warrants, or calls relating to any shares of any Loan Party’s capital
Stock, including any right of conversion or exchange under any outstanding
security or other instrument. No Loan Party is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital Stock or any security convertible into or exchangeable for
any of its capital Stock.

(c) Set forth on Schedule 5.1(c) to the Information Certificate (as such
Schedule may be updated from time to time to reflect changes resulting from
transactions permitted under this Agreement), is a complete and accurate list of
the Loan Parties’ direct and indirect Subsidiaries, showing: (i) the number of
shares of each class of common and preferred Stock authorized for each of such
Subsidiaries, and (ii) the number and the percentage of the outstanding shares
of each such class owned directly or indirectly by each Loan Party. All of the
outstanding capital Stock of each such Subsidiary has been validly issued and is
fully paid and non-assessable.

(d) Except as set forth on Schedule 5.1(d) to the Information Certificate, there
are no subscriptions, options, warrants, or calls relating to any shares of any
capital stock or any Loan Party or of any of its Subsidiaries, including any
right of conversion or exchange under any outstanding security or other
instrument. No Loan Party nor any of its Subsidiaries is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of such Loan Party’s Subsidiaries’ capital Stock or any
security convertible into or exchangeable for any such capital Stock.

5.2 Due Authorization; No Conflict.

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

 

Exhibit D

Page 1

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

5.3 Governmental and Other Consents. No consent, approval, authorization, or
other order or other action by, and no notice to or filing with, any
Governmental Authority or any other Person is required (a) for the grant of a
Lien by such Loan Party in and to the Collateral pursuant to this Agreement or
the other Loan Documents or for the execution, delivery, or performance of this
Agreement by such Loan Party, or (b) for the exercise by Lender of the voting or
other rights provided for in this Agreement with respect to the Investment
Related Property or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with such disposition of
Investment Related Property by laws affecting the offering and sale of
securities generally. Except as set forth on Schedule 5.3 to the Information
Certificate, no Intellectual Property License of any Loan Party that is
necessary to the conduct of such Loan Party’s business requires any consent of
any other Person in order for such Loan Party to grant the security interest
granted hereunder in such Loan Party’s right, title or interest in or to such
Intellectual Property License.

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

5.5 Title to Assets; No Encumbrances. Each of the Loan Parties and its
Subsidiaries has (a) good, sufficient and legal title to (in the case of fee
interests in Real Property), (b) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (c) good and marketable
title to (in the case of all other personal property), all of their respective
assets reflected in their most recent financial statements delivered pursuant to
Section 6.1 and most recent collateral reports delivered pursuant to
Section 6.2, in each case except for assets disposed of since the date of such
financial statements to the extent permitted hereby. All of such assets are free
and clear of Liens except for Permitted Liens.

 

Exhibit D

Page 2

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5.6 Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims.

(a) The exact legal name of (within the meaning of Section 9-503 of the Code)
and jurisdiction of organization of each Loan Party and each of its Subsidiaries
is set forth on Schedule 5.6(a) to the Information Certificate (as such Schedule
may be updated from time to time to reflect changes resulting from transactions
permitted under this Agreement).

(b) The chief executive office of each Loan Party and each of its Subsidiaries
is located at the address indicated on Schedule 5.6(b) to the Information
Certificate (as such Schedule may be updated from time to time to reflect
changes resulting from transactions permitted under this Agreement).

(c) The tax identification number and organizational identification number, if
any, of each Loan Party and each of its Subsidiaries are identified on Schedule
5.6(c) to the Information Certificate (as such Schedule may be updated from time
to time to reflect changes resulting from transactions permitted under this
Agreement).

(d) As of the Closing Date, no Loan Party and no Subsidiary of a Loan Party
holds any asserted Commercial Tort Claims or, to its knowledge, holds any
unasserted Commercial Tort Claims, in either case, that exceed $500,000 in
amount, except as set forth on Schedule 5.6(d) to the Information Certificate
(as such Schedule may be updated from time to time to reflect changes resulting
from transactions permitted under this Agreement).

5.7 Litigation.

(a) There are no actions, suits, or proceedings pending or, to the knowledge of
any Loan Party, after due inquiry, threatened in writing against a Loan Party or
any of its Subsidiaries that either individually or in the aggregate could
reasonably be expected to result in a Material Adverse Change.

(b) Schedule 5.7(b) to the Information Certificate sets forth a complete and
accurate description, with respect to each of the actions, suits, or proceedings
with asserted liabilities in excess of, or that could reasonably be expected to
result in liabilities in excess of, $500,000 in any one case or in excess of
$1,500,000 in the aggregate that, as of the Closing Date, is pending or, to the
knowledge of any Loan Party, after due inquiry, threatened in writing against
any Loan Party or any of its Subsidiaries, including (i) the parties to such
actions, suits, or proceedings, (ii) the nature of the dispute that is the
subject of such actions, suits, or proceedings, (iii) the status, as of the
Closing Date, with respect to such actions, suits, or proceedings, and
(iv) whether any liability of any Loan Party or any Subsidiary in connection
with such actions, suits, or proceedings is covered by insurance.

5.8 Compliance with Laws. No Loan Party nor any of its Subsidiaries (a) is in
violation of any applicable laws, rules, regulations, executive orders, or codes
(including Environmental Laws) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Change, or (b) is subject
to or in default with respect to any final judgments, writs, injunctions,
decrees, rules or regulations of any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Change.

 

Exhibit D

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

5.10 Fraudulent Transfer.

(a) Each Loan Party (other than Guarantors) is Solvent.

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

(c) No Loan Party that is a Guarantor has any operations or owns any material
assets.

5.11 Employee Benefits. No Loan Party, none of their Subsidiaries, or any of
their ERISA Affiliates maintains or contributes to any Benefit Plan.

5.12 Environmental Condition. Except as set forth on Schedule 5.12 to the
Information Certificate, (a) to each Loan Party’s knowledge, no properties or
assets of any Loan Party or any of its Subsidiaries have ever been used by a
Loan Party, its Subsidiaries, or by previous owners or operators in the disposal
of, or to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such disposal, production, storage, handling, treatment,
release or transport was in violation, in any material respect, of any
applicable Environmental Law, (b) to each Loan Party’s knowledge, after due
inquiry, no Loan Party’s nor any of its Subsidiaries’ properties or assets have
ever been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, (c) no Loan Party nor
any of its Subsidiaries has received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by a Loan Party or its Subsidiaries, and (d) no Loan Party nor any of
its Subsidiaries nor any of their respective facilities or operations is subject
to any outstanding written order, consent decree, or settlement agreement with
any Person relating to any Environmental Law or Environmental Liability that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Change.

5.13 Intellectual Property. Each Loan Party and each of its Subsidiaries own, or
hold licenses in, all trademarks, trade names, copyrights, patents, and licenses
that are necessary to the conduct of its business as currently conducted.

 

Exhibit D

Page 4

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5.14 Leases. Each Loan Party and each of its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
it is a party or under which it is operating, and, subject to Permitted
Protests, all of such material leases are valid and subsisting and no material
default by the applicable Loan Party or the applicable Subsidiary exists under
any of them.

5.15 Deposit Accounts and Securities Accounts. Set forth on Schedule 5.15 to the
Information Certificate (as updated pursuant to Section 6.12(j)(iv)) is a
listing of all of the Deposit Accounts and Securities Accounts of each Loan
Party and each of its Subsidiaries, including, with respect to each bank or
securities intermediary (a) the name and address of such Person, and (b) the
account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.

5.16 Complete Disclosure. All factual information taken as a whole (other than
forward-looking information and projections and information of a general
economic nature and general information about the industry of a Loan Party or
any of its Subsidiaries) furnished by or on behalf of a Loan Party or any of its
Subsidiaries in writing to Lender (including all information contained in the
Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement or the other Loan Documents, and all other such
factual information taken as a whole (other than forward-looking information and
projections and information of a general economic nature and general information
about the industry of a Loan Party or any of its Subsidiaries) hereafter
furnished by or on behalf of a Loan Party or any of its Subsidiaries in writing
to Lender will be, true and accurate, in all material respects, on the date as
of which such information is dated or certified and not incomplete by omitting
to state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances
under which such information was provided. The Projections most recently
delivered to Lender represent, and as of the date on which any other Projections
are delivered to Lender, such additional Projections represent, each Borrowers’
good faith estimate, on the date such Projections are delivered, of the future
performance of a Loan Party or any of its Subsidiaries for the periods covered
thereby based upon assumptions believed by Borrowers to be reasonable at the
time of the delivery thereof to Lender.

5.17 Material Contracts. Set forth on Schedule 5.17 to the Information
Certificate (as such Schedule may be updated from time to time in accordance
herewith) is a reasonably detailed description of the Material Contracts of each
Loan Party and each of its Subsidiaries as of the most recent date on which
Borrowers provided their Compliance Certificate pursuant to Section 6.1;
provided, however, that any Borrower may amend Schedule 5.17 to the Information
Certificate to add additional Material Contracts so long as such amendment
occurs by written notice to Lender on the date that such Borrower provides its
Compliance Certificate. Except for matters which, either individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Change, each Material Contract (other than those that have expired at the end of
their normal terms) (a) is in full force and effect and is binding upon and
enforceable against the applicable Loan Party or the applicable Subsidiary and,
to such Borrower’s knowledge, after due inquiry, each other Person that is a
party thereto in accordance with its terms, (b) has not been otherwise amended
or modified (other than amendments or modifications permitted by
Section 7.7(b)), and (c) is not in default due to the action or inaction of the
applicable Loan Party or the applicable Subsidiary.

 

Exhibit D

Page 5

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5.18 Patriot Act. To the extent applicable, each Loan Party and each of its
Subsidiaries is in compliance, in all material respects, with the (a) Trading
with the Enemy Act, as amended, and each of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) and any other enabling legislation or executive order
relating thereto, and (b) Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act
of 2001) (the “Patriot Act”). No part of the proceeds of the loans made
hereunder will be used by any Loan Party or any of its Subsidiaries or any of
their Affiliates, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

5.19 Indebtedness. Set forth on Schedule 5.19 to the Information Certificate is
a true and complete list of all Indebtedness of each Loan Party and each of its
Subsidiaries outstanding immediately prior to the Closing Date that is to remain
outstanding immediately after giving effect to the closing hereunder on the
Closing Date and such Schedule accurately sets forth the aggregate principal
amount of such Indebtedness as of the Closing Date.

5.20 Payment of Taxes. Except as otherwise permitted under Section 6.5, all tax
returns of each Loan Party and each of its Subsidiaries required to be filed by
any of them have been timely filed, and all taxes shown on such tax returns to
be due and payable and all assessments, fees and other governmental charges upon
a Loan Party and its Subsidiaries and upon their respective assets, income,
businesses and franchises that are due and payable have been paid when due and
payable. Each Loan Party and each of its Subsidiaries have made adequate
provision in accordance with GAAP for all taxes not yet due and payable. No
Borrower knows of any proposed tax assessment against a Loan Party or any of its
Subsidiaries that is not being actively contested by such Loan Party or such
Subsidiary diligently, (a) in good faith, and by appropriate proceedings;
provided such reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or provided therefor or
(b) that has resulted in a Lien in excess of $500,000 on any of the assets of
any of the Loan Parties.

5.21 Margin Stock. <No>Neither any Loan Party <or>nor any of its Subsidiaries
owns any Margin Stock or is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock. No part of the proceeds of the <loans>Advances made
to Borrowers will be used to purchase or carry any <such >Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any <such
>Margin Stock or for any purpose that violates the provisions of Regulation T, U
or X of the Board of Governors< of the United States Federal Reserve>. Neither
any Loan Party nor any of its Subsidiaries expects to acquire any Margin Stock.

5.22 Governmental Regulation. No Loan Party or any of its Subsidiaries is
subject to regulation under the Federal Power Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable. No Loan Party or any of its
Subsidiaries is a “registered investment company” or a company “controlled” by a
“registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of
1940.

 

Exhibit D

Page 6

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5.23 OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws. No Loan
Party or any of its Subsidiaries is in violation of any <of the country or list
based economic and trade sanctions administered and enforced by OFAC>Sanctions.
No Loan Party or any of its Subsidiaries or, to the knowledge of such Loan
Party, any director, officer, employee, agent or Affiliate of such Loan Party or
such Subsidiary (a) is a Sanctioned Person or a Sanctioned Entity, (b) has
<its>any assets located in Sanctioned Entities, or (c) derives revenues from
investments in, or transactions with Sanctioned Persons or Sanctioned Entities.
Each of the Loan Parties and its Subsidiaries has implemented and maintains in
effect policies and procedures designed to ensure compliance with all Sanctions,
Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Loan Parties
and its Subsidiaries, and to the knowledge of each such Loan Party, each
director, officer, employee, agent and Affiliate of each such Loan Party and
each such Subsidiary, is in compliance with all Sanctions, Anti-Corruption Laws
and Anti-Money Laundering Laws. No proceeds of any <loan made>Advance made or
Letter of Credit issued hereunder will be used to fund any operations in,
finance any investments or activities in, or make any payments to, a Sanctioned
Person or a Sanctioned Entity<.>, or otherwise used in any manner that would
result in a violation of any Sanction, Anti-Corruption Law or Anti-Money
Laundering Law by any Person (including Lender, Bank Product Provider, or other
individual or entity participating in any transaction)..

5.24 Employee and Labor Matters. There is (a) no unfair labor practice complaint
pending or, to the knowledge of Borrowers, threatened against any Loan Party or
any of its Subsidiaries before any Governmental Authority and no grievance or
arbitration proceeding pending or threatened against any Loan Party or any of
its Subsidiaries which arises out of or under any collective bargaining
agreement and that could reasonably be expected to result in a material
liability, (b) no strike, labor dispute, slowdown, stoppage or similar action or
grievance pending or threatened in writing against any Loan Party or any of its
Subsidiaries that could reasonably be expected to result in a material
liability, or (c) to the knowledge of Borrowers, after due inquiry, no union
representation question existing with respect to the employees of any Loan Party
or any of its Subsidiaries and no union organizing activity taking place with
respect to any of the employees of any Loan Party or any of its Subsidiaries. No
Loan Party or any of its Subsidiaries has incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act or similar state
law, which remains unpaid or unsatisfied. The hours worked and payments made to
employees of each Loan Party and each of its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable legal
requirements, except to the extent such violations could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Change.
All material payments due from any Loan Party or any of its Subsidiaries on
account of wages and employee health and welfare insurance and other benefits
have been paid or accrued as a liability on the books of such Loan Party, except
where the failure to do so could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change.

5.25 [Reserved.]

 

Exhibit D

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5.26 Collateral.

(a) Real Property. Schedule 5.26(a) to the Information Certificate sets forth
all Real Property owned by any of the Loan Parties as of the Closing Date.

(b) Intellectual Property.

(i) As of the Closing Date, Schedule 5.26(b) to the Information Certificate (as
such Schedule may be updated from time to time to reflect changes resulting from
transactions permitted under this Agreement) provides a complete and correct
list of: (A) all registered Copyrights owned by any Loan Party, all applications
for registration of Copyrights owned by any Loan Party, and all other Copyrights
owned by any Loan Party and material to the conduct of the business of any Loan
Party; (B) all Intellectual Property Licenses entered into by any Loan Party
pursuant to which (x) any Loan Party has provided any license or other rights in
Intellectual Property owned or controlled by such Loan Party to any other Person
or (y) any Person has granted to any Loan Party any license or other rights in
Intellectual Property owned or controlled by such Person that is material to the
business of such Loan Party, including any Intellectual Property that is
incorporated in any Inventory, software, or other product marketed, sold,
licensed, or distributed by such Loan Party; (C) all Patents owned by any Loan
Party and all applications for Patents owned by any Loan Party; and (D) all
registered Trademarks owned by any Loan Party, all applications for registration
of Trademarks owned by any Loan Party, and all other Trademarks owned by any
Loan Party and material to the conduct of the business of any Loan Party;

(ii) all employees and contractors of each Loan Party who were involved in the
creation or development of any Intellectual Property for such Loan Party that is
necessary to the business of such Loan Party have signed agreements containing
assignment of Intellectual Property rights to such Loan Party and obligations of
confidentiality;

(iii) to each Loan Party’s knowledge after reasonable inquiry, no Person has
infringed or misappropriated or is currently infringing or misappropriating any
Intellectual Property rights owned by such Loan Party, in each case, that either
individually or in the aggregate could reasonably be expected to result in a
Material Adverse Change;

(iv) to each Loan Party’s knowledge after reasonable inquiry, all registered
Copyrights, registered Trademarks, and issued Patents that are owned by such
Loan Party and necessary in to the conduct of its business are valid, subsisting
and enforceable and in compliance with all legal requirements, filings, and
payments and other actions that are required to maintain such Intellectual
Property in full force and effect; and

(v) each Loan Party has taken reasonable steps to maintain the confidentiality
of and otherwise protect and enforce its rights in all trade secrets owned by
such Loan Party that are necessary in the business of such Loan Party;

(c) Valid Security Interest. This Agreement creates a valid security interest in
the Collateral of each Loan Party, to the extent a security interest therein can
be created under the Code, securing the payment of the Obligations. Except to
the extent a security interest in the Collateral cannot be perfected by the
filing of a financing statement under the Code, all filings and

 

Exhibit D

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other actions necessary or desirable to perfect and protect such security
interest have been duly taken or will have been taken upon the filing of
financing statements listing each applicable Loan Party, as a debtor, and Lender
for itself and as agent for the Bank Product Providers, as secured party, in the
jurisdictions listed next to such Loan Party’s name on Schedule 5.6(a) to the
Information Certificate (as such Schedule may be updated from time to time to
reflect changes resulting from transactions permitted under this Agreement).
Upon the making of such filings, Lender shall have a first priority perfected
security interest in the Collateral of each Loan Party to the extent such
security interest can be perfected by the filing of a financing statement,
subject to Permitted Liens which are purchase money Liens. Upon filing of the
Copyright Security Agreement with the United States Copyright Office, filing of
the Patent and Trademark Security Agreement with the PTO, and the filing of
appropriate financing statements in the jurisdictions listed on Schedule 5.6(a)
to the Information Certificate (as such Schedule may be updated from time to
time to reflect changes resulting from transactions permitted under this
Agreement), all action necessary or desirable to protect and perfect the
Security Interest in and to on each Loan Party’s Patents, Trademarks, or
Copyrights has been taken and such perfected Security Interest is enforceable as
such as against any and all creditors of and purchasers from any Loan Party. All
action by any Loan Party necessary to protect and perfect such security interest
on each item of Collateral has been duly taken.

(d) Pledged Interests. (i) Except for the Security Interest created hereby, each
Loan Party is and will at all times be the sole holder of record and the legal
and beneficial owner, free and clear of all Liens other than Permitted Liens, of
the Pledged Interests indicated on Schedule 5.1(c) to the Information
Certificate (as such Schedule may be updated from time to time to reflect
changes resulting from transactions permitted under this Agreement) as being
owned by such Loan Party and, when acquired by such Loan Party, any Pledged
Interests acquired after the Closing Date and included on Schedule 5.1(c) to the
Information Certificate (as such Schedule may be updated from time to time to
reflect changes resulting from transactions permitted under this Agreement);
(ii) all of the Pledged Interests are duly authorized, validly issued, fully
paid and non-assessable and the Pledged Interests constitute or will constitute
the percentage of the issued and outstanding Stock of the Pledged Companies of
such Loan Party identified on Schedule 5.1(c) to the Information Certificate (as
such Schedule may be updated from time to time to reflect changes resulting from
transactions permitted under this Agreement) as supplemented or modified by any
Pledged Interests Addendum or any Joinder to this Agreement; (iii) such Loan
Party has the right and requisite authority to pledge, the Investment Related
Property pledged by such Loan Party to Lender as provided herein; (iv) all
actions necessary or desirable to perfect and establish the first priority of,
or otherwise protect, Lender’s Liens in the Investment Related Property, and the
proceeds thereof, have been duly taken, upon (A) the execution and delivery of
this Agreement; (B) the taking of possession by Lender (or its Lender or
designee) of any certificates representing the Pledged Interests, together with
undated powers (or other documents of transfer acceptable to Lender) endorsed in
blank by the applicable Loan Party; (C) the filing of financing statements in
the applicable jurisdiction set forth on Schedule 5.6(a) to the Information
Certificate (as such Schedule may be updated from time to time to reflect
changes resulting from transactions permitted under this Agreement) for such
Loan Party with respect to the Pledged Interests of such Loan Party that are not
represented by certificates, and (D) with respect to any Securities Accounts,
the delivery of Control Agreements with respect thereto; and (v) each Loan Party
has delivered to and deposited with Lender all certificates representing the
Pledged Interests owned by such Loan Party to the extent such Pledged Interests
are represented by certificates, and undated powers (or

 

Exhibit D

Page 9

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other documents of transfer acceptable to Lender) endorsed in blank with respect
to such certificates. None of the Pledged Interests owned or held by such Loan
Party has been issued or transferred in violation of any securities
registration, securities disclosure, or similar laws of any jurisdiction to
which such issuance or transfer may be subject. As to all limited liability
company or partnership interests, issued under any Pledged Operating Agreement
or Pledged Partnership Agreement, each Borrower hereby represents and warrants
that the Pledged Interests issued pursuant to such agreement (A) are not dealt
in or traded on securities exchanges or in securities markets, (B) do not
constitute investment company securities, and (C) are not held by such Loan
Party in a securities account. In addition, none of the Pledged Operating
Agreements, the Pledged Partnership Agreements, or any other agreements
governing any of the Pledged Interests issued under any Pledged Operating
Agreement or Pledged Partnership Agreement, provided that such Pledged Interests
are securities governed by Section 8 of the Uniform Commercial Code as in effect
in any relevant jurisdiction.

5.27 Eligible Accounts. As to each Account that is identified by a Borrower as
an Eligible Account in a Borrowing Base Certificate submitted to Lender, such
Account is (a) a bona fide existing payment obligation of the applicable Account
Debtor created by the sale and delivery of Inventory or the rendition of
services to such Account Debtor in the ordinary course of such Borrower’s
business, (b) owed to such Borrower, and (c) not excluded as ineligible by
virtue of one or more of the excluding criteria (other than Lender-discretionary
criteria) set forth in the definition of Eligible Accounts.

5.28 Eligible Inventory. As to each item of Inventory that is identified by
Borrower as Eligible Inventory in a Borrowing Base Certificate submitted to
Lender, such Inventory is (a) of good and merchantable quality, free from known
defects, and (b) not excluded as ineligible by virtue of one or more of the
excluding criteria (other than Lender-discretionary criteria) set forth in the
definition of Eligible Inventory.

5.29 Locations of Inventory and Equipment. The Inventory and Equipment (other
than vehicles or Equipment out for repair) of the Loan Parties and their
Subsidiaries are not stored with a bailee, warehouseman, or similar party and
are located only at, or in-transit between or to, the locations identified on
Schedule 5.29 to the Information Certificate (as such Schedule may be updated
pursuant to Section 6.14).

5.30 Inventory Records. Each Loan Party keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and of
the Inventory of its Subsidiaries and the book value thereof.

5.31 Surety Agreements. No Loan Party or any of its Subsidiaries has any Surety
Bond or related agreement (including any intercreditor agreements) with any
Surety except as disclosed on Schedule 5.31 to the Information Certificate
(including all amendments thereto).

5.32 Surety Bonds Cash and LCs. No Loan Party or any of its Subsidiaries has
provided any cash collateral or letters of credit to issuers of Surety Bonds
except as disclosed on Schedule 5.32 to the Information Certificate.

 

Exhibit D

Page 10

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5.33 Bonded Contracts: No Loan Party is subject to any Bonded Contract except as
disclosed on Schedule 5.33 to the Information Certificate.

5.34 Hedge Agreements: On each date that any Hedge Agreement is executed by any
Hedge Provider, Borrower and each other Loan Party satisfy all eligibility,
suitability and other requirements under the Commodity Exchange Act (7 U.S.C. §
1, et seq., as in effect from time to time) and the Commodity Futures Trading
Commission regulations.

 

Exhibit D

Page 11

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EXHIBIT E

TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

INFORMATION CERTIFICATE

OF

LOAN PARTIES

 

 

Dated: [                ]

Wells Fargo Bank, National Association

MAC S4101-158

100 W. Washington St. 15th Floor

Phoenix, AZ 85003-1808

Attention: <Howard I. Handman>Michael L. Gerard

In connection with certain financing provided or to be provided by Wells Fargo
Bank, National Association (“Lender”), Administrative Borrower on behalf of each
Loan Party represents and warrants to Lender the following information about
each Loan Party (capitalized terms not specifically defined shall have the
meaning set forth in the Agreement):

 

1.

Attached as Schedule 5.1(b) is a complete and accurate description of (i) the
authorized capital Stock of each Loan Party and each of its Subsidiaries, by
class, and the number of shares issued and outstanding and the names of the
owners thereof (including stockholders, members and partners) and their
holdings, all as of the date of this Agreement, (ii) all subscriptions, options,
warrants or calls relating to any shares of Stock of each Loan Party and each of
its Subsidiaries, including any right of conversion or exchange; (iii) each
stockholders’ agreement, restrictive agreement, voting agreement or similar
agreement relating to any such capital Stock; and (iv) an organization chart of
each Loan Party and all Subsidiaries.

 

2.

Each Loan Party is affiliated with, or has ownership in, the entities (including
Subsidiaries) set forth on Schedule 5.1(c).

 

3.

The Loan Parties use the following trade name(s) in the operation of their
business (e.g. billing, advertising, etc.):

[                    ]

 

4.

Each of the Loan Parties is a registered organization of the following type:

[                    ]

 

Exhibit E

Page 1

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5.

The exact legal name (within the meaning of Section 9-503 of the Code) of each
Loan Party and each Subsidiary of each Loan Party as set forth in its respective
certificate of incorporation, organization or formation, or other public organic
document, as amended to date is set forth in Schedule 5.6(a).

 

6.

Each Loan Party and each Subsidiary of each Loan Party is organized solely under
the laws of the State set forth on Schedule 5.6(a). Each Loan Party and each
Subsidiary of each Loan Party is in good standing under those laws and no Loan
Party is organized in any other State.

 

7.

The chief executive office and mailing address of each Loan Party and each
Subsidiary of each Loan Party is located at the address set forth on Schedule
5.6(b) hereto.

 

8.

The books and records of each Loan Party and each Subsidiary of each Loan Party
pertaining to Accounts, contract rights, Inventory, and other assets are located
at the addresses specified on Schedule 5.6(b).

 

9.

The identity and Federal Employer Identification Number of each Loan Party and
each Subsidiary of each Loan Party and organizational identification number, if
any, is set forth on Schedule 5.6(c). (Please Use Form Attached)

 

10.

No Loan Party has any Commercial Tort Claims, except as set forth on Schedule
5.6(d).

 

11.

There are no judgments, actions, suits, proceedings or other litigation pending
by or against or threatened by or against any Loan Party, any of its
Subsidiaries and/or Affiliates or any of its officers or principals, except as
set forth on Schedule 5.7(b).

 

12.

Since its date of organization, the name as set forth in each Loan Party’s
organizational documentation filed of record with the applicable state authority
has been changed as follows:

 

Date

  

Prior Name

[Date]    [Prior Name]

 

13.

Since the dates of their respective organization, the Loan Parties have made or
entered into the following mergers or acquisitions:

[                    ]

 

Exhibit E

Page 2

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

14.

The assets of each Loan Party and of each Subsidiary of each Loan Party are
owned and held free and clear of Liens, mortgages, pledges, security interests,
encumbrances or charges except as set forth below:

 

Name and Address

of Secured Party

  

Description of Collateral

  

File No. of Financing

Statement/Jurisdiction

     

 

15.

Each Loan Party and each Subsidiary of each Loan Party has been and remains in
compliance with all environmental laws applicable to its business or operations
except as set forth on Schedule 5.12.

 

16.

No Loan Party and no Subsidiary of any Loan Party has any Deposit Accounts,
investment accounts, Securities Accounts or similar accounts with any bank,
securities intermediary or other financial institution, except as set forth on
Schedule 5.15 for the purposes and of the types indicated therein.

 

17.

No Loan Party and no Subsidiary of any Loan Party is a party to or bound by an
collective bargaining or similar agreement with any union, labor organization or
other bargaining agent except as set forth below(indicate date of agreement,
parties to agreement, description of employees covered, and date of termination)

 

Name of Agreement

  

Date of

Agreement

  

Parties to Agreement

  

Date of Expiration /

Termination

        

 

18.

Set forth on Schedule 5.17 is a reasonably detailed description of each Material
Contract of each Loan Party and its Subsidiaries as of the date of the
Agreement.

 

19.

Set forth on Schedule 5.19 is a true and complete list of all Indebtedness of
each Loan Party and its Subsidiaries outstanding immediately prior to the
Closing Date.

 

20.

No Loan Party and no Subsidiary of any Loan Party has made any loans or advances
or guaranteed or otherwise become liable for the obligations of any others,
except as set forth below:

 

Name / Address of Debtor

  

Outstanding Balance of

Loans as of [Date]

  

Secured / Unsecured

  

Due Date

        

 

21.

No Loan Party has any Chattel Paper (whether tangible or electronic) or
instruments as of the date hereof, except as follows:

[            ]

 

Exhibit E

Page 3

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

22.

No Loan Party owns or licenses any Trademarks, Patents, Copyrights or other
Intellectual Property, and is not a party to any Intellectual Property License
except as set forth on Schedule 5.26(b) (indicate type of Intellectual Property
and whether owned or licensed, registration number, date of registration, and,
if licensed, the name and address of the licensor) and there are no restrictions
in any Intellectual Property License that restrict the sale or other disposition
of any Inventory, Equipment or other property of any Loan Party other than as
set forth in Schedule 5.26.(b).

 

23.

Schedule 5.26(a) sets forth all Real Property owned by each Loan Party.

 

24.

The Inventory, Equipment and other goods of each Loan Party are located only at
the locations set forth on Schedule 5.29.

 

25.

At the present time, there are no delinquent taxes due (including, but not
limited to, all payroll taxes, personal property taxes, real estate taxes or
income taxes) of any Loan Party or any Subsidiary of any Loan Party except as
follows:

[            ]

 

26.

There is no consignment, bill and hold, sale or return, sale on approval or
conditional sale arrangements with respect to any Inventory of any Borrower or
any other Loan or other goods except as set forth in Schedule 7.15.

 

27.

No Borrower or other Loan Party has any Inventory stored with or in the
possession of a bailee, warehouseman, processor or other third party except as
set forth in Schedule 7.16.

 

28.

Schedule 5.31 sets forth all agreements (including any intercreditor agreements)
with any issuer of a Surety Bond.

 

29.

Schedule 5.32 sets forth all cash collateral or letters of credit to issuers of
Surety Bonds.

 

30.

Schedule 5.33 sets forth all Bonded Contracts entered into by any Loan Party.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

Exhibit E

Page 4

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

Lender shall be entitled to rely upon the foregoing in all respects and the
undersigned is duly authorized to execute and deliver this Information
Certificate on behalf of each Loan Party.

 

Very truly yours,

 

ADMINISTRATIVE BORROWER:

 

IES HOLDINGS, INC.

By:     Name:  

<Robert W. Lewey>

  <Title: Senior Vice President> Title:  

 

 

Exhibit E

Page 5

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

Schedule 5.1(b)

TO INFORMATION CERTIFICATE

Capitalization of Loan Parties

and Subsidiaries

Organization Chart

 

Loan Party

   Authorized
Shares /
Issued
Shares    Holder   

Type of Rights/Stock

(common/preferred/

option/class)

  

Number of Shares

(after exercise of all

rights to acquire

shares)

   Percent
Interest (on
a fully
diluted
basis)               

 

 

Schedule 5.1(b)

Page 1

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

Schedule 5.1(c)

TO INFORMATION CERTIFICATE

Subsidiaries; Affiliates; Investments; Pledged Interests<3>2

Part 1 – Subsidiaries (More than 50% owned by a Loan Party)

 

Name

  

Jurisdiction of Organization

  

Percentage Owned

Part 2 – Affiliates (Less than 50% Owned by a Loan Party)

 

Name

  

Jurisdiction of Organization

  

Percentage Owned

Part 3 – Affiliates (Subject to common ownership with) a Loan Party

 

Name

  

Jurisdiction of Organization

  

Parent

  

Percentage Owned

Part 4 – Shareholders (If widely held, only holders with more than 10%)

 

Name

  

Jurisdiction of Organization

  

Percentage Owned

     

Part 5 – Pledged Interests

 

Name of Pledgor

  

Name of Pledged
Company

  

Number of

Shares/Units

  

Class of

Interests

  

Percentage of

Class Owned

  

Certificate

Nos.

 

 

*

If Shareholders are individuals, indicate “N/A”

 

Schedule 5.1(c)

Page 1

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

Schedule 5.3

TO INFORMATION CERTIFICATE

Governmental and Other Consents

 

Schedule 5.3

Page 1

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

Schedule 5.5(a)

TO INFORMATION CERTIFICATE

Exact Legal Name

 

 

Schedule 5.5(a)

Page 1

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

Schedule 5.6(a)

TO INFORMATION CERTIFICATE

Jurisdiction of Organization

 

Name

  

Jurisdiction of Organization*

 

 

*

If Shareholders are individuals, indicate “N/A”

 

Schedule 5.6(a)

Page 1

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

Schedule 5.6(b)

TO INFORMATION CERTIFICATE

Locations

Part 1 - Chief Executive Office

[                    ]

[                    ]

[                    ]

Part 2 - Location of Books and Records

[                    ]

[                    ]

[                    ]

 

Schedule 5.6(b)

Page 1

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

Schedule 5.6(c)

TO INFORMATION CERTIFICATE

Federal Employer Identification Number

Organizational Identification Number

 

Name

  

Federal Employer

Identification Number

  

Organizational Identification

Number

 

 

Schedule 5.6(c)

Page 1

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

Schedule 5.6(d)

TO INFORMATION CERTIFICATE

Commercial Tort Claims

 

Schedule 5.6(d)

Page 1

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

Schedule 5.7(b)

TO INFORMATION CERTIFICATE

Judgments/ Pending Litigation

 

Schedule 5.7(b)

Page 1

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

Schedule 5.12

TO INFORMATION CERTIFICATE

Environmental Compliance

 

Schedule 5.12

Page 1

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

Schedule 5.15

TO INFORMATION CERTIFICATE

Deposit Accounts; Investment Accounts

Part 1 - Deposit Accounts

 

Name and Address of Bank

  

Account No.

  

Purpose*

Part 2 - Investment and Other Accounts

 

Name and Address of

Broker or Other Institution

  

Account No.

  

Purpose

  

Types of Investments

  

Balance as of

[Date]

 

 

*

For “Purpose” indicate either: “collection account” if proceeds of receivables
or other assets are deposited in it, and note “lockbox” if it is subject to
lockbox servicing arrangements with the applicable bank or “disbursement
account” if it is a checking account or account used for transferring funds to
third parties and note if it is used for a specific purpose, e.g., “payroll”,
“medical”, “insurance”, “escrow” etc. Also, please note any “zero balance” or
other automatic sweep or investment sweep accounts

 

Schedule 5.15

Page 1

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

Schedule 5.17

TO INFORMATION CERTIFICATE

Material Contracts

 

Name of Agreement

  

Date of Agreement

  

Parties to Agreement

  

Date of Expiration /

Termination

 

 

Schedule 5.17

Page 1

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

Schedule 5.19

TO INFORMATION CERTIFICATE

Existing Indebtedness

Part 1 - Direct Debt

 

Name/Address of Payee

  

Principal Balance as of

[Date]

  

Nature of Debt

  

Term

        

Part 2 - Guarantees

 

Name/Address of Payee

  

Principal Balance as of

[Date]

  

Nature of Debt

  

Term

        

 

 

Schedule 5.19

Page 1

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

Schedule 5.26(a)

TO INFORMATION CERTIFICATE

Owned Real Estate

 

Schedule 5.26(a)

Page 1

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

Schedule 5.26(b)

TO INFORMATION CERTIFICATE

Intellectual Property

Part 1 – Trademarks Owned

 

Trademark

  

Registration

Number

  

Registration

Date

  

Expiration

Date

        

 

Trademark

Application

  

Application/Serial

Number

  

Application

Date

     

Part 2 – Trademarks Licensed

 

Trademark

  

Registration

Number

  

Registration

Date

  

Expiration

Date

        

 

Trademark

Application

  

Application/Serial

Number

  

Application

Date

     

Part 3 – Patents Owned

 

Patent

Description

  

Registration

Number

  

Registration

Date

  

Expiration

Date

        

 

 

Schedule 5.26(b)

Page 1

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

Patent

Application

  

Application/Serial

Number

  

Application

Date

     

Part 4 – Patents Licensed

 

Patent

Description

  

Registration

Number

  

Registration

Date

  

Expiration

Date

        

 

Patent

Application

  

Application/Serial

Number

  

Application

Date

     

Part 5 – Copyrights Owned

 

Copyright

  

Registration Number

  

Registration Date

     

Part 6 – Copyrights Licensed

 

Copyright

  

Registration Number

  

Registration Date

     

Part 7 – Other License Agreements

 

Name of

Document

  

Date of

Document

  

Licensor

  

Term

  

License

Intellectual

Property

           

[Restrictions]

 

Schedule 5.26(b)

Page 2

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

Schedule 5.26(c)

TO INFORMATION CERTIFICATE

Motor Vehicles

 

Schedule 5.26(c)

Page 1

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

Schedule 5.29

TO INFORMATION CERTIFICATE

Locations of Inventory and Equipment

Locations of Inventory, Equipment and Other Assets

 

Address

  

Owned/Leased/Third Party*

  

Name/Address of Lessor or

Third Party, as Applicable

     

 

*

Indicate in this column next to applicable address whether the location is owned
by the Company, licensed by the Company or owned and operated by a third party
(e.g., ware house, processor, consignee, etc.)

 

Schedule 5.29

Page 1

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

Schedule 5.31

TO INFORMATION CERTIFICATE

SURETY AGREEMENTS

 

Schedule 5.31

Page 1

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

Schedule 5.32

TO INFORMATION CERTIFICATE

Cash Collateral or Letters Of Credit to Issuers of Surety Bonds

 

Schedule 5.32

Page 1

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

Schedule 5.33

TO INFORMATION CERTIFICATE

Bonded Contracts

 

Schedule 5.33

Page 1

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

EXHIBIT E-1

TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

FORM OF SUPPLEMENT TO INFORMATION CERTIFICATE

OF

LOAN PARTIES

 

 

Dated: [            ]

Wells Fargo Bank, National Association

MAC S4101-158

100 W. Washington St. 15th Floor

Phoenix, AZ 85003-1808

Attention: <Howard I. Handman>Michael L. Gerard

This Supplement (this “Supplement”), dated as of                     , 20__, to
the Information Certificate, dated as of [__], 2017 (as amended, restated,
supplemented or otherwise modified from time to time, the “Information
Certificate”) by the Administrative Borrower on behalf of each of the Loan
Parties (collectively, jointly and severally, “Grantors” and each individually
“Grantor”).

Reference is made to that certain Second Amended and Restated Credit and
Security Agreement (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”) dated as of April 10, 2017, by and
among WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”), IES HOLDINGS, INC., a
Delaware corporation; IES COMMUNICATIONS, LLC, a Delaware limited liability
company; IES COMMERCIAL, INC., a Delaware corporation; IES MANAGEMENT LP, a
Texas limited partnership; IES MANAGEMENT ROO, LP, a Texas limited partnership;
IES <PURCHASING & MATERIALS, INC., a Delaware corporation; IES >RESIDENTIAL,
INC., a Delaware corporation; INTEGRATED ELECTRICAL FINANCE, INC., a Delaware
corporation; IES SUBSIDIARY HOLDINGS, INC., a Delaware corporation; MAGNETECH
INDUSTRIAL SERVICES, INC., an Indiana corporation; <HK ENGINE COMPONENTS, LLC,
an Indiana limited liability company; IES RENEWABLE ENERGY, LLC, a Delaware
limited liability company >SOUTHERN INDUSTRIAL SALES AND SERVICES, INC., a
Georgia corporation d/b/a Southern Rewinding and Sales, CALUMET ARMATURE AND
ELECTRIC, L.L.C., an Illinois limited liability company, <SHANAHAN MECHANICAL
AND ELECTRICAL, INC., a Nebraska corporation, IES>IES INFRASTRUCTURE SOLUTIONS,
LLC, a Delaware limited liability company, TECHNIBUS, INC., a Delaware
corporation, FREEMAN ENCLOSURE SYSTEMS, LLC, an Ohio limited liability company,
STRATEGIC EDGE LLC, an Ohio limited liability company, IES CONSOLIDATION, LLC, a
Delaware limited liability company; IES <PROPERTIES, INC., a Delaware
corporation; IES >SHARED SERVICES<, INC., a Delaware corporation; IES TANGIBLE
PROPERTIES>, INC., a Delaware corporation; KEY ELECTRICAL SUPPLY, INC., a Texas
corporation; IES OPERATIONS GROUP, INC., a Delaware corporation and ICS HOLDINGS
LLC, an Arizona limited liability company.

 

Exhibit E-1

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

All initially capitalized terms used herein without definition shall have the
meanings ascribed thereto in the Credit Agreement. Administrative Borrower, on
behalf of the following Loan Part[y][ies] hereby [supplements][amends and
restates] the following Schedules to the Information Certificate: [__] as set
forth on the corresponding schedules hereto.

Except as expressly supplemented hereby, the Information Certificate shall
remain in full force and effect.

Lender shall be entitled to rely upon the foregoing in all respects and the
undersigned is duly authorized to execute and deliver this Supplement on behalf
of each applicable Loan Party.

 

Very truly yours,

 

ADMINISTRATIVE BORROWER:

 

IES HOLDINGS, INC.

By:    

Name:    

Title:    

 

Exhibit E-1

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

EXHIBIT F

TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

FORM OF

PLEDGED INTERESTS ADDENDUM

This Pledged Interests Addendum, dated as of [                    ], is
delivered pursuant to Section 6.12(h)(ii) of the Credit Agreement referred to
below. The undersigned hereby agrees that this Pledged Interests Addendum may be
attached to that certain Second Amended and Restated Credit and Security
Agreement, dated as of April 10, 2017 (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), made by the
undersigned, together with the other Borrowers and Guarantors named therein, to
Wells Fargo Bank, National Association, as Lender. Initially capitalized terms
used but not defined herein shall have the meanings ascribed to such terms in
the Credit Agreement. The undersigned hereby agrees that the additional
interests listed on this Pledged Interests Addendum as set forth below shall be
and become part of the Pledged Interests pledged by the undersigned to the
Lender in the Credit Agreement and any pledged company set forth on this Pledged
Interests Addendum as set forth below shall be and become a “Pledged Company”
under the Credit Agreement, each with the same force and effect as if originally
named therein.

The undersigned hereby certifies that the representations and warranties of the
undersigned set forth in Section 5.26 of Exhibit D to the Credit Agreement are
true and correct as to the Pledged Interests listed herein on and as of the date
hereof.

[Signature Page Follows]

 

Exhibit F

Page 1

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

IN WITNESS WHEREOF, the undersigned has caused this Pledged Interests Addendum
to be executed and delivered as of the day and year first above written.

 

IES HOLDINGS, INC. By:       Name:   Title:

 

Exhibit F

Page 2

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

SCHEDULE I

TO

PLEDGED INTERESTS ADDENDUM

Pledged Interests

 

Name of

Pledgor

  

Name of

Pledged

Company

  

Number of

Shares/Units

  

Class of Interests

  

Percentage of

Class Owned

  

Certificate Nos.

              

 

Exhibit F

Page 3

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

Schedule A-1

TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

Collection Account

 

Schedule A-1

Page 1

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

Schedule A-2

TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

Authorized Person

 

Schedule A-2

Page 1

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

Schedule D-1

TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

Designated Account

 

Schedule D-1

Page 1

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

Schedule P-1

TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

Permitted Investments

 

Schedule P-1

Page 1

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

Schedule P-2

TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

Permitted Liens

 

Schedule P-2

Page 1

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

Exhibit B

Closing Checklist

[See Attached]

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

CLOSING CHECKLIST

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Lender

IES HOLDINGS, INC.

IES COMMUNICATIONS, LLC

IES COMMERCIAL, INC.

IES MANAGEMENT, LP

IES MANAGEMENT ROO, LP

IES RESIDENTIAL, INC.

INTEGRATED ELECTRICAL FINANCE, INC.

IES SUBSIDIARY HOLDINGS, INC.

MAGNETECH INDUSTRIAL SERVICES, INC.

SOUTHERN INDUSTRIAL SALES AND SERVICES, INC.

CALUMET ARMATURE AND ELECTRIC, L.L.C.

IES INFRASTRUCTURE SOLUTIONS, LLC

TECHNIBUS, INC.

FREEMAN ENCLOSURE SYSTEMS, LLC

NEXT ELECTRIC, LLC

AZIMUTH COMMUNICATIONS, INC.

Fifth Amendment to Second Amended and Restated Credit and Security Agreement

Closing Date: September 6, 2019

 

I.

Parties:

 

  A.

WELLS FARGO BANK, NATIONAL ASSOCIATION (“WFB”), as Lender (“Lender”)

100 West Washington Street, 15th Floor

Phoenix, Arizona 85003-1808

Attention: Michael L. Gerard

IES HOLDINGS, INC., a Delaware corporation;

IES COMMUNICATIONS, LLC, a Delaware limited liability company;

IES COMMERCIAL, INC., a Delaware corporation;

IES MANAGEMENT, LP, a Texas limited partnership;

IES MANAGEMENT ROO, LP, a Texas limited partnership;

IES RESIDENTIAL, INC., a Delaware corporation;

INTEGRATED ELECTRICAL FINANCE, INC., a Delaware corporation;

IES SUBSIDIARY HOLDINGS, INC., a Delaware corporation;

MAGNETECH INDUSTRIAL SERVICES, INC., an Indiana corporation;

SOUTHERN INDUSTRIAL SALES AND SERVICES, INC., a Georgia corporation d/b/a
Southern Rewinding and Sales,

CALUMET ARMATURE AND ELECTRIC, L.L.C., an Illinois limited liability company,

TECHNIBUS, INC., a Delaware corporation,

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

IES INFRASTRUCTURE SOLUTIONS, LLC, a Delaware limited liability company,

FREEMAN ENCLOSURE SYSTEMS, LLC, an Ohio limited liability company,

NEXT Electric, LLC, a Wisconsin limited liability company, and

AZIMUTH COMMUNICATIONS, INC., an Oregon corporation (each, individually a
“Borrower”, and collectively, the “Borrowers”);

IES CONSOLIDATION, LLC, a Delaware limited liability company;

IES SHARED SERVICES, INC., a Delaware corporation;

KEY ELECTRICAL SUPPLY, INC., a Texas corporation;

IES OPERATIONS GROUP, INC., a Delaware corporation; and

ICS HOLDINGS LLC, an Arizona limited liability company (each, individually a
(“Guarantor”), and collectively, the “Guarantors”); Borrowers and Guarantors are
collectively, the “Loan Parties”)

c/o IES Holding, Inc.

5433 Westheimer, Suite 500

Houston, Texas 77056

Attention: Gary Matthews

 

II.

Counsel to Parties:

 

  A.

Counsel to Lender:

GOLDBERG KOHN LTD.

55 East Monroe Street, Suite 3300

Chicago, Illinois 60603

Attention: William A. Starshak

 

  B.

Counsel to Borrowers:

DINSMORE & SHOHL LLP

225 East Fifth Street, Suite 1900

Cincinnati, Ohio 45202

Attention: Mary Newman

 

III.

Consent Closing Documents:

 

  A.

Loan Documents:

 

  1.

Fifth Amendment to Second Amended and Restated Credit and Security Agreement

 

  (a)

Restated Second Amended and Restated Credit and Security Agreement

 

  2.

Information Certificate Supplement

 

  B.

Security Documents

 

  3.

Amendment to Trademark and Patent Security Agreement

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

  4.

Updated certificates of insurance of the Loan Parties: (i) property and casualty
and business interruption insurance policies, showing Lender as certificate
holder and loss payee, with lender’s loss payable clause in favor of Lender, and
(ii) liability and other third party policies, showing Lender as certificate
holder and additional insured party

 

  C.

Corporate Due Diligence:

 

  5.

Secretary’s Certificate of IES Holdings, Inc., including the following:

 

  (a)

Certified Charter

 

  (b)

Bylaws

 

  (c)

Resolutions

 

  (d)

Incumbency of Officers

 

  (e)

Good Standing Certificates (Delaware)

 

  D.

Other Items:

 

  6.

Opinion of Dinsmore re Consent

 

  7.

Officer’s Certificate re Dissolution of Entities

 

  (a)

IES Properties, Inc.

 

  (b)

IES Tangible Properties, Inc.

 

  (c)

IES Purchasing & Materials, Inc.

 

  (d)

IES Renewable Energy, LLC, and

 

  (e)

Shanahan Mechanical and Electrical, Inc.

 

  8.

Evidence of Dissolution of:

 

  (a)

IES Properties, Inc.

 

  (b)

IES Tangible Properties, Inc.

 

  (c)

IES Purchasing & Materials, Inc.

 

  (d)

IES Renewable Energy, LLC, and

 

  (e)

Shanahan Mechanical and Electrical, Inc.

 

  9.

Satisfaction of Mortgage (Clermont County, Ohio)

 

  10.

Mortgage Release (Mobile County, Alabama)