Exhibit 10.15

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of October 31,
2008 (this “Agreement”), is executed by and among HILL INTERNATIONAL, INC., a
Delaware corporation, which has its chief executive office located at 303
Lippincott Centre, Marlton, New Jersey 08053 (“Hill International”), PCI Group
LLC, a Nevada limited liability company, which has its chief executive office
located at 5905 Granite Lake Drive, Suite 180, Douglas Office Park at Granite
Bay, Building 5, Granite Bay, California 95746-6824 (“PCI Group”)(Hill
International, PCI Group and any other Person that shall become a borrower
hereto pursuant to a Joinder Agreement are each individually a “Borrower” and
collectively the “Borrowers”), and BANK OF AMERICA, N.A., a national banking
association, as successor by merger to LaSalle Bank N.A. (“Lender”), having an
office at 135 South LaSalle Street, Chicago, Illinois 60603.

R E C I T A L S:

WHEREAS, prior hereto, Lender provided certain extensions of credit, loans and
other financial accommodations to Hill International pursuant to (i) that
certain Loan and Security Agreement dated as of December 18, 2006, as amended by
that certain First Amendment to Loan and Security Agreement dated as of
October 15, 2007, each by and between Hill International and Lender
(collectively, the “Prior Loan Agreement”), and (ii) the other agreements,
documents and instruments referenced therein or executed and delivered pursuant
thereto or in connection therewith;

WHEREAS, Borrowers desire Lender to, among other things, (i) increase the
maximum principal amount of the Revolving Loan, (ii) add PCI Group as a
co-borrower under all Loans, and (iii) amend and restate the Prior Loan
Agreement as set forth in this Agreement (collectively the “Financial
Accommodations”); and

WHEREAS, Lender is willing to provide the Financial Accommodations to Borrowers,
but solely on the terms and subject to the conditions set forth in this
Agreement, which is an amendment and restatement of the Prior Loan Agreement,
and the other documents, instruments and agreements executed and delivered
pursuant to this Agreement or referenced herein.

NOW THEREFORE, in consideration of any Financial Accommodations, the mutual
promises and understandings of Lender and Borrowers set forth herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lender and Borrowers hereby agree as follows:

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A G R E E M E N T S:

Section 1. DEFINITIONS.

1.1 Defined Terms. For the purposes of this Agreement, the following capitalized
words and phrases shall have the meanings set forth below.

“Affiliate” of any Person shall mean (a) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person, (b) any officer or director of such Person, and (c) with respect to
Lender, any entity administered or managed by Lender, or an Affiliate or
investment advisor thereof and which is engaged in making, purchasing, holding
or otherwise investing in commercial loans. A Person shall be deemed to be
“controlled by” any other Person if such Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of such Person whether by contract, ownership of voting securities,
membership interests or otherwise.

“Applicable Margin” shall mean the rate per annum added to the Prime Rate and/or
LIBOR to determine the Revolving Interest Rate as determined by the ratio of
Borrowers’ consolidated Total Debt to EBITDA calculated on a trailing twelve
(12) month basis as of the last day of each fiscal quarter, as set forth below:

 

Ratio of Total Debt to EBITDA

   Applicable Margin
for Prime Loans    Applicable Margin
for LIBOR Loans

Greater than or equal to 2.00 to 1:00

   250 bps    250 bps

Greater than or equal to 1.5 to 1.00 less than 2.00 to 1.00

   225 bps    225 bps

Greater than or equal to 1.00 to 1.00 but less than 1.50 to 1.00

   175 bps    175 bps

Less than 1.00 to 1:00

   125 bps    125 bps

The Applicable Margin as of the date hereof is one hundred seventy-five
(175) basis points for Prime Loans and one hundred seventy-five (175) basis
points for LIBOR Loans and shall be adjusted as of each Interest Rate Change
Date.

“Asset Disposition” shall mean the sale, lease, assignment or other transfer for
value (each a “Disposition”) by the Borrowers or any Subsidiary to any Person
(other than the Borrowers or any Subsidiary) of any asset or right of the
Borrowers or any Subsidiary (including, the loss, destruction or damage of any
thereof or any actual or threatened (in writing to the Borrowers or such
Subsidiary) condemnation, confiscation, requisition, seizure or taking thereof),
other than (a) the Disposition of any asset which is to be replaced, and is in
fact replaced, within thirty (30) days with another asset performing the same or
a similar function, and (b) the sale or lease of inventory in the ordinary
course of business.

 

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“Closing Date” shall mean the date on which all conditions precedent set forth
in Section III have been satisfied or waived in writing by Lender and the
initial Revolving Loan is advanced hereunder.

“Bank Product Agreements” shall mean those certain agreements entered into from
time to time by the Borrowers, any Borrower or any Subsidiary with Lender or any
Affiliate of Lender concerning Bank Products.

“Bank Product Obligations” shall mean all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by the Borrowers, any
Borrower or any Subsidiary to Lender or any Affiliate of Lender pursuant to or
evidenced by Bank Product Agreements and irrespective of whether for the payment
of money, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising.

“Bank Products” shall mean any service or facility extended to the Borrowers,
any Borrower or any Subsidiary by Lender or any Affiliate of Lender, including:
(a) credit cards, (b) credit card processing services, (c) debit cards,
(d) purchase cards, (e) ACH Transactions, (f) cash management, including
controlled disbursement, accounts or services, or (g) Hedging Agreements.

“Bankruptcy Code” shall mean the United States Bankruptcy Code, as now existing
or hereafter amended.

“Basic Fixed Charge Coverage Ratio” shall mean the ratio of (a) the sum of
EBITDA plus lease expense and rent expense minus the sum of taxes, dividends and
distributions paid in cash, to (b) the sum of Interest Charges, lease expense,
rent expense, the current portion of long-term Liabilities and current portion
of Capitalized Lease Obligations.

“Business Day” shall mean any day other than a Saturday, Sunday or a legal
holiday on which banks are authorized or required to be closed for the conduct
of commercial banking business in Chicago, Illinois.

“Capital Expenditures” shall mean all expenditures (including Capitalized Lease
Obligations) which, in accordance with GAAP, would be required to be capitalized
and shown on the consolidated balance sheet of the Borrowers, but excluding
expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (i) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (ii) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced.

“Capital Lease” shall mean, as to any Person, a lease of any interest in any
kind of property or asset, whether real, personal or mixed, or tangible or
intangible, by such Person, as lessee, that is, or should be, in accordance with
Financial Accounting Standards Board Statement No. 13, as amended from time to
time, or, if such statement is not then in effect, such statement of GAAP as may
be applicable, recorded as a “capital lease” on the financial statements of such
Person prepared in accordance with GAAP.

 

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“Capital Securities” shall mean, with respect to any Person, all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person’s capital, whether now outstanding or
issued or acquired after the date hereof, including common shares, preferred
shares, membership interests in a limited liability company, limited or general
partnership interests in a partnership or any other equivalent of such ownership
interest.

“Capitalized Lease Obligations” shall mean, as to any Person, all rental
obligations of such Person, as lessee under a Capital Lease which are or will be
required to be capitalized on the books of such Person.

“Cash Equivalent Investment” shall mean, at any time, (a) any evidence of Debt,
maturing not more than one year after such time, issued or guaranteed by the
United States government or any agency thereof, (b) commercial paper, maturing
not more than one year from the date of issue, or corporate demand notes, in
each case (unless issued by Lender or its holding company) rated at least A-1 by
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc. or P-1 by Moody’s Investors Service, Inc., (c) any certificate of deposit,
time deposit or banker’s acceptance, maturing not more than one year after such
time, or any overnight Federal Funds transaction that is issued or sold by
Lender or its holding company (or by a commercial banking institution that is a
member of the Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000), (d) any repurchase agreement
entered into with Lender, or other commercial banking institution of the nature
referred to in clause (c), which (i) is secured by a fully perfected security
interest in any obligation of the type described in any of clauses (a) through
(c) above, and (ii) has a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of Lender, or
other commercial banking institution, thereunder, (e) money market accounts or
mutual funds which invest exclusively in assets satisfying the foregoing
requirements, and (f) other short term liquid investments approved in writing by
Lender.

“Collateral” shall have the meaning set forth in Section 6.1 hereof.

“Collateral Access Agreement” shall mean an agreement in form and substance
reasonably satisfactory to Lender pursuant to which a mortgagee or lessor of
real property on which Collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory or other property owned by
any Borrower or any Subsidiary, acknowledges the Liens of Lender and waives any
Liens held by such Person on such property, and, in the case of any such
agreement with a mortgagee or lessor, permits Lender reasonable access to and
use of such real property following the occurrence and during the continuance of
an Event of Default to assemble, complete and sell any collateral stored or
otherwise located thereon.

“Contingent Liability” and “Contingent Liabilities” shall mean, respectively,
each obligation and liability of the Borrowers or any Borrower and all such
obligations and liabilities of the Borrowers or any Borrower incurred pursuant
to any agreement, undertaking or arrangement

 

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by which any Borrower: (a) guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
indebtedness, dividend, obligation or other liability of any other Person in any
manner (other than by endorsement of instruments in the course of collection),
including without limitation, any indebtedness, dividend or other obligation
which may be issued or incurred at some future time; (b) guarantees the payment
of dividends or other distributions upon the shares or ownership interest of any
other Person; (c) undertakes or agrees (whether contingently or otherwise):
(i) to purchase, repurchase, or otherwise acquire any indebtedness, obligation
or liability of any other Person or any property or assets constituting security
therefor, (ii) to advance or provide funds for the payment or discharge of any
indebtedness, obligation or liability of any other Person (whether in the form
of loans, advances, stock purchases, capital contributions or otherwise), or to
maintain solvency, assets, level of income, working capital or other financial
condition of any other Person, or (iii) to make payment to any other Person
other than for value received; (d) agrees to lease property or to purchase
securities, property or services from such other Person with the purpose or
intent of assuring the owner of such indebtedness or obligation of the ability
of such other Person to make payment of the indebtedness or obligation; (e) to
induce the issuance of, or in connection with the issuance of, any letter of
credit for the benefit of such other Person; or (f) undertakes or agrees
otherwise to assure a creditor against loss. The amount of any Contingent
Liability shall (subject to any limitation set forth herein) be deemed to be the
outstanding principal amount (or maximum permitted principal amount, if larger)
of the indebtedness, obligation or other liability guaranteed or supported
thereby.

“Debt” shall mean, as to any Person, without duplication, (a) all indebtedness
of such Person; (b) all borrowed money of such Person (including principal,
interest, fees and charges), whether or not evidenced by bonds, debentures,
notes or similar instruments; (c) all obligations to pay the deferred purchase
price of property or services; (d) all obligations, contingent or otherwise,
with respect to the maximum face amount of all letters of credit (whether or not
drawn), bankers’ acceptances and similar obligations issued for the account of
such Person (including the Letters of Credit), and all unpaid drawings in
respect of such letters of credit, bankers’ acceptances and similar obligations;
(e) all indebtedness secured by any Lien on any property owned by such Person,
whether or not such indebtedness has been assumed by such Person (provided,
however, if such Person has not assumed or otherwise become liable in respect of
such indebtedness, such indebtedness shall be deemed to be in an amount equal to
the fair market value of the property subject to such Lien at the time of
determination); (f) the aggregate amount of all Capitalized Lease Obligations of
such Person; (g) all Contingent Liabilities of such Person, whether or not
reflected on its balance sheet; (h) all Hedging Obligations of such Person;
(i) all Debt of any partnership of which such Person is a general partner; and
(j) all monetary obligations of such Person under (i) a so-called synthetic,
off-balance sheet or tax retention lease, or (ii) an agreement for the use or
possession of property creating obligations that do not appear on the balance
sheet of such Person but which, upon the insolvency or bankruptcy of such
Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment). Notwithstanding the foregoing, Debt shall not
include trade payables, accrued expenses and current operating liabilities
incurred by such Person in accordance with customary practices and in the
ordinary course of business of such Person.

 

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“Default Rate” shall mean a per annum rate of interest equal to the Prime Rate
plus three percent (3.0%).

“Depreciation” shall mean the total amounts added to depreciation, amortization,
obsolescence, valuation and other proper reserves, as reflected on a Person’s
financial statements and determined in accordance with GAAP.

“EBITDA” shall mean, net income, less income or plus loss from discontinued
operations and extraordinary items, plus the sum of income taxes, Interest
Charges, depreciation, depletion, amortization and other non-cash charges.

“Employee Plan” includes any pension, stock bonus, employee stock ownership
plan, retirement, profit sharing, deferred compensation, stock option, bonus or
other incentive plan, whether qualified or nonqualified, or any disability,
medical, dental or other health plan, life insurance or other death benefit
plan, vacation benefit plan, severance plan or other employee benefit plan or
arrangement, including those pension, profit-sharing and retirement plans of the
Borrowers described from time to time in the financial statements of any
Borrower and any pension plan, welfare plan, Defined Benefit Pension Plans (as
defined in ERISA) or any multi-employer plan, maintained or administered by any
Borrower or to which any Borrower is a party or may have any liability or by
which any Borrower is bound.

“Environmental Laws” shall mean all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative or judicial orders, consent agreements,
directed duties, requests, licenses, authorizations and permits of, and
agreements with, any governmental authority, in each case relating to any matter
arising out of or relating to public health and safety, or pollution or
protection of the environment or workplace, including any of the foregoing
relating to the presence, use, production, generation, handling, transport,
treatment, storage, disposal, distribution, discharge, emission, release,
threatened release, control or cleanup of any Hazardous Substance.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

“Event of Default” shall mean any of the events or conditions which are set
forth in Section 11 hereof.

“Federal Funds Rate” shall mean, for any day, a fluctuating interest rate equal
for each day during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding 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 Lender. Lender’s determination of such rate shall be binding and
conclusive absent manifest error.

 

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“Fee Letter” shall mean the fee letter agreement dated on or around the date
hereof between the Borrowers and Lender.

“GAAP” shall mean generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination, provided, however, that interim financial statements or reports
shall be deemed in compliance with GAAP despite the absence of footnotes and
fiscal year-end adjustments as required by GAAP.

“Guarantor” and “Guarantors” shall mean, respectively, each of and collectively,
any Person that provides a guaranty of all or any portion of the Obligations.

“Guaranty” shall mean any guaranty of all or any part of the Obligations
executed and delivered in favor of Lender.

“Hazardous Substances” shall mean (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, dielectric fluid containing levels of
polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials,
pollutant or substances defined as or included in the definition of “hazardous
substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous
substances”, “restricted hazardous waste”, “toxic substances”, “toxic
pollutants”, “contaminants”, “pollutants” or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or substance,
the exposure to, or release of which is prohibited, limited or regulated by any
governmental authority or for which any duty or standard of care is imposed
pursuant to, any Environmental Law.

“Hedging Agreement” shall mean any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.

“Hedging Obligation” shall mean, with respect to any Person, any liability of
such Person under any Hedging Agreement.

“Hill Luxembourg” shall mean Hill International S.A.

“Hill Middle East” shall mean Hill International (Middle East) Ltd.

“Hill UK” shall mean Hill International (UK) Ltd.

 

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“Indemnified Party” and “Indemnified Parties” shall mean, respectively, each of
Lender and any parent corporation, Affiliate or Subsidiary of Lender, and each
of their respective officers, directors, employees, attorneys and agents, and
all of such parties and entities.

“Intellectual Property” shall mean the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, patents, service marks and trademarks, and all registrations and
applications for registration therefor and all licensees thereof, trade names,
domain names, technology, know-how and processes, and all rights to sue at law
or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.

“Interest Charges” shall mean, for any period, the sum of: (a) all interest,
charges and related expenses payable with respect to that fiscal period to a
lender in connection with borrowed money or the deferred purchase price of
assets that are treated as interest in accordance with GAAP, plus (b) the
portion of Capitalized Lease Obligations with respect to that fiscal period that
should be treated as interest in accordance with GAAP, plus (c) all charges paid
or payable (without duplication) during that period with respect to any Hedging
Agreements.

“Interest Period” shall mean successive one, two, three, six or nine month
periods, beginning and ending as provided in this Agreement.

“Interest Rate Change Date” shall mean the date two (2) Business Days after the
delivery to Lender of the quarterly or year-end financial statements of the
Borrowers, which initial change date shall occur after the delivery to Lender of
the financial statements of the Borrowers for the fiscal year ending
September 30, 2008.

“Investment” shall mean, with respect to any Person, any investment in another
Person, whether by acquisition of any debt or equity security, by making any
loan or advance, by becoming obligated with respect to a Contingent Liability in
respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business).

“JKH” shall mean James R. Knowles (Holdings) Ltd., an English limited company.

“Joinder Agreement” means a joinder agreement establishing a new borrower under
this Agreement and the other Loan Documents entered into by Lender, Borrowers
and such new borrower, in form and substance satisfactory to Lender.

“Letter of Credit” and “Letters of Credit” shall mean, respectively, a letter of
credit and all such letters of credit issued by Lender, in its sole discretion,
upon the execution and delivery by the Borrowers or any Borrower and the
acceptance by Lender of a Master Letter of Credit Agreement and a Letter of
Credit Application, as set forth in Section 2.5 of this Agreement.

 

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“Letter of Credit Applicable Margin” shall mean the rate per annum to determine
the standby Letter of Credit fee as determined by the ratio of Borrowers’
consolidated Total Debt to EBITDA calculated on a trailing twelve (12) month
basis as of the last day of each fiscal quarter, as set forth below:

 

Ratio of Total Debt to EBITDA

   Letter of Credit
Applicable Margin

Greater than or equal to 2.00 to 1.00

   250 bps

Greater than or equal to 1.50 to 1.00; less than 2.00 to 1.00

   225 bps

Greater than or equal to 1.00 to 1.00; less than 1.50 to 1.00

   175 bps

Less than or equal to 1.00 to 1.00

   125 bps

The Letter of Credit Applicable Margin as of the date hereof is 175 basis points
and shall be adjusted as of each Interest Rate Change Date.

“Letter of Credit Application” shall mean, with respect to any request for the
issuance of a Letter of Credit, a letter of credit application in the form being
used by Lender at the time of such request for the type of Letter of Credit
requested.

“Letter of Credit Commitment” shall mean, at any time, an amount equal to the
lesser of (a) the Revolving Loan Commitment minus the aggregate amount of all
Revolving Loans outstanding, or (b) Twenty Million and no/100 Dollars
($20,000,000.00).

“Letter of Credit Maturity Date” shall mean the Revolving Loan Maturity Date.

“Letter of Credit Obligations” shall mean, at any time, an amount equal to the
aggregate of the original face amounts of all Letters of Credit minus the sum of
(i) the amount of any reductions in the original face amount of any Letter of
Credit which did not result from a draw thereunder, (ii) the amount of any
payments made by Lender with respect to any draws made under a Letter of Credit
for which the Borrowers have reimbursed Lender, (iii) the amount of any payments
made by Lender with respect to any draws made under a Letter of Credit which
have been converted to a Revolving Loan as set forth in Section 2.2, and
(iv) the portion of any issued but expired Letter of Credit which has not been
drawn by the beneficiary thereunder. For purposes of determining the outstanding
Letter of Credit Obligations at any time, Lender’s acceptance of a draft drawn
on Lender pursuant to a Letter of Credit shall constitute a draw on the
applicable Letter of Credit at the time of such acceptance.

“Liabilities” shall mean at all times all liabilities of a Borrower that would
be shown as such on the balance sheet of such Borrower prepared in accordance
with GAAP.

 

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“LIBOR” shall mean a rate of interest equal to (a) the per annum rate of
interest at which United States dollar deposits for a period equal to the
relevant Interest Period are offered in the London Interbank Eurodollar market
at 11:00 a.m. (London time) two Business Days prior to the commencement of such
Interest Period (or three Business Days prior to the commencement of such
Interest Period if banks in London, England were not open and dealing in
offshore United States dollars on such second preceding Business Day), as
displayed in the Bloomberg Financial Markets system (or other authoritative
source selected by Lender in its sole discretion), divided by (b) a number
determined by subtracting from 1.00 the then stated maximum reserve percentage
for determining reserves to be maintained by member banks of the Federal Reserve
System for Eurocurrency funding or liabilities as defined in Regulation D (or
any successor category of liabilities under Regulation D), or as LIBOR is
otherwise determined by Lender in its sole and absolute discretion. Lender’s
determination of LIBOR shall be conclusive, absent manifest error.

“LIBOR Loan” or “LIBOR Loans” shall mean that portion, and collectively those
portions, of the aggregate outstanding principal balance of the Loans that bear
interest at the LIBOR Rate, of which at any time, the Borrowers may identify no
more than three (3) advances of the Revolving Loans which bear interest at the
LIBOR Rate.

“LIBOR Rate” shall mean a per annum rate of interest equal to LIBOR for the
relevant Interest Period, plus the Applicable Margin, which LIBOR Rate shall
remain fixed during such Interest Period.

“Lien” shall mean, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person (including an interest in respect of a
Capital Lease) which secures payment or performance of any obligation and shall
include any mortgage, lien, encumbrance, title retention lien, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.

“Loans” shall mean, collectively, all Revolving Loans made by Lender to the
Borrowers and all Letter of Credit Obligations, under and pursuant to this
Agreement.

“Loan Documents” shall mean each of the agreements, documents, instruments and
certificates set forth in Section 3.1 hereof, and any and all such other
instruments, documents, certificates and agreements from time to time executed
and delivered by the Borrowers, the Guarantors or any of their Subsidiaries for
the benefit of Lender pursuant to any of the foregoing, and all amendments,
restatements, supplements and other modifications thereto.

“Master Letter of Credit Agreement” shall mean, at any time, with respect to the
issuance of Letters of Credit, a Master Letter of Credit Agreement in the form
being used by Lender at such time.

“Material Adverse Effect” shall mean (a) a material adverse change in, or a
material adverse effect upon, the assets, business, properties, prospects,
condition (financial or otherwise) or results of operations of the Borrowers and
their Subsidiaries taken as a whole, (b) a

 

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material impairment of the ability of the Borrowers and their Subsidiaries to
perform any of the Obligations under any of the Loan Documents, or (c) a
material adverse effect on (i) any substantial portion of the Collateral,
(ii) the legality, validity, binding effect or enforceability against the
Borrowers and their Subsidiaries of any of the Loan Documents, (iii) the
perfection or priority of any Lien granted to Lender under any Loan Document, or
(iv) the rights or remedies of Lender under any Loan Document.

“Net Income” shall mean, with respect to any Person for any period, the
consolidated net income (or loss) of such Person for such period as determined
in accordance with GAAP, excluding any gains from Asset Dispositions, any
extraordinary gains and any gains from discontinued operations.

“Non-Excluded Taxes” shall have the meaning set forth in Section 2.5(a) hereof.

“Note” and “Notes” shall mean, respectively, each of and collectively, the
Revolving Note and any other promissory notes executed and delivered by
Borrowers to Lender under this Agreement.

“Obligations” shall mean the Loans, as evidenced by any Note, all interest
accrued thereon (including interest which would be payable as post-petition in
connection with any bankruptcy or similar proceeding, whether or not permitted
as a claim thereunder), any fees due Lender hereunder, any expenses incurred by
Lender hereunder, including without limitation, all liabilities and obligations
under this Agreement, under any other Loan Document, any reimbursement
obligations of the Borrowers or any Borrower to Lender in respect of Letters of
Credit and surety bonds, all Hedging Obligations of the Borrowers or any
Borrower which are owed to Lender or any Affiliate of Lender, and all Bank
Product Obligations of the Borrowers or any Borrower, and any and all other
liabilities and obligations owed by the Borrowers or any Borrower to Lender from
time to time, howsoever created, arising or evidenced, whether direct or
indirect, joint or several, absolute or contingent, now or hereafter existing,
or due or to become due, together with any and all renewals, extensions,
restatements or replacements of any of the foregoing.

“Obligor” shall mean each Borrower, any of the Guarantors, accommodation
endorser, third party pledgor, or any other party liable with respect to the
Obligations.

“Organizational Identification Number” means, with respect to each Borrower, the
organizational identification number assigned to such Borrower by the applicable
governmental unit or agency of the jurisdiction of organization of such
Borrower.

“Other Taxes” shall mean any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from the
execution, delivery, enforcement or registration of, or otherwise with respect
to, this Agreement or any of the other Loan Documents.

 

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“Permitted Acquisition” shall mean a Borrower’s acquisition of the Capital
Securities or substantially all of the assets of a single Person or group of
related Persons (A) which meets the following requirements and conditions:
(a) Borrowers shall have notified Lender of such proposed acquisition not less
than 30 days prior to the closing thereof and shall have provided Lender with
all information requested by Lender in connection with such acquisition; (b) the
sum of the cash paid for each such acquisition shall not exceed Ten Million and
no/100 Dollars ($10,000,000.00); (c) the sum of the debt incurred (including
drawings under the Revolving Loan) for each such acquisition shall not exceed
Five Million and no/100 Dollars ($5,000,000.00); (d) no Event of Default or
Unmatured Event of Default then exists; (e) Borrowers shall have provided proof
to Lender that on a pro-forma basis, immediately after giving effect to the
proposed acquisition, Borrowers will be in compliance with the financial
covenants set forth in Section 10 below; (f) if any Borrower acquires a foreign
entity deemed material by Lender in Lender’s sole and absolute discretion, then
such Borrower shall grant to Lender a first priority lien in 66 2/3% of the
issued and outstanding stock of such foreign entity; and (g) contemporaneously
with any such acquisition of a United States domestic entity or substantially
all of the assets thereof, (i) Lender shall be granted a first priority lien in
all of the assets of such domestic entity, and (ii) the acquired entity shall
execute and deliver to Lender such agreements, documents and instruments as
required by Lender to make such entity a co-Borrower or Guarantor of the
Obligations, as selected by Lender in its sole discretion, or (B) as approved by
Lender in writing in its sole and absolute discretion.

“Permitted Liens” shall mean (a) Liens for Taxes, assessments or other
governmental charges not at the time delinquent or thereafter payable without
penalty or being contested in good faith by appropriate proceedings and, in each
case, for which it maintains adequate reserves in accordance with GAAP and in
respect of which no Lien has been filed; (b) Liens arising in the ordinary
course of business (such as (i) Liens of carriers, warehousemen, mechanics and
materialmen and other similar Liens imposed by law, and (ii) Liens in the form
of deposits or pledges incurred in connection with worker’s compensation,
unemployment compensation and other types of social security (excluding Liens
arising under ERISA) or in connection with surety bonds, bids, performance bonds
and similar obligations) for sums not overdue or being contested in good faith
by appropriate proceedings and not involving any advances or borrowed money or
the deferred purchase price of property or services, which do not in the
aggregate materially detract from the value of the property or assets of the
Borrowers or materially impair the use thereof in the operation of the
Borrowers’ business and, in each case, for which it maintains adequate reserves
in accordance with GAAP and in respect of which no Lien has been filed;
(c) Liens described on Schedule 9.2 as of the Closing Date; (d) attachments,
appeal bonds, judgments and other similar Liens, for sums not exceeding One
Hundred Thousand and 00/100 Dollars ($100,000) arising in connection with court
proceedings, provided the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings and to the extent such judgments or
awards do not constitute an Event of Default under Section 11.8 hereof;
(e) easements, rights of way, restrictions, minor defects or irregularities in
title and other similar Liens not interfering in any material respect with the
ordinary conduct of the business of the Borrowers or any of their Subsidiaries;
(f) subject to the limitation set forth in Section 9.1(f), Liens for Capital
Expenditures (including Liens that constitute purchase money security interests
on any property securing Debt

 

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incurred for the purpose of financing all or any part of the cost of acquiring
such property), provided that any such Lien attaches to such property within
twenty (20) days of the acquisition thereof and attaches solely to the property
so acquired; (g) deposits or Liens to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary
course of the Borrowers’ business; provided that no Liens shall be granted in
favor of such surety encumbering Inventory, Accounts or Equipment; and (h) Liens
granted to Lender hereunder and under the Loan Documents.

“Person” shall mean any natural person, partnership, limited liability company,
corporation, trust, joint venture, joint stock company, association,
unincorporated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.

“Prime Loan” or “Prime Loans” shall mean that portion, and collectively, those
portions of the aggregate outstanding principal balance of the Loans that bear
interest at the Prime Rate plus the Applicable Margin.

“Prime Rate” shall mean the floating per annum rate of interest which at any
time, and from time to time, shall be most recently announced by Lender as its
Prime Rate, which is not intended to be Lender’s lowest or most favorable rate
of interest at any one time. The effective date of any change in the Prime Rate
shall for purposes hereof be the date the Prime Rate is changed by Lender.
Lender shall not be obligated to give notice of any change in the Prime Rate.

“Regulatory Change” shall mean the introduction of, or any change in any
applicable law, treaty, rule, regulation or guideline or in the interpretation
or administration thereof by any governmental authority or any central bank or
other fiscal, monetary or other authority having jurisdiction over Lender or its
lending office.

“Revolving Interest Rate” shall mean the Borrowers’ from time to time option of
(i) a floating per annum rate of interest equal to the Prime Rate plus the
Applicable Margin, or (ii) the LIBOR Rate.

“Revolving Loan” and “Revolving Loans” shall mean, respectively, each direct
advance and the aggregate of all such direct advances made by Lender to the
Borrowers or any Borrower under and pursuant to this Agreement, as set forth in
Section 2.1 of this Agreement.

“Revolving Loan Availability” shall mean, at any time, an amount equal to the
Revolving Loan Commitment minus the Letter of Credit Obligations.

“Revolving Loan Commitment” shall mean Sixty Million and no/100 Dollars
($60,000,000.00).

 

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“Revolving Loan Maturity Date” shall mean October 31, 2011, unless extended by
Lender pursuant to any modification, extension or renewal note executed by the
Borrowers and accepted by Lender in its sole and absolute discretion in
substitution for the Revolving Note.

“Revolving Note” shall mean a revolving note in the form prepared by and
acceptable to Lender, dated as of the date hereof, in the amount of the
Revolving Loan Commitment and maturing on the Revolving Loan Maturity Date, duly
executed by the Borrowers and payable to the order of Lender, together with any
and all renewal, extension, modification or replacement notes executed by the
Borrowers and delivered to Lender and given in substitution therefor.

“Subordinated Debt” shall mean liabilities subordinated to Borrowers’
obligations to Lender in a manner acceptable to Lender in its sole discretion.

“Subsidiary” and “Subsidiaries” shall mean, respectively, with respect to any
Person, each and all such corporations, partnerships, limited partnerships,
limited liability companies, limited liability partnerships, joint ventures or
other entities of which or in which such Person owns, directly or indirectly,
such number of outstanding Capital Securities as have more than fifty percent
(50.00%) of the ordinary voting power for the election of directors or other
managers of such corporation, partnership, limited liability company or other
entity. Unless the context otherwise requires, each reference to Subsidiaries
herein shall be a reference to Subsidiaries of any Borrower.

“Tangible Net Worth” shall mean the value of Borrowers’ total assets (including
leaseholds and leasehold improvements and reserves against assets but excluding
goodwill, patents, trademarks, trade names, organization expense, unamortized
debt discount and expense, capitalized or deferred research and development
costs, deferred marketing expenses, and other like intangibles, and monies due
from affiliates, officers, directors, employees, shareholders, members or
managers of any Borrower) less total liabilities, including but not limited to
accrued and deferred income taxes, but excluding the non-current portion of
Subordinated Debt.

“Taxes” shall mean any and all present and future taxes, duties, levies,
imposts, deductions, assessments, charges or withholdings, and any and all
liabilities (including interest and penalties and other additions to taxes) with
respect to the foregoing.

“Total Debt” shall mean, at any date of determination, all outstanding Debt for
borrowed money and other interest-bearing liabilities, including current and
long-term Debt, plus Letters of Credit issued under the Revolving Loan, less the
non-current portion of Subordinated Debt, determined on a consolidated basis.

“UCC” shall mean the Uniform Commercial Code in effect in the state of Illinois
from time to time.

“Unmatured Event of Default” shall mean any event which, with the giving of
notice, the passage of time or both, would constitute an Event of Default.

 

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“Voidable Transfer” shall have the meaning set forth in Section 13.21 hereof.

“Wholly-Owned Subsidiary” shall mean any Subsidiary of which or in which any
Borrower owns, directly or indirectly, one hundred percent (100%) of the Capital
Securities of such Subsidiary.

“Working Capital” shall mean the total of cash on hand, cash equivalents,
marketable securities, Accounts minus adequate reserves for doubtful Accounts,
and readily salable Inventory at the lower of cost or market value, minus the
total of all liabilities payable within one year, all as determined in
accordance with GAAP.

1.2 Accounting Terms. Any accounting terms used in this Agreement which are not
specifically defined herein shall have the meanings customarily given them in
accordance with GAAP. Calculations and determinations of financial and
accounting terms used and not otherwise specifically defined hereunder and the
preparation of financial statements to be furnished to Lender pursuant hereto
shall be made and prepared, both as to classification of items and as to amount,
in accordance with sound accounting practices and GAAP as used in the
preparation of the financial statements of the Borrowers on the date of this
Agreement. If any changes in accounting principles or practices from those used
in the preparation of the financial statements are hereafter occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or any successor thereto or agencies with similar
functions), which results in a material change in the method of accounting in
the financial statements required to be furnished to Lender hereunder or in the
calculation of financial covenants, standards or terms contained in this
Agreement, the parties hereto agree to enter into good faith negotiations to
amend such provisions so as equitably to reflect such changes to the end that
the criteria for evaluating the financial condition and performance of the
Borrowers will be the same after such changes as they were before such changes;
and if the parties fail to agree on the amendment of such provisions, the
Borrowers will furnish financial statements in accordance with such changes, but
shall provide calculations for all financial covenants, perform all financial
covenants and otherwise observe all financial standards and terms in accordance
with applicable accounting principles and practices in effect immediately prior
to such changes. Calculations with respect to financial covenants required to be
stated in accordance with applicable accounting principles and practices in
effect immediately prior to such changes shall be reviewed and certified by the
Borrowers’ accountants.

1.3 Other Terms Defined in UCC. All other capitalized words and phrases used
herein and not otherwise specifically defined herein shall have the respective
meanings assigned to such terms in the UCC, to the extent the same are used or
defined therein.

1.4 Other Interpretive Provisions.

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms. Whenever the context so requires, the neuter
gender includes the masculine and feminine, the single number includes the
plural, and vice versa, and in particular the words “Borrower” and “Borrowers”
shall be so construed.

 

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(b) Section and Schedule references are to this Agreement unless otherwise
specified. The words “hereof”, “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement

(c) The term “including” is not limiting, and means “including, without
limitation”.

(d) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including”; the words “to” and
“until” each mean “to but excluding”, and the word “through” means “to and
including”.

(e) Unless otherwise expressly provided herein, (i) references to agreements
(including this Agreement and the other Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
supplements and other modifications thereto, but only to the extent such
amendments, restatements, supplements and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to any statute or
regulation shall be construed as including all statutory and regulatory
provisions amending, replacing, supplementing or interpreting such statute or
regulation.

(f) To the extent any of the provisions of the other Loan Documents are
inconsistent with the terms of this Agreement, the provisions of this Agreement
shall govern.

(g) This Agreement and the other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and each shall be
performed in accordance with its terms.

Section 2. COMMITMENT OF LENDER.

2.1 Revolving Loans.

(a) Revolving Loan Commitment. Subject to the terms and conditions of this
Agreement and the other Loan Documents, and in reliance upon the representations
and warranties of the Borrowers set forth herein and in the other Loan
Documents, Lender agrees to make such Revolving Loans at such times as the
Borrowers may from time to time request until, but not including, the Revolving
Loan Maturity Date, and in such amounts as the Borrowers may from time to time
request, provided, however, that the aggregate principal balance of all
Revolving Loans outstanding at any time shall not exceed the Revolving Loan
Availability. Revolving Loans made by Lender may be repaid

 

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and, subject to the terms and conditions hereof, borrowed again up to, but not
including the Revolving Loan Maturity Date unless the Revolving Loans are
otherwise accelerated, terminated or extended as provided in this Agreement. The
Revolving Loans shall be used by the Borrowers for the purpose of working
capital and to finance Permitted Acquisitions. All revolving loans outstanding
under the Prior Loan Agreement shall be deemed Revolving Loans outstanding
hereunder.

(b) Revolving Loan Interest and Payments. Except as otherwise provided in this
Section 2.1(b), the principal amount of the Revolving Loans outstanding from
time to time shall bear interest at the applicable Revolving Interest Rate.
Accrued and unpaid interest on the unpaid principal balance of all Revolving
Loans outstanding from time to time which are Prime Loans, shall be due and
payable quarterly, in arrears, commencing on October 31, 2008, and continuing on
the last day of each calendar quarter thereafter, and on the Revolving Loan
Maturity Date. Accrued and unpaid interest on the unpaid principal balance of
all Revolving Loans outstanding from time to time which are LIBOR Loans shall be
payable on the last Business Day of each Interest Period (provided, however,
that for Interest Periods of six months or longer, accrued interest shall also
be paid every three months from the first day of such Interest Period),
commencing on the first such date to occur after the date hereof, on the date of
any principal repayment of a LIBOR Loan and on the Revolving Loan Maturity Date.
From and after maturity, or after the occurrence and during the continuation of
an Event of Default, interest on the outstanding principal balance of the
Revolving Loans, at the option of Lender, may accrue at the Default Rate and
shall be payable upon demand from Lender.

(c) Revolving Loan Principal Payments.

(i) Revolving Loan Mandatory Payments. All Revolving Loans hereunder shall be
repaid by the Borrowers on the Revolving Loan Maturity Date, unless payable
sooner pursuant to the provisions of this Agreement. In the event the aggregate
outstanding principal balance of all Revolving Loans and Letter of Credit
Obligations hereunder exceeds the Revolving Loan Availability, the Borrowers
shall, without notice or demand of any kind, immediately make such repayments of
the Revolving Loans or take such other actions as are satisfactory to Lender as
shall be necessary to eliminate such excess. Also, if the Borrowers choose not
to convert any Revolving Loan which is a LIBOR Loan to a Prime Loan as provided
in Section 2.2(b) and Section 2.2(c), then such Revolving Loan shall immediately
be due and payable on the last Business Day of the then existing Interest Period
or on such earlier date as required by law, all without further demand,
presentment, protest or notice of any kind, all of which are hereby waived by
the Borrowers.

(ii) Optional Prepayments. The Borrowers may from time to time prepay the
Revolving Loans which are Prime Loans, in whole or in part, without any
prepayment penalty whatsoever, provided that any prepayment of the entire
principal balance of the Prime Loans shall include accrued interest on such
Prime Loans to the date of such prepayment.

 

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2.2 Additional LIBOR Loan Provisions.

(a) LIBOR Loan Prepayments. Notwithstanding anything to the contrary contained
herein, the principal balance of any LIBOR Loan may not be prepaid in whole or
in part at any time. If, for any reason, a LIBOR Loan is paid prior to the last
Business Day of any Interest Period, whether voluntary, involuntary, by reason
of acceleration or otherwise, each such prepayment of a LIBOR Loan will be
accompanied by the amount of accrued interest on the amount prepaid and any and
all costs, expenses, penalties and charges incurred by Lender as a result of the
early termination or breakage of a LIBOR Loan, plus the amount, if any, by which
(i) the additional interest which would have been payable during the Interest
Period on the LIBOR Loan prepaid had it not been prepaid, exceeds (ii) the
interest which would have been recoverable by Lender by placing the amount
prepaid on deposit in the domestic certificate of deposit market, the eurodollar
deposit market, or other appropriate money market selected by Lender, for a
period starting on the date on which it was prepaid and ending on the last day
of the Interest Period for such LIBOR Loan. The amount of any such loss or
expense payable by the Borrowers to Lender under this section shall be
determined in Lender’s sole discretion based upon the assumption that Lender
funded its loan commitment for LIBOR Loans in the London Interbank Eurodollar
market and using any reasonable attribution or averaging methods which Lender
deems appropriate and practical, provided, however, that Lender is not obligated
to accept a deposit in the London Interbank Eurodollar market in order to charge
interest on a LIBOR Loan at the LIBOR Rate.

(b) LIBOR Unavailability. If Lender determines in good faith (which
determination shall be conclusive, absent manifest error) prior to the
commencement of any Interest Period that (i) the making or maintenance of any
LIBOR Loan would violate any applicable law, rule, regulation or directive,
whether or not having the force of law, (ii) United States dollar deposits in
the principal amount, and for periods equal to the Interest Period for finding
any LIBOR Loan are not available in the London Interbank Eurodollar market in
the ordinary course of business, (iii) by reason of circumstances affecting the
London Interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the LIBOR Rate to be applicable to the relevant LIBOR Loan, or
(iv) the LIBOR Rate does not accurately reflect the cost to Lender of a LIBOR
Loan, Lender shall promptly notify the Borrowers thereof and, so long as the
foregoing conditions continue, none of the Loans may be advanced as a LIBOR Loan
thereafter. In addition, at the Borrowers’ option, each existing LIBOR Loan
shall be immediately (i) converted to a Prime Loan on the last Business Day of
the then existing Interest Period, or (ii) due and payable on the last Business
Day of the then existing Interest Period, without further demand, presentment,
protest or notice of any kind, all of which are hereby waived by the Borrowers.

 

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(c) Regulatory Change. In addition, if, after the date hereof, a Regulatory
Change shall, in the reasonable determination of Lender, make it unlawful for
Lender to make or maintain the LIBOR Loans, then Lender shall promptly notify
the Borrowers and none of the Loans may be advanced as a LIBOR Loan thereafter.
In addition, at the Borrowers’ option, each existing LIBOR Loan shall be
immediately (i) converted to a Prime Loan on the last Business Day of the then
existing Interest Period or on such earlier date as required by law, or (ii) due
and payable on the last Business Day of the then existing Interest Period or on
such earlier date as required by law, all without further demand, presentment,
protest or notice of any kind, all of which are hereby waived by the Borrowers.

(d) LIBOR Indemnity. If any Regulatory Change, or compliance by Lender or any
Person controlling Lender with any request or directive of any governmental
authority, central bank or comparable agency (whether or not having the force of
law) shall (a) impose, modify or deem applicable any assessment, reserve,
special deposit or similar requirement against assets held by, or deposits in or
for the account of or loans by, or any other acquisition of funds or
disbursements by, Lender; (b) subject Lender or any LIBOR Loan to any tax, duty,
charge, stamp tax or fee or change the basis of taxation of payments to Lender
of principal or interest due from the Borrowers to Lender hereunder (other than
a change in the taxation of the overall net income of Lender); or (c) impose on
Lender any other condition regarding such LIBOR Loan or Lender’s funding
thereof, and Lender shall determine (which determination shall be conclusive,
absent manifest error) that the result of the foregoing is to increase the cost
to, or to impose a cost on, Lender or such controlling Person of making or
maintaining such LIBOR Loan or to reduce the amount of principal or interest
received by Lender hereunder, then the Borrowers shall pay to Lender or such
controlling Person, on demand, such additional amounts as Lender shall, from
time to time, determine are sufficient to compensate and indemnify Lender for
such increased cost or reduced amount.

2.3 Interest and Fee Computation; Collection of Funds. Except as otherwise set
forth herein, all interest and fees shall be calculated on the basis of a year
consisting of 360 days and shall be paid for the actual number of days elapsed.
Principal payments submitted in funds not immediately available shall continue
to bear interest until collected. If any payment to be made by the Borrowers
hereunder or under any Note shall become due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in computing any interest in respect of such
payment. Notwithstanding anything to the contrary contained herein, the final
payment due under any of the Loans must be made by wire transfer or other
immediately available funds. All payments made by the Borrowers hereunder or
under any of the Loan Documents shall be made without setoff, counterclaim, or
other defense. To the extent permitted by applicable law, all payments hereunder
or under any of the Loan Documents (including any payment of principal,
interest, or fees) to, or for the benefit, of any Person shall be made by the
Borrowers free and clear of, and without deduction or withholding for, or
account of, any taxes now or hereinafter imposed by any taxing authority.

 

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2.4 Late Charge. If any payment of interest or principal due hereunder is not
made within ten (10) days after such payment is due in accordance with the terms
hereof, then, in addition to the payment of the amount so due, the Borrowers
shall pay to Lender a “late charge” of five cents for each whole dollar so
overdue to defray part of the cost of collection and handling such late payment.
The Borrowers agree that the damages to be sustained by Lender for the detriment
caused by any late payment are extremely difficult and impractical to ascertain,
and that the amount of five cents for each one dollar due is a reasonable
estimate of such damages, does not constitute interest, and is not a penalty.

2.5 Letters of Credit. Subject to the terms and conditions of this Agreement and
upon (i) the execution by the Borrowers and Lender of a Master Letter of Credit
Agreement in form and substance acceptable to Lender, if requested by Lender
(together with all amendments, modifications and restatements thereof, the
“Master Letter of Credit Agreement”), and (ii) the execution and delivery by the
Borrowers, and the acceptance by Lender, in its sole and absolute discretion, of
a Letter of Credit Application, Lender agrees to issue for the account of the
Borrowers such Letters of Credit in the standard form of Lender and otherwise in
form and substance acceptable to Lender, from time to time during the term of
this Agreement, provided that the Letter of Credit Obligations may not at any
time exceed the Letter of Credit Commitment and provided further, that no Letter
of Credit shall have an expiration date later than the Letter of Credit Maturity
Date. The amount of any payments made by Lender with respect to draws made by a
beneficiary under a Letter of Credit for which the Borrowers have failed to
reimburse Lender upon the earlier of (i) Lender’s demand for repayment, or
(ii) five (5) days from the date of such payment to such beneficiary by Lender,
shall be deemed to have been converted to a Revolving Loan as of the date such
payment was made by Lender to such beneficiary. Upon the occurrence of an Event
of a Default and at the option of Lender, all Letter of Credit Obligations shall
be converted to Revolving Loans consisting of Prime Loans, all without demand,
presentment, protest or notice of any kind, all of which are hereby waived by
the Borrowers. To the extent the provisions of the Master Letter of Credit
Agreement differ from, or are inconsistent with, the terms of this Agreement,
the provisions of this Agreement shall govern.

2.6 Taxes.

(a) All payments made by the Borrowers under this Agreement shall be made free
and clear of, and without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any governmental authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on Lender as a result of a present or former connection between Lender and the
jurisdiction of the governmental authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from Lender having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings (collectively, “Non-Excluded Taxes”)
or Other Taxes are required to be withheld from any amounts payable to Lender
hereunder, the amounts so

 

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payable to Lender shall be increased to the extent necessary to yield to Lender
(after payment of all Non-Excluded Taxes and Other Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrowers shall not be required to
increase any such amounts payable to Lender with respect to any Non-Excluded
Taxes that are attributable to Lender’s failure to comply with the requirements
of subsection 2.8(c).

(b) The Borrowers shall pay any Other Taxes to the relevant governmental
authority in accordance with applicable law.

(c) At the request of the Borrowers and at the Borrowers’ sole cost, Lender
shall take reasonable steps to (i) contest its liability for any Non-Excluded
Taxes or Other Taxes that have not been paid, or (ii) seek a refund of any
Non-Excluded Taxes or Other Taxes that have been paid.

(d) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrowers,
as promptly as possible thereafter the Borrowers shall send to Lender a
certified copy of an original official receipt received by the Borrowers showing
payment thereof. If the Borrowers fail to pay any Non-Excluded Taxes or Other
Taxes when due to the appropriate taxing authority or fails to remit to Lender
the required receipts or other required documentary evidence or if any
governmental authority seeks to collect a Non-Excluded Tax or Other Tax directly
from Lender for any other reason, the Borrowers shall indemnify Lender on an
after-tax basis for any incremental taxes, interest or penalties that may become
payable by Lender.

(e) The agreements in this Section shall survive the satisfaction and payment of
the Obligations and the termination of this Agreement.

2.7 All Loans to Constitute Single Obligation. The Loans shall constitute one
general obligation of the Borrowers, and shall be secured by Lender’s priority
security interest in and Lien upon all of the Collateral and by all other
security interests, Liens, claims and encumbrances heretofore, now or at any
time or times hereafter granted by the Borrowers and/or any Subsidiary to
Lender.

Section 3. CONDITIONS OF BORROWING.

Notwithstanding any other provision of this Agreement, Lender shall not be
required to disburse, make or continue all or any portion of the Loans, if any
of the following conditions shall have occurred.

3.1 Loan Documents. The Borrowers shall have failed to execute and deliver to
Lender any of the following Loan Documents, all of which must be satisfactory to
Lender and Lender’s counsel in form, substance and execution:

(a) Loan Agreement. Two copies of this Agreement duly executed by the Borrowers.

 

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(b) Revolving Note. A Revolving Note duly executed by the Borrowers, in the form
prepared by and acceptable to Lender.

(c) Master Letter of Credit Agreement. A Master Letter of Credit Agreement
prepared by and acceptable to Lender, duly executed by the Borrowers in favor of
Lender.

(d) Stock Pledge Agreement. A separate Stock Pledge Agreement in favor of Lender
in the form prepared by and acceptable to Lender, together with original stock
certificates and stock powers duly executed in blank for all stock pledged to
Lender, pledging to Lender 66.6% of the issued and outstanding Capital
Securities of Hill Luxembourg, Hill UK, Hill Middle East and JKH.

(e) Collateral Access Agreement. Unless waived by Lender, Collateral Access
Agreements dated as of the date of this Agreement, from the owner, lessor or
mortgagee, as the case may be, of any real estate whereon any Collateral is
stored or otherwise located, in the form prepared by and acceptable to Lender.
Lender hereby acknowledges and agrees that no Collateral Access Agreements will
be required to close the Loans referenced in this Agreement; provided, however,
Lender reserves the right to request Collateral Access Agreements at any time
hereafter, in which case Borrowers shall use their commercially reasonable best
efforts to obtain such Collateral Access Agreements and shall provide proof
thereof to Lender.

(f) Search Results; Lien Terminations. Copies of UCC search reports dated such a
date as is reasonably acceptable to Lender, listing all effective financing
statements which name each Borrower under its present name and any previous
names, as debtor, together with (i) copies of such financing statements,
(ii) payoff letters evidencing repayment in full of all existing Debt to be
repaid with the Loans, the termination of all agreements relating thereto and
the release of all Liens granted in connection therewith, with UCC or other
appropriate termination statements and documents effective to evidence the
foregoing (other than Permitted Liens), and (iii) such other UCC termination
statements as Lender may reasonably request.

(g) Organizational and Authorization Document. Copies of (i) the Articles of
Incorporation or Articles of Organization and Bylaws or Operating Agreement of
each Borrower; (ii) resolutions of the board of directors or the members of each
Borrower approving and authorizing such Person’s execution, delivery and
performance of the Loan Documents to which it is party and the transactions
contemplated thereby; (iii) signature and incumbency certificates of the
officers of each Borrower executing any of the Loan Documents, each of which the
respective Borrower hereby certifies to be true and complete, and in full force
and effect without modification, it being understood that Lender may
conclusively rely on each such document and certificate until formally advised
by each Borrower of any changes therein; and (iv) good standing certificates in
the state of incorporation or organization of each Borrower and in each other
state requested by Lender.

 

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(h) Insurance. Evidence satisfactory to Lender of the existence of insurance
required to be maintained pursuant to Section 8.6, together with evidence that
Lender has been named as a lender’s loss payee on all related insurance
policies.

(i) Additional Documents. Such other certificates, financial statements,
schedules, resolutions, opinions of counsel, notes and other documents which are
provided for hereunder or which Lender shall require.

3.2 Event of Default. Any Event of Default, or Unmatured Event of Default shall
have occurred and be continuing.

3.3 Material Adverse Effect. The occurrence of any event having a Material
Adverse Effect upon the Borrowers.

3.4 Litigation. Any litigation or governmental proceeding shall have been
instituted against the Borrowers or any of their officers, shareholders, members
or managerse having a Materially Adverse Effect upon the Borrowers.

3.5 Representations and Warranties. Any representation or warranty of the
Borrowers or any Borrower contained herein or in any Loan Document shall be
untrue or incorrect as of the date of any Loan as though made on such date,
except to the extent such representation or warranty expressly relates to an
earlier date.

3.6 Commitment Fee. The Borrowers shall have failed to pay to Lender the fees
set forth in the Fee Letter.

Section 4. NOTES EVIDENCING LOANS.

4.1 Revolving Note. The Revolving Loans and the Letter of Credit Obligations
shall be evidenced by the Revolving Note. At the time of the initial
disbursement of a Revolving Loan and at each time any additional Revolving Loan
shall be requested hereunder or a repayment made in whole or in part thereon, a
notation thereof shall be made on the books and records of Lender. All amounts
recorded shall be, absent manifest error, conclusive and binding evidence of
(i) the principal amount of the Revolving Loans advanced hereunder and the
amount of all Letter of Credit Obligations, (ii) any accrued and unpaid interest
owing on the Revolving Loans, and (iii) all amounts repaid on the Revolving
Loans or the Letter of Credit Obligations. The failure to record any such amount
or any error in recording such amounts shall not, however, limit or otherwise
affect the obligations of the Borrowers under the Revolving Note to repay the
principal amount of the Revolving Loans, together with all interest accruing
thereon.

 

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Section 5. MANNER OF BORROWING.

5.1 Borrowing Procedures. Each Revolving Loan may be advanced either as a Prime
Loan or a LIBOR Loan, provided, however, that at any time, the Borrowers may
identify no more than three (3) Revolving Loans which may be LIBOR Loans. Each
Loan shall be made available to the Borrowers upon any written, verbal,
electronic, telephonic or telecopy loan request which Lender in good faith
believes to emanate from a properly authorized representative of the Borrowers
or any Borrower, whether or not that is in fact the case. Each such notice shall
be effective upon receipt by Lender, shall be irrevocable, and shall specify the
date, amount and type of borrowing and, in the case of a LIBOR Loan, the initial
Interest Period therefor. The Borrowers shall select Interest Periods so as not
to require a payment or prepayment of any LIBOR Loan during an Interest Period
for such LIBOR Loan. The final Interest Period for any LIBOR Loan must be such
that its expiration occurs on or before the Maturity Date of such Loan. A
request for a Prime Loan must be received by Lender no later than 11:00 a.m.
Chicago, Illinois time, on the day it is to be funded. A request for a LIBOR
Loan must be (i) received by Lender no later than 11:00 a.m. Chicago, Illinois
time, three days before the day it is to be funded, and (ii) in an amount equal
to One Hundred Thousand and 00/100 Dollars ($100,000.00) or a higher integral
multiple of One Hundred Thousand and 00/100 Dollars ($100,000.00). The proceeds
of each Loan shall be made available at the office of Lender by credit to the
account of the Borrowers or by other means requested by the Borrowers and
acceptable to Lender. The Borrowers do hereby irrevocably confirm, ratify and
approve all such advances by Lender and does hereby indemnify Lender against
losses and expenses (including court costs, attorneys’ and paralegals’ fees) and
shall hold Lender harmless with respect thereto.

5.2. LIBOR Conversion and Continuation Procedures. Each LIBOR Loan shall
automatically renew for the Interest Period specified in the initial request
received by Lender pursuant to Section 5.1, at the then current LIBOR Rate
unless the Borrowers, pursuant to a subsequent written notice received by
Lender, shall elect a different Interest Period or the conversion of all or a
portion of such LIBOR Loan to a Prime Loan. Each Interest Period occurring after
the initial Interest Period with respect to any LIBOR Loan shall commence on the
same day of each applicable month as the first day of the initial Interest
Period. Whenever the last day of any Interest Period with respect to any LIBOR
Loan would otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding Business
Day. Whenever an Interest Period with respect to any LIBOR Loan would otherwise
end on a day of a month for which there is no numerically corresponding day in
the calendar month, such Interest Period shall end on the last day of such
calendar month, unless such day is not a Business Day, in which event such
Interest Period shall be extended to end on the next Business Day. Upon receipt
by Lender of such subsequent notice, the Borrowers may, subject to the terms and
conditions of this Agreement, elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Loan having an Interest Period expiring
on such day for a different Interest Period, or to convert any such LIBOR Loan
to a Prime Loan. Such notice shall, in the case of a conversion to a Prime Loan,
be given before 11:00 a.m., Chicago time, on the proposed date of such
conversion, and in the case of conversion to a LIBOR Loan having a different
Interest Period, be given before 11:00 a.m., Chicago time, at least three
Business Days prior to the proposed date of such conversion, specifying: (i) the
proposed date of conversion; (ii)

 

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the aggregate amount of Loans to be converted; (iii) the type of Loans resulting
from the proposed conversion; and (iv) the duration of the requested Interest
Period. The Borrowers may not elect a LIBOR Rate, and an Interest Period for a
LIBOR Loan shall not automatically renew, with respect to any principal amount
which is scheduled to be repaid before the last day of the applicable Interest
Period, and any such amounts shall bear interest at the Prime Rate plus the
Applicable Margin until repaid.

5.3. Letters of Credit. All Letters of Credit shall bear such application,
issuance, renewal, negotiation and other fees and charges, and bear such
interest as charged by Lender or otherwise payable pursuant to the Master Letter
of Credit Agreement. In addition to the foregoing, each standby Letters of
Credit issued under and pursuant to this Agreement shall bear an issuance fee
equal to the Letter of Credit Applicable Margin multiplied by the face amount of
such standby Letter of Credit, payable by the Borrowers quarterly in arrears,
until (i) such Letter of Credit has expired or has been returned to Lender, or
(ii) Lender has paid the beneficiary thereunder the full face amount of such
Letter of Credit.

5.4 Automatic Debit. In order to effectuate the timely payment of any of the
Obligations when due, the Borrowers hereby authorize and direct Lender, at
Lender’s option, to (a) debit the amount of the Obligations to any ordinary
deposit account of the Borrowers or any Borrower, or (b) make a Revolving Loan
hereunder to pay the amount of the Obligations.

5.5 Discretionary Disbursements. Lender, in its sole and absolute discretion,
may immediately upon notice to the Borrowers, disburse any or all proceeds of
the Loans made or available to the Borrowers pursuant to this Agreement to pay
any fees, costs, expenses or other amounts required to be paid by the Borrowers
hereunder and not so paid. All monies so disbursed shall be a part of the
Obligations, payable by the Borrowers on demand from Lender.

5.6 Co-Obligor Provisions. (A) Each Borrower is and shall remain jointly and
severally liable for all amounts due to Lender under this Agreement and the
other Loan Documents, including, without limitation, all Obligations, regardless
of which Borrower actually receives Loans or other extensions of credit
hereunder or the amount of such Loans received or the manner in which Lender
accounts for such Loans or other extensions of credit on its books and records,
and accordingly, each Borrower hereby unconditionally guaranties for the benefit
of Lender the full and timely payment of the Obligations.

(B) Lender shall not be required or obligated to take any of the following
action prior to pursuing any rights or remedies Lender may have against any
Borrower: (1) take any action to collect from, or to file any claim of any kind
against, any other Borrower or any Obligor; (2) take any steps to protect,
enforce, take possession of, perfect any interest in, foreclose or realize on
any collateral or security, if any, securing the Obligations; or (3) in any
other respect, exercise any diligence whatsoever in enforcing, collecting or
attempting to collect any of the Obligations by any means.

(C) Each Borrower unconditionally and irrevocably waives each and every defense
which would otherwise impair, restrict, diminish or affect any of the
Obligations. Without limiting

 

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the foregoing, Lender shall have the exclusive right from time to time without
impairing, restricting, diminishing or affecting any of the Obligations, and
without notice of any kind to all Borrowers, to (1) provide additional financial
accommodations to Borrowers or any Borrower; (2) accept partial payments on the
Obligations; (3) take and hold collateral or security to secure the Obligations,
or take any other guaranty to secure the Obligations; (4) in its sole
discretion, apply any such collateral or security, and direct the order or
manner of sale thereof, and the application of the proceeds thereof; (5) release
any guarantor or co-obligor of the Obligations; and (6) settle, release,
compromise, collect or otherwise liquidate the Obligations or exchange, enforce,
sell, lease, use, maintain, impair and release any collateral or security
therefor in any manner, without affecting or impairing any of the Obligations
hereunder.

(D) Each Borrower hereby unconditionally waives (1) notice of any default by
Borrowers in the full and prompt payment or performance of the Obligations, and
(2) presentment, notice of dishonor, protest, demand for payment and any other
notices of any kind.

(E) Each Borrower assumes full responsibility for keeping informed of (1) the
financial condition of the other Borrowers; (2) the extent of the Obligations;
and (3) all other circumstances bearing upon Borrowers or the risk of
non-payment of the Obligations. Each Borrower agrees that Lender shall have no
duty or obligation to advise, furnish or supply such Borrower of or with any
information known to Lender, including, but not limited to, the financial
condition of the other Borrowers, any other circumstances relating to
non-payment of the Obligations or otherwise. If Lender, in its sole discretion,
provides any advice or information to any Borrower, Lender shall be under no
obligation to investigate the matters contained in such advice or information,
or to correct such advice or information if Lender thereafter knows or should
have known that such advice or information is misleading or untrue, in whole or
in part, or to update or provide any other advice or information in the future.

(F) Each Borrower acknowledges and agrees that it may have a right of
indemnification, subrogation, contribution and reimbursement from the other
Borrowers, Lender or any other Obligor based upon its execution of this
Agreement. Each Borrower understands the benefits of having such rights,
including, but not limited to, (1) such Borrower’s right to reimbursement from
the other Borrowers of all monies expended for the payment of the Obligations;
and (2) such Borrower’s subrogation to the rights of Lender after payment of the
Obligations. No Borrower shall exercise any such rights of indemnification,
subrogation, contribution or reimbursement from the other Borrowers, Lender or
any Obligor prior to the indefeasible payment and satisfaction in full to Lender
of the Obligations.

(G) Each Borrower appoints each other Borrower as its agent for all purposes
relevant to this Agreement and the other Loan Documents, including, without
limitation, the giving and receipt of notices and execution and delivery of all
documents, instruments and certificates contemplated herein and all
modifications hereto. Any acknowledgment, consent, direction, certification or
other action which might otherwise be valid or effective only if given or taken
by all of the Borrowers or any Borrower acting singly, shall be valid and
effective if given or taken only by one Borrower, whether or not the other
Borrowers join therein.

 

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Section 6. SECURITY FOR THE OBLIGATIONS.

6.1 Security for Obligations. As security for the payment and performance of the
Obligations, Hill International hereby reaffirms its prior grant of a security
interest and lien to Lender in all of Hill International’s assets, as set forth
in the Prior Loan Agreement, and the each Borrower hereby pledges, assigns,
transfers, delivers and grants to Lender, for its own benefit and as agent for
its Affiliates, a continuing and unconditional first priority security interest
in and to any and all property of such Borrower, of any kind or description,
tangible or intangible, wheresoever located and whether now existing or
hereafter arising or acquired, including the following (all of which property,
along with the products and proceeds therefrom, are individually and
collectively referred to as the “Collateral”):

(a) all property of, or for the account of, such Borrower now or hereafter
coming into the possession, control or custody of, or in transit to, Lender or
any agent or bailee for Lender or any parent, Affiliate or Subsidiary of Lender
or any participant with Lender in the Loans (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise), including all earnings,
dividends, interest, or other rights in connection therewith and the products
and proceeds therefrom, including the proceeds of insurance thereon; and

(b) the additional property of such Borrower, whether now existing or hereafter
arising or acquired, and wherever now or hereafter located, together with all
additions and accessions thereto, substitutions, betterments and replacements
therefor, products and Proceeds therefrom, and all of such Borrower’s books and
records and recorded data relating thereto (regardless of the medium of
recording or storage), together with all of such Borrower’s right, title and
interest in and to all computer software required to utilize, create, maintain
and process any such records or data on electronic media, identified and set
forth as follows:

 

  (i) All Accounts and all Goods whose sale, lease or other disposition by such
Borrower have given rise to Accounts and have been returned to, or repossessed
or stopped in transit by, such Borrower, or rejected or refused by an Account
Debtor;

 

  (ii) All Inventory, including, without limitation, raw materials,
work-in-process and finished goods;

 

  (iii) All Goods (other than Inventory), including, without limitation,
embedded software, Equipment, vehicles, furniture and Fixtures;

 

  (iv) All Software and computer programs;

 

  (v) All Securities, Investment Property, Financial Assets and Deposit
Accounts;

 

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  (vi) All Chattel Paper, Electronic Chattel Paper, Instruments, Documents,
Letter of Credit Rights, all proceeds of letters of credit,
Health-Care-Insurance Receivables, Supporting Obligations, notes secured by real
estate, Commercial Tort Claims and General Intangibles, including Payment
Intangibles; and

 

  (vii) All Proceeds (whether Cash Proceeds or Noncash Proceeds) of the
foregoing property, including, without limitation, all insurance policies and
proceeds of insurance payable by reason of loss or damage to the foregoing
property, including unearned premiums, and of eminent domain or condemnation
awards.

6.2 Other Collateral. In addition, the Obligations are also secured by (a) that
certain Stock Pledge Agreement of even date herewith executed and delivered by
Hill International to Lender, and (b) certain other Stock Pledge Agreements
executed and delivered by Hill Luxembourg to Lender.

6.3 Possession and Transfer of Collateral. Unless an Event of Default exists
hereunder, the Borrowers shall be entitled to possession or use of the
Collateral (other than Instruments or Documents, Tangible Chattel Paper,
Investment Property consisting of certificated securities and other Collateral
required to be delivered to Lender pursuant to this Section 6). The cancellation
or surrender of any Note, upon payment or otherwise, shall not affect the right
of Lender to retain the Collateral for any other of the Obligations. The
Borrowers shall not sell, assign (by operation of law or otherwise), license,
lease or otherwise dispose of, or grant any option with respect to any of the
Collateral, except that the Borrowers may sell Inventory in the ordinary course
of business.

6.4 Financing Statements. The Borrowers shall, at Lender’s request, at any time
and from time to time, execute and deliver to Lender such financing statements,
amendments and other documents and do such acts as Lender deems necessary in
order to establish and maintain valid, attached and perfected first priority
security interests in the Collateral in favor of Lender, free and clear of all
Liens and claims and rights of third parties whatsoever, except Permitted Liens.
The Borrowers hereby irrevocably authorize Lender at any time, and from time to
time, to file in any jurisdiction any initial financing statements and
amendments thereto without the signature of the Borrowers that (a) indicate the
Collateral (i) is comprised of all assets of the Borrowers or words of similar
effect, regardless of whether any particular asset comprising a part of the
Collateral falls within the scope of Article 9 of the Uniform Commercial Code of
the jurisdiction wherein such financing statement or amendment is filed, or
(ii) as being of an equal or lesser scope or within greater detail as the grant
of the security interest set forth herein, and (b) contain any other information
required by Section 5 of Article 9 of the Uniform Commercial Code of the
jurisdiction wherein such financing statement or amendment is filed regarding
the sufficiency or filing office acceptance of any financing statement or
amendment, including (i) whether the Borrowers are an organization, the type of
organization and any Organizational Identification Number issued to the
Borrowers, and (ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be cut,
a sufficient

 

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description of the real property to which the Collateral relates. The Borrowers
hereby agree that a photocopy or other reproduction of this Agreement is
sufficient for filing as a financing statement and the Borrowers authorize
Lender to file this Agreement as a financing statement in any jurisdiction. The
Borrowers agree to furnish any such information to Lender promptly upon request.
The Borrowers further ratify and affirm their authorization for any financing
statements and/or amendments thereto, executed and filed by Lender in any
jurisdiction prior to the date of this Agreement. In addition, the Borrowers
shall make appropriate entries on its books and records disclosing Lender’s
security interests in the Collateral.

6.5 Additional Collateral. The Borrowers shall deliver to Lender immediately
upon its demand, such other collateral as Lender may from time to time request,
should the value of the Collateral, in Lender’s sole and absolute discretion,
decline, deteriorate, depreciate or become impaired, and does hereby grant to
Lender a continuing security interest in such other collateral, which, when
pledged, assigned and transferred to Lender shall be and become part of the
Collateral. Lender’s security interests in all of the foregoing Collateral shall
be valid, complete and perfected whether or not covered by a specific
assignment.

6.6 Preservation of the Collateral. Lender may, but is not required, to take
such actions from time to time as Lender deems appropriate to maintain or
protect the Collateral. Lender shall have exercised reasonable care in the
custody and preservation of the Collateral if Lender takes such action as the
Borrowers shall reasonably request in writing which is not inconsistent with
Lender’s status as a secured party, but the failure of Lender to comply with any
such request shall not be deemed a failure to exercise reasonable care;
provided, however, Lender’s responsibility for the safekeeping of the Collateral
shall (i) be deemed reasonable if such Collateral is accorded treatment
substantially equal to that which Lender accords its own property, and (ii) not
extend to matters beyond the control of Lender, including acts of God, war,
insurrection, riot or governmental actions. In addition, any failure of Lender
to preserve or protect any rights with respect to the Collateral against prior
or third parties, or to do any act with respect to preservation of the
Collateral, not so requested by the Borrowers, shall not be deemed a failure to
exercise reasonable care in the custody or preservation of the Collateral. The
Borrowers shall have the sole responsibility for taking such action as may be
necessary, from time to time, to preserve all rights of the Borrowers and Lender
in the Collateral against prior or third parties. Without limiting the
generality of the foregoing, where Collateral consists in whole or in part of
securities, the Borrowers represent to, and covenant with, Lender that the
Borrowers have made arrangements for keeping informed of changes or potential
changes affecting the securities (including rights to convert or subscribe,
payment of dividends, reorganization or other exchanges, tender offers and
voting rights), and the Borrowers agree that Lender shall have no responsibility
or liability for informing the Borrowers of any such or other changes or
potential changes or for taking any action or omitting to take any action with
respect thereto.

6.7 Other Actions as to any and all Collateral. The Borrowers further agree to
take any other action reasonably requested by Lender to ensure the attachment,
perfection and first priority of, and the ability of Lender to enforce, Lender’s
security interest in any and all of the Collateral including (a) causing
Lender’s name to be noted as secured party on any certificate of title for a
titled good if such notation is a condition to attachment, perfection or
priority of, or

 

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ability of the bank to enforce, Lender’s security interest in such Collateral,
(b) complying with any provision of any statute, regulation or treaty of the
United States as to any Collateral if compliance with such provision is a
condition to attachment, perfection or priority of, or ability of Lender to
enforce, Lender’s security interest in such Collateral, (c) obtaining
governmental and other third party consents and approvals, including any consent
of any licensor, lessor or other Person obligated on Collateral, (d) obtaining
waivers from mortgagees and landlords in form and substance satisfactory to
Lender, and (e) taking all actions required by the UCC in effect from time to
time or by other law, as applicable in any relevant UCC jurisdiction, or by
other law as applicable in any foreign jurisdiction. The Borrowers further agree
to jointly and severally indemnify and hold Lender harmless against claims of
any Persons not a party to this Agreement concerning disputes arising over the
Collateral.

6.8 Collateral in the Possession of a Warehouseman or Bailee. If any of the
Collateral at any time is in the possession of a warehouseman or bailee, the
Borrowers shall promptly notify Lender thereof, and shall promptly obtain a
Collateral Access Agreement. Lender agrees with the Borrowers that Lender shall
not give any instructions to such warehouseman or bailee pursuant to such
Collateral Access Agreement unless an Event of Default has occurred and is
continuing, or would occur after taking into account any action by the Borrowers
with respect to the warehouseman or bailee.

6.9 Letter-of-Credit Rights. If either or both Borrowers at any time are a
beneficiary under a letter of credit now or hereafter issued in favor of the
Borrowers or any Borrower, the Borrowers shall promptly notify Lender thereof
and, at the request and option of Lender, the Borrowers shall, pursuant to an
agreement in form and substance satisfactory to Lender, either (i) arrange for
the issuer and any confirmer of such letter of credit to consent to an
assignment to Lender of the proceeds of any drawing under the letter of credit,
or (ii) arrange for Lender to become the transferee beneficiary of the letter of
credit, with Lender agreeing, in each case, that the proceeds of any drawing
under the letter to credit are to be applied as provided in this Agreement.

6.10 Commercial Tort Claims. If any Borrower shall at any time hold or acquire a
Commercial Tort Claim, such Borrower shall immediately notify Lender in writing
signed by such Borrower of the details thereof and grant to Lender in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, in each case in form and substance satisfactory to
Lender, and shall execute any amendments hereto deemed reasonably necessary by
Lender to perfect its security interest in such Commercial Tort Claim.

6.11 Electronic Chattel Paper and Transferable Records. If any Borrower at any
time holds or acquires an interest in any electronic chattel paper or any
“transferable record”, as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of
the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, such Borrower shall promptly notify Lender thereof and, at the
request of Lender, shall take such action as Lender may reasonably request to
vest in Lender control under Section 9-105 of the UCC of such electronic chattel
paper or control under Section 201 of the federal Electronic Signatures in
Global and National Commerce Act or, as the case may be,

 

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Section 16 of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record. Lender agrees with the Borrowers that
Lender will arrange, pursuant to procedures satisfactory to Lender and so long
as such procedures will not result in Lender’s loss of control, for the
Borrowers to make alterations to the electronic chattel paper or transferable
record permitted under Section 9-105 of the UCC or, as the case may be,
Section 201 of the federal Electronic Signatures in Global and National Commerce
Act or Section 16 of the Uniform Electronic Transactions Act for a party in
control to make without loss of control.

Section 7. REPRESENTATIONS AND WARRANTIES.

To induce Lender to make the Loans, the Borrowers make the following
representations and warranties to Lender, each of which shall survive the
execution and delivery of this Agreement:

7.1 Borrowers Organization and Name. Hill International is a corporation duly
organized, existing and in good standing under the laws of the State of
Delaware, with full and adequate power to carry on and conduct its business as
presently conducted and each Subsidiary is validly existing and in good standing
under the laws of the jurisdiction of its organization. PCI Group is a limited
liability company duly organized, existing and in good standing under the laws
of the State of Nevada, with full and adequate power to carry on and conduct its
business as presently conducted and each Subsidiary is validly existing and in
good standing under the laws of the jurisdiction of its organization. Each
Borrower is duly licensed or qualified in all foreign jurisdictions wherein the
nature of its activities require such qualification or licensing, except for
such jurisdictions where the failure to so qualify would not have a Material
Adverse Effect. Hill International’s Organizational Identification Number is
3785704. PCI Group’s Organizational Identification Number is LLC8283-2002. The
exact legal names of the Borrowers are as set forth in the first paragraph of
this Agreement, and the Borrowers currently do not conduct, nor has any Borrower
during the last five (5) years conducted, business under any other name or trade
name, other than Arpeggio Acquisition Corporation.

7.2 Authorization. The Borrowers have full corporate or limited liability
company power and authority to enter into this Agreement, to make the borrowings
and execute and deliver the Loan Documents as provided herein and to perform all
of its duties and obligations under this Agreement and the other Loan Documents.
The execution and delivery of this Agreement and the other Loan Documents will
not, nor will the observance or performance of any of the matters and things
herein or therein set forth, violate or contravene any provision of law or of
the articles/certificate of incorporation, articles of organization, bylaws or
operating agreement of the Borrowers. All necessary and appropriate action has
been taken on the part of the Borrowers to authorize the execution and delivery
of this Agreement and the Loan Documents.

7.3 Validity and Binding Nature. This Agreement and the other Loan Documents are
the legal, valid and binding obligations of the Borrowers, enforceable against
the Borrowers in accordance with their terms, subject to bankruptcy, insolvency
and similar laws affecting the enforceability of creditors’ rights generally and
to general principles of equity.

 

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7.4 Consent; Absence of Breach. The execution, delivery and performance of this
Agreement, the other Loan Documents and any other documents or instruments to be
executed and delivered by the Borrowers in connection with the Loans, and the
borrowings by the Borrowers hereunder, do not and will not (a) require any
consent, approval, authorization of, or filings with, notice to or other act by
or in respect of, any governmental authority or any other Person (other than any
consent or approval which has been obtained and is in full force and effect);
(b) conflict with (i) any provision of law or any applicable regulation, order,
writ, injunction or decree of any court or governmental authority, (ii) the
articles of incorporation, articles of organization, bylaws or operating
agreement of the Borrowers or any of their Subsidiaries, or (iii) any material
agreement, indenture, instrument or other document, or any judgment, order or
decree, which is binding upon the Borrowers or any of their Subsidiaries or any
of their respective properties or assets; or (c) require, or result in, the
creation or imposition of any Lien on any asset of Borrowers or any of their
Subsidiaries, other than Liens in favor of Lender created pursuant to this
Agreement.

7.5 Ownership of Properties; Liens. The Borrowers are the sole owners of all of
their properties and assets, real and personal, tangible and intangible, of any
nature whatsoever (including patents, trademarks, trade names, service marks and
copyrights), free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, service marks,
copyrights and the like), other than Permitted Liens.

7.6 Equity Ownership. All issued and outstanding Capital Securities of the
Borrowers and each of their Subsidiaries are duly authorized and validly issued,
fully paid, non-assessable, and such securities were issued in compliance with
all applicable state and federal laws concerning the issuance of securities. All
issued and outstanding Capital Securities of each of the Borrowers’ Subsidiaries
are free and clear of all Liens other than those in favor of Lender. As of the
date hereof, there are no pre-emptive or other outstanding rights, options,
warrants, conversion rights or other similar agreements or understandings for
the purchase or acquisition of any Capital Securities of the Borrowers and each
of their Subsidiaries.

7.7 Intellectual Property. The Borrowers own and possess or have a license or
other right to use all Intellectual Property, as are necessary for the conduct
of the businesses of the Borrowers, without any infringement upon rights of
others which could reasonably be expected to have a Material Adverse Effect upon
the Borrowers, and no material claim has been asserted and is pending by any
Person challenging or questioning the use of any Intellectual Property or the
validity or effectiveness of any Intellectual Property nor do the Borrowers know
of any valid basis for any such claim.

7.8 Financial Statements. All financial statements submitted to Lender have been
prepared in accordance with sound accounting practices and GAAP on a basis,
except as otherwise noted therein, consistent with the previous fiscal year and
present fairly the financial condition of the Borrowers and the results of the
operations for the Borrowers as of such date and for the periods indicated.
Since the date of the most recent financial statement submitted by the Borrowers
to Lender, there has been no change in the financial condition or in the assets
or liabilities of the Borrowers having a Material Adverse Effect on the
Borrowers.

 

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7.9 Litigation and Contingent Liabilities. There is no litigation, arbitration
proceeding, demand, charge, claim, petition or governmental investigation or
proceeding pending, or to the knowledge of any Borrower, threatened, against any
Borrower, which, if adversely determined, which might reasonably be expected to
have a Material Adverse Effect upon such Borrower, except as set forth in
Schedule 7.9. Other than any liability incident to such litigation or
proceedings, the Borrowers have no material guarantee obligations, contingent
liabilities, liabilities for taxes, or any long-term leases or unusual forward
or long-term commitments, including any interest rate or foreign currency swap
or exchange transaction or other obligation in respect of derivatives, that are
not fully-reflected or fully reserved for in the most recent audited financial
statements delivered pursuant to subsection 8.8(a) or fully-reflected or fully
reserved for in the most recent quarterly financial statements delivered
pursuant to subsection 8.8(b) and not permitted by Section 9.1.

7.10 Event of Default. No Event of Default or Unmatured Event of Default exists
or would result from the incurrence by the Borrowers of any of the Obligations
hereunder or under any of the other Loan Document, and no Borrower is in default
(without regard to grace or cure periods) under any other contract or agreement
to which it is a party, the effect of which would have a Material Adverse Effect
upon such Borrower.

7.11 Adverse Circumstances. No condition, circumstance, event, agreement,
document, instrument, restriction, litigation or proceeding (or threatened
litigation or proceeding or basis therefor) exists which (a) would have a
Material Adverse Effect upon the Borrowers, or (b) would constitute an Event of
Default or an Unmatured Event of Default.

7.12 Environmental Laws and Hazardous Substances. The Borrowers have not
generated, used, stored, treated, transported, manufactured, handled, produced
or disposed of any Hazardous Substances, on or off any of the premises of the
Borrowers (whether or not owned by it) in any manner which at any time violates
any Environmental Law or any license, permit, certificate, approval or similar
authorization thereunder. The Borrowers will comply in all material respects
with all Environmental Laws and will obtain all licenses, permits certificates,
approvals and similar authorizations thereunder. There has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any governmental authority or any other Person, nor is any pending or,
to the best of the Borrowers’ knowledge, threatened, and the Borrowers shall
immediately notify Lender upon becoming aware of any such investigation,
proceeding, complaint, order, directive, claim, citation or notice, and shall
take prompt and appropriate actions to respond thereto, with respect to any
non-compliance with, or violation of, the requirements of any Environmental Law
by the Borrowers or the release, spill or discharge, threatened or actual, of
any Hazardous Material or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Material or any other environmental, health or safety matter, which affects the
Borrowers or their business, operations or assets or any properties at which the
Borrowers have transported, stored or disposed of any Hazardous Substances. The
Borrowers have no material liability, contingent or

 

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otherwise, in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Substances or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Material. The Borrowers further agree to allow Lender or its agent access to the
properties of the Borrowers and their Subsidiaries to confirm compliance with
all Environmental Laws, and the Borrowers shall, following determination by
Lender that there is non-compliance, or any condition which requires any action
by or on behalf of the Borrowers in order to avoid any non-compliance, with any
Environmental Law, at the Borrowers’ sole expense, cause an independent
environmental engineer acceptable to Lender to conduct such tests of the
relevant site as are appropriate, and prepare and deliver a report setting forth
the result of such tests, a proposed plan for remediation and an estimate of the
costs thereof.

7.13 Solvency, etc. As of the date hereof, and immediately prior to and after
giving effect to the issuance of each Letter of Credit and each Loan hereunder
and the use of the proceeds thereof, (a) the fair value of each Borrower’s
assets is greater than the amount of its liabilities (including disputed,
contingent and unliquidated liabilities) as such value is established and
liabilities evaluated as required under the Section 548 of the Bankruptcy Code,
(b) the present fair saleable value of each Borrower’s assets is not less than
the amount that will be required to pay the probable liability on its debts as
they become absolute and matured, (c) each Borrower is able to realize upon its
assets and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business,
(d) each Borrower does not intend to, and does not believe that it will, incur
debts or liabilities beyond its ability to pay as such debts and liabilities
mature, and (e) no Borrower is engaged in business or a transaction, nor is any
Borrower about to engage in business or a transaction, for which its property
would constitute unreasonably small capital.

7.14 ERISA Obligations. All Employee Plans of the Borrowers meet the minimum
funding standards of Section 302 of ERISA and 412 of the Internal Revenue Code
where applicable, and each such Employee Plan that is intended to be qualified
within the meaning of Section 401 of the Internal Revenue Code of 1986 is
qualified. No withdrawal liability has been incurred under any such Employee
Plans and no “Reportable Event” or “Prohibited Transaction” (as such terms are
defined in ERISA), has occurred with respect to any such Employee Plans, unless
approved by the appropriate governmental agencies. The Borrowers have promptly
paid and discharged all obligations and liabilities arising under the Employee
Retirement Income Security Act of 1974 (“ERISA”) of a character which if unpaid
or unperformed might result in the imposition of a Lien against any of their
properties or assets.

7.15 Labor Relations. Except as could not reasonably be expected to have a
Material Adverse Effect, (i) there are no strikes, lockouts or other labor
disputes against the Borrowers or, to the best knowledge of any Borrower,
threatened, (ii) hours worked by and payment made to employees of the Borrowers
have not been in violation of the Fair Labor Standards Act or any other
applicable law, and (ii) no unfair labor practice complaint is pending against
the Borrowers or, to the best knowledge of any Borrower, threatened before any
governmental authority.

7.16 Security Interest. This Agreement creates a valid security interest in
favor of Lender in the Collateral and, when properly perfected by filing in the
appropriate jurisdictions, or by possession or Control of such Collateral by
Lender or delivery of such Collateral to Lender, shall constitute a valid,
perfected, first-priority security interest in such Collateral.

 

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7.17 Lending Relationship. The relationship hereby created between the Borrowers
and Lender is and has been conducted on an open and arm’s length basis in which
no fiduciary relationship exists, and the Borrowers have not relied and are not
relying on any such fiduciary relationship in executing this Agreement and in
consummating the Loans. Lender represents that it will receive any Note payable
to its order as evidence of a bank loan.

7.18 Business Loan. The Loans, including interest rate, fees and charges as
contemplated hereby, (i) are business loans within the purview of 815 ILCS
205/4(1)(c), as amended from time to time, (ii) are an exempted transaction
under the Truth In Lending Act, 12 U.S.C. 1601 et seq., as amended from time to
time, and (iii) do not, and when disbursed shall not, violate the provisions of
the Illinois usury laws, any consumer credit laws or the usury laws of any state
which may have jurisdiction over this transaction, the Borrowers or any property
securing the Loans.

7.19 Taxes. Each Borrower has timely filed all tax returns and reports required
by law to have been filed by it and has paid all taxes, governmental charges and
assessments due and payable with respect to such returns, except any such taxes
or charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books, are insured against or bonded over to the
satisfaction of Lender and the contesting of such payment does not create a Lien
on the Collateral which is not a Permitted Lien. There is no controversy or
objection pending, or to the knowledge of any Borrower, threatened in respect of
any tax returns of the Borrowers. The Borrowers have made adequate reserves on
their books and records in accordance with GAAP for all taxes that have accrued
but which are not yet due and payable.

7.20 Compliance with Regulation U. No portion of the proceeds of the Loans shall
be used by the Borrowers, or any Affiliate of the Borrowers, either directly or
indirectly, for the purpose of purchasing or carrying any margin stock, within
the meaning of Regulation U as adopted by the Board of Governors of the Federal
Reserve System or any successor thereto.

7.21 Governmental Regulation. The Borrowers, their Subsidiaries and any of the
Guarantors are not, or after giving effect to any loan, will not be, subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the ICC Termination Act of 1995 or the Investment Company Act of 1940
or to any federal or state statute or regulation limiting its ability to incur
indebtedness for borrowed money.

7.22 Bank Accounts. All Deposit Accounts and operating bank accounts of each
Borrower are located at Lender and no Borrower has other Deposit Accounts except
those listed on Schedule 7.22 attached hereto.

7.23 Place of Business. The principal place of business and books and records of
the Borrowers are set forth in the preamble to this Agreement, and the location
of all Collateral, if

 

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other than at such principal place of business, is as set forth on Schedule 7.23
attached hereto and made a part hereof, and the Borrowers shall promptly notify
Lender of any change in such locations. The Borrowers will not remove or permit
the Collateral to be removed from such location without the prior written
consent of Lender, except for Inventory sold in the usual and ordinary course of
the Borrowers’ business.

7.24 Complete Information. This Agreement and all financial statements,
schedules, certificates, confirmations, agreements, contracts, and other
materials and information heretofore or contemporaneously herewith furnished in
writing by the Borrowers to Lender for purposes of, or in connection with, this
Agreement and the transactions contemplated hereby is, and all written
information hereafter furnished by or on behalf of the Borrowers to Lender
pursuant hereto or in connection herewith will be, true and accurate in every
material respect on the date as of which such information is dated or certified,
and none of such information is or will be incomplete by omitting to state any
material fact necessary to make such information not misleading in light of the
circumstances under which made (it being recognized by Lender that any
projections and forecasts provided by the Borrowers are based on good faith
estimates and assumptions believed by the Borrowers to be reasonable as of the
date of the applicable projections or assumptions and that actual results during
the period or periods covered by any such projections and forecasts may differ
from projected or forecasted results).

7.25 Internal Controls. From and after the closing of an initial public offering
of the capital stock of the Borrowers:

(a) The Borrowers have established and maintain disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the U.S. Securities
Exchange Act or 1934, as amended (the “Exchange Act”)), which (i) are designed
to ensure that material information relating to the Borrowers are made known to
the Borrowers’ principal executive officer and its principal financial offer or
persons performing similar functions by others within those entities,
particularly during the periods in which the periodic reports required under the
Exchange Act are being prepared; (ii) have been evaluated for effectiveness as a
date within ninety (90) days prior to the filing of the Borrowers’ most recent
annual or quarterly report filed with the Securities Exchange Commission; and
(iii) are effective in all material respects to perform the functions for which
they were established;

(b) Based on the evaluation of its disclosure controls and procedures, the
Borrowers are not aware of (i) any significant deficiency in the design or
operation of internal controls which could adversely affect the Borrowers’
abilities to record, process, summarize and report financial data or any
material weaknesses in internal controls or (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Borrowers’ internal controls; and

(c) Since the date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls or in
other factors that could significantly affect internal controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

 

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Section 8. AFFIRMATIVE COVENANTS.

8.1 Compliance with Bank Regulatory Requirements; Increased Costs. If Lender
shall reasonably determine that any Regulatory Change, or compliance by Lender
or any Person controlling Lender with any request or directive (whether or not
having the force of law) of any governmental authority, central bank or
comparable agency has or would have the effect of reducing the rate of return on
Lender’s or such controlling Person’s capital as a consequence of Lender’s
obligations hereunder or under any Letter of Credit to a level below that which
Lender or such controlling Person could have achieved but for such Regulatory
Change or compliance (taking into consideration Lender’s or such controlling
Person’s policies with respect to capital adequacy) by an amount deemed by
Lender or such controlling Person to be material or would otherwise reduce the
amount of any sum received or receivable by Lender under this Agreement or under
any Note with respect thereto, then from time to time, upon demand by Lender
(which demand shall be accompanied by a statement setting forth the basis for
such demand and a calculation of the amount thereof in reasonable detail), the
Borrowers shall pay directly to Lender or such controlling Person such
additional amount as will compensate Lender for such increased cost or such
reduction, so long as such amounts have accrued on or after the day which is one
hundred eighty days (180) days prior to the date on which Lender first made
demand therefor.

8.2 Borrower Existence. Each Borrower shall at all times (a) preserve and
maintain its existence and good standing in the jurisdiction of its
organization, (b) preserve and maintain its qualification to do business and
good standing in each jurisdiction where the nature of its business makes such
qualification necessary (other than such jurisdictions in which the failure to
be qualified or in good standing could not reasonably be expected to have a
Material Adverse Effect), and (c) continue as a going concern in the business
which such Borrower is presently conducting.

8.3 Compliance With Laws. The Borrowers shall use the proceeds of the Loans for
working capital and other general corporate or business purposes as set forth
herein (including Permitted Acquisitions) not in contravention of any
requirements of law and not in violation of this Agreement, and shall comply,
and cause each Subsidiary to comply, in all respects, including the conduct of
its business and operations and the use of its properties and assets, with all
applicable laws, rules, regulations, decrees, orders, judgments, licenses and
permits, except where failure to comply could not reasonably be expected to have
a Material Adverse Effect. In addition, and without limiting the foregoing
sentence, the Borrowers shall (a) ensure, and cause each Subsidiary to ensure,
that no person who owns a controlling interest in or otherwise controls any
Borrower or any Subsidiary is or shall be listed on the Specially Designated
Nationals and Blocked Person List or other similar list maintained by the Office
of Foreign Assets Control (“OFAC”), the Department of the Treasury or included
in any Executive Orders, (b) not use or permit the use of the proceeds of the
Loans to violate any of the foreign asset control regulations of OFAC or any
enabling statute or Executive Order relating thereto, and (c) comply, and cause
each Subsidiary to comply, with all applicable Bank Secrecy Act (“BSA”) laws and
regulations, as amended.

 

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8.4 Payment of Taxes and Liabilities. Each Borrower shall pay, and cause each
Subsidiary to pay, and discharge, prior to delinquency and before penalties
accrue thereon, all property and other taxes, and all governmental charges or
levies against it or any of the Collateral, as well as claims of any kind which,
if unpaid, could become a Lien on any of its property; provided that the
foregoing shall not require any Borrower or any Subsidiary to pay any such tax
or charge so long as it shall contest the validity thereof in good faith by
appropriate proceedings and shall set aside on its books adequate reserves with
respect thereto in accordance with GAAP and, in the case of a claim which could
become a Lien on any of the Collateral, such contest proceedings stay the
foreclosure of such Lien or the sale of any portion of the Collateral to satisfy
such claim.

8.5 Maintain Property. Each Borrower shall at all times maintain, preserve and
keep its plant, properties and Equipment, including, but not limited to, any
Collateral, in good repair, working order and condition; normal wear and tear
excepted, and shall from time to time make all needful and proper repairs,
renewals, replacements, and additions thereto so that at all times the
efficiency thereof shall be fully preserved and maintained. The Borrowers shall
permit Lender to examine and inspect such plant, properties and Equipment,
including, but not limited to, any Collateral, upon reasonable notice during
business hours.

8.6 Maintain Insurance. Each Borrower shall at all times maintain, and cause
each Subsidiary to maintain, with insurance companies reasonably acceptable to
Lender, such insurance coverage as may be required by any law or governmental
regulation or court decree or order applicable to it and such other insurance,
to such extent and against such hazards and liabilities, including employers’,
public and professional liability risks, as is customarily maintained by
companies similarly situated, and shall have insured amounts no less than, and
deductibles no higher than, are reasonably acceptable to Lender. The Borrowers
shall furnish to Lender a certificate setting forth in reasonable detail the
nature and extent of all insurance maintained by the Borrowers, which shall be
reasonably acceptable in all respects to Lender. The Borrowers shall cause each
issuer of an insurance policy to provide Lender with an endorsement (i) showing
Lender as lender’s loss payee with respect to each policy of property or
casualty insurance and naming Lender as an additional insured with respect to
each policy of liability insurance; and (ii) providing that thirty (30) days
notice will be given to Lender prior to any cancellation of, material reduction
or change in coverage provided by or other material modification to such policy.
The Borrowers shall execute and deliver to Lender a collateral assignment, in
form and substance satisfactory to Lender, of each business interruption
insurance policy maintained by the Borrowers.

In the event the Borrowers either fail to provide Lender with evidence of the
insurance coverage required by this Section or at any time hereafter shall fail
to obtain or maintain any of the policies of insurance required above, or to pay
any premium in whole or in part relating thereto, then Lender, without waiving
or releasing any obligation or default by the Borrowers hereunder, may at any
time (but shall be under no obligation to so act), obtain and maintain such

 

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policies of insurance and pay such premiums and take any other action with
respect thereto, which Lender deems advisable. This insurance coverage (a) may,
but need not, protect the Borrowers’ interests in such property, including the
Collateral, and (b) may not pay any claim made by, or against, the Borrowers in
connection with such property, including the Collateral. The Borrowers may later
cancel any such insurance purchased by Lender, but only after providing Lender
with evidence that the Borrowers have obtained the insurance coverage required
by this Section. If Lender purchases insurance for the Collateral, the Borrowers
will be responsible for the costs of that insurance, including interest and any
other charges that may be imposed with the placement of the insurance, until the
effective date of the cancellation or expiration of the insurance. The costs of
the insurance may be added to the principal amount of the Loans owing hereunder.
The costs of the insurance may be more than the cost of the insurance the
Borrowers may be able to obtain on its own.

8.7 ERISA Liabilities; Employee Plans. The Borrowers shall (i) keep in full
force and effect any and all Employee Plans which are presently in existence or
may, from time to time, come into existence under ERISA, and not withdraw from
any such Employee Plans, unless such withdrawal can be effected or such Employee
Plans can be terminated without liability to the Borrowers; (ii) make
contributions to all of such Employee Plans in a timely manner and in a
sufficient amount to comply with the standards of ERISA; including the minimum
funding standards of ERISA; (iii) comply with all material requirements of ERISA
which relate to such Employee Plans; (iv) notify Lender immediately upon receipt
by the Borrowers of any notice concerning the imposition of any withdrawal
liability or of the institution of any proceeding or other action which may
result in the termination of any such Employee Plans or the appointment of a
trustee to administer such Employee Plans; (v) promptly advise Lender of the
occurrence of any “Reportable Event” or “Prohibited Transaction” (as such terms
are defined in ERISA), with respect to any such Employee Plans; and (vi) amend
any Employee Plan that is intended to be qualified within the meaning of
Section 401 of the Internal Revenue Code of 1986 to the extent necessary to keep
the Employee Plan qualified, and to cause the Employee Plan to be administered
and operated in a manner that does not cause the Employee Plan to lose its
qualified status.

8.8 Financial Statements. The Borrowers shall at all times maintain a standard
and modern system of accounting, on the accrual basis of accounting and in all
respects in accordance with GAAP, and shall furnish to Lender or its authorized
representatives such information regarding the business affairs, operations and
financial condition of the Borrowers, including:

(a) promptly when available, and in any event, within ninety (90) days after the
close of each of its fiscal years, a copy of (i) the annual audited financial
statements of the Borrowers and their Subsidiaries, including consolidated
balance sheet, statement of income and retained earnings, and statement of cash
flows for the fiscal year then ended and such other information (including
nonfinancial information) as Lender may request, in reasonable detail, prepared
and certified without adverse reference to going concern value and without
qualification by Amper, Politziner & Mattia or other independent auditor of
recognized standing, selected by the Borrowers and reasonably acceptable to
Lender, and (ii) a consolidating balance sheet of the Borrowers and their
Subsidiaries as of the end of

 

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each of its fiscal years and consolidating statements of earnings and cash flows
for the Borrowers and their Subsidiaries for each of its fiscal years, certified
as true and correct by each Borrower’s treasurer or chief financial officer;

(b) promptly when available, and in any event, within forty-five (45) days
following the end of each of the first three fiscal quarters of each fiscal
year, a copy of the consolidated and consolidating financial statements of the
Borrowers and their Subsidiaries regarding such fiscal quarter, including
balance sheet, statement of income and retained earnings, statement of cash
flows for the fiscal quarter then ended and such other information (including
nonfinancial information) as Lender may request, in reasonable detail, prepared
and certified as true and correct by each Borrower’s treasurer or chief
financial officer; and

(c) within ten (10) days after the filing due date (as such date may be extended
in accordance with properly granted extensions) each year, a signed copy of the
complete income tax returns filed with the Internal Revenue Service by the
Borrowers.

The Borrowers represent and warrant to Lender that the financial statements
delivered to Lender at or prior to the execution and delivery of this Agreement
and to be delivered at all times thereafter accurately reflect and will
accurately reflect the financial condition of the Borrowers. Lender shall have
the right at all times during business hours to inspect the books and records of
the Borrowers and make extracts therefrom.

8.9 Reserved.

8.10 Supplemental Financial Statements. The Borrowers shall immediately upon
receipt thereof, provide to Lender copies of interim and supplemental reports if
any, submitted to the Borrowers by independent accountants in connection with
any interim audit or review of the books of the Borrowers.

8.11 Aged Accounts Schedule/Work in Process Reports. The Borrowers shall, within
forty-five (45) days after the end of each fiscal quarter, deliver the following
to Lender, each certified as accurate by each Borrower’s treasurer or chief
financial officer and otherwise in form and substance satisfactory to Lender:
(a) an aged schedule of the Accounts of each Borrower, listing the name and
amount due from each Account Debtor and showing the aggregate amounts due from
(1) 0-30 days, (2) 31-60 days, (3) 61-90 days and (4) more than 90 days, and
(b) each Borrower and its Subsidiaries’ work in process report.

8.12 Covenant Compliance Certificate. The Borrowers shall, contemporaneously
with the furnishing of the financial statements pursuant to Section 8.8, deliver
to Lender a duly completed compliance certificate, dated the date of such
financial statements and certified as true and correct by an appropriate officer
of each Borrower, containing a computation of each of the financial covenants
set forth in Section 10 and stating that such Borrower has not become aware of
any Event of Default or Unmatured Event of Default that has occurred and is
continuing or, if there is any such Event of Default or Unmatured Event of
Default describing it and the steps, if any, being taken to cure it.

 

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8.13 Field Audits. Upon reasonable notice and during regular business hours, the
Borrowers shall permit Lender to inspect the Inventory, other tangible assets
and/or other business operations of the Borrowers and each Subsidiary, to
perform appraisals of the Equipment of the Borrowers and each Subsidiary, and to
inspect, audit, check and make copies of, and extracts from, the books, records,
computer data, computer programs, journals, orders, receipts, correspondence and
other data relating to Inventory, Accounts and any other Collateral, the results
of which must be satisfactory to Lender in Lender’s sole and absolute
discretion. All such inspections or audits by Lender shall be at the Borrowers’
sole expense; provided, however, that so long as no Event of Default shall have
occurred, (a) the Borrowers shall not be obligated to pay for more than two such
inspections or audits in any given year; and (b) the Borrowers shall not be
obligated to pay more than [$10,000] in the aggregate in any given year for such
inspections or audits.

8.14 Other Reports. The Borrowers shall, within such period of time as Lender
may specify, deliver to Lender such other schedules and reports as Lender may
reasonably require.

8.15 Collateral Records. The Borrowers shall keep full and accurate books and
records relating to the Collateral and shall mark its financial books and
records to indicate Lender’s Lien in the Collateral.

8.16 Intellectual Property. The Borrowers shall maintain, preserve and renew all
Intellectual Property necessary for the conduct of its business as and where the
same is currently located as heretofore or as hereafter conducted by it.

8.17 Notice of Proceedings. The Borrowers, upon becoming aware, shall give
written notice to Lender of any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by the Borrowers to Lender
which has been instituted or, to the knowledge of the Borrowers, is threatened
in writing against any Borrower or any of Borrowers’ Subsidiaries or to which
any of Borrowers’ properties is subject which might reasonably be expected to
have a Material Adverse Effect.

8.18 Notice of Event of Default or Material Adverse Effect. The Borrowers shall,
immediately after the commencement thereof, give notice to Lender in writing of
the occurrence of any Event of Default or any Unmatured Event of Default, or the
occurrence of any condition or event having a Material Adverse Effect.

8.19 Environmental Matters. If any release or threatened release or other
disposal of Hazardous Substances shall occur or shall have occurred on any real
property or any other assets of the Borrowers or any of their Subsidiaries, the
Borrowers shall, or shall cause the applicable Subsidiary to, cause the prompt
containment and removal of such Hazardous Substances and the remediation of such
real property or other assets as necessary to comply with all Environmental Laws
and to preserve the value of such real property or other assets. Without
limiting the

 

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generality of the foregoing, the Borrowers shall, and shall cause each
Subsidiary to, comply with any Federal or state judicial or administrative order
requiring the performance at any real property of the Borrowers or any
Subsidiary of activities in response to the release or threatened release of a
Hazardous Substance. To the extent that the transportation of Hazardous
Substances is permitted by this Agreement, the Borrowers shall, and shall cause
its Subsidiaries to, dispose of such Hazardous Substances, or of any other
wastes, only at licensed disposal facilities operating in compliance with
Environmental Laws.

8.20 Further Assurances. The Borrowers shall take such actions as are necessary
or as Lender may reasonably request from time to time to ensure that the
Obligations under the Loan Documents are secured by substantially all of the
assets of the Borrowers, in each case as Lender may determine, including (a) the
execution and delivery of security agreements, pledge agreements, mortgages,
deeds of trust, financing statements and other documents, and the filing or
recording of any of the foregoing, (b) the delivery of certificated securities
and other collateral with respect to which perfection is obtained by possession,
and (c) the execution and delivery of such additional documents, agreements and
instruments as may be necessary for Lender to maintain a first priority Lien on
66 2/3% of the issued and outstanding Capital Securities of each of Hill
Luxembourg, Hill UK, Hill Middle East and JKH, and any other foreign Subsidiary
of Borrower whose Capital Securities have been pledged to Lender. Borrower shall
provide notice to Lender prior to any of Borrower’s direct or indirect foreign
Subsidiaries issuing any additional Capital Securities.

8.21 Banking Relationship. The Borrowers covenant and agree to at all times
during the term of this Agreement utilize Lender as their bank of account and
depository for all financial services, including all receipts, disbursements,
cash management and related service.

8.22 Non-Utilization Fee. The Borrowers agree to pay to Lender a non-utilization
fee equal to one quarter of one percent (0.25%) of the total of (a) the
Revolving Loan Commitment, minus (b) the sum of (i) the daily average of the
aggregate principal amount of all Revolving Loans outstanding, plus (ii) the
daily average of the aggregate amount of the Letter of Credit Obligations, which
non-utilization fee shall be (A) calculated on the basis of a year consisting of
360 days, (B) paid for the actual number of days elapsed, and (C) payable
quarterly in arrears on the last day of each March, June, September and
December, commencing on December 31, 2008, and on the Revolving Loan Maturity
Date. As of October 31, 2008, Borrowers shall pay to Lender the non-utilization
fee due under the Prior Loan Agreement.

Section 9. NEGATIVE COVENANTS.

9.1 Debt. The Borrowers shall not, either directly or indirectly, create,
assume, incur or have outstanding any Debt (including purchase money
indebtedness), or become liable, whether as endorser, guarantor, surety or
otherwise, for any debt or obligation of any other Person, except:

(a) the Obligations under this Agreement and the other Loan Documents;

 

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(b) obligations of the Borrowers for Taxes, assessments, municipal or other
governmental charges;

(c) obligations of the Borrowers for accounts payable, other than for money
borrowed, incurred in the ordinary course of business;

(d) Subordinated Debt;

(e) Hedging Obligations incurred in favor of Lender or an Affiliate thereof for
bona fide hedging purposes and not for speculation;

(f) Debt for Capital Expenditures, other than Capital Expenditures constituting
Permitted Acquisitions, provided that the aggregate amount of all such Debt
outstanding at any time shall not exceed One Million and no/100 Dollars
($1,000,000.00);

(g) Debt described on Schedule 9.1 and any extension, renewal or refinancing
thereof so long as the principal amount thereof is not increased;

(h) performance guaranties issued by the Borrowers of the operating obligations
of their Subsidiaries made in the ordinary course of Borrowers’ business;
provided, however, such guaranties shall exclude any guaranty of the payment of
such Subsidiaries’ monetary obligations;

(i) other unsecured Subordinated Debt, in addition to the Debt listed above, in
an aggregate amount outstanding at any time not to exceed One Million and 00/100
Dollars ($1,000,000.00); and

(j) revolving loan facility Debt or Debt incurred in connection with advance
payment or performance guaranties, each to the extent incurred by Borrowers’
foreign Subsidiaries after the date hereof, provided, (i) the applicable foreign
Subsidiary uses good faith efforts to utilize Lender or an Affiliate of Lender
to obtain such financing (considering all of the business circumstances
involved) and it is determined to be impractical for the applicable foreign
Subsidiary to obtain such financing from Lender or any of Lender’s Affiliates,
whether utilizing Letters of Credit issued under this Agreement or otherwise;
and (ii) the total aggregate outstanding amount of such Debt incurred after the
date hereof does not exceed $5,000,000.

9.2 Encumbrances. The Borrowers and their direct and indirect Subsidiaries shall
not, either directly or indirectly, create, assume, incur or suffer or permit to
exist any Lien or charge of any kind or character upon any asset of the
Borrowers or their Subsidiaries, whether owned at the date hereof or hereafter
acquired, except for Permitted Liens.

9.3 Investments. The Borrowers and their direct and indirect Subsidiaries shall
not, either directly or indirectly, make or have outstanding any Investment,
except:

(a) capital contributions or loans by the Borrowers to any Wholly-Owned
Subsidiary, or by any Subsidiary to any other Wholly-Owned Subsidiary;

 

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(b) Investments constituting Debt permitted by Section 9.1;

(c) Contingent Liabilities constituting Debt permitted by Section 9.1 or Liens
permitted by Section 9.2;

(d) Cash Equivalent Investments;

(e) bank deposits in the ordinary course of business, provided that the
aggregate amount of all such deposits (excluding amounts in payroll accounts or
for accounts payable, in each case to the extent that checks have been issued to
third parties) which are maintained with any bank other than Lender shall not at
any time exceed $250,000, unless any such amount in excess of $250,000 is swept
to Lender on a daily basis pursuant to Section 8.21 above;

(f) Investments in securities of Account Debtors received pursuant to any plan
of reorganization or similar arrangement upon the bankruptcy or insolvency of
such account debtors;

(g) Permitted Acquisitions made after the date of this Agreement;

(h) Investments listed on Schedule 9.3 as of the Closing Date;

(i) Investments in publicly traded securities not in excess of $5,000,000
outstanding at any time, provided (a) no Event of Default exists at the time of
any such Investment, and (b) no Loan proceeds are used to purchase all or any
portion of such Investments.

(j) bank deposits maintained by Borrowers’ foreign Subsidiaries and Affiliates
in non-United States bank accounts in the ordinary course of business.

provided, however, that (i) any Investment which when made complies with the
requirements of the definition of the term “Cash Equivalent Investment” may
continue to be held notwithstanding that such Investment if made thereafter
would not comply with such requirements; and (ii) no Investment otherwise
permitted by subsections (b) or (c) shall be permitted to be made if,
immediately before or after giving effect thereto, any Event of Default or
Unmatured Event of Default exists.

9.4 Transfer; Merger; Sales. The Borrowers shall not and not permit any
Subsidiary to, whether in one transaction or a series of related transactions,
(a) be a party to any merger or consolidation, or purchase or otherwise acquire
all or substantially all of the assets or any Capital Securities of any class
of, or any partnership or joint venture interest in, any other Person, except
for (i) any such merger, consolidation, sale, transfer, conveyance, lease or
assignment of or by any

 

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Wholly-Owned Subsidiary into the Borrowers or into any other domestic
Wholly-Owned Subsidiary; (ii) any such purchase or other acquisition by the
Borrowers or any domestic Wholly-Owned Subsidiary of the assets or equity
interests of any Wholly-Owned Subsidiary, (b) sell, transfer, convey or lease
all or any substantial part of its assets or Capital Securities (including the
sale of Capital Securities of any Subsidiary), except for sales of Inventory in
the ordinary course of business, or (c) sell or assign, with or without
recourse, any receivables.

9.5 Reserved.

9.6 Distributions. The Borrowers shall not (a) make any distribution or dividend
(other than stock dividends), whether in cash or otherwise, to any of their
equityholders, (b) purchase or redeem any of its equity interests or any
warrants, options or other rights in respect thereof, (c) pay any management
fees or similar fees to any of its equityholders or any Affiliate thereof,
(d) pay or prepay interest on, principal of, premium, if any, redemption,
conversion, exchange, purchase, retirement, defeasance, sinking fund or any
other payment in respect of any Subordinated Debt, or (e) set aside funds for
any of the foregoing. Notwithstanding the foregoing, provided no Unmatured Event
of Default or Event of Default then exists or would be created thereby,
(i) Borrowers shall be entitled to make cash dividends to their equityholders,
and (ii) Borrowers shall be entitled to make regularly scheduled payments of
principal and interest on Subordinated Debt to the extent such payments are
expressly permitted pursuant to the terms of the subordination agreement between
Lender and the holder of such Subordinated Debt.

9.7 Transactions with Affiliates. The Borrowers shall not, directly or
indirectly, enter into or permit to exist any transaction with any of their
Affiliates or with any director, officer or employee of the Borrowers other than
transactions in the ordinary course of, and pursuant to the reasonable
requirements of, the business of the Borrowers and upon fair and reasonable
terms and are no less favorable to the Borrowers than would be obtained in a
comparable arm’s length transaction with a Person that is not an Affiliate of
the Borrowers.

9.8 Unconditional Purchase Obligations. The Borrowers shall not and shall not
permit any Subsidiary to enter into or be a party to any contract for the
purchase of materials, supplies or other property or services if such contract
requires that payment be made by the applicable Borrower or Subsidiary
regardless of whether delivery is ever made of such materials, supplies or other
property or services.

9.9 Cancellation of Debt. The Borrowers shall not, and not permit any Subsidiary
to, cancel any claim or debt owing to it, except for reasonable consideration or
in the ordinary course of business.

9.10 Inconsistent Agreements. The Borrowers shall not and shall not permit any
Subsidiary to enter into any agreement containing any provision which would
(a) be violated or breached by any borrowing by the Borrowers hereunder or by
the performance by the Borrowers or any Subsidiary of any of its Obligations
hereunder or under any other Loan Document, (b) prohibit the Borrowers or any
Subsidiary from granting to Lender a Lien on any of its assets or (c) create or
permit to exist or become effective any encumbrance or restriction on the
ability of

 

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any Subsidiary to (i) pay dividends or make other distributions to the Borrowers
or any other Subsidiary, or pay any Debt owed to the Borrowers or any other
Subsidiary, (ii) make loans or advances to the Borrowers or any other
Subsidiary, or (iii) transfer any of its assets or properties to the Borrowers
or any other Subsidiary, other than (A) customary restrictions and conditions
contained in agreements relating to the sale of all or a substantial part of the
assets of any Subsidiary pending such sale, provided that such restrictions and
conditions apply only to the Subsidiary to be sold and such sale is permitted
hereunder, (B) restrictions or conditions imposed by any agreement relating to
purchase money Debt, Capital Leases and other secured Debt permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Debt, and (C) customary provisions in leases and other
contracts restricting the assignment thereof.

9.11 Use of Proceeds. Neither the Borrowers nor any of their Subsidiaries or
Affiliates shall use any portion of the proceeds of the Loans, either directly
or indirectly, for the purpose of purchasing any securities underwritten by any
Affiliate of Lender.

9.12 Bank Accounts. The Borrowers shall not establish any new Deposit Accounts
or other bank accounts, other than Deposit Accounts or other bank accounts
established at or with Lender without the prior written consent of Lender.

9.13 Business Activities; Change of Legal Status and Organizational Documents.
Each Borrower shall not and shall not permit any Subsidiary to (a) engage in any
line of business other than the businesses engaged in on the date hereof and
businesses reasonably related thereto, (b) change its name, its Organizational
Identification Number, if it has one, its type of organization, its jurisdiction
of organization or other legal structure, or (b) permit its charter, bylaws,
operating agreement or other organizational documents to be amended or modified
in any way which could reasonably be expected to materially adversely affect the
interests of Lender.

Section 10. FINANCIAL COVENANTS.

10.1 Tangible Net Worth. As of the end of each of its fiscal quarters beginning
with the fiscal quarter ending December 31, 2008, the Borrowers and their
Subsidiaries shall maintain consolidated Tangible Net Worth in an amount not
less than Forty-Five Million and no/100 Dollars ($45,000,000.00).

10.2 Total Debt to EBITDA. As of the end of each of its fiscal quarters
beginning with the fiscal quarter ending December 31, 2008, the Borrowers and
their Subsidiaries shall maintain a ratio of consolidated Total Debt to
consolidated EBITDA for such fiscal quarter, of not greater than 2.5 to 1.00,
calculated on a trailing twelve (12) month basis as of the last day of each
fiscal quarter.

10.3 Basic Fixed Charge Coverage. As of the end of each of its fiscal quarters
beginning with the fiscal quarter ending December 31, 2008, the Borrowers and
their Subsidiaries shall maintain a Basic Fixed Charge Coverage Ratio of not
less than 2.00 to 1.00, calculated on a trailing twelve (12) month basis as of
the last day of each fiscal quarter.

 

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10.4 Billed Accounts Receivable to Total Debt. As of the end of each of its
fiscal quarters beginning with the fiscal quarter ending December 31, 2008, the
Borrowers and their Subsidiaries shall maintain a ratio of consolidated billed
accounts receivable arising in the ordinary course of business to Total Debt, of
not less than 2.00 to 1.00.

Section 11. EVENTS OF DEFAULT.

The Borrowers, without notice or demand of any kind, shall be in default under
this Agreement upon the occurrence of any of the following events (each an
“Event of Default”).

11.1 Nonpayment of Obligations. Any amount due and owing on any Note or any of
the Obligations, whether by its terms or as otherwise provided herein, is not
paid when due and such failure to pay continues for a period of five (5) days
after notice thereof is provided to Borrowers.

11.2 Misrepresentation. Any oral or written warranty, representation,
certificate or statement of any Obligor in this Agreement, the other Loan
Documents or any other agreement with Lender shall be false in any material
respect when made or at any time thereafter, or if any financial data or any
other information now or hereafter furnished to Lender by or on behalf of any
Obligor shall prove to be false, inaccurate or misleading in any material
respect.

11.3 Nonperformance. Any failure to perform or default in the performance of any
covenant, condition or agreement contained in this Agreement, or in the other
Loan Documents or any other agreement with Lender and such failure to perform or
default in performance continues beyond any applicable grace or cure period;
provided, that, with respect to the affirmative covenants set forth in Article
VIII (other than Sections 8.2(c), 8.3, 8.6, 8.8, 8.11, 8.12, 8.13, 8.15, 8.18,
8.20, 8.21, and 8.22, for which there shall be no cure period) there shall be a
thirty (30) calendar day cure period.

11.4 Default under Loan Documents. A default under any of the other Loan
Documents, all of which covenants, conditions and agreements contained therein
are hereby incorporated in this Agreement by express reference, shall be and
constitute an Event of Default under this Agreement and any other of the
Obligations.

11.5 Default under Other Debt. Any default by any Obligor in the payment of any
Debt (other than Debt subject to a bona fide dispute which is being contested in
good faith by Borrowers) for any other obligation in excess of $250,000.00
beyond any period of grace provided with respect thereto or in the performance
of any other term, condition or covenant contained in any agreement (including
any capital or operating lease or any agreement in connection with the deferred
purchase price of property) under which any such obligation is created, the
effect of which default is to cause or permit the holder of such obligation (or
the other party to such other agreement) to cause such obligation to become due
prior to its stated maturity or terminate such other agreement.

 

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11.6 Other Material Obligations. Any default in the payment when due, or in the
performance or observance of, any material obligation of, or condition agreed to
by, any Obligor with respect to any material purchase or lease of goods or
services where such default, singly or in the aggregate with all other such
defaults, might reasonably be expected to have a Material Adverse Effect.

11.7 Bankruptcy, Insolvency, etc. Any Obligor becomes insolvent or generally
fails to pay, or admits in writing its inability or refusal to pay, debts as
they become due; or any Obligor applies for, consents to, or acquiesces in the
appointment of a trustee, receiver or other custodian for such Obligor or any
property thereof, or makes a general assignment for the benefit of creditors;
or, in the absence of such application, consent or acquiescence, a trustee,
receiver or other custodian is appointed for any Obligor or for a substantial
part of the property of any thereof; or any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any bankruptcy or insolvency law,
or any dissolution or liquidation proceeding, is commenced in respect of any
Obligor; or any Obligor takes any action to authorize, or in furtherance of, any
of the foregoing.

11.8 Judgments. The entry of any final judgment, decree, levy, attachment,
garnishment or other process in excess of $100,000.00, or the filing of any Lien
against any Obligor which is not fully covered by insurance, and such judgment
or other process shall not have been, within thirty (30) days from the entry
thereof, (a) bonded over to the satisfaction of Lender and appealed (unless
applicable judicial rules permit the filing of an appeal after 30 days in which
case the appeal shall be filed within such applicable period), (b) vacated, or
(c) discharged.

11.9 Collateral Impairment. The entry of any judgment, decree, levy, attachment,
garnishment or other process, or the filing of any Lien against, any of the
Collateral or any collateral under a separate security agreement securing any of
the Obligations, or the loss, theft, destruction, seizure or forfeiture, or the
occurrence of any material deterioration or impairment of any of the Collateral
or any of the collateral under any security agreement securing any of the
Obligations, or any material decline or depreciation in the value or market
price thereof (whether actual or reasonably anticipated), which causes the
Collateral, in the sole opinion of Lender acting in good faith, to become
unsatisfactory as to value or character, or which causes Lender to reasonably
believe that it is insecure and that the likelihood for repayment of the
Obligations is or will soon be impaired, time being of the essence. The cause of
such deterioration, impairment, decline or depreciation shall include, but is
not limited to, the failure by the Borrowers to do any act deemed necessary by
Lender to preserve and maintain the value and collectability of the Collateral.

11.10 Material Adverse Effect. The occurrence of any development, condition or
event which has a Material Adverse Effect on any Borrower.

11.11 Guaranty. There is a discontinuance by any of the Guarantors of any of the
Guaranties, any of the Guarantors shall contest the validity of such Guaranty.

 

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11.12 Subordinated Debt. The subordination provisions of any Subordinated Debt
shall for any reason be revoked or invalid or otherwise cease to be in full
force and effect. The Borrowers shall contest in any manner, or any other holder
thereof shall contest in any judicial proceeding, the validity or enforceability
of the Subordinated Debt or deny that it has any further liability or obligation
thereunder, or the Obligations shall for any reason not have the priority
contemplated by the subordination provisions of the Subordinated Debt.

Section 12. REMEDIES.

Upon the occurrence of an Event of Default, Lender shall have all rights, powers
and remedies set forth in the Loan Documents, in any written agreement or
instrument (other than this Agreement or the Loan Documents) relating to any of
the Obligations or any security therefor, as a secured party under the UCC or as
otherwise provided at law or in equity. Without limiting the generality of the
foregoing, Lender may, at its option upon the occurrence of an Event of Default,
declare its commitments to the Borrowers to be terminated and all Obligations to
be immediately due and payable, provided, however, that upon the occurrence of
an Event of Default under Section 11.7, all commitments of Lender to the
Borrowers shall immediately terminate and all Obligations shall be automatically
due and payable, all without demand, notice or further action of any kind
required on the part of Lender. The Borrowers hereby waive any and all
presentment, demand, notice of dishonor, protest, and all other notices and
demands in connection with the enforcement of Lender’s rights under the Loan
Documents, and hereby consent to, and waive notice of release, with or without
consideration, of any Collateral, notwithstanding anything contained herein or
in the Loan Documents to the contrary. In addition to the foregoing:

12.1 Possession and Assembly of Collateral. Lender may, without notice, demand
or legal process of any kind, take possession of any or all of the Collateral
(in addition to Collateral of which Lender already has possession), wherever it
may be found, and for that purpose may pursue the same wherever it may be found,
and may at any time enter into any of the Borrowers’ premises where any of the
Collateral may be or is supposed to be, and search for, take possession of,
remove, keep and store any of the Collateral until the same shall be sold or
otherwise disposed of and Lender shall have the right to store and conduct a
sale of the same in any of the Borrowers’ premises without cost to Lender. At
Lender’s request, the Borrowers will, at the Borrowers’ sole expense, assemble
the Collateral and make it available to Lender at a place or places to be
designated by Lender which is reasonably convenient to Lender and the Borrowers.

12.2 Sale of Collateral. Lender may sell any or all of the Collateral at public
or private sale, upon such terms and conditions as Lender may deem proper, and
Lender may purchase any or all of the Collateral at any such sale. The Borrowers
acknowledge that Lender may be unable to effect a public sale of all or any
portion of the Collateral because of certain legal and/or practical restrictions
and provisions which may be applicable to the Collateral and, therefore, may be
compelled to resort to one or more private sales to a restricted group of
offerees and purchasers. The Borrowers consent to any such private sale so made
even though at places and upon terms less favorable than if the Collateral were
sold at public sale. Lender shall have no obligation to clean-up or otherwise
prepare the Collateral for sale. Lender may apply the net proceeds, after
deducting all costs, expenses, attorneys’ and paralegals’ fees incurred or paid
at

 

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any time in the collection, protection and sale of the Collateral and the
Obligations, to the payment of any Note and/or any of the other Obligations,
returning the excess proceeds, if any, to the Borrowers. The Borrowers shall
remain liable for any amount remaining unpaid after such application, with
interest at the Default Rate. Any notification of intended disposition of the
Collateral required by law shall be conclusively deemed reasonably and properly
given if given by Lender at least ten (10) calendar days before the date of such
disposition. The Borrowers hereby confirm, approve and ratify all acts and deeds
of Lender relating to the foregoing, and each part thereof, and expressly waives
any and all claims of any nature, kind or description which it has or may
hereafter have against Lender or its representatives, by reason of taking,
selling or collecting any portion of the Collateral. The Borrowers consent to
releases of the Collateral at any time (including prior to default) and to sales
of the Collateral in groups, parcels or portions, or as an entirety, as Lender
shall deem appropriate. The Borrowers expressly absolve Lender from any loss or
decline in market value of any Collateral by reason of delay in the enforcement
or assertion or nonenforcement of any rights or remedies under this Agreement.

12.3 Standards for Exercising Remedies. To the extent that applicable law
imposes duties on Lender to exercise remedies in a commercially reasonable
manner, the Borrowers acknowledge and agree that it is not commercially
unreasonable for Lender (a) to fail to incur expenses reasonably deemed
significant by Lender to prepare Collateral for disposition or otherwise to
complete raw material or work-in-process into finished goods or other finished
products for disposition, (b) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (c) to fail to
exercise collection remedies against Account Debtors or other Persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (d) to exercise collection remedies against Account Debtors
and other Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
Persons, whether or not in the same business as the Borrowers, for expressions
of interest in acquiring all or any portion of the Collateral, (g) to hire one
or more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
including any warranties of title, (k) to purchase insurance or credit
enhancements to insure Lender against risks of loss, collection or disposition
of Collateral or to provide to Lender a guaranteed return from the collection or
disposition of Collateral, or (l) to the extent deemed appropriate by Lender, to
obtain the services of other brokers, investment bankers, consultants and other
professionals to assist Lender in the collection or disposition of any of the
Collateral. The Borrowers acknowledge that the purpose of this section is to
provide non-exhaustive indications of what actions or omissions by Lender would
not be commercially unreasonable in Lender’s exercise of remedies against the
Collateral and that other actions or omissions by Lender shall not be deemed
commercially unreasonable solely on account of not being indicated in this
section. Without limitation upon the foregoing, nothing contained in this
section shall be

 

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construed to grant any rights to the Borrowers or to impose any duties on Lender
that would not have been granted or imposed by this Agreement or by applicable
law in the absence of this section.

12.4 UCC and Offset Rights. Lender may exercise, from time to time, any and all
rights and remedies available to it under the UCC or under any other applicable
law in addition to, and not in lieu of, any rights and remedies expressly
granted in this Agreement or in any other agreements between any Obligor and
Lender, and may, without demand or notice of any kind, appropriate and apply
toward the payment of such of the Obligations, whether matured or unmatured,
including costs of collection and attorneys’ and paralegals’ fees, and in such
order of application as Lender may, from time to time, elect, any indebtedness
of Lender to any Obligor, however created or arising, including balances,
credits, deposits, accounts or moneys of such Obligor in the possession, control
or custody of, or in transit to Lender. Each Borrower, on behalf of itself and
each Obligor, hereby waives the benefit of any law that would otherwise restrict
or limit Lender in the exercise of its right, which is hereby acknowledged, to
appropriate at any time hereafter any such indebtedness owing from Lender to any
Obligor.

12.5 Additional Remedies. Lender shall have the right and power to:

(a) instruct the Borrowers, at their own expense, to notify any parties
obligated on any of the Collateral, including any Account Debtors, to make
payment directly to Lender of any amounts due or to become due thereunder, or
Lender may directly notify such obligors of the security interest of Lender,
and/or of the assignment to Lender of the Collateral and direct such obligors to
make payment to Lender of any amounts due or to become due with respect thereto,
and thereafter, collect any such amounts due on the Collateral directly from
such Persons obligated thereon;

(b) enforce collection of any of the Collateral, including any Accounts, by suit
or otherwise, or make any compromise or settlement with respect to any of the
Collateral, or surrender, release or exchange all or any part thereof, or
compromise, extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder;

(c) take possession or control of any proceeds and products of any of the
Collateral, including the proceeds of insurance thereon;

(d) extend, renew or modify for one or more periods (whether or not longer than
the original period) any Note, any other of the Obligations, any obligation of
any nature of any other obligor with respect to any Note or any of the
Obligations;

(e) grant releases, compromises or indulgences with respect to any Note, any of
the Obligations, any extension or renewal of any of the Obligations, any
security therefor, or to any other obligor with respect to any Note or any of
the Obligations;

 

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(f) transfer the whole or any part of securities which may constitute Collateral
into the name of Lender or Lender’s nominee without disclosing, if Lender so
desires, that such securities so transferred are subject to the security
interest of Lender, and any corporation, association, or any of the managers or
trustees of any trust issuing any of such securities, or any transfer agent,
shall not be bound to inquire, in the event that Lender or such nominee makes
any further transfer of such securities, or any portion thereof, as to whether
Lender or such nominee has the right to make such further transfer, and shall
not be liable for transferring the same;

(g) vote the Collateral;

(h) make an election with respect to the Collateral under Section 1111 of the
Bankruptcy Code or take action under Section 364 or any other section of the
Bankruptcy Code; provided, however, that any such action of Lender as set forth
herein shall not, in any manner whatsoever, impair or affect the liability of
the Borrowers hereunder, nor prejudice, waive, nor be construed to impair,
affect, prejudice or waive Lender’s rights and remedies at law, in equity or by
statute, nor release, discharge, nor be construed to release or discharge, the
Borrowers, any guarantor or other Person liable to Lender for the Obligations;
and

(i) at any time, and from time to time, accept additions to, releases,
reductions, exchanges or substitution of the Collateral, without in any way
altering, impairing, diminishing or affecting the provisions of this Agreement,
the Loan Documents, or any of the other Obligations, or Lender’s rights
hereunder, under any Note or under any of the other Obligations.

The Borrowers hereby ratify and confirm whatever Lender may do with respect to
the Collateral and agrees that Lender shall not be liable for any error of
judgment or mistakes of fact or law with respect to actions taken in connection
with the Collateral.

12.6 Attorney-in-Fact. The Borrowers hereby irrevocably make, constitute and
appoint Lender (and any officer of Lender or any Person designated by Lender for
that purpose) as the Borrowers’ true and lawful proxy and attorney-in-fact (and
agent-in-fact) in the Borrowers’ name, place and stead, with full power of
substitution, to (i) after the occurrence of an Event of Default, take such
actions as are permitted in this Agreement, (ii) execute such financing
statements and other documents and to do such other acts as Lender may require
to perfect and preserve Lender’s security interest in, and to enforce such
interests in the Collateral, and (iii) after the occurrence of an Event of
Default, carry out any remedy provided for in this Agreement, including
endorsing any Borrower’s name to checks, drafts, instruments and other items of
payment, and proceeds of the Collateral, executing change of address forms with
the postmaster of the United States Post Office serving the addresses of the
Borrowers, changing the addresses of the Borrowers to that of Lender, opening
all envelopes addressed to the Borrowers and applying any payments contained
therein to the Obligations. The Borrowers hereby acknowledge that the
constitution and appointment of such proxy and attorney-in-fact are coupled with
an interest and are irrevocable. The Borrowers hereby ratify and confirm all
that such attorney-in-fact may do or cause to be done by virtue of any provision
of this Agreement.

 

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12.7 No Marshaling. Lender shall not be required to marshal any present or
future collateral security (including this Agreement and 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.
To the extent that it lawfully may, the Borrowers hereby agree that they will
not invoke any law relating to the marshaling of collateral which might cause
delay in or impede the enforcement of Lender’s rights under this Agreement or
under any other 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 they lawfully may, the Borrowers hereby irrevocably waive the
benefits of all such laws.

12.8 Application of Proceeds. Lender will within three (3) Business Days after
receipt of cash or solvent credits from collection of items of payment, proceeds
of Collateral or any other source, apply the whole or any part thereof against
the Obligations secured hereby. Lender shall further have the exclusive right to
determine how, when and what application of such payments and such credits shall
be made on the Obligations, and such determination shall be conclusive upon the
Borrowers. Any proceeds of any disposition by Lender of all or any part of the
Collateral may be first applied by Lender to the payment of expenses incurred by
Lender in connection with the Collateral, including attorneys’ fees and legal
expenses as provided for in Section 13 hereof.

12.9 No Waiver. No Event of Default shall be waived by Lender except in writing.
No failure or delay on the part of Lender in exercising any right, power or
remedy hereunder shall operate as a waiver of the exercise of the same or any
other right at any other time; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. There shall be no
obligation on the part of Lender to exercise any remedy available to Lender in
any order. The remedies provided for herein are cumulative and not exclusive of
any remedies provided at law or in equity. The Borrowers agree that in the event
that the Borrowers fail to perform, observe or discharge any of its Obligations
or liabilities under this Agreement or any other agreements with Lender, no
remedy of law will provide adequate relief to Lender, and further agrees that
Lender shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.

12.10 Letters of Credit. With respect to all Letters of Credit for which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to this Section 12, the Borrowers shall at such time deposit in a cash
collateral account opened by Lender an amount equal to the Letter of Credit
Obligations then outstanding. Amounts held in such cash collateral account shall
be applied by Lender to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay the
Obligations, in such order of application as Lender may, in its sole discretion,
from time to time elect. After all such Letters of Credit shall

 

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have expired or been fully drawn upon, all commitments to make Loans hereunder
have terminated all other Obligations have been indefeasibly satisfied and paid
in full in cash, the balance, if any, in such cash collateral account shall be
returned to the Borrowers or such other Person as may be lawfully entitled
thereto.

Section 13. MISCELLANEOUS.

13.1 Obligations Absolute. None of the following shall affect the Obligations of
the Borrowers to Lender under this Agreement or Lender’s rights with respect to
the Collateral:

(a) acceptance or retention by Lender of other property or any interest in
property as security for the Obligations;

(b) release by Lender of any Borrower, any of the Guarantors or of all or any
part of the Collateral or of any party liable with respect to the Obligations;

(c) release, extension, renewal, modification or substitution by Lender of any
Note, or any note evidencing any of the Obligations, or the compromise of the
liability of any of the Guarantors of the Obligations; or

(d) failure of Lender to resort to any other security or to pursue the Borrowers
or any other obligor liable for any of the Obligations before resorting to
remedies against the Collateral.

13.2 Entire Agreement. This Agreement and the other Loan Documents (i) are
valid, binding and enforceable against the Borrowers and Lender in accordance
with their respective provisions and no conditions exist as to their legal
effectiveness; (ii) constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof; and (iii) are the final
expression of the intentions of the Borrowers and Lender. No promises, either
expressed or implied, exist between the Borrowers and Lender, unless contained
herein or therein. This Agreement, together with the other Loan Documents,
supersedes all negotiations, representations, warranties, commitments, term
sheets, discussions, negotiations, offers or contracts (of any kind or nature,
whether oral or written) prior to or contemporaneous with the execution hereof
with respect to any matter, directly or indirectly related to the terms of this
Agreement and the other Loan Documents. This Agreement and the other Loan
Documents are the result of negotiations among Lender, the Borrowers and the
other parties thereto, and have been reviewed (or have had the opportunity to be
reviewed) by counsel to all such parties, and are the products of all parties.
Accordingly, this Agreement and the other Loan Documents shall not be construed
more strictly against Lender merely because of Lender’s involvement in their
preparation.

13.3 Amendments; Waivers. No delay on the part of Lender in the exercise of any
right, power or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise by Lender of any right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right, power or remedy.
No amendment, modification or waiver of, or consent with

 

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respect to, any provision of this Agreement or the other Loan Documents shall in
any event be effective unless the same shall be in writing and acknowledged by
Lender, and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

13.4 WAIVER OF DEFENSES. EACH BORROWER, ON BEHALF OF ITSELF AND ANY GUARANTOR OF
ANY OF THE OBLIGATIONS, WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF
ACTION, COUNTERCLAIM OR SETOFF WHICH SUCH BORROWER MAY NOW HAVE OR HEREAFTER MAY
HAVE TO ANY ACTION BY LENDER IN ENFORCING THIS AGREEMENT. PROVIDED LENDER ACTS
IN GOOD FAITH, THE BORROWERS RATIFY AND CONFIRM WHATEVER LENDER MAY DO PURSUANT
TO THE TERMS OF THIS AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO THE BORROWERS.

13.5 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE
OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION. THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. THE BORROWERS FURTHER IRREVOCABLY CONSENT TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE BORROWERS HEREBY EXPRESSLY AND
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

13.6 WAIVER OF JURY TRIAL. LENDER AND THE BORROWERS, AFTER CONSULTING OR HAVING
HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY
OTHER LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY
COURSE OF CONDUCT OR

 

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COURSE OF DEALING IN WHICH LENDER AND THE BORROWERS ARE ADVERSE PARTIES, AND
EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER GRANTING
ANY FINANCIAL ACCOMMODATION TO THE BORROWERS.

13.7 Assignability. Lender may at any time assign Lender’s rights in this
Agreement, the other Loan Documents, the Obligations, or any part thereof and
transfer Lender’s rights in any or all of the Collateral, and Lender thereafter
shall be relieved from all liability with respect to such Collateral. In
addition, Lender may at any time sell one or more participations in the Loans.
The Borrowers may not sell or assign this Agreement, or any other agreement with
Lender or any portion thereof, either voluntarily or by operation of law,
without the prior written consent of Lender. This Agreement shall be binding
upon Lender and the Borrowers and their respective legal representatives and
successors. All references herein to the Borrowers shall be deemed to include
any successors, whether immediate or remote. In the case of a joint venture or
partnership, the term “Borrowers” shall be deemed to include all joint venturers
or partners thereof, who shall be jointly and severally liable hereunder.

13.8 Confirmations. The Borrowers and Lender agree from time to time, upon
written request received by it from the other, to confirm to the other in
writing the aggregate unpaid principal amount of the Loans then outstanding
under such Note.

13.9 Confidentiality. Lender agrees to use commercially reasonable efforts
(equivalent to the efforts Lender applies to maintain the confidentiality of its
own confidential information) to maintain as confidential all information
provided to it by the Borrowers, including all information designated as
confidential, except that Lender may disclose such information (a) to Persons
employed or engaged by Lender in evaluating, approving, structuring or
administering the Loans; (b) to any assignee or participant or potential
assignee or participant that has agreed to comply with the covenant contained in
this Section 13.9 (and any such assignee or participant or potential assignee or
participant may disclose such information to Persons employed or engaged by them
as described in clause (a) above); (c) as required or requested by any federal
or state regulatory authority or examiner, or any insurance industry
association, or as reasonably believed by Lender to be compelled by any court
decree, subpoena or legal or administrative order or process; (d) as, on the
advice of Lender’s counsel, is required by law; (e) in connection with the
exercise of any right or remedy under the Loan Documents or in connection with
any litigation to which Lender is a party; (f) to any nationally recognized
rating agency that requires access to information about Lender’s investment
portfolio in connection with ratings issued with respect to Lender; (g) to any
Affiliate of Lender who may provide Bank Products to the Borrowers or any
Subsidiary, or (h) that ceases to be confidential through no fault of Lender.

13.10 Binding Effect. This Agreement shall become effective upon execution by
the Borrowers and Lender. If this Agreement is not dated or contains any blanks
when executed by the Borrowers, Lender is hereby authorized, without notice to
the Borrowers, to date this Agreement as of the date when it was executed by the
Borrowers, and to complete any such blanks according to the terms upon which
this Agreement is executed.

 

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13.11 Governing Law. This Agreement, the Loan Documents and any Note shall be
delivered and accepted in and shall be deemed to be contracts made under and
governed by the internal laws of the State of Illinois (but giving effect to
federal laws applicable to national banks) applicable to contracts made and to
be performed entirely within such state, without regard to conflict of laws
principles.

13.12 Enforceability. Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by, unenforceable or
invalid under any jurisdiction, such provision shall as to such jurisdiction, be
severable and be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

13.13 Survival of Borrowers Representations. All covenants, agreements,
representations and warranties made by the Borrowers herein shall,
notwithstanding any investigation by Lender, be deemed material and relied upon
by Lender and shall survive the making and execution of this Agreement and the
Loan Documents and the issuance of any Note, and shall be deemed to be
continuing representations and warranties until such time as the Borrowers have
fulfilled all of their Obligations to Lender, and Lender has been indefeasibly
paid in full in cash. Lender, in extending financial accommodations to the
Borrowers, is expressly acting and relying on the aforesaid representations and
warranties. Notwithstanding anything to the contrary contained herein, in the
event any Investment Property is subject to the terms of a separate security
agreement in favor of Lender, the terms of such separate security agreement
shall govern and control unless otherwise agreed to in writing by Lender.

13.14 Extensions of Bank’s Commitment. This Agreement shall secure and govern
the terms of (i) any extensions or renewals of Lender’s commitment hereunder,
and (ii) any replacement note executed by the Borrowers and accepted by Lender
in its sole and absolute discretion in substitution for any Note.

13.15 Time of Essence. Time is of the essence in making payments of all amounts
due Lender under this Agreement and in the performance and observance by the
Borrowers of each covenant, agreement, provision and term of this Agreement.

13.16 Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same Agreement.
Receipt of an executed signature page to this Agreement by facsimile or other
electronic transmission shall constitute effective delivery thereof. Electronic
records of executed Loan Documents maintained by Lender shall deemed to be
originals thereof.

13.17 Notices. Except as otherwise provided herein, the Borrowers waive all
notices and demands in connection with the enforcement of Lender’s rights
hereunder. All notices, requests, demands and other communications provided for
hereunder shall be in writing and addressed as follows:

 

To the Borrowers:   

Hill International, Inc.

303 Lippincott Centre

Marlton, New Jersey 08053

Attention: Irvin E. Richter, Chief Executive Officer

Attention: John Fanelli III, Chief Financial Officer

 

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PCI Group LLC

5905 Granite Lake Drive, Suite 180

Douglas Office Park at Granite Bay, Building 5

Granite Bay, California 95746-6824

Attention: Irvin E. Richter

With a copy to:   

McCarter & English, LLP

245 Park Avenue, 33rd Floor

New York, New York 10167

Attention: Peter S. Twombly, Esq.

To the Lender:   

Bank of America, N.A.

135 South LaSalle Street

Chicago, Illinois 60603

Attention: George A. Linhart

With a copy to:   

Thompson Coburn Fagel Haber

55 E. Monroe Street, 40th Floor

Chicago, Illinois 60603

Attention: Victor A. Des Laurier, Esq,

or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of this subsection. All notices addressed as above shall be deemed to have been
properly given (i) if served in person, upon acceptance or refusal of delivery;
(ii) if mailed by certified or registered mail, return receipt requested,
postage prepaid, on the third (3rd) day following the day such notice is
deposited in any post office station or letter box; or (iii) if sent by
recognized overnight courier, on the first (1st) day following the day such
notice is delivered to such carrier. No notice to or demand on the Borrowers in
any case shall entitle the Borrowers to any other or further notice or demand in
similar or other circumstances.

13.18 Release of Claims Against Bank. In consideration of Lender making the
Loans, the Borrowers and all other Obligors do each hereby release and discharge
Lender of and from any and all claims, harm, injury, and damage of any and every
kind, known or unknown, legal or equitable, which any Obligor may have against
Lender from the date of their respective first

 

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contact with Lender until the date of this Agreement including any claim arising
from any reports (environmental reports, surveys, appraisals, etc.) prepared by
any parties hired or recommended by Lender. The Borrowers and all other Obligors
confirm to Lender that they have reviewed the effect of this release with
competent legal counsel of their choice, or have been afforded the opportunity
to do so, prior to execution of this Agreement and the Loan Documents and do
each acknowledge and agree that Lender is relying upon this release in extending
the Loans to the Borrowers.

13.19 Costs, Fees and Expenses. The Borrowers shall pay or reimburse Lender for
all reasonable costs, fees and expenses incurred by Lender or for which Lender
becomes obligated in connection with the negotiation, preparation, consummation,
collection of the Obligations or enforcement of this Agreement, the other Loan
Documents and all other documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (including any amendment,
supplement or waiver to any Loan Document), or during any workout, restructuring
or negotiations in respect thereof, including reasonable consultants’ fees and
attorneys’ fees and time charges of counsel to Lender, which shall also include
attorneys’ fees and time charges of attorneys who may be employees of Lender or
any Affiliate of Lender, plus costs and expenses of such attorneys or of Lender;
search fees, costs and expenses; and all taxes payable in connection with this
Agreement or the other Loan Documents, whether or not the transaction
contemplated hereby shall be consummated. In furtherance of the foregoing, the
Borrowers shall pay any and all stamp and other taxes, UCC search fees, filing
fees and other costs and expenses in connection with the execution and delivery
of this Agreement, any Note and the other Loan Documents to be delivered
hereunder, and agrees to save and hold Lender harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such costs and expenses. That portion of the Obligations
consisting of costs, expenses or advances to be reimbursed by the Borrowers to
Lender pursuant to this Agreement or the other Loan Documents which are not paid
on or prior to the date hereof shall be payable by the Borrowers to Lender on
demand. If at any time or times hereafter Lender: (a) employs counsel for advice
or other representation (i) with respect to this Agreement or the other Loan
Documents, (ii) to represent Lender in any litigation, contest, dispute, suit or
proceeding or to commence, defend, or intervene or to take any other action in
or with respect to any litigation, contest, dispute, suit, or proceeding
(whether instituted by Lender, the Borrowers, or any other Person) in any way or
respect relating to this Agreement, the other Loan Documents or the Borrowers’
business or affairs, or (iii) to enforce any rights of Lender against the
Borrowers or any other Person that may be obligated to Lender by virtue of this
Agreement or the other Loan Documents; (b) takes any action to protect, collect,
sell, liquidate, or otherwise dispose of any of the Collateral; and/or
(c) attempts to or enforces any of Lender’s rights or remedies under the
Agreement or the other Loan Documents, the costs and expenses incurred by Lender
in any manner or way with respect to the foregoing, shall be part of the
Obligations, payable by the Borrowers to Lender on demand.

13.20 Indemnification. The Borrowers agree to defend (with counsel satisfactory
to Lender), protect, indemnify, exonerate and hold harmless each Indemnified
Party from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and distributions
of any kind or nature (including the disbursements and the reasonable fees of
counsel for each Indemnified Party thereto, which shall also include, without

 

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limitation, reasonable attorneys’ fees and time charges of attorneys who may be
employees of any Indemnified Party), which may be imposed on, incurred by, or
asserted against, any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal, state or local laws or
regulations, including securities laws, Environmental Laws, commercial laws and
regulations, under common law or in equity, or based on contract or otherwise)
in any manner relating to or arising out of this Agreement or any of the Loan
Documents, or any act, event or transaction related or attendant thereto, the
preparation, execution and delivery of this Agreement and the Loan Documents,
including the making or issuance and management of the Loans, the use or
intended use of the proceeds of the Loans, the enforcement of Lender’s rights
and remedies under this Agreement, the Loan Documents, any Note, any other
instruments and documents delivered hereunder, or under any other agreement
between the Borrowers or any Borrower and Lender; provided, however, that the
Borrowers shall not have any obligations hereunder to any Indemnified Party with
respect to matters determined by a court of competent jurisdiction by final and
nonappealable judgment to have been caused by or resulting from the willful
misconduct or gross negligence of such Indemnified Party. To the extent that the
undertaking to indemnify) set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, the Borrowers shall
satisfy such undertaking to the maximum extent permitted by applicable law. Any
liability, obligation, loss, damage, penalty, cost or expense covered by this
indemnity shall be paid to each Indemnified Party on demand, and failing prompt
payment, together with interest thereon at the Default Rate from the date
incurred by each Indemnified Party until paid by the Borrowers, shall be added
to the Obligations of the Borrowers and be secured by the Collateral. The
provisions of this Section shall survive the satisfaction and payment of the
other Obligations and the termination of this Agreement.

13.21 Revival and Reinstatement of Obligations. If the incurrence or payment of
the Obligations by any Obligor or the transfer to Lender of any property should
for any reason subsequently be 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 transfers of property
(collectively, 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,
the Obligations shall automatically shall be revived, reinstated, and restored
and shall exist as though such Voidable Transfer had never been made.

13.22 Joint and Several Liability. All references to Borrowers shall mean Hill
International and PCI Group, both individually and collectively, and jointly and
severally, and all representations, warranties, duties, covenants, agreements
and obligations of Borrowers shall be the individual and collective
representations, warranties, duties, covenants, agreements and obligations of
Hill International and PCI Group.

13.23 Customer Identification – USA Patriot Act Notice. Lender hereby notifies
the Borrowers that pursuant to the requirements of the USA Patriot Act (Title
III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”), and
Lender’s policies and practices, Lender is

 

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required to obtain, verify and record certain information and documentation that
identifies the Borrowers, which information includes the name and address of the
Borrowers and such other information that will allow Lender to identify the
Borrowers in accordance with the Act.

13.24 Additional Borrowers. If, upon Borrowers’ request therefor, Lender, in its
sole discretion, permits Borrowers to add one or more additional borrowers to
this Agreement and the other Loan Documents, Borrowers and such additional
borrowers shall execute and deliver to Lender a Joinder Agreement, together with
such other agreements, documents and instruments as may be requested by Lender,
as a condition precedent to the addition of such new borrower or borrowers.

[signature page follows]

 

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IN WITNESS WHEREOF, the Borrowers and Lender have executed this Loan and
Security Agreement as of the date first above written.

 

HILL INTERNATIONAL, INC.,     PCI GROUP LLC, a Delaware corporation     a Nevada
limited liability company       By:   Hill International, Inc.,         Its Sole
Member By:  

/s/ David L. Richter

        Name:   David L. Richter         Title:   President and Chief Operating
Officer       By:  

/s/ David L. Richter

        Name:   David L. Richter         Title:   President and Chief Operating
Officer

Agreed and accepted:

        BANK OF AMERICA, N.A.,        

a national banking association

       

By:

 

/s/ George Linhart

       

Name:

  George Linhart        

Title:

  Senior Vice President        

 

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Schedule 7.9

Litigation

William Hushes General Contractors, Inc. v. Monroe Twp. Board of Education,
Hill, et al., Superior Court of New Jersey, Law Division, Gloucester County,
Docket No. GLO-L-01931-96.

Wartsila NSD North America, Inc. v. Hill, United States District Court, District
of New Jersey, No. 99-CV-4565 (SBB).

 

* Hill International, Inc. is currently involved in additional litigation which
is not expected to have a material adverse effect.

 

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Schedule 7.22

Bank Accounts

Citizens Bank of Pennsylvania

Citizens Gateway Center

3025 Chemical Road, Suite 325

Plymouth Meeting, PA 19462

ABA # 036076150

 

Account #669900-790-8

   Regular

Account #669900-791-6

   Payroll

Account #610173-525-0

   For TCS Project Payments

 

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Schedule 7.23

Places of Business

 

OFFICE LOCATION

 

CURRENT SPACE

LEASED/OWNED

(NET USABLE)

 

EXPIRATION

DATE OF

CURRENT LEASE

NEW JERSEY   38,678 sq ft.   10/31/2013 Hill International, Inc.     303
Lippincott Centre     Marlton, NJ 08053     856-810-6200 Tel     856-810-1309
Fax     Hill International, Inc   3,978 sq ft.   9/30/20015 Overlook at Great
Notch     Suite 1103     150 Clove Road     Little Falls, NJ 07424     Tel:
973-774-3520     Fax: 973-774-3539     Chitester Management Systems, Inc.   950
sq. ft.   02/28/09 216 Haddon Avenue, Ste 609     Westmont, NJ 08108     (notice
of termination sent 10/29/08) Tenant: Chitester Mngt Syst.     Tel: 856-854-8000
    Fax: 856-854-8000     ARIZONA   6,106 sq. ft.   03/31/13 Hill International,
Inc.     2777 East Camelback Road,     Suite 150     Phoenix, AZ 85016-4350    
Tel: 602-778-9888     Fax: 602-778-9890     KJM & Associates, Ltd.   2,208 sq
ft.   08/28/06-02/28/10 2575 E. Camelback Road     7th Floor     Phoenix, AZ
85016     602-778-9888 Tel     602-778-9890 Fax     Subtenant:   2,208 sq. ft.  
11/3/08-2/28/2010 Paramount Residential Mortgage Group, Inc.     2280 Wardlow
Street,     Suite 220     Corona CA 92880     (951) 278-0000     PCI Group of
North America, LLC   950 sq. ft.   Apr 30 2011 7440 E. Sixth Avenue, Suite 202  
  Scottsdale, AZ 85251     Fax: 800-871-6973     CALIFORNIA   1221 sq. ft.   Nov
30 2011 PCI Group of California, LLC     5905 Granite Lake Drive, Suite 180
Douglas Office Park at Granite Bay, Building 5     Granite Bay, CA 95746-6824  
  Fax: 888-475-4077     KJM & Associates, Ltd.   2,045 sq ft.  
11/15/06-11/30/09 Tower Seventeen, Suite 1440     Listed to be subleased 18881
Von Karman Avenue     Irvine, CA 92612     949-474-2908 Tel     949-474-8427 Fax
    Suite 330   1,523 sq ft. (3rd floor)   month to month agreement

 

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Hill International, Inc.   7,125 sq ft   Estimated Jan 15 2009 for 5 years 18100
Von Karman Avenue     Suite 700     Irvine, California 92612     (949) 474-2908
Tel     KJM & Associates, Ltd.   Virtual Office/Office 58D   3 month Emerald
Plaza     9/1/08 - 11/30/08 402 West Broadway, Suite 400     San Diego, CA 92101
    619-595-4823 Tel     619-595-3150 Fax     Hill International, Inc.   1,975
sq. ft.   11/01/06-12/31/09 33 New Montgomery Street     Suite 210     San
Francisco, CA 94105     Subtenant:     12/31/09 RapOuts Inc. (DBA Involver)    
33 New Montgomery Street     Suite 210     San Francisco, CA 94105     Hill
International, Inc.   2,100 sq. ft.   11/30/09 425 California Street     Suite
925     San Francisco, CA 94104     415-248-1286 Tel     415-249-0138 Fax    
CONNECTICUT   Virtual Office   Month to Month Hill International, Inc.     100
Mill Plain Road     Danbury, CT 06811     203-791-3852 Tel     203-791-3801 Fax
    COLORADO   2188 sq ft.   2/28/09 Hill International, Inc     1920 Vindicator
Drive, Suite 112     Colorado Springs, CO 80919     Tel: 719-598-9845     Fax:
719-598-0843     John Balch 719-641-3600     DISTRICT OF COLUMBIA   18,031 Total
  11/30/12 Hill International, Inc.     1225 Eye Street, N.W.     Washington, DC
20005     202-408-3000 Tel     202-408-3058 Fax     Chitester Management
Systems, Inc   2,524 sq ft   12/31/2012 Suite 305     5100 West Lemon Street    
Tampa, Florida 33607     Tenant: Hill International, Inc     Tel: 813-288-0531  
  Fax: 813-289-0298    

 

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Hill International, Inc

Courvoisier Center II

601 Brickell Key Drive

Suite 600

Miami, FL 33131

Tel: 305-468-4900

Fax: 305-468-4919

  5148   Lease Agreement Signed 3/31/08

FLORIDA

Hill International, Inc.

7380 Sand Lake Road

Suite 500

Orlando, FL 32819

407-352-5206 Tel

407-351-1901 Fax

  Virtual Office   Three month auto renewals

ILLINOIS

Hill International, Inc.

225 West Washington Street

Suite 2200

Chicago, IL 60606

312-924-0250 Tel

312-924-0270 Fax

  Office #2202   Month to month

LOUISIANA

Hill International

1100 Poydras Street

Suite 2900

New Orleans, LA 70163

504-799-2253 Tel

504-585-7301 Fax

  Virtual Office  

MARYLAND

Hill International

300 E. Lombard Street

Suite 840 Baltimore, MD 21202

410-814-7524

  Virtual Office   02/9/07-08/09/07

NEVADA

Hill International, Inc.

10801 W. Charleston

Suite 650

Las Vegas, NV 89135

Tel: 702-515-7490

Fax: 702-515-7491

  6,743 sq ft   1/21/2015

John Jackson and PCI Group of Nevada, Inc. 3351 So. Highland Drive

Suites 209, 210, 211 and 212

Las Vegas, NV 89109

Tel: 702-693-6560

Fax: 702-693-5937

Fax: 702-974-0667

  3,755 sq ft.   06/30/09

 

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NEW YORK

Hill International, Inc.

One Penn Plaza

Suite 3415

New York, NY

212-244-3700 Tel

212-244-3740 Fax

  7,820 sq ft.   4/29/10

OREGON

KJM & Associates, Ltd.

111 SW Columbia, Suite 830

Portland, OR 97201

503-225-1120 Tel

503-224-3226 Fax

  3070 sq. ft   6/30/2013

PENNSYLVANIA

Transportation Construction Services

3580 Progress Drive, Suite I

Bensalem, PA 19020

215-633-8601 Tel

215-633-8607 Fax

  3,400 sq ft.   02/28/12

Hill International, Inc.

One Penn Square West

30 South 15th Street

Philadelphia, PA 19102

215-557-3240 Tel

215-557-0214 Fax

  10,273 sq ft.   06/30/12

TEXAS

KJM & Associates, Ltd.

5307 E. Mockingbird Lane

Suite 700

Dallas, TX 75206

214-220-0180 Tel

214-871-7642 Fax

  3,460 sq ft.   11/30/10

PCI Group Of Nevada, LLC

4343 W. Royal Lane, Suite 114

Irving, Texas 75062

Tel: 972-621-6300

Fax: 800-854-6732

  2,843 sq. ft.   Feb 28 2009

WASHINGTON

Hill International, Inc.

500 108th Avenue NE

Suite 1000

Bellevue, WA 98004

425-451-3881 Tel

425-454-8965 Fax

  10,139 sq ft.   10/31/14

KJM & Associates, Ltd.

Peyton Building

10 N. Post, Suite 305

Spokane, WA

509-747-8031 Tel

509-747-8037 Fax

  2,500 sq ft.   01/01/06-12/31/08

Hill International, Inc.

Lincoln Plaza

818 West Riverside Avenue

Suite 350

Spokane, WA 99201

  5,853 sq ft.  

12/1/08 - 12/31/13

(5 year and one month term)

 

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Schedule 9.1

Debt

Capital Lease Obligations of the Borrowers

Balances as of October 31, 2008

None.

 

69

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Schedule 9.1

Debt (Continued)

Credit Facilities:

The Company has various credit facilities with international financial
institutions as follows:

 

  •  

Credit facility with a bank in the Middle East for 11,500,000 AED (Approximately
$3,100,000) collateralized by certain overseas receivables. The interest rate on
that facility is the Emirates InterBank Offer Rate (“EIBOR”), which at
September 30, 2006 was 4.0%, plus 2%. At October 27, 2008, we had drawn down
nothing under this facility.

 

  •  

a credit facility with a European Bank for 1,000,000 Euros (approximately
$1,437,000), secured by receivables from one specific project. The interest rate
on this facility is bank prime, which at September 30, 2008, was 7.50%, plus
2.5%. At October 27, 2008, we had drawn down nothing under this facility.

 

  •  

a credit facility with third European Bank for £500,000 (approximately
$901,000). The interest rate on that facility is the LIBOR rate (5.00% AT
September 30, 2008) plus 2%. At October 27, 2008, we had drawn down nothing
under this facility.

 

  •  

a credit facility with a fourth European Bank for £750,000 (approximately
$1,078,000). The interest rate on that facility is the EURIBOR rate (6.03% at
September 30, 2008,) plus 0.75%. At September 30, 2008, we had drawn down
nothing under this facility.

 

  •  

various equipment loans aggregating $204,000. (Shreeves)

Schedule 9.1

Debt (Continued)

Off-Balance Sheet Arrangements

The Company enters into agreements with banks for the banks to issue bonds to
clients or potential clients for three separate purposes as follows:

 

  (1)

Certain of the Company’s subsidiaries (Hill International S.A., Hill
International (UK) Ltd. and Hill International (Middle East) Ltd.) have entered
into contracts

 

70

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for the performance of construction management services which provide that the
Company receive advance payment of some of the management fee from the client
prior to commencement of the construction project. However, the clients require
a guarantee of service performance in the form of an advance payment bond. These
bonds are evidenced by Letters of Guarantee issued by the subsidiaries’ banks in
favor of the clients. In some cases these clients also require a parent company
guarantee of the Company.

 

  (2) The Company may also enter into certain contracts which require a
performance bond to be issued by a bank in favor of the client for a portion of
the value of the contract. These bonds may be exercised by the client in
instances where the Company fails to provide the contracted services.

 

  (3) Certain clients may require bonds as part of the bidding process for new
work. The bid bonds are provided to demonstrate the financial strength of the
companies seeking the work and are usually outstanding for short periods. If the
bid is rejected the bond is cancelled and if the bid is accepted the Company may
be required to provide a performance bond.

The maximum potential future payments under these arrangements at October 28,
2008, were approximately $22,993,000. No liability is currently recorded on the
Company’s balance sheet related to parental guarantees on behalf of its
subsidiaries related to the bond arrangements. (1)

The Company also has cash held in restricted accounts as collateral for the
issuance of performance and advance payment bonds of $3,897,000 at September 30,
2008. (1)

(1) - See supporting analyses attached

 

71

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Schedule 9.2

Liens

None.

 

72

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Schedule 9.3

Investments

Hill International has an ownership interest of 33.33% of the members’ equity of
Stanley Baker Hill, LLC (SBH). Stanley Baker Hill, LLC is a joint venture formed
in February 2004 between Stanley Consultants, Inc., Michael Baker, Jr. and Hill.
SBH provides various architect-engineer services in Iraq. SBH has a contract for
an indefinite delivery and indefinite quantity for construction management and
general architect-engineer services for facilities in Iraq with the US Army
Corps of Engineers Transatlantic Program Center.

 

73