AMENDED AND RESTATED
CREDIT AGREEMENT

 

Dated as of December 5, 2012

 

among

 

CPI AEROSTRUCTURES, INC.

as the Borrower,

 

The Several Lenders from

Time to Time Parties Hereto

and

SOVEREIGN BANK, N.A.

as Sole Arranger, Administrative Agent and Collateral Agent

 

 

 

 

 

 

 

  Page     ARTICLE I. DEFINITIONS 2     ARTICLE II. AMOUNT AND TERMS OF
COMMITMENTS AND TERM LOANS 23     ARTICLE III. GENERAL PROVISIONS 29     ARTICLE
IV. REPRESENTATIONS AND WARRANTIES 44     ARTICLE V. CONDITIONS PRECEDENT 49    
ARTICLE VI. AFFIRMATIVE COVENANTS 52     ARTICLE VII. NEGATIVE COVENANTS 57    
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES 63     ARTICLE IX. THE AGENT AND
THE ARRANGER 67     ARTICLE X. MISCELLANEOUS 72

 

SCHEDULES:

 

  I Commitments   4.1 Financial Condition   4.6 Material Litigation   4.8
Ownership of Property; Liens   4.10 Tax Filings and Payments   4.14 Subsidiaries
  4.18 Insurance   7.2 Existing Indebtedness; Subordinated Debt   7.3 Existing
Liens   7.4 Existing Guaranty Obligations   7.9(e) Existing Investments

 

i

 

 

EXHIBITS:

 

  A-1 Form of Term Loan Note   A-2 Form of Revolving Credit Note   B-1 Form of
Guaranty Agreement   B-2 Form of Security Agreement   C Form of Assignment and
Acceptance   D Form of Legal Opinion   E Form of Closing Certificate   F Form of
Compliance Certificate   G Secured Party Designation Notice

 

ii

 

 

AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 5, 2012 (this
“Credit Agreement”), among CPI AEROSTRUCTURES, INC., a New York corporation (the
“Borrower”), SOVEREIGN BANK, N.A., a national banking association, as Sole
Arranger, Agent, Lender and Swap Provider and the other financial institutions
from time to time parties hereto as lenders (collectively, the “Lenders”),
SOVEREIGN BANK, N.A., a national banking association, as administrative agent
and collateral agent for the Lenders hereunder (in such capacities, the
“Administrative Agent” and the “Collateral Agent,” respectively and each an
“Agent”).

 

Recitals

 

Sovereign Bank, N.A., as lender (the “Existing Lender”) has made available to
the Borrower a revolving credit and term loan facility pursuant to the Existing
Credit Agreement (defined below).

 

Certain “Obligations” (as defined in the Existing Credit Agreement) of the
Borrower to the Existing Lender under the Existing Credit Agreement are
evidenced by promissory notes issued under the Existing Credit Agreement
(collectively, the “Prior Notes”).

 

The Borrower, the Lenders and the Administrative Agent have agreed to increase
the amounts available under, and amend and restate the Existing Credit Agreement
as herein reflected, and by the execution and delivery of this Agreement do so
increase the amounts available under, and amend and restate the Existing Credit
Agreement, and in connection therewith the Borrower has agreed to issue amended
and restated notes to the Lenders in replacement of the Prior Notes and to
reaffirm its obligations under the credit support documentation or execute new
or restated credit support documentation.

 

Increase, Amendment and Restatement

 

The Borrower, the Administrative Agent and the Lenders hereby agree that upon
the effectiveness of this Agreement, the amounts available under and the terms
and provisions of the Existing Credit Agreement shall be and hereby are
increased, amended and restated in their entirety by the terms and conditions of
this Agreement and the terms and provisions of the Existing Credit Agreement,
except as otherwise provided herein, shall be superseded by this Agreement.

 

Notwithstanding the increase in availability, and the amendment and restatement
of the Existing Credit Agreement by this Agreement, the Borrower shall continue
to be, or now be, as the case may be, liable to the Administrative Agent and the
Lenders with respect to agreements on the part of the Borrower under the
Existing Credit Agreement to indemnify and hold harmless the Administrative
Agent and the Lenders from and against all claims, demands, liabilities,
damages, losses, costs, charges and expenses to which the Administrative Agent
and the Lenders may be subject arising in connection with the Existing Credit
Agreement. This Agreement is given as a substitution and restatement of, and not
as a repayment of, the obligations of Borrower under the Existing Credit
Agreement and is not intended to constitute a novation of the Existing Credit
Agreement. Except as otherwise selected by the Borrower by delivery of a notice
of borrowing or a notice of conversion prior to the date hereof in accordance
with the terms hereof, upon the effectiveness of this Agreement, all amounts
outstanding and owing by the Borrower under the Existing Credit Agreement, as of
the date hereof, as determined by the Lenders, shall be refinanced and shall
constitute Loans to the Borrower hereunder accruing interest (a) with respect to
LIBOR Rate Loans under the Existing Credit Agreement, at the Eurodollar Rate
hereunder, and (b) with respect to Floating Rate Loans under the Existing Credit
Agreement, at the Base Rate hereunder.

 

1

 

 

In consideration of the premises and the mutual covenants herein set forth, the
parties hereto agree as follows:

 

ARTICLE I: DEFINITIONS

 

1.1. Defined Terms. As used in this Agreement, the following terms shall have
the following meanings:

 

“Accounts”: shall mean those accounts arising out of the sale or lease of goods
or the rendition of services by the Borrower and its Subsidiaries, as same may
be more fully described in the Security Documents.

 

“Account Debtor”: shall mean the Person who is obligated on or under an Account.

 

“Administrative Agent”: as defined in the preamble hereto, and shall include any
successor appointed in accordance with Section 9.9.

 

“Affiliate”: of any Person, (a) any other Person (other than a wholly owned
Subsidiary of such Person) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person or (b) any other
Person who is a director or officer of (i) such Person, (ii) any Subsidiary of
such Person or (iii) any Person described in clause (a) above. For purposes of
this definition, a Person shall be deemed to be “controlled by” such other
Person if such other Person possesses, directly or indirectly, power either to
(A) vote 10% or more of the securities or other equity interest having ordinary
voting power for the election of directors of such first Person or (B) direct or
cause the direction of the management and policies of such first Person whether
by contract or otherwise.

 

“Agent”: as defined in the preamble hereto, and shall include any successor
appointed in accordance with Section 9.9.

 

“Aggregate Loans”: on any date, the sum of the Aggregate Revolving Credit
Commitments (or if the Revolving Credit Commitments have terminated or expired
at such time, the Aggregate Revolving Credit Outstanding of all Revolving
Lenders) and the aggregate Term Loans outstanding.

 

“Aggregate Revolving Credit Commitments”: the aggregate amount of the Revolving
Credit Commitments of all the Revolving Lenders, provided that, in no event
shall the Aggregate Revolving Credit Commitments exceed the Aggregate Revolving
Credit Maximum Amount.

 

2

 

 

“Aggregate Revolving Credit Maximum Amount”: shall mean after giving effect to
any increase under Section 2.8, the principal amount of up to $50,000,000.00.

 

“Aggregate Revolving Credit Outstanding”: as at any date of determination with
respect to any Revolving Lender, the aggregate unpaid principal amount of such
Lender’s Revolving Credit Loans on such date.

 

“Agreement”: this Amended and Restated Credit Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.

 

“Applicable Margin”: means, from time to time with respect to Revolving Credit
Loans and the fees payable under Section 3.5(a), the following percentages per
annum, adjusted quarterly based upon the Borrower’s Maximum Leverage Ratio for
the fiscal quarter then-ended (the “Financial Covenant”) as set forth in the
most recent Compliance Certificate received by Administrative Agent pursuant to
Section 6.2(b):

 

Pricing
Level Leverage
Ratio Eurodollar Rate
Margin Base Rate
Margin Commitment
Fee           1 >2.00x 2.50% 0.00% 0.30% 2 > 1.00x; < 2.00x 2.25% 0.00% 0.25% 3
< 1.00x 2.00% 0.00% 0.20%

 

Any increase or decrease in the Applicable Margin resulting from a change in the
Financial Covenant shall become effective as of the first Business Day of the
month immediately following the date a Compliance Certificate is delivered
pursuant to Section 6.2(b); provided, however, that if a Compliance Certificate
is not delivered when due in accordance with such Section, then Pricing Level 1
shall apply as of the first Business Day of the month following the date such
Compliance Certificate was required to have been delivered and shall remain in
effect until the date on which such Compliance Certificate is delivered. The
Applicable Margin in effect from the Closing Date through December 31, 2012
shall be determined based upon Pricing Level 1.

 

Notwithstanding anything to the contrary contained in this definition, the
determination of Applicable Margin for any period shall be subject to the
provisions of Section 3.1(j).

 

“Approved Fund”: as defined in Section 10.6(b).

 

“Arranger”: Sovereign Bank, N.A.

 

“Assignee”: as defined in Section 10.6(b) (iii).

 

“Assignment and Acceptance”: an assignment and acceptance agreement
substantially in the form attached hereto as Exhibit C executed by a Lender and
Eligible Assignee who has satisfied the requirements of Section 10.6.

 

3

 

 

“Attributable Indebtedness”: means, on any date, (a) in respect of any Financing
Lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease or similar payments under the relevant lease or other
applicable agreement or instrument that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP if such lease or other
agreement or instrument were accounted for as a Financing Lease, (c) all
Synthetic Debt of such Person, (d) in respect of any Securitization Transaction,
the outstanding principal amount of such financing, after taking into account
reserve accounts and making appropriate adjustments, determined by the
Administrative Agent in its reasonable judgment and (e) in respect of any Sale
and Leaseback Transaction, the present value (discounted in accordance with GAAP
at the debt rate implied in the applicable lease) of the obligations of the
lessee for rental payments during the term of such lease.

 

“Available Revolving Credit Commitment”: as of any date of determination with
respect to any Revolving Lender, an amount equal to the excess, if any, of (a)
the amount of such Lender’s Revolving Credit Commitment in effect on such date
over (b) the Aggregate Revolving Credit Outstanding of such Lender on such date.

 

“Base Rate”: means for any day a fluctuating rate per annum equal to (i) the
highest of (a) the Federal Funds Effective Rate plus 1.0%, (b) the rate of
interest in effect for such day as publicly announced from time to time by the
Agent as its “prime rate”, and (c) the Eurodollar Rate plus 1.5%, plus (ii) the
Applicable Margin.

 

“Base Rate Loans”: Loans the rate of interest applicable to which is based upon
the Base Rate.

 

“Benefited Lender”: as defined in Section 10.7(a).

 

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

 

“Borrower”: as defined in the preamble hereto.

 

“Borrowing Date”: any Business Day specified in a notice pursuant to Sections
2.2, 2.6, 2.8 or 3.2 as a date on which the Borrower requests the Lenders to
make Loans hereunder.

 

“Business”: as defined in Section 4.15(b).

 

“Business Day”: (a) for all purposes other than as covered by clause (b) below,
a day other than a Saturday, Sunday or other day on which commercial banks in
New York City are authorized or required by law to close and (b) with respect to
all notices and determinations in connection with, and payments of principal and
interest on, Eurodollar Loans, any day which is a Business Day described in
clause (a) and which is also a London Banking Day.

 

4

 

 

“Capital Expenditures”: direct or indirect (by way of the acquisition of
securities of a Person or the expenditure of cash or the incurrence of
Indebtedness) expenditures in respect of the purchase or other acquisition of
fixed or capital assets excluding normal replacements and maintenance which are
properly charged to current operations.

 

“Capital Stock”: any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation)
(collectively, “Underlying Equity Interests”), and any and all warrants or
options to purchase any of the foregoing. The term “Capital Stock” shall exclude
awards issued pursuant to incentive equity plans or other customary benefit
plans of Borrower and its Subsidiaries and Underlying Equity Interests issued
upon the exercise or vesting thereof.

 

“Cash Equivalents”: the following to the extent owned by the Borrower or any of
its Subsidiaries free and clear of all Liens (other than Liens created under the
Loan Documents and other Liens permitted hereunder): (a) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed or insured by the United States Government or any agency thereof, (b)
certificates of deposit and euro dollar time deposits with maturities of one
year or less from the date of acquisition and overnight bank deposits of any
Lender or of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any Lender or of any commercial bank
satisfying the requirements of clause (b) of this definition, having a term of
not more than 30 days with respect to securities issued or fully guaranteed or
insured by the United States Government, (d) commercial paper of a domestic
issuer rated at least A-3 by S&P or P-3 by Moody’s, (e) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody’s (or
the equivalent rating by either such rating agency for such type of securities),
(f) securities with maturities of one year or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition or (g) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.

 

“Cash Management Agreement”: any agreement that is not prohibited by the terms
hereof to provide treasury or cash management services, including deposit
accounts, overnight draft, credit cards, debit cards, p-cards (including
purchasing cards and commercial cards), funds transfer, automated clearinghouse,
zero balance accounts, returned check concentration, controlled disbursement,
lockbox, account reconciliation and reporting and trade finance services and
other cash management services.

 

“Cash Management Bank”: any Person in its capacity as a party to a Cash
Management Agreement that, at the time it enters into a Cash Management
Agreement with a Loan Party, is a Lender or an Affiliate of a Lender, in its
capacity as a party to such Cash Management Agreement (even if such Person
ceases to be a Lender or such Person’s Affiliate ceased to be a Lender);
provided, however, that for any of the foregoing to be included as a “Secured
Cash Management Agreement” on any date of determination by the Administrative
Agent, the applicable Cash Management Bank (other than the Administrative Agent
or an Affiliate of the Administrative Agent) must have delivered a Secured Party
Designation Notice to the Administrative Agent prior to such date of
determination.

 

5

 

 

“Class”: the classification of loans as Term Loans or Revolving Credit Loans,
each of which categories shall be deemed to be a “Class” of Loans.

 

“Closing Date”: the first date that all the conditions precedent in Section 5.1
are satisfied or waived in accordance with Section 10.1.

 

“Code”: the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral”: means the assets and properties of the Loan Parties in which the
Collateral Agent, for the benefit of the Lenders, is granted a security interest
pursuant to the Security Documents.

 

“Collateral Agent”: as defined in the preamble hereto, and shall include any
successor appointed in accordance with Section 9.9.

 

“Commitments”: the collective reference to the Term Commitments, and the
Revolving Credit Commitments.

 

“Continuing Directors”: the directors of the Borrower on the Closing Date and
each other director, if such other director’s nomination for election to the
Board of Directors of the Borrower is recommended by a majority of the then
continuing Directors.

 

“Contract Termination Payment”: shall mean any termination, cancellation,
rejection or similar fee of amount received by Borrower upon any early
termination, cancellation, rejection, expiration or inability to agree (each a
“Cancellation”) with respect to any Designated Contract or any damages or other
amounts received by Borrower for the foregoing.

 

“Contractual Obligation”: as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or undertaking to which such
Person is a party or by which it or any of its property is bound.

 

“Debtor Relief Laws”: means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief laws of the United States or other applicable
jurisdictions from time to time in effect.

 

“Default”: any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.

 

6

 

 

“Defaulting Lender”: means, subject to Section 2.9(b), any Lender that (a) has
failed to (i) fund all or any portion of its Loans within two (2) Business Days
of the date such Loans were required to be funded hereunder unless such Lender
notifies the Administrative Agent and the Borrower in writing that such failure
is the result of such Lender’s determination that one or more conditions
precedent to funding (each of which conditions precedent, together with any
applicable default, shall be specifically identified in such writing) has not
been satisfied, or (ii) pay to the Administrative Agent, or any other Lender any
other amount required to be paid by it hereunder within two (2) Business Days of
the date when due, (b) has notified the Borrower, the Administrative Agent, in
writing that it does not intend to comply with its funding obligations
hereunder, or has made a public statement to that effect (unless such writing or
public statement relates to such Lender’s obligation to fund a Loan hereunder
and states that such position is based on such Lender’s determination that a
condition precedent to funding (which condition precedent, together with any
applicable default, shall be specifically identified in such writing or public
statement) cannot be satisfied), (c) has failed, within three (3) Business Days
after written request by the Administrative Agent or the Borrower, to confirm in
writing to the Administrative Agent and the Borrower that it will comply with
its prospective funding obligations hereunder (provided that such Lender shall
cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such
written confirmation by the Administrative Agent and the Borrower), or (d) has,
or has a direct or indirect parent company that has, (i) become the subject of a
proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver,
custodian, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or assets, including the Federal Deposit Insurance Corporation or any
other state or federal regulatory authority acting in such a capacity; provided
that a Lender shall not be a Defaulting Lender solely by virtue of the ownership
or acquisition of any equity interest in that Lender or any direct or indirect
parent company thereof by a Governmental Authority so long as such ownership
interest does not result in or provide such Lender with immunity from the
jurisdiction of courts within the United States or from the enforcement of
judgments or writs of attachment on its assets or permit such Lender (or such
Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts
or agreements made with such Lender. Any determination by the Administrative
Agent that a Lender is a Defaulting Lender under any one or more of clauses (a)
through (d) above, and the effective date of such status, shall be conclusive
and binding absent manifest error, and such Lender shall be deemed to be a
Defaulting Lender (subject to Section 2.9(b)) as of the date established
therefor by the Administrative Agent in a written notice of such determination,
which shall be delivered by the Administrative Agent to the Borrower, and each
other Lender promptly following such determination.

 

“Designated Account”: as defined in Section 3.1(e).

 

“Designated Amount”: shall mean the lesser of (i) fifty (50%) percent of each
Contract Termination Payment received by the Borrower, or (ii) the outstanding
principal balance of the First Term Loan.

 

“Designated Contract”: means those three (3) contracts executed (or to be
executed) by the Borrower and disclosed in detail to the Agent, including
(without limitation) each such final contract, any amendments and additions
thereto, and any letter subcontract, memorandum of understanding, term sheet or
supporting documentation in connection therewith.

 

7

 

 

“Dividends”: means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Capital Stock or other equity
interest of Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such Capital Stock or other equity interest or on account of
any return of capital to Borrower’s stockholders, partners or members (or the
equivalent Person thereof)..

 

“Dollars”, “U.S. Dollars” and “$”: dollars in lawful currency of the United
States of America.

 

“Domestic Subsidiary”: any Subsidiary other than a Foreign Subsidiary.

 

“EBITDA”: means, at any date of determination, an amount equal to Net Income of
the Borrower and its Subsidiaries on a consolidated basis for the most recently
completed measurement period plus (a) the following to the extent deducted in
calculating such Net Income: (i) Interest Expense, (ii) the provision for
Federal, state, local and foreign income taxes payable, (iii) depreciation and
amortization expense and (iv) other non-recurring expenses reducing such Net
Income which do not represent a cash item in such period or any future period
(in each case of or by the Borrower and its Subsidiaries for such measurement
period) and minus (b) the following to the extent included in calculating such
Net Income: (i) Federal, state, local and foreign income tax credits and (ii)
all non-cash items increasing Net Income (in each case of or by the Borrower and
its Subsidiaries for such measurement period).

 

“Eligible Assignee”: shall have the meaning set forth in Section 10.6(b)(i).

 

“Environmental Laws”: the common law and all laws, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, the preservation or reclamation of
natural resources, the management, Release or threatened Release of any
Hazardous Materials or to health and safety matters.

 

“Equipment Collateral”: means all equipment and fixtures of each Loan Party,
whether now owned or hereafter acquired, wherever located, including, without
limitation, all machinery, furniture, furnishings, leasehold improvements,
computer equipment, books and records, motor vehicles, forklifts, rolling stock,
dies and tools used or useful in each Loan Party's business operations.

 

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

 

“ERISA Affiliate”: any trade or business (whether or not incorporated) that,
together with the Borrower or any of its Subsidiaries, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code, other than United Refining Company, a
Pennsylvania corporation, and its Subsidiaries.

 

8

 

 

“ERISA Event”: (a) any “reportable event,” as defined in Section 4043 of ERISA
or the regulations issued thereunder, with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) with respect to any
Plan, failure to satisfy the minimum funding standard (as defined in Section 412
of the Code or Section 302 of ERISA), whether or not waived, (c) the failure to
make by its due date a required installment under Section 412(m) of the Code (or
Section 430(j) of the Code, as amended by the Pension Protection Act of 2006)
with respect to any Plan or the failure to make any required contribution to a
Multiemployer Plan; (d) the filing pursuant to Section 412of the Code or of an
application for a waiver of the minimum funding standard with respect to any
Plan; (e) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(f) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (g) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (h) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, “insolvent” or in “reorganization”,
within the meaning of Title IV of ERISA; or (i) the making of any amendment to
any Plan which could result in the imposition of a lien or the posting of a bond
or other security.

 

“Eurodollar Loans”: Loans the rate of interest applicable to which is based upon
the Eurodollar Rate.

 

“Eurodollar Rate”: with respect to a Eurodollar Loan for the relevant Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to (a) for Revolving Credit Loans, the sum of (i) the LIBOR
Rate for such Interest Period plus (ii) the Applicable Margin, and (b) for the
First Term Loan, the sum of (i) the LIBOR Rate for a one month Interest Period
plus (ii) 3.0%.

 

“Event of Default”: any of the events specified in Section 8, provided that any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.

 

“Exchange Act”: the Securities Exchange Act of 1934, as amended.

 

“Excluded Taxes”: with respect to the Administrative Agent, any Lender or any
other recipient of any payment to be made by or on account of any obligation of
the Borrower hereunder, (a) any Taxes imposed by any jurisdiction other than the
United States (or any taxing authority thereof or therein), any jurisdiction in
which the Borrower conducts business or claims an interest deduction with
respect to this Agreement or any other taxing jurisdiction from or through which
payments hereunder are made, (b) income or franchise taxes imposed on (or
measured by) its net income or net profits by the United States of America, or
by the jurisdiction under the laws of which such recipient is organized, in
which such recipient conducts business (other than a business that is deemed to
arise solely as a result of entering into this Agreement, receipt of payments
hereunder or enforcement of its rights hereunder)) or in which its principal
office is located or, in the case of any Lender, in which its applicable lending
office is located, (c) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the
Borrower is located and (d) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 3.14(b)), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender’s failure to comply
with Section 3.12(f), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Borrower with
respect to such withholding tax pursuant to Section 3.12(a).

 

9

 

 

“Existing Credit Agreement”: shall mean that certain Credit Agreement between
the Borrower and Sovereign Bank, N.A., successor to Sovereign Bank, dated as of
August 13, 2007, as amended pursuant to that certain First Amendment dated
October 22, 2008, that Second Amendment dated as of July 7, 2009, that Third
Amendment dated as of May 21, 2010, that Fourth Amendment dated as of March 14,
2011, that Fifth Amendment dated as of May 10, 2011, that Sixth Amendment dated
as of September 1, 2011, that Seventh Amendment dated as of November 28, 2011,
and that Eighth Amendment dated as of March 7, 2012.

 

“Existing Lender”: as defined in the preamble hereto.

 

“Extension of Credit”: as to any Lender, the making of a Loan by such Lender.

 

“Facility”: means the Term Loans or the Revolving Credit Loans, as the context
may require.

 

“Federal Funds Effective Rate”: for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

 

“Financial Covenants”: the financial covenants set forth in Section 7.1.

 

“Financial Officer”: with respect to any Person, the chief executive officer, or
the chief financial officer of such Person.

 

“Financing Lease”: (a) any lease of property, real or personal, the obligations
under which are capitalized on a consolidated balance sheet of the Borrower and
its Subsidiaries and (b) any other such lease to the extent that the then
present value of the minimum rental commitment thereunder should, in accordance
with GAAP, be capitalized on a balance sheet of the lessee.

 

10

 

 

“First Term Loan”: as defined in Section 2.6.

 

“First Term Note”: as defined in Section 2.6.

 

“Foreign Plan”: any employee benefit plan, program, policy, arrangement or
agreement maintained or contributed to by, or entered into with, Borrower or any
Subsidiary with respect to employees employed outside the United States.

 

“Foreign Lender”: any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is located. For purposes of this
definition, the United States of America, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.

 

“Foreign Subsidiary”: as to any Person, any Subsidiary of such Person which is
organized under the laws of any jurisdiction outside of the country of the
jurisdiction of organization of such Person.

 

“Funded Debt”: means, as of any date of determination, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) the outstanding principal
amount of all obligations, whether current or long-term, for borrowed money
(including Obligations hereunder) and all obligations evidenced by bonds,
debentures, notes, loan agreements or other similar instruments, (b) all
purchase money Indebtedness, (c) all direct obligations arising under letters of
credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments, (d) all obligations in respect
of the deferred purchase price of property of services (other than trade
accounts payable in the ordinary course of business), (e) all Attributable
Indebtedness, (f) without duplication, all Guaranty Obligations with respect to
outstanding Indebtedness of the types specified in clauses (a) through (e) above
of Persons other than the Borrower or any Subsidiary, and (g) all Indebtedness
of the types referred to in clauses (a) through (f) above of any partnership or
joint venture (other than a joint venture that is itself a corporation of
limited liability company) in which the Borrower or a Subsidiary is a general
partner or joint venture, unless such Indebtedness is expressly made
non-recourse to the Borrower or such Subsidiary.

 

“GAAP”: GAAP means generally accepted accounting principles in the United States
set forth 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 such other
principles as may be approved from time to time by a significant segment of the
accounting profession in the United States, that are applicable to the
circumstances as of the date of determination, consistently applied.

 

“Governmental Authority”: any nation or government, any state, province or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

 

“Guarantors” means the Subsidiaries of the Borrower as are or may from time to
time become parties to this Agreement pursuant to Section 6.9.

 

11

 

 

“Guaranty Agreement”: the Guaranty Agreement, substantially in the form attached
hereto as Exhibit B-1, executed and delivered by Loan Parties other than
Borrower, as the same may be amended, supplemented or otherwise modified.

 

“Guaranty Obligation”: as to any Person, any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the “primary obligations”) of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guaranty Obligation shall not include guarantees by a Loan Party of any
other Loan Party’s primary obligations or endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guaranty Obligation shall be deemed to be an amount, without double counting if
more than one Loan Party guarantees a primary obligation of a primary obligor,
the obligations, equal to the value as of any date of determination of the
stated or determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made (unless such Guaranty Obligation shall be expressly
limited to a lesser amount, in which case such lesser amount shall apply) or, if
not stated or determinable, the value as of any date of determination of the
maximum reasonably anticipated liability in respect thereof as determined by
such Person in good faith.

 

“Hazardous Materials”: any solid wastes, toxic or hazardous substances,
materials or wastes, defined, listed, classified or regulated as such in or
under any Environmental Laws, including, without limitation, asbestos, petroleum
or petroleum products (including gasoline, crude oil or any fraction thereof),
polychlorinated biphenyls, and urea-formaldehyde insulation, and any other
substance the presence of which may give rise to liability under any
Environmental Law.

 

“Indebtedness”: of a Person, at a particular date, the sum (without duplication)
at such date of (a) indebtedness for borrowed money or for the deferred purchase
price of property or services in respect of which such Person is liable as
obligor (other than trade liabilities and accruals of expenses incurred in the
ordinary course of business and payable in accordance with customary practices
of such Person), (b) indebtedness secured by any Lien on any property or asset
owned or held by such Person regardless of whether the indebtedness secured
thereby shall have been assumed by or is a primary liability of such Person, (c)
obligations of such Person under Financing Leases, (d) the face amount of all
letters of credit issued for the account of or upon the application of such
Person and, without duplication, the unreimbursed amount of all drafts drawn
thereunder, (e) obligations (in the nature of principal or interest) of such
Person in respect of acceptances or similar obligations issued or created for
the account of such Person and (f) net obligations of such Person under any Swap
Contract. The amount of any net obligation under any Swap Contract on any date
shall be deemed to be the Swap Termination Value thereof as of such date. If for
any reason, the sale of Sold Receivables is judicially or otherwise
re-characterized as a grant of collateral by Borrower to secure financing,
Indebtedness shall be deemed to not include such financing.

 

12

 

 

“Indemnified Taxes”: Taxes other than Excluded Taxes.

 

“Intellectual Property”: as defined in Section 4.9.

 

“Interest Expense”: means, for any measurement period, the sum of (a) all
interest, premium payments, debt discount, fees, charges and related expenses in
connection with borrowed money (including capitalized interest) or in connection
with the deferred purchase price of assets, in each case to the extent treated
as interest in accordance with GAAP, (b) all interest paid or payable with
respect to discontinued operations and (c) the portion of rent expense under
Financing Leases that is treated as interest in accordance with GAAP, in each
case, of or by the Borrower and its Subsidiaries on an consolidated basis for
the most recently completed measurement period.

 

“Interest Payment Date”: (a) as to any Base Rate Loan, the last Business Day of
each March, June, September and December and the Maturity Date of such Loan, (b)
as to any Eurodollar Loan having an Interest Period of three months or less, the
last day of such Interest Period and the Maturity Date of such Loan (c) as to
any Eurodollar Loan having an Interest Period longer than three months, (i) each
day which is three months after the first day of such Interest Period and (ii)
the last day of such Interest Period.

 

“Interest Period”: with respect to any Eurodollar Loan:

 

(a) initially, the period commencing on the borrowing or conversion date, as the
case may be, with respect to a Revolving Credit Loan and ending one, two, three
or six months thereafter, as selected by the Borrower in its notice of borrowing
or notice of conversion, as the case may be, given with respect thereto;

 

(b) thereafter, each period commencing on the last day of the immediately
preceding Interest Period applicable to a Revolving Credit Loan and ending one,
two, three or six months thereafter, as selected by the Borrower by irrevocable
notice to the Administrative Agent not less than three Business Days prior to
the last day of the then current Interest Period with respect thereto; and

 

(c) in the case of each Term Loan the Interest Period shall have a duration of
one (1) month;

 

provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:

 

(i) if any Interest Period pertaining to a Loan would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;

 

13

 

 

(ii) any Interest Period applicable to a Loan that would otherwise extend beyond
the date final payment is due on such Loan shall end on such date of final
payment; and

 

(iii) any Interest Period pertaining to a Loan that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.

 

“Inventory Collateral”: means all inventory of each Loan Party, whether now
owned or hereafter acquired, wherever located, including, without limitation,
all goods of each Loan Party held for sale or lease or furnished or to be
furnished under contracts of service, all goods held for display or
demonstration, goods on lease or consignment, spare parts, repair parts,
returned and repossessed goods, all raw materials, work-in-process, finished
goods and supplies used or consumed in such Loan Party's business, together with
all documents, documents of title, dock warrants, dock receipts, warehouse
receipts, bills of lading or orders for the delivery of all, or any portion, of
the foregoing; provided, however, that "Inventory Collateral" shall not include
goods which are placed by the owner thereof on consignment with a Loan Party in
compliance with Section 2-326 of the Uniform Commercial Code of the applicable
jurisdiction.

 

“Legal Requirement”: as to (a) any Person, any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject, and (b) any property, any
law, treaty, rule, regulation, requirement, judgment, decree or determination of
any Governmental Authority applicable to or binding upon such property or to
which such property is subject.

 

“Lenders”: as defined in the preamble hereto.

 

“Leverage Ratio”: has the meaning ascribed in Section 7.1(b).

 

“LIBOR Rate”: with respect to any Eurodollar Loan for any Interest Period
applicable thereto, (i) the rate per annum (rounded upward, if necessary, to the
nearest 1/32 of one percent) equal to the composite London Interbank Offered
Rate which appears on the Telerate page 3750 as of 11:00 a.m. London time on the
day that is two (2) London Banking Days preceding the first day of such Interest
Period (or if not reported thereon, then as determined by the Administrative
Agent from another recognized source or interbank quotation). In the event that
the Board of Governors of the Federal Reserve System shall impose a Reserve
Percentage with respect to LIBOR deposits of the Administrative Agent, then for
any period during which such Reserve Percentage shall apply, LIBOR shall be
equal to the amount determined above divided by an amount equal to one (1) minus
the Reserve Percentage. “Reserve Percentage” shall mean the maximum aggregate
reserve requirement (including all basic, supplemental, marginal and other
reserves) which is imposed on member banks of the Federal Reserve System against
“Euro-currency Liabilities” as defined in Regulation D.

 

14

 

 

“Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement
(other than a bank or similar deposit account), encumbrance, lien (statutory or
other), or preference, priority or other security interest or similar
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
Financing Lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction in respect of any of the foregoing,
and, in the case of securities, a third party’s right to purchase such
securities).

 

“Line of Business”: means (i) the contract production of structural aircraft
parts principally for the United States Air Force and other branches of the
United States Armed Forces, either as a prime contractor or as a subcontractor
to other defense prime contractors, and (ii) acting as a subcontractor to prime
aircraft manufacturers in the production of commercial aircraft parts.

 

“Loan Documents”: the collective reference to this Agreement, any Notes, the
Security Documents, any documents or instruments evidencing or governing the
Security Documents, each Guaranty Agreement (if any), the Master Agreement and
any other documents executed in connection therewith (but specifically excluding
any Secured Cash Management Agreement and any Secured Swap Contract).

 

“Loan Parties”: means, collectively the Borrower, each Guarantor, each
indemnitor and/or each grantor party to any Security Document.

 

“Loans”: the collective reference to the Term Loans and the Revolving Credit
Loans.

 

“London Banking Day”: any day on which commercial banks are open for
international business (including dealing in U.S. Dollar ($) deposits) in
London, England and New York.

 

“Master Agreement”: shall mean the ISDA Master Agreement dated as of October 22,
2008 between the Swap Provider and the Borrower, as same may be thereafter
amended or reaffirmed.

 

“Material Adverse Effect”: a material adverse change in the business, assets,
operations, properties, condition (financial or otherwise), contingent
liabilities (including as to products, and whether such liabilities have been or
yet may be asserted), prospects or material agreements of the Borrower and its
Subsidiaries, taken as a whole.

 

“Moody’s”: Moody’s Investors Service, Inc. or any successor thereto.

 

“Multiemployer Plan”: a Plan which is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

 

“Net Cash Proceeds”: means, in each case as set forth in a statement in
reasonable detail delivered by the Borrower to the Administrative Agent: (a)
with respect to the disposition of assets by the Borrower or any Loan Party, the
excess, if any, of (1) the cash proceeds received in connection with such
disposition over (2) the sum of (A) the principal amount of any Indebtedness
(other than the Obligations) which is secured by such asset and which is
required to be repaid in connection with the disposition thereof, plus (B) the
reasonable out-of-pocket expenses incurred by the Borrower or such Loan Party,
as the case may be, in connection with such disposition, plus (C) provision for
taxes, including income taxes, attributable to the disposition of such asset;
and (b) with respect to any cash proceeds received by the Borrower or any Loan
Party in respect of the issuance of any Capital Stock or the incurrence of any
Indebtedness (except Indebtedness secured by purchase money liens), all such
cash proceeds, after deducting therefrom all reasonable and customary costs and
expenses incurred by the Borrower or such Loan Party directly in connection with
the issuance of such Capital Stock or the incurrence of Indebtedness.

 

15

 

 

“Net Income”: for any measuring period, the net income (or deficit) of the
Borrower and its Subsidiaries for such period (taken as a cumulative whole),
determined on a consolidated basis in accordance with GAAP; provided that any
non-cash extraordinary gains and losses in accordance with GAAP shall be
excluded in determining Net Income.

 

“Notes”: the collective reference to the Term Loan Notes and the Revolving
Credit Notes.

 

“Obligations”: collectively, the unpaid principal of and interest on the Loans,
and all other obligations and liabilities of the Borrower to the Agent, and any
of the Lenders under or in connection with this Agreement, the other Loan
Documents and any Swap Contracts with any Lender or any Affiliate of a Lender
(including in each case, without limitation, interest accruing at the then
applicable rate provided in this Agreement or any other applicable Loan Document
or Swap Contract after the maturity of the Loans and interest accruing at the
then applicable rate provided in this Agreement or any other applicable Loan
Document or Swap Contract after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, the Notes, the
other Loan Documents or any Swap Contract with a Lender or any Affiliate of a
Lender or any other document made, delivered or given in connection therewith,
in each case whether on account of principal, interest, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all reasonable fees
and disbursements of counsel to the Agents or to the Lenders).

 

“Other Taxes”: any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.

 

“Participant Register”: as defined in Section 10.6(c).

 

“Participants”: as defined in Section 10.6(c).

 

16

 

 

“Patriot Act”: as defined in Section 10.17.

 

“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor thereto.

 

“Person”: an individual, partnership, corporation, business trust, joint stock
company, limited liability company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.

 

“Plan”: any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower, any of its
Subsidiaries or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section
3(5) of ERISA.

 

“Pledgee”: as defined in Section 10.16.

 

“Prime Rate”: the rate of interest per annum from time to time established by
Agent as its prime rate and made available by Agent at its main office or, in
the discretion of Agent, the base, reference or other rate then designated by
Agent for general commercial loan reference purposes, it being understood that
such rate is a reference rate, not necessarily the lowest, established from time
to time, which serves as a basis upon which effective interest rates are
calculated for loans making reference thereto (the “Index”). The Index is not
necessarily the lowest rate charged by Agent on its loans and is set by Agent in
its sole discretion. If the Index becomes unavailable during the term of this
Agreement, Agent may designate a substitute index after notifying the Borrower.
Agent will tell the Borrower the current Index rate upon the Borrower’s request.
The interest rate change will not occur more than each time as and when the
Index changes.

 

“Prior Term Loans”: as defined in Section 2.5.

 

“Properties”: as defined in Section 4.15(a).

 

“Register”: as defined in Section 10.6(b).

 

“Related Parties”: with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.

 

“Release”: any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, escaping, leaking, dumping, disposing, spreading, depositing or
dispersing of any Hazardous Materials in, unto or onto the environment.

 

“Required Lenders”: at any time (A) there are two or fewer non-Defaulting
Lenders, all of the non-Defaulting Lenders; and (B) there are more than two
non-Defaulting Lenders, at least two (2) non-Defaulting Lenders having a
combined Total Loan Percentage of 50.1% or more, provided however, that the Loan
Percentage of any Defaulting Lender shall be disregarded in determining Required
Lenders at any time.

 

17

 

 

“Requirement of Law”: as to (a) any Person, the certificate of incorporation and
by-laws or the partnership or limited partnership agreement or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject, and (b) any
property, any law, treaty, rule, regulation, requirement, judgment, decree or
determination of any Governmental Authority applicable to or binding upon such
property or to which such property is subject, including, without limitation,
any Environmental Laws.

 

“Responsible Officer”: with respect to any Loan Party, the chief operating
officer or any Financial Officer of such Loan Party.

 

“Restricted Payments”: as defined in Section 7.7.

 

“Revolving Credit Commitment”: as to any Revolving Lender at any time, its
obligation to make Revolving Credit Loans in an aggregate amount not to exceed
at any time outstanding the amount set forth opposite such Lender’s name in
Schedule I hereto under the heading “Revolving Credit Commitment,” as such
amount may be reduced from time to time pursuant to Section 2.4 or increased
pursuant to Section 2.8 and the other applicable provisions hereof.

 

“Revolving Credit Commitment Percentage”: as to any Revolving Lender at any
time, the percentage which such Lender’s Revolving Credit Commitment then
constitutes of the Aggregate Revolving Credit Commitments (or, if the Revolving
Credit Commitments have terminated or expired at such time, the percentage which
(a) the Aggregate Revolving Credit Outstanding of such Lender at such time then
constitutes of (b) the Aggregate Revolving Credit Outstanding of all Lenders at
such time).

 

“Revolving Credit Commitment Period”: the period from and including the Closing
Date to but not including the Revolving Credit Termination Date, or such earlier
date on which the Revolving Credit Commitments shall terminate as provided
herein.

 

“Revolving Credit Loan”: as defined in Section 2.1(a).

 

“Revolving Credit Note”: as defined in Section 3.16(d).

 

“Revolving Credit Termination Date”: December 5, 2016.

 

“Revolving Lender”: each Lender that has a Revolving Credit Commitment or that
holds Revolving Credit Loans.

 

“Sale and Leaseback Transaction”: means, with respect to any Loan Party or any
Subsidiary, any arrangement, directly or indirectly, with any Person whereby
such Loan Party or such Subsidiary shall sell or transfer any property used or
useful in its business, whether now owned or hereafter acquired, and thereafter
rent or lease such property or other property that it intends to use for
substantially the same purpose or purposes as the property being sold or
transferred.

 

18

 

 

“S&P”: Standard & Poor’s Ratings Group or any successor thereto.

 

“SEC”: the Securities and Exchange Commission.

 

“Secured Cash Management Agreement”: any Cash Management Agreement between the
any Loan Party and any of its Subsidiaries and any Cash Management Bank.

 

“Secured Obligations”: (a) all Obligations, (b) all obligations arising under
Secured Cash Management Agreements and Secured Swap Contracts and (c) all costs
and expenses incurred in connection with enforcement and collection of the
foregoing, including the fees, charges and disbursements of counsel, in each
case whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest and fees that accrue after the commencement by or against
any Loan Party or any Affiliate thereof of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.

 

“Secured Party Designation Notice”: a notice from any Lender or an Affiliate of
a Lender substantially in the form of Exhibit G.

 

“Secured Parties”: collectively, the Administrative Agent, the Lenders, the Swap
Provider, the Cash Management Banks, the Indemnitees, each co-agent or sub-agent
appointed by the Administrative Agent from time to time pursuant to Article IX.

 

“Secured Swap Contract”: any interest rate, currency, foreign exchange, or
commodity Swap Contract required or permitted under Article VI or VII between
any Loan Party and any of its Subsidiaries and the Swap Provider.

 

“Security Agreement”: the Security Agreement, substantially in the form attached
hereto as Exhibit B-2.

 

“Security Documents”: the collective reference to the Security Agreements,
landlord waivers, and each other security document or similar agreement that may
be delivered to the Administrative Agent pledging collateral security for any or
all of the Obligations, in each case as amended, supplemented or otherwise
modified from time to time.

 

“Sold Receivables”: the accounts receivable of United Technologies Corporation
as further described in Schedule 7.3.

 

“Solvent”: with respect to any Person on a particular date, that on such date,
(a) the fair value of the property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent liabilities, of
such Person, (b) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and mature, (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature, (d) such Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such Person’s property
would constitute an unreasonably small amount of capital and (e) such Person is
able to pay its debts as they become due and payable.

 

19

 

 

“Statutory Reserve Rate”: a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the
aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by the
Board to which the Administrative Agent is subject with respect to the
Eurodollar Rate, for eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

 

“Subordinated Debt”: shall mean indebtedness of the Borrower or any of its
Subsidiaries, now existing or hereafter incurred, subordinated in right of
payment to the obligations to the Lenders under this Agreement, pursuant to
documentation containing maturities, amortization schedules, covenants,
defaults, remedies, subordination provisions and other material terms in form
and substance reasonably satisfactory to the Administrative Agent and the
Required Lenders.

 

“Subsidiary”: as to any Person, a corporation, partnership or other entity of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly, through one or more intermediaries, or both, by such Person
(exclusive of any Affiliate in which such Person has a minority ownership
interest). Unless otherwise qualified, all references to a “Subsidiary” or to
“Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower, other than a Subsidiary that is inactive and has assets of no
material value.

 

“Swap Contract”: (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement, including any such obligations or
liabilities under the Master Agreement defined herein.

 

20

 

 

“Swap Contract Obligation”: any obligation of the Borrower under any one or more
Swap Contracts to make payments to the counterparties thereunder upon the
occurrence of a termination event or similar event thereunder.

 

“Swap Provider”: Sovereign Bank, N.A.

 

“Swap Termination Value”: in respect of any one or more Swap Contracts, after
taking into account the effect of any legally enforceable netting agreement
relating to such Swap Contracts, (a) for any date on or after the date such Swap
Contracts have been closed out and termination value(s) determined in accordance
therewith, such termination value(s), and (b) for any date prior to the date
referenced in clause (a), the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, as determined based upon one or more
mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

 

“Synthetic Debt”: means, with respect to any Person as of any date of
determination thereof, all obligations of such Person in respect of transactions
entered into by such Person that are intended to function primarily as a
borrowing of funds (including any minority interest transactions that function
primarily as a borrowing) but are not otherwise included in the definition of
“Indebtedness” or as a liability on the consolidated balance sheet of such
Person and its Subsidiaries in accordance with GAAP.

 

“Synthetic Lease Obligation”: means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property (including Sale and Leaseback
Transactions), in each case, creating obligations that do not appear on the
balance sheet of such Person but which, upon the application of any Debtor
Relief Laws to such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

 

“Taxes”: any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

 

“Term Commitment”: as to any Term Lender, the obligation of such Lender to make
a Term Loan to the Borrower in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Lender’s name in Schedule I
hereto under the heading “Term Commitment”.

 

“Term Lenders”: each Lender that has a Term Commitment or that holds a Term Loan
together with the Swap Provider with respect to the Term Loans.

 

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“Term Loan”: as defined in Section 2.5.

 

“Term Loan Maturity Date”: March 9, 2017.

 

“Term Loan Note”: as defined in Section 3.16(d).

 

“Term Loan Percentage”: as to any Term Lender at any time, the percentage which
the aggregate principal amount of such Lender’s Term Loans then outstanding
constitutes of the aggregate principal amount of the Term Loans then
outstanding.

 

“Total Loan Percentage”: as to any Lender at any time, the percentage which the
sum of such Lender’s Term Loans then outstanding and Revolving Credit
Commitments then in effect (or, if the Revolving Credit Commitments have
terminated or expired at such time, such Lender’s Aggregate Revolving Credit
Outstanding) constitutes of the Aggregate Loans then outstanding.

 

“Tranche”: the collective reference to Eurodollar Loans the then current
Interest Periods with respect to which begin on the same date and end on the
same later date (whether or not such Loans shall originally have been made on
the same day).

 

“Transferee”: as defined in Section 10.16.

 

“Type”: as to any Loan, its nature as a Base Rate Loan or a Eurodollar Loan.

 

“USA Subordination Agreement”: the Subordination Agreement between the Borrower
and the Agent on behalf of the Lenders in favor of the United States of America.

 

“Withdrawal Liability”: liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

 

1.2 Other Definitional Provisions.

 

(a) All accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial ratios
and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP applied on a consistent
basis, as in effect from time to time, applied in a manner consistent with that
used in preparing the Audited Financial Statements, except as otherwise
specifically prescribed herein. Notwithstanding the foregoing, for purposes of
determining compliance with any covenant (including the computation of any
financial covenant) contained herein, Indebtedness of the Borrower and its
Subsidiaries shall be deemed to be carried at 100% of the outstanding principal
amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial
liabilities shall be disregarded.

 

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(b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either the
Borrower or the Required Lenders shall so request, the Administrative Agent, the
Lenders and the Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders); provided that, until so
amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

 

(c) Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the Notes, the other Loan Documents
or any certificate or other document made or delivered pursuant hereto.

 

(d) 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, and Section, Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.

 

(e) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

 

ARTICLE II: AMOUNT AND TERMS OF COMMITMENTS AND TERM LOANS

 

2.1 Revolving Credit Commitments.

 

(a) Subject to the terms and conditions hereof, each Revolving Lender severally
agrees to make revolving credit loans (each, a “Revolving Credit Loan”) in U.S.
Dollars to the Borrower from time to time during the Revolving Credit Commitment
Period so long as after giving effect thereto (i) the Available Revolving Credit
Commitment of each Lender with a Revolving Credit Commitment is greater than or
equal to zero and (ii) the Aggregate Revolving Credit Outstanding of all Lenders
does not exceed the Aggregate Revolving Credit Commitments. During the Revolving
Credit Commitment Period the Borrower may use the Revolving Credit Commitments
by borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.

 

(b) The Revolving Credit Loans may from time to time be (i) Eurodollar Loans,
(ii) Base Rate Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
2.2 and 3.2, provided that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.

 

(c) Subject to the terms and conditions hereof, the Aggregate Revolving Credit
Commitments may be reduced pursuant to Section 2.4, or increased pursuant to
Section 2.8.

 

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2.2 Procedure for Revolving Credit Borrowing. The Borrower may borrow under the
Revolving Credit Commitments during the Revolving Credit Commitment Period on
any Business Day, provided that the Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent
prior to 2:00 P.M. (New York City time) at least (a) three Business Days prior
to the requested Borrowing Date, if all or any part of the requested Revolving
Credit Loans are to be initially Eurodollar Loans, or (b) one (1) Business Day
prior to the requested Borrowing Date, otherwise), specifying in each case (i)
the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the
borrowing is to be of Eurodollar Loans, Base Rate Loans or a combination thereof
and (iv) if the borrowing is to be entirely or partly of Eurodollar Loans, the
amount of such Type of Loan and the length of the initial Interest Periods
therefor. Each borrowing under the Revolving Credit Commitments shall be in an
amount equal to (A) in the case of Base Rate Loans, $100,000.00 or a whole
multiple of $10,000.00 in excess thereof and (B) in the case of Eurodollar
Loans, $100,000.00 or a whole multiple of $10,000.00 in excess thereof. Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
promptly notify each Revolving Lender thereof not later than 3:00 P.M., New York
City time, on the date the Administrative Agent receives such notice. Not later
than 12:00 Noon, New York City time, on each requested Borrowing Date each
Revolving Lender shall make an amount equal to its Revolving Credit Commitment
Percentage of the principal amount of the Revolving Credit Loans requested to be
made on such Borrowing Date available to the Administrative Agent at its office
specified in Section 10.2 in U.S. Dollars and in immediately available funds.
The Administrative Agent shall on such date credit the account of the Borrower
on the books of such office with the aggregate of the amounts made available to
the Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.

 

2.3 Repayment of Revolving Credit Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Revolving
Lender the then unpaid principal amount of each Revolving Credit Loan of such
Lender (whether made before or after the termination or expiration of the
Revolving Credit Commitments) on the Revolving Credit Termination Date and on
such other dates and in such other amounts as may be required from time to time
pursuant to this Agreement, including, without limitation Section (g) of Section
3.1. The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Revolving Credit Loans from time to time outstanding until payment
thereof in full at the rates per annum, and on the dates, set forth in Section
3.1.

 

2.4 Termination and Reduction of Revolving Credit Commitments. The Borrower
shall have the right, upon not less than three (3) Business Days’ notice to the
Administrative Agent (which shall promptly notify each Lender thereof), to
terminate the Aggregate Revolving Credit Commitments or, from time to time, to
reduce the amount of the Aggregate Revolving Credit Commitments; provided that
no such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments of the Revolving Credit Loans made on the
effective date thereof, the Available Revolving Credit Commitment of any Lender
would not be greater than or equal to zero. Any such permitted reduction shall
be in an amount equal to $1,000,000 or a whole multiple of $100,000 in excess
thereof and shall reduce permanently the Aggregate Revolving Credit Commitments
then in effect.

 

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2.5 Term Commitment. Subject to the terms and conditions hereof, pursuant to
Section 2.6 below, each Term Lender severally (but not jointly) agrees to make,
refinance and/or restate one or more term loans (each, a “Term Loan”) to the
Borrower on the Closing Date in an amount not to exceed in the aggregate the
amount of the Term Commitment of such Term Lender. On the Closing Date, Borrower
shall (i) refinance the outstanding principal balance of the first term loan
under the Existing Credit Agreement with a Revolving Credit Loan, and (ii)
restate and refinance the second term loan under the Existing Credit Agreement
(the “Prior Term Loan”) as set forth in Section 2.6 below, and (iii) on the
Closing Date, the Existing Lender shall sell to the Term Loan Lenders in
proportion to their Term Loan Percentages as much of its interest in such Prior
Term Loan as necessary to give effect to the overall Term Loan Percentages. On
and after the Closing Date, the Existing Lender shall retain its 100% ownership
interest in and shall constitute the Swap Provider for any related interest rate
swap transaction pursuant to the Master Agreement with respect to the Prior Term
Loan as restated and refinanced by the First Term Loan.

 

2.6 Term Loan Borrowing. Subject to the terms and conditions hereof, upon
receipt by the Administrative Agent of the Proceeds of the First Term Loan, each
Term Lender severally agrees to make available to the Borrower (through the
Administrative Agent) on the Closing Date its Term Loan Percentage of a term
loan in the aggregate principal amount of $3,900,000 (the “First Term Loan”).
The First Term Loan shall be evidenced by a first term note (the “First Term
Note”) of the Borrower payable to each Term Lender. Each First Term Note shall
be dated the Closing Date and shall mature on the applicable Term Loan Maturity
Date at which time the entire outstanding principal balance and all interest
thereon shall be due and payable. Each First Term Loan shall bear interest at a
rate per annum equal to the applicable Eurodollar Rate for a one month Interest
Period, the entire outstanding principal balance of which shall continue to be
subject to an interest rate swap transaction with the Swap Provider for the
remainder of the term pursuant to the Master Agreement. Interest shall be
payable in arrears on the first day of each month commencing on January 1, 2013
and on the first day of each month thereafter in accordance with Section 3.1
hereof. Prepayments shall be subject to Section 3.4 hereof. Each First Term Note
shall be entitled to the benefits and subject to the provisions of this
Agreement.

 

2.7 Repayment of Term Loans. The principal balance of the First Term Loan shall
be payable to the Administrative Agent for the account of each Term Lender (in
accordance with each Term Lender’s respective Term Loan Percentage) in
consecutive monthly installments of principal, the first fifty-one (51) of which
shall be in an amount equal to Seventy-Five Thousand and 00/100 ($75,000.00)
Dollars each, commencing on January 1, 2013 with each succeeding installment
being due on the first day of each month thereafter until March 1, 2017 with a
final payment due on the applicable Term Loan Maturity Date in an amount equal
to the then outstanding principal balance of the First Term Loan.
Notwithstanding the foregoing, upon Borrower’s receipt of each Contract
Termination Payment (if any), Borrower shall then (at Borrower’s option) either
(1) prepay the First Term Loan on the last day of the current one month LIBOR
Rate Interest Period in the principal amount equal to the Designated Amount plus
all accrued and unpaid interest through the date of prepayment, or (2) deposit
into a bank account held by and pledged (as additional collateral for the Loans
and the related interest rate swap obligations) to the Agent on behalf of the
Term Lenders, on terms and documentation satisfactory to the Agent and its
counsel, an amount equal to the Designated Amount. Each Term Lender shall
receive its Term Loan Percentage of each installment of principal paid under the
First Term Loan.

 

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2.8 Increase in Revolving Credit Commitments

 

(a) Provided there exists no Default, and no Default would result from any
borrowing as of the funding date thereof, upon sixty (60) days written notice to
the Administrative Agent (which shall promptly notify the Revolving Lenders),
the Borrower may from time to time request an increase in the Aggregate
Revolving Credit Commitment by an additional amount (for all such requests) not
exceeding $15,000,000.00 in the aggregate; provided that (i) any such request
for an increase shall be in a minimum amount of $5,000,000 and integral
multiples of $1,000,000.00 in excess thereof, (ii) the Borrower may make a
maximum of three (3) such requests and (iii) after giving effect to any increase
under this Section, the Aggregate Revolving Credit Commitment shall not exceed
the Aggregate Revolving Credit Maximum Amount. At the time of sending such
notice, the Borrower (in consultation with the Administrative Agent) shall
specify the time period within which each Revolving Lender is requested to
respond (which shall in no event be less than twenty (20) Business Days from the
date of delivery of such notice to the Revolving Lenders).

 

(b) Each Revolving Lender shall notify the Administrative Agent within such time
period whether or not it agrees to increase its Revolving Credit Commitment and,
if so, whether by an amount equal to, greater than, or less than its Revolving
Credit Commitment Percentage of such requested increase. Any Revolving Lender
not responding within such time period shall be deemed to have declined to
increase its Revolving Credit Commitment.

 

(c) The Administrative Agent shall notify the Borrower and each Revolving Lender
of the Revolving Lenders’ responses to each request made hereunder. To achieve
the full amount of a requested increase, and subject to the approval of the
Administrative Agent, the Borrower may also invite additional Eligible
Assignees, as provided in Section 10.6 hereof, reasonably acceptable to the
Administrative Agent to become Revolving Lenders pursuant to a joinder agreement
(“New Revolving Lenders”) in form and substance satisfactory to the
Administrative Agent and its counsel.

 

(d) If the Aggregate Revolving Credit Commitment is increased in accordance with
this Section, the Administrative Agent and the Borrower shall determine the
effective date (the “Revolving Increase Effective Date”) and the final
allocation of such increase. The Administrative Agent shall promptly notify the
Borrower and the Revolving Lenders and the New Revolving Lenders, if any, of the
final allocation of such increase and the Revolving Increase Effective Date.

 

(e) As a condition precedent to such increase, the Borrower shall deliver to the
Administrative Agent a certificate of each Loan Party dated as of the Revolving
Increase Effective Date (in sufficient copies for each Lender) signed by a
Responsible Officer of such Loan Party (i) certifying and attaching the
resolutions adopted by such Loan Party approving or consenting to such increase,
and (ii) in the case of the Borrower, certifying that, before and after giving
effect to such increase, (A) the representations and warranties contained in
Section 4 (inclusive) and the other Loan Documents are true and correct, on and
as of the Revolving Increase Effective Date, (B) no Default exists or would
exist after any such borrowing, and (C) a pro forma calculation as of the latest
fiscal quarter for which internal financial statements are available indicating
compliance (including calculations) with the financial covenants set forth in
Section 7.1. The Borrower shall prepay any Revolving Credit Loans outstanding on
the Revolving Increase Effective Date (and pay any additional amounts required
pursuant to Section 3.11) to the extent necessary to keep the outstanding
Revolving Credit Loans ratable with any revised Applicable Revolving Percentages
arising from any nonratable increase in the Revolving Credit Commitments under
this Section.

 

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(f) This Section 2.8 shall supersede any provisions in 10.1 to the contrary.

 

2.9 Defaulting Lenders.

 

(a) Adjustments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by
applicable Law:

 

 

(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definition of “Required Lenders” and Section
10.1.

 

(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article VIII or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 10.7 shall be applied at such time or
times as may be determined by the Administrative Agent as follows: first, to the
payment of any amounts owing by such Defaulting Lender to the Administrative
Agent hereunder; second, as the Borrower may request (so long as no Default or
Event of Default exists), to the funding of any Loan in respect of which such
Defaulting Lender has failed to fund its portion thereof as required by this
Agreement, as determined by the Administrative Agent; third, if so determined by
the Administrative Agent and the Borrower, to be held in a deposit account and
released pro rata in order to satisfy such Defaulting Lender’s potential future
funding obligations with respect to Loans under this Agreement and; fourth, to
the payment of any amounts owing to the Lenders, as a result of any judgment of
a court of competent jurisdiction obtained by any Lender, against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement; fifth, so long as no Default or Event of
Default exists, to the payment of any amounts owing to the Borrower as a result
of any judgment of a court of competent jurisdiction obtained by the Borrower
against such Defaulting Lender as a result of such Defaulting Lender’s breach of
its obligations under this Agreement; and sixth, to such Defaulting Lender or as
otherwise as may be required under the Loan Documents in connection with any
Lien conferred thereunder or directed by a court of competent jurisdiction;
provided that if (1) such payment is a payment of the principal amount of any
Loans in respect of which such Defaulting Lender has not fully funded its
appropriate share, and (2) such Loans were made when the conditions set forth in
Section 5 were satisfied or waived, such payment shall be applied solely to pay
the Loans of all Non-Defaulting Lenders on a pro rata basis prior to being
applied to the payment of any Loans owed to such Defaulting Lender until such
time as all Loans are held by the Lenders pro rata in accordance with the
Commitments hereunder. Any payments, prepayments or other amounts paid or
payable to a Defaulting Lender that are applied (or held) to pay amounts owed by
a Defaulting Lender pursuant to this Section 2.9(a)(ii) shall be deemed paid to
and redirected by such Defaulting Lender, and each Lender irrevocably consents
hereto.

 

27

 

 

(iii) Certain Fees: No Defaulting Lender shall be entitled to receive any fee
payable under Section 3.5(a) for any period during which that Lender is a
Defaulting Lender (and the Borrower shall not be required to pay any such fee
that otherwise would have been required to have been paid to that Defaulting
Lender).

 

(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent, agrees in
writing that a Lender is no longer a Defaulting Lender, the Administrative Agent
will so notify the parties hereto, whereupon as of the effective date specified
in such notice and subject to any conditions set forth therein, that Lender
will, to the extent applicable, purchase at par that portion of outstanding
Loans of the other Lenders or take such other actions as the Administrative
Agent may determine to be necessary to cause the Loans be held on a pro rata
basis by the Lenders in accordance with their respective Revolving Credit
Commitment and Term Loan Percentages, whereupon such Lender will cease to be a
Defaulting Lender; provided that no adjustments will be made retroactively with
respect to fees accrued or payments made by or on behalf of the Borrower while
that Lender was a Defaulting Lender; and provided, further, that except to the
extent otherwise expressly agreed by the affected parties, no change hereunder
from Defaulting Lender to Lender will constitute a waiver or release of any
claim of any party hereunder arising from that Lender’s having been a Defaulting
Lender.

 

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ARTICLE III: GENERAL PROVISIONS

 

3.1 Interest Rates and Payment Dates.

 

(a) Each Eurodollar Loan shall bear interest for each day during each Interest
Period with respect thereto at a rate per annum equal to the applicable
Eurodollar Rate determined for such Interest Period.

 

(b) Each Base Rate Loan shall bear interest for each day on which it is
outstanding at a rate per annum equal to the Base Rate for such day.

 

(c) If all or a portion of (i) the principal amount of any Loan, (ii) any
interest payable thereon or (iii) any fee or other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such amount shall bear interest for each day after the due date
until such amount is paid in full at a rate per annum equal to (x) in the case
of principal, the rate that would otherwise be applicable thereto pursuant to
the foregoing provisions of this Section plus 3% per annum or (y) in the case of
any such overdue interest, fee or other amount, the rate described in paragraph
(b) of this Section plus 3% per annum. If any Event of Default described in
Sections 8(c) (with respect to Section 7.1 only), (f), (h) or (j) shall occur
and be continuing, and the Required Lenders shall give notice to the Borrower
that this sentence shall apply, then, until such Event of Default shall be cured
or waived or such notice shall be withdrawn, the outstanding principal amount of
all Loans shall bear interest at 3% per annum above the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section 3.1 (other than the first sentence of this paragraph (c)).

 

(d) Interest on Revolving Credit Loans shall be payable in arrears on each
Interest Payment Date, provided that interest accruing pursuant to paragraph (c)
of this Section 3.1 shall be payable from time to time on demand. Interest on
Term Loans shall be payable monthly in arrears pursuant to Section 2.6 hereof.

 

(e) On each date when the payment of any principal, interest or fees are due
hereunder or under any Note, Borrower agrees to maintain on deposit in an
ordinary checking account maintained by Borrower with the Administrative Agent
(as such account shall be designated by Borrower in a written notice to the
Administrative Agent from time to time, the “Designated Account”) an amount
sufficient to pay such principal, interest or fees in full on such date.
Borrower hereby authorizes the Administrative Agent (i) to deduct automatically
all principal, interest or fees when due hereunder or under any Note from the
Designated Account, and (ii) if and to the extent any payment of principal,
interest or fees under this Agreement or any Note is not made when due to deduct
any such amount from any or all of the accounts of Borrower maintained at the
Administrative Agent. The Administrative Agent agrees to provide written notice
to Borrower of any automatic deduction made pursuant to this Section 3.1(e)
showing in reasonable detail the amounts of such deduction.

 

(f) All funds deposited in the Designated Account shall be held under the sole
dominion and control of the Collateral Agent for the account of and subject to
the security interest of the Collateral Agent for the benefit of the Lenders. In
addition to the rights of the Collateral Agent in the funds on deposit in the
Designated Account as proceeds of the Collateral, the Borrower hereby pledges,
assigns and grants to the Collateral Agent a security interest in all funds,
whether or not proceeds of the Collateral, now or hereafter on deposit in the
Designated Account and all of the Borrower's present and future rights in and to
the Designated Account and the funds on deposit therein.

 

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(g) The Administrative Agent has the right, and the Borrower hereby irrevocably
authorizes the Administrative Agent, to withdraw funds from and/or draw upon the
Designated Account to pay amounts due and owing to the Lenders under this
Agreement, including, without limitation, interest on and principal of Loans
thereunder, and the fees set forth in Section 3.5 payable thereunder. The
Borrower hereby agrees that all amounts deposited into the Designated Account or
on deposit in the Designated Account shall, on the Business Day that Obligations
are due after receipt thereof, be withdrawn by the Administrative Agent and
either (i) if and solely to the extent any amount is outstanding on such day in
respect of Obligations under any of the Loan Documents, such amounts on deposit
in the Designated Account shall be applied by the Agent to satisfy such
outstanding Obligations (and to the extent any such amounts on deposit in the
Designated Account shall not be required to satisfy Obligations, such amounts
shall be treated as provided for below) or (ii) if there are no Obligations at
that time outstanding (and provided no Default or Event of Default has occurred
and is continuing), upon Borrower’s written request to Administrative Agent,
such amounts on deposit in the Designated Account shall be transferred by the
Agent to the Borrower's main operating account with the Administrative Agent
(the “Operating Account”). The Borrower shall on the next succeeding Business
Day advise the Administrative Agent of the funds deposited to the Designated
Account as cash for which the Administrative Agent did not afford the Borrower
credit against the Obligations and the Administrative Agent shall make a
retroactive adjustment for same. Upon the occurrence and during the continuation
of a Default or an Event of Default, no amounts on deposit in the Designated
Account shall be transferred by the Collateral Agent, and any amounts on deposit
therein may be used by the Collateral Agent, at the Collateral Agent's
discretion, to satisfy the Obligations as provided for above, or may be held by
the Collateral Agent as cash collateral for the Obligations, as provided for
above and in the Security Agreement.

 

(h) Upon the occurrence and during the continuation of an Event of Default, upon
written direction from the Required Lenders, the Designated Account shall be
converted into a lockbox account under the sole dominion and control of the
Collateral Agent. In such event, the Borrower hereby agrees, on forms approved
by the Collateral Agent, if requested by Collateral Agent at the direction of
the Required Lenders, to instruct all Account Debtors to make all payments in
respect of Accounts directly to the lockbox account. This lockbox account shall
be non-interest bearing and shall be subject to debit or withdrawal solely by
the Collateral Agent. The balance from time to time in this lockbox account
shall be used to reduce the Obligations, at the Administrative Agent’s sole
discretion, and such balance shall be held as security for such Obligations as
provided in Section 3.1(g) hereof and in the Security Agreement.

 

(i) The Designated Account and the funds on deposit therein shall be subject to
the Collateral Agent's right of setoff, Collateral Agent's lien and other rights
for the benefit of the Lenders as the Collateral Agent has in and to deposit
accounts maintained therein. Nothing contained herein shall be deemed to be a
waiver of any rights or remedies the Collateral Agent may have against the
Borrower or any funds of the Borrower on deposit at the Collateral Agent. No
failure of the Collateral Agent to require, and no delay by the Collateral Agent
in requiring, the Borrower to comply with any requirement of this Agreement
shall constitute a waiver of compliance with any requirement of this Agreement.
No failure of the Collateral Agent to exercise, and no delay by the Bank in
exercising, any right or any remedy, whether under this Agreement, at law or
otherwise shall constitute a waiver of any such right or remedy. Any waiver by
the Collateral Agent of compliance with a requirement of this Agreement, or of
any right or any remedy, shall be effective only if in a writing signed by the
Collateral Agent, and shall be limited to the specific instance for which such
waiver was granted and shall not constitute a waiver of such compliance, right
or remedy in the future or of compliance with any other requirement, or of any
other right or remedy, whether under this Agreement or otherwise.

 

30

 

 

(j) If, as a result of any restatement of or other adjustment to the financial
statements of Borrower or for any other reason, Borrower or the Lenders
determine that (i) the Financial Covenant used in the definition “Applicable
Margin” as calculated by Borrower as of any applicable date was inaccurate and
(ii) a proper calculation of such Financial Covenant would have resulted in
higher pricing for such period, Borrower shall immediately and retroactively be
obligated to pay to Agent for the account of the applicable Lenders, promptly on
demand by Agent (or, after the occurrence of an actual or deemed entry of an
order for relief with respect to Borrower under the Bankruptcy Code of the
United States, automatically and without further action by Agent or any Lender),
an amount equal to the excess of the amount of interest and fees that should
have been paid for such period over the amount of interest and fees actually
paid for such period. This paragraph shall not limit the rights of Agent or any
Lender, as the case may be, under Section 8 (inclusive) hereunder or otherwise.
Borrower’s obligations under this paragraph shall survive the termination of the
Commitments and the repayment of the Aggregate Loans and all other Obligations
hereunder.

 

3.2 Conversion and Continuation Options. With respect to Revolving Credit Loans:

 

(a) The Borrower may elect from time to time to convert outstanding Eurodollar
Loans (in whole or in part) to Base Rate Loans by giving the Administrative
Agent at least two (2) Business Days’ prior irrevocable notice of such election,
provided that any such conversion of Eurodollar Loans may only be made on the
last day of an Interest Period with respect thereto. The Borrower may elect from
time to time to convert outstanding Base Rate Loans (in whole or in part) to
Eurodollar Loans by giving the Administrative Agent prior irrevocable notice of
such election no later than 11:00 A.M., New York City time, at least three
Business Days’ prior to the proposed conversion date. Any such notice of
conversion to Eurodollar Loans shall specify the length of the initial Interest
Period or Interest Periods therefor. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof. All or
any part of outstanding Eurodollar Loans and Base Rate Loans may be converted as
provided herein, provided that (i) no Base Rate Loan may be converted into a
Eurodollar Loan when any Default or Event of Default has occurred and is
continuing and the Administrative Agent or the Required Lenders have determined
in its or their sole discretion that such conversion is not appropriate, (ii)
any such conversion may only be made if, after giving effect thereto, Section
3.3 shall not have been violated, and (iii) no Base Rate Loan may be converted
into a Eurodollar Loan after the date that is one month prior to the Revolving
Credit Termination Date or the Term Loan Maturity Date, as applicable.

 

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(b) Any Eurodollar Loans may be continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving notice
to the Administrative Agent of the length of the next Interest Period to be
applicable to such Loans determined in accordance with the applicable provisions
of the term “Interest Period” set forth in Section 1.1, provided that no
Eurodollar Loan may be continued as such (i) when any Default or Event of
Default has occurred and is continuing and the Administrative Agent or the
Required Lenders have determined in its or their sole discretion that such
continuation is not appropriate, (ii) if, after giving effect thereto, Section
3.3 would be contravened or (iii) after the date that is one month prior to the
Revolving Credit Termination Date or the Term Loan Maturity Date, as applicable;
and provided, further, that if the Borrower shall fail to give such notice or if
such continuation is not permitted pursuant to the preceding proviso, such
Eurodollar Loans shall automatically be converted to Base Rate Loans on the last
day of such then expiring Interest Period. Upon receipt of any notice pursuant
to this Section 3.2(b), the Administrative Agent shall promptly notify each
Lender thereof.

 

3.3 Minimum Amounts of Tranches. All borrowings, conversions and continuations
of Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving effect
thereto, (a) for the Revolving Credit Loans (i) the aggregate principal amount
of the Eurodollar Loans comprising each Tranche shall be equal to $1,000,000 or
an integral multiple thereof and (ii) there shall not be more than three (3)
Tranches at any one time outstanding; and (b) for the Term Loans (i) the
aggregate principal amount of the Eurodollar Loans comprising the Term Loans
shall be equal to the remaining principal balance of each Term Loan and (ii)
there shall not be more than one (1) Tranche for each Term Loan at any one time
outstanding.

 

3.4 Optional and Mandatory Prepayments.

 

(a) The Borrower may at any time and from time to time prepay the Loans, in
whole or in part, upon at least three (3) Business Days’ irrevocable notice to
the Administrative Agent (in the case of Eurodollar Loans) and at least one (1)
Business Day’s irrevocable notice to the Administrative Agent (in the case of
Base Rate Loans), specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans, Base Rate Loans or a combination thereof,
and, in each case if a combination thereof, the amount allocable to each. Upon
the receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein. Partial
prepayments of the Loans shall be in an aggregate principal amount of $50,000 or
an integral multiple thereof.

 

(b) Amounts to be applied in connection with prepayments made pursuant to this
Section shall be applied to the prepayment of the Term Loans in accordance with
Section 3.8(a)(ii) and shall be made, first, to Base Rate Loans and, second, to
Eurodollar Loans.

 

(c) If, at any time during the Revolving Credit Commitment Period, for any
reason the Aggregate Revolving Credit Outstanding of all the Revolving Lenders
exceeds the Aggregate Revolving Credit Commitments then in effect, or the
Aggregate Revolving Credit Outstanding of any Lender exceeds the Revolving
Credit Commitment of such Lender then in effect, the Borrower shall, without
notice or demand, immediately prepay the Revolving Credit Loans, in an aggregate
amount at least sufficient to eliminate any such excess.

 

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(d) On each date on which the Revolving Credit Loans exceed any borrowing
limitations set forth herein, the Borrower shall repay or prepay such principal
amount of the outstanding Revolving Credit Loans, if any (together with interest
accrued thereon and any amount due under this Section 3.4), as may be necessary
so that after such payment the Revolving Credit Loans do not exceed such
borrowing limitations. Each such payment or prepayment shall be applied ratably
to the Revolving Credit Loans of the Lenders outstanding on the date of payment
or prepayment, first, to Base Rate Loans, and, next, to Eurodollar Loans.

 

(e) Contemporaneously upon receipt of Net Cash Proceeds in excess of $500,000,
unless a Default or Event of Default then exists (in which event, Section 3.8
shall be controlling), the Borrower shall pay to the Administrative Agent an
amount equal to: (i) the sum of (x) seventy-five percent (75%) of all Net Cash
Proceeds in the aggregate in any Fiscal Year from the disposition of assets
whether or not such assets are Collateral hereunder, other than Inventory
Collateral and Sold Receivables, plus (y) seventy-five percent (75%) of the Net
Cash Proceeds in the aggregate in any Fiscal Year from the disposition of
Equipment Collateral, and Properties to the extent such Net Cash Proceeds are
not used substantially simultaneously to replace such disposed Equipment
Collateral and disposed Properties with new Equipment Collateral, or new
Properties, as the case may be, and (ii) seventy-five percent (75%) of the Net
Cash Proceeds from the incurrence of Indebtedness. Such payment shall be
accompanied by a detailed calculation showing all deductions from gross proceeds
in order to arrive at Net Cash Proceeds, as well as amounts used or reserved for
the purchase of replacement Equipment Collateral, if applicable. All such
payments from Net Cash Proceeds shall be applied, first, (A) pro rata, to either
(1) prepay the Term Loans then outstanding, in prepayment of the principal
installments thereof in inverse order of maturity, or (2) to deposit such amount
into a bank account held by and pledged (as additional collateral for the Loans
and any related interest rate swap obligations) to the Agent on behalf of the
Term Lenders on terms and documentation satisfactory to Agent and its counsel;
and (B) next, as to any remainder, to the Revolving Credit Loans.

 

(f) Each prepayment of Loans pursuant to this Section 3.4 shall be accompanied
by accrued and unpaid interest on the amount prepaid to the date of prepayment
and any amounts payable under Section 3.11 or 3.15 in connection with such
prepayment.

 

(g) Each prepayment of any Term Loan shall be subject to any breakage costs for
prepayments pursuant to the Master Agreement.

 

(h) Upon Borrower’s receipt of each Contract Termination Payment (if any),
Borrower shall comply with the prepayment or cash security provisions of Section
2.7.

 

(i) If the Borrower decides to proceed with a public offering of its stock and
(1) raises $10,000,000 or more, and (2) after giving effect to the receipt of
the net proceeds of such public offering Borrower’s Leverage Ratio is 2.0 or
more, Borrower shall then promptly utilize an amount equal to 25% of Borrower’s
Net Cash Proceeds from such offering to pay down the outstanding Revolving
Credit Loans.

 

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3.5 Commitment Fees; Other Fees.

 

(a) The Borrower shall pay to the Administrative Agent for the account of each
Revolving Lender in accordance with its Revolving Credit Commitment Percentage,
a commitment fee equal to the Commitment Fee set forth in the Applicable
Percentage definition times the actual daily amount by which the Aggregate
Revolving Credit Commitment exceeds the Aggregate Revolving Credit Outstanding.
The commitment fee shall accrue at all times during the relevant period that the
Revolving Credit Commitments are outstanding including at any time during which
one or more of the conditions in Section 5 (inclusive) is not met, and shall be
due and payable quarterly in arrears on the last Business Day of each March,
June, September and December, commencing with the first such date to occur after
the Closing Date and on the last day of the availability period.

 

(b) The Borrower shall pay to the Agent for the pro rata account of each Lender
on the Closing Date the up front fees set forth in the Agent Fee Letter and the
fee letter dated the date hereof with each Lender (other than the Agent). Such
fees shall be fully earned when paid and shall be nonrefundable for any reason
whatsoever.

 

(c) Borrower shall pay to Agent for Agent’s own account, fees in the amounts and
at the times specified in the letter agreement, dated the date hereof (the
“Agent Fee Letter”), between Borrower and Agent. Such fees shall be fully earned
when paid and shall be nonrefundable for any reason whatsoever.

 

3.6 Computation of Interest and Fees.

 

(a) Interest and fees shall be calculated on the basis of a 360-day year for the
actual days elapsed (including the first day but excluding the last day). The
Administrative Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the Base Rate shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in the Base Rate.

 

(b) Each determination of an interest rate by the Administrative Agent pursuant
to any provision of this Agreement shall be conclusive and binding on the
Borrower and the Lenders in the absence of manifest error. The Administrative
Agent shall, at the request of the Borrower deliver to the Borrower a statement
showing in reasonable detail the calculations used by the Administrative Agent
in determining any interest rate pursuant to Section 3.1.

 

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3.7 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:

 

(a) the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or

 

(b) the Administrative Agent has received notice from the Required Lenders that
the Eurodollar Rate determined or to be determined for such Interest Period will
not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Eurodollar Loans during such Interest Period, the
Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (i) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans in U.S. Dollars, (ii) any Loans
that were to have been converted on the first day of such Interest Period to or
continued as Eurodollar Loans shall be converted to or continued as Base Rate
Loans and (iii) any outstanding Eurodollar Loans shall be converted on the last
day of such Interest Period to Base Rate Loans. Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made
or continued as such, nor shall the Borrower have the right to convert Base Rate
Loans to Eurodollar Loans.

 

3.8 Pro Rata Treatment and Payments.

 

(a) (i) Each borrowing of Loans by the Borrower from the Lenders hereunder shall
be made pro rata according to the Term Loan Percentages or Revolving Credit
Commitment Percentages, as applicable, of the relevant Lenders in effect on the
date of such borrowing.

 

(ii) Each payment (including each prepayment) by the Borrower, on account of
principal of and interest on the Term Loans shall be made pro rata according to
the respective outstanding principal amounts of the Term Loans then held by the
Term Lenders. The amount of each principal prepayment of the Term Loans shall be
applied in inverse order of maturity to reduce the then remaining installments
of the Term Loans pro rata based upon the respective then outstanding principal
amounts thereof. Amounts prepaid on account of the Term Loans may not be
reborrowed.

 

(iii) Each payment (including each prepayment) by the Borrower on account of
principal of and interest on the Revolving Credit Loans shall be made pro rata
according to the respective outstanding principal amounts of the Revolving
Credit Loans then held by the Revolving Lenders.

 

(iv) Each payment by the Borrower on account of any commitment fee hereunder
shall be allocated by the Administrative Agent among the Revolving Lenders pro
rata in accordance with the Revolving Credit Commitment Percentages of the
Lenders as of such date.

 

(v) Any reduction of the Revolving Credit Commitments of the Lenders shall be
allocated by the Administrative Agent among the Lenders pro rata according to
the Revolving Credit Commitment Percentages of the Lenders on the date of such
reduction. Any increase of the Revolving Credit Commitments of the Lenders shall
be allocated in accordance with Section 2.8 hereof.

 

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(vi) All payments (including prepayments) to be made by the Borrower in respect
of Loans hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without set-off or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders entitled thereto, at the Administrative
Agent’s office specified in Section 10.2, in U.S. Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders entitled to receive the same promptly upon receipt in like funds as
received.

 

(vii) If any payment hereunder (other than payments on the Eurodollar Loans)
becomes due and payable on a day other than a Business Day, the maturity of such
payment shall be extended to the next succeeding Business Day, and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a Eurodollar Loan
becomes due and payable on a day other than a Business Day, the maturity of such
payment shall be extended to the next succeeding Business Day (and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension) unless the result of such extension would
be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day.

 

(b) Unless the Administrative Agent shall have been notified in writing by any
Lender prior to a Borrowing Date that such Lender will not make the amount that
would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate per
annum equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error. If such Lender’s share of such borrowing is not made
available to the Administrative Agent by such Lender within three (3) Business
Days of such Borrowing Date, the Borrower shall repay such Lender’s share of
such borrowing (together with interest thereon from the date such amount was
made available to the Borrower) at the rate per annum applicable to Base Rate
Loans hereunder to the Administrative Agent not later than three (3) Business
Days after receipt of written notice from the Administrative Agent specifying
such Lender’s share of such borrowing that was not made available to such
Administrative Agent, and the Borrower shall have the right to pursue any
remedies against such Lender for its failure to make its portion of such
borrowing available.

 

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(c) Unless the Administrative Agent shall have been notified in writing by the
Borrower prior to a date on which a payment is due from the Borrower hereunder
that the Borrower will not make such payment available to the Administrative
Agent, the Administrative Agent may assume that the Borrower is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the applicable Lenders a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the due date therefor, each applicable Lender
shall pay to the Administrative Agent, on demand, such amount with interest
thereon at a rate per annum equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Administrative Agent. A certificate of the Administrative Agent submitted to
any Lender with respect to any amounts owing under this Section shall be
conclusive in the absence of manifest error.

 

(d) If any Lender shall, by exercising any right of setoff or counterclaim or
otherwise, obtain payment in respect of (a) Obligations in respect of any of the
Facilities due and payable to such Lender hereunder and under the other Loan
Documents at such time in excess of its ratable share (according to the
proportion of (i) the amount of such Obligations due and payable to such Lender
at such time to (ii) the aggregate amount of the Obligations in respect of the
Facilities due and payable to all Lenders hereunder and under the other Loan
Documents at such time) of payments on account of the Obligations in respect of
the Facilities due and payable to all Lenders hereunder and under the other Loan
Documents at such time obtained by all the Lenders at such time or
(c) Obligations in respect of any of the Facilities owing (but not due and
payable) to such Lender hereunder and under the other Loan Documents at such
time in excess of its ratable share (according to the proportion of (i) the
amount of such Obligations owing (but not due and payable) to such Lender at
such time to (ii) the aggregate amount of the Obligations in respect of the
Facilities owing (but not due and payable) to all Lenders hereunder and under
the other Loan Documents at such time) of payments on account of the Obligations
in respect of the Facilities owing (but not due and payable) to all Lenders
hereunder and under the other Loan Documents at such time obtained by all of the
Lenders at such time, then, in each case under clauses (a) and (b) above, the
Lender receiving such greater proportion shall (A) notify the Administrative
Agent of such fact, and (B) purchase (for cash at face value) participations in
the Loans of the other Lenders, or make such other adjustments as shall be
equitable, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of Obligations in
respect of the Facilities then due and payable to the Lenders or owing (but not
due and payable) to the Lenders, as the case may be, provided that:

 

(1) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest; and

 

(2) the provisions of this Section shall not be construed to apply to (x) any
payment made by or on behalf of the Borrower pursuant to and in accordance with
the express terms of this Agreement (including the application of funds arising
from the existence of a Defaulting Lender).

 

Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.

 

37

 

 

3.9 Illegality. Notwithstanding any other provision herein, if the adoption of
or any change in any Legal Requirement or in the interpretation or application
thereof shall make it unlawful for any Lender to make or maintain Eurodollar
Loans as contemplated by this Agreement, (a) the commitment of such Lender
hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled until
such time as it shall no longer be unlawful for such Lender to make or maintain
the affected Loans and (b) such Lender’s Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Eurodollar Loans or within such earlier period as may be required by law. If any
such conversion of a Eurodollar Loan occurs on a day which is not the last day
of the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to Section
3.11.

 

3.10 Increased Costs.

 

(a) In the event that the adoption of or any change in any Legal Requirement (or
in the interpretation or application thereof) or compliance by any Lender with
any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority:

 

(i) does or shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note, any Loans made by it, or change the basis
of taxation of payments to such Lender of principal, fees, interest or any other
amount payable hereunder (except for (A) changes in the rate of tax on the
overall net income or profits of such Lender, (B) any tax to the extent that the
Borrower is or would be required to pay an additional amount with respect to
such tax under Section 3.12 or (C) any tax with respect to which the Borrower
would not be required to pay an additional amount under Section 3.12 because
payment of such additional amount with respect to such tax would be specifically
excluded thereunder);

 

(ii) does or shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
such Lender which are not otherwise included in the determination of the
Eurodollar Rate; or

 

(iii) does or shall impose on such Lender any other condition affecting this
Agreement or the Loans made by any Lender; and the result of any of the
foregoing is to increase the cost to such Lender, by any amount which such
Lender deems to be material, of making, renewing, maintaining or participating
in advances or extensions of credit or to reduce any amount receivable
hereunder, in each case in respect of its Loans, then, in any such case, the
Borrower shall promptly pay such Lender, upon receipt of its demand setting
forth in reasonable detail, any additional amounts necessary to compensate such
Lender for such additional cost or reduced amount receivable, together with
interest on each such amount from the date two (2) Business Days after the date
demanded until payment in full thereof at the Base Rate. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by such
Lender, through the Administrative Agent, to the Borrower shall be conclusive in
the absence of manifest error. This covenant shall survive the termination of
this Agreement and payment of all amounts outstanding hereunder for a period of
one (1) year.

 

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(b) The Borrower will pay any Lender, on demand, for such Lender’s costs or
losses arising from any Change in Law which are allocated to this Agreement or
any credit outstanding under this Agreement. The allocation will be made as
determined by such Lender, using any reasonable method. The costs include,
without limitation, the following:

 

(i) any reserve or deposit requirements (excluding any reserve requirement
already reflected in the calculation of the interest rate in this Agreement);
and

 

(ii) any capital requirements relating to the Lender’s assets and commitments
for credit.

 

“Change in Law” means the occurrence, after the date of this Agreement, of the
adoption or taking effect of any new or changed law, rule, regulation or treaty,
or the issuance of any request, rule, guideline or directive (whether or not
having the force of law) by any Governmental Authority; provided that (x) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives issued in connection with that Act, and (y) all
requests, rules guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor authority) or the United States regulatory authorities, in each case
pursuant to Basel III, shall in each case be deemed to be a “Change in Law”,
regardless of the date enacted, adopted or issued.

 

(c) Any request by any Lender for compensation under this Section 3.10 shall be
accompanied by a certificate of a duly authorized officer of such Lender setting
forth such information and calculations supporting such request as such Lender
shall customarily provide in similar situations.

 

(d) Failure or delay on the part of any Lender to demand compensation pursuant
to this Section 3.10 shall not constitute a waiver of such Lender’s right to
demand such compensation.

 

3.11 Indemnity. Without duplication of the provisions of Section 3.15, the
Borrower agrees to indemnify each Lender and to hold each Lender harmless from
any loss or expense which such Lender may sustain or incur as a consequence of
(a) default by the Borrower in payment when due of the principal amount of or
interest on any Loans of such Lender, (b) default by the Borrower in making a
borrowing, continuation or conversion after the Borrower has given a notice of
borrowing, a notice of continuation or a notice of conversion in accordance with
this Agreement, (c) default by the Borrower in making any prepayment after the
Borrower has given a notice in accordance with this Agreement or (d) the making
of a prepayment, continuation or conversion of a Eurodollar Loan on a day which
is not the last day of an Interest Period with respect thereto, including,
without limitation, in each case, any such loss or expense arising from the
reemployment of funds obtained by it to maintain its Eurodollar Loans hereunder
or from fees payable to terminate the deposits from which such funds were
obtained, but excluding, in each case, lost profit. A certificate as to any
amounts payable pursuant to this Section 3.11, submitted by a Lender to the
Borrower shall be conclusive in the absence of manifest error. This covenant
shall survive termination of this Agreement and payment of all amounts
outstanding hereunder.

 

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3.12 Taxes.

 

(a) Any and all payments by or on account of any obligation of the Borrower
hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent or Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

 

(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

 

(c) The Borrower shall indemnify the Administrative Agent and each Lender,
within 10 days after written demand therefor, accompanied by a certificate
setting forth the nature and calculation of the amounts being demanded, for the
full amount of any Indemnified Taxes or Other Taxes paid by the Administrative
Agent or such Lender, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender, or by the Administrative Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.

 

(d) Each Lender shall indemnify the Administrative Agent within 10 days after
demand therefor, for the full amount of any Excluded Taxes attributable to such
Lender that are payable by the Administrative Agent and reasonable expenses
arising therefrom or with respect thereto, whether or not such Excluded Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to any Lender by the Administrative Agent shall be conclusive absent manifest
error.

 

(e) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

 

40

 

 

(f) Any Lender that is entitled to an exemption from or reduction of any
applicable withholding tax with respect to payments hereunder or under any other
Loan Document shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender, if
requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, in the case of any
withholding tax other than U.S. federal withholding tax the completion,
execution and submission of such forms shall not be required if in the Lender’s
judgment such completion, execution or submission would subject such Lender to
any material unreimbursed cost or expense or would materially prejudice the
legal or commercial position of such Lender.

 

Without limiting the generality of the foregoing, any Foreign Lender shall, to
the extent it is legally entitled to do so, deliver to the Borrower and the
Administrative Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the request of the
Borrower or the Administrative Agent), whichever of the following is applicable:

 

(i) duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States of
America is a party,

 

(ii) duly completed copies of Internal Revenue Service Form W-8ECI,

 

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower
within the meaning of section 881(c)(3)(B) of the Code, (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and (D) the
interest payment in question are not effectively connected with the United
States trade or business conducted by such Lender (a “U.S. Tax Compliance
Certificate”) and (y) duly completed copies of Internal Revenue Service Form
W-8BEN,

 

(iv) to the extent a Foreign Lender is not the beneficial owner (for example,
where the Foreign Lender is a partnership or participating Lender granting a
typical participation), an Internal Revenue Service Form W-8IMY, accompanied by
a Form W-8ECI, W-8BEN, U.S. Tax Compliance Certificate, Form W-9, and/or other
certification documents from each beneficial owner, as applicable; provided
that, if the Foreign Lender is a partnership (and not a participating Lender)
and one or more beneficial owners of such Foreign Lender are claiming the
portfolio interest exemption, such Foreign Lender may provide a U.S. Tax
Compliance Certificate on behalf of such beneficial owner(s), or

 

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(v) any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable law to permit the Borrower to determine the withholding or deduction
required to be made.

 

Each Lender agrees that if any form or certification it previously delivered by
it expires or becomes obsolete or inaccurate in any respect, it shall update
such form or certification or promptly notify Borrower and the Administrative
Agent in writing of its legal inability to do so.

 

(g) If the Administrative Agent or a Lender has received a refund of any Taxes
or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this
Section 3.12, it shall pay over such refund to the Borrower as determined in
good faith by the Administrative Agent or such Lender in its sole commercially
reasonable discretion (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 3.12 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided that the Borrower upon the request of the Administrative
Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section 3.12 shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.

 

3.13 Use of Proceeds. The proceeds of the Loans shall be used to fund the
refinancing of existing revolving and term indebtedness payable to the Existing
Lender pursuant to the Existing Credit Agreement, pay fees, commissions, and
expenses in connection therewith, and for the general working capital and
general corporate purposes of the Borrower and its Subsidiaries.

 

3.14 Change in Lending Office; Replacement of Lender.

 

(a) Each Lender agrees that if it makes any demand for payment under Section
3.10 or 3.12, or if any adoption or change of the type described in Section 3.9
shall occur with respect to it, it will use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions and so long as such
efforts would not be disadvantageous to it, as determined in its sole
discretion) to designate a different lending office or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates if such
designation or assignment would reduce or obviate the need for the Borrower to
make payments under Section 3.10 or 3.12, or would eliminate or reduce the
effect of any adoption or change described in Section 3.9.

 

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(b) If any Lender requests any payment under Section 3.10 or 3.12, the Borrower
shall have the right to replace such Lender with one or more replacement
lenders, each of which shall be reasonably acceptable to the Administrative
Agent; provided that (i) the Borrower shall repay (or the replacement lender
shall purchase) all Loans and other amounts owing hereunder to such replaced
Lender on or prior to the date of replacement, (ii) until such time as such
replacement shall be consummated, the Borrower shall pay additional amounts (if
any) required pursuant to Section 3.10 or 3.12 for the period prior to
replacement and (iii) any such replacement shall not be deemed to be a waiver of
any rights which the Borrower, the Administrative Agent or any other Lender
shall have against the replaced Lender.

 

3.15 Break Funding Payments. In the event of (a) the payment of any principal of
any Eurodollar Loan other than on the last day of an Interest Period applicable
thereto (including, without limitation, as a result of an Event of Default), (b)
the conversion of any Eurodollar other than on the last day of an Interest
Period applicable thereto, or (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto, then, in any such event, the Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event. Such loss,
cost or expense to any Lender shall be the amount determined by such Lender to
be the excess, if any, of (i) the amount of interest that would have accrued on
the principal amount of such Loan had such event not occurred, at the Eurodollar
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan) over (ii) the amount of
interest that would accrue on such principal amount for such period at the
interest rate such Lender would bid were it to bid, at the commencement of such
period, for dollar deposits of a comparable amount and period from other banks
in the eurodollar market. A certificate of any Lender setting forth any amount
or amounts that such Lender is entitled to receive pursuant to this Section 3.15
shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof. The Lender is authorized (but
not obligated) to debit any deposit account of the Borrower now or hereafter
maintained by the Borrower with the Lender to pay any such amount that is not
paid when due.

 

3.16 Evidence of Debt.

 

(a) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing indebtedness of the Borrower to such Lender resulting
from each Revolving Credit Loan or Term Loan of such Lender from time to time,
including the amounts of principal and interest payable thereon and paid to such
Lender from time to time under this Agreement.

 

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(b) The Administrative Agent shall maintain the Register pursuant to Section
10.6(b), and a subaccount therein for each Lender, in which shall be recorded
(i) the amount of each Revolving Credit Loan or Term Loan made hereunder, the
Type thereof and each Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder in respect of the Revolving Credit Loans or
Term Loans and (iii) both the amount of any sum received by the Administrative
Agent hereunder from the Borrower in respect of the Revolving Credit Loans or
Term Loans and each Lender’s share thereof.

 

(c) The entries made in the Register and the accounts of each Lender maintained
pursuant to Section 3.16(a) shall, to the extent permitted by applicable law, be
prima facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded; provided, however, that the failure of any Lender to
maintain such account or the Administrative Agent to maintain the Register, or
any error therein, shall not in any manner affect the obligation of the Borrower
to repay (with applicable interest) the Loans made to the Borrower by such
Lender in accordance with the terms of this Agreement.

 

(d) The Borrower agrees that it will, upon the request of any Term Lender,
execute and deliver to such Lender a promissory note of the Borrower evidencing
the Term Loans owed by it, substantially in the form attached hereto as Exhibit
A-1 with appropriate insertions as to date and principal amount and indicating
the Term Loan Percentage of such Term Lenders (each, a “Term Loan Note”). The
Borrower agrees that it will, upon the request of any Revolving Lender, execute
and deliver to such Lender a promissory note of the Borrower evidencing the
Revolving Credit Commitment of such Lender, substantially in the form attached
hereto as Exhibit A-2 with appropriate insertions as to date and principal
amount (each, a “Revolving Credit Note”); provided that any Revolving Credit
Note previously delivered to such Lender (or any predecessor thereof) has been
returned to the Borrower and marked cancelled or an affidavit or lost or
destroyed Note (in form reasonably acceptable to the Borrower) is executed and
delivered by such requesting Lender in lieu of such Note.

 

ARTICLE IV: REPRESENTATIONS AND WARRANTIES

 

To induce the Lenders to enter into this Agreement and to make the Loans, the
Borrower represents and warrants to the Agent and to each Lender that:

 

4.1 Financial Condition; Accuracy of Information. Except as set forth on
Schedule 4.1 during the period from September 30, 2012 to and including the date
hereof, there has been no sale, transfer or other disposition by the Borrower of
any material part of its business or property and no purchase or other
acquisition of any business or property (including any capital stock of any
other Person) material in relation to the financial condition of the Borrower on
September 30, 2012, other than the sale of inventory in the ordinary course of
business

 

4.2 No Change. Since September 30, 2012, there has been no development or event
which has had or would reasonably be expected to have a Material Adverse Effect.

 

4.3 Corporate Existence; Compliance with Law. Each Loan Party and its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the power and
authority, and the legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except to the extent that the failure to be so qualified in any
such jurisdiction could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect, and (d) is in compliance with all Requirements of Law,
except to the extent that the failure to comply therewith would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

44

 

 

4.4 Corporate Power; Authorization; Enforceable Obligations. Each Loan Party has
the power and authority, and the legal right, to make, deliver and perform the
Loan Documents to which it is a party and to borrow and obtain other extensions
of credit hereunder and has taken all necessary action to authorize the
borrowings and other extensions of credit hereunder on the terms and conditions
of this Agreement and any Notes and to authorize the execution, delivery and
performance of the Loan Documents to which it is a party. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required as a condition precedent
to the borrowings or other extensions of credit hereunder or the execution,
delivery, performance, validity or enforceability of the Loan Documents. This
Agreement has been, and each other Loan Document to which it is a party will be,
duly executed and delivered on behalf of each Loan Party that is a party hereto
or thereto. This Agreement constitutes, and each other Loan Document to which it
is a party constitutes, a legal, valid and binding obligation of each Loan Party
that is a party hereto or thereto, enforceable against such Loan Party in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.

 

4.5 No Legal Bar. The execution, delivery and performance by the Borrower of the
Loan Documents, the borrowings and other extensions of credit hereunder and the
use of the proceeds thereof will not (a) violate any Requirement of Law or
Contractual Obligation of any Loan Party or of any of its Subsidiaries except
(other than with respect to Security Documents or the organizational and
governing documents of such Loan Party or Subsidiaries), as would not, in the
aggregate, reasonably be expected to result in a Material Adverse Effect, or (b)
result in, or require, the creation or imposition of any Lien on any of its or
their respective properties or revenues pursuant to any such Requirement of Law
or Contractual Obligation (other than those Liens created by the Loan
Documents).

 

4.6 No Material Litigation. Except as set forth on Schedule 4.6, no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of the Loan Parties, threatened by or
against any Loan Party or any of its Subsidiaries or against any of its or their
respective properties or revenues (a) with respect to any of the Loan Documents
and the other transactions contemplated hereby or thereby, or (b) which would
reasonably be expected to have a Material Adverse Effect.

 

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4.7 No Default. No Loan Party or any of its Subsidiaries is in default under or
with respect to any of its Contractual Obligations in any respect which could
reasonably be expected to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.

 

4.8 Ownership of Property; Liens. Each of the Loan Parties and its Subsidiaries
has good record and marketable title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, except to the extent that the failure to
have such title would not have a Material Adverse Effect. None of such property
is subject to any Lien except as permitted by Section 7.3. With respect to real
property or interests in real property, as of the Closing Date, the Borrower or
its Subsidiaries have (i) fee title to all of the real property listed on
Schedule 4.8 under the heading “Fee Properties”, and (ii) good and valid title
to the leasehold estates in all of the real property leased by it and listed on
Schedule 4.8 under the heading “Leased Properties”, in each case free and clear
of all mortgages, liens, security interests, easements, covenants, rights-of-way
and other similar restrictions of any nature whatsoever, except (A) Liens
permitted pursuant to Section 7.3, (B) as to leased property, the terms and
provisions of the respective lease therefor and any matters affecting the fee
title and any estate superior to the leasehold estate related thereto, and (C)
title or lease defects, or leases or subleases granted to others, which are not
material to the fee properties or the leased properties, as the case may be,
taken as a whole.

 

4.9 Intellectual Property. Each Loan Party, and each of its Subsidiaries, owns,
or is licensed to use or otherwise has the right to use, all trademarks, trade
names, copyrights, patents, domain names, trade secrets and other proprietary
information that it uses in the conduct of its business as currently conducted
except for those for which the failure to own or license which would not
reasonably be expected to have a Material Adverse Effect (the “Intellectual
Property”). To the knowledge of each Loan Party, no claim has been asserted and
is pending or is threatened to be asserted by any Person challenging or
questioning the use of any material Intellectual Property or the validity or
enforceability of any such Intellectual Property which would reasonably be
expected to have a Material Adverse Effect, nor does any Loan Party know of any
valid basis for any such claim. The use of such Intellectual Property by each
Loan Party and its Subsidiaries does not infringe on the rights of any Person,
except for such claims and infringements that, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.

 

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4.10 Taxes. Except as disclosed in Schedule 4.10, each Loan Party, and each of
its Subsidiaries, has filed or caused to be filed all material tax returns which
are required to be filed (and each such tax return is true and correct in all
material respects) and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of such Loan Party or its Subsidiaries, as the case may be), and no tax
Lien has been filed, and, to the knowledge of the Loan Parties, no claim is
being asserted, with respect to any such tax, fee or other charge, in each case
other than to the extent that any such failure to act or existence of claim
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

 

4.11 Federal Regulations. No part of the proceeds of any Loans, will be used for
“purchasing” or “carrying” any “margin stock” within the respective meanings of
each of the quoted terms under Regulation U of the Board as now and from time to
time hereafter in effect. If requested by any Lender or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-1 referred to in said Regulation U, as the case may be.

 

4.12 ERISA

 

(a) No ERISA Event has occurred or is reasonably expected to occur that, when
taken together with all other such ERISA Events for which liability is
reasonably expected to occur, would reasonably be expected to result in a
Material Adverse Effect. The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan by more than $250,000 and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the fair market value of the assets of all such
underfunded Plans by more than $250,000.

 

(b) Except as would not reasonably be expected to result in a Material Adverse
Effect, (i) each Foreign Plan has been maintained in compliance with its terms
and with the requirements of any and all applicable laws, statutes, rules,
regulations and orders and has been maintained, where required, in good standing
with applicable regulatory authorities, and (ii) neither the Borrower nor any
Subsidiary have incurred any obligation in connection with the termination of or
withdrawal from any Foreign Plan.

 

4.13 Investment Company Act; Other Regulations. The Borrower is not an
“investment company,” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board) which limits its ability to
incur Indebtedness.

 

4.14 Subsidiaries. Schedule 4.14 sets forth all Subsidiaries (if any) of the
Borrower.

 

4.15 Environmental Matters. Except to the extent that all of the following, in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect:

 

(a) The facilities and properties owned, leased or operated by each Loan Party
or any of its Subsidiaries (the “Properties”) do not contain any Hazardous
Materials in amounts or concentrations which (i) constitute a violation of, or
(ii) could reasonably be expected to give rise to liability under, any
Environmental Law.

 

47

 

 

(b) The Properties and all operations at the Properties are in compliance in all
material respects with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by any
Loan Party or any of its Subsidiaries (the “Business”) which could materially
interfere with the continued operation of the Properties.

 

(c) Neither any Loan Party nor any of its Subsidiaries has received any written
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding any Environmental Laws with regard to any of the Properties
or the Business, nor does any Loan Party have knowledge that any such notice
will be received or is being threatened.

 

(d) No Hazardous Materials have been transported or disposed of from the
Properties in violation of, or in a manner or to a location which could
reasonably be expected to give rise to liability under, any Environmental Law,
nor have any Hazardous Materials been generated, treated, stored or disposed of
at, on or under any of the Properties in violation of, or in a manner that could
reasonably be expected to give rise to liability under, any applicable
Environmental Law.

 

(e) No judicial proceeding or governmental or administrative action is pending
or, to the knowledge of any Loan Party, threatened, under any Environmental Law
to which any Loan Party or any Subsidiary thereof is or will be named as a party
with respect to the Properties or the Business, nor are there any decrees,
orders or agreements which impose obligations, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business.

 

(f) There has been no release or threat of release of Hazardous Materials at,
under or from the Properties, or arising from or related to the operations of
any Loan Party or any Subsidiary thereof in connection with the Properties or
otherwise in connection with the Business, in violation of or in amounts or in a
manner that could reasonably be expected to give rise to liability under
Environmental Laws.

 

4.16 Solvency. Each Loan Party is, and after giving effect to the incurrence of
all Indebtedness and obligations being incurred in connection herewith will be,
Solvent.

 

4.17 Security Documents. The Security Agreements are effective to create in
favor of the Administrative Agent, for the benefit of the Lenders, a legal,
valid and enforceable security interest in the Collateral described, and as
defined, therein, subject only to Liens (if any) permitted hereunder, and
proceeds thereof.

 

4.18 Insurance. Schedule 4.18 sets forth a true, complete and correct summary
description of all material insurance maintained by each Loan Party. Such
insurance is in full force and effect and all premiums have been duly paid. Each
Loan Party has insurance through insurers it reasonably believes to be of
recognized financial responsibility covering its properties, operations,
personnel and businesses, including business interruption insurance, which
insurance is in amounts and insures against such losses and risks as it
reasonably believes are adequate to protect it and its Subsidiaries and their
respective businesses; and neither the Borrower nor any of its Subsidiaries has
received notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made in order
to continue such insurance.

 

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4.19 OFAC. Neither any Loan Party, nor any Subsidiary of any Loan Party, nor any
Affiliate of any Loan Party, is (a) named on the list of Specially Designated
Nationals or Blocked Persons maintained by the U.S. Department of the Treasury’s
Office of Foreign Assets Control available at
http://www.treas.gov/offices/eotffe/ofac/sdn/index.html, or (b)(i) an agency of
the government of a country, (ii) an organization controlled by a country, or
(iii) a Person resident in a country that is subject to a sanctions program
identified on the list maintained by the U.S. Department of the Treasury’s
Office of Foreign Assets Control and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise
published from time to time, as such program maybe be applicable to such agency,
organization or Person, and the proceeds from the credit extensions made
pursuant to this Agreement will not be used to fund any operations in, finance
any investments or activities in, or make any payments to, any such country or
Person.

 

ARTICLE V: CONDITIONS PRECEDENT

 

5.1 Conditions to Closing Date. The Closing Date shall occur on the date of
satisfaction of the following conditions precedent:

 

(a) Loan Documents. The Administrative Agent shall have received (i) this
Agreement (inclusive of all exhibits, and attachments), executed and delivered
by a duly authorized officer of the Borrower, with a counterpart or a conformed
copy for each Lender, (ii) the Security Documents, executed and delivered by a
duly authorized officer of each party thereto, with a counterpart or a conformed
copy for each Lender, and (iii) signed Term Loan Notes and Revolving Credit
Notes for the account of each Lender that shall so request, executed and
delivered by a duly authorized officer of the Borrower and (iv) executed
counterparts of all other Loan Documents.

 

(b) Existing Credit Agreement. The Existing Credit Agreement shall have been (i)
refinanced, increased, amended and restated hereby, (ii) all indebtedness,
liabilities and obligations outstanding thereunder shall have been refinanced
with the proceeds of the Loans and (iii) the Existing Credit Agreement shall
have been terminated, superceded, restated and of no further force or effect
after the Closing Date.

 

(c) Closing Date Certificate. The Administrative Agent shall have received, with
a copy for each Lender, a certificate of each of the Borrower and the other Loan
Parties, dated the Closing Date, substantially in the form attached hereto as
Exhibit E, with appropriate insertions and attachments satisfactory in form and
substance to the Administrative Agent, executed by the President of the Borrower
or the relevant Loan Party, as applicable.

 

(d) Corporate Proceedings of the Borrower. The Administrative Agent shall have
received, with a counterpart for each Lender, a copy of the resolutions, in form
and substance satisfactory to the Administrative Agent, of the Board of
Directors of the Borrower authorizing (i) the execution, delivery and
performance of this Agreement and (ii) the borrowings contemplated hereunder,
certified by the Secretary or an Assistant Secretary of the Borrower as of the
Closing Date, which certificate shall be in form and substance satisfactory to
the Administrative Agent and shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded.

 

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(e) Officers’ Certificate of the Borrower. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of the Borrower
dated the Closing Date, as to the incumbency and signature of the officers of
the Borrower executing any Loan Document satisfactory in form and substance to
the Administrative Agent, executed by the President or any Vice President and
the Secretary or any Assistant Secretary of the Borrower.

 

(f) Corporate Proceedings of Subsidiaries. The Administrative Agent shall have
received, with a counterpart for each Lender, a copy of the resolutions, in form
and substance satisfactory to the Administrative Agent, of the Board of
Directors of each other Subsidiary of the Borrower which is a party to a Loan
Document authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, certified by the Secretary or an Assistant
Secretary of each such Subsidiary as of the Closing Date, which certificate
shall be in form and substance satisfactory to the Administrative Agent and
shall state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded.

 

(g) Subsidiary Incumbency Certificates. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each other
Subsidiary of the Borrower which is a party to a Loan Document, dated the
Closing Date, as to the incumbency and signature of the officers of such
Subsidiary, satisfactory in form and substance to the Administrative Agent,
executed by the President or any Vice President and the Secretary or any
Assistant Secretary of each such Subsidiary.

 

(h) USA Subordination Agreement. The Administrative Agent and the Borrower shall
have entered into the USA Subordination Agreement or any reaffirmation thereof.

 

(i) Insurance Certificates. The Bank shall have received insurance certificates
and paid receipts (i) naming the Agent on behalf of the Lenders as loss payee,
evidencing personal property coverage (for inventory and equipment) on ACORD
Form 28 and general liability coverage on ACORD Form 25, and (ii) such other
certificates necessary to show compliance with Section 6.5.

 

(j) Interest in First Term Loan. The conditions in Section 2.5 shall have been
satisfied.

 

(k) Corporate Documents. The Administrative Agent shall have received, with a
counterpart for each Lender, true and complete copies of the certificate of
incorporation and by-laws of each Loan Party, certified as of the Closing Date
as complete and correct copies thereof by the Secretary or an Assistant
Secretary of such Loan Party.

 

(l) Fees. The Arranger, the Agent and the Lenders shall have received all
invoiced fees, costs, expenses and compensation required to be paid on the
Closing Date (including fees payable under the Agent Fee Letter, any fee letter
with the Lenders and the reasonable fees, disbursements and other charges of
legal counsel to the Arranger and the Lenders and expenses of appraisers,
consultants and other advisors to the Arranger and the Lenders and who have been
approved by the Borrower).

 

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(m) Legal Opinions. The Administrative Agent shall have received, with a
counterpart for each Lender, the executed legal opinion of Graubard Miller,
special counsel to the Borrower and the other Loan Parties, substantially in the
form attached hereto as Exhibit E.

 

(n) Actions to Perfect Liens. The Administrative Agent shall have received
evidence in form and substance satisfactory to it that all filings, recordings,
registrations and other actions, including, without limitation, the filing of
duly executed financing statements on form UCC-1 or UCC-3 necessary or, in the
opinion of the Administrative Agent, desirable to perfect or continue the Liens
created by the Security Documents shall have been completed or shall continue to
be in full force and effect.

 

(o) Lien Searches. The Administrative Agent shall have received the results of a
recent search by a Person satisfactory to the Administrative Agent of the
Uniform Commercial Code filings which may have been filed with respect to
personal property of each Loan Party and each patent, trademark or copyright
recorded with the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, and such search shall reveal no material liens
on any of the assets of such Loan Party except for liens created by the Security
Documents or Liens permitted by the Loan Documents.

 

(p) Consents, Licenses and Approvals. All governmental and material third party
approvals necessary in connection with the execution, delivery and performance
of the Loan Documents shall have been obtained and be in full force and effect
or shall continue to be in full force and effect.

 

(q) Litigation. There shall be no litigation or administrative proceeding or
proposed or pending regulatory changes in law or regulations applicable to the
Borrower or its Subsidiaries, that would reasonably be expected to have a
Material Adverse Effect or a material adverse effect on the ability of the
parties to consummate the execution, delivery and performance of the Loan
Documents and the borrowings hereunder.

 

(r) Indebtedness. Immediately after giving effect to the Extensions of Credit on
the Closing Date, the Borrower and its Subsidiaries shall not have outstanding
Indebtedness for borrowed money or preferred stock other than (w) Indebtedness
under the Loan Documents, (x) Indebtedness permitted hereunder, (y) Indebtedness
as set forth on Schedule 7.2 and (z) other Indebtedness for borrowed money not
enumerated above, not to exceed $500,000.

 

(s) Documentation: Projections. The Lenders have received such other legal
opinions, corporate documents and other instruments and/or certificates as they
may reasonably request, including, but not limited to, projections of Borrower’s
balance sheet, income statement, and statement of cash flow, (consistent with
the proposed structure and advance rates), through the fiscal year ended
December 31, 2016, in a form acceptable to the Administrative Agent.

 

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(t) Material Adverse Change. Since September 30, 2012, there has been no
development or event which has had or would reasonably be expected to have a
Material Adverse Effect.

 

(u) Landlord Waiver and Consent. The Administrative Agent shall have received a
Landlord Waiver and Consent from the landlord with respect to the premises at 91
Heartland Boulevard, Edgewood, New York, reasonably satisfactory in form and
substance to Administrative Agent and its counsel.

 

(v) Execution by Lenders. This Agreement shall have been executed and delivered
by each Lender hereunder.

 

5.2 Conditions to Each Extension of Credit. The agreement of each Lender to make
any Extension of Credit requested to be made by it on any date (including,
without limitation, the Closing Date), is subject to the receipt of a notice of
request for a Term Loan or a Revolving Credit Loan, as applicable, and the
satisfaction of the following conditions precedent as of the date such Extension
of Credit is requested to be made:

 

(a) Representations and Warranties. Each of the representations and warranties
made by each of the Loan Parties in or pursuant to the Loan Documents shall be
true and correct in all material respects on and as of such date as if made on
and as of such date, other than any such representations and warranties that, by
their terms, refer to a specific date other than such date, in which case as of
such specific date.

 

(b) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or immediately after giving effect to the Extension of
Credit requested to be made on such date.

 

Each request by the Borrower for an Extension of Credit to be made to the
Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date of such Extension of Credit that the conditions
contained in this Section 5.2 have been satisfied.

 

ARTICLE VI: AFFIRMATIVE COVENANTS

 

The Borrower hereby agrees that, so long as the Commitments (or any of them)
remain in effect, any Loan remains outstanding and unpaid or any other amount is
owing to any Lender or the Administrative Agent hereunder or under any other
Loan Document, the Borrower shall and shall cause each of its Subsidiaries to:

 

6.1 Financial Statements. Furnish to each Lender:

 

(a) As soon as available, but in any event, within ninety (90) days after the
end of each fiscal year, or, if earlier, within fifteen (15) days after the date
(without extension) required to be filed with the SEC, audited consolidated
financial statements of Borrower and its Subsidiaries as of the end of such
year, fairly presenting Borrower's and its Subsidiaries' financial position,
which statements shall consist of a balance sheet and related statements of
income, retained earnings, and cash flow covering the period of Borrower's
immediately preceding fiscal year, and which shall be prepared by Borrower in
accordance with GAAP consistently applied and audited by independent certified
public accountants (the “Auditors”) reasonably satisfactory to the
Administrative Agent; such statements shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception as
to the scope of such audit. Administrative Agent and the Lenders hereby accept
Cohn Reznick LLP, CPAs as the Borrower’s Auditors. At the same time, Borrower
shall deliver to each Lender (i) internally prepared consolidating financial
statements of Borrower and its Subsidiaries, and (ii) a covenant compliance
certificate certifying that there are no defaults to the Loan Documents in the
form of Exhibit F attached hereto and made a part hereof and otherwise in form
and substance reasonably satisfactory to the Administrative Agent, executed by a
Financial Officer of Borrower. All such financial statements and other documents
delivered to each Lender are to be certified as accurate by a Financial Officer
of Borrower.

 

52

 

 

(b) Within forty-five (45) days of each first, second and third fiscal quarter
of each fiscal year, or if earlier, within five (5) days after the date (without
extension) required to be filed with the SEC, consolidated financial statements
of Borrower and its Subsidiaries as of the end of such period, fairly presenting
Borrower's and its Subsidiaries' financial position, and internally prepared
consolidating financial statements of Borrower and its Subsidiaries. At the same
time, the Borrower shall deliver to the each Lender a covenant compliance
certificate certifying that there are no defaults to the Loan Documents in the
form of Exhibit F attached hereto and made a part hereof and otherwise in form
and substance reasonably satisfactory to the Administrative Agent, executed by a
Financial Officer of Borrower. All such reports shall be in such detail as the
Administrative Agent shall request and shall be prepared in accordance with GAAP
consistently applied and shall be signed and certified to be correct by the
Financial Officer of Borrower.

 

(c) Within twenty (20) days after the end of each month, a schedule of projects
in which the Borrower is then involved (each a “Work-in-Progress Schedule”), in
form and substance satisfactory to the Administrative Agent and including,
without limitation: (y) an identification of each project by name or project
number, and (z) the contract price for each such project (including any change
orders), the costs incurred to date, gross profit to date, contract billings to
date, costs and estimated earnings in excess of billings and billings in excess
of costs and estimated earnings, and costs to complete. The Work-in-Progress
Schedule will include contract revenues earned and contract costs for the period
reported. Each such Work-in-Progress Schedule shall be certified by the chief
financial executive officer of the Borrower as being true, correct and complete
to the best of such officer’s knowledge.

 

(d) With each corresponding Work-in-Progress Schedule as specified in Section
(c) above, an accounts receivable aging schedule in form and detail reasonably
acceptable to Administrative Agent.

 

(e) As soon as available and in any event within forty-five (45) days after the
end of the calendar year, a pro forma budget for the succeeding Fiscal Year,
containing an income statement, balance sheet and statement of cash flow.

 

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(f) Promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed with the SEC, or
any Governmental Authority succeeding to any or all functions of said
Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be.

 

(g) Promptly following any request therefor, such other information regarding
the results of operations, business affairs and financial condition of the
Borrower or any Subsidiary as the Administrative Agent (or any Lender through
the Administrative Agent) may reasonably request.

 

All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except that interim statements may exclude detailed footnote disclosure
in accordance with standard practice).

 

6.2 Certificates; Other Information. Furnish to each Lender:

 

(a) concurrently with the delivery of the financial statements referred to in
Sections 6.1(a) and 6.1(b), a certificate of a Responsible Officer of the
Borrower stating that, to the best of such officer’s knowledge, each Loan Party
during such period has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Loan Documents to be observed, performed or satisfied by it, and that such
officer has obtained no knowledge of any Default or Event of Default except as
specified in such certificate; and in the case of financial statements referred
to in Sections 6.1(a) and 6.1(b), including calculations and information
demonstrating in reasonable detail compliance with the requirements of Section
7.1; and

 

(b) promptly, such additional financial and other information as any Lender may
from time to time reasonably request.

 

6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature (including taxes), except where the failure to
pay, discharge or otherwise satisfy such obligations would not have a Material
Adverse Effect and the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of the Borrower or its
Subsidiaries, as the case may be.

 

6.4 Maintenance of Existence. Preserve, renew and keep in full force and effect
its corporate existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business except as otherwise permitted pursuant to Section 7.5; and comply with
all Contractual Obligations and Requirements of Law except to the extent that
failure to comply therewith would not, in the aggregate, be reasonably expected
to have a Material Adverse Effect.

 

6.5 Maintenance of Property; Insurance. Keep all property material to the
conduct of the business of the Borrower and its Subsidiaries, taken as a whole,
in good working order and condition; maintain with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business; and furnish to each Lender, upon written request, full information as
to the insurance carried.

 

54

 

 

6.6 Inspection of Property; Books and Records; Discussions. Keep proper books of
records and account in which full, true and correct entries in conformity with
GAAP and all Requirements of Law shall be made of all dealings and transactions
in relation to its business and activities; and, following reasonable written
notice, permit representatives of any Lender or their agents to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records during normal business hours (a “Field Audit”) at the expense
of the Borrower, and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of the
Borrower and its Subsidiaries with officers of the Borrower and its Subsidiaries
and, in the presence of an officer of the Borrower, with its employees and
independent certified public accountants. Prior to an Event of Default such
Field Audits shall be limited (in aggregate for all Lenders) to once in each
twelve (12) month period.

 

6.7 Notices. Promptly give notice to the Administrative Agent (who shall
promptly notify each Lender) of:

 

(a) the occurrence of any Default or Event of Default;

 

(b) any (i) default or event of default under any Contractual Obligation of the
Borrower or any of its Subsidiaries or (ii) litigation, investigation or
proceeding which may exist at any time between the Borrower or any of its
Subsidiaries and any Governmental Authority, which in either case, if not cured
or if adversely determined, as the case may be, would reasonably be expected to
have a Material Adverse Effect;

 

(c) any litigation or proceeding (including without limitation any notice of
violation, alleged violation, liability or potential liability under any
Environmental Law) that is filed or commenced (in each case after the Closing
Date) affecting the Borrower or any of its Subsidiaries in which the amount
claimed by the plaintiff is $500,000 or more and not covered by insurance;

 

(d) any ERISA Event, that alone or together with any other ERISA Events that
have occurred, would reasonably be expected to result in a liability of the
Borrower and its Subsidiaries in an amount exceeding $250,000 (as soon as
possible and in any event within 30 days after any Loan Party knows or has
reason to know thereof); and

 

(e) any development or event which has had or would reasonably be expected to
have a Material Adverse Effect.

 

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes to take with
respect thereto.

 

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6.8 Environmental Laws.

 

(a) Comply with, and ensure compliance by all tenants and subtenants, if any,
with, all applicable Environmental Laws and obtain and comply in all respects
with and maintain, and ensure that all tenants and subtenants obtain and comply
in all respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, except to the extent that any failures could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect or to result in the
payment of an amount of more than $250,000.

 

(b) Conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws except to the
extent that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not be reasonably
expected to have a Material Adverse Effect.

 

6.9 Additional Subsidiaries; Additional Collateral.

 

(a) With respect to any Domestic Subsidiary created or acquired after the
Closing Date by the Borrower, promptly cause such Subsidiary to execute a
Guaranty Agreement and Security Agreement, securing the Obligations as described
in the Guaranty Agreement and Security Agreement and covering the types of
assets covered by the Guaranty Agreement and Security Agreement, take all
required actions to perfect the security interests created by the Guaranty
Agreement and Security Agreement in the assets of such Subsidiary and if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the preceding matters, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.

 

(b) With respect to each direct Foreign Subsidiary of the Borrower or of any
Domestic Subsidiary acquired or formed after the Closing Date or a Foreign
Subsidiary that otherwise becomes a direct Foreign Subsidiary after the Closing
Date, promptly after the acquisition or formation thereof or such other Foreign
Subsidiary becoming a direct Foreign Subsidiary, execute and deliver and cause
each such Foreign Subsidiary to execute and deliver to the Administrative Agent,
in form and substance reasonably satisfactory to the Administrative Agent, such
documents and instruments (including, without limitation, pledge agreements) and
take such action (including, without limitation, the delivery of stock
certificates and instruments) as the Administrative Agent may reasonably request
in order to grant to the Administrative Agent, for the ratable benefit of the
Lenders, as collateral security for the Obligations, a first priority perfected
security interest in 65% of the voting Capital Stock and 100% of the non-voting
Capital Stock of, or equivalent ownership interests in, such direct Foreign
Subsidiary, along with any warrants, options, or other rights to acquire the
same, in all cases to the extent legally permissible and practicable and deliver
to the Administrative Agent such legal opinions as it shall reasonably request
with respect thereto. For purposes of this Section 6.9(b), “direct” means
directly held by the Borrower or any Domestic Subsidiary.

 

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(c) If requested by the Administrative Agent, grant in favor of the
Administrative Agent, for the benefit of the Lenders, Liens on any other assets
other than real property (owned or leased) hereafter acquired by the Borrower or
any Domestic Subsidiary and on previously encumbered assets which become
unencumbered, to the extent such Liens are then permissible under applicable law
and pursuant to any agreements to which the Borrower or its Subsidiaries are a
party, pursuant to documentation in form and substance reasonably satisfactory
to the Administrative Agent.

 

6.10 Maintain Accounts. Maintain an operating account with Administrative Agent.

 

ARTICLE VII: NEGATIVE COVENANTS

 

The Borrower hereby agrees that, so long as the Commitments (or any of them)
remain in effect, any Loan remains outstanding and unpaid or any other amount is
due and payable to any Lender or the Administrative Agent hereunder or under any
other Loan Document, the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:

 

7.1 Financial Condition Covenants.

 

(a) Minimum Debt Service Coverage Ratio. Permit the Debt Service Coverage Ratio
of the Borrower at the end of each fiscal quarter for the trailing four quarter
period then ended to be less than 1.25 to 1.0. “Debt Service Coverage Ratio”
shall mean (i) the sum of EBITDA, minus Dividends minus unfinanced Capital
Expenditures, divided by (ii) the sum of scheduled principal and Financing Lease
payments plus Interest Expense; in each case as determined by GAAP consistently
applied.

 

(b) Maximum Leverage Ratio. Permit the Leverage Ratio of the Borrower at the end
of each fiscal quarter for the trailing four quarter period then ended to be
more than 2.75 to 1.0. “Leverage Ratio” shall mean (i) Funded Debt, divided by
(ii) EBITDA.

 

(c) Minimum Net Income. Permit, as of the end of each fiscal quarter, the amount
of the Borrower’s net income after taxes to be less than $1.

 

 

7.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:

 

(a) Indebtedness of the Borrower or any Subsidiary under this Agreement or any
other Loan Document;

 

(b) existing Indebtedness of the Borrower and its Subsidiaries listed on
Schedule 7.2 and any refinancing of same provided that any refinancing of
unsubordinated debt to non-Affiliates shall be in compliance with the Refinance
Conditions in respect thereof. The following constitute such “Refinance
Conditions”: (a) it is in an aggregate principal amount that does not exceed the
principal amount of the debt being extended, renewed or refinanced; (b) it is
subordinated to the Obligations at least to the same extent as the debt being
extended, renewed or refinanced; (c) the representations, covenants and defaults
applicable to it are no less favorable to Borrower than those applicable to the
debt being extended, renewed or refinanced; (d) no additional Lien is granted to
secure it; (e) no additional Person is obligated on such debt; and (f) upon
giving effect to it, no Default or Event of Default exists.

 

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(c) Indebtedness of the Borrower under Swap Contracts entered into solely to
hedge interest rate exposure and not for speculative purposes;

 

(d) Indebtedness of the Borrower or any Subsidiary (other than Indebtedness
incurred pursuant to the Term Loans or Revolving Credit Loans hereunder)
incurred to finance the acquisition, construction or improvement of any fixed or
capital assets, including obligations under Financing Leases and any
Indebtedness assumed in connection with the acquisition of any such assets or
secured by a Lien on any such assets prior to the acquisition thereof which Lien
was not created in contemplation of such acquisition and on any extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof; provided that (A) such Indebtedness is
incurred prior to or within 120 days after such acquisition or the completion of
such construction or improvement and (B) the aggregate principal amount of
Indebtedness permitted by this paragraph (d) shall not exceed $250,000 per
fiscal year;

 

(e) the Indebtedness of (i) any Subsidiary to the Borrower or any other
Subsidiary arising after the date hereof or (ii) Borrower to any Subsidiary; and

 

(f) Subordinated Debt listed on Schedule 7.2 or otherwise permitted in writing
by the Agent and the Required Lenders.

 

(g) Indebtedness or Obligations under any Cash Management Agreement and under
the Master Agreement.

 

7.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:

 

(a) Liens for taxes, assessments or other governmental charges or levies not yet
due or which are being contested in good faith by appropriate proceedings,
provided that adequate reserves with respect thereto are maintained on the books
of such Person in conformity with GAAP (or, in the case of Foreign Subsidiaries,
generally accepted accounting principles in effect from time to time in their
respective jurisdictions of incorporation);

 

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business which are not overdue for
a period of more than 60 days or which are being contested in good faith by
appropriate proceedings;

 

(c) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation;

 

(d) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

 

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(e) easements, zoning restrictions, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which do not
secure any monetary obligations and do not in any case materially detract from
the value of the property subject thereto or materially interfere with the
ordinary conduct of the business of such Person;

 

(f) Liens (i) existing as of the Closing Date and listed on Schedule 7.3 and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof, and (ii) previously identified in writing
to the Administrative Agent, arrangements for the release of which satisfactory
to the Administrative Agent have been made;

 

(g) Liens securing Indebtedness of the Borrower or any Subsidiaries permitted by
Section 7.2(d) incurred to finance the acquisition of fixed or capital assets
(whether pursuant to a loan, a Financing Lease or otherwise), provided that (i)
such Liens shall be created substantially simultaneously with the acquisition of
such fixed or capital assets, (ii) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness, (iii) the amount
of Indebtedness secured thereby is not increased and (iv) the principal amount
of Indebtedness secured by any such Lien shall at no time exceed the original
purchase price of such property at the time it was acquired;

 

(h) Liens arising from (i) operating leases and the information only UCC
financing statement filings in respect thereof and (ii) equipment or other goods
which are not owned by Borrower or any Subsidiary located on the premises of
Borrower or such Subsidiary (but not in connection with, or as part of, the
financing thereof), whether pursuant to consignment arrangements or otherwise,
from time to time in the ordinary course of business and consistent with current
practices of Borrower or such Subsidiary and the information only UCC financing
statement filings in respect thereof;

 

(i) Liens or rights of setoff against credit balances of Borrower or its
Subsidiaries with credit card issuers or credit card processors of amounts owing
by such credit card issuers or credit card processors to Borrower or its
Subsidiaries in the ordinary course of business, but not liens on or rights of
setoff against any other property or assets of Borrower or its Subsidiaries,
pursuant to the credit card agreements (as in effect on the date hereof) to
secure the obligations of Borrower or its Subsidiaries to the credit card
issuers or credit card processors as result of fees and chargebacks;

 

(j) Statutory or common law liens or rights of setoff of depository banks with
respect to funds of Borrowers or Guarantors at such banks to secure fees and
charges in connection with returned items or the standard fees and charges of
such banks in connection with the deposit accounts maintained by Borrowers and
Guarantors at such banks (but not any other Indebtedness or obligations);

 

(k) Judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default; provided, that (i) such
liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, and (iii) a stay of
enforcement of any such liens is in effect;

 

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(l) Liens in favor of the United States of America and described in the USA
Subordination Agreement;

 

(m) Liens upon the Sold Receivables; in connection with the sale described in
Section 7.6(d) below; and

 

(n) Liens created pursuant to the Security Documents.

 

7.4 Limitation on Guaranty Obligations. Create, incur, assume or suffer to exist
any Guaranty Obligation except:

 

(a) Guaranty Obligations in existence on the date hereof and listed on Schedule
7.4; and

 

(b) guarantees made in the ordinary course of its business by the Borrower of
obligations of any of its Domestic Subsidiaries, or by any Domestic Subsidiary
of the obligations of the Borrower or any other Domestic Subsidiaries which
obligations are otherwise permitted under this Agreement.

 

7.5 Limitation on Fundamental Changes. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business or
assets, except:

 

(a) any Subsidiary of the Borrower may be merged or consolidated with or into
the Borrower (provided that the Borrower shall be the continuing or surviving
corporation) or with or into any one or more wholly owned Subsidiaries of the
Borrower (provided that if a Domestic Subsidiary is a party to such transaction,
such Domestic Subsidiary shall be the continuing or surviving corporation); and

 

(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise dispose
of any or all of its assets (upon voluntary liquidation or otherwise) to the
Borrower or any other wholly owned Domestic Subsidiary of the Borrower.

 

7.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired, or, in the case of any Subsidiary, issue or sell any shares of such
Subsidiary’s Capital Stock to any Person other than the Borrower or any wholly
owned Domestic Subsidiary, except:

 

(a) the sale or other disposition of obsolete or worn out property in the
ordinary course of business or property no longer used or useful in the business
of Borrower or any Subsidiary;

 

(b) the sale of inventory in the ordinary course of business;

 

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(c) as permitted by Section 7.5(b); and

 

(d) the sale of Sold Receivables to Citibank, N.A.

 

7.7 Limitation on Dividends and Other Restricted Payments. Declare or pay any
dividend (other than dividends payable solely in its common stock) on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of Capital Stock of the Borrower or any Subsidiary
or any warrants or options to purchase any such Capital Stock, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower or any Subsidiary thereof (such declarations, payments, setting apart,
purchases, redemptions, defeasances, retirements, acquisitions and distributions
being herein called “Restricted Payments”) except (a) any Subsidiary may pay
dividends to the Borrower or any other Subsidiary and (b) the Borrower or any
Subsidiary may make Restricted Payments pursuant to and in accordance with
customary equity incentive plans or other customary benefit plans of the
Borrower and its Subsidiaries.

 

7.8 Limitation on Capital Expenditures. Make any Capital Expenditure except for
Capital Expenditures by the Borrower and its Subsidiaries in the ordinary course
of business not exceeding $1,500,000.00 in the aggregate during any fiscal year
of the Borrower.

 

7.9 Limitation on Investments, Loans and Advances. Make any advance, loan,
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a business
unit of, or make any other investment in, any Person, except:

 

(a) extensions of trade credit in the ordinary course of business;

 

(b) investments in Cash Equivalents;

 

(c) loans and advances to employees of the Borrower or its Subsidiaries for
travel, entertainment and relocation expenses in the ordinary course of business
in an aggregate amount for the Borrower and its Subsidiaries not to exceed
$250,000 at any one time outstanding;

 

(d) investments by the Borrower or its Subsidiaries in any wholly owned
Subsidiary of the Borrower which has complied with the conditions set forth in
Section 6.9(a) or any wholly owned Foreign Subsidiary which has complied with
the conditions set forth in Section 6.9(b); or

 

(e) investments by the Borrower and its Subsidiaries existing on the Closing
Date and set forth on Schedule 7.9 (e).

 

7.10 Limitation on Transactions with Affiliates. Except as otherwise
specifically set forth in this Agreement, directly or indirectly purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or enter into any transaction, with any Affiliate except in the ordinary course
of business and at prices and on terms not less favorable to it than those which
would have been obtained in an arm’s-length transaction with a non-affiliated
third party.

 

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7.11 Intentionally Omitted.

 

7.12 Limitation on Negative Pledge Clauses. Enter into with any Person any
agreement, other than this Agreement and the other Loan Documents or Financing
Leases permitted by this Agreement (in which cases, any prohibition or
limitation shall only be effective against the assets financed thereby), which
prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired; provided that the
foregoing shall not apply to (i) restrictions and conditions imposed by law,
(ii) customary restrictions and conditions contained in agreements relating to
the sale of a Subsidiary permitted hereunder pending such sale, provided such
restrictions or conditions apply only to the Subsidiary that is to be sold,
(iii) restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted hereunder if such restrictions or conditions apply only
to the property or assets securing such Indebtedness and (iv) customary
provisions in leases and other contracts restricting the assignment thereof.

 

7.13 Limitation on Lines of Business. Enter into or engage in any material lines
of business, either directly or through any Subsidiary, substantially different
from Borrower’s Line of Business or any business incidental thereto.

 

7.14 Swap Contracts. Enter into any Swap Contract, except (a) the Master
Agreement, (b) Swap Contracts entered into to hedge or mitigate risks to which
the Borrower or any Subsidiary has actual exposure (other than those in respect
of Capital Stock of the Borrower or any of its Subsidiaries) and (c) Swap
Contract entered into in order to effectively cap, collar or exchange interest
rates (from fixed to floating rates, from one floating rate to another floating
rate or otherwise) with respect to any interest-bearing liability or investment
of the Borrower or any Subsidiary.

 

7.15 ERISA. (a) Terminate any Plan so as to result in any material liability to
the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of
Title IV of ERISA (the “PBGC”), (b) engage in or permit any person to engage in
any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975
of the Internal Revenue Code of 1954, as amended) involving any Plan which would
subject the Borrower to any material tax, penalty or other liability, (c) incur
or suffer to exist any material “accumulated funding deficiency” (as defined in
Section 302 of ERISA), whether or not waived, involving any Plan, or (d) allow
or suffer to exist any event or condition, which presents a material risk of
incurring a material liability to the PBGC by reason of termination of any Plan.

 

7.16 Accounting Changes. Make or permit any Subsidiary to make any change in its
accounting treatment or financial reporting practices except as required or
permitted by GAAP in effect from time to time.

 

7.17 Change of Control. Without the prior written consent of the Administrative
Agent, suffer or permit a Change of Control Transaction, as hereinafter defined.
“Change of Control Transaction” means the occurrence after the date hereof of
any of the following: (i) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under
the Exchange Act) of effective control (whether through legal or beneficial
ownership of capital stock of the Borrower, by contract or otherwise) of an
excess of 49.99% of the voting securities of the Borrower, or (ii) the Borrower
merges into or consolidates with any other Person, or any Person merges into or
consolidates with the Borrower and, after giving effect to such transaction, the
stockholders of the Borrower immediately prior to such transaction own less than
a majority of the aggregate voting power of the Borrower or the successor entity
of such transaction, or (iii) the Borrower sells or transfers all or
substantially all of its assets to another Person and the stockholders of the
Borrower immediately prior to such transaction own less than a majority of the
aggregate voting power of the acquiring entity immediately after the
transaction, or (iv) a replacement at one time or within a two (2) year period
of more than one-half of the members of the Borrower’s board of directors which
is not approved by a majority of those individuals who are members of the board
of directors on the date hereof (or by those individuals who are serving as
members of the board of directors on any date whose nomination to the board of
directors was approved by a majority of the members of the board of directors
who are members on the date hereof), or (v) the execution by the Borrower of an
agreement to which the Borrower is a party or by which it is bound, providing
for any of the events set forth in clauses (i) through (iv) above.

 

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ARTICLE VIII: EVENTS OF DEFAULT AND REMEDIES

 

8.1 Events of Default. Any of the following events shall constitute an Event of
Default:

 

(a) The Borrower shall fail to pay (i) any principal of any Loans when due
(whether at the stated maturity, by acceleration or otherwise) in accordance
with the terms thereof or hereof or (ii) any interest on any Loans, or any fee
or other amount payable hereunder, after any such interest, fee or other amount
becomes due in accordance with the terms hereof; or

 

(b) Any representation or warranty made or deemed made by the Borrower or any
other Loan Party herein or in any other Loan Document or which is contained in
any certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any other Loan Document shall
prove to have been incorrect in any material respect on or as of the date made
or deemed made or furnished; or

 

(c) The Borrower or any other Loan Party shall default in the observance or
performance of any covenant contained in Section 7, Section 6.1, Section 6.2 or
Section 6.7(a) (to the extent relating to notice of an Event of Default) hereof
or in any negative covenant contained in any Security Document to which it is a
party.

 

(d) The Borrower or any other Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any other Loan
Document other than as provided in (a) through (c) above, and such default shall
continue unremedied for a period of twenty (20) days, and after the earlier to
occur of (i) actual knowledge of such default by a Responsible Officer of the
Borrower and (ii) notice from the Administrative Agent to the Borrower; or

 

(e) Any Loan Document shall cease, for any reason, to be in full force and
effect, or the Borrower or any other Loan Party shall so assert; or any Loan
Party shall default under any other agreement with any Lender; or any security
interest created by any of the Security Documents in a material portion of the
Collateral shall cease to be enforceable and of the same effect and priority
purported to be created thereby; or

 

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(f) (i) The Borrower or any of its Subsidiaries shall suffer or permit a default
(beyond any applicable notice or cure period) with respect to either (A) default
in any payment of principal of or interest on any Indebtedness (other than
Indebtedness under this Agreement and Indebtedness under Swap Contracts), in the
payment of any Guaranty Obligation beyond the period of grace, if any, provided
in the instrument or agreement under which such Indebtedness or Guaranty
Obligation was created in excess of one hundred thousand ($100,000) dollars
individually or in the aggregate; or (B) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness, Guaranty Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness or, beneficiary
or beneficiaries of such Guaranty Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to become due prior to its
stated maturity or such Guaranty Obligation to become payable (ii) there occurs
under any Swap Contract an Early Termination Date (as defined in such Swap
Contract) resulting from (A) any event of default under such Swap Contract as to
which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined
in such Swap Contract) or (B) any Termination Event (as so defined) under such
Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected
Party (as so defined) and, in either event, the Swap Termination Value owed by
such Loan Party or such Subsidiary as a result thereof is greater than $100,000;
or

 

(g) (i) The Borrower, any Domestic Subsidiary or any Foreign Subsidiary shall
commence any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets, or the
Borrower, any Domestic Subsidiary or any Foreign Subsidiary shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against the Borrower, any Domestic Subsidiary or any Foreign Subsidiary any
case, proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged or unbonded for a period
of 60 days; or (iii) there shall be commenced against the Borrower, any Domestic
Subsidiary or any Foreign Subsidiary any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) the Borrower, any Domestic Subsidiary or any Foreign Subsidiary
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) the Borrower, any Domestic Subsidiary or any Foreign Subsidiary
shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or

 

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(h) An ERISA Event shall have occurred that, when taken together with all other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$250,000; or

 

(i) One or more judgments or decrees shall be entered against the Borrower or
any of its Subsidiaries involving in the aggregate a liability (not paid by
insurance or otherwise fully covered by insurance or paid by a third-party
indemnitor) and all such judgments or decrees requiring payments in excess of
one hundred thousand ($100,000) dollars shall not have been paid pursuant to its
terms, vacated, discharged, stayed or bonded pending appeal within 30 days from
the entry thereof; or

 

(j) (i) Any Person or “group” (within the meaning of Section 13(d) or 15(d) of
the Exchange Act), other than any Person or group beneficially owning 10% or
more of the Capital Stock of the Borrower on the date hereof (A) shall have
acquired, combined with previous holdings, beneficial ownership of 50% or more
of any outstanding class of Capital Stock of the Borrower having ordinary voting
power in the election of directors or (B) shall obtain the power (whether or not
exercised) to elect a majority of the Borrower’s directors; or (ii) the Board of
Directors of the Borrower shall not consist of a majority of Continuing
Directors; or

 

(k) Borrower or any Loan Party shall default beyond any applicable cure period
under any lease of real property on which any Collateral is located; or

 

(l) The Administrative Agent shall have determined in its commercially
reasonable discretion that one or more conditions exist or events have occurred
which have resulted in a material adverse change in the business, properties or
financial condition of the Borrower.

 

8.2 Remedies upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

 

(a) declare the Commitment of each Lender to make Loans to be terminated,
whereupon such commitments and obligation shall be terminated;

 

(b) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; and

 

(c) exercise on behalf of itself, the Lenders all rights and remedies available
to it, the Lenders under the Loan Documents or applicable Law or equity;

 

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans shall automatically
terminate, the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable.

 

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8.3 Application of Funds: After the exercise of remedies provided for in Section
8.2 (or after the Loans have automatically become immediately due and payable)
or if at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all Secured Obligations then due hereunder,
any amounts received on account of the Secured Obligations shall, subject to the
provisions of Section 2.9, be applied by the Administrative Agent in the
following order :

 

First, to payment of that portion of the Secured Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under
Article III) payable to the Administrative Agent in its capacity as such;

 

Second, to payment of that portion of the Secured Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders (including fees, charges and disbursements of counsel to the respective
Lenders arising under the Loan Documents and amounts payable under Article III,
ratably among them in proportion to the respective amounts described in this
clause Second payable to them;

 

Third, to payment of that portion of the Secured Obligations constituting
accrued and unpaid interest on the Loans, and other Secured Obligations arising
under the Loan Documents, ratably among the Lenders in proportion to the
respective amounts described in this clause Third payable to them;

 

Fourth, to payment of that portion of the Secured Obligations constituting
unpaid principal of the Loans, and Secured Obligations then owing under Secured
Swap Contracts and Secured Cash Management Agreements, ratably among the
Lenders, the Swap Provider and the Cash Management Banks in proportion to the
respective amounts described in this clause Fourth held by them; and

 

Last, the balance, if any, after all of the Secured Obligations have been
indefeasibly paid in full, to the Borrower or as otherwise required by Law.

 

Notwithstanding the foregoing, Secured Obligations arising under Secured Cash
Management Agreements and Secured Swap Contracts shall be excluded from the
application described above if the Administrative Agent has not received a
Secured Party Designation Notice, together with such supporting documentation as
the Administrative Agent may request, from the applicable Cash Management Bank.
Each Cash Management Bank not a party to this Agreement that has given the
notice contemplated by the preceding sentence shall, by such notice, be deemed
to have acknowledged and accepted the appointment of the Administrative Agent
pursuant to the terms of Article IX for itself and its Affiliates as if a
“Lender” party hereto.

 

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ARTICLE IX: THE AGENT AND THE ARRANGER

 

9.1 Appointment. Each Lender hereby irrevocably designates and appoints
Sovereign Bank, N.A. as the Administrative Agent and as the Collateral Agent of
each such Lender under this Agreement and the other Loan Documents, and each
Lender irrevocably authorizes each of the Administrative Agent and the
Collateral Agent, in such respective capacities, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to
the Administrative Agent and the Collateral Agent, as the case may be, by the
terms of this Agreement and the other Loan Documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement, no Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.

 

9.2 Delegation of Duties. Each Agent may execute any of its duties under this
Agreement and the other Loan Documents by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. No Agent shall be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.

 

9.3 Exculpatory Provisions. The Administrative Agent shall not have any duties
or obligations except those expressly set forth herein and in the other Loan
Documents, and its duties hereunder shall be administrative in nature. Without
limiting the generality of the foregoing, the Administrative Agent and its
Related Parties:

 

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;

 

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable Law, including for the avoidance of
doubt any action that may be in violation of the automatic stay under any Debtor
Relief Law or that may effect a forfeiture, modification or termination of
property of a Defaulting Lender in violation of any Debtor Relief Law; and

 

(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty or responsibility to disclose, and shall not be liable
for the failure to disclose, any information relating to any Loan Party or any
of its Affiliates that is communicated to or obtained by the Person serving as
the Administrative Agent or any of its Affiliates in any capacity.

 

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Neither the Administrative Agent nor any of its Related Parties shall be liable
for any action taken or not taken by the Administrative Agent under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby or thereby (i) with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary), or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 10.1 and 8.2) or
(ii) in the absence of its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction by final and nonappealable
judgment. Any such action taken or failure to act pursuant to the foregoing
shall be binding on all Lenders. The Administrative Agent shall be deemed not to
have knowledge of any Default unless and until notice describing such Default is
given in writing to the Administrative Agent by the Borrower or a Lender.

 

Neither the Administrative Agent nor any of its Related Parties have any duty or
obligation to any Lender or participant or any other Person to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document, or the creation, perfection or priority
of any Lien purported to be created by the Security Documents, (v) the value or
the sufficiency of any Collateral, or (vi) the satisfaction of any condition set
forth in Article IV or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent.

 

9.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to the Borrower), independent accountants and other experts selected by such
Agent with reasonable care. The Agent may deem and treat the Person whose name
is recorded in the Register pursuant to the terms hereof as the owner thereof
for all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Administrative Agent. The Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders (or, to the extent provided in Section 10.1,
all of the Lenders) as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Required Lenders (or, to the extent provided in Section 10.1, all
of the Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.

 

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9.5 Notice of Default. No Agent shall be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a “notice of default” (and, in the case of the Collateral Agent,
shall have received notice thereof as described in the following sentence). In
the event that the Administrative Agent receives such a notice, the
Administrative Agent shall promptly give notice thereof to the other Agents and
Lenders. The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders (or, if so specified by this Agreement, all Lenders); provided that
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.

 

9.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly acknowledges
that no Agent or any Agent’s officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by any Agent hereafter taken, including any review of the
affairs of the Borrower shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to each Agent that
it has, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of an investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Agents, the Arranger or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent or the Collateral Agent hereunder, no Agent
shall have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Borrower which
may come into the possession of such Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.

 

9.7 Indemnification. The Lenders agree to indemnify each Agent in its capacity
as such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Total Loan Percentages in effect on the date on which indemnification is sought
(or, if indemnification is sought after the date upon which the Commitments
shall have terminated and the Loans shall have been paid in full, ratably in
accordance with their Total Loan Percentages immediately prior to such date),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or asserted
against such Agent in any way relating to or arising out of the Commitments,
this Agreement, any of the other Loan Documents or any documents contemplated by
or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by such Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from such Agent’s gross negligence or willful misconduct. The agreements in this
Section 9.7 shall survive the payment of the Loans and all other amounts payable
hereunder.

 

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9.8 Agent in Its Individual Capacity. The entity which is an Agent and its
Affiliates may make extensions of credit to, accept deposits from and generally
engage in any kind of business with the Borrower as though the entity which is
such Agent were not such Agent hereunder and under the other Loan Documents.
With respect to the Loans made by it, such entity shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not an Agent, and the terms “Lender” and
“Lenders” shall include the entity which is such Agent in its individual
capacity.

 

9.9 Successor Agents. (a) Notice. The Administrative Agent may at any time
resign as Administrative Agent upon thirty (30) days notice to the Lenders and
the Borrower. Upon receipt of any such notice of resignation, the Required
Lenders shall have the right, in consultation with the Borrower, to appoint a
successor, which shall be a bank with an office in the United States, or an
Affiliate of any such bank with an office in the United States. If no such
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment prior to the effective date of the resignation of the
Administrative Agent gives (the “Resignation Effective Date”), then the retiring
Administrative Agent may (but shall not be obligated to) on behalf of the
Lenders, appoint a successor Administrative Agent meeting the qualifications set
forth above; provided that if the Administrative Agent shall notify the Borrower
and the Lenders that no qualifying Person has accepted such appointment, then
such resignation shall nonetheless become effective.

 

(b) Defaulting Lender. If the Person serving as Administrative Agent is a
Defaulting Lender pursuant to clause (d) of the definition thereof, the Required
Lenders may, to the extent permitted by applicable Law, by notice in writing to
the Borrower and such Person remove such Person as Administrative Agent and, in
consultation with the Borrower, appoint a successor. If no such successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within thirty (30) days (or such earlier day as shall be agreed by
the Required Lenders) (the “Removal Effective Date”), then such removal shall
nonetheless become effective in accordance with such notice on the Removal
Effective Date.

 

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(c) Effect of Resignation or Removal. With effect from the Resignation Effective
Date or the Removal Effective Date (as applicable) (i) the retiring or removed
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders
under any of the Loan Documents, the retiring or removed Administrative Agent
shall continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (ii) except for any indemnity payments or
other amounts then owed to the retiring or removed Administrative Agent, all
payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender
directly, until such time, if any, as the Required Lenders appoint a successor
Administrative Agent as provided for above. Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring (or removed) Administrative Agent (and other than any rights to
indemnity payments or other amounts owed to the retiring or removed
Administrative Agent as of the Resignation Effective Date or the Removal
Effective Date, as applicable), and the retiring or removed Administrative Agent
shall be discharged from all of its duties and obligations hereunder or under
the other Loan Documents (if not already discharged therefrom as provided above
in this Section). The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrower and such successor. After the retiring or removed
Administrative Agent’s resignation or removal hereunder and under the other Loan
Documents, the provisions of this Article and Section 11.4 shall continue in
effect for the benefit of such retiring or removed Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while the retiring or removed
Administrative Agent was acting as Administrative Agent.

 

9.10 Secured Cash Management Agreements and Secured Swap Contracts.

 

Except as otherwise expressly set forth herein, no Cash Management Bank or Swap
Provider that obtains the benefit of the provisions of Sections 8.3 or 9.7, or
any Collateral by virtue of the provisions hereof or any Loan Document shall
have any right to notice of any action or to consent to, direct or object to any
action hereunder or under any other Loan Document or otherwise in respect of the
Collateral (including the release or impairment of any Collateral) (or to notice
of or to consent to any amendment, waiver or modification of the provisions
hereof or any Collateral Document) other than in its capacity as a Lender and,
in such case, only to the extent expressly provided in the Loan Documents.
Notwithstanding any other provision of this Article to the contrary, the
Administrative Agent shall not be required to verify the payment of, or that
other satisfactory arrangements have been made with respect to, Secured
Obligations arising under Secured Cash Management Agreements and Secured Swap
Contracts except to the extent expressly provided herein and unless the
Administrative Agent has received a Secured Party Designation Notice of such
Secured Obligations, together with such supporting documentation as the
Administrative Agent may request, from the applicable Cash Management Bank or
Swap Provider, as the case may be. The Administrative Agent shall not be
required to verify the payment of, or that other satisfactory arrangements have
been made with respect to, Secured Obligations arising under Secured Cash
Management Agreements and Secured Swap Contracts in the case of a Termination
Date.

 

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ARTICLE X: MISCELLANEOUS

 

10.1 Amendments and Waivers. (a) Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof, may be amended, supplemented, waived
or modified except in accordance with the provisions of this Section 10.1. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (y) enter into with the applicable
Loan Parties written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights or obligations
of the Lenders or of the Borrower or of any other Loan Party hereunder or
thereunder or (z) waive at the Borrower’s request, on such terms and conditions
as the Required Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall:

 

(i) increase the Commitment of any Lender without the written consent of such
Lender,

 

(ii) reduce the principal amount of any Loan or reduce the rate of interest
thereon or require any Lender to offer Interest Periods of longer than six
months without regard to availability, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby,

 

(iii) postpone the scheduled date of payment of the principal amount of any Loan
or any interest thereon, or any fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment, without the written consent of each Lender affected thereby,

 

(iv) change Section 3.8 in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Lender affected
thereby,

 

(v) release any Guaranty Agreements or Security Agreements or any Guarantor, or
all or substantially all of the Collateral under, and as defined in, the
Guaranty Agreements or Security Documents without the written consent of each
Lender,

 

(vi) change any of the provisions of this Section 10.1 or the definition of
“Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender, or

 

(vii) amend or waive any provisions of this Agreement or any other Loan Document
for purposes of determining whether the conditions precedent set forth in
Section 5.2 to the making of any Revolving Credit Loan have been satisfied
without the written consent of the Required Lenders.

 

(viii) Notwithstanding anything to the contrary herein, (A) no Defaulting Lender
shall have any right to approve or disapprove any amendment, waiver or consent
hereunder (and any amendment, waiver or consent which by its terms requires the
consent of all Lenders or each affected Lender, or all Lenders or each affected
Lender under a Facility, may be effected with the consent of the applicable
Lenders other than Defaulting Lenders, except that (1) the Commitment of any
Defaulting Lender may not be increased or extended without the consent of such
Lender and (2) any waiver, amendment or modification requiring the consent of
all Lenders or each affected Lender, or all Lenders or each affected Lender
under a Facility, that by its terms affects any Defaulting Lender
disproportionately adversely relative to other affected Lenders shall require
the consent of such Defaulting Lender; (B) each Lender is entitled to vote as
such Lender sees fit on any bankruptcy reorganization plan that affects the
Loans, and each Lender acknowledges that the provisions of Section 1126(c) of
the Bankruptcy Code of the United States supersedes the unanimous consent
provisions set forth herein and (C) the Required Lenders shall determine whether
or not to allow a Loan Party to use cash collateral in the context of a
bankruptcy or insolvency proceeding and such determination shall be binding on
all of the Lenders.

 

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Notwithstanding anything to the contrary herein the Administrative Agent may,
with the prior written consent of the Borrower only, amend, modify or supplement
this Agreement or any of the other Loan Documents to cure any ambiguity,
omission, mistake, defect or inconsistency.

 

(b) If, in connection with any proposed amendment, waiver or consent requiring
the consent of “each Lender” or “each Lender directly affected thereby,” or the
consent of the Required Lenders, and the consent of necessary Lenders is not
obtained (any such Lender whose consent is necessary but not obtained being
referred to herein as a “Non-Consenting Lender”), then the Borrower may elect to
replace a Non-Consenting Lender as a Lender party to this Agreement, provided
that, concurrently with such replacement, (i) another bank or other entity which
is reasonably satisfactory to the Borrower and the Administrative Agent shall
agree, as of such date, to purchase for cash the Loans and other Obligations due
to the Non-Consenting Lender pursuant to an Assignment and Assumption and to
become a Lender for all purposes under this Agreement and to assume all
obligations of the Non-Consenting Lender to be terminated as of such date and to
comply with the requirements of clause (c) of Section 10.6(b)(i)(A), and (ii)
the Borrower shall pay to such Non-Consenting Lender in same day funds on the
day of such replacement all interest, fees and other amounts then accrued but
unpaid to such Non-Consenting Lender by the Company hereunder to and including
the date of termination, including without limitation payments due to such
Non-Consenting Lender under Sections 3.6, 3.7, 3.8 and 3.9.

 

(c) In addition to the foregoing, (x) no such amendment, supplement or
modification shall amend, modify or otherwise affect the rights or duties of any
Agent or any Lender hereunder without the prior written consent of such Agent or
the Lender, as the case may be, and (y) no such amendment, supplement,
modification or waiver shall amend, modify or otherwise affect Section 7.1 at a
time when a Default or Event of Default shall have occurred and be continuing
unless the Lenders holding a majority in interest of the Aggregate Revolving
Credit Commitments shall have consented in writing to such amendment,
modification or waiver. Any waiver and any amendment, supplement or modification
pursuant to this Section 10.1 shall apply to each of the Lenders and shall be
binding upon the Borrower, the applicable other Loan Parties, the Lenders, the
Agents and all future holders of the Loans. In the case of any waiver, the
Borrower, the Lenders and the Agents shall be restored to their former positions
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.

 

10.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission) and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made (a) in the case of delivery by hand, when
delivered, (b) in the case of delivery by mail, three days after being deposited
in the mails, postage prepaid, or (c) in the case of delivery by facsimile
transmission, when sent and receipt has been confirmed, addressed as follows in
the case of the Borrower and the Administrative Agent, and as set forth in
Schedule I in the case of the other parties hereto, or to such other address as
may be hereafter notified in writing by the respective parties hereto:

 

The Borrower: CPI Aerostructures, Inc.   91 Heartland Boulevard   Edgewood, NY
11717   Attn: Mr. Vincent Palazzolo       Chief Financial Officer              
      with a copy to:                     Graubard Miller   405 Lexington Avenue
  New York, New York 10174   Attn: David A. Miller, Esq.                 The
Administrative Agent and       the Collateral Agent and the       Swap Provider:
Sovereign Bank, N.A.   330 South Service Road, Suite 118   Melville, NY 11747  
Attn: Ms. Christine Gerula       Senior Vice President             with a copy
to:             Certilman Balin Adler & Hyman LLP   90 Merrick Avenue   East
Meadow, NY 11554   Attn:  Kenneth A. Hoffmann, Esq.

 

provided that any notice, request or demand to or upon any Agent or the Lenders
pursuant to Section 2.2, 2.4, 2.6, 2.8 or 3.2 shall not be effective until
received.

 

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10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of any Agent or any Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

 

10.4 Survival. All representations and warranties made hereunder, in the other
Loan Documents and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the execution and delivery of
this Agreement and the making of the Loans hereunder until all obligations
hereunder and under the other Loan Documents have been paid in full and the
Commitments hereunder have been terminated. In addition to all other covenants
and agreements which are stated to survive the termination of this Agreement and
the payment of the Loans, the Notes and all other amounts payable hereunder, the
agreements in Section 3.12 shall survive the termination of this Agreement and
the payment of the Notes and all other amounts payable hereunder until the
expiration of the applicable statute of limitations for such taxes.

 

10.5 Payment of Expenses and Taxes; Indemnity. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the development, preparation,
syndication and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, (b) to
pay or reimburse each Lender and any Agent for all its reasonable costs and
expenses incurred during the continuance of any Default or Event of Default in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel to each
Lender and of counsel to the Agents, (c) to pay, indemnify, and hold harmless
each Lender and the Agent from, any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any delay in paying,
Other Taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation or administration
of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the other Loan Documents and any such other documents, and (d) to
pay, indemnify, and hold harmless each Lender and the Administrative Agent and
their respective officers, directors, employees, subsidiaries, affiliates,
shareholders, agents and controlling persons (each, an “Indemnitee”) from and
against any and all other liabilities, obligations, losses, damages, settlement
payment, penalties, claims, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement, the
other Loan Documents and related documents, the transactions contemplated
thereby, the use of the proceeds of the Loans, or the Collateral therefor,
including, without limitation, any of the foregoing relating to the violation
of, noncompliance with or liability under, any Environmental Law applicable to
the operations of the Borrower, any of its Subsidiaries or any of the Properties
(all the foregoing in this clause (d), collectively, the “indemnified
liabilities”), provided that the Borrower shall have no obligation hereunder to
the Administrative Agent or any Lender with respect to indemnified liabilities
solely arising from the gross negligence or willful misconduct of such
Indemnitee. In any such litigation, or the preparation therefor, the Borrower
may elect to assume the defense thereof with counsel retained by Borrower and
reasonably satisfactory to the Administrative Agent, however the Administrative
Agent and the Lenders shall be entitled to select their own counsel and, in
addition to the foregoing indemnity, the Borrower agrees to pay promptly the
reasonable fees and expenses of Indemnitees’ counsel, provided further that so
long as Indemnitees’ interests are similar in all material respects, the
Indemnitees shall endeavor to use the same counsel. The agreements in this
Section shall survive the termination of this Agreement and the repayment of the
Loans and all other amounts payable hereunder.

 

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10.6 Successors and Assigns; Participation and Assignments.

 

(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agent and their respective successors and assigns
permitted hereby, except that (i) the Borrower may not assign or transfer any of
its rights or obligations under this Agreement without the prior written consent
of each Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section 10.6. Nothing in this Agreement, express or implied, shall be construed
to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby), Participants (to the extent provided
in paragraph (c) of this Section 10.6) and, to the extent expressly contemplated
hereby, the Related Parties of the Agent and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

 

(b) (i) Subject to the conditions set forth in clause (ii) below, any Lender may
assign to one or more assignees (“Eligible Assignees”) all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld, delayed or conditioned) of:

 

(A) the Borrower, provided that no consent of the Borrower shall be required at
any time for an assignment to a Lender, an Affiliate of a Lender or an Approved
Fund (defined below), or for any assignment to any assignee prior to completion
of primary syndication of the Loans and Commitments hereunder (as determined by
the Arranger in its sole discretion) or if a Default or Event of Default has
occurred and is continuing; and

 

(B) the Administrative Agent, provided that no consent of the Administrative
Agent shall be required for (i) an assignment of any Revolving Credit Commitment
to an assignee that is a Lender with a Revolving Credit Commitment immediately
prior to giving effect to such assignment or an Affiliate of such Lender or (ii)
an assignment of all or portion of a Term Loan to an assignee that is a Term
Lender immediately prior to giving effect to such assignment or an Affiliate of
such Lender.

 

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

 

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender’s
Commitment or Loans of any Class, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000.00 or unless each of the
Borrower and the Administrative Agent otherwise consents, provided that no such
consent of the Borrower shall be required prior to completion of primary
syndication of the Loans and Commitments hereunder (as determined by Sovereign
Bank, N.A. in its sole discretion) or if a Default or Event of Default has
occurred and is continuing;

 

(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement,
provided that this clause shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender’s rights and obligations in
respect of one Class of Commitments or Loans;

 

(C) notwithstanding any provision to the contrary in (ii)(B) above, each
assignment of Term Loans by a Lender shall include a ratable assignment of Term
Loans made to the Borrower;

 

(D) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of $3,500, provided that only one such fee shall be payable
in the event of simultaneous assignments by a Lender to or from two or more
Approved Funds; and

 

(E) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent a completed Administrative Questionnaire.

 

(F) No such assignment shall be made (A) to the Borrower or any of the
Borrower’s Affiliates or Subsidiaries, (B) to any Defaulting Lender or any of
its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would
constitute any of the foregoing Persons described in this clause (B), or (C) to
a natural Person.

 

(G) In connection with any assignment of rights and obligations of any
Defaulting Lender hereunder, no such assignment shall be effective unless and
until, in addition to the other conditions thereto set forth herein, the parties
to the assignment shall make such additional payments to the Administrative
Agent in an aggregate amount sufficient, upon distribution thereof as
appropriate (which may be outright payment, purchases by the assignee of
participations or subparticipations, or other compensating actions, including
funding, with the consent of the Borrower and the Administrative Agent, the
applicable pro rata share of Loans previously requested but not funded by the
Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (A) pay and satisfy in full all payment liabilities
then owed by such Defaulting Lender to the Administrative Agent or any Lender
hereunder (and interest accrued thereon) and (B) acquire (and fund as
appropriate) its full pro rata share of all Loans in accordance with its
respective applicable Percentage. Notwithstanding the foregoing, in the event
that any assignment of rights and obligations of any Defaulting Lender hereunder
shall become effective under applicable Law without compliance with the
provisions of this paragraph, then the assignee of such interest shall be deemed
to be a Defaulting Lender for all purposes of this Agreement until such
compliance occurs.

 

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For purposes of the minimum assignment sizes set forth in Section 10.6(b) (ii)
(A), simultaneous assignments to Approved Funds under common management by a
Lender shall be aggregated, provided that any such individual assignment shall
not be less than $500,000. For the purposes of this Section 10.6(b), the term
“Approved Fund” has the following meaning:

 

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender, provided that a
hedge fund or similar financial institution that operates like a hedge fund
shall not be deemed an Approved Fund.

 

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
of this Section, from and after the effective date specified in each Assignment
and Assumption the assignee thereunder (“Assignee”) shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 10.6
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

 

(iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the Borrower,
the Agents and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

 

(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an Assignee, the Assignee’s completed Administrative
Questionnaire (unless the Assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

 

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(c) (i) Any Lender may, without the consent of the Borrower, the Administrative
Agent or the other Lenders, sell participations to one or more banks or other
entities (a “Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (A) such Lender’s obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in clauses (ii), (iii) and (v) of Section 10.1
that affects such Participant. Subject to paragraph (c) (ii) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.10, 3.11 and 3.12 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 10.7 as though it were a Lender, provided that such
Participant agrees to be subject to Section 3.8 as though it were a Lender. Each
Lender that sells a participation shall, acting solely for this purpose as an
agent of the Borrower, maintain a register on which it enters the name and
address of each Participant and the principal amounts (and stated interest) of
each participant’s interest in the Loans or other obligations under this
Agreement (the “Participant Register”). The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary.

 

(ii) A Participant shall not be entitled to receive any greater payment under
Sections 3.10 or 3.12 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.12 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 3.12(f) as
though it were a Lender.

 

(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

 

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10.7 Adjustments; Set-off.

 

(a) If any Lender (a “Benefited Lender”) shall at any time receive any payment
of all or part of its Loans owing to it by the Borrower, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
clause (h) of Section 8 or otherwise, except for payments pursuant to the
operation of Sections 3.14(b) or 10.6), in a greater proportion than any such
payment to or collateral received by any other Lender, if any, in respect of
such other Lender’s Loans owing to it by the Borrower or interest thereon, such
Benefited Lender shall purchase for cash from the other Lenders a participating
interest in such portion of each such other Lender’s Loan owing to it by the
Borrower or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
Benefited Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
Benefited Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.

 

(b) In addition to any rights and remedies of the Lenders provided by law, each
Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.

 

10.8 Counterparts; Execution. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be delivered to the Borrower and the
Administrative Agent. This Agreement may, upon execution, be delivered by
facsimile or electronic mail, which shall be deemed for all purposes to be an
original signature.

 

10.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Without limiting the foregoing provisions of this Section,
if and to the extent that the enforceability of any provisions in this Agreement
relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as
determined in good faith by the Administrative Agent, then such provisions shall
be deemed to be in effect only to the extent not so limited.

 

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10.10 Integration. This Agreement and the other Loan Documents represent the
entire agreement of the Borrower, the Agents and the Lenders with respect to the
subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Borrower, any Agent or any Lender relative
to the subject matter hereof or thereof not expressly set forth or referred to
herein or in the other Loan Documents.

 

10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

10.12 Submission to Jurisdiction; Waivers. The parties hereby irrevocably and
unconditionally:

 

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement or any other Loan Document to which it is a party, or
for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

 

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 10.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto; and

 

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction.

 

10.13 Acknowledgements. The Borrower hereby acknowledges that:

 

(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents;

 

(b) none of the Administrative Agent or any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Administrative Agent and the Lenders, on the one hand, and the Borrower, on
the other hand, in connection herewith or therewith is solely that of debtor and
creditor; and

 

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(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders.

 

10.14 WAIVERS OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

10.15 WAIVERS OF AUTOMATIC STAY. THE BORROWER AGREES THAT, IN THE EVENT THAT
BORROWER, ANY GUARANTOR OR ANY OF THE PERSONS OR PARTIES CONSTITUTING THE
BORROWER OR A GUARANTOR SHALL (i) FILE WITH ANY BANKRUPTCY COURT OF COMPETENT
JURISDICTION OR BE THE SUBJECT OF ANY PETITION UNDER TITLE 11 OF THE U.S. CODE,
AS AMENDED (“BANKRUPTCY CODE”), (ii) BE THE SUBJECT OF ANY ORDER FOR RELIEF
ISSUED UNDER THE BANKRUPTCY CODE, (iii) FILE OR BE THE SUBJECT OF ANY PETITON
SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT
OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER RELIEF FOR DEBTORS, (iv)
HAVE SOUGHT OR CONSENT TO OR ACQUIESCED IN THE APPOINTMENT OF ANY TRUSTEE,
RECEIVER, CONSERVATOR, OR LIQUIDATOR, OR (v) BE THE SUBJECT OF ANY ORDER,
JUDGMENT, OR DECREE ENTERED BY ANY COURT OF COMPETENT JURISDICTION APPROVING A
PETITION FILED AGAINST SUCH PARTY FOR ANY REORGANIZATION, ARRANGEMENT,
COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY
PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY,
INSOLVENCY, OR RELIEF TO DEBTORS, THE ADMINISTRATIVE AGENT SHALL THEREUPON BE
ENTITLED AND THE BORROWER IRREVOCABLY CONSENTS TO IMMEDIATE AND UNCONDITIONAL
RELIEF FROM ANY AUTOMATIC STAY IMPOSED BY SECTION 362 OF THE BANKRUPTCY CODE, OR
OTHERWISE, ON OR AGAINST THE EXERCISE OF THE RIGHTS AND REMEDIES OTHERWISE
AVAILABLE TO THE ADMINISTRATIVE AGENT AS PROVIDED FOR HEREIN, OTHER LOAN
DOCUMENTS DELIVERED IN CONNECTION HEREWITH AND AS OTHERWISE PROVIDED BY LAW, AND
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO OBJECT TO SUCH RELIEF AND
WILL NOT CONTEST ANY MOTION BY ADMINISTRATIVE AGENT SEEKING RELIEF FROM THE
AUTOMATIC STAY AND THE BORROWER WILL COOPERATE WITH ADMINISTRATIVE AGENT, IN ANY
MANNER REQUESTED BY ADMINISTRATIVE AGENT, IN ITS EFFORTS TO OBTAIN RELIEF FROM
SUCH STAY OR PROHIBITION.

 

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10.16 Confidentiality. Each Agent and Lender agrees to take normal and
reasonable precautions to maintain the confidentiality of information provided
to it by the Borrower or any Subsidiary in connection with this Agreement (and,
if delivered after the date of this Agreement, designated in writing as
confidential); provided, however, that any such Person may disclose such
information (a) at the request of any regulatory authority having supervisory
jurisdiction over it or in connection with an examination of such Person by any
such authority or the request of any rating agency requiring access to a
Lender’s portfolio, (b) pursuant to subpoena or other court process, (c) when
required to do so in accordance with the provisions of any applicable law, (d)
at the direction of any other Governmental Authority, (e) to such Person’s
Affiliates, independent auditors and other professional advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such information and instructed to keep such
information confidential), (f) which has become generally available to the
public, other than as a result of a disclosure by such Person or agent of such
Person or a disclosure known to such Person or agent of such Person to have been
made by any person or entity to which such Person or agent has delivered such
confidential information, (g) which becomes available to such Person from a
source other than the Borrower or any Subsidiary (provided that such source is
not known to such Person to be bound by a duty of confidentiality to the
Borrower or any Subsidiary), (h) subject to an agreement containing provisions
substantially the same as those of this Section 10.16, to any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Borrower and its obligations or (i) to any Participant or
Assignee or potential Participant or Assignee (each, a “Transferee”) or any
pledgee (or prospective pledgee) (each, a “Pledgee”) of any Lender that is a
Person (other than a natural person) that is engaged in making, purchasing,
holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business; provided that such Transferee or Pledgee agrees
in writing to comply with the provisions of this Section 10.16.

 

10.17 USA Patriot Act. Each Lender hereby notifies the Borrower that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Patriot Act”), it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the Patriot Act.

 

10.18 Federal Reserve Bank. The Administrative Agent may at any time pledge,
endorse, assign, or transfer all or a portion of its rights under the Loan
Documents to any of the twelve (12) Federal Reserve Banks organized under
Section 4 of the Federal Reserve Act. 12 U.S.C. Section 341. No such pledge or
enforcement thereof shall release the Administrative Agent from its obligations
under any of the Loan Documents.

 

10.19 Interest Adjustment. Notwithstanding anything to the contrary contained in
this Agreement, the rate of interest payable shall never exceed the maximum rate
of interest permitted under applicable law. If at any time the rate of interest
otherwise prescribed herein shall exceed such maximum rate, and such prescribed
rate is thereafter below such maximum rate, the prescribed rate shall be
increased to the maximum rate for such period of time as is required so that the
total amount of interest received by Lenders is that which would have been
received by Lenders except for the operation of the first sentence of this
Section 10.19.

 

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10.20 Errors and Omissions. The Borrower hereby consents and agrees that in the
event any of the documents evidencing and/or securing the Loans misstate or
inaccurately reflect the true and correct terms and provisions of the Loans and
said misstatement or inaccuracy is due to the unilateral mistake on the part of
a Lender, mutual mistake on the part of a Lender and the Borrower or clerical
error, then in such event the Borrower shall, upon request of the Administrative
Agent and in order to correct such misstatement or inaccuracy, execute such new
documents as the Administrative Agent may deem necessary to remedy said
inaccuracy or mistake, provided however, such obligation on behalf of the
Borrower shall not extend to the execution of any new or redrafted document
which materially and adversely adds to or changes the obligations of the
Borrower beyond those set forth in or contemplated by the terms hereof. The
Borrower agrees to execute all such other and further documents as may or shall
be reasonably necessary, as determined solely by the Administrative Agent, in
order to give effect to the documents executed (whether in connection with the
Loans or any future loan) and so as to confirm the transaction. The Borrower
agrees to comply with the reasonable requirements of the Administrative Agent
within ten (10) days after written notice. Upon the Borrower failing or refusing
to comply with the terms and provisions of this Section, such failure shall
constitute a default by the Borrower under this Agreement and thereupon, the
Lenders shall have all the rights and remedies against the Borrower as otherwise
specified in this Agreement and other documents by reason of a default.

 

10.21 Replacement Documents. Upon receipt of an affidavit of an officer of the
Administrative Agent as to the loss, theft, destruction or mutilation of any
Loan Document or any other security document(s) which is not of public record
and, in the case of any such destruction or mutilation, upon surrender and
cancellation of any Loan Document or other document(s), the Borrower will issue,
in lieu thereof, a replacement note or other document(s) in the same principal
amount thereof and otherwise of like tenor.

 

10.22 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of their respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
applicable Law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held and
other obligations (in whatever currency) at any time owing by such Lender or any
such Affiliate to or for the credit or the account of the Borrower or any other
Loan Party against any and all of the obligations of the Borrower or such Loan
Party now or hereafter existing under this Agreement or any other Loan Document
to such Lender or their respective Affiliates, irrespective of whether or not
such Lender, or Affiliate shall have made any demand under this Agreement or any
other Loan Document and although such obligations of the Borrower or such Loan
Party may be contingent or unmatured, secured or unsecured, or are owed to a
branch, office or Affiliate of such Lender or different from the branch, office
or Affiliate holding such deposit or obligated on such indebtedness; provided
that in the event that any Defaulting Lender shall exercise any such right of
setoff, (a) all amounts so set off shall be paid over immediately to the
Administrative Agent for further application in accordance with the provisions
of Section 2.9 and, pending such payment, shall be segregated by such Defaulting
Lender from its other funds and deemed held in trust for the benefit of the
Administrative Agent, and the Lenders, and (b) the Defaulting Lender shall
provide promptly to the Administrative Agent a statement describing in
reasonable detail the Secured Obligations owing to such Defaulting Lender as to
which it exercised such right of setoff. The rights of each Lender, and their
respective Affiliates under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Lender, or their
respective Affiliates may have. Each Lender and agrees to notify the Borrower
and the Administrative Agent promptly after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

 

  CPI AEROSTRUCTURES, INC., as Borrower       By: /s/ Douglas McCrosson    
Name: Douglas McCrosson     Title: Chief Operating Officer                    
SOVEREIGN BANK, N.A., as Arranger, Agent, Lender and Swap Provider           By:
/s/ Christine Gerula       Christine Gerula       Senior Vice President        
            VALLEY NATIONAL BANK, as Lender           By: /s/       Name:      
Title:  

 

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