domesticloandoc.htm


    


     

    
      	
               REVOLVING
      CREDIT

            
	 
	
               AND

            
	 
	
               SECURITY
      AGREEMENT

            
	 
	
               PNC
      BANK, NATIONAL ASSOCIATION

            
	 
	
               (AS
      LENDER AND AS AGENT)

            
	 
	
               WITH

            
	 
	 
      
              BANNER
      AEROSPACE HOLDING COMPANY I, INC.

            
	
               D A C
      INTERNATIONAL, INC.

            
	
               MAPTECH
      AERODATA, LLC

            
	
               MATRIX
      AVIATION, INC.

            
	
               NASAM
      INCORPORATED 

            
	
               PROFESSIONAL
      AIRCRAFT ACCESSORIES, INC.

            
	
               PROFESSIONAL
      AVIATION ASSOCIATES, INC.

            
	
               GCCUS,
      INC.

            
	 
	
               (BORROWERS)

            
	
               June
      20, 2008

            
	 
	 
	 


    

     

    


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


     

     

    
      	 	I.	 	
              DEFINITIONS.

            	 	
              1

            	 
	 	 	 	 	 	 	 
	 	1.1.	 	
              Accounting
      Terms

            	 	
              1

            	 
	 	1.2.	 	
              General
      Terms

            	 	
              1

            	 
	 	1.3.	 	
              Uniform
      Commercial Code Terms

            	 	
              23

            	 
	 	1.4.	 	
              Certain
      Matters of Construction

            	 	
              23

            	 
	 	 	 	 	 	 
	
              II.

            	 	
              ADVANCES,
      PAYMENTS.

            	 	
              24

            	 
	 	 	 	 	 	 	 
	 	2.1.	 	
              Revolving
      Advances

            	 	
              24

            	 
	 	2.2.	 	
              Procedure
      for Revolving Advances Borrowing

            	 	
              26

            	 
	 	2.3.	 	
              Disbursement
      of Advance Proceeds

            	 	
              28

            	 
	 	2.4.	 	
              Reserved

            	 	
              28

            	 
	 	2.5.	 	
              Maximum
      Advances

            	 	
              28

            	 
	 	2.6.	 	
              Repayment
      of Advances

            	 	
              28

            	 
	 	2.7.	 	
              Repayment
      of Excess Advances

            	 	
              29

            	 
	 	2.8.	 	
              Statement
      of Account

            	 	      
              29

            	 
	 	2.9.	 	
              Letters
      of Credit

            	 	      
              29

            	 
	 	2.10.	 	
              Issuance
      of Letters of Credit

            	 	      
              29

            	 
	 	2.11.	 	
              Requirements
      for Issuance of Letters of Credit

            	 	      
              30

            	 
	 	2.12.	 	
              Disbursements,
      Reimbursement

            	 	      
              31

            	 
	 	2.13.	 	
              Repayment
      of Participation Advances

            	 	32	 
	 	2.14.	 	
              Documentation

            	 	32 	 
	  2.15.	 	 Determination
      to Honor Drawing Request	 	32	 
	  2.16.	 	 Nature
      of Participation and Reimbursement Obligations	 	33	 
	  2.17.	 	 Indemnity	 	34	 
	     
      2.18.	 	 Liability
      for Acts and Omissions	 	34	 
	     
      2.19.	 	 Additional
      Payments	 	36	 
	     
      2.20.	 	 Manner
      of Borrowing and Payment	 	36	 
	     
      2.21.	 	 Mandatory
      Prepayments	 	37	 
	     
      2.22.	 	 Use
      of Proceeds	 	38	 
	     
      2.23.	 	 Defaulting
      Lender	 	38	 
	 	 	 	 	 	 
	
              III.

            	 	
              INTEREST
      AND FEES.

            	 	39 	 
	 	 	 	 	 	 	 
	 	3.1.	 	
              Interest

            	 	39	 
	 	3.2.	 	
              Letter
      of Credit Fees

            	 	39 	 
	 	3.3.	 	
              Closing
      Fee and Facility Fee

            	 	40	 
	 	3.4.	 	
              Collateral
      Evaluation Fee, Collateral Monitoring Fee and Appraisals

            	 	40	 
	 	3.5.	 	
              Computation
      of Interest and Fees

            	 	41	 
	 	3.6.	 	
              Maximum
      Charges

            	 	41 	 
	 	3.7.	 	
              Increased
      Costs

            	 	41 	 
	 	3.8.	 	
              Basis
      For Determining Interest Rate Inadequate or Unfair

            	 	42 	 
	 	3.9.	 	
              Capital
      Adequacy

            	 	43	 
	 	3.10.	 	
              Gross
      Up for Taxes

            	 	43	 
	 	3.11.	 	
              Withholding
      Tax Exemption

            	 	44	 
	 	 	 	 	 	 
	
              IV.

            	 	
              COLLATERAL:   GENERAL
      TERMS

            	 	45	 
	 	 	 	 	 	 	 
	 	4.1.	 	
              Security
      Interest in the Collateral

            	 	45 	 
	 	4.2.	 	
              Perfection
      of Security Interest

            	 	45	 
	 	4.3.	 	
              Disposition
      of Collateral

            	 	45 	 
	 	4.4.	 	
              Preservation
      of Collateral

            	 	45 	 
	 	4.5.	 	
              Ownership
      of Collateral

            	 	45 	 
	 	4.6.	 	
              Defense
      of Agent’s and Lenders’ Interests

            	 	46 	 
	 	4.7.	 	
              Books
      and Records

            	 	46 	 


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    



    
      	 	4.8.	 	
              Financial
      Disclosure

            	 	47	 
	 	4.9.	 	
              Compliance
      with Laws

            	 	47 	 
	 	4.10.	 	
              Inspection
      of Premises

            	 	47 	 
	 	4.11.	 	
              Insurance

            	 	48 	 
	 	4.12.	 	
              Failure
      to Pay Insurance

            	 	48 	 
	 	4.13.	 	
              Payment
      of Taxes

            	 	49 	 
	 	4.14.	 	
              Payment
      of Leasehold Obligations

            	 	49 	 
	 	4.15.	 	
              Receivables

            	 	49 	 
	 	4.16.	 	
              Inventory

            	 	52	 
	 	4.17.	 	
              Maintenance
      of Equipment

            	 	52 	 
	 	4.18.	 	
              Exculpation
      of Liability

            	 	52 	 
	 	4.19.	 	
              Environmental
      Matters

            	 	52 	 
	 	4.20.	 	
              Financing
      Statements

            	 	54 	 
	 	 	 	 	 	 	 
	V. 	 	 	
              REPRESENTATIONS
      AND WARRANTIES.

            	 	54	 
	 	 	 	 	 	 	 
	 	5.1.	 	
              Authority

            	 	54 	 
	 	5.2.	 	
              Formation
      and Qualification

            	 	55 	 
	 	5.3.	 	
              Survival
      of Representations and Warranties

            	 	55 	 
	 	5.4.	 	
              Tax
      Returns

            	 	55 	 
	 	5.5.	 	
              Financial
      Statements

            	 	56 	 
	 	5.6.	 	
              Entity
      Names

            	 	56 	 
	 	5.7.	 	 O	 	56 	 
	 	5.8.	 	
              Solvency;
      No Litigation, Violation, Indebtedness or Default

            	 	57 	 
	 	5.9.	 	
              Patents,
      Trademarks, Copyrights and Licenses

            	 	58 	 
	 	5.10.	 	
              Licenses
      and Permits

            	 	59 	 
	 	5.11.	 	
              Default
      of Indebtedness

            	 	59 	 
	 	5.12.	 	
              No
      Default

            	 	59 	 
	 	5.13.	 	
              No
      Burdensome Restrictions

            	 	59 	 
	 	5.14.	 	
              No
      Labor Disputes

            	 	59 	 
	 	5.15.	 	
              Margin
      Regulations

            	 	59 	 
	 	5.16.	 	
              Investment
      Company Act

            	 	59 	 
	 	5.17.	 	
              Disclosure

            	 	59	 
	 	5.18.	 	
              Delivery
      of Subordinated Loan Documentation

            	 	60	 
	 	5.19.	 	
              Swaps

            	 	60 	 
	 	5.20.	 	
              Conflicting
      Agreements

            	 	60 	 
	 	5.21.	 	
              Application
      of Certain Laws and Regulations

            	 	60 	 
	 	5.22.	 	
              Business
      and Property of Borrowers

            	 	60 	 
	 	5.23.	 	
              Section
      20 Subsidiaries

            	 	60 	 
	 	5.24.	 	
              Anti-Terrorism
      Laws

            	 	60 	 
	 	5.25.	 	
              Trading
      with the Enemy

            	 	61 	 
	 	5.26.	 	
              Federal
      Securities Laws

            	 	61 	 
	 	5.27.	 	
              Equity
      Interests: The authorized and outstanding Equity Interests of each
      Borrower is as shown on Schedule 5

            	 	61 	 


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    



    
      	
              VI.

            	 	
              AFFIRMATIVE
      COVENANTS.

            	 	62	 
	 	 	 	 	 	 	 
	 	6.1.	 	
              Payment
      of Fees

            	 	62 	 
	 	6.2.	 	
              Conduct
      of Business and Maintenance of Existence and Assets

            	 	62 	 
	 	6.3.	 	
              Violations

            	 	62 	 
	 	6.4.	 	
              Government
      Receivables

            	 	62 	 
	 	6.5.	 	
              Fixed
      Charge Coverage Ratio

            	 	62 	 
	 	6.6.	 	
              Execution
      of Supplemental Instruments

            	 	63	 
	 	6.7.	 	
              Payment
      of Indebtedness

            	 	63 	 
	 	6.8.	 	
              Standards
      of Financial Statements

            	 	63 	 
	 	6.9.	 	
              Federal
      Securities Laws

            	 	63 	 
	 	 	 	 	 	 
	
              VII.

            	 	
              NEGATIVE
      COVENANTS.

            	 	63 	 
	 	 	 	 	 	 	 
	 	7.1.	 	
              Merger,
      Consolidation, Acquisition and Sale of Assets

            	 	64	 
	 	7.2.	 	
              Creation
      of Liens

            	 	64 	 
	 	7.3.	 	
              Guarantees

            	 	64 	 
	 	7.4.	 	
              Investments

            	 	64 	 
	 	7.5.	 	
              Loans

            	 	64 	 
	 	7.6.	 	
              Capital
      Expenditures

            	 	64 	 
	 	7.7.	 	
              Dividends
      / Distributions

            	 	65 	 
	 	7.8.	 	
              Indebtedness

            	 	65 	 
	 	7.9.	 	
              Nature
      of Business

            	 	65 	 
	 	7.10.	 	
              Transactions
      with Affiliates

            	 	65 	 
	 	7.11.	 	
              Leases

            	 	65 	 
	 	7.12.	 	
              Subsidiaries

            	 	65 	 
	 	7.13.	 	
              Fiscal
      Year and Accounting Changes

            	 	66 	 
	 	7.14.	 	
              Pledge
      of Credit

            	 	66 	 
	 	7.15.	 	
              Amendment
      of Articles of Incorporation, By-Laws, Certificate of Formation or
      Operating Agreement

            	 	66 	 
	 	7.16.	 	
              Compliance
      with ERISA

            	 	66 	 
	 	7.17.	 	
              Prepayment
      of Indebtedness

            	 	66 	 
	 	7.18.	 	
              Anti-Terrorism
      Laws

            	 	66	 
	 	7.19.	 	
              Membership/Partnership
      Interests

            	 	67 	 
	 	7.20.	 	
              Trading
      with the Enemy Act

            	 	67 	 
	 	7.21.	 	
              Subordinated
      Indebtedness

            	 	67 	 
	 	7.22.	 	
              Other
      Agreements

            	 	67 	 
	 	 	 	 	 	 
	
              VIII.

            	 	
              CONDITIONS
      PRECEDENT.

            	 	67 	 
	 	 	 	 	 	 	 
	 	8.1.	 	
              Conditions
      to Initial Advances

            	 	67 	 
	 	8.2.	 	
              Conditions
      to Each Advance

            	 	71	 
	 	 	 	 	 	 
	
              IX.

            	 	
              INFORMATION
      AS TO BORROWERS.

            	 	71 	 
	 	 	 	 	 	 	 
	 	9.1.	 	
              Disclosure
      of Material Matters

            	 	71 	 
	 	9.2.	 	
              Schedules

            	 	71 	 
	 	9.3.	 	
              Environmental
      Reports

            	 	72	 
	 	9.4.	 	
              Litigation

            	 	72	 


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	 	9.5.	 	
              Material
      Occurrences

            	 	72	 
	 	9.6.	 	
              Government
      Receivables

            	 	73	 
	 	9.7.	 	
              Annual
      Financial Statements

            	 	73 	 
	 	9.8.	 	
              Quarterly
      Financial Statements

            	 	73 	 
	 	9.9.	 	
              Monthly
      Financial Statements

            	 	73 	 
	 	9.10.	 	
              Other
      Reports

            	 	74 	 
	 	9.11.	 	
              Additional
      Information

            	 	74 	 
	 	9.12.	 	
              Projected
      Operating Budget

            	 	74 	 
	 	9.13.	 	
              Variances
      From Operating Budget

            	 	74 	 
	 	9.14.	 	
              Notice
      of Suits, Adverse Events

            	 	74 	 
	 	9.15.	 	
              ERISA
      Notices and Requests

            	 	74 	 
	 	9.16.	 	
              Additional
      Documents

            	 	75 	 
	 	 	 	 	 	 	 
	X. 	 	 	
              EVENTS
      OF DEFAULT.

            	 	75 	 
	 	 	 	 	 	 	 
	 	10.1.	 	
              Nonpayment

            	 	75 	 
	 	10.2.	 	
              Breach
      of Representation

            	 	75 	 
	 	10.3.	 	
              Financial
      Information

            	 	76	 
	 	10.4.	 	
              Judicial
      Actions

            	 	76 	 
	 	10.5.	 	
              Noncompliance

            	 	76 	 
	 	10.6.	 	
              Judgments

            	 	76 	 
	 	10.7.	 	
              Bankruptcy

            	 	76 	 
	 	10.8.	 	
              Inability
      to Pay

            	 	76 	 
	 	10.9.	 	
              Affiliate
      Bankruptcy

            	 	76 	 
	 	10.10.	 	
              Material
      Adverse Effect

            	 	77 	 
	 	10.11.	 	
              Lien
      Priority

            	 	77 	 
	 	10.12.	 	
              Subordinated
      Loan Default

            	 	77 	 
	 	10.13.	 	
              Cross
      Default

            	 	77 	 
	 	10.14.	 	
              Breach
      of Guaranty

            	 	77 	 
	 	10.15.	 	
              Change
      of Ownership

            	 	77 	 
	 	10.16.	 	
              Invalidity

            	 	77 	 
	 	10.17.	 	
              Licenses

            	 	77 	 
	 	10.18.	 	
              Seizures

            	 	78 	 
	 	10.19.	 	
              Pension
      Plans

            	 	78 	 
	 	 	 	 	 	 
	
              XI.

            	 	
              LENDERS’
      RIGHTS AND REMEDIES AFTER DEFAULT.

            	 	78 	 
	 	 	 	 	 	 	 
	 	11.1.	 	
              Rights
      and Remedies

            	 	78 	 
	 	11.2.	 	
              Agent’s
      Discretion

            	 	80	 
	 	11.3.	 	
              Setoff

            	 	80 	 
	 	11.4.	 	
              Rights
      and Remedies not Exclusive

            	 	80 	 
	 	11.5.	 	
              Allocation
      of Payments After Event of Default

            	 	80 	 
	 	 	 	 	 	 
	
              XII.

            	 	
              WAIVERS
      AND JUDICIAL PROCEEDINGS.

            	 	81 	 
	 	 	 	 	 	 	 
	 	12.1.	 	
              Waiver
      of Notice

            	 	81 	 
	 	12.2.	 	
              Delay

            	 	81 	 
	 	12.3.	 	
              Jury
      Waiver

            	 	81 	 


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    



    
      	
              XIII.

            	 	
              EFFECTIVE
      DATE AND TERMINATION.

            	 	81 	 
	 	 	 	 	 	 	 
	 	13.1.	 	
              Term

            	 	81 	 
	 	13.2.	 	
              Termination

            	 	82 	 
	 	 	 	 	 	 
	
              XIV.

            	 	
              REGARDING
      AGENT.

            	 	82 	 
	 	 	 	 	 	 	 
	 	14.1.	 	
              Appointment

            	 	82 	 
	 	14.2.	 	
              Nature
      of Duties

            	 	83 	 
	 	14.3.	 	
              Lack
      of Reliance on Agent and Resignation

            	 	83 	 
	 	14.4.	 	
              Certain
      Rights of Agent

            	 	84 	 
	 	14.5.	 	
              Reliance

            	 	84 	 
	 	14.6.	 	
              Notice
      of Default

            	 	84 	 
	 	14.7.	 	
              Indemnification

            	 	84 	 
	 	14.8.	 	
              Agent
      in its Individual Capacity

            	 	84 	 
	 	14.9.	 	
              Delivery
      of Documents

            	 	85 	 
	 	14.10.	 	
              Borrowers’
      Undertaking to Agent

            	 	85 	 
	 	14.11.	 	
              No
      Reliance on Agent’s Customer Identification Program

            	 	85 	 
	 	14.12.	 	
              Other
      Agreements

            	 	85 	 
	 	 	 	 	 	 
	
              XV.

            	 	
              BORROWING
      AGENCY.

            	 	85 	 
	 	 	 	 	 	 	 
	 	15.1.	 	
              Borrowing
      Agency Provisions

            	 	85 	 
	 	15.2.	 	
              Waiver
      of Subrogation

            	 	86 	 
	 	 	 	 	 	 
	
              XVI.

            	 	
              MISCELLANEOUS.

            	 	86	 
	 	 	 	 	 	 	 
	 	16.1.	 	
              Governing
      Law

            	 	86	 
	 	16.2.	 	
              Entire
      Understanding

            	 	87 	 
	 	16.3.	 	
              Successors
      and Assigns; Participations; New Lenders

            	 	89 	 
	 	16.4.	 	
              Application
      of Payments

            	 	91	 
	 	16.5.	 	
              Indemnity

            	 	91 	 
	 	16.6.	 	
              Notice

            	 	92 	 
	 	16.7.	 	
              Survival

            	 	94 	 
	 	16.8.	 	
              Severability

            	 	94 	 
	 	16.9.	 	
              Expenses

            	 	94 	 
	 	16.10.	 	
              Injunctive
      Relief

            	 	94 	 
	 	16.11.	 	
              Consequential
      Damages

            	 	95 	 
	 	16.12.	 	
              Captions

            	 	95 	 
	 	16.13.	 	
              Counterparts;
      Facsimile Signatures

            	 	95 	 
	 	16.14.	 	
              Construction

            	 	95 	 
	 	16.15.	 	
              Confidentiality;
      Sharing Information

            	 	95 	 
	 	16.16.	 	
              Publicity

            	 	96	 
	 	16.17.	 	
              Certifications
      From Banks and Participants; USA PATRIOT Act

            	 	96 	 


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    LIST
OF EXHIBITS AND SCHEDULES

     

    Exhibits

    


    Exhibit
1.2                                Borrowing
Base Certificate

    Exhibit
2.1(a)                                Revolving
Credit Note

    Exhibit
5.5(a)                                Financial
Projections

    Exhibit
8.1(k)                                Financial
Condition Certificate

    Exhibit
16.3                                Commitment
Transfer Supplement

    


    


    Schedules

    


    Schedule
1.2                                Permitted
Encumbrances

    Schedule
4.5                                Equipment
and Inventory Locations

    Schedule
4.15(h)                                           Deposit
and Investment Accounts

    Schedule
4.19                                Real
Property

    Schedule
5.1                                Consents

    Schedule
5.2(a)                                           States
of Qualification and Good Standing

    Schedule
5.2(b)                                           Subsidiaries

    Schedule
5.4                                Federal
Tax Identification Number

    Schedule
5.6                                Prior
Names

    Schedule
5.7                                Environmental

    Schedule
5.8(b)                                           Litigation

    Schedule
5.8(d)                                           Plans

    Schedule
5.9                                Intellectual
Property, Source Code Escrow Agreements

    Schedule
5.10                                Licenses
and Permits

    Schedule
5.14                                Labor
Disputes

    Schedule
7.3                                Guarantees

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    REVOLVING
CREDIT

     

    AND

     

    SECURITY
AGREEMENT

     

    Revolving
Credit and Security Agreement dated as of June 20, 2008 among Banner
Aerospace Holding Company I, Inc., a corporation organized under the laws
of the State of Delaware (“BAHCI”), D A C
International, Inc., a corporation organized under the laws of the State
of Texas (“DAC”), Maptech
AeroData, LLC, a limited liability company formed under the laws of the
State of Delaware (“Maptech”), Matrix
Aviation, Inc., a corporation organized under the laws of the State of
Kansas (“Matrix”), NASAM
Incorporated, a corporation organized under the laws of the State of
California (“NSM”), Professional
Aircraft Accessories, Inc., a corporation organized under the laws of the
State of Florida (“PAF”) and Professional
Aviation Associates, Inc., a corporation organized under the laws of
Georgia (“PAA”) GCCUS,
Inc. a California corporation (“GCC”, together with BAHCI, DAC, Maptech,
Matrix, NSM, PAF and PAA, collectively, the “Borrowers” and each a “Borrower”),
the financial institutions which are now or which hereafter become a party
hereto (collectively, the “Lenders” and each individually a “Lender”) and PNC
Bank, National Association (“PNC”), as agent for Lenders (PNC, in such
capacity, the “Agent”).

     

    IN
CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrowers, Lenders and Agent hereby agree as follows:

     

    I. DEFINITIONS.

     

    1.1. Accounting
Terms.  As used in this Agreement, the Other Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrowers for the fiscal year ended September
30, 2007.

     

    1.2. General
Terms.  For purposes of this Agreement the following terms
shall have the following meanings:

     

    “Accountants” shall
have the meaning set forth in Section 9.7 hereof.

     

    “Advance Rates” shall
have the meaning set forth in Section 2.1(a)(y)(ii).

     

    “Advances” shall mean
and include the Revolving Advances and Letters of Credit.

     

    “Affiliate” of any
Person shall mean (a) any Person which, directly or indirectly, is in control
of, is controlled by, or is under common control with such Person, or (b) any
Person who is a director, managing member, general partner or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above.  For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 5% or
more of the Equity Interests having ordinary voting power for the election of
directors of such Person or other Persons performing similar functions for any
such Person, or (y) to direct or cause the direction of the management and
policies of such Person whether by ownership of Equity Interests, contract or
otherwise.

     

    “Agent” shall have the
meaning set forth in the preamble to this Agreement and shall include its
successors and assigns.

     

    “Agreement” shall mean
this Revolving Credit and Security Agreement, as the same may be amended,
restated, supplemented or otherwise modified from time to time.

     

    “Alternate Base Rate”
shall mean, for any day, a rate per annum equal to the higher of (i) the Base
Rate in effect on such day and (ii) the Federal Funds Open Rate in effect on
such day plus 1/2 of 1%.

     

    “Anti-Terrorism Laws”
shall mean any Applicable Laws relating to terrorism or money laundering,
including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws
comprising or implementing the Bank Secrecy Act, and the Applicable Laws
administered by the United States Treasury Department’s Office of Foreign Asset
Control (as any of the foregoing Applicable Laws may from time to time be
amended, renewed, extended, or replaced).

     

    “Applicable Law” shall
mean all laws, rules and regulations applicable to the Person, conduct,
transaction, covenant, Other Document or contract in question, including all
applicable common law and equitable principles; all provisions of all applicable
state, federal and foreign constitutions, statutes, rules, regulations and
orders of any Governmental Body, and all orders, judgments and decrees of all
courts and arbitrators.

     

    “Authority” shall have
the meaning set forth in Section 4.19(d).

     

    “Base Rate” shall mean
the base commercial lending rate of PNC as publicly announced to be in effect
from time to time, such rate to be adjusted automatically, without notice, on
the effective date of any change in such rate.  This rate of interest
is determined from time to time by PNC as a means of pricing some loans to its
customers and is neither tied to any external rate of interest or index nor does
it necessarily reflect the lowest rate of interest actually charged by PNC to
any particular class or category of customers of PNC.

     

    “Blocked Accounts”
shall have the meaning set forth in Section 4.15(h).

     

    “Blocked Account Bank”
shall have the meaning set forth in Section 4.15(h).

     

    “Blocked Person” shall
have the meaning set forth in Section 5.24(b) hereof.

     

    “Borrower” or “Borrowers” shall have
the meaning set forth in the preamble to this Agreement and shall extend to all
permitted successors and assigns of such Persons.

     

    “Borrowers on a Consolidated
Basis” shall mean the consolidation in accordance with GAAP of the
accounts or other items of the Borrowers and their respective
Subsidiaries.

     

    “Borrowers’ Account”
shall have the meaning set forth in Section 2.8.

     

    “Borrowing Agent”
shall mean BAHCI.

     

    “Borrowing Base
Certificate” shall mean a certificate in substantially the form of
Exhibit 1.2 duly executed by the President, Vice President, Chief Financial
Officer or Controller of the Borrowing Agent and delivered to the Agent,
appropriately completed, by which such officer shall certify to Agent the
Formula Amount and calculation thereof as of the date of such
certificate.

     

    “Business Day” shall
mean any day other than Saturday or Sunday or a legal holiday on which
commercial banks are authorized or required by law to be closed for business in
East Brunswick, New Jersey and, if the applicable Business Day relates to any
Eurodollar Rate Loans, such day must also be a day on which dealings are carried
on in the London interbank market.

     

    “Capital Expenditures”
shall mean expenditures made or liabilities incurred for the acquisition of any
fixed assets or improvements, replacements, substitutions or additions thereto
which have a useful life of more than one year, including the total principal
portion of Capitalized Lease Obligations, which, in accordance with GAAP, would
be classified as capital expenditures.

     

    “Capitalized Lease
Obligation” shall mean any Indebtedness of any Borrower represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

     

    “CERCLA” shall mean
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. §§9601 et seq.

     

    “Change of Control”
shall mean (a) the occurrence of any event (whether in one or more transactions)
which results in a transfer of control of any Borrower to a Person who is not an
Original Owner or (b) any merger or consolidation of or with any Borrower or
sale of all or substantially all of the property or assets of any
Borrower.  For purposes of this definition, “control of Borrower”
shall mean the power, direct or indirect (x) to vote 33% or more of the Equity
Interests having ordinary voting power for the election of directors (or the
individuals performing similar functions) of any Borrower or (y) to direct or
cause the direction of the management and policies of any Borrower by contract
or otherwise.

     

    “Change of Ownership”
shall mean (a) 100% of the Equity Interests of any Borrower is no longer owned
or controlled by (including for the purposes of the calculation of percentage
ownership, any Equity Interests into which any Equity Interests of any Borrower
held by any of the Original Owners are convertible or for which any such Equity
Interests of any Borrower or of any other Person may be exchanged and any Equity
Interests issuable to such Original Owners upon exercise of any warrants,
options or similar rights which may at the time of calculation be held by such
Original Owners) a Person who is an Original Owner, (b) any merger,
consolidation or sale of substantially all of the property or assets of any
Borrower or Holdings or (c) (i) any Person or group of Persons (within the
meaning of Sections 13(d) or 14(a) of the Security Exchange Act of 1934, as
amended) shall have acquired voting interests in excess of thirty five percent
35% of the total voting interests of Holdings or the Permitted Holders shall in
the aggregate hold less than thirty-five percent (35%) of the voting interests
in Holdings; or (ii)
from and after the date hereof, during any period of two (2) consecutive
years, individuals who
on the date hereof constitute the board of directors of Holdings (together with
any new directors whose election by such Board of Directors or whose nomination
for election by the shareholders of Holdings was approved by a vote of a
majority of the directors then still in office who were either directors on the
date hereof or whose election or nomination for election was previously
approved) cease for any reason to constitute a majority of the board of
directors of Holdings then in office.

     

    “Charges” shall mean
all taxes, charges, fees, imposts, levies or other assessments, including all
net income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation and property taxes, custom duties, fees, assessments, liens, claims
and charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts, imposed by any taxing or
other authority, domestic or foreign (including the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the Collateral, any
Borrower or any of its Affiliates.

     

    “Closing Date” shall
mean June 20, 2008 or such other date as may be agreed to by the parties
hereto.

     

    “Code” shall mean the
Internal Revenue Code of 1986, as the same may be amended or supplemented from
time to time, and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.

     

    “Collateral” shall
mean and include:

     

    (a) all
Receivables;

     

    (b) all
Equipment;

     

    (c) all
General Intangibles;

     

    (d) all
Inventory;

     

    (e) all
Investment Property;

     

    (f) all
Subsidiary Stock;

     

    (g) all of
each Borrower’s right, title and interest in and to, whether now owned or
hereafter acquired and wherever located; (i) its respective goods and other
property including, but not limited to, all merchandise returned or rejected by
Customers, relating to or securing any of the Receivables; (ii) all of each
Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic,
artisan, or other lienor, including stoppage in transit, setoff, detinue,
replevin, reclamation and repurchase; (iii) all additional amounts due to any
Borrower from any Customer relating to the Receivables; (iv) other property,
including warranty claims, relating to any goods securing the Obligations; (v)
all of each Borrower’s contract rights, rights of payment which have been earned
under a contract right, instruments (including promissory notes), documents,
chattel paper (including electronic chattel paper), warehouse receipts, deposit
accounts, letters of credit and money; (vi) all commercial tort claims (whether
now existing or hereafter arising); (vii) if and when obtained by any Borrower,
all real and personal property of third parties in which such Borrower has been
granted a lien or security interest as security for the payment or enforcement
of Receivables; (viii) all letter of credit rights (whether or not the
respective letter of credit is evidenced by a writing); (ix) all supporting
obligations; and (x) any other goods, personal property or real property now
owned or hereafter acquired in which any Borrower has expressly granted a
security interest or may in the future grant a security interest to Agent
hereunder, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and any Borrower;

     

    (h) all of
each Borrower’s ledger sheets, ledger cards, files, correspondence, records,
books of account, business papers, computers, computer software (owned by any
Borrower or in which it has an interest), computer programs, tapes, disks and
documents relating to (a), (b), (c), (d), (e), (f) or (g) of this paragraph;
and

     

    (i) all
proceeds and products of (a), (b), (c), (d), (e), (f), (g) or (h) in whatever
form, including, but not limited to:  cash, deposit accounts (whether
or not comprised solely of proceeds), certificates of deposit, insurance
proceeds (including hazard, flood and credit insurance), negotiable instruments
and other instruments for the payment of money, chattel paper, security
agreements, documents, eminent domain proceeds, condemnation proceeds and tort
claim proceeds.

     

    “Commitment
Percentage” of any Lender shall mean the percentage set forth below such
Lender’s name on the signature page hereof as same may be adjusted upon any
assignment by a Lender pursuant to Section 16.3(c) or (d) hereof.

     

    “Commitment Transfer
Supplement” shall mean a document in the form of Exhibit 16.3 hereto,
properly completed and otherwise in form and substance satisfactory to Agent by
which the Purchasing Lender purchases and assumes a portion of the obligation of
Lenders to make Advances under this Agreement.

     

    “Compliance
Certificate” shall mean a compliance certificate to be signed by the Vice
President, Chief Financial Officer or Controller of Borrowing Agent, which shall
state that, based on an examination sufficient to permit such officer to make an
informed statement, no Default or Event of Default exists, or if such is not the
case, specifying such Default or Event of Default, its nature, when it occurred,
whether it is continuing and the steps being taken by Borrowers with respect to
such default and, such certificate shall have appended thereto calculations
which set forth Borrowers’ compliance with the requirements or restrictions
imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.11.

     

    “Consents” shall mean
all filings and all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Bodies and other third parties,
domestic or foreign, necessary to carry on any Borrower’s business or necessary
(including to avoid a conflict or breach under any agreement, instrument, other
document, license, permit or other authorization) for the execution, delivery or
performance of this Agreement, the Other Documents, the Subordinated Loan
Documentation including any Consents required under all applicable federal,
state or other Applicable Law.

     

    “Consigned Inventory”
shall mean Inventory of any Borrower that is in the possession of another Person
on a consignment, sale or return, or other basis that does not constitute a
final sale and acceptance of such Inventory.

     

    “Contract Rate” shall
have the meaning set forth in Section 3.1 hereof.

     

    “Controlled Group”
shall mean, at any time, each Borrower and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with any Borrower, are
treated as a single employer under Section 414 of the Code.

     

    “Customer” shall mean
and include the account debtor with respect to any Receivable and/or the
prospective purchaser of goods, services or both with respect to any contract or
contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with any Borrower, pursuant to which such Borrower
is to deliver any personal property or perform any services.

     

    “Customs” shall have
the meaning set forth in Section 2.11(b) hereof.

     

    “Debt Payments” shall
mean and include (a) all cash actually expended by any Borrower to make interest
payments on any Advances under this Agreement and the Ex-Im Agreement, plus (b)
accrued but unpaid interest on account of Eurodollar Rate Loans under this
Agreement and the Ex-Im Agreement, plus (c) scheduled principal payments on any
term loans payable to Agent and Lender, plus (d) all cash actually expended by
any Borrower to make payments for all fees, commissions and charges set forth
herein and with respect to any Advances under this Agreement and the Ex-Im
Agreement, plus (e) all cash actually expended by any Borrower to make payments
on Capitalized Lease Obligations, plus (f) all cash actually expended by any
Borrower to make payments with respect to any other Indebtedness for borrowed
money, plus the out of pocket costs and expenses to be paid by Borrowers at or
prior to the Closing Date to the Agent for the ratable benefit of the Lenders
hereunder (excluding the sum of the fees payable under Section 3.3(a) hereof)
plus the out-of-pocket costs and expenses to be paid by Borrowers at or prior to
the Closing Date to the Ex-Im Agent for the ratable benefit of Lenders (as
defined in the Ex-Im Agreement) under the Ex-Im Agreement.

     

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

     

    “Default Rate” shall
have the meaning set forth in Section 3.1 hereof.

     

    “Defaulting Lender”
shall have the meaning set forth in Section 2.23(a) hereof.

     

    “Depository Accounts”
shall have the meaning set forth in Section 4.15(h) hereof.

     

    “Direct Billing
Amount” shall mean an amount equal to any and all reimbursement
obligations of Borrowers, or any of them, due to Holdings within 14 calendar
days of the Closing Date for unreimbursed costs and expenses incurred on behalf
of Borrowers.

     

    “Documents” shall have
the meaning set forth in Section 8.1(c) hereof.

     

    “Dollar” and the sign
“$” shall mean
lawful money of the United States of America.

     

    “Domestic Rate Loan”
shall mean any Advance that bears interest based upon the Alternate Base
Rate.

     

    “Drawing Date” shall
have the meaning set forth in Section 2.12(b) hereof.

     

    “Early Termination
Date” shall have the meaning set forth in Section 13.1
hereof.

     

    “Earnings Before Interest and
Taxes” shall mean for any period the sum of (i) net income (or loss) of
Borrowers on a Consolidated Basis for such period (excluding extraordinary gains
and losses), plus (ii) all interest expense of Borrowers on a Consolidated Basis
for such period, plus (iii) all charges against income of Borrowers on a
Consolidated Basis for such period for federal, state and local
taxes.

     

    “EBITDA” shall mean
for any period the sum of (i) Earnings Before Interest and Taxes for such period
plus (ii) depreciation expenses for such period, plus (iii) amortization
expenses for such period.

     

    “Eligible Domestic Finished
Good Inventory” shall mean, as determined by Agent in its reasonable
discretion, Eligible Inventory consisting of new finished goods Inventory and
used Inventory which has been refurbished, is in the process of being
refurbished, or will be refurbished.

     

    “Eligible Inventory”
shall mean and include Inventory, including used Inventory which has been or
will be refurbished or is in process of being refurbished, with respect to each
Borrower, valued at the lower of cost or market value, determined on a
first-in-first-out basis, which is not, in Agent’s opinion, obsolete, slow
moving or unmerchantable and which Agent, in its reasonable discretion, shall
not deem ineligible Inventory, based on such considerations as Agent may in its
reasonable discretion from time to time deem appropriate including whether the
Inventory is subject to a perfected, first priority security interest in favor
of Agent and no other Lien (other than a Permitted
Encumbrance).  Eligible Inventory shall include all Inventory
in-transit between locations owned or leased by the Borrowers and inventory
classified as exchanges, which is insured to the full value thereof and for
which Agent shall have in its possession (a) all negotiable bills of lading
properly endorsed and (b) all non-negotiable bills of lading issued in Agent’s
name. In addition, Inventory shall not be Eligible Inventory if it: (i) does not
conform to all standards imposed by any Governmental Body which has regulatory
authority over such goods or the use or sale thereof; (ii) except as set forth
above, is in transit; (iii) is located outside the continental United States;
(iv) constitutes Consigned Inventory; (v) is the subject of an Intellectual
Property Claim; (vi) is subject to a License Agreement or other agreement that
limits, conditions or restricts any Borrower’s or Agent’s right to sell or
otherwise dispose of such Inventory, unless Agent is a party to a Licensor/Agent
Agreement with the Licensor under such License Agreement; (vii) or is situated
at a location not owned by a Borrower unless the owner or occupier of such
location has executed in favor of Agent a Lien Waiver Agreement; or (viii) is
included in the Formula Amount under the Export Import Agreement.

     

    “Eligible Receivables”
shall mean and include with respect to each Borrower, each Receivable of such
Borrower arising in the Ordinary Course of Business and which Agent, in its sole
credit judgment, shall deem to be an Eligible Receivable, based on such
considerations as Agent may from time to time deem appropriate.  A
Receivable shall not be deemed eligible unless such Receivable is subject to
Agent’s first priority perfected security interest and no other Lien (other than
Permitted Encumbrances), and is evidenced by an invoice or other documentary
evidence satisfactory to Agent.  In addition, no Receivable shall be
an Eligible Receivable if:

     

    (a) it arises
out of a sale made by any Borrower to an Affiliate of any Borrower or to a
Person controlled by an Affiliate of any Borrower;

     

    (b) it is due
or unpaid more than ninety (90) days after the invoice date;

     

    (c) fifty
percent (50%) or more of the Receivables from such Customer are not deemed
Eligible Receivables hereunder.  Such percentage may, in Agent’s sole
discretion, be increased or decreased from time to time;

     

    (d) any
covenant, representation or warranty contained in this Agreement with respect to
such Receivable has been breached;

     

    (e) the
Customer shall (i) apply for, suffer, or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property or call a meeting of its
creditors, (ii) admit in writing its inability, or be generally unable, to pay
its debts as they become due or cease operations of its present business, (iii)
make a general assignment for the benefit of creditors, (iv) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, any petition which is filed
against it in any involuntary case under such bankruptcy laws, or (viii) take
any action for the purpose of effecting any of the foregoing;

     

    (f) the sale
is to a Customer outside the continental United States of America, unless the
sale is on letter of credit, guaranty or acceptance terms, in each case
acceptable to Agent in its sole discretion;

     

    (g) the sale
to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced by
chattel paper;

     

    (h) Agent
believes, in its sole judgment, that collection of such Receivable is insecure
or that such Receivable may not be paid by reason of the Customer’s financial
inability to pay;

     

    (i) the
Customer is the United States of America, any state or any department, agency or
instrumentality of any of them, unless the applicable Borrower assigns its right
to payment of such Receivable to Agent pursuant to the Assignment of Claims Act
of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C.
Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes
or ordinances;

     

    (j) the goods
giving rise to such Receivable have not been delivered to and accepted by the
Customer or the services giving rise to such Receivable have not been performed
by the applicable Borrower and accepted by the Customer or the Receivable
otherwise does not represent a final sale;

     

    (k) the
Receivables of the Customer exceed a credit limit determined by Agent, in its
reasonable discretion, to the extent such Receivable exceeds such
limit;

     

    (l) the
Receivable is subject to any offset, deduction, defense, dispute, or
counterclaim (to the extent of such offset, deduction, defense or counterclaim),
the Customer is also a creditor or supplier of a Borrower or the Receivable is
contingent in any respect or for any reason;

     

    (m) the
applicable Borrower has made any agreement with any Customer for any deduction
therefrom, except for discounts or allowances made in the Ordinary Course of
Business for prompt payment, all of which discounts or allowances are reflected
in the calculation of the face value of each respective invoice related
thereto;

     

    (n) any
return, rejection or repossession of the merchandise has occurred or the
rendition of services has been disputed;

     

    (o) such
Receivable is not payable to a Borrower;

     

    (p) such
Receivable is included in the Formula Amount under the Export-Import Agreement;
and

     

    (q) such
Receivable is not otherwise satisfactory to Agent as determined in good faith by
Agent in the exercise of its discretion in a reasonable manner.

     

    “Environmental
Complaint” shall have the meaning set forth in Section 4.19(d)
hereof.

     

    “Environmental Laws”
shall mean all federal, state and local environmental laws, statutes, ordinances
and codes relating to the protection of the environment and/or governing the
use, storage, treatment, generation, transportation, processing, handling,
production or disposal of Hazardous Substances and the rules, regulations,
policies, guidelines, interpretations, decisions, orders and directives of
federal, state and local governmental agencies and authorities with respect
thereto.

     

    “Equipment” shall mean
and include as to each Borrower all of such Borrower’s tangible personal
property (other than Inventory) whether now owned or hereafter acquired and
wherever located including: all equipment; machinery; manufacturing;
distribution; selling; data processing and office equipment; assembly systems,
tools; molds; dies; fixtures; appliances; apparatus; motor vehicles; fittings;
furniture; furnishings; fixtures; parts; accessories; and any and all
accessions, parts, appurtenances attached to any of the foregoing or used in
connection therewith; and any replacements, products, proceeds, and
substitutions therefor or accessions thereto.

     

    “Equity Interests” of
any Person shall mean any and all shares, rights to purchase, options, warrants,
general, limited or limited liability partnership interests, member interests,
participation or other equivalents of or interest in (regardless of how
designated) equity of such Person, whether voting or nonvoting, including common
stock, preferred stock, convertible securities or any other “equity security”
(as such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the SEC under the Exchange Act).

     

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

     

    “Eurodollar Rate”
shall mean for any Eurodollar Rate Loan for the then current Interest Period
relating thereto, the interest rate per annum determined by Agent by dividing
(the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of
1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such
other substitute Bloomberg page that displays rates at which US dollar deposits
are offered by leading banks in the London interbank deposit market), or the
rate which is quoted by another source selected by Agent which has been approved
by the British Bankers’ Association as an authorized information vendor for the
purpose of displaying rates at which U.S. dollar deposits are offered by leading
banks in the London interbank deposit market (an “Alternate Source”), at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period as the London interbank offered rate for
U.S. Dollars for an amount comparable to such Eurodollar Rate Loan and having a
borrowing date and a maturity comparable to such Interest Period (or if there
shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or
any substitute page) or any Alternate Source, a comparable replacement rate
determined by Agent at such time (which determination shall be conclusive absent
manifest error)), by (ii) a number equal 1.00 minus the Reserve Percentage. The
Eurodollar Rate may also be expressed by the following formula:

     

    
      	 
      	
              Average
      of London interbank offered rates  quoted by Bloomberg
      or  appropriate Successor as shown on

            
	
              Eurodollar
      Rate =

            	
              Bloomberg Page BBAM1

              1.00
      - Reserve Percentage

            


    

    


    The
Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that
is outstanding on the effective date of any change in the Reserve Percentage as
of such effective date.  The Agent shall give prompt notice to the
Borrowing Agent of the Eurodollar Rate as determined or adjusted in accordance
herewith, which determination shall be conclusive absent manifest
error.

     

    “Eurodollar Rate Loan”
shall mean an Advance at any time that bears interest based on the Eurodollar
Rate.

     

    “Event of Default”
shall have the meaning set forth in Article X hereof.

     

    “Excess Cash Flow” for
any fiscal period shall mean, in each case for Borrowers on a Consolidated
Basis, EBITDA for such fiscal period minus Unfunded Capital Expenditures during
such fiscal period, minus taxes actually paid during such fiscal period minus
dividends and distributions made during such period, minus Debt Payments made
during such period.

     

    “Exchange Act” shall
have the mean the Securities Exchange Act of 1934, as amended.

     

    “Executive Order No.
13224” shall mean the Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, as the same has been, or shall hereafter be,
renewed, extended, amended or replaced.

     

    “Ex-Im Agent” shall
mean the agent pursuant to the Ex-Im Agreement, as the term is defined
therein.

     

    “Export-Import
Agreement” or “Ex-Im Agreement”
shall mean that certain Export-Import Revolving Credit and Security Agreement
among Agent, Lenders and Borrowers of even date herewith (as the same may be
amended, restated, supplemented or replaced from time to time).

     

    “Ex-Im Credit
Documents” shall mean any and all documents executed in connection with
the Ex-Im Agreement.

     

    “Federal Funds Effective
Rate” for any day shall mean the rate per annum (based on a year of 360
days and actual days elapsed and rounded upward to the nearest 1/100 of 1%)
announced by the Federal Reserve Bank of New York (or any successor) on such day
as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the “Federal Funds Effective
Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank
(or its successor) does not announce such rate on any day, the "Federal Funds
Effective Rate" for such day shall be the Federal Funds Effective Rate for the
last day on which such rate was announced.

     

    “Federal Funds Open
Rate” shall mean the rate per annum determined by the Agent in accordance
with its usual procedures (which determination shall be conclusive absent
manifest error) to be the "open" rate for federal funds transactions as of the
opening of business for federal funds transactions among members of the Federal
Reserve System arranged by federal funds brokers on such day, as quoted by
Garvin Guybutler Corporation, any successor entity thereto, or any other broker
selected by the Agent, as set forth on the applicable Telerate display page;
provided, however; that if such day is not a Business Day, the Federal Funds
Open Rate for such day shall be the "open" rate on the immediately preceding
Business Day, or if no such rate shall be quoted by a Federal funds broker at
such time, such other rate as determined by the Agent in accordance with its
usual procedures.

     

    “Finished Goods Inventory
Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(ii)
hereof.

     

    “Fixed Charge Coverage
Ratio” shall mean and include, with respect to any fiscal period, the
ratio of (a) EBITDA, minus Unfunded Capital Expenditures made during such
period, minus distributions (including tax distributions) and dividends made
during such period, minus cash taxes paid during such period, to (b) all Debt
Payments made during such period.

     

    “Foreign Subsidiary”
of any Person, shall mean any Subsidiary of such Person that is not organized or
incorporated in the United States or any State or territory
thereof.

     

    “Formula Amount” shall
have the meaning set forth in Section 2.1(a).

     

    “GAAP” shall mean
generally accepted accounting principles in the United States of America in
effect from time to time.

     

    “General Intangibles”
shall mean and include as to each Borrower all of such Borrower’s general
intangibles, whether now owned or hereafter acquired, including all present and
future (i) general intangibles; (ii) rights, interests, payment intangibles,
choses in action, causes of action, claims and other intangible property of
every kind and nature (other than Receivables); (iii) corporate and other
business records; (iv) loans, royalties, and other obligations receivable; (v)
trademarks, registered trademarks, trademark applications, service marks,
registered service marks, service mark applications, patents, registered
patents, patent applications, trade names, rights of use of any name, labels,
fictitious names, inventions, designs, design rights, trade secrets, computer
programs, software, printouts, computer information, source codes, codes,
records and updates, registrations, and other computer materials, equipment
formulations, manufacturing procedures, quality control procedures, goodwill,
copyrights, copyright applications, permits, licenses, franchises, customer
lists, credit files, correspondence, and advertising materials; (vi) customer
and supplier contracts, firm sale orders, rights under license and franchise
agreements, rights under tax sharing agreements, rights under non-compete
agreements, and other contracts and contract rights; (vii) interests in
partnerships and joint ventures; (viii) tax refunds and tax refund claims; (ix)
right, title and other agreements relating to property; (x) deposit accounts
(general or special with any bank or other financial institution; (xi) credits
with and other claims against third parties (including carriers and shippers);
(xii) rights to indemnification and with respect to support and keep-well
agreements; (xiii) reversionary interests in pension and profit sharing plans
and reversionary, beneficial and residual interest in trusts; (xiv) letters of
credit, guarantees, Liens, security interests and other security held by or
granted to such Person; (xvi) uncertificated securities; (xvii) investment
property; (xviii) all claims under guaranties, security interests or other
security held by or granted to such Borrower to secure payment of any of the
Receivables by a Customer (other than to the extent covered by Receivables) all
rights of indemnification and all other intangible property of every kind and
nature (other than Receivables).

     

    “Governmental Acts”
shall have the meaning set forth in Section 2.17.

     

    “Governmental Body”
shall mean any nation or government, any federal, state, local or other
political subdivision thereof and any entity, authority, agency, division or
department exercising the executive, legislative, judicial, regulatory or
administrative functions of or pertaining to a government.

     

    “Guarantor” shall mean
any Person who may hereafter guarantee payment or performance of the whole or
any part of the Obligations and “Guarantors” means collectively all such
Persons.

     

    “Guarantor Security
Agreement” shall mean any Security Agreement executed by any Guarantor in
favor of Agent securing the Guaranty of such Guarantor.

     

    “Guaranty” shall mean
any guaranty of the obligations of Borrowers executed by a Guarantor in favor of
Agent for its benefit and for the ratable benefit of Lenders.

     

    “Hazardous Discharge”
shall have the meaning set forth in Section 4.19(d) hereof.

     

    “Hazardous Substance”
shall mean, without limitation, any flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products, methane, hazardous materials,
Hazardous Wastes, hazardous or Toxic Substances or related materials as defined
in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, et  seq.), RCRA, Articles 15 and 27 of the New York
State Environmental Conservation Law or any other applicable Environmental Law
and in the regulations adopted pursuant thereto.

     

    “Hazardous Wastes”
shall mean all waste materials subject to regulation under CERCLA, RCRA or
applicable state law, and any other applicable Federal and state laws now in
force or hereafter enacted relating to hazardous waste disposal.

     

    “Hedge Liabilities”
shall have the meaning provided in the definition of “Lender-Provided Interest
Rate Hedge”.

     

    “Holdings” shall mean
The Fairchild Corporation, a Delaware corporation.

     

    “Indebtedness” of a
Person at a particular date shall mean all obligations of such Person which in
accordance with GAAP would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned or otherwise) and in any event, without
limitation by reason of enumeration, shall include all indebtedness, debt and
other similar monetary obligations of such Person whether direct or guaranteed,
and all premiums, if any, due at the required prepayment dates of such
indebtedness, and  all indebtedness secured by a Lien on assets owned
by such Person, whether or not such indebtedness actually shall have been
created, assumed or incurred by such Person.  Any indebtedness of such
Person resulting from the acquisition by such Person of any assets subject to
any Lien shall be deemed, for the purposes hereof, to be the equivalent of the
creation, assumption and incurring of the indebtedness secured thereby, whether
or not actually so created, assumed or incurred.

     

    “Ineligible Security”
shall mean any security which may not be underwritten or dealt in by member
banks of the Federal Reserve System under Section 16 of the Banking Act of 1933
(12 U.S.C. Section 24, Seventh), as amended.

     

    “Intellectual
Property” shall mean property constituting under any Applicable Law a
patent, patent application, copyright, trademark, service mark, trade name, mask
work, trade secret or license or other right to use any of the
foregoing.

     

    “Intellectual Property
Claim” shall mean the assertion by any Person of a claim (whether
asserted in writing, by action, suit or proceeding or otherwise) that any
Borrower’s ownership, use, marketing, sale or distribution of any Inventory,
Equipment, Intellectual Property or other property or asset is violative of any
ownership of or right to use any Intellectual Property of such
Person.

     

    “Interest Period”
shall mean the period provided for any Eurodollar Rate Loan pursuant to Section
2.2(b).

     

    “Interest Rate Hedge”
shall mean an interest rate exchange, collar, cap, swap, interest rate future or
option, currency swap, currency future, forward, or option, adjustable strike
cap, adjustable strike corridor or similar agreements entered into by any
Borrower or its Subsidiaries in order to provide protection to, or minimize the
impact upon, such Borrower, any Guarantor and/or their respective Subsidiaries
of fluctuation in interests rates or increasing floating rates of interest
applicable to Indebtedness, and/or foreign exchange rates or conversion rates
for conversion of foreign currencies to Dollars.

     

    “Inventory” shall mean
and include as to each Borrower all of such Borrower’s now owned or hereafter
acquired goods, merchandise and other personal property, wherever located, to be
furnished under any consignment arrangement, contract of service or held for
sale or lease, all raw materials, work in process, finished goods and materials
and supplies of any kind, nature or description which are or might be used or
consumed in such Borrower’s business or used in selling or furnishing such
goods, merchandise and other personal property, and all documents of title or
other documents representing them.

     

    “Investment Property”
shall mean and include as to each Borrower, all of such Borrower’s now owned or
hereafter acquired securities (whether certificated or uncertificated),
securities entitlements, securities accounts, commodities contracts and
commodities accounts.

     

    “Issuer” shall mean
any Person who issues a Letter of Credit and/or accepts a draft pursuant to the
terms hereof.

     

    “Lender” and “Lenders” shall have
the meaning ascribed to such term in the preamble to this Agreement and shall
include each Person which becomes a transferee, successor or assign of any
Lender.

     

    “Lender-Provided Interest
Rate Hedge” shall mean an Interest Rate Hedge which is provided by any
Lender and with respect to which the Agent confirms meets the following
requirements: such Interest Rate Hedge (i) is documented in a standard
International Swap Dealer Association Agreement, (ii) provides for the method of
calculating the reimbursable amount of the provider's credit exposure in a
reasonable and customary manner, and (iii) is entered into for hedging (rather
than speculative) purposes.  The liabilities of any Borrower to the
provider of any Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”)
shall be “Obligations” hereunder, guaranteed obligations under any Guaranty and
secured obligations under any Guarantor Security Agreement and otherwise treated
as Obligations for purposes of each of the Other Documents. The Liens securing
the Hedge Liabilities shall be pari passu with the Liens securing all other
Obligations under this Agreement and the Other Documents.

     

    “Letter of Credit
Fees” shall have the meaning set forth in Section 3.2.

     

    “Letter of Credit
Borrowing” shall have the meaning set forth in Section
2.12(d).

     

    “Letter of Credit
Sublimit” shall mean $1,000,000.

     

    “Letters of Credit”
shall have the meaning set forth in Section 2.9.

     

    “License Agreement”
shall mean any agreement between any Borrower and a Licensor pursuant to which
such Borrower is authorized to use any Intellectual Property in connection with
the manufacturing, marketing, sale or other distribution of any Inventory of
such Borrower or otherwise in connection with such Borrower’s business
operations.

     

    “Licensor” shall mean
any Person from whom any Borrower obtains the right to use (whether on an
exclusive or non-exclusive basis) any Intellectual Property in connection with
such Borrower’s manufacture, marketing, sale or other distribution of any
Inventory or otherwise in connection with such Borrower’s business
operations.

     

    “Licensor/Agent
Agreement” shall mean an agreement between Agent and a Licensor, in form
and content satisfactory to Agent, by which Agent is given the unqualified
right, vis-a-vis such Licensor, to enforce Agent’s Liens with respect to and to
dispose of any Borrower’s Inventory with the benefit of any Intellectual
Property applicable thereto, irrespective of such Borrower’s default under any
License Agreement with such Licensor.

     

    “Lien” shall mean any
mortgage, deed of trust, pledge, hypothecation, assignment, security interest,
lien (whether statutory or otherwise), Charge, claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement
held or asserted in respect of any asset of any kind or nature whatsoever
including any conditional sale or other title retention agreement, any lease
having substantially the same economic effect as any of the foregoing, and the
filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction.

     

    “Lien Waiver
Agreement” shall mean an agreement which is executed in favor of Agent by
a Person who owns or occupies premises at which any Collateral may be located
from time to time and by which such Person shall waive any Lien that such Person
may ever have with respect to any of the Collateral and shall authorize Agent
from time to time to enter upon the premises to inspect or remove the Collateral
from such premises or to use such premises to store or dispose of such
Inventory.

     

    “Management Agreement”
shall mean that certain Management Services Agreement between Holdings and
Borrowing Agent dated as of June 11, 2008; as in effect on the Closing
Date.

     

    “Management Services”
shall mean all services provided to Borrowers under the Management
Agreement.

     

    “Material Adverse
Effect” shall mean a material adverse effect on (a) the condition
(financial or otherwise), results of operations, assets, business, properties or
prospects of the Borrowers and Guarantor on a consolidated basis, (b) any
Borrower’s ability to duly and punctually pay or perform the Obligations in
accordance with the terms thereof, (c) Agent’s Liens on the Collateral or the
priority of any such Lien, or (d) the practical realization of the benefits of
Agent’s and each Lender’s rights and remedies under this Agreement and the Other
Documents.

     

    “Maximum Face Amount”
shall mean, with respect to any outstanding Letter of Credit, the face amount of
such Letter of Credit including all automatic increases provided for in such
Letter of Credit, whether or not any such automatic increase has become
effective.

     

    “Maximum Loan Amount”
shall mean $28,000,000.

     

    “Maximum Revolving Advance
Amount” shall mean $28,000,000 less the amount of outstanding Advances
(as defined in the Export-Import Agreement) under the Export-Import
Agreement.

     

    “Maximum Undrawn
Amount” shall mean with respect to any outstanding Letter of Credit, the
amount of such Letter of Credit that is or may become available to be drawn,
including all automatic increases provided for in such Letter of Credit, whether
or not any such automatic increase has become effective.

     

    “Modified Commitment Transfer
Supplement” shall have the meaning set forth in Section
16.3(d).

     

    “Multiemployer Plan”
shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of
ERISA.

     

    “Multiple Employer
Plan” shall mean a Plan which has two or more contributing sponsors
(including any Borrower or any member of the Controlled Group) at least two of
whom are not under common control, as such a plan is described in Section 4064
of ERISA.

     

    “Net Orderly Liquidation
Value Appraisal” shall means the certain appraisal prepared by SH&E,
Inc, dated April 1, 2008 and such later appraisal, in form and substance
satisfactory to Agent and prepared by an appraiser acceptable to Agent from time
to time.

     

    “Note” shall mean,
collectively, the Revolving Credit Notes.

     

    “Obligations” shall
mean and include any and all loans, advances, debts, liabilities, obligations,
covenants and duties owing by any Borrower to Lenders or Agent or to any other
direct or indirect subsidiary or affiliate of Agent or any Lender of any kind or
nature, present or future (including any interest or other amounts accruing
thereon after maturity, or after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding relating
to any Borrower, whether or not a claim for post-filing or post-petition
interest or other amounts is allowed in such proceeding), whether or not
evidenced by any note, guaranty or other instrument, whether arising under any
agreement, instrument or document, (including this Agreement and the Other
Documents) whether or not for the payment of money, whether arising by reason of
an extension of credit, opening or amendment of a letter of credit, loan,
equipment lease or guarantee, under any interest or currency swap, future,
option or other similar agreement, or in any other manner, whether arising out
of overdrafts or deposit or other accounts or electronic funds transfers
(whether through automated clearing houses or otherwise) or out of the Agent’s
or any Lenders non-receipt of or inability to collect funds or otherwise not
being made whole in connection with depository transfer check or other similar
arrangements, whether direct or indirect (including those acquired by assignment
or participation), absolute or contingent, joint or several, due or to become
due, now existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, regardless of how such indebtedness or liabilities arise or by
what agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument, including, but not limited to, any and all of any
Borrower’s Indebtedness and/or liabilities under this Agreement, the Other
Documents or under any other agreement between Agent or Lenders and any Borrower
and any amendments, extensions, renewals or increases and all costs and expenses
of Agent and any Lender incurred in the documentation, negotiation,
modification, enforcement, collection or otherwise in connection with any of the
foregoing, including but not limited to reasonable attorneys’ fees and expenses
and all obligations of any Borrower to Agent or Lenders to perform acts or
refrain from taking any action.

     

    “Ordinary Course of
Business” shall mean with respect to any Borrower, the ordinary course of
such Borrower’s business as conducted on the Closing Date.

     

    “Original Owners”
shall mean (i) with respect to BAHCI, Holdings and (ii) with respect to all
other Borrowers, BAHCI.

     

    “Other Documents”
shall mean the Note, the Perfection Certificates, any Guaranty, any Guarantor
Security Agreement, any Lender-Provided Interest Rate Hedge and any and all
other agreements, instruments and documents, including guaranties, pledges,
powers of attorney, consents, interest or currency swap agreements or other
similar agreements and all other writings heretofore, now or hereafter executed
by any Borrower or any Guarantor and/or delivered to Agent or any Lender in
respect of the transactions contemplated by this Agreement.

     

    “Out-of-Formula Loans”
shall have the meaning set forth in Section 16.2(b).

     

    “Parent” of any Person
shall mean a corporation or other entity owning, directly or indirectly at least
50% of the shares of stock or other ownership interests having ordinary voting
power to elect a majority of the directors of the Person, or other Persons
performing similar functions for any such Person.

     

    “Participant” shall
mean each Person who shall be granted the right by any Lender to participate in
any of the Advances and who shall have entered into a participation agreement in
form and substance satisfactory to such Lender.

     

    “Participation
Advance” shall have the meaning set forth in Section
2.12(d).

     

    “Participation
Commitment” shall mean each Lender’s obligation to buy a participation of
the Letters of Credit issued hereunder.

     

    “Payment Office” shall
mean initially Two Tower Center Boulevard, East Brunswick, New Jersey 08816;
thereafter, such other office of Agent, if any, which it may designate by notice
to Borrowing Agent and to each Lender to be the Payment Office.

     

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

     

    “Permitted
Acquisitions” shall mean acquisitions of the assets or Equity Interests
of another Person so long as:  (a) Borrowers have average Undrawn
Availability of not less than an amount equal to the sum of $3,000,000, plus the
amount of Advances being drawn and used in connection with such acquisition, for
the prior thirty (30) day period; (b) after giving effect to such acquisition
Borrowers have Undrawn Availability of $3,000,000; (c) the total costs and
liabilities of all such acquisitions do not exceed, in the aggregate, $5,000,000
(including without limitation all assumed liabilities, all earn-out payments,
deferred payments and the value of any other stock or assets transferred,
assigned or encumbered with respect to such acquisitions); (d) with respect to
the acquisition of Equity Interests, such acquired company shall have a positive
EBITDA and tangible net worth, calculated in accordance with GAAP immediately
prior to such acquisition; (e) the acquired company or property is used or
useful in the same or a similar line of business as the Borrowers were engaged
in on the Closing Date (or any reasonable extensions or expansions thereof); (f)
Agent shall have received a first-priority security interest in all assets or
Equity Interests, subject to documentation satisfactory to Agent; (g) the board
of directors (or other comparable governing body) of such company shall have
duly approved the transaction; (h) the Borrowers shall have delivered to Agent
(i) a pro forma balance sheet and pro forma financial statements and a
Compliance Certificate demonstrating that, upon giving effect to such
acquisition on a pro forma basis, the Borrowers would be in compliance with the
financial covenants set forth in Section 6.5 as of the most recent fiscal
quarter end and (ii) audited financial statements of the acquired entity,
in form and substance reasonably acceptable to Agent, audited in accordance with
GAAP; (i) if such acquisition includes general partnership interests or any
other Equity Interest that does not have a corporate (or similar) limitation on
liability of the owners thereof, then such acquisition shall be effected by
having such Equity Interests acquired by a corporate holding company directly or
indirectly wholly-owned by a Borrower and newly formed for the sole purpose of
effecting such acquisition; (j) no assets acquired in any such transaction(s)
shall be included in the Formula Amount until Agent has received an audit of
such assets, in form and substance acceptable to Agent and (k) no Default or
Event of Default shall have occurred or will occur after giving pro forma effect
to such acquisition. For the purposes of calculating average Undrawn
Availability and Undrawn Availability under this definition, any assets being
acquired in the proposed acquisition shall be included in the Formula Amount
hereunder or the Formula Amount under the Ex-Im Agreement, as applicable, for
each of the previous thirty (30) days and on the date of closing so long as
Agent has received an audit of such assets as set forth in clause (j) above and
so long as such assets satisfy the applicable eligibility criteria.

     

    “Perfection
Certificates” shall mean collectively, the Perfection Certificates and
the responses thereto provided by each Borrower and delivered to
Agent.

     

    “Pension Benefit Plan”
shall mean at any time any employee pension benefit plan (including a Multiple
Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the
Code and either (i) is maintained by any member of the Controlled Group for
employees of any member of the Controlled Group; or (ii) has at any time within
the preceding five years been maintained by any entity which was at such time a
member of the Controlled Group for employees of any entity which was at such
time a member of the Controlled Group.

     

    “Permitted
Encumbrances” shall mean: (a) Liens in favor of Agent for the benefit of
Agent and Lenders; (b) Liens for taxes, assessments or other governmental
charges not delinquent or being contested in good faith and by appropriate
proceedings and with respect to which proper reserves have been taken by
Borrowers; provided, that, the Lien shall have no effect on the priority of the
Liens in favor of Agent or the value of the assets in which Agent has such a
Lien and a stay of enforcement of any such Lien shall be in effect; (c) Liens
disclosed in the financial statements referred to in Section 5.5, the existence
of which Agent has consented to in writing; (d) deposits or pledges to secure
obligations under worker’s compensation, social security or similar laws, or
under unemployment insurance; (e) deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the Ordinary Course of Business; (f) Liens arising by virtue of the
rendition, entry or issuance against any Borrower or any Subsidiary, or any
property of any Borrower or any Subsidiary, of any judgment, writ, order, or
decree for so long as each such Lien (i) is in existence for less than 20
consecutive days after it first arises or is being Properly Contested and (ii)
is at all times junior in priority to any Liens in favor of Agent; (g)
mechanics’, workers’, materialmen’s or other like Liens arising in the Ordinary
Course of Business with respect to obligations which are not due or which are
being contested in good faith by the applicable Borrower; (h) Liens placed upon
fixed assets hereafter acquired to secure a portion of the purchase price
thereof, provided that (x) any such lien shall not encumber any other property
of any Borrower and (y) the aggregate amount of Indebtedness secured by such
Liens incurred as a result of such purchases during any fiscal year shall not
exceed the amount provided for in Section 7.6; and (i) Liens disclosed on
Schedule 1.2.

     

    “Permitted Holders”
shall mean (i) Jeffrey J. Steiner; (ii) any member of Jeffrey J. Steiner’s
immediate family or any of his lineal descendants; (iii) any trust or estate the
principal beneficiaries of which are Persons referred to in clauses (i) and
(ii); (iv) in the event of the incompetence or death of any of the Persons
described in clauses (i) or (ii), such Person’s estate, executor, administrator,
committee or other personal representative or beneficiaries, and (v) Affiliates
or “associates” (as defined in the Securities Exchange Act) of the Persons
described in clauses (i), (ii), (iii), and (iv).

     

    “Person” shall mean
any natural person, individual, sole proprietorship, partnership, corporation,
business trust, joint stock company, trust, unincorporated organization,
association, limited liability company, limited liability partnership,
institution, public benefit corporation, joint venture, entity or Governmental
Body (whether federal, state, county, city, municipal or otherwise, including
any instrumentality, division, agency, body or department thereof).

     

    “Plan” shall mean any
employee benefit plan within the meaning of Section 3(3) of ERISA (including a
Pension Benefit Plan), maintained for employees of any Borrower or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its
employees.

     

    “PNC” shall have the
meaning set forth in the preamble to this Agreement and shall extend to all of
its successors and assigns.

     

    “Properly Contested”
shall mean, in the case of any Indebtedness of any Person (including any taxes)
that is not paid as and when due or payable by reason of such Person’s bona fide
dispute concerning its liability to pay same or concerning the amount thereof,
(i) such Indebtedness is being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; (ii) such Person has
established appropriate reserves as shall be required in conformity with GAAP;
(iii) the non-payment of such Indebtedness will not have a Material Adverse
Effect and will not result in the forfeiture of any assets of such Person; (iv)
no Lien is imposed upon any of such Person’s assets with respect to such
Indebtedness unless such Lien is at all times junior and subordinate in priority
to the Liens in favor of the Agent (except only with respect to property taxes
that have priority as a matter of applicable state law) and enforcement of such
Lien is stayed during the period prior to the final resolution or disposition of
such dispute; (v) if such Indebtedness results from, or is determined by the
entry, rendition or issuance against a Person or any of its assets of a
judgment, writ, order or decree, enforcement of such judgment, writ, order or
decree is stayed pending a timely appeal or other judicial review; and (vi) if
such contest is abandoned, settled or determined adversely (in whole or in part)
to such Person, such Person forthwith pays such Indebtedness and all penalties,
interest and other amounts due in connection therewith.

     

    “Projections” shall
have the meaning set forth in Section 5.5(a) hereof.

     

    “Purchasing CLO” shall
have the meaning set forth in Section 16.3(d) hereof.

     

    “Purchasing Lender”
shall have the meaning set forth in Section 16.3(c) hereof.

     

    “RCRA” shall mean the
Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may
be amended from time to time.

     

    “Real Property” shall
mean all of each Borrower’s right, title and interest in and to the owned and
leased premises identified on Schedule 4.19 hereto.

     

    “Receivables” shall
mean and include, as to each Borrower, all of such Borrower’s present and
future: (i) accounts; (ii) contract rights, chattel paper (including electronic
chattel paper), instruments (including those evidencing indebtedness owed to
such Borrower by its Affiliates), documents, general intangibles relating to
accounts, drafts and acceptances, credit card receivables, deposit accounts, and
other rights to payment of any kind, whether or not arising out of or in
connection with the sale or lease of goods or the rendering of services, and
whether or not earned by performance; (iii) any of the foregoing which are not
evidenced by instruments or chattel paper; (iv) inter-company receivables, and
any security documents executed in connection therewith; (v) proceeds of any
letters of credit or insurance policies on which such Borrower is named as
beneficiary; (vi) claims against third parties for advances and other financial
accommodations and any other obligations whatsoever owing to such Borrower;
(vii) rights in and to all security agreements, leases, guarantees, instruments,
securities, documents of title and other contracts securing, evidencing,
supporting or otherwise relating to any of the foregoing, together with all
rights in any goods, merchandise or Inventory which any of the foregoing may
represent: (viii) rights in returned and repossessed goods, merchandise and
Inventory which any of the same may represent, including, without limitation,
any right of stoppage in transit; and (ix) and all other forms of obligations
owing to such Borrower arising out of or in connection with the sale or lease of
Inventory or the rendition of services, all supporting obligations, guarantees
and other security therefor, whether secured or unsecured, now existing or
hereafter created, and whether or not specifically sold or assigned to Agent
hereunder.

     

    “Receivables Advance
Rate” shall have the meaning set forth in Section 2.1(a)(y)(i)
hereof.

     

    “Register” shall have
the meaning set forth in Section 16.3(e).

     

    “Reimbursement
Obligation” shall have the meaning set forth in Section
2.12(b)hereof.

     

    “Release” shall have
the meaning set forth in Section 5.7(c)(i) hereof.

     

    “Reportable Event”
shall mean a reportable event described in Section 4043(c) of ERISA or the
regulations promulgated thereunder.

     

    “Required Lenders”
shall mean Lenders holding at least sixty-six and two thirds percent (66.6667%)
of the Advances and, if no Advances are outstanding, shall mean Lenders holding
sixty-six and two thirds percent (66.6667%) of the Commitment Percentages;
provided, however, if there are fewer than three (3) Lenders, Required Lenders
shall mean all Lenders.

     

    “Reserve Percentage”
shall mean as of any day the maximum percentage in effect on such day as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental,
marginal and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as “Eurocurrency Liabilities”.

     

    “Revolving Advances”
shall mean Advances made other than Letters of Credit.

     

    “Revolving Credit
Note” shall mean, collectively, the promissory notes referred to in
Section 2.1(a) hereof.

     

    “Revolving Interest
Rate” shall mean an interest rate per annum equal to (a) the Alternate
Base Rate with respect to Domestic Rate Loans and (b) the sum of the Eurodollar
Rate plus two and one-half of one percent (2.50%) with respect to Eurodollar
Rate Loans.

     

    “SEC” shall mean the
Securities and Exchange Commission or any successor thereto.

     

    “Section 20
Subsidiary” shall mean the Subsidiary of the bank holding company
controlling PNC, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible
Securities.

     

    “Securities Act” shall
mean the Securities Act of 1933, as amended.

     

    “Settlement Date”
shall mean the Closing Date and thereafter Wednesday or Thursday of each week or
more frequently if Agent deems appropriate unless such day is not a Business Day
in which case it shall be the next succeeding Business Day.

     

    “Standby Letters of
Credit” shall mean letters of credit constituted with all the documents
complying with the Uniform Customs and Practice for International Standby
Practices as most recently published by the International Chamber of Commerce at
the time the letter of credit is issued.

     

    “Subordinated
Indebtedness” shall mean the indebtedness owed by the Borrowers to
Subordinated Lender pursuant to the Subordinated Loan
Documentation.

     

    “Subordinated Lender”
shall mean Holdings.

     

    “Subordinated Loan
Documentation” shall mean the Subordinated Notes and all other related
agreements, instruments and documents among Borrowers and Subordinated
Lender.

     

    “Subordinated Note”
shall mean the subordinated promissory note issued by Borrowers in favor of
Subordinated Lender dated January 12, 2004 in the aggregate unpaid principal
amount of all intercompany loans made by Holdings to certain of the
Borrowers.

     

    “Subordination
Agreement” shall mean the Subordination Agreement dated the date hereof
among Agent, Borrowers and Subordinated Lender.

     

    “Subsidiary” of any
Person shall mean a corporation or other entity of whose Equity Interests having
ordinary voting power (other than Equity Interests having such power only by
reason of the happening of a contingency) to elect a majority of the directors
of such corporation, or other Persons performing similar functions for such
entity, are owned, directly or indirectly, by such Person, one or more of the
other Subsidiaries of such Person or any combination thereof.

     

    “Subsidiary Stock”
shall mean all of the issued and outstanding Equity Interests of any Subsidiary
owned by any Borrower (not to exceed 65% of the Equity Interests of any Foreign
Subsidiary).

     

    “Term” shall have the
meaning set forth in Section 13.1 hereof.

     

    “Termination Event”
shall mean (i) a Reportable Event with respect to any Plan or Multiemployer
Plan; (ii) the withdrawal of any Borrower or any member of the Controlled Group
from a Plan or Multiemployer Plan during a plan year in which such entity was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the
providing of notice of intent to terminate a Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Plan or Multiemployer Plan; (v) any event or
condition (a) which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (b) that may result in termination of a Multiemployer
Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any
Borrower or any member of the Controlled Group from a Multiemployer
Plan.

     

    “Toxic Substance”
shall mean and include any material present on the Real Property or the
Leasehold Interests which has been shown to have significant adverse effect on
human health or which is subject to regulation under the Toxic Substances
Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any
other applicable Federal or state laws now in force or hereafter enacted
relating to toxic substances.  “Toxic Substance” includes but is not
limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.

     

    “Trading with the Enemy
Act” shall mean the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any
enabling legislation or executive order relating thereto.

     

    “Transactions” shall
mean the transactions contemplated by this Agreement.

     

    “Transferee” shall
have the meaning set forth in Section 16.3(d) hereof.

     

    “Undrawn Availability”
at a particular date shall mean an amount equal to (a) the lesser of (i)
(without duplication) the sum of the Formula Amount, plus the Formula Amount
under the Ex-Im Agreement or (ii) the Maximum Loan Amount less the Maximum
Undrawn Amount, minus (b) the sum of (i) the outstanding amount of Advances,
plus (ii) the outstanding amount of Advances under the Ex-Im Agreement, plus
(iii) all amounts due and owing to any Borrower’s trade creditors which are
outstanding sixty (60) days beyond their due date, plus (iv) fees and expenses
for which Borrowers are liable, but which have not been paid or charged to
Borrowers’ Account under this Agreement or the Ex-Im Agreement.

     

    “Unfunded Capital
Expenditures” shall mean Capital Expenditures made through Revolving
Advances or out of Borrowers’ own funds other than through equity contributed
subsequent to the Closing Date or purchase money or other financing or lease
transactions permitted hereunder.

     

    “Uniform Commercial
Code” shall have the meaning set forth in Section 1.3
hereof.

     

    “USA PATRIOT Act”
shall mean the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as
the same has been, or shall hereafter be, renewed, extended, amended or
replaced.

     

    “Week” shall mean the
time period commencing with the opening of business on a Wednesday and ending on
the end of business the following Tuesday.

     

    1.3. Uniform Commercial Code
Terms.  All terms used herein and defined in the Uniform
Commercial Code as adopted in the State of New York from time to time (the
“Uniform Commercial Code”) shall have the meaning given therein unless otherwise
defined herein.  Without limiting the foregoing, the terms “accounts”,
“chattel paper”, “instruments”, “general intangibles”, “payment intangibles”,
“supporting obligations”, “securities”, “investment property”, “documents”,
“deposit accounts”, “software”, “letter of credit rights”, “inventory”,
“equipment” and “fixtures”, as and when used in the description of Collateral
shall have the meanings given to such terms in Articles 8 or 9 of the Uniform
Commercial Code.  To the extent the definition of any category or type
of collateral is expanded by any amendment, modification or revision to the
Uniform Commercial Code, such expanded definition will apply automatically as of
the date of such amendment, modification or revision.

     

    1.4. Certain Matters of
Construction.  The terms “herein”, “hereof” and “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any
particular section, paragraph or subdivision.  All references herein
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this
Agreement.  Any pronoun used shall be deemed to cover all
genders.  Wherever appropriate in the context, terms used herein in
the singular also include the plural and vice versa.  All references
to statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.  Unless otherwise provided, all
references to any instruments or agreements to which Agent is a party, including
references to any of the Other Documents, shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.  All references herein to the time of day shall mean the time
in New York, New York.  Unless otherwise provided, all financial
calculations shall be performed with Inventory valued on a first-in, first-out
basis.  Whenever the words “including” or “include” shall be used,
such words shall be understood to mean “including, without limitation” or
“include, without limitation”.  A Default or Event of Default shall be
deemed to exist at all times during the period commencing on the date that such
Default or Event of Default occurs to the date on which such Default or Event of
Default is waived in writing pursuant to this Agreement or, in the case of a
Default, is cured within any period of cure expressly provided for in this
Agreement; and an Event of Default shall “continue” or be “continuing” until
such Event of Default has been waived in writing by the Required
Lenders.  Any Lien referred to in this Agreement or any of the Other
Documents as having been created in favor of Agent, any agreement entered into
by Agent pursuant to this Agreement or any of the Other Documents, any payment
made by or to or funds received by Agent pursuant to or as contemplated by this
Agreement or any of the Other Documents, or any act taken or omitted to be taken
by Agent, shall, unless otherwise expressly provided, be created, entered into,
made or received, or taken or omitted, for the benefit or account of Agent and
Lenders. Wherever the phrase “to the best of Borrowers’ knowledge” or words of
similar import relating to the knowledge or the awareness of any Borrower are
used in this Agreement or Other Documents, such phrase shall mean and refer to
(i) the actual knowledge of a senior officer of any Borrower or (ii) the
knowledge that a senior officer would have obtained if he had engaged in good
faith and diligent performance of his duties, including the making of such
reasonably specific inquiries as may be necessary of the employees or agents of
such Borrower and a good faith attempt to ascertain the existence or accuracy of
the matter to which such phrase relates.  All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or otherwise within the limitations of, another covenant shall
not avoid the occurrence of a default if such action is taken or condition
exists.  In addition, all representations and warranties hereunder
shall be given independent effect so that if a particular representation or
warranty proves to be incorrect or is breached, the fact that another
representation or warranty concerning the same or similar subject matter is
correct or is not breached will not affect the incorrectness of a breach of a
representation or warranty hereunder.

     

    II. ADVANCES,
PAYMENTS.

     

    2.1. Revolving
Advances.

     

    (a) Amount of Revolving
Advances.  Subject to the terms and conditions set forth in
this Agreement including Sections 2.1(b), (c), (d) and (e), each Lender,
severally and not jointly, will make Revolving Advances to Borrowers in
aggregate amounts outstanding at any time equal to such Lender’s Commitment
Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the
aggregate Maximum Undrawn Amount of all outstanding Letters of Credit or (y) an
amount equal to the sum of:

     

    (i) up to
85%, subject to the provisions of Section 2.1(e) hereof (“Receivables Advance
Rate”), of Eligible Receivables, plus

     

    (ii) up to the
lesser of (A) 65%, subject to the provisions of Sections 2.1(b), (c), (d) and
(e) hereof, of the value of the Eligible Domestic Finished Goods Inventory
(“Finished Goods Inventory Advance Rate” and together with the Receivables
Advance Rate, collectively, the “Advance Rates”) or (B) 85% of the appraised net
orderly liquidation value of Eligible Inventory (as evidenced by the Net Orderly
Liquidation Value Appraisal), minus

     

    (iii) the
aggregate Maximum Undrawn Amount of all outstanding Letters of Credit,
minus

     

    (iv) such
reserves as Agent may reasonably deem proper and necessary from time to
time.

     

    The
amount derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii) minus (y)
Section 2.1(a)(y)(iii) and (iv) at any time and from time to time shall be
referred to as the “Formula Amount”.  The Revolving Advances shall be
evidenced by one or more secured promissory notes (collectively, the “Revolving
Credit Note”) substantially in the form attached hereto as Exhibit
2.1(a).

     

    (b) Sublimit for Revolving
Advances Against Eligible Domestic Finished Goods
Inventory.  The aggregate amount of Revolving Advances made to
Borrowers against Eligible Domestic Finished Goods Inventory shall not exceed in
the aggregate, at any one time outstanding, the sum of $18,000,000 less the aggregate
advances outstanding against Eligible Export-Related Inventory Value under the
Ex-Im Agreement.

     

    (c) Sublimit for Revolving
Advances Against Eligible Domestic Finished Goods Inventory in transit.
The aggregate amount of Revolving Advances made to Borrowers against
in-transit Eligible Domestic Finished Goods Inventory shall not exceed in the
aggregate, at any one time outstanding, the sum of $1,500,000 less the aggregate
advances outstanding against in-transit Eligible Export-Related Inventory Value
under the Ex-Im Agreement.

     

    (d) Sublimit for Revolving
Advances Against Work in Process Eligible Domestic Finished Goods
Inventory.  The aggregate amount of Revolving Advances made to
Borrower against work in process Eligible Domestic Finished Goods Inventory
shall not exceed in the aggregate, at any one time outstanding the sum of
$2,800,000 less
the aggregate advances outstanding against work in process Eligible Export
Related Finished Goods Inventory under the Ex-Im Agreement.

     

    (e) Discretionary
Rights.  Based on a material change in the composition, or
performance, of the collateral base as determined by Agent from the results of
field examinations and/or other collateral evaluations, the Advance Rates may be
increased or decreased by Agent at any time and from time to time in the
exercise of its reasonable discretion.  Each Borrower consents to any
such increases or decreases and acknowledges that decreasing the Advance Rates
or increasing or imposing reserves may limit or restrict Advances requested by
Borrowing Agent.  Agent shall give Borrowing Agent ten (10) days prior
written notice of its intention to decrease the Advance Rates.  The
rights of Agent under this subsection are subject to the provisions of Section
16.2(b).

     

    2.2. Procedure for Revolving
Advances Borrowing.

     

    (a) Borrowing
Agent on behalf of any Borrower may notify Agent prior to 12:00 p.m. on a
Business Day of a Borrower’s request to incur, on that day, a Revolving Advance
hereunder.  Should any amount required to be paid as interest
hereunder, or as fees or other charges under this Agreement or any other
agreement with Agent or Lenders, or with respect to any other Obligation, become
due, same shall be deemed a request for a Revolving Advance as of the date such
payment is due, in the amount required to pay in full such interest, fee, charge
or Obligation under this Agreement or any other agreement with Agent or Lenders,
and such request shall be irrevocable.

     

    (b) Notwithstanding
the provisions of subsection (a) above, in the event any Borrower desires to
obtain a Eurodollar Rate Loan, Borrowing Agent shall give Agent written notice
by no later than 1:00 p.m. on the day which is three (3) Business Days prior to
the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of
the proposed borrowing (which shall be a Business Day), (ii) the type of
borrowing and the amount on the date of such Advance to be borrowed, which
amount shall be in a minimum amount of $500,000 and in integral multiples of
$100,000 thereafter, and (iii) the duration of the first Interest Period
therefor.  Interest Periods for Eurodollar Rate Loans shall be for
one, two, three or six months; provided, if an Interest Period would end on a
day that is not a Business Day, it shall end on the next succeeding Business Day
unless such day falls in the next succeeding calendar month in which case the
Interest Period shall end on the next preceding Business Day.  No
Eurodollar Rate Loan shall be made available to any Borrower during the
continuance of a Default or an Event of Default.  After giving effect
to each requested Eurodollar Rate Loan, including those which are converted from
a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more
than three (3) Eurodollar Rate Loans, in the aggregate.

     

    (c) Each
Interest Period of a Eurodollar Rate Loan shall commence on the date such
Eurodollar Rate Loan is made and shall end on such date as Borrowing Agent may
elect as set forth in subsection (b)(iii) above provided that the exact length
of each Interest Period shall be determined in accordance with the practice of
the interbank market for offshore Dollar deposits and no Interest Period shall
end after the last day of the Term.

     

    Borrowing
Agent shall elect the initial Interest Period applicable to a Eurodollar Rate
Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by
its notice of conversion given to Agent pursuant to Section 2.2(d), as the case
may be.  Borrowing Agent shall elect the duration of each succeeding
Interest Period by giving irrevocable written notice to Agent of such duration
not later than 11:00 a.m. on the day which is three (3) Business Days prior to
the last day of the then current Interest Period applicable to such Eurodollar
Rate Loan.  If Agent does not receive timely notice of the Interest
Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have
elected to convert to a Domestic Rate Loan subject to Section 2.2(d)
hereinbelow.

     

    (d) Provided
that no Event of Default shall have occurred and be continuing, Borrowing Agent
may, on the last Business Day of the then current Interest Period applicable to
any outstanding Eurodollar Rate Loan, or on any Business Day with respect to
Domestic Rate Loans, convert any such loan into a loan of another type in the
same aggregate principal amount provided that any conversion of a Eurodollar
Rate Loan shall be made only on the last Business Day of the then current
Interest Period applicable to such Eurodollar Rate Loan.  If Borrowing
Agent desires to convert a loan, Borrowing Agent shall give Agent written notice
by no later than 11:00 a.m. (i) on the day which is three (3) Business Days’
prior to the date on which such conversion is to occur with respect to a
conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the
day which is one (1) Business Day prior to the date on which such conversion is
to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic
Rate Loan, specifying, in each case, the date of such conversion, the loans to
be converted and if the conversion is from a Domestic Rate Loan to any other
type of loan, the duration of the first Interest Period therefor.

     

    (e) At its
option and upon written notice given prior to 11:00 a.m. (New York time) at
least three (3) Business Days’ prior to the date of such prepayment, any
Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part
from time to time with accrued interest on the principal being prepaid to the
date of such repayment.  Such Borrower shall specify the date of
prepayment of Advances which are Eurodollar Rate Loans and the amount of such
prepayment.  In the event that any prepayment of a Eurodollar Rate
Loan is required or permitted on a date other than the last Business Day of the
then current Interest Period with respect thereto, such Borrower shall indemnify
Agent and Lenders therefor in accordance with Section 2.2(f)
hereof.

     

    (f) Each
Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless
from and against any and all losses or expenses that Agent and Lenders may
sustain or incur as a consequence of any prepayment, conversion of or any
default by any Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including, but not limited to, any interest payable by Agent or
Lenders to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder.  A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by Agent or any
Lender to Borrowing Agent shall be conclusive absent manifest
error.

     

    (g) Notwithstanding
any other provision hereof, if any Applicable Law, treaty, regulation or
directive, or any change therein or in the interpretation or application
thereof, shall make it unlawful for any Lender (for purposes of this subsection
(g), the term “Lender” shall include any Lender and the office or branch where
any Lender or any corporation or bank controlling such Lender makes or maintains
any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the
obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be
cancelled and Borrowers shall, if any affected Eurodollar Rate Loans are then
outstanding, promptly upon request from Agent, either pay all such affected
Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans
of another type.  If any such payment or conversion of any Eurodollar
Rate Loan is made on a day that is not the last day of the Interest Period
applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent, upon Agent’s
request, such amount or amounts as may be necessary to compensate Lenders for
any loss or expense sustained or incurred by Lenders in respect of such
Eurodollar Rate Loan as a result of such payment or conversion, including (but
not limited to) any interest or other amounts payable by Lenders to lenders of
funds obtained by Lenders in order to make or maintain such Eurodollar Rate
Loan.  A certificate as to any additional amounts payable pursuant to
the foregoing sentence submitted by Lenders to Borrowing Agent shall be
conclusive absent manifest error.

     

    2.3. Disbursement of Advance
Proceeds.  All Advances shall be disbursed from whichever
office or other place Agent may designate from time to time and, together with
any and all other Obligations of Borrowers to Agent or Lenders, shall be charged
to Borrowers’ Account on Agent’s books.  During the Term, Borrowers
may use the Revolving Advances by borrowing, prepaying and re-borrowing, all in
accordance with the terms and conditions hereof.  The proceeds of each
Revolving Advance requested by Borrowing Agent on behalf of any Borrower or
deemed to have been requested by any Borrower under Section 2.2(a) hereof shall,
with respect to requested Revolving Advances to the extent Lenders make such
Revolving Advances, be made available to the applicable Borrower on the day so
requested by way of credit to such Borrower’s operating account at PNC, or such
other bank as Borrowing Agent may designate following notification to Agent, in
immediately available federal funds or other immediately available funds or,
with respect to Revolving Advances deemed to have been requested by any
Borrower, be disbursed to Agent to be applied to the outstanding Obligations
giving rise to such deemed request.

     

    2.4. Reserved.

     

    2.5. Maximum
Advances.  The aggregate balance of Revolving Advances
outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving
Advance Amount less the Maximum Undrawn Amount of all issued and outstanding
Letters of Credit or (b) the Formula Amount.

     

    2.6. Repayment of
Advances.

     

    (a) The
Advances shall be due and payable in full on the last day of the Term subject to
earlier prepayment as herein provided.

     

    (b) Each
Borrower recognizes that the amounts evidenced by checks, notes, drafts or any
other items of payment relating to and/or proceeds of Collateral may not be
collectible by Agent on the date received.  In consideration of
Agent’s agreement to conditionally credit Borrowers’ Account as of the Business
Day on which Agent receives those items of payment, each Borrower agrees that,
in computing the charges under this Agreement, all items of payment shall be
deemed applied by Agent on account of the Obligations one (1) Business Day after
(i) the Business Day Agent receives such payments via wire transfer or
electronic depository check or (ii) in the case of payments received by Agent in
any other form, the Business Day such payment constitutes good funds in Agent’s
account.  Agent is not, however, required to credit Borrowers’ Account
for the amount of any item of payment which is unsatisfactory to Agent and Agent
may charge Borrowers’ Account for the amount of any item of payment which is
returned to Agent unpaid.

     

    (c) All
payments of principal, interest and other amounts payable hereunder, or under
any of the Other Documents shall be made to Agent at the Payment Office not
later than 1:00 P.M. (New York time) on the due date therefor in lawful money of
the United States of America in federal funds or other funds immediately
available to Agent.  Agent shall have the right to effectuate payment
on any and all Obligations due and owing hereunder by charging Borrowers’
Account or by making Advances as provided in Section 2.2 hereof.

     

    (d) Borrowers
shall pay principal, interest, and all other amounts payable hereunder, or under
any related agreement, without any deduction whatsoever, including, but not
limited to, any deduction for any setoff or counterclaim.

     

    2.7. Repayment of Excess
Advances.  The aggregate balance of Advances outstanding at any
time in excess of the maximum amount of Advances permitted hereunder shall be
immediately due and payable without the necessity of any demand, at the Payment
Office, whether or not a Default or Event of Default has occurred.

     

    2.8. Statement of
Account.  Agent shall maintain, in accordance with its
customary procedures, a loan account (“Borrowers’ Account”) in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; provided,
however, the failure by Agent to record the date and amount of any Advance shall
not adversely affect Agent or any Lender.  Each month, Agent shall
send to Borrowing Agent a statement showing the accounting for the Advances
made, payments made or credited in respect thereof, and other transactions
between Agent and Borrowers during such month.  The monthly statements
shall be deemed correct and binding upon Borrowers in the absence of manifest
error and shall constitute an account stated between Lenders and Borrowers
unless Agent receives a written statement of Borrowers’ specific exceptions
thereto within thirty (30) days after such statement is received by Borrowing
Agent.  The records of Agent with respect to the loan account shall be
conclusive evidence absent manifest error of the amounts of Advances and other
charges thereto and of payments applicable thereto.

     

    2.9. Letters of
Credit.  Subject to the terms and conditions hereof, Agent
shall issue or cause the issuance of Standby Letters of Credit (“Letters of
Credit”) for the account of any Borrower; provided, however, that Agent will not
be required to issue or cause to be issued any Letters of Credit to the extent
that the issuance thereof would then cause the sum of (i) the outstanding
Revolving Advances plus (ii) the Maximum Undrawn Amount of all outstanding
Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance
Amount or (y) the Formula Amount.  The Maximum Undrawn Amount of
outstanding Letters of Credit shall not exceed in the aggregate at any time the
Letter of Credit Sublimit.  All disbursements or payments related to
Letters of Credit shall be deemed to be Domestic Rate Loans consisting of
Revolving Advances and shall bear interest at the applicable Contract Rate;
Letters of Credit that have not been drawn upon shall not bear
interest.

     

    2.10. Issuance of Letters of
Credit.

     

    (a) Borrowing
Agent, on behalf of Borrowers, may request Agent to issue or cause the issuance
of a Letter of Credit by delivering to Agent at the Payment Office, prior to
10:00 a.m. (New York time), at least five (5)  Business Days’ prior to
the proposed date of issuance, Agent’s form of Letter of Credit Application (the
“Letter of Credit Application”) completed to the satisfaction of Agent; and,
such other certificates, documents and other papers and information as Agent may
reasonably request.  Borrowing Agent, on behalf of Borrowers, also has
the right to give instructions and make agreements with respect to any
application, any applicable letter of credit and security agreement, any
applicable letter of credit reimbursement agreement and/or any other applicable
agreement, any letter of credit and the disposition of documents, disposition of
any unutilized funds, and to agree with Agent upon any amendment, extension or
renewal of any Letter of Credit.

     

    (b) Each
Letter of Credit shall, among other things, (i) provide for the payment of sight
drafts, other written demands for payment, or acceptances of issuance drafts
when presented for honor thereunder in accordance with the terms thereof and
when accompanied by the documents described therein and (ii) have an expiry date
not later than twelve (12) months after such Letter of Credit’s date of issuance
and in no event later than the last day of the Term.  Each Letter of
Credit shall be subject either to the Uniform Customs and Practice for
Documentary Credits as most recently published by the International Chamber of
Commerce at the time the Letter of Credit is issued (“UCP”) or the International
Standby Practices (ISP98-International Chamber of Commerce Publication Number
590) (“ISP98 Rules”), as determined by Agent, and each trade Letter of Credit
shall be subject to the UCP.

     

    (c) Agent
shall use its reasonable efforts to notify Lenders of the request by Borrowing
Agent for a Letter of Credit hereunder.

     

    2.11.  Requirements For Issuance of
Letters of Credit.

     

    (a) Borrowing
Agent shall authorize and direct any Issuer to name the applicable Borrower as
the “Applicant” or “Account Party” of each Letter of Credit.  If Agent
is not the Issuer of any Letter of Credit, Borrowing Agent shall authorize and
direct the Issuer to deliver to Agent all instruments, documents, and other
writings and property received by the Issuer pursuant to the Letter of Credit
and to accept and rely upon Agent’s instructions and agreements with respect to
all matters arising in connection with the Letter of Credit, the application
therefor or any acceptance therefor.

     

    (b) In
connection with all Letters of Credit issued or caused to be issued by Agent
under this Agreement, each Borrower hereby appoints Agent, or its designee, as
its attorney, with full power and authority if an Event of Default shall have
occurred, (i) to sign and/or endorse such Borrower’s name upon any warehouse or
other receipts, letter of credit applications and acceptances, (ii) to sign such
Borrower’s name on bills of lading; (iii) to clear Inventory through the United
States of America Customs Department (“Customs”) in the name of such Borrower or
Agent or Agent’s designee, and to sign and deliver to Customs officials powers
of attorney in the name of Borrower for such purpose; and (iv) to complete in
such Borrower’s name or Agent’s, or in the name of Agent’s designee, any order,
sale or transaction, obtain the necessary documents in connection therewith, and
collect the proceeds thereof.  Neither Agent nor its attorneys will be
liable for any acts or omissions nor for any error of judgment or mistakes of
fact or law, except for Agent’s or its attorney’s willful
misconduct.  This power, being coupled with an interest, is
irrevocable as long as any Letters of Credit remain outstanding.

     

    2.12. Disbursements,
Reimbursement.

     

    (a) Immediately
upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from Agent a
participation in such Letter of Credit and each drawing thereunder in an amount
equal to such Lender’s Commitment Percentage of the Maximum Face Amount of such
Letter of Credit and the amount of such drawing, respectively.

     

    (b) In the
event of any request for a drawing under a Letter of Credit by the beneficiary
or transferee thereof, Agent will promptly notify Borrowing
Agent.  Provided that Borrowing Agent shall have received such notice,
the Borrowers shall reimburse (such obligation to reimburse Agent shall
sometimes be referred to as a “Reimbursement Obligation”) Agent prior to 12:00
Noon, New York time on each date that an amount is paid by Agent under any
Letter of Credit (each such date, a “Drawing Date”) in an amount equal to the
amount so paid by Agent.  In the event Borrowers fail to reimburse
Agent for the full amount of any drawing under any Letter of Credit by 12:00
Noon, New York time, on the Drawing Date, Agent will promptly notify each Lender
thereof, and Borrowers shall be deemed to have requested that a Domestic Rate
Loan be made by the Lenders to be disbursed on the Drawing Date under such
Letter of Credit, subject to the amount of the unutilized portion of the lesser
of the Maximum Revolving Advance Amount or the Formula Amount and subject to
Section 8.2 hereof.  Any notice given by Agent pursuant to this
Section 2.12(b) may be oral if immediately confirmed in writing; provided that
the lack of such an immediate confirmation shall not affect the conclusiveness
or binding effect of such notice.

     

    (c) Each
Lender shall upon any notice pursuant to Section 2.12(b) make available to Agent
an amount in immediately available funds equal to its Commitment Percentage of
the amount of the drawing, whereupon the participating Lenders shall (subject to
Section 2.12(d)) each be deemed to have made a Domestic Rate Loan to Borrowers
in that amount.  If any Lender so notified fails to make available to
Agent the amount of such Lender’s Commitment Percentage of such amount by no
later than 2:00 p.m., New York time on the Drawing Date, then interest shall
accrue on such Lender’s obligation to make such payment, from the Drawing Date
to the date on which such Lender makes such payment (i) at a rate per annum
equal to the Federal Funds Rate during the first three days following the
Drawing Date and (ii) at a rate per annum equal to the rate applicable to
Domestic Rate Loans on and after the fourth day following the Drawing
Date.  Agent will promptly give notice of the occurrence of the
Drawing Date, but failure of Agent to give any such notice on the Drawing Date
or in sufficient time to enable any Lender to effect such payment on such date
shall not relieve such Lender from its obligation under this Section 2.12(c),
provided that such Lender shall not be obligated to pay interest as provided in
Section 2.12(c) (i) and (ii) until and commencing from the date of receipt of
notice from Agent of a drawing.

     

    (d) With
respect to any unreimbursed drawing that is not converted into a Domestic Rate
Loan to Borrowers in whole or in part as contemplated by Section 2.12(b),
because of Borrowers’ failure to satisfy the conditions set forth in Section 8.2
(other than any notice requirements) or for any other reason, Borrowers shall be
deemed to have incurred from Agent a borrowing (each a “Letter of Credit
Borrowing”) in the amount of such drawing. Such Letter of Credit Borrowing shall
be due and payable on demand (together with interest) and shall bear interest at
the rate per annum applicable to a Domestic Rate Loan.  Each Lender’s
payment to Agent pursuant to Section 2.12(c) shall be deemed to be a payment in
respect of its participation in such Letter of Credit Borrowing and shall
constitute a “Participation Advance” from such Lender in satisfaction of its
Participation Commitment under this Section 2.12.

     

    (e) Each
Lender’s Participation Commitment shall continue until the last to occur of any
of the following events: (x) Agent ceases to be obligated to issue or cause to
be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created
hereunder remains outstanding and uncancelled; and (z) all Persons (other than
the Borrowers) have been fully reimbursed for all payments made under or
relating to Letters of Credit.

     

    2.13. Repayment of Participation
Advances.

     

    (a) Upon (and
only upon) receipt by Agent for its account of immediately available funds from
Borrowers (i) in reimbursement of any payment made by the Agent under the Letter
of Credit with respect to which any Lender has made a Participation Advance to
Agent, or (ii) in payment of interest on such a payment made by Agent under such
a Letter of Credit, Agent will pay to each Lender, in the same funds as those
received by Agent, the amount of such Lender’s Commitment Percentage of such
funds, except Agent shall retain the amount of the Commitment Percentage of such
funds of any Lender that did not make a Participation Advance in respect of such
payment by Agent.

     

    (b) If Agent
is required at any time to return to any Borrower, or to a trustee, receiver,
liquidator, custodian, or any official in any insolvency proceeding, any portion
of the payments made by Borrowers to Agent pursuant to Section 2.13(a) in
reimbursement of a payment made under the Letter of Credit or interest or fee
thereon, each Lender shall, on demand of Agent, forthwith return to Agent the
amount of its Commitment Percentage of any amounts so returned by Agent plus
interest at the Federal Funds Effective Rate.

     

    2.14. Documentation.  Each
Borrower agrees to be bound by the terms of the Letter of Credit Application and
by Agent’s interpretations of any Letter of Credit issued on behalf of such
Borrower and by Agent’s written regulations and customary practices relating to
letters of credit, though Agent’s interpretations may be different from such
Borrower’s own.  In the event of a conflict between the Letter of
Credit Application and this Agreement, this Agreement shall
govern.  It is understood and agreed that, except in the case of gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment), Agent shall not be liable for
any error, negligence and/or mistakes, whether of omission or commission, in
following the Borrowing Agent’s or any Borrower’s instructions or those
contained in the Letters of Credit or any modifications, amendments or
supplements thereto.

     

    2.15. Determination to Honor
Drawing Request.  In determining whether to honor any request
for drawing under any Letter of Credit by the beneficiary thereof, Agent shall
be responsible only to determine that the documents and certificates required to
be delivered under such Letter of Credit have been delivered and that they
comply on their face with the requirements of such Letter of Credit and that any
other drawing condition appearing on the face of such Letter of Credit has been
satisfied in the manner so set forth.

     

    2.16. Nature of Participation and
Reimbursement Obligations.  Each Lender’s obligation in
accordance with this Agreement to make the Revolving Advances or Participation
Advances as a result of a drawing under a Letter of Credit, and the obligations
of Borrowers to reimburse Agent upon a draw under a Letter of Credit, shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Section 2.16 under all circumstances,
including the following circumstances:

     

    (i) any
set-off, counterclaim, recoupment, defense or other right which such Lender may
have against Agent, any Borrower or any other Person for any reason
whatsoever;

     

    (ii) the
failure of any Borrower or any other Person to comply, in connection with a
Letter of Credit Borrowing, with the conditions set forth in this Agreement for
the making of a Revolving Advance, it being acknowledged that such conditions
are not required for the making of a Letter of Credit Borrowing and the
obligation of the Lenders to make Participation Advances under Section
2.12;

     

    (iii) any lack
of validity or enforceability of any Letter of Credit;

     

    (iv) any claim
of breach of warranty that might be made by Borrower or any Lender against the
beneficiary of a Letter of Credit, or the existence of any claim, set-off,
recoupment, counterclaim, crossclaim, defense or other right which any Borrower
or any Lender may have at any time against a beneficiary, any successor
beneficiary or any transferee of any Letter of Credit or the proceeds thereof
(or any Persons for whom any such transferee may be acting), Agent or any Lender
or any other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between any Borrower or any Subsidiaries of such Borrower and the
beneficiary for which any Letter of Credit was procured);

     

    (v) the lack
of power or authority of any signer of (or any defect in or forgery of any
signature or endorsement on) or the form of or lack of validity, sufficiency,
accuracy, enforceability or genuineness of any draft, demand, instrument,
certificate or other document presented under or in connection with any Letter
of Credit, or any fraud or alleged fraud in connection with any Letter of
Credit, or the transport of any property or provisions of services relating to a
Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has
been notified thereof;

     

    (vi) payment
by Agent under any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit;

     

    (vii) the
solvency of, or any acts or omissions by, any beneficiary of any Letter of
Credit, or any other Person having a role in any transaction or obligation
relating to a Letter of Credit, or the existence, nature, quality, quantity,
condition, value or other characteristic of any property or services relating to
a Letter of Credit;

     

    (viii) any
failure by the Agent or any of Agent’s Affiliates to issue any Letter of Credit
in the form requested by Borrowing Agent, unless the Agent has received written
notice from Borrowing Agent of such failure within three (3) Business Days after
the Agent shall have furnished Borrowing Agent a copy of such Letter of Credit
and such error is material and no drawing has been made thereon prior to receipt
of such notice;

     

    (ix) any
Material Adverse Effect on any Borrower or any Guarantor;

     

    (x) any
breach of this Agreement or any Other Document by any party
thereto;

     

    (xi) the
occurrence or continuance of an insolvency proceeding with respect to any
Borrower or any Guarantor;

     

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

     

    (xiii) the fact
that the Term shall have expired or this Agreement or the Obligations hereunder
shall have been terminated; and

     

    (xiv) any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing.

     

    2.17. Indemnity.  In
addition to amounts payable as provided in Section 16.5, each Borrower hereby
agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s
Affiliates that have issued a Letter of Credit from and against any and all
claims, demands, liabilities, damages, taxes, penalties, interest, judgments,
losses, costs, charges and expenses (including reasonable fees, expenses and
disbursements of counsel and allocated costs of internal counsel) which the
Agent or any of Agent’s Affiliates may incur or be subject to as a consequence,
direct or indirect, of the issuance of any Letter of Credit, other than as a
result of (a) the gross negligence or willful misconduct of the Agent as
determined by a final and non-appealable judgment of a court of competent
jurisdiction or (b) the wrongful dishonor by the Agent or any of Agent’s
Affiliates of a proper demand for payment made under any Letter of Credit,
except if such dishonor resulted from any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Body (all
such acts or omissions herein called “Governmental Acts”).

     

    2.18. Liability for Acts and
Omissions.  As between Borrowers and Agent and Lenders, each
Borrower assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit by, the respective beneficiaries of such Letters of
Credit.  In furtherance and not in limitation of the respective
foregoing, Agent shall not be responsible for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for an issuance of any such Letter
of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged (even if Agent shall have been
notified thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) the
failure of the beneficiary of any such Letter of Credit, or any other party to
which such Letter of Credit may be transferred, to comply fully with any
conditions required in order to draw upon such Letter of Credit or any other
claim of any Borrower against any beneficiary of such Letter of Credit, or any
such transferee, or any dispute between or among any Borrower and any
beneficiary of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of Agent, including any governmental acts, and
none of the above shall affect or impair, or prevent the vesting of, any of
Agent’s rights or powers hereunder. Nothing in the preceding sentence shall
relieve Agent from liability for Agent’s gross negligence or willful misconduct
(as determined by a court of competent jurisdiction in a final non-appealable
judgment) in connection with actions or omissions described in such clauses (i)
through (viii) of such sentence.  In no event shall Agent or Agent’s
Affiliates be liable to any Borrower for any indirect, consequential,
incidental, punitive, exemplary or special damages or expenses (including
without limitation attorneys’ fees), or for any damages resulting from any
change in the value of any property relating to a Letter of Credit.

     

    Without
limiting the generality of the foregoing, Agent and each of its Affiliates (i)
may rely on any oral or other communication believed in good faith by Agent
or  such Affiliate to have been authorized or given by or on behalf of
the applicant for a Letter of Credit, (ii) may honor any presentation if the
documents presented appear on their face substantially to comply with the terms
and conditions of the relevant Letter of Credit; (iii) may honor a previously
dishonored presentation under a Letter of Credit, whether such dishonor was
pursuant to a court order, to settle or compromise any claim of wrongful
dishonor, or otherwise, and shall be entitled to reimbursement to the same
extent as if such presentation had initially been honored, together with any
interest paid by Agent or its Affiliates; (iv) may honor any drawing that is
payable upon presentation of a statement advising negotiation or payment, upon
receipt of such statement (even if such statement indicates that a draft or
other document is being delivered separately), and shall not be liable for any
failure of any such draft or other document to arrive, or to conform in any way
with the relevant Letter of Credit; (v) may pay any paying or negotiating bank
claiming that it rightfully honored under the laws or practices of the place
where such bank is located; and (vi) may settle or adjust any claim or demand
made on Agent or its Affiliate in any way related to any order issued at the
applicant’s request to an air carrier, a letter of guarantee or of indemnity
issued to a carrier or any similar document (each an “Order”) and honor any
drawing in connection with any Letter of Credit that is the subject of such
Order, notwithstanding that any drafts or other documents presented in
connection with such Letter of Credit fail to conform in any way with such
Letter of Credit.

     

    In
furtherance and extension and not in limitation of the specific provisions set
forth above, any action taken or omitted by Agent under or in connection with
the Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith and without gross negligence (as
determined by a court of competent jurisdiction in a final non-appealable
judgment), shall not put Agent under any resulting liability to any Borrower or
any Lender.

     

    2.19. Additional
Payments.  Any sums expended by Agent or any Lender due to any
Borrower’s failure to perform or comply with its obligations under this
Agreement or any Other Document including any Borrower’s obligations under
Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrowers’
Account as a Revolving Advance and added to the Obligations.

     

    2.20. Manner of Borrowing and
Payment.

     

    (a) Each
borrowing of Revolving Advances shall be advanced according to the applicable
Commitment Percentages of Lenders.

     

    (b) Each
payment (including each prepayment) by any Borrower on account of the principal
of and interest on the Revolving Advances, shall be applied to the Revolving
Advances pro rata according to the applicable Commitment Percentages of Lenders.
Except as expressly provided herein, all payments (including prepayments) to be
made by any Borrower on account of principal, interest and fees shall be made
without set off or counterclaim and shall be made to Agent on behalf of the
Lenders to the Payment Office, in each case on or prior to 1:00 P.M., New York
time, in Dollars and in immediately available funds.

     

    (c) (i)           Notwithstanding
anything to the contrary contained in Sections 2.20(a) and (b) hereof,
commencing with the first Business Day following the Closing Date, each
borrowing of Revolving Advances shall be advanced by Agent and each payment by
any Borrower on account of Revolving Advances shall be applied first to those
Revolving Advances advanced by Agent.  On or before 1:00 P.M., New
York time, on each Settlement Date commencing with the first Settlement Date
following the Closing Date, Agent and Lenders shall make certain payments as
follows: (I) if the aggregate amount of new Revolving Advances made by Agent
during the preceding Week (if any) exceeds the aggregate amount of repayments
applied to outstanding Revolving Advances during such preceding Week, then each
Lender shall provide Agent with funds in an amount equal to its applicable
Commitment Percentage of the difference between (w) such Revolving Advances and
(x) such repayments and (II) if the aggregate amount of repayments applied to
outstanding Revolving Advances during such Week exceeds the aggregate amount of
new Revolving Advances made during such Week, then Agent shall provide each
Lender with funds in an amount equal to its applicable Commitment Percentage of
the difference between (y) such repayments and (z) such Revolving
Advances.

     

    (ii) Each
Lender shall be entitled to earn interest at the applicable Contract Rate on
outstanding Advances which it has funded.

     

    (iii) Promptly
following each Settlement Date, Agent shall submit to each Lender a certificate
with respect to payments received and Advances made during the Week immediately
preceding such Settlement Date.  Such certificate of Agent shall be
conclusive in the absence of manifest error.

     

    (d) If any
Lender or Participant (a “benefited Lender”) shall at any time receive any
payment of all or part of its Advances, or interest thereon, or receive any
Collateral in respect thereof (whether voluntarily or involuntarily or by
set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender’s
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such benefited Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender’s Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such benefited Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.  Each Lender so purchasing a portion
of another Lender’s Advances may exercise all rights of payment (including
rights of set-off) with respect to such portion as fully as if such Lender were
the direct holder of such portion.

     

    (e) Unless
Agent shall have been notified by telephone, confirmed in writing, by any Lender
that such Lender will not make the amount which would constitute its applicable
Commitment Percentage of the Advances available to Agent, Agent may (but shall
not be obligated to) assume that such Lender shall make such amount available to
Agent on the next Settlement Date and, in reliance upon such assumption, make
available to Borrowers a corresponding amount.  Agent will promptly
notify Borrowing Agent of its receipt of any such notice from a
Lender.  If such amount is made available to Agent on a date after
such next Settlement Date, such Lender shall pay to Agent on demand an amount
equal to the product of (i) the daily average Federal Funds Rate (computed on
the basis of a year of 360 days) during such period as quoted by Agent, times
(ii) such amount, times (iii) the number of days from and including such
Settlement Date to the date on which such amount becomes immediately available
to Agent.  A certificate of Agent submitted to any Lender with respect
to any amounts owing under this paragraph (e) shall be conclusive, in the
absence of manifest error.  If such amount is not in fact made
available to Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrowers; provided, however, that Agent’s
right to such recovery shall not prejudice or otherwise adversely affect
Borrowers’ rights (if any) against such Lender.

     

    2.21. Mandatory
Prepayments.  Subject to Section 4.3 hereof, when any Borrower
sells or otherwise disposes of any Collateral other than Inventory in the
Ordinary Course of Business, Borrowers shall repay the Advances in an amount
equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable
costs of such sales or other dispositions), such repayments to be made promptly
but in no event more than one (1) Business Day following receipt of such net
proceeds, and until the date of payment, such proceeds shall be held in trust
for Agent.  The foregoing shall not be deemed to be implied consent to
any such sale otherwise prohibited by the terms and conditions
hereof.  Such repayments shall be applied to the Advances in such
order as Agent may determine, subject to Borrowers’ ability to reborrow
Revolving Advances in accordance with the terms hereof.

     

    2.22. Use of
Proceeds.

     

    (a) Borrowers
shall apply the proceeds of Advances to (i) repay existing indebtedness owed to
The CIT Group/Business Credit, Inc., (ii) pay fees and expenses relating to this
transaction, and (iii) provide for its working capital needs, including, without
limitation, provide for making Permitted Acquisitions and reimburse drawings
under Letters of Credit.

     

    (b) Without
limiting the generality of Section 2.22(a) above, neither the Borrowers, the
Guarantors nor any other Person which may in the future become party to this
Agreement or the Other Documents as a Borrower or Guarantor, intends to use nor
shall they use any portion of the proceeds of the Advances, directly or
indirectly, for any purpose in violation of the Trading with the Enemy
Act.

     

    (c) In
accordance with the Subordination Agreement and this Agreement, including
without limitation, Sections 7.7, 7.21 and 8.1(dd) hereof, Borrowing Agent may
use the proceeds of the Advances from time to time to repay the Subordinated
Indebtedness as permitted in Section 7.21 herein (including without limitation,
the right to repay Subordinated Indebtedness on the Closing Date so long as
after giving effect to such payment, together with the payment of any and all
other fees and costs under this Agreement and the Ex-Im Agreement; Borrowers
satisfy the condition set forth in Section 8.1(dd).

     

    2.23. Defaulting
Lender.

     

    (a) Notwithstanding
anything to the contrary contained herein, in the event any Lender (x) has
refused (which refusal constitutes a breach by such Lender of its obligations
under this Agreement) to make available its portion of any Advance or (y)
notifies either Agent or Borrowing Agent that it does not intend to make
available its portion of any Advance (if the actual refusal would constitute a
breach by such Lender of its obligations under this Agreement) (each, a “Lender
Default”), all rights and obligations hereunder of such Lender (a “Defaulting
Lender”) as to which a Lender Default is in effect and of the other parties
hereto shall be modified to the extent of the express provisions of this Section
2.23 while such Lender Default remains in effect.

     

    (b) Advances
shall be incurred pro rata from Lenders (the “Non-Defaulting Lenders”) which are
not Defaulting Lenders based on their respective Commitment Percentages, and no
Commitment Percentage of any Lender or any pro rata share of any Advances
required to be advanced by any Lender shall be increased as a result of such
Lender Default.  Amounts received in respect of principal of any type
of Advances shall be applied to reduce the applicable Advances of each Lender
(other than any Defaulting Lender) pro rata based on the aggregate of the
outstanding Advances of that type of all Lenders at the time of such
application; provided, that, Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender’s
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including any principal, interest or
fees).  Amounts payable to a Defaulting Lender shall instead be paid
to or retained by Agent.  Agent may hold and, in its discretion,
re-lend to a Borrower the amount of such payments received or retained by it for
the account of such Defaulting Lender.

     

    (c) A
Defaulting Lender shall not be entitled to give instructions to Agent or to
approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents.  All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.

     

    (d) Other
than as expressly set forth in this Section 2.23, the rights and obligations of
a Defaulting Lender (including the obligation to indemnify Agent) and the other
parties hereto shall remain unchanged.  Nothing in this Section 2.23
shall be deemed to release any Defaulting Lender from its obligations under this
Agreement and the Other Documents, shall alter such obligations, shall operate
as a waiver of any default by such Defaulting Lender hereunder, or shall
prejudice any rights which any Borrower, Agent or any Lender may have against
any Defaulting Lender as a result of any default by such Defaulting Lender
hereunder.

     

    (e) In the
event a Defaulting Lender retroactively cures to the satisfaction of Agent the
breach which caused a Lender to become a Defaulting Lender, such Defaulting
Lender shall no longer be a Defaulting Lender and shall be treated as a Lender
under this Agreement.

     

    III. INTEREST
AND FEES.

     

    3.1. Interest.  Interest
on Advances shall be payable in arrears on the first day of each month with
respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at
the end of each Interest Period or, for Eurodollar Rate Loans with an Interest
Period in excess of three months, at the earlier of (a) each three months from
the commencement of such Eurodollar Rate Loan or (b) the end of the Interest
Period.  Interest charges shall be computed on the actual principal
amount of Advances outstanding during the month at a rate per annum equal to the
applicable Revolving Interest Rate (as applicable, the “Contract
Rate”).  Whenever, subsequent to the date of this Agreement, the
Alternate Base Rate is increased or decreased, the applicable Contract Rate
shall be similarly changed without notice or demand of any kind by an amount
equal to the amount of such change in the Alternate Base Rate during the time
such change or changes remain in effect.  The Eurodollar Rate shall be
adjusted with respect to Eurodollar Rate Loans without notice or demand of any
kind on the effective date of any change in the Reserve Percentage as of such
effective date.  Upon and after the occurrence of an Event of Default,
and during the continuation thereof, in the reasonable discretion of Agent or at
the direction of Required Lenders, the Obligations shall bear interest at the
applicable Contract Rate plus two (2%) percent per annum (as applicable, the
“Default Rate”).

     

    3.2. Letter of Credit
Fees.

     

    (a) Borrowers
shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter
of Credit for the period from and excluding the date of issuance of same to and
including the date of expiration or termination, equal to the average daily face
amount of each outstanding Letter of Credit multiplied by two percent (2.00%)
per annum, such fees to be calculated on the basis of a 360-day year for the
actual number of days elapsed and to be payable quarterly in arrears on the
first day of each quarter and on the last day of the Term, and (y) to the Issuer
together with any and all administrative, issuance, amendment, payment and
negotiation charges with respect to Letters of Credit and all fees and expenses
as agreed upon by the Issuer and the Borrowing Agent in connection with any
Letter of Credit, including in connection with the opening, amendment or renewal
of any such Letter of Credit and any acceptances created thereunder and shall
reimburse Agent for any and all fees and expenses, if any, paid by Agent to the
Issuer (all of the foregoing fees, the “Letter of Credit Fees”).  All
such charges shall be deemed earned in full on the date when the same are due
and payable hereunder and shall not be subject to rebate or pro-ration upon the
termination of this Agreement for any reason.  Any such charge in
effect at the time of a particular transaction shall be the charge for that
transaction, notwithstanding any subsequent change in the Issuer’s prevailing
charges for that type of transaction.  All Letter of Credit Fees
payable hereunder shall be deemed earned in full on the date when the same are
due and payable hereunder and shall not be subject to rebate or pro-ration upon
the termination of this Agreement for any reason.

     

    (b) At any
time following the occurrence of an Event of Default or upon the expiration of
the Term, Borrowers will cause cash to be deposited and maintained in an account
with Agent, as cash collateral, in an amount equal to one hundred and five
percent (105%) of the Maximum Undrawn Amount of all outstanding Letters of
Credit, and each Borrower hereby irrevocably authorizes Agent, in its
discretion, on such Borrower’s behalf and in such Borrower’s name, to open such
an account and to make and maintain deposits therein, or in an account opened by
such Borrower, in the amounts required to be made by such Borrower, out of the
proceeds of Receivables or other Collateral or out of any other funds of such
Borrower coming into any Lender’s possession at any time.  Agent will
invest such cash collateral (less applicable reserves) in such short-term
money-market items as to which Agent and such Borrower mutually agree and the
net return on such investments shall be credited to such account and constitute
additional cash collateral.  No Borrower may withdraw amounts credited
to any such account except upon the occurrence of all of the following: (x)
payment and performance in full of all Obligations; (y) expiration of all
Letters of Credit; and (z) termination of this Agreement.

     

    3.3. Closing Fee and Facility
Fee.

     

    (a) Upon the
execution of this Agreement, Borrowers shall pay to Agent for the ratable
benefit of Lenders a closing fee of $80,000 less that portion of the commitment
fee of $50,000 heretofore paid by Borrowers to Agent remaining after application
of such fees to out of pocket costs and expenses.

     

    (b) If, for
any calendar quarter during the Term, the average daily unpaid balance of the
Revolving Advances and undrawn amount of any outstanding Letters of Credit for
each day of such calendar quarter does not equal the Maximum Revolving Advance
Amount, then Borrowers shall pay to Agent for the ratable benefit of Lenders a
fee at a rate equal to one quarter of one percent (0.25%) per annum on the
amount by which the Maximum Revolving Advance Amount exceeds such average daily
unpaid balance.  Such fee shall be payable to Agent in arrears on the
first day of each calendar quarter with respect to the previous calendar
quarter.

     

    3.4. Collateral Evaluation Fee,
Collateral Monitoring Fee and Appraisals.

     

    (a) Borrowers
shall pay Agent a collateral monitoring fee equal to $2,000 per month commencing
on the first day of the month following the Closing Date and on the first day of
each month thereafter during the Term.  The collateral monitoring fee
shall be deemed earned in full on the date when same is due and payable
hereunder and shall not be subject to rebate or proration upon termination of
this Agreement for any reason.

     

    (b) Borrowers
shall pay to Agent on the first day of each month following any month in which
Agent performs any collateral evaluation - namely any field examination,
collateral analysis or other business analysis, the need for which is to be
determined by Agent and which evaluation is undertaken by Agent or for Agent’s
benefit - a collateral evaluation fee in an amount equal to $750 per day for
each person employed to perform such evaluation, plus all costs and
disbursements incurred by Agent in the performance of such examination or
analysis.

     

    (c) Agent
may, in its sole discretion, exercised in a commercially reasonable manner,
engage the services of an independent appraisal firm or firms of reputable
standing, satisfactory to Agent, for the purpose of appraising the then current
values of Borrowers’ Inventory and Real Property. Absent the occurrence and
continuance of an Event of Default at such time, Agent shall consult with
Borrowers as to the identity of any such firm.  All of the fees and
out-of-pocket costs and expense of any such firm (collectively, “appraisal
amounts”) shall be paid for when due, in full and without off-set, by
Borrowers.  In the event the value of Borrowers’ Inventory, as so
determined pursuant to such appraisal, is less than anticipated by Agent or
Lenders, such that the Revolving Advances against Eligible Domestic Finished
Goods Inventory, are in fact in excess of such Advances permitted hereunder,
then, promptly upon Agent’s demand for same, Borrowers shall make mandatory
prepayments of the then outstanding Revolving Advances made against such
Eligible Domestic Finished Goods Inventory so as to eliminate the excess
Advances, provided that, so long as no Default or Event of Default has occurred
hereunder, Agent shall not charge Borrowers for more than one such examination
in any calendar year.

     

    3.5. Computation of Interest and
Fees.  Interest and fees hereunder shall be computed on the
basis of a year of 360 days and for the actual number of days
elapsed.  If any payment to be made hereunder becomes due and payable
on a day other than a Business Day, the due date thereof shall be extended to
the next succeeding Business Day and interest thereon shall be payable at the
applicable Contract Rate during such extension.

     

    3.6. Maximum
Charges.  In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrowers, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrowers and the provisions hereof
shall be deemed amended to provide for such permissible rate.

     

    3.7. Increased
Costs.  In the event that any Applicable Law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term “Lender” shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:

     

    (a) subject
Agent or any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments to
Agent or any Lender of principal, fees, interest or any other amount payable
hereunder or under any Other Documents (except for changes in the rate of tax on
the overall net income of Agent or any Lender by the jurisdiction in which it
maintains its principal office);

     

    (b) impose,
modify or hold applicable any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or for the account of,
advances or loans by, or other credit extended by, any office of Agent or any
Lender, including pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or

     

    (c) impose on
Agent or any Lender or the London interbank Eurodollar market any other
condition with respect to this Agreement or any Other Document;

     

    and the
result of any of the foregoing is to increase the cost to Agent or any Lender of
making, renewing or maintaining its Advances hereunder by an amount that Agent
or such Lender deems to be material or to reduce the amount of any payment
(whether of principal, interest or otherwise) in respect of any of the Advances
by an amount that Agent or such Lender deems to be material, then, in any case
Borrowers shall promptly pay Agent or such Lender, upon its demand, such
additional amount as will compensate Agent or such Lender for such additional
cost or such reduction, as the case may be, provided that the foregoing shall
not apply to increased costs which are reflected in the Eurodollar Rate, as the
case may be.  Agent or such Lender shall certify the amount of such
additional cost or reduced amount to Borrowing Agent, and such certification
shall be conclusive absent manifest error.

     

    3.8. Basis For Determining
Interest Rate Inadequate or Unfair.  In the event that Agent or
any Lender shall have determined that:

     

    (a) reasonable
means do not exist for ascertaining the Eurodollar Rate applicable pursuant to
Section 2.2 hereof for any Interest Period; or

     

    (b) Dollar
deposits in the relevant amount and for the relevant maturity are not available
in the London interbank Eurodollar market, with respect to an outstanding
Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion
of a Domestic Rate Loan into a Eurodollar Rate Loan,

     

    then
Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination.  If such notice is given, (i) any such
requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless
Borrowing Agent shall notify Agent no later than 10:00 a.m. (New York City time)
two (2) Business Days prior to the date of such proposed borrowing, that its
request for such borrowing shall be cancelled or made as an unaffected type of
Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which
was to have been converted to an affected type of Eurodollar Rate Loan shall be
continued as or converted into a Domestic Rate Loan, or, if Borrowing Agent
shall notify Agent, no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the proposed conversion, shall be maintained as an
unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected
Eurodollar Rate Loans shall be converted into a Domestic Rate Loan, or, if
Borrowing Agent shall notify Agent, no later than 10:00 a.m. (New York City
time) two (2) Business Days prior to the last Business Day of the then current
Interest Period applicable to such affected Eurodollar Rate Loan, shall be
converted into an unaffected type of Eurodollar Rate Loan, on the last Business
Day of the then current Interest Period for such affected Eurodollar Rate
Loans.  Until such notice has been withdrawn, Lenders shall have no
obligation to make an affected type of Eurodollar Rate Loan or maintain
outstanding affected Eurodollar Rate Loans and no Borrower shall have the right
to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan
into an affected type of Eurodollar Rate Loan.

     

    3.9. Capital
Adequacy.

     

    (a) In the
event that Agent or any Lender shall have determined that any Applicable Law,
rule, regulation or guideline regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or any Lender
(for purposes of this Section 3.9, the term “Lender” shall include Agent or any
Lender and any corporation or bank controlling Agent or any Lender) and the
office or branch where Agent or any Lender (as so defined) makes or maintains
any Eurodollar Rate Loans with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on Agent or any Lender’s capital as a consequence of its obligations
hereunder to a level below that which Agent or such Lender could have achieved
but for such adoption, change or compliance (taking into consideration Agent’s
and each Lender’s policies with respect to capital adequacy) by an amount deemed
by Agent or any Lender to be material, then, from time to time, Borrowers shall
pay upon demand to Agent or such Lender such additional amount or amounts as
will compensate Agent or such Lender for such reduction.  In
determining such amount or amounts, Agent or such Lender may use any reasonable
averaging or attribution methods.  The protection of this Section 3.9
shall be available to Agent and each Lender regardless of any possible
contention of invalidity or inapplicability with respect to the Applicable Law,
regulation or condition.

     

    (b) A
certificate of Agent or such Lender setting forth such amount or amounts as
shall be necessary to compensate Agent or such Lender with respect to Section
3.9(a) hereof when delivered to Borrowing Agent shall be conclusive absent
manifest error.

     

    3.10. Gross Up for
Taxes.  If any Borrower shall be required by Applicable Law to
withhold or deduct any taxes from or in respect of any sum payable under this
Agreement or any of the Other Documents to Agent, or any Lender, assignee of any
Lender, or Participant (each, individually, a “Payee” and collectively, the
“Payees”), (a) the sum payable to such Payee or Payees, as the case may be,
shall be increased as may be necessary so that, after making all required
withholding or deductions, the applicable Payee or Payees receives an amount
equal to the sum it would have received had no such withholding or deductions
been made (the “Gross-Up Payment”), (b) such Borrower shall make such
withholding or deductions, and (c) such Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with Applicable Law.  Notwithstanding the foregoing, no
Borrower shall be obligated to make any portion of the Gross-Up Payment that is
attributable to any withholding or deductions that would not have been paid or
claimed had the applicable Payee or Payees properly claimed a complete exemption
with respect thereto pursuant to Section 3.11 hereof.

     

    3.11. Withholding Tax
Exemption.

     

    (a) Each
Payee that is not incorporated under the Laws of the United States of America or
a state thereof (and, upon the written request of Agent, each other Payee)
agrees that it will deliver to Borrowing Agent and Agent two (2) duly completed
appropriate valid Withholding Certificates (as defined under §1.1441-1(c)(16) of
the Income Tax Regulations (“Regulations”)) certifying its status (i.e., U.S. or
foreign person) and making a claim of exemption from U.S. withholding tax on the
basis of an income tax treaty or an exemption provided by the
Code.  The term “Withholding Certificate” means a Form W-9; a Form
W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and
certifications as required under §1.1441-1(e)(2) and/or (3) of the Regulations;
a statement described in §1.871-14(c)(2)(v) of the Regulations; or any other
certificates under the Code or Regulations that certify or establish the status
of a payee or beneficial owner as a U.S. or foreign person.

     

    (b) Each
Payee required to deliver to Borrowing Agent and Agent a valid Withholding
Certificate pursuant to Section 3.11(a) hereof shall deliver such valid
Withholding Certificate as follows:  (i) each Payee which is a party
hereto on the Closing Date shall deliver such valid Withholding Certificate at
least five (5) Business Days prior to the first date on which any interest or
fees are payable by any Borrower hereunder for the account of such Payee; (ii)
each Payee shall deliver such valid Withholding Certificate at least five (5)
Business Days before the effective date of such assignment or participation
(unless Agent in its sole discretion shall permit such Payee to deliver such
Withholding Certificate less than five (5) Business Days before such date in
which case it shall be due on the date specified by Agent).  Each
Payee which so delivers a valid Withholding Certificate further undertakes to
deliver to Borrowing Agent and Agent two (2) additional copies of such
Withholding Certificate (or a successor form) on or before the date that such
Withholding Certificate expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent Withholding Certificate so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by Borrowing Agent or Agent.

     

    (c) Notwithstanding
the submission of a Withholding Certificate claiming a reduced rate of or
exemption from U.S. withholding tax required under Section 3.11(b) hereof, Agent
shall be entitled to withhold United States federal income taxes at the full 30%
withholding rate if in its reasonable judgment it is required to do so under the
due diligence requirements imposed upon a withholding agent under §1.1441-7(b)
of the Regulations.  Further, Agent is indemnified under §1.1461-1(e)
of the Regulations against any claims and demands of any Payee for the amount of
any tax it deducts and withholds in accordance with regulations under §1441 of
the Code.

     

    IV. COLLATERAL:   GENERAL
TERMS

     

    4.1. Security Interest in the
Collateral.  To secure the prompt payment and performance to
Agent and each Lender of the Obligations, each Borrower hereby assigns, pledges
and grants to Agent for its benefit and for the ratable benefit of each Lender a
continuing security interest in and to and Lien on all of its Collateral,
whether now owned or existing or hereafter acquired or arising and located
wheresoever.  Each Borrower shall mark its books and records as may be
necessary or appropriate to evidence, protect and perfect Agent’s security
interest and shall cause its financial statements to reflect such security
interest.  Each Borrower shall promptly provide Agent with written
notice of all commercial tort claims, such notice to contain the case title
together with the applicable court and a brief description of the
claim(s).  Upon delivery of each such notice, such Borrower shall be
deemed to hereby grant to Agent a security interest and lien in and to such
commercial tort claims and all proceeds thereof.

     

    4.2. Perfection of Security
Interest.  Each Borrower shall take all action that may be
necessary or desirable, or that Agent may request, so as at all times to
maintain the validity, perfection, enforceability and priority of Agent’s
security interest in and Lien on the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to: (i) immediately discharging all Liens other than Permitted
Encumbrances; (ii) obtaining Lien Waiver Agreements; (iii) delivering to Agent,
endorsed or accompanied by such instruments of assignment as Agent may specify,
and stamping or marking, in such manner as Agent may specify, any and all
chattel paper, instruments, letters of credits and advices thereof and documents
evidencing or forming a part of the Collateral; (iv) entering into warehousing,
lockbox and other custodial arrangements satisfactory to Agent; and (v)
executing and delivering financing statements, control agreements, instruments
of pledge, mortgages, notices and assignments, in each case in form and
substance satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent’s security interest and Lien under the
Uniform Commercial Code or other Applicable Law.  By its signature
hereto, each Borrower hereby authorizes Agent to file against such Borrower, one
or more financing, continuation or amendment statements pursuant to the Uniform
Commercial Code in form and substance satisfactory to Agent.  All
charges, expenses and fees Agent may incur in doing any of the foregoing, and
any local taxes relating thereto, shall be charged to Borrowers’ Account as a
Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at
Agent’s option, shall be paid to Agent for its benefit and for the ratable
benefit of Lenders immediately upon demand.

     

    4.3. Disposition of
Collateral.  Each Borrower will safeguard and protect all
Collateral for Agent’s general account and make no disposition thereof whether
by sale, lease or otherwise except (a) the sale of Inventory in the Ordinary
Course of Business and (b) the disposition or transfer of obsolete and worn-out
Equipment in the Ordinary Course of Business during any fiscal year having an
aggregate fair market value of not more than $100,000 and only to the extent
that (i) the proceeds of any such disposition are used to acquire replacement
Equipment which is subject to Agent’s first priority security interest or (ii)
the proceeds of which are remitted to Agent to be applied pursuant to Section
2.21.

     

    4.4. Preservation of
Collateral.  Following the occurrence of a Default or Event of
Default in addition to the rights and remedies set forth in Section 11.1 hereof,
Agent: (a) may at any time take such steps as Agent deems necessary to protect
Agent’s interest in and to preserve the Collateral, including the hiring of such
security guards or the placing of other security protection measures as Agent
may deem appropriate; (b) may employ and maintain at any of any Borrower’s
premises a custodian who shall have full authority to do all acts necessary to
protect Agent’s interests in the Collateral; (c) may lease warehouse facilities
to which Agent may move all or part of the Collateral; (d) may use any
Borrower’s owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and (e) shall have, and is
hereby granted, a right of ingress and egress to the places where the Collateral
is located, and may proceed over and through any of Borrowers’ owned or leased
property.  Each Borrower shall cooperate fully with all of Agent’s
efforts to preserve the Collateral and will take such actions to preserve the
Collateral as Agent may direct.  All of Agent’s expenses of preserving
the Collateral, including any expenses relating to the bonding of a custodian,
shall be charged to Borrowers’ Account as a Revolving Advance and added to the
Obligations.

     

    4.5. Ownership of
Collateral.

     

    (a) With
respect to the Collateral, at the time the Collateral becomes subject to Agent’s
security interest:  (i) each Borrower shall be the sole owner of and
fully authorized and able to sell, transfer, pledge and/or grant a first
priority security interest in each and every item of the its respective
Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall
be free and clear of all Liens and encumbrances whatsoever; (ii) each document
and agreement executed by each Borrower or delivered to Agent or any Lender in
connection with this Agreement shall be true and correct in all material
respects; (iii) all signatures and endorsements of each Borrower that appear on
such documents and agreements shall be genuine and each Borrower shall have full
capacity to execute same; and (iv) each Borrower’s Equipment and Inventory shall
be located as set forth on Schedule 4.5 and shall not be removed from such
location(s) without the prior written consent of Agent except with respect to
the sale of Inventory in the Ordinary Course of Business and Equipment to the
extent permitted in Section 4.3 hereof.

     

    (b) (i) There
is no location at which any Borrower has any Inventory (except for Inventory in
transit) other than those locations listed on Schedule 4.5; (ii) Schedule 4.5
hereto contains a correct and complete list, as of the Closing Date, of the
legal names and addresses of each warehouse at which Inventory of any Borrower
is stored; none of the receipts received by any Borrower from any warehouse
states that the goods covered thereby are to be delivered to bearer or to the
order of a named Person or to a named Person and such named Person’s
assigns;  (iii) Schedule 4.5 hereto sets forth a correct and complete
list as of the Closing Date of (A) each place of business of each Borrower and
(B) the chief executive office of each Borrower; and (iv) Schedule 4.5 hereto
sets forth a correct and complete list as of the Closing Date of the location,
by state and street address, of all Real Property owned or leased by each
Borrower, together with the names and addresses of any landlords.

     

    4.6. Defense of Agent’s and
Lenders’ Interests.  Until (a) payment and performance in full
of all of the Obligations and (b) termination of this Agreement, Agent’s
interests in the Collateral shall continue in full force and
effect.  During such period no Borrower shall, without Agent’s prior
written consent, pledge, sell (except Inventory in the Ordinary Course of
Business and Equipment to the extent permitted in Section 4.3 hereof), assign,
transfer, create or suffer to exist a Lien upon or encumber or allow or suffer
to be encumbered in any way except for Permitted Encumbrances, any part of the
Collateral.  Each Borrower shall defend Agent’s interests in the
Collateral against any and all Persons whatsoever.  At any time
following demand by Agent for payment of all Obligations, Agent shall have the
right to take possession of the indicia of the Collateral and the Collateral in
whatever physical form contained, including:  labels, stationery,
documents, instruments and advertising materials.  If Agent exercises
this right to take possession of the Collateral, Borrowers shall, upon demand,
assemble it in the best manner possible and make it available to Agent at a
place reasonably convenient to Agent.  In addition, with respect to
all Collateral, Agent and Lenders shall be entitled to all of the rights and
remedies set forth herein and further provided by the Uniform Commercial Code or
other Applicable Law.  Each Borrower shall, and Agent may, at its
option, instruct all suppliers, carriers, forwarders, warehousers or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver same to Agent and/or subject to
Agent’s order and if they shall come into any Borrower’s possession, they, and
each of them, shall be held by such Borrower in trust as Agent’s trustee, and
such Borrower will immediately deliver them to Agent in their original form
together with any necessary endorsement.

     

    4.7. Books and
Records.  Each Borrower shall: (a) keep proper books of record
and account in which full, true and correct entries will be made of all dealings
or transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including by reason of enumeration, accruals for
premiums, if any, due on required payments and accruals for depreciation,
obsolescence, or amortization of properties), which should be set aside from
such earnings in connection with its business.  All determinations
pursuant to this subsection shall be made in accordance with, or as required by,
GAAP consistently applied in the opinion of such independent public accountant
as shall then be regularly engaged by Borrowers.

     

    4.8. Financial
Disclosure.  Each Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by such Borrower at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
such Borrower’s financial statements, trial balances or other accounting records
of any sort in the accountant’s or auditor’s possession, and to disclose to
Agent and each Lender any information such accountants may have concerning such
Borrower’s financial status and business operations.  Each Borrower
hereby authorizes all Governmental Bodies to furnish to Agent and each Lender
copies of reports or examinations relating to such Borrower, whether made by
such Borrower or otherwise; however, Agent and each Lender will attempt to
obtain such information or materials directly from such Borrower prior to
obtaining such information or materials from such accountants or Governmental
Bodies.

     

    4.9. Compliance with
Laws.  Each Borrower shall comply with all Applicable Laws with
respect to the Collateral or any part thereof or to the operation of such
Borrower’s business the non-compliance with which could reasonably be expected
to have a Material Adverse Effect.  Each Borrower may, however,
contest or dispute any Applicable Laws in any reasonable manner, provided that
any related Lien is inchoate or stayed and sufficient reserves are established
to the reasonable satisfaction of Agent to protect Agent’s Lien on or security
interest in the Collateral.  The assets of Borrowers at all times
shall be maintained in accordance with the requirements of all insurance
carriers which provide insurance with respect to the assets of Borrowers so that
such insurance shall remain in full force and effect.

     

    4.10. Inspection of
Premises.  So long as no Default or Event of Default is
continuing, during business hours and at any time during the continuance of a
Default or Event of Default, Agent shall have full access to and the right to
audit, check, inspect and make abstracts and copies from each Borrower’s books,
records, audits, correspondence and all other papers relating to the Collateral
and the operation of each Borrower’s business.  Agent and its agents
may enter upon any premises of any Borrower at any time during business hours
and at any other reasonable time, and from time to time, for the purpose of
inspecting the Collateral and any and all records pertaining thereto and the
operation of such Borrower’s business.

     

    4.11. Insurance.  The
assets and properties of each Borrower at all times shall be maintained in
accordance with the requirements of all insurance carriers which provide
insurance with respect to the assets and properties of such Borrower so that
such insurance shall remain in full force and effect.  Each Borrower
shall bear the full risk of any loss of any nature whatsoever with respect to
the Collateral.  At each Borrower’s own cost and expense in amounts
and with carriers acceptable to Agent, each Borrower shall: (a) keep all its
insurable properties and properties in which such Borrower has an interest
insured against the hazards of fire, flood, sprinkler leakage, those hazards
covered by extended coverage insurance and such other hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to such Borrower’s including business interruption insurance; (b) maintain a
bond or insurance policy in such amounts as is customary in the case of
companies engaged in businesses similar to such Borrower insuring against
larceny, embezzlement or other criminal misappropriation of insured’s officers
and employees who may either singly or jointly with others at any time have
access to the assets or funds of such Borrower either directly or through
authority to draw upon such funds or to direct generally the disposition of such
assets; (c) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others; (d) maintain all
such worker’s compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which such Borrower is engaged in business;
(e) furnish Agent with (i) copies of all insurance policies as soon as
reasonably available and evidence of the maintenance of such policies within ten
(10) Business Days of any expiration date of such policies, and (ii) appropriate
loss payable endorsements in form and substance satisfactory to Agent, naming
Agent as a co-insured and loss payee as its interests may appear with respect to
all insurance coverage referred to in clauses (a), and (c) above, and providing
(A) that all proceeds thereunder shall be payable to Agent, (B) no such
insurance shall be affected by any act or neglect of the insured or owner of the
property described in such policy, and (C) that such policy and loss payable
clauses may not be cancelled, amended or terminated unless at least thirty (30)
days’ prior written notice is given to Agent.  In the event of any
loss thereunder, the carriers named therein hereby are directed by Agent and the
applicable Borrower to make payment for such loss to Agent and not to such
Borrower and Agent jointly.  If any insurance losses are paid by
check, draft or other instrument payable to any Borrower and Agent jointly,
Agent may endorse such Borrower’s name thereon and do such other things as Agent
may deem advisable to reduce the same to cash.  Agent is hereby
authorized to adjust and compromise claims under insurance coverage referred to
in clauses (a), and (b) above.  All loss recoveries received by Agent
upon any such insurance may be applied to the Obligations, in such order as
Agent in its sole discretion shall determine.  Any surplus shall be
paid by Agent to Borrowers or applied as may be otherwise required by
law.  Any deficiency thereon shall be paid by Borrowers to Agent, on
demand.

     

    4.12. Failure to Pay
Insurance.  If any Borrower fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects,
may obtain such insurance and pay the premium therefor on behalf of such
Borrower, and charge Borrowers’ Account therefor as a Revolving Advance of a
Domestic Rate Loan and such expenses so paid shall be part of the
Obligations.

     

    4.13. Payment of
Taxes.  Each Borrower will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon such Borrower or
any of the Collateral including real and personal property taxes, assessments
and charges and all franchise, income, employment, social security benefits,
withholding, and sales taxes.  If any tax by any Governmental Body is
or may be imposed on or as a result of any transaction between any Borrower and
Agent or any Lender which Agent or any Lender may be required to withhold or pay
or if any taxes, assessments, or other Charges remain unpaid after the date
fixed for their payment, or if any claim shall be made which, in Agent’s or any
Lender’s opinion, may possibly create a valid Lien on the Collateral, Agent may
without notice to Borrowers pay the taxes, assessments or other Charges and each
Borrower hereby indemnifies and holds Agent and each Lender harmless in respect
thereof.  Agent will not pay any taxes, assessments or Charges to the
extent that any applicable Borrower has contested or disputed those taxes,
assessments or Charges in good faith, by expeditious protest, administrative or
judicial appeal or similar proceeding provided that any related tax lien is
stayed and sufficient reserves are established to the reasonable satisfaction of
Agent to protect Agent’s security interest in or Lien on the
Collateral.  The amount of any payment by Agent under this Section
4.13 shall be charged to Borrowers’ Account as a Revolving Advance of a Domestic
Rate Loan and added to the Obligations and, until Borrowers shall furnish Agent
with an indemnity therefore (or supply Agent with evidence satisfactory to Agent
that due provision for the payment thereof has been made), Agent may hold
without interest any balance standing to Borrowers’ credit and Agent shall
retain its security interest in and Lien on any and all Collateral held by
Agent.

     

    4.14. Payment of Leasehold
Obligations.  Each Borrower shall at all times pay, when and as
due, its rental obligations under all leases under which it is a tenant, and
shall otherwise comply, in all material respects, with all other terms of such
leases and keep them in full force and effect and, at Agent’s request will
provide evidence of having done so.

     

    4.15. Receivables.

     

    (a) Nature of
Receivables.  Each of the Receivables shall be a bona fide and
valid account representing a bona fide indebtedness incurred by the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto
(provided immaterial or unintentional invoice errors shall not be deemed to be a
breach hereof) with respect to an absolute sale or lease and delivery of goods
upon stated terms of a Borrower, or work, labor or services theretofore rendered
by a Borrower as of the date each Receivable is created.  Same shall
be due and owing in accordance with the applicable Borrower’s standard terms of
sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Borrowers to Agent.

     

    (b) Solvency of
Customers.  Each Customer, to the best of each Borrower’s
knowledge, as of the date each Receivable is created, is and will be solvent and
able to pay all Receivables on which the Customer is obligated in full when due
or with respect to such Customers of any Borrower who are not solvent such
Borrower has set up on its books and in its financial records bad debt reserves
adequate to cover such Receivables.

     

    (c) Location of
Borrowers.  Each Borrower’s chief executive office is located
at 1750 Tysons Boulevard, Suite 1400, McLean, VA 22102.  Until written
notice is given to Agent by Borrowing Agent of any other office at which any
Borrower keeps its records pertaining to Receivables, all such records shall be
kept at such executive office.

     

    (d) Collection of
Receivables.  Until any Borrower’s authority to do so is
terminated by Agent (which notice Agent may give at any time following the
occurrence of an Event of Default or a Default or when Agent in its sole
discretion deems it to be in Lenders’ best interest to do so), each Borrower
will, at such Borrower’s sole cost and expense, but on Agent’s behalf and for
Agent’s account, collect as Agent’s property and in trust for Agent all amounts
received on Receivables, and shall not commingle such collections with any
Borrower’s funds or use the same except to pay Obligations.  Each
Borrower shall deposit in the Blocked Account or, upon request by Agent, deliver
to Agent, in original form and on the date of receipt thereof, all checks,
drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness.

     

    (e) Notification of Assignment
of Receivables.  At any time after an Event of Default has
occurred and is continuing or Agent reasonably believes that the Collateral is
being improperly diverted by Borrowers, Agent shall have the right to send
notice of the assignment of, and Agent’s security interest in and Lien on, the
Receivables to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral.  Thereafter, Agent shall have
the sole right to collect the Receivables, take possession of the Collateral, or
both.  Agent’s actual collection expenses, including, but not limited
to, stationery and postage, telephone and telegraph, secretarial and clerical
expenses and the salaries of any collection personnel used for collection, may
be charged to Borrowers’ Account and be added to the Obligations.

     

    (f) Power of Agent to Act on
Borrowers’ Behalf.  Agent shall have the right to receive,
endorse, assign and/or deliver in the name of Agent or any Borrower any and all
checks, drafts and other instruments for the payment of money relating to the
Receivables, and each Borrower hereby waives notice of presentment, protest and
non-payment of any instrument so endorsed.  Each Borrower hereby
constitutes Agent or Agent’s designee as such Borrower’s attorney with power (i)
at any time (A) to endorse such Borrower’s name upon any notes, acceptances,
checks, drafts, money orders or other evidences of payment or Collateral; (B) to
sign such Borrower’s name on any invoice or bill of lading relating to any of
the Receivables, drafts against Customers, assignments and verifications of
Receivables; (C) to send verifications of Receivables to any Customer; (D) to
sign such Borrower’s name on all financing statements or any other documents or
instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent’s interest in the Collateral and to file same; and (ii) at any
time following the occurrence of a Default or Event of Default (A) to demand
payment of the Receivables; (B) to enforce payment of the Receivables by legal
proceedings or otherwise; (C) to exercise all of such Borrower’s rights and
remedies with respect to the collection of the Receivables and any other
Collateral; (D) to settle, adjust, compromise, extend or renew the Receivables;
(E) to settle, adjust or compromise any legal proceedings brought to collect
Receivables; (F) to prepare, file and sign such Borrower’s name on a proof of
claim in bankruptcy or similar document against any Customer; (G) to prepare,
file and sign such Borrower’s name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables; and
(H) to do all other acts and things necessary to carry out this
Agreement.  All acts of said attorney or designee are hereby ratified
and approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross (not mere) negligence (as determined
by a court of competent jurisdiction in a final non-appealable judgment); this
power being coupled with an interest is irrevocable while any of the Obligations
remain unpaid.  Agent shall have the right at any time following the
occurrence of an Event of Default or Default, to change the address for delivery
of mail addressed to any Borrower to such address as Agent may designate and to
receive, open and dispose of all mail addressed to any Borrower.

     

    (g) No
Liability.  Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever other than gross negligence, have any
liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Receivables or any instrument
received in payment thereof, or for any damage resulting
therefrom.  Following the occurrence of an Event of Default or
Default, Agent may, without notice or consent from any Borrower, sue upon or
otherwise collect, extend the time of payment of, compromise or settle for cash,
credit or upon any terms any of the Receivables or any other securities,
instruments or insurance applicable thereto and/or release any obligor
thereof.  Agent is authorized and empowered to accept following the
occurrence of an Event of Default or Default the return of the goods represented
by any of the Receivables, without notice to or consent by any Borrower, all
without discharging or in any way affecting any Borrower’s liability
hereunder.

     

    (h) Establishment of a Lockbox
Account, Dominion Account.  All proceeds of Collateral shall be
deposited by Borrowers into either (i) a lockbox account, dominion account or
such other “blocked account” (“Blocked Accounts”) established at a bank or banks
(each such bank, a “Blocked Account Bank”) pursuant to an arrangement with such
Blocked Account Bank as may be selected by Borrowing Agent and be acceptable to
Agent or (ii) depository accounts (“Depository Accounts”) established at the
Agent for the deposit of such proceeds.  Each applicable Borrower,
Agent and each Blocked Account Bank shall enter into a deposit account control
agreement in form and substance satisfactory to Agent directing such Blocked
Account Bank to transfer such funds so deposited to Agent, either to any account
maintained by Agent at said Blocked Account Bank or by wire transfer to
appropriate account(s) of Agent.  All funds deposited in such Blocked
Accounts shall immediately become the property of Agent and Borrowing Agent
shall obtain the agreement by such Blocked Account Bank to waive any offset
rights against the funds so deposited.  Neither Agent nor any Lender
assumes any responsibility for such blocked account arrangement, including any
claim of accord and satisfaction or release with respect to deposits accepted by
any Blocked Account Bank thereunder.  All deposit accounts and
investment accounts of each Borrower and its Subsidiaries are set forth on
Schedule 4.15(h).

     

    (i) Adjustments.  No
Borrower will, without Agent’s consent, compromise or adjust any material amount
of the Receivables (or extend the time for payment thereof) or accept any
material returns of merchandise or grant any additional discounts, allowances or
credits thereon except for those compromises, adjustments, returns, discounts,
credits and allowances as have been heretofore customary in the business of such
Borrower.

     

    4.16. Inventory.  To
the extent Inventory held for sale or lease has been produced by any Borrower,
it has been and will be produced by such Borrower in accordance with the Federal
Fair Labor Standards Act of 1938, as amended, and all rules, regulations and
orders thereunder.

     

    4.17. Maintenance of
Equipment.  The Equipment shall be maintained in good operating
condition and repair (reasonable wear and tear excepted) and all necessary
replacements of and repairs thereto shall be made so that the value and
operating efficiency of the Equipment shall be maintained and
preserved.  No Borrower shall use or operate the Equipment in
violation of any law, statute, ordinance, code, rule or
regulation.  Each Borrower shall have the right to sell Equipment to
the extent set forth in Section 4.3 hereof.

     

    4.18. Exculpation of
Liability.  Nothing herein contained shall be construed to
constitute Agent or any Lender as any Borrower’s agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause
thereof.  Neither Agent nor any Lender, whether by anything herein or
in any assignment or otherwise, assume any of any Borrower’s obligations under
any contract or agreement assigned to Agent or such Lender, and neither Agent
nor any Lender shall be responsible in any way for the performance by any
Borrower of any of the terms and conditions thereof.

     

    4.19. Environmental
Matters.

     

    (a) Borrowers
shall undertake best efforts to ensure that the Real Property and all operations
and businesses conducted thereon remain in compliance with all Environmental
Laws and they shall not place or permit to be placed any Hazardous Substances on
any Real Property except as permitted by Applicable Law, permits, licenses, or
appropriate governmental authorities.

     

    (b) Borrowers
shall undertake best efforts to monitor compliance with all applicable
Environmental Laws including periodic reviews of such compliance.

     

    (c) Borrowers
shall (i) employ in connection with the use of the Real Property appropriate
technology necessary to maintain compliance with any applicable Environmental
Laws and (ii) dispose of any and all Hazardous Waste generated at the Real
Property only at facilities and with carriers that maintain valid permits under
RCRA and any other applicable Environmental Laws.  Borrowers shall use
their best efforts to obtain certificates of disposal, such as hazardous waste
manifest receipts, from all treatment, transport, storage or disposal facilities
or operators employed by Borrowers in connection with the transport or disposal
of any Hazardous Waste generated at the Real Property.

     

    (d) In the
event any Borrower obtains, gives or receives notice of any Release or threat of
Release of a reportable quantity of any Hazardous Substances at the Real
Property (any such event being hereinafter referred to as a “Hazardous
Discharge”) or receives any notice of violation, request for information or
notification that it is potentially responsible for investigation or cleanup of
environmental conditions at the Real Property, demand letter or complaint,
order, citation, or other written notice with regard to any Hazardous Discharge
or violation of Environmental Laws affecting the Real Property or any Borrower’s
interest therein (any of the foregoing is referred to herein as an
“Environmental Complaint”) from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the “Authority”), then Borrowing
Agent shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which any Borrower is aware giving rise to
the Hazardous Discharge or Environmental Complaint.  Such information
is to be provided to allow Agent to protect its security interest in and Lien on
the Real Property and the Collateral and is not intended to create nor shall it
create any obligation upon Agent or any Lender with respect
thereto.

     

    (e) Borrowing
Agent shall promptly forward to Agent copies of any request for information,
notification of potential liability, demand letter relating to potential
responsibility with respect to the investigation or cleanup of Hazardous
Substances at any other site owned, operated or used by any Borrower to dispose
of Hazardous Substances and shall continue to forward copies of correspondence
between any Borrower and the Authority regarding such claims to Agent until the
claim is settled.  Borrowing Agent shall promptly forward to Agent
copies of all documents and reports concerning a Hazardous Discharge at the Real
Property that any Borrower is required to file under any Environmental
Laws.  Such information is to be provided solely to allow Agent to
protect Agent’s security interest in and Lien on the Real Property and the
Collateral.

     

    (f) Borrowers
shall respond promptly to any Hazardous Discharge or Environmental Complaint and
take all necessary action in order to safeguard the health of any Person and to
avoid subjecting the Collateral or Real Property to any Lien.  If any
Borrower shall fail to respond promptly to any Hazardous Discharge or
Environmental Complaint or any Borrower shall fail to comply with any of the
requirements of any Environmental Laws, Agent on behalf of Lenders may, but
without the obligation to do so, for the sole purpose of protecting Agent’s
interest in the Collateral:  (i) give such notices or (ii) enter onto
the Real Property (or authorize third parties to enter onto the Real Property)
and take such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise
deal with any such Hazardous Discharge or Environmental
Complaint.  All reasonable costs and expenses incurred by Agent and
Lenders (or such third parties) in the exercise of any such rights, including
any sums paid in connection with any judicial or administrative investigation or
proceedings, fines and penalties, together with interest thereon from the date
expended at the Default Rate for Domestic Rate Loans of Revolving Advances shall
be paid upon demand by Borrowers, and until paid shall be added to and become a
part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and any
Borrower.

     

    (g) At any
time following the Closing Date, upon the occurrence of any Hazardous Discharge,
or if the Agent has reasonable cause to believe that there has been a Hazardous
Discharge or a material violation of Environmental Laws, Borrowers shall
promptly upon the written request of Agent from time to time, provide Agent, at
Borrowers’ expense, with an environmental site assessment or environmental audit
report prepared by an environmental engineering firm acceptable in the
reasonable opinion of Agent, to assess with a reasonable degree of certainty the
existence of a Hazardous Discharge and the potential costs in connection with
abatement, cleanup and removal of any Hazardous Substances found on, under, at
or within the Real Property.  Any report or investigation of such
Hazardous Discharge proposed and acceptable to an appropriate Authority that is
charged to oversee the clean-up of such Hazardous Discharge shall be acceptable
to Agent.  If such estimates, individually or in the aggregate, exceed
$100,000, Agent shall have the right to require Borrowers to post a bond, letter
of credit or other security reasonably satisfactory to Agent to secure payment
of these costs and expenses.

     

    (h) Borrowers
shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their
respective employees, agents, directors and officers harmless from and against
all loss, liability, damage and expense, claims, costs, fines and penalties,
including attorney’s fees, suffered or incurred by Agent or Lenders under or on
account of any Environmental Laws, including the assertion of any Lien
thereunder, with respect to any Hazardous Discharge, the presence of any
Hazardous Substances affecting the Real Property, whether or not the same
originates or emerges from the Real Property or any contiguous real estate,
including any loss of value of the Real Property as a result of the foregoing
except to the extent such loss, liability, damage and expense is attributable to
any Hazardous Discharge resulting from actions on the part of Agent or any
Lender.  Borrowers’ obligations under this Section 4.19 shall arise
upon the discovery of the presence of any Hazardous Substances at the Real
Property, whether or not any federal, state, or local environmental agency has
taken or threatened any action in connection with the presence of any Hazardous
Substances.  Borrowers’ obligation and the indemnifications hereunder
shall survive the termination of this Agreement.

     

    (i) For
purposes of Section 4.19 and 5.7, all references to Real Property shall be
deemed to include all of each Borrower’s right, title and interest in and to its
owned and leased premises.

     

    4.20. Financing
Statements.  Except as respects the financing statements filed
by Agent and the financing statements described on Schedule 1.2, no financing
statement covering any of the Collateral or any proceeds thereof is on file in
any public office.

     

    V. REPRESENTATIONS
AND WARRANTIES.

     

    Each
Borrower represents and warrants as follows:

     

    5.1. Authority.  Each
Borrower has full power, authority and legal right to enter into this Agreement
and the Other Documents and to perform all its respective Obligations hereunder
and thereunder.  This Agreement, the Subordination Agreement and the
Other Documents have been duly executed and delivered by each Borrower, and this
Agreement, the Subordination Agreement and the Other Documents constitute the
legal, valid and binding obligation of such Borrower enforceable in accordance
with their terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights
generally.  The execution, delivery and performance of this Agreement
and of the Other Documents (a) are within such Borrower’s corporate or limited
liability company powers, as applicable, have been duly authorized by all
necessary corporate or company action, as applicable, are not in contravention
of law or the terms of such Borrower’s by-laws, certificate of incorporation,
operating agreement, certificate of formation or other applicable documents
relating to such Borrower’s formation or to the conduct of such Borrower’s
business or of any material agreement or undertaking to which such Borrower is a
party or by which such Borrower is bound or the Subordinated Loan Documentation,
(b) will not conflict with or violate any law or regulation, or any judgment,
order or decree of any Governmental Body, (c) will not require the Consent of
any Governmental Body or any other Person, except those Consents set forth on
Schedule 5.1 hereto, all of which will have been duly obtained, made or compiled
prior to the Closing Date and which are in full force and effect and (d) will
not conflict with, nor result in any breach in any of the provisions of or
constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Borrower under the provisions of
any agreement, charter document, instrument, by-law, operating agreement, or
other instrument to which such Borrower is a party or by which it or its
property is a party or by which it may be bound, including under the provisions
of the Subordinated Loan Documentation.

     

    5.2. Formation and
Qualification.

     

    (a) Each
Borrower is duly incorporated or formed, as applicable, and in good standing
under the laws of the state listed on Schedule 5.2(a) and is qualified to do
business and is in good standing in the states listed on Schedule 5.2(a) which
constitute all states in which qualification and good standing are necessary for
such Borrower to conduct its business and own its property and where the failure
to so qualify could reasonably be expected to have a Material Adverse Effect on
such Borrower.  Each Borrower has delivered to Agent true and complete
copies of its certificate or articles of incorporation and by-laws or its
certificate of formation and operating agreement, as applicable, and will
promptly notify Agent of any amendment or changes thereto.

     

    (b) The only
Subsidiaries of Holdings and each Borrower are listed on Schedule
5.2(b).

     

    5.3. Survival of Representations
and Warranties.  All representations and warranties of such
Borrower contained in this Agreement and the Other Documents shall be true at
the time of such Borrower’s execution of this Agreement and the Other Documents,
and shall survive the execution, delivery and acceptance thereof by the parties
thereto and the closing of the transactions described therein or related
thereto, until the end of the Term, except as otherwise provided in Section
16.7.

     

    5.4. Tax
Returns.  Each Borrower’s federal tax identification number is
set forth on Schedule 5.4.  Each Borrower has filed all federal, state
and local tax returns and other reports each is required by law to file and has
paid all taxes, assessments, fees and other governmental charges that are due
and payable.  Federal, state and local income tax returns of each
Borrower have been examined and reported upon by the appropriate taxing
authority or closed by applicable statute and satisfied for all fiscal years
prior to and including the fiscal year ending September 30, 2003.  The
provision for taxes on the books of each Borrower is adequate for all years not
closed by applicable statutes, and for its current fiscal year, and no Borrower
has any knowledge of any deficiency or additional assessment in connection
therewith not provided for on its books.

     

    5.5. Financial
Statements.

     

    (a) The
twelve-month cash flow projections of Borrowers on a Consolidated Basis and
their projected balance sheets as of the Closing Date, copies of which are
annexed hereto as Exhibit 5.5(a) (the “Projections”) were prepared by the Chief
Financial Officer of Holdings, are based on underlying assumptions which provide
a reasonable basis for the projections contained therein and reflect Borrowers’
judgment based on present circumstances of the most likely set of conditions and
course of action for the projected period.

     

    (b) The
consolidated and consolidating balance sheets of Borrowers, their Subsidiaries
and such other Persons described therein (including the accounts of all
Subsidiaries for the respective periods during which a subsidiary relationship
existed) as of September 30, 2007, and the related statements of income, changes
in stockholder’s equity, and changes in cash flow for the period ended on such
date, all accompanied by reports thereon containing opinions without
qualification by independent certified public accountants, copies of which have
been delivered to Agent, have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur and present fairly the financial position of Borrowers and
their Subsidiaries at such date and the results of their operations for such
period.  Since March 31, 2008, there has been no change in the
condition, financial or otherwise, of Borrowers or their Subsidiaries as shown
on the consolidated balance sheet as of such date and no change in the aggregate
value of machinery, equipment and Real Property owned by Borrowers and their
respective Subsidiaries, except changes in the Ordinary Course of Business, none
of which individually or in the aggregate has been materially
adverse.

     

    5.6. Entity
Names.  No Borrower has been known by any other corporate name
in the past five years and does not sell Inventory under any other name except
as set forth on Schedule 5.6, nor has any Borrower been the surviving
corporation or company, as applicable, of a merger or consolidation or acquired
all or substantially all of the assets of any Person during the preceding five
(5) years.

     

    5.7. O.S.H.A. and Environmental
Compliance.

     

    (a) Each
Borrower has duly complied with, and its facilities, business, assets, property,
leaseholds, Real Property and Equipment are in compliance in all material
respects with, the provisions of the Federal Occupational Safety and Health Act,
the Environmental Protection Act, RCRA and all other Environmental Laws and
there are no outstanding citations, notices or orders of non-compliance issued
to any Borrower or relating to its business, assets, property, leaseholds or
Equipment under any such laws, rules or regulations.

     

    (b) Each
Borrower has been issued all required federal, state and local licenses,
certificates or permits relating to all applicable Environmental
Laws.

     

    (c) To the
best of Borrowing Agent’s knowledge and information, (i) there are no visible
signs of releases, spills, discharges, leaks or disposal (collectively referred
to as “Releases”) of Hazardous Substances at, upon, under or within any Real
Property including any premises leased by any Borrower; (ii) there are no
underground storage tanks or polychlorinated biphenyls on the Real Property
including any premises leased by any Borrower; (iii) the Real Property including
any premises leased by any Borrower has never been used as a treatment, storage
or disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are
present on the Real Property including any premises leased by any Borrower,
excepting such quantities as are handled in accordance with all applicable
manufacturer’s instructions and governmental regulations and in proper storage
containers and as are necessary for the operation of the commercial business of
any Borrower or of its tenants.

     

    5.8. Solvency; No Litigation,
Violation, Indebtedness or Default.

     

    (a) Each
Borrower is solvent, able to pay its debts as they mature, has capital
sufficient to carry on its business and all businesses in which it is about to
engage, and (i) as of the Closing Date, the fair present saleable value of its
assets, calculated on a going concern basis, is in excess of the amount of its
liabilities and (ii) subsequent to the Closing Date, the fair saleable value of
its assets (calculated on a going concern basis) will be in excess of the amount
of its liabilities.

     

    (b) Except as
disclosed in Schedule 5.8(b), no Borrower has (i) any pending or, to the best
knowledge of Borrowing Agent after due inquiry, threatened litigation,
arbitration, actions or proceedings which involve the possibility of having a
Material Adverse Effect, and (ii) any liabilities or indebtedness for borrowed
money other than the Obligations.

     

    (c) No
Borrower is in violation of any applicable statute, law, rule, regulation or
ordinance in any respect which could reasonably be expected to have a Material
Adverse Effect, nor is any Borrower in violation of any order of any court,
Governmental Body or arbitration board or tribunal.

     

    (d) No
Borrower nor any member of the Controlled Group maintains or contributes to any
Plan other than those listed on Schedule 5.8(d) hereto.  (i) No Plan
has incurred any “accumulated funding deficiency,” as defined in Section
302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived, and
each Borrower and each member of the Controlled Group has met all applicable
minimum funding requirements under Section 302 of ERISA in respect of each Plan;
(ii) each Plan which is intended to be a qualified plan under Section 401(a) of
the Code as currently in effect has been determined by the Internal Revenue
Service to be qualified under Section 401(a) of the Code and the trust related
thereto is exempt from federal income tax under Section 501(a) of the Code;
(iii) neither any Borrower nor any member of the Controlled Group has incurred
any liability to the PBGC other than for the payment of premiums, and there are
no premium payments which have become due which are unpaid; (iv) no Plan has
been terminated by the plan administrator thereof nor by the PBGC, and there is
no occurrence which would cause the PBGC to institute proceedings under Title IV
of ERISA to terminate any Plan; (v) except as provided in Schedule 5.8(d)
hereto, at this time, the current value of the assets of each Plan exceeds the
present value of the accrued benefits and other liabilities of such Plan and
neither any Borrower nor any member of the Controlled Group knows of any facts
or circumstances which would materially change the value of such assets and
accrued benefits and other liabilities; (vi) neither any Borrower nor any member
of the Controlled Group has breached any of the responsibilities, obligations or
duties imposed on it by ERISA with respect to any Plan; (vii) neither any
Borrower nor any member of a Controlled Group has incurred any liability for any
excise tax arising under Section 4972 or 4980B of the Code, and no fact exists
which could give rise to any such liability; (viii) neither any Borrower nor any
member of the Controlled Group nor any fiduciary of, nor any trustee to, any
Plan, has engaged in a “prohibited transaction” described in Section 406 of the
ERISA or Section 4975 of the Code nor taken any action which would constitute or
result in a Termination Event with respect to any such Plan which is subject to
ERISA; (ix) each Borrower and each member of the Controlled Group has made all
contributions due and payable with respect to each Plan; (x) there exists no
event described in Section 4043(b) of ERISA, for which the thirty (30) day
notice period has not been waived; (xi) neither any Borrower nor any member of
the Controlled Group has any fiduciary responsibility for investments with
respect to any plan existing for the benefit of persons other than employees or
former employees of any Borrower and any member of the Controlled Group; (xii)
neither any Borrower nor any member of the Controlled Group maintains or
contributes to any Plan which provides health, accident or life insurance
benefits to former employees, their spouses or dependents, other than in
accordance with Section 4980B of the Code; (xiii) neither any Borrower nor any
member of the Controlled Group has withdrawn, completely or partially, from any
Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan
Amendments Act of 1980 and there exists no fact which would reasonably be
expected to result in any such liability; and (xiv) no Plan fiduciary (as
defined in Section 3(21) of ERISA) has any liability for breach of fiduciary
duty or for any failure in connection with the administration or investment of
the assets of a Plan.

     

    5.9. Patents, Trademarks,
Copyrights and Licenses.  All patents, patent applications,
trademarks, trademark applications, service marks, service mark applications,
copyrights, copyright applications, design rights, tradenames, assumed names,
trade secrets and licenses owned by or used in the respective business of any
Borrower as currently conducted, which are material to its condition (financial
or otherwise), are set forth on Schedule 5.9, are valid and, except for common
law rights, have been duly registered or filed with all appropriate Governmental
Bodies and constitute all of the intellectual property rights which are
necessary for the operation of its business; except as set forth in Schedule 5.9
hereto, there is no objection to or pending challenge to the validity of any
such patent, trademark, copyright, design rights, tradenames, trade secret or
license and no claims are pending, or to the best of each Borrower’s knowledge
following diligent inquiry, threatened that any Borrower is infringing or
otherwise adversely affecting the rights of any Person with respect to such
rights.  Except for such claims and infringements as do not, in the
aggregate, give rise to any liability on the part of any Borrower which will, or
is reasonably likely to, result in a Material Adverse Effect, each patent,
patent application, patent license, trademark, trademark application, trademark
license, service mark, service mark application, service mark license, design
rights, copyright, copyright application and copyright license owned or held by
any Borrower and all trade secrets used by any Borrower consist of original
material or property developed by such Borrower or was lawfully acquired by such
Borrower from the proper and lawful owner thereof; each of such items has been
maintained so as to preserve the value thereof from the date of creation or
acquisition thereof; with respect to all software used by any Borrower, such
Borrower is in possession of all source and object codes related to each piece
of software or is the beneficiary of a valid license or source code escrow
agreement, and each such source code escrow agreement is listed on Schedule 5.9
hereto.

     

    5.10. Licenses and
Permits.  Except as set forth in Schedule 5.10, each Borrower
(a) is in compliance with and (b) has procured and is now in possession of, all
material licenses or permits required by any applicable federal, state,
provincial or local law, rule or regulation for the operation of its business in
each jurisdiction wherein it is now conducting or proposes to conduct business
and where the failure to procure such licenses or permits could have a Material
Adverse Effect.

     

    5.11. Default of
Indebtedness.  No Borrower is in default in the payment of the
principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.

     

    5.12. No
Default.  No Borrower is in default in the payment or
performance of any of its contractual obligations and no Default has
occurred.

     

    5.13. No Burdensome
Restrictions.  No Borrower is party to any contract or
agreement the performance of which could have a Material Adverse
Effect.  Each Borrower has heretofore delivered to Agent true and
complete copies of all material contracts to which it is a party or to which it
or any of its properties is subject.  No Borrower has agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien which is not a Permitted Encumbrance.

     

    5.14. No Labor
Disputes.  No Borrower is involved in any labor dispute; there
are no strikes or walkouts or union organization of any Borrower’s employees
threatened or in existence and no labor contract is scheduled to expire during
the Term other than as set forth on Schedule 5.14 hereto.

     

    5.15. Margin
Regulations.  No Borrower is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect.  No part of the proceeds of any Advance will be
used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of
such Board of Governors.

     

    5.16. Investment Company
Act.  No Borrower is an “investment company” registered or
required to be registered under the Investment Company Act of 1940, as amended,
nor is it controlled by such a company.

     

    5.17. Disclosure.  No
representation or warranty made by any Borrower in this Agreement, the
Subordinated Loan Documentation, or in any financial statement, report,
certificate or any other document furnished in connection herewith or therewith
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the statements herein or therein not
misleading.  There is no fact known to any Borrower or which
reasonably should be known to such Borrower which such Borrower has not
disclosed to Agent in writing with respect to the transactions contemplated or
evidenced by the Subordinated Loan Documentation or this Agreement which could
reasonably be expected to have a Material Adverse Effect.

     

    5.18. Delivery of Subordinated
Loan Documentation.  Agent has received complete copies of the
Subordinated Loan Documentation (including all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant thereto, if any)
and all amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof.  None of such documents and
agreements has been amended or supplemented, nor have any of the provisions
thereof been waived, except pursuant to a written agreement or instrument which
has heretofore been delivered to Agent.

     

    5.19. Swaps.  No
Borrower is a party to, nor will it be a party to, any swap agreement whereby
such Borrower has agreed or will agree to swap interest rates or currencies
unless same provides that damages upon termination following an event of default
thereunder are payable on an unlimited “two-way basis” without regard to fault
on the part of either party.

     

    5.20. Conflicting
Agreements.  No provision of any mortgage, indenture, contract,
agreement, judgment, decree or order binding on any Borrower or affecting the
Collateral conflicts with, or requires any Consent which has not already been
obtained to, or would in any way prevent the execution, delivery or performance
of, the terms of this Agreement or the Other Documents.

     

    5.21. Application of Certain Laws
and Regulations.  Neither any Borrower nor any Affiliate of any
Borrower is subject to any law, statute, rule or regulation which regulates the
incurrence of any Indebtedness, including laws, statutes, rules or regulations
relative to common or interstate carriers or to the sale of electricity, gas,
steam, water, telephone, telegraph or other public utility
services.

     

    5.22. Business and Property of
Borrowers.  Upon and after the Closing Date, Borrowers do not
propose to engage in any business other than aerospace distribution and avionics
and activities necessary to conduct the foregoing.  On the Closing
Date, each Borrower will own all the property and possess all of the rights and
Consents necessary for the conduct of the business of such
Borrower.

     

    5.23. Section 20
Subsidiaries.  Borrowers do not intend to use and shall not use
any portion of the proceeds of the Advances, directly or indirectly, to purchase
during the underwriting period, or for 30 days thereafter, Ineligible Securities
being underwritten by a Section 20 Subsidiary.

     

    5.24. Anti-Terrorism
Laws.

     

    (a) General.  Neither
any Borrower nor any Affiliate of any Borrower is in violation of any
Anti-Terrorism Law or engages in or conspires to engage in any
transaction  that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.

     

    (b) Executive Order No.
13224.  Neither any Borrower nor any Affiliate of any Borrower
or their respective agents acting or benefiting in any capacity in connection
with the Advances or other transactions hereunder, is any of the following (each
a “Blocked Person”):

     

    (i) a Person
that is listed in the annex to, or is otherwise subject to the provisions of,
the Executive Order No. 13224;

     

    (ii) a Person
owned or  controlled  by, or acting for or on
behalf  of,  any  Person  that is listed
in the annex to, or is otherwise subject to the provisions of, the Executive
Order No. 13224;

     

    (iii) a Person
or entity with which any Lender is prohibited from dealing or otherwise engaging
in any transaction by any Anti-Terrorism Law;

     

    (iv) a Person
or entity that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order No. 13224;

     

    (v) a Person
or entity that is named as a “specially designated national” on the most current
list published by the U.S. Treasury Department Office of Foreign Asset Control
at its official website or any replacement website or other replacement official
publication of such list, or

     

    (vi) a Person
or entity who is affiliated or associated with a Person or entity listed
above.

     

    Neither
any Borrower nor to the knowledge of any Borrower, any of its agents acting in
any capacity in connection with the Advances or other transactions hereunder (i)
conducts any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any Blocked Person, or (ii)
deals in, or otherwise engages in any transaction relating to, any property or
interests in property  blocked  pursuant to the Executive
Order No. 13224.

     

    5.25. Trading with the
Enemy.  No Borrower has engaged, nor does it intend to engage,
in any business or activity prohibited by the Trading with the Enemy
Act.

     

    5.26. Federal Securities
Laws.  Neither any Borrower nor any of its Subsidiaries (i) is
required to file periodic reports under the Exchange Act, (ii) has any
securities registered under the Exchange Act or (iii) has filed a registration
statement that has not yet become effective under the Securities
Act.

     

    5.27. Equity
Interests:  The authorized and outstanding Equity Interests of
each Borrower is as shown on Schedule 5.27 hereto.  All of the Equity
Interests of each Borrower has been duly and validly authorized and issued and
is fully paid and non-assessable and has been sold and delivered to the holders
hereof in compliance with, or under valid exemption from, all federal and state
laws and the rules and regulations of each Governmental Body governing the sale
and delivery of securities.  Except for the rights and obligations
shown on Schedule 5.27, there are no subscriptions, warrants, options, calls,
commitments, rights or agreements by which any Borrower or any of the
shareholders of any Borrower is bound relating to the issuance, transfer, voting
or redemption of shares of its Equity Interests or any pre-emptive rights held
by any Person with respect to the Equity Interests of
Borrowers.  Except as shown on Schedule 5.27, Borrowers have not
issued any securities convertible into or exchangeable for shares of its Equity
Interests or any options, warrants or other rights to acquire such shares or
securities convertible into or exchangeable for such shares.

     

    VI. AFFIRMATIVE
COVENANTS.

     

    Each
Borrower shall, until payment in full of the Obligations and termination of this
Agreement:

     

    6.1. Payment of
Fees.  Pay to Agent on demand all usual and customary fees and
expenses which Agent incurs in connection with (a) the forwarding of Advance
proceeds and (b) the establishment and maintenance of any Blocked Accounts or
Depository Accounts as provided for in Section 4.15(h).  Agent may,
without making demand, charge Borrowers’ Account for all such fees and
expenses.

     

    6.2. Conduct of Business and
Maintenance of Existence and Assets.  (a) Conduct continuously
and operate actively its business according to good business practices and
maintain all of its properties useful or necessary in its business in good
working order and condition (reasonable wear and tear excepted and except as may
be disposed of in accordance with the terms of this Agreement), including all
licenses, patents, copyrights, design rights, tradenames, trade secrets and
trademarks and take all actions necessary to enforce and protect the validity of
any intellectual property right or other right included in the Collateral; (b)
keep in full force and effect its existence and comply in all material respects
with the laws and regulations governing the conduct of its business where the
failure to do so could reasonably be expected to have a Material Adverse Effect;
and (c) make all such reports and pay all such franchise and other taxes and
license fees and do all such other acts and things as may be lawfully required
to maintain its rights, licenses, leases, powers and franchises under the laws
of the United States or any political subdivision thereof where the failure to
do so could reasonably be expected to have a Material Adverse
Effect.

     

    6.3. Violations.  Promptly
notify Agent in writing of any violation of any law, statute, regulation or
ordinance of any Governmental Body, or of any agency thereof, applicable to any
Borrower which could reasonably be expected to have a Material Adverse
Effect.

     

    6.4. Government
Receivables.  Take all reasonable steps necessary to protect
Agent’s interest in the Collateral under the Federal Assignment of Claims Act,
the Uniform Commercial Code and all other applicable state or local statutes or
ordinances and deliver to Agent appropriately endorsed, any instrument or
chattel paper connected with any Receivable arising out of contracts between any
Borrower and the United States, any state or any department, agency or
instrumentality of any of them.

     

    6.5. Fixed Charge Coverage
Ratio.  Cause to be maintained as of the end of each quarter, a
Fixed Charge Coverage Ratio of not less than 1.25 to 1.0 to be tested on a
rolling four quarter basis; provided however that (i) for the fiscal quarter
ending September 30, 2008, the Fixed Charge Coverage Ratio shall be tested for
the fiscal quarter then ending; (ii) for the fiscal quarter ending December 31,
2008, the Fixed Charge Coverage Ratio shall be tested for the two fiscal
quarters then ending and (iii) for the fiscal quarter ending March 31, 2009, the
Fixed Charge Coverage Ratio shall be tested for the three fiscal quarters then
ending.

     

    6.6. Execution of Supplemental
Instruments.  Execute and deliver to Agent from time to time,
upon reasonable demand, such material supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement may be carried into effect.

     

    6.7. Payment of
Indebtedness.  Pay, discharge or otherwise satisfy at or before
maturity (subject, where applicable, to specified grace periods and, in the case
of the trade payables, to normal payment practices) all its obligations and
liabilities of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and each Borrower shall have provided for such reserves as Agent may
reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Lenders.

     

    6.8. Standards of Financial
Statements.  Cause all financial statements referred to in
Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, and 9.13 as to which GAAP is
applicable to be complete and correct in all material respects (subject, in the
case of interim financial statements, to normal year-end audit adjustments) and
to be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as concurred in by
such reporting accountants or officer, as the case may be, and disclosed
therein).

     

    6.9. Federal Securities
Laws.  Promptly notify Agent in writing if any Borrower or any
of its Subsidiaries is required to file periodic reports under the Exchange Act;
or if Holdings or any Borrower or any of any Borrower’s Subsidiaries (i)
registers any securities under the Exchange Act or (ii) files a registration
statement under the Securities Act.

     

    6.10. Post Closing
Requirements.

     

    (a) Borrowers
shall use commercially reasonable efforts to deliver to Agent, within 45 days of
the Closing Date, a Lien Waiver Agreement, in form and substance satisfactory to
Agent in it sole discretion, for the Collateral located (a) 601 Gateway Blvd.,
South San Francisco, California and (b) 4694 Aviation Parkway, Suite K, Atlanta,
GA 30349, each executed by the owner of such property in favor of Agent,
provided however, that failure to obtain such Lien Waiver Agreement shall not be
deemed an Event of Default hereunder, provided further that, Borrowers
acknowledge that Agent shall have the right to impose a reserve under the
Formula Amount in an amount not less than three months rent due under the lease
for such property.

     

    (b) Borrowers
shall deliver to Agent, within 30 days, an Aircraft Security Agreement covering
the Aircraft, serial number XR-955, FAA Registration Number N4367L, such
agreement to be in form and substance satisfactory to Agent in its sole
discretion.

     

    VII. NEGATIVE
COVENANTS.

     

    No
Borrower shall, until satisfaction in full of the Obligations and termination of
this Agreement:

     

    7.1. Merger, Consolidation,
Acquisition and Sale of Assets.

     

    (a) Enter
into any merger, consolidation or other reorganization with or into any other
Person or acquire all or a substantial portion of the assets or Equity Interests
of any Person or permit any other Person to consolidate with or merge with it,
provided however Borrowers (i) may engage in Permitted Acquisitions and (ii)
Maptech may merge with and into DAC so long as Borrowers provide copies of the
applicable merger documents to Agent, such documents to be in form and substance
satisfactory to Agent in its reasonable discretion, five (5) Business Days prior
to the closing of such merger and no Default or Event of Default has occurred
and is continuing or would occur after giving effect to such
merger.

     

    (b) Sell,
lease, transfer or otherwise dispose of any of its properties or assets, except
(i) dispositions of Inventory and Equipment to the extent expressly permitted by
Section 4.3 and (ii) any other sales or dispositions expressly permitted by this
Agreement.

     

    7.2. Creation of
Liens.  Create or suffer to exist any Lien or transfer upon or
against any of its property or assets now owned or hereafter acquired, except
Permitted Encumbrances.

     

    7.3. Guaranties.  Become
liable upon the obligations or liabilities of any Person by assumption,
endorsement or guaranty thereof or otherwise (other than to Lenders) except (a)
as disclosed on Schedule 7.3, and (b) the endorsement of checks in the Ordinary
Course of Business.

     

    7.4. Investments.  Except
for Permitted Acquisitions, purchase or acquire obligations or Equity Interests
of, or any other interest in, any Person, except: (a) obligations issued or
guaranteed by the United States of America or any agency thereof; (b) commercial
paper with maturities of not more than 180 days and a published rating of not
less than A-1 or P-1 (or the equivalent rating); (c) certificates of time
deposit and bankers’ acceptances having maturities of not more than 180 days and
repurchase agreements backed by United States government securities of a
commercial bank if (i) such bank has a combined capital and surplus of at least
$500,000,000, or (ii) its debt obligations, or those of a holding company of
which it is a Subsidiary, are rated not less than A (or the equivalent rating)
by a nationally recognized investment rating agency; and (d) U.S. money market
funds that invest solely in obligations issued or guaranteed by the United
States of America or an agency thereof.

     

    7.5. Loans.  Make
advances, loans or extensions of credit to any Person, including any Parent,
Subsidiary or Affiliate except with respect to the extension of commercial trade
credit in connection with the sale of Inventory in the Ordinary Course of
Business and travel advances to employees in the Ordinary Course of Business not
to exceed $75,000 in the aggregate or $25,000 per employee at any time
outstanding.

     

    7.6. Capital
Expenditures.  Contract for, purchase or make any expenditure
or commitments for Capital Expenditures in any fiscal year in an aggregate
amount for all Borrowers in excess of $750,000.

     

    7.7. Dividends /
Distributions.  Declare, pay or make any dividend or
distribution on any Equity Interests of any Borrower (other than dividends or
distributions payable in its stock, or split-ups or reclassifications of its
stock) or apply any of its funds, property or assets to the purchase, redemption
or other retirement of any Equity Interest, or of any options to purchase or
acquire any Equity Interest of any Borrower. 

     

    7.8. Indebtedness.  Create,
incur, assume or suffer to exist any Indebtedness (exclusive of trade debt)
except in respect of: (i) trade debt, wages, and other accrued expenses incurred
in the Ordinary Course of Business, and recourse obligations resulting from
endorsement of negotiable instruments for collection in the Ordinary Course of
Business; (ii) Indebtedness to Lenders; (iii) Indebtedness incurred for Capital
Expenditures permitted under Section 7.6 hereof; (iv) Indebtedness due under the
Subordinated Loan Documentation; and (v) Indebtedness with respect to reasonable
warranties and indemnities made under any agreements for asset sales permitted
under Section 7.1.

     

    7.9. Nature of
Business.  Substantially change the nature of the business in
which it is presently engaged, nor except as specifically permitted hereby
purchase or invest, directly or indirectly, in any assets or property other than
in the Ordinary Course of Business for assets or property which are useful in,
necessary for and are to be used in its business as presently
conducted.

     

    7.10. Transactions with
Affiliates.  Directly or indirectly, purchase, acquire or lease
any property or services from, or sell, transfer or lease any property or
services to, or otherwise enter into any transaction or deal with, any
Affiliate, including without limitation, Holdings, except (i) transactions
disclosed to the Agent, which are in the Ordinary Course of Business, on an
arm’s-length basis on terms and conditions no less favorable than terms and
conditions which would have been obtainable from a Person other than an
Affiliate and (ii) transactions entered into with Holdings relating to
Management Services, health care costs, 401k expenses, standalone audit
expenses, EPL premiums, casualty premiums, workers compensation premiums,
property insurance premiums, APL premiums and Borrowing Agent’s corporate
employee allocation and expense reports, such costs not to exceed $5,000,000 in
the aggregate per fiscal year and provided that such costs are reimbursements,
on a dollar for dollar basis, for expenses incurred by Holdings on behalf of the
Borrowers and such costs been expensed in the calculation of Borrowers’ net
income.

     

    7.11. Leases.  Enter
as lessee into any lease arrangement for real or personal property (unless
capitalized and permitted under Section 7.6 hereof) if after giving effect
thereto, aggregate annual rental payments for all leased property would exceed
$1,200,000 in any one fiscal year in the aggregate for all
Borrowers.

     

    7.12. Subsidiaries.

     

    (a) Form any
Subsidiary unless (i) such Subsidiary expressly joins in this Agreement as a
borrower and becomes jointly and severally liable for the obligations of
Borrowers hereunder, under the Notes, and under any other agreement between any
Borrower and Lenders; and (ii) Agent shall have received all documents,
including legal opinions, it may reasonably require to establish compliance with
each of the foregoing conditions.

     

    (b) Enter
into any partnership, joint venture or similar arrangement.

     

    7.13. Fiscal Year and Accounting
Changes.  Change its fiscal year from September 30 or make any
change (i) in accounting treatment and reporting practices except as required by
GAAP or (ii) in tax reporting treatment except as required by law.

     

    7.14. Pledge of
Credit.  Now or hereafter pledge Agent’s or any Lender’s credit
on any purchases or for any purpose whatsoever or use any portion of any Advance
in or for any business other than such Borrower’s business as conducted on the
date of this Agreement.

     

    7.15. Amendment of Articles of
Incorporation, By-Laws, Certificate of Formation or Operating
Agreement.  Amend, modify or waive any term or material
provision of its Articles or Certificate of Incorporation or By-Laws or its
Certificate of Formation or Operating Agreement, as applicable, unless required
by law.

     

    7.16. Compliance with
ERISA.  (i) (x) Maintain, or permit any member of the
Controlled Group to maintain, or (y) become obligated to contribute, or permit
any member of the Controlled Group to become obligated to contribute, to any
Plan, other than those Plans disclosed on Schedule 5.8(d), (ii) engage, or
permit any member of the Controlled Group to engage, in any non-exempt
“prohibited transaction”, as that term is defined in section 406 of ERISA and
Section 4975 of the Code, (iii) incur, or permit any member of the Controlled
Group to incur, any “accumulated funding deficiency”, as that term is defined in
Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any
member of the Controlled Group to terminate, any Plan where such event could
result in any liability of any Borrower or any member of the Controlled Group or
the imposition of a lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any
member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any
Termination Event, (viii) fail to comply, or permit a member of the Controlled
Group to fail to comply, with the requirements of ERISA or the Code or other
Applicable Laws in respect of any Plan, (ix) fail to meet, or permit any member
of the Controlled Group to fail to meet, all minimum funding requirements under
ERISA or the Code or postpone or delay or allow any member of the Controlled
Group to postpone or delay any funding requirement with respect of any
Plan.

     

    7.17. Prepayment of
Indebtedness.  Except as permitted pursuant to Section 7.21
hereof, at any time, directly or indirectly, prepay any Indebtedness (other than
to Lenders), or repurchase, redeem, retire or otherwise acquire any Indebtedness
of any Borrower.

     

    7.18. Anti-Terrorism
Laws.  No Borrower shall, until satisfaction in full of the
Obligations and termination of this Agreement, nor shall it permit any Affiliate
or agent to:

     

    (a) Conduct
any business or engage in any transaction or dealing with any Blocked Person,
including the making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person.

     

    (b) Deal in,
or otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order No. 13224.

     

    (c) Engage in
or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in the Executive Order No. 13224, the USA PATRIOT Act or any other
Anti-Terrorism Law.  Borrower shall deliver to Lenders any
certification or other evidence requested from time to time by any Lender in its
sole discretion, confirming Borrower’s compliance with this
Section.

     

    7.19. Membership/Partnership
Interests.  Elect to treat or permit any of its Subsidiaries to
(x) treat its limited liability company membership interests or partnership
interests, as the case may be, as securities as contemplated by the definition
of “security” in Section 8-102(15) and by Section 8-103 of Article 8 of Uniform
Commercial Code or (y) certificate its limited liability company membership
interests or partnership interests, as the case may be.

     

    7.20. Trading with the Enemy
Act.  Engage in any business or activity in violation of the
Trading with the Enemy Act.

     

    7.21. Subordinated
Indebtedness.  At any time, directly or indirectly, pay,
prepay, repurchase, redeem, retire or otherwise acquire, or make any payment on
account of any principal of, interest on or premium payable in connection with
the repayment or redemption of the Subordinated Indebtedness, except as
permitted in the Subordination Agreement.

     

    7.22. Other
Agreements.  Enter into any material amendment, waiver or
modification of the Subordinated Loan Documentation, Management Agreement or any
related agreements.

     

    VIII. CONDITIONS
PRECEDENT.

     

    8.1. Conditions to Initial
Advances.  The agreement of Lenders to make the initial
Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Agent, immediately prior to or concurrently with the
making of such Advances, of the following conditions precedent:

     

    (a) Note.  Agent
shall have received the Notes duly executed and delivered by an authorized
officer of each Borrower;

     

    (b) Filings, Registrations and
Recordings.  Each document (including any Uniform Commercial
Code financing statement) required by this Agreement, any related agreement or
under law or reasonably requested by the Agent to be filed, registered or
recorded in order to create, in favor of Agent, a perfected security interest in
or lien upon the Collateral shall have been properly filed, registered or
recorded in each jurisdiction in which the filing, registration or recordation
thereof is so required  or requested, and Agent shall have received an
acknowledgment copy, or other evidence satisfactory to it, of each such filing,
registration or recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto;

     

    (c) Proceedings of
Borrowers.  Agent shall have received a copy of the resolutions
in form and substance reasonably satisfactory to Agent, of the Board of
Directors, Management Committee, Managing Member, or Manager, as applicable, of
each Borrower authorizing (i) the execution, delivery and performance of this
Agreement, the Notes, any related agreements, the Subordinated Loan
Documentation, (collectively the “Documents”) and (ii) the granting by each
Borrower of the security interests in and liens upon the Collateral in each case
certified by the Secretary, an Assistant Secretary, or Manager of each Borrower,
as applicable, as of the Closing Date; and, such certificate shall state that
the resolutions thereby certified have not been amended, modified, revoked or
rescinded as of the date of such certificate;

     

    (d) Incumbency Certificates of
Borrowers.  Agent shall have received a certificate of the
Secretary, an Assistant Secretary or Manager of each Borrower, as applicable,
dated the Closing Date, as to the incumbency and signature of the officers of
each Borrower executing this Agreement, the Other Documents, any certificate or
other documents to be delivered by it pursuant hereto, together with evidence of
the incumbency of such Secretary, Assistant Secretary or Manager;

     

    (e) Reserved.

     

    (f) Reserved.

     

    (g) Certificates.  Agent
shall have received a copy of the Articles or Certificate of Incorporation or
Formation of each Borrower, and all amendments thereto, certified by the
Secretary of State or other appropriate official of its jurisdiction of
incorporation or formation together with copies of the By-Laws or Operating
Agreement, as applicable, of each Borrower and all agreements of each Borrower’s
and Guarantor’s shareholders or members certified as accurate and complete by
the Secretary of each Borrower and such Guarantor;

     

    (h) Good Standing
Certificates.  Agent shall have received good standing
certificates for Holdings, each Borrower and Guarantor dated not more than 30
days prior to the Closing Date, issued by the Secretary of State or other
appropriate official of Holdings’, each Borrower’s and Guarantor’s jurisdiction
of incorporation or formation and each jurisdiction where the conduct of
Holdings, each Borrower’s and Guarantor’s business activities or the ownership
of its properties necessitates qualification;

     

    (i) Legal
Opinion.  Agent shall have received the executed legal opinion
of Odin Feldman Pittleman, PC in form and substance satisfactory to Agent which
shall cover such matters incident to the transactions contemplated by this
Agreement, the Notes, the Other Documents, the Guaranty, the Subordination
Agreement and related agreements as Agent may reasonably require and each
Borrower hereby authorizes and directs such counsel to deliver such opinions to
Agent and Lenders;

     

    (j) No
Litigation.  (i) No litigation, investigation or proceeding
before or by any arbitrator or Governmental Body shall be continuing, or to the
best knowledge of Borrowing Agent after due inquiry, threatened, against any
Borrower or against the officers or directors of any Borrower (A) in connection
with this Agreement, the Other Documents, the Subordinated Loan Documents or any
of the transactions contemplated thereby and which, in the reasonable opinion of
Agent, is deemed material or (B) which could, in the reasonable opinion of
Agent, have a Material Adverse Effect; and (ii) no injunction, writ, restraining
order or other order of any nature materially adverse to any Borrower or the
conduct of its business or inconsistent with the due consummation of the
Transactions shall have been issued by any Governmental Body;

     

    (k) Financial Condition
Certificates.  Agent shall have received an executed Financial
Condition Certificate in the form of Exhibit 8.1(k).

     

    (l) Collateral
Examination.  Agent shall have completed Collateral
examinations and received appraisals, the results of which shall be satisfactory
in form and substance to Lenders, of the Receivables and Inventory of each
Borrower and all books and records in connection therewith and Agent shall have
received the Net Orderly Liquidation Appraisal;

     

    (m) Fees.  Agent
shall have received all fees payable to Agent and Lenders on or prior to the
Closing Date hereunder, including pursuant to Article III hereof;

     

    (n) Projections.  Agent
shall have received a copy of the Projections which shall be satisfactory in all
respects to Lenders;

     

    (o) Reserved.

     

    (p) Subordination
Agreements.  Agent shall have entered into a Subordination
Agreement with Borrowers and Subordinated Lender which shall set forth the basis
upon which the Subordinated Lender may receive, and Borrowers may make, payments
under the Subordinated Note, which basis shall be satisfactory in form and
substance to Agent in its sole discretion;

     

    (q) Insurance.  Agent
shall have received in form and substance satisfactory to Agent, certified
copies of Borrowers’ casualty insurance policies, together with loss payable
endorsements on Agent’s standard form of loss payee endorsement naming Agent as
loss payee, and certified copies of Borrowers’ liability insurance policies,
together with endorsements naming Agent as a co-insured;

     

    (r) Reserved.

     

    (s) Reserved.

     

    (t) Payment
Instructions.  Agent shall have received written instructions
from Borrowing Agent directing the application of proceeds of the initial
Advances made pursuant to this Agreement;

     

    (u) Blocked
Accounts.  Agent shall have received duly executed agreements
establishing the Blocked Accounts or Depository Accounts with financial
institutions acceptable to Agent for the collection or servicing of the
Receivables and proceeds of the Collateral;

     

    (v) Consents.  Agent
shall have received any and all Consents necessary to permit the effectuation of
the transactions contemplated by this Agreement and the Other Documents;
including, without limitation, the consent of the CIT Group/Business Credit,
Inc., the lender which is to be repaid with a portion of the Advances, to the
extent such consent is required for prepayment of any loans owing to CIT
Group/Business Credit, Inc., and, Agent shall have received such Consents and
waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary;

     

    (w) No Adverse Material
Change.  (i) since March 31, 2008, there shall not have
occurred any event, condition or state of facts which could reasonably be
expected to have a Material Adverse Effect and (ii) no representations made or
information supplied to Agent or Lenders shall have been proven to be inaccurate
or misleading in any material respect;

     

    (x) Leasehold
Agreements.  Agent shall have received landlord, mortgagee or
warehouseman agreements satisfactory to Agent with respect to all premises
leased by Borrowers at which Inventory and books and records are
located;

     

    (y) Reliance
Letter.  Agent shall have received a reliance letter from
SH&E, Inc. authorizing Agent to rely on SH&E’s Net Orderly Liquidation
Value Appraisal dated April 1, 2008.

     

    (z) Guaranty and Other
Documents.  Agent shall have received (i) the executed
Guaranty, (ii) the executed Guarantor Security Agreement, and (iii) the executed
Other Documents, all in form and substance satisfactory to Agent;

     

    (aa) Contract
Review.  Agent shall have reviewed all material contracts of
Borrowers including leases, union contracts, labor contracts, vendor supply
contracts, license agreements and distributorship agreements and such contracts
and agreements shall be satisfactory in all respects to Agent;

     

    (bb) Closing
Certificate.  Agent shall have received a closing certificate
signed by the Vice President of each Borrower dated as of the date hereof,
stating that, in all material respects: (i) all representations and warranties
set forth in this Agreement and the Other Documents are true and correct on and
as of such date; (ii) Borrowers are on such date in compliance with all the
terms and provisions set forth in this Agreement and the Other Documents; and
(iii) on such date no Default or Event of Default has occurred or is
continuing;

     

    (cc) Borrowing
Base.  Agent shall have received evidence from Borrowers that
the aggregate amount of Eligible Receivables and Eligible Domestic Finished
Goods Inventory is sufficient in value and amount to support Advances in the
amount requested by Borrowers on the Closing Date;

     

    (dd) Undrawn
Availability.  After giving effect to the initial Advances
hereunder and under the Ex-Im Agreement, Borrowers shall have Undrawn
Availability in an amount not less than the sum of $2,000,000 plus the Direct
Billing Amount;

     

    (ee) Compliance with
Laws.  Agent shall be reasonably satisfied that each Borrower
is in compliance with all materially applicable federal, state, local or
territorial regulations, including those with respect to the Federal
Occupational Safety and Health Act, the Environmental Protection Act, ERISA and
the Trading with the Enemy Act;

     

    (ff) Ex-Im Credit
Documents.  Evidence that the Ex-Im Credit Documents have been
duly executed and delivered and are in full force and effect; and

     

    (gg) Other.  All
corporate and other proceedings, and all documents, instruments and other legal
matters in connection with the Transactions shall be satisfactory in form and
substance to Agent and its counsel.

     

    8.2. Conditions to Each
Advance.  The agreement of Lenders to make any Advance
requested to be made on any date (including the initial Advance), is subject to
the satisfaction of the following conditions precedent as of the date such
Advance is made:

     

    (a) Representations and
Warranties.  Each of the representations and warranties made
by  any Borrower in or pursuant to this Agreement, the Other Documents
and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement, the Other Documents or any related agreement shall be true and
correct in all material respects on and as of such date as if made on and as of
such date;

     

    (b) No
Default.  No Event of Default or Default shall have occurred
and be continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date; provided, however that Agent, in
its sole discretion, may continue to make Advances notwithstanding the existence
of an Event of Default or Default and that any Advances so made shall not be
deemed a waiver of any such Event of Default or Default; and

     

    (c) Maximum
Advances.  In the case of any type of Advance requested to be
made, after giving effect thereto, the aggregate amount of such type of Advance
shall not exceed the maximum amount of such type of Advance permitted under this
Agreement.

     

    Each
request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been
satisfied.

     

    IX. INFORMATION
AS TO BORROWERS.

     

    Each
Borrower shall, or (except with respect to Section 9.11) shall cause Borrowing
Agent on its behalf to, until satisfaction in full of the Obligations and the
termination of this Agreement:

     

    9.1. Disclosure of Material
Matters.  Immediately upon learning thereof, report to Agent
all matters materially affecting the value, enforceability or collectibility of
any portion of the Collateral, including any Borrower’s reclamation or
repossession of, or the return to any Borrower of, a material amount of goods or
claims or disputes asserted by any Customer or other obligor.

     

    9.2. Schedules.  Deliver
to Agent on or before the fifteenth (15th) day of
each month as and for the prior month, and if the fifteenth (15th) day of
the month falls on a day that is not a Business Day, then it shall be delivered
the following Business Day: (a) accounts receivable ageings inclusive of
reconciliations to the general ledger; (b) accounts payable schedules inclusive
of reconciliations to the general ledger; (c) Inventory reports; (d) a report
detailing all Receivables collected by Borrowers and separating such collections
into collections received on account of Export Related Accounts Receivable (as
defined in the Ex-Im Agreement) and collections received on account of all other
Receivables, and (e) a Borrowing Base Certificate in form and substance
satisfactory to Agent (which shall be calculated as of the last day of the prior
month and which shall not be binding upon Agent or restrictive of Agent’s rights
under this Agreement).  In addition, each Borrower will deliver to
Agent at such reasonable intervals as Agent may require: (i) confirmatory
assignment schedules; (ii) copies of Customer’s invoices; (iii) evidence of
shipment or delivery; and (iv) such further schedules, documents and/or
information regarding the Collateral as Agent may require including trial
balances and test verifications.  Agent shall have the right to
confirm and verify all Receivables by any manner and through any medium it
considers advisable and do whatever it may deem reasonably necessary to protect
its interests hereunder.  The items to be provided under this Section
are to be in form satisfactory to Agent and executed by each Borrower and
delivered to Agent from time to time solely for Agent’s convenience in
maintaining records of the Collateral, and any Borrower’s failure to deliver any
of such items to Agent shall not affect, terminate, modify or otherwise limit
Agent’s Lien with respect to the Collateral.

     

    9.3. Environmental
Reports.  Furnish Agent, concurrently with the delivery of the
financial statements referred to in Sections 9.7 and 9.8, with a certificate
signed by the President of Borrowing Agent stating, to the best of his
knowledge, that each Borrower is in compliance in all material respects with all
federal, state and local Environmental Laws.  To the extent any
Borrower is not in compliance with the foregoing laws, the certificate shall set
forth with specificity all areas of non-compliance and the proposed action such
Borrower will implement in order to achieve full compliance.

     

    9.4. Litigation.  Promptly
notify Agent in writing of any claim, litigation, suit or administrative
proceeding affecting any Borrower or any Guarantor, whether or not the claim is
covered by insurance, and of any litigation, suit or administrative proceeding,
which in any such case affects the Collateral or which could reasonably be
expected to have a Material Adverse Effect.

     

    9.5. Material
Occurrences.  Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event of default
under the Subordinated Loan Documentation; (c) any event which with the giving
of notice or lapse of time, or both, would constitute an event of default under
the Subordinated Loan Documentation; (d) any event, development or circumstance
whereby any financial statements or other reports furnished to Agent fail in any
material respect to present fairly, in accordance with GAAP consistently
applied, the financial condition or operating results of any Borrower as of the
date of such statements; (e) any accumulated retirement plan funding deficiency
which, if such deficiency continued for two plan years and was not corrected as
provided in Section 4971 of the Code, could subject any Borrower to a tax
imposed by Section 4971 of the Code; (f) each and every default by any Borrower
which might result in the acceleration of the maturity of any Indebtedness,
including the names and addresses of the holders of such Indebtedness with
respect to which there is a default existing or with respect to which the
maturity has been or could be accelerated, and the amount of such Indebtedness;
and (g) any other development in the business or affairs of any Borrower,
Holdings or any Guarantor, which could reasonably be expected to have a Material
Adverse Effect; in each case describing the nature thereof and the action
Borrowers propose to take with respect thereto.

     

    9.6. Government
Receivables.  Notify Agent immediately if any of its
Receivables arise out of contracts between any Borrower and the United States,
any state, or any department, agency or instrumentality of any of
them.

     

    9.7. Annual Financial
Statements.  Furnish Agent and Lenders within ninety (90) days
after the end of each fiscal year of Borrowers, financial statements of
Borrowers on a consolidating and consolidated basis including, but not limited
to, statements of income and stockholders’ equity and cash flow from the
beginning of the current fiscal year to the end of such fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in accordance with
GAAP applied on a basis consistent with prior practices, and in reasonable
detail and reported upon without qualification by an independent certified
public accounting firm selected by Borrowers and satisfactory to Agent (the
“Accountants”).  The report of the Accountants shall be accompanied by
a statement of the Accountants certifying that (i) they have caused this
Agreement to be reviewed, (ii) in making the examination upon which such report
was based either no information came to their attention which to their knowledge
constituted an Event of Default or a Default under this Agreement or any related
agreement or, if such information came to their attention, specifying any such
Default or Event of Default, its nature, when it occurred and whether it is
continuing, and such report shall contain or have appended thereto calculations
which set forth Borrowers’ compliance with the requirements or restrictions
imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.11 hereof.  In
addition, the reports shall be accompanied by a Compliance
Certificate.

     

    9.8. Quarterly Financial
Statements.  Furnish Agent and Lenders within forty five (45)
days after the end of each fiscal quarter, an unaudited balance sheet of
Borrowers on a consolidated and consolidating basis and unaudited statements of
income and stockholders’ equity and cash flow of Borrowers on a consolidated and
consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such quarter and for such quarter, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal and recurring year end adjustments that individually
and in the aggregate are not material to Borrowers’ business.  The
reports shall be accompanied by a Compliance Certificate.

     

    9.9. Monthly Financial
Statements.  Furnish Agent and Lenders within thirty (30) days
after the end of each month (other than for the months of March, June, September
and December which shall be delivered in accordance with Sections 9.7 and 9.8 as
applicable), an unaudited balance sheet of Borrowers on a consolidated and
consolidating basis and unaudited statements of income and stockholders’ equity
and cash flow of Borrowers on a consolidated and consolidating basis reflecting
results of operations from the beginning of the fiscal year to the end of such
month and for such month, prepared on a basis consistent with prior practices
and complete and correct in all material respects, subject to normal and
recurring year end adjustments that individually and in the aggregate are not
material to Borrowers’ business.  The reports shall be accompanied by
a Compliance Certificate.

     

    9.10. Other
Reports.  Furnish Agent as soon as available, but in any event
within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as each Borrower shall send to its
stockholders or members, as applicable and (ii) copies of all notices, reports,
financial statements and other materials sent pursuant to the Subordinated Loan
Documentation.

     

    9.11. Additional
Information.  Furnish Agent with such additional information as
Agent shall reasonably request in order to enable Agent to determine whether the
terms, covenants, provisions and conditions of this Agreement and the Notes have
been complied with by Borrowers including, without the necessity of any request
by Agent, (a) copies of all existing environmental audits and reviews, (b) at
least thirty (30) days prior thereto, notice of any Borrower’s opening of any
new office or place of business or any Borrower’s closing of any existing office
or place of business, and (c) promptly upon any Borrower’s learning thereof,
notice of any labor dispute to which any Borrower may become a party, any
strikes or walkouts relating to any of its plants or other facilities, and the
expiration of any labor contract to which any Borrower is a party or by which
any Borrower is bound.

     

    9.12. Projected Operating
Budget.  Furnish Agent and Lenders, no later than thirty (30)
days prior to the beginning of each Borrower’s fiscal years commencing with
fiscal year 2009, a month by month projected operating budget and cash flow of
Borrowers on a consolidated and consolidating basis for such fiscal year
(including an income statement for each month and a balance sheet as at the end
of the last month in each fiscal quarter), such projections to be accompanied by
a certificate signed by a Vice President of each Borrower to the effect that
such projections have been prepared on the basis of sound financial planning
practice consistent with past budgets and financial statements and that such
officer has no reason to question the reasonableness of any material assumptions
on which such projections were prepared.

     

    9.13. Variances From Operating
Budget.   Furnish Agent, concurrently with the delivery of
the financial statements referred to in Section 9.7 and each monthly report, a
written report summarizing all material variances from budgets submitted by
Borrowers pursuant to Section 9.12 and a discussion and analysis by management
with respect to such variances.

     

    9.14. Notice of Suits, Adverse
Events.  Furnish Agent with prompt written notice of (i) any
lapse or other termination of any Consent issued to any Borrower by any
Governmental Body or any other Person that is material to the operation of any
Borrower’s business, (ii) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (iii) copies of any periodic or
special reports filed by any Borrower or any Guarantor with any Governmental
Body or Person, if such reports indicate any material change in the business,
operations, affairs or condition of any Borrower or any Guarantor, or if copies
thereof are requested by Lender, and (iv) copies of any material notices and
other communications from any Governmental Body or Person which specifically
relate to any Borrower or any Guarantor.

     

    9.15. ERISA Notices and
Requests.  Furnish Agent with immediate written notice in the
event that (i) any Borrower or any member of the Controlled Group knows or has
reason to know that a Termination Event has occurred, together with a written
statement describing such Termination Event and the action, if any, which such
Borrower or any member of the Controlled Group has taken, is taking, or proposes
to take with respect thereto and, when known, any action taken or threatened by
the Internal Revenue Service, Department of Labor or PBGC with respect thereto,
(ii) any  Borrower or any member of the Controlled Group knows or has
reason to know that a prohibited transaction (as defined in Sections 406 of
ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which such Borrower or any member of
the Controlled Group has taken, is taking or proposes to take with respect
thereto, (iii) a funding waiver request has been filed with respect to any Plan
together with all communications received by any Borrower or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Borrower or any member of the Controlled
Group was not previously contributing shall occur, (v) any Borrower or any
member of the Controlled Group shall receive from the PBGC a notice of intention
to terminate a Plan or to have a trustee appointed to administer a Plan,
together with copies of each such notice, (vi) any Borrower or any member of the
Controlled Group shall receive any favorable or unfavorable determination letter
from the Internal Revenue Service regarding the qualification of a Plan under
Section 401(a) of the Code, together with copies of each such letter, (vii) any
Borrower or any member of the Controlled Group shall receive a notice regarding
the imposition of withdrawal liability, together with copies of each such
notice, (viii) any Borrower or any member of the Controlled Group shall fail to
make a required installment or any other required payment under Section 412 of
the Code on or before the due date for such installment or payment,
and  (ix) any Borrower or any member of the Controlled Group knows
that (a) a Multiemployer Plan has been terminated; (b) the administrator or plan
sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan; or
(c) the PBGC has instituted or will institute proceedings under Section 4042 of
ERISA to terminate a Multiemployer Plan.

     

    9.16. Additional
Documents.  Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time, reasonably request to
carry out the purposes, terms or conditions of this Agreement.

     

    X. EVENTS OF
DEFAULT.

     

    The
occurrence of any one or more of the following events shall constitute an “Event
of Default”:

     

    10.1. Nonpayment.  Failure
by any Borrower to pay any principal or interest on the Obligations when due,
whether at maturity or by reason of acceleration pursuant to the terms of this
Agreement or by notice of intention to prepay, or by required prepayment or
failure to pay any other liabilities or make any other payment, fee or charge
provided for herein when due or in any Other Document;

     

    10.2. Breach of
Representation.  Any representation or warranty made or deemed
made by any Borrower or any Guarantor in this Agreement, any Other Document or
any related agreement or in any certificate, document or financial or other
statement furnished at any time in connection herewith or therewith shall prove
to have been misleading in any material respect on the date when made or deemed
to have been made;

     

    10.3. Financial
Information.  Failure by any Borrower to (i) furnish financial
information when due or when requested, or (ii) permit the inspection of its
books or records;

     

    10.4. Judicial
Actions.  Issuance of a notice of Lien, levy, assessment,
injunction or attachment against any Borrower’s Inventory or Receivables or
against a material portion of any Borrower’s other property which is not stayed
or lifted within thirty (30) days;

     

    10.5. Noncompliance.  Except
as otherwise provided for in Sections 10.1, 10.3 and 10.5(ii), (i) failure or
neglect of any Borrower or any Guarantor to perform, keep or observe any term,
provision, condition, covenant herein contained, or contained in any Other
Document or any other agreement or arrangement, now or hereafter entered into
between any Borrower or any Guarantor, and Agent or any Lender, or (ii) failure
or neglect of any Borrower to perform, keep or observe any term, provision,
condition or covenant, contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3, 6.4, 9.4
or 9.6 hereof which is not cured within ten (10) days from the occurrence of
such failure or neglect;

     

    10.6. Judgments.  Any
judgment or judgments are rendered against any Borrower for an aggregate amount
in excess of $250,000 or against all Borrowers for an aggregate amount in excess
of $250,000 and (i) enforcement proceedings shall have been commenced by a
creditor upon such judgment, (ii) there shall be any period of thirty (30)
consecutive days during which a stay of enforcement of such judgment, by reason
of a pending appeal or otherwise, shall not be in effect, or (iii) any such
judgment results in the creation of a Lien upon any of the Collateral (other
than a Permitted Encumbrance);

     

    10.7. Bankruptcy.  Any
Borrower or any Guarantor shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days,
any petition filed against it in any involuntary case under such bankruptcy
laws,  or (vii) take any action for the purpose of effecting any of
the foregoing;

     

    10.8. Inability to
Pay.  Any Borrower or any Guarantor shall admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease
operations of its present business;

     

    10.9. Affiliate
Bankruptcy.  Any Material Adverse Effect shall occur from any
Affiliate or any Subsidiary of any Borrower, or of any Guarantor, taking any of
the following actions: (i) apply for, consent to or suffer the appointment of,
or the taking of possession by, a receiver, custodian, trustee, liquidator or
similar fiduciary of itself or of all or a substantial part of its property,
(ii) admit in writing its inability, or be generally unable, to pay its debts as
they become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a voluntary case
under any state or federal bankruptcy laws (as now or hereafter in effect), (v)
be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vii) acquiesce
to, or fail to have dismissed, within thirty (30) days, any petition filed
against it in any involuntary case under such bankruptcy laws, or (viii) take
any action for the purpose of effecting any of the foregoing;

     

    10.10. Material Adverse
Effect. The occurrence of any Material Adverse Effect;

     

    10.11. Lien
Priority.  Any Lien created hereunder or provided for hereby or
under any related agreement for any reason ceases to be or is not a valid and
perfected Lien having a first priority interest;

     

    10.12. Subordinated Loan
Default.  An event of default has occurred under the
Subordinated Loan Documentation, the Subordinated Note or the Subordination
Agreement, which default shall not have been cured or waived within any
applicable grace period;

     

    10.13. Cross
Default.  A default of the obligations of any Borrower (i)
under the Ex-Im Credit Documents or (ii) under any other agreement to which it
is a party shall occur which causes a Material Adverse Effect which default is
not cured within any applicable grace period, or which is outstanding for a
period of time sufficient to permit the acceleration of such
Indebtedness;

     

    10.14. Breach of
Guaranty.  Termination or breach of any Guaranty or Guaranty
Security Agreement or similar agreement executed and delivered to Agent in
connection with the Obligations of any Borrower, or if any Guarantor attempts to
terminate, challenges the validity of, or its liability under, any such Guaranty
or Guaranty Security Agreement or similar agreement;

     

    10.15. Change of
Ownership.  Any Change of Ownership or Change of Control shall
occur;

     

    10.16. Invalidity.  Any
material provision of this Agreement or any Other Document shall, for any
reason, cease to be valid and binding on any Borrower or any Guarantor, or any
Borrower or any Guarantor shall so claim in writing to Agent or any
Lender;

     

    10.17. Licenses.  (i)
Any Governmental Body shall (A) revoke, terminate, suspend or adversely modify
any license, permit, patent trademark or tradename of any Borrower or any
Guarantor, the continuation of which is material to the continuation of any
Borrower’s or Guarantor’s business, or (B) commence proceedings to suspend,
revoke, terminate or adversely modify any such license, permit, trademark,
tradename or patent and such proceedings shall not be dismissed or discharged
within sixty (60) days, or (c) schedule or conduct a hearing on the renewal of
any license, permit, trademark, tradename or patent necessary for the
continuation of any Borrower’s or any Guarantor’s business and the staff of such
Governmental Body issues a report recommending the termination, revocation,
suspension or material, adverse modification of such license, permit, trademark,
tradename or patent; (ii) any agreement which is necessary or material to the
operation of any Borrower’s or any Guarantor’s business shall be revoked or
terminated and not replaced by a substitute acceptable to Agent within thirty
(30) days after the date of such revocation or termination, and such revocation
or termination and non-replacement would reasonably be expected to have a
Material Adverse Effect;

     

    10.18. Seizures.  Any
portion of the Collateral shall be seized or taken by a Governmental Body, or
any Borrower or any Guarantor or the title and rights of any Borrower, any
Guarantor or any Original Owner which is the owner of any material portion of
the Collateral shall have become the subject matter of claim, litigation, suit
or other proceeding which might, in the opinion of Agent, upon final
determination, result in impairment or loss of the security provided by this
Agreement or the Other Documents; or

     

    10.19. Pension
Plans.  An event or condition specified in Sections 7.16 or
9.15 hereof shall occur or exist with respect to any Plan and, as a result of
such event or condition, together with all other such events or conditions, any
Borrower or any member of the Controlled Group shall incur, or in the opinion of
Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both)
which, in the reasonable judgment of Agent, would have a Material Adverse
Effect.

     

    XI. LENDERS’
RIGHTS AND REMEDIES AFTER DEFAULT.

     

    11.1. Rights and
Remedies.

     

    (a) Upon the
occurrence of (i) an Event of Default pursuant to Section 10.7 all Obligations
shall be immediately due and payable and this Agreement and the obligation of
Lenders to make Advances shall be deemed terminated; and, (ii) any of the other
Events of Default and at any time thereafter, at the option of Required Lenders
all Obligations shall be immediately due and payable and Lenders shall have the
right to terminate this Agreement and to terminate the obligation of Lenders to
make Advances and (iii) a filing of a petition against any Borrower in any
involuntary case under any state or federal bankruptcy laws, all Obligations
shall be immediately due and payable and the obligation of Lenders to make
Advances hereunder shall be terminated other than as may be required by an
appropriate order of the bankruptcy court having jurisdiction over such
Borrower.  Upon the occurrence of any Event of Default, Agent shall
have the right to exercise any and all rights and remedies provided for herein,
under the Other Documents, under the Uniform Commercial Code and at law or
equity generally, including the right to foreclose the security interests
granted herein and to realize upon any Collateral by any available judicial
procedure and/or to take possession of and sell any or all of the Collateral to
the extent permitted by law.  Agent may enter any of any Borrower’s
premises or other premises without legal process and without incurring liability
to any Borrower therefor, and Agent may thereupon, or at any time thereafter, in
its discretion without notice or demand, take the Collateral and remove the same
to such place as Agent may deem advisable and Agent may require Borrowers to
make the Collateral available to Agent at a convenient place.  With or
without having the Collateral at the time or place of sale, Agent may sell the
Collateral, or any part thereof, at public or private sale, at any time or
place, in one or more sales, at such price or prices, and upon such terms,
either for cash, credit or future delivery, as Agent may
elect.  Except as to that part of the Collateral which is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent shall give Borrowers reasonable notification of such
sale or sales, it being agreed that in all events written notice mailed to
Borrowing Agent at least ten (10) days prior to such sale or sales is reasonable
notification.  At any public sale Agent or any Lender may bid for and
become the purchaser, and Agent, any Lender or any other purchaser at any such
sale thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and all such
claims, rights and equities are hereby expressly waived and released by each
Borrower.  In connection with the exercise of the foregoing remedies,
including the sale of Inventory, Agent is granted a perpetual nonrevocable,
royalty free, nonexclusive license and Agent is granted permission to use all of
each Borrower’s (a) trademarks, trade styles, trade names, patents, patent
applications, copyrights, service marks, licenses, franchises and other
proprietary rights which are used or useful in connection with Inventory for the
purpose of marketing, advertising for sale and selling or otherwise disposing of
such Inventory and (b) Equipment for the purpose of completing the manufacture
of unfinished goods.  The cash proceeds realized from the sale of any
Collateral shall be applied to the Obligations in the order set forth in Section
11.5 hereof.  Noncash proceeds will only be applied to the Obligations
as they are converted into cash.  If any deficiency shall arise,
Borrowers shall remain liable to Agent and Lenders therefor.

     

    (b) To the
extent that Applicable Law imposes duties on the Agent to exercise remedies in a
commercially reasonable manner, each Borrower acknowledges and agrees that it is
not commercially unreasonable for the Agent (i) to fail to incur expenses
reasonably deemed significant by the Agent to prepare Collateral for disposition
or otherwise to complete raw material or work in process into finished goods or
other finished products for disposition, (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain governmental or third party consents
for the collection or disposition of Collateral to be collected or disposed of,
(iii) to fail to exercise collection remedies against Customers or other Persons
obligated on Collateral or to remove Liens on or any adverse claims against
Collateral, (iv) to exercise collection remedies against Customers and other
Persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (v) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature, (vi) to contact other Persons,
whether or not in the same business as any Borrower, for expressions of interest
in acquiring all or any portion of such Collateral, (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the Collateral is of a specialized nature, (viii) to dispose of Collateral
by utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed return from
the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral.  Each Borrower
acknowledges that the purpose of this Section 11.1(b) is to provide
non-exhaustive indications of what actions or omissions by the Agent would not
be commercially unreasonable in the Agent’s exercise of remedies against the
Collateral and that other actions or omissions by the Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 11.1(b).  Without limitation upon the foregoing, nothing
contained in this Section 11.1(b) shall be construed to grant any rights to any
Borrower or to impose any duties on Agent that would not have been granted or
imposed by this Agreement or by Applicable Law in the absence of this Section
11.1(b).

     

    11.2. Agent’s
Discretion.  Agent shall have the right in its reasonable
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent’s or Lenders’ rights hereunder.

     

    11.3. Setoff.  Subject
to Section 14.12, in addition to any other rights which Agent or any Lender may
have under Applicable Law, upon the occurrence of an Event of Default hereunder,
Agent and such Lender shall have a right, immediately and without notice of any
kind, to apply any Borrower’s property held by Agent and such Lender to reduce
the Obligations.

     

    11.4. Rights and Remedies not
Exclusive.  The enumeration of the foregoing rights and
remedies is not intended to be exhaustive and the exercise of any rights or
remedy shall not preclude the exercise of any other right or remedies provided
for herein or otherwise provided by law, all of which shall be cumulative and
not alternative.

     

    11.5. Allocation of Payments After
Event of Default.  Notwithstanding any other provisions of this
Agreement to the contrary, after the occurrence and during the continuance of an
Event of Default, all amounts collected or received by the Agent on account of
the Obligations or any other amounts outstanding under any of the Other
Documents or in respect of the Collateral may, at Agent’s discretion, be paid
over or delivered as follows:

     

    FIRST, to
the payment of all reasonable out-of-pocket costs and expenses (including
reasonable attorneys’ fees) of the Agent in connection with enforcing its rights
and the rights of the Lenders under this Agreement and the Other Documents and
any protective advances made by the Agent with respect to the Collateral under
or pursuant to the terms of this Document;

     

    SECOND,
to payment of any fees owed to the Agent;

     

    THIRD, to
the payment of all reasonable out-of-pocket costs and expenses (including
reasonable attorneys’ fees) of each of the Lenders to the extent owing to such
Lender pursuant to the terms of this Agreement;

     

    FOURTH,
to the payment of all of the Obligations consisting of accrued fees and
interest;

     

    FIFTH, to
the payment of the outstanding principal amount of the Obligations (including
the payment or cash collateralization of any outstanding Letters of
Credit);

     

    SIXTH, to
all other Obligations and other obligations which shall have become due and
payable under the Other Documents or otherwise and not repaid pursuant to
clauses “FIRST” through “FIFTH” above; and

     

    SEVENTH,
to the payment of the surplus, if any, to whoever may be lawfully entitled to
receive such surplus.

     

    In
carrying out the foregoing: (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses “FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to the extent that any
amounts available for distribution pursuant to clause “FIFTH” above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Agent in a cash collateral account and applied
(A) first, to reimburse the Issuer from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses “FIFTH” and
“SIXTH” above in the manner provided in this Section 11.5.

     

    XII. WAIVERS
AND JUDICIAL PROCEEDINGS.

     

    12.1. Waiver of
Notice.  Each Borrower hereby waives notice of non-payment of
any of the Receivables, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of loans
or advances made, credit extended, Collateral received or delivered, or any
other action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.

     

    12.2. Delay.  No
delay or omission on Agent’s or any Lender’s part in exercising any right,
remedy or option shall operate as a waiver of such or any other right, remedy or
option or of any Default or Event of Default.

     

    12.3. Jury
Waiver.  EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.

     

    XIII. EFFECTIVE
DATE AND TERMINATION.

     

    13.1. Term.  This
Agreement, which shall inure to the benefit of and shall be binding upon the
respective successors and permitted assigns of each Borrower, Agent and each
Lender, shall become effective on the date hereof and shall continue in full
force and effect until June 20, 2011 (the “Term”) unless sooner terminated as
herein provided.  Borrowers may terminate this Agreement at any time
upon sixty (60) days’ prior written notice upon payment in full of the
Obligations.  In the event the Obligations are prepaid in full prior
to the last day of the Term (the date of such prepayment hereinafter referred to
as the “Early Termination Date”), Borrowers shall pay to Agent for the benefit
of Lenders an early termination fee in an amount equal to (x) one percent (1%)
of the Maximum Loan Amount if the Early Termination Date occurs on or after the
Closing Date to and including the date immediately preceding the second
anniversary of the Closing Date, and (y) zero percent (0%) of the Maximum Loan
Amount if the Early Termination Date occurs on or after the second anniversary
of the Closing Date to and including the date immediately preceding the third
anniversary of the Closing Date.

     

    13.2. Termination.  The
termination of the Agreement shall not affect any Borrower’s, Agent’s or any
Lender’s rights, or any of the Obligations having their inception prior to the
effective date of such termination, and the provisions hereof shall continue to
be fully operative until all transactions entered into, rights or interests
created or Obligations have been fully and indefeasibly paid, disposed of,
concluded or liquidated.  The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrowers’ Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of each Borrower have been indefeasibly paid and performed in full
after the termination of this Agreement or each Borrower has furnished Agent and
Lenders with an indemnification satisfactory to Agent and Lenders with respect
thereto.  Accordingly, each Borrower waives any rights which it may
have under the Uniform Commercial Code to demand the filing of termination
statements with respect to the Collateral, and Agent shall not be required to
send such termination statements to each Borrower, or to file them with any
filing office, unless and until this Agreement shall have been terminated in
accordance with its terms and all Obligations have been indefeasibly paid in
full in immediately available funds.  All representations, warranties,
covenants, waivers and agreements contained herein shall survive termination
hereof until all Obligations are indefeasibly paid and performed in
full.

     

    XIV. REGARDING
AGENT.

     

    14.1. Appointment.  Each
Lender hereby designates PNC to act as Agent for such Lender under this
Agreement and the Other Documents.  Each Lender hereby irrevocably
authorizes Agent to take such action on its behalf under the provisions of this
Agreement and the Other Documents and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically delegated to or
required of Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto and Agent shall hold all Collateral, payments of
principal and interest, fees (except the fees set forth in Sections 3.3(a) and
3.4), charges and collections (without giving effect to any collection days)
received pursuant to this Agreement, for the ratable benefit of
Lenders.  Agent may perform any of its duties hereunder by or through
its agents or employees.  As to any matters not expressly provided for
by this Agreement (including collection of the Note) Agent shall not be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided, however, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or Applicable Law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.

     

    14.2. Nature of
Duties.  Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the Other
Documents.  Neither Agent nor any of its officers, directors,
employees or agents shall be (i) liable for any action taken or omitted by them
as such hereunder or in connection herewith, unless caused by their gross (not
mere) negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment), or (ii) responsible in any
manner for any recitals, statements, representations or warranties made by any
Borrower or any officer thereof contained in this Agreement, or in any of the
Other Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by Agent under or in connection
with, this Agreement or any of the Other Documents or for the value, validity,
effectiveness, genuineness, due execution, enforceability or sufficiency of this
Agreement, or any of the Other Documents or for any failure of any Borrower to
perform its obligations hereunder.  Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any of the Other Documents, or to inspect the properties, books or
records of any Borrower.  The duties of Agent as respects the Advances
to Borrowers shall be mechanical and administrative in nature; Agent shall not
have by reason of this Agreement a fiduciary relationship in respect of any
Lender; and nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon Agent any obligations in respect of this
Agreement except as expressly set forth herein.

     

    14.3. Lack of Reliance on Agent
and Resignation.  Independently and without reliance upon Agent
or any other Lender, each Lender has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of each
Borrower and each Guarantor in connection with the making and the continuance of
the Advances hereunder and the taking or not taking of any action in connection
herewith, and (ii) its own appraisal of the creditworthiness of each Borrower
and each Guarantor.  Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its possession
before making of the Advances or at any time or times thereafter except as shall
be provided by any Borrower pursuant to the terms hereof.  Agent shall
not be responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of any Borrower
or any Guarantor, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement, the Note, the Other Documents or the financial condition of any
Borrower, or the existence of any Event of Default or any Default.

     

    Agent may
resign on sixty (60) days’ written notice to each of Lenders and Borrowing Agent
and upon such resignation, the Required Lenders will promptly designate a
successor Agent reasonably satisfactory to Borrowers.

     

    Any such
successor Agent shall succeed to the rights, powers and duties of Agent, and the
term “Agent” shall mean such successor agent effective upon its appointment, and
the former Agent’s rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former
Agent.  After any Agent’s resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.

     

    14.4. Certain Rights of
Agent.  If Agent shall request instructions from Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any Other Document, Agent shall be entitled to refrain from such
act or taking such action unless and until Agent shall have received
instructions from the Required Lenders; and Agent shall not incur liability to
any Person by reason of so refraining.  Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.

     

    14.5. Reliance.  Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, order or other document or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person or entity, and, with respect to all legal matters
pertaining to this Agreement and the Other Documents and its duties hereunder,
upon advice of counsel selected by it.  Agent may employ agents and
attorneys-in-fact and shall not be liable for the default or misconduct of any
such agents or attorneys-in-fact selected by Agent with reasonable
care.

     

    14.6. Notice of
Default.  Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder or under the
Other Documents, unless Agent has received notice from a Lender or Borrowing
Agent referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a “notice of
default”.  In the event that Agent receives such a notice, Agent shall
give notice thereof to Lenders.  Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided, that, unless and until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of
Lenders.

     

    14.7. Indemnification.  To
the extent Agent is not reimbursed and indemnified by Borrowers, each Lender
will reimburse and indemnify Agent in proportion to its respective portion of
the Advances (or, if no Advances are outstanding, according to its Commitment
Percentage), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Agent in performing its duties hereunder, or in any way
relating to or arising out of this Agreement or any Other Document; provided
that, Lenders shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent’s gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment).

     

    14.8. Agent in its Individual
Capacity.  With respect to the obligation of Agent to lend
under this Agreement, the Advances made by it shall have the same rights and
powers hereunder as any other Lender and as if it were not performing the duties
as Agent specified herein; and the term “Lender” or any similar term shall,
unless the context clearly otherwise indicates, include Agent in its individual
capacity as a Lender.  Agent may engage in business with any Borrower
as if it were not performing the duties specified herein, and may accept fees
and other consideration from any Borrower for services in connection with this
Agreement or otherwise without having to account for the same to
Lenders.

     

    14.9. Delivery of
Documents.  To the extent Agent receives financial statements
required under Sections 9.7, 9.8, 9.9, 9.12 and 9.13 or Borrowing Base
Certificates from any Borrower pursuant to the terms of this Agreement which any
Borrower is not obligated to deliver to each Lender, Agent will promptly furnish
such documents and information to Lenders.

     

    14.10. Borrowers’ Undertaking to
Agent.  Without prejudice to their respective obligations to
Lenders under the other provisions of this Agreement, each Borrower hereby
undertakes with Agent to pay to Agent from time to time on demand all amounts
from time to time due and payable by it for the account of Agent or Lenders or
any of them pursuant to this Agreement to the extent not already
paid.  Any payment made pursuant to any such demand shall pro tanto
satisfy the relevant Borrower’s obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this
Agreement.

     

    14.11. No Reliance on Agent’s
Customer Identification Program.  Each Lender acknowledges and
agrees that neither such Lender, nor any of its Affiliates, participants or
assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s,
participant’s or assignee’s customer identification program, or other
obligations required or imposed under or pursuant to the USA PATRIOT Act or the
regulations thereunder, including the regulations contained in 31 CFR 103.121
(as hereafter amended or replaced, the “CIP Regulations”), or any other
Anti-Terrorism Law, including any programs involving any of the following items
relating to or in connection with any Borrower, its Affiliates or its agents,
this Agreement, the Other Documents or the transactions hereunder or
contemplated hereby: (1) any identity verification procedures, (2) any
record-keeping, (3) comparisons with government lists, (4) customer notices or
(5) other procedures required under the CIP Regulations or such other
laws.

     

    14.12. Other
Agreements.  Each of the Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to any Borrower or any deposit
accounts of any Borrower now or hereafter maintained with such
Lender.  Anything in this Agreement to the contrary notwithstanding,
each of the Lenders further agrees that it shall not, unless specifically
requested to do so by Agent, take any action to protect or enforce its rights
arising out of this Agreement or the Other Documents, it being the intent of
Lenders that any such action to protect or enforce rights under this Agreement
and the Other Documents shall be taken in concert and at the direction or with
the consent of Agent or Required Lenders.

     

    XV. BORROWING
AGENCY.

     

    15.1. Borrowing Agency
Provisions.

     

    (a) Each
Borrower hereby irrevocably designates Borrowing Agent to be its attorney and
agent and in such capacity to borrow, sign and endorse notes, and execute and
deliver all instruments, documents, writings and further assurances now or
hereafter required hereunder, on behalf of such Borrower or Borrowers, and
hereby authorizes Agent to pay over or credit all loan proceeds hereunder in
accordance with the request of Borrowing Agent.

     

    (b) The
handling of this credit facility as a co-borrowing facility with a borrowing
agent in the manner set forth in this Agreement is solely as an accommodation to
Borrowers and at their request.  Neither Agent nor any Lender shall
incur liability to Borrowers as a result thereof.  To induce Agent and
Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against
any and all liabilities, expenses, losses, damages and claims of damage or
injury asserted against Agent or any Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as
provided herein, reliance by Agent or any Lender on any request or instruction
from Borrowing Agent or any other action taken by Agent or any Lender with
respect to this Section 15.1 except due to willful misconduct or gross (not
mere) negligence by the indemnified party (as determined by a court of competent
jurisdiction in a final and non-appealable judgment).

     

    (c) All
Obligations shall be joint and several, and each Borrower shall make payment
upon the maturity of the Obligations by acceleration or otherwise, and such
obligation and liability on the part of each Borrower shall in no way be
affected by any extensions, renewals and forbearance granted to Agent or any
Lender to any Borrower, failure of Agent or any Lender to give any Borrower
notice of borrowing or any other notice, any failure of Agent or any Lender to
pursue or preserve its rights against any Borrower, the release by Agent or any
Lender of any Collateral now or thereafter acquired from any Borrower, and such
agreement by each Borrower to pay upon any notice issued pursuant thereto is
unconditional and unaffected by prior recourse by Agent or any Lender to the
other Borrowers or any Collateral for such Borrower’s Obligations or the lack
thereof.  Each Borrower waives all suretyship defenses.

     

    15.2. Waiver of
Subrogation.  Each Borrower expressly waives any and all rights
of subrogation, reimbursement, indemnity, exoneration, contribution of any other
claim which such Borrower may now or hereafter have against the other Borrowers
or other Person directly or contingently liable for the Obligations hereunder,
or against or with respect to the other Borrowers’ property (including, without
limitation, any property which is Collateral for the Obligations), arising from
the existence or performance of this Agreement, until termination of this
Agreement and repayment in full of the Obligations.

     

    XVI. MISCELLANEOUS.

     

    16.1. Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania applied to
contracts to be performed wholly within the Commonwealth of
Pennsylvania.  Any judicial proceeding brought by or against any
Borrower with respect to any of the Obligations, this Agreement, the Other
Documents or any related agreement may be brought in any court of competent
jurisdiction in the Commonwealth of Pennsylvania, United States of America, and,
by execution and delivery of this Agreement, each Borrower accepts for itself
and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this
Agreement.  Each Borrower hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
registered mail (return receipt requested) directed to Borrowing Agent at its
address set forth in Section 16.6 and service so made shall be deemed completed
five (5) days after the same shall have been so deposited in the mails of the
United States of America, or, at the Agent’s option, by service upon Borrowing
Agent which each Borrower irrevocably appoints as such Borrower’s Agent for the
purpose of accepting service within the Commonwealth of
Pennsylvania.  Nothing herein shall affect the right to serve process
in any manner permitted by law or shall limit the right of Agent or any Lender
to bring proceedings against any Borrower in the courts of any other
jurisdiction.  Each Borrower waives any objection to jurisdiction and
venue of any action instituted hereunder and shall not assert any defense based
on lack of jurisdiction or venue or based upon forum non
conveniens.  Each Borrower waives the right to remove any judicial
proceeding brought against such Borrower in any state court to any federal
court.  Any judicial proceeding by any Borrower against Agent or any
Lender involving, directly or indirectly, any matter or claim in any way arising
out of, related to or connected with this Agreement or any related agreement,
shall be brought only in a federal or state court located in the County of
Philadelphia, Commonwealth of Pennsylvania.

     

    16.2. Entire
Understanding.

     

    (a) This
Agreement and the documents executed concurrently herewith contain the entire
understanding between each Borrower, Agent and each Lender and supersedes all
prior agreements and understandings, if any, relating to the subject matter
hereof.  Any promises, representations, warranties or guarantees not
herein contained and hereinafter made shall have no force and effect unless in
writing, signed by each Borrower’s, Agent’s and each Lender’s respective
officers.  Neither this Agreement nor any portion or provisions hereof
may be changed, modified, amended, waived, supplemented, discharged, cancelled
or terminated orally or by any course of dealing, or in any manner other than by
an agreement in writing, signed by the party to be charged.  Each
Borrower acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.

     

    (b) The
Required Lenders, Agent with the consent in writing of the Required Lenders, and
Borrowers may, subject to the provisions of this Section 16.2 (b), from time to
time enter into written supplemental agreements to this Agreement or the Other
Documents executed by Borrowers, for the purpose of adding or deleting any
provisions or otherwise changing, varying or waiving in any manner the rights of
Lenders, Agent or Borrowers thereunder or the conditions, provisions or terms
thereof or waiving any Event of Default thereunder, but only to the extent
specified in such written agreements; provided, however, that no such
supplemental agreement shall, without the consent of all Lenders:

     

    (i) increase
the Commitment Percentage, the maximum dollar commitment of any Lender or the
Maximum Revolving Advance Amount;

     

    (ii) extend
the maturity of any Note or the due date for any amount payable hereunder, or
decrease the rate of interest or reduce any fee payable by Borrowers to Lenders
pursuant to this Agreement;

     

    (iii) alter the
definition of the term Required Lenders or alter, amend or modify this Section
16.2(b);

     

    (iv) release
any Collateral during any calendar year (other than in accordance with the
provisions of this Agreement) having an aggregate value in excess of
$1,000,000;

     

    (v) change
the rights and duties of Agent;

     

    (vi) permit
any Revolving Advance to be made if after giving effect thereto the total of
Revolving Advances outstanding hereunder would exceed the Formula Amount for
more than sixty (30) consecutive Business Days or exceed one hundred and ten
percent (110%) of the Formula Amount;

     

    (vii) increase
the Advance Rates above the Advance Rates in effect on the Closing Date;
or

     

    (viii) release
any Guarantor.

     

    Any such
supplemental agreement shall apply equally to each Lender and shall be binding
upon Borrowers, Lenders and Agent and all future holders of the
Obligations.  In the case of any waiver, Borrowers, Agent and Lenders
shall be restored to their former positions and rights, and any Event of Default
waived shall be deemed to be cured and not continuing, but no waiver of a
specific Event of Default shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as the Event of
Default which was waived), or impair any right consequent thereon.

     

    In the
event that Agent requests the consent of a Lender pursuant to this Section 16.2
and such Lender shall not respond or reply to Agent in writing within five (5)
days of delivery of such request, such Lender shall be deemed to have consented
to the matter that was the subject of the request.  In the event that
Agent requests the consent of a Lender pursuant to this Section 16.2 and such
consent is denied, then PNC may, at its option, require such Lender to assign
its interest in the Advances to PNC or to another Lender or to any other Person
designated by the Agent (the “Designated Lender”), for a price equal to (i) the
then outstanding principal amount thereof plus (ii) accrued and unpaid interest
and fees due such Lender, which interest and fees shall be paid when collected
from Borrowers.  In the event PNC elects to require any Lender to
assign its interest to PNC or to the Designated Lender, PNC will so notify such
Lender in writing within forty-five (45) days following such Lender’s denial,
and such Lender will assign its interest to PNC or the Designated Lender no
later than five (5) days following receipt of such notice pursuant to a
Commitment Transfer Supplement executed by such Lender, PNC or the Designated
Lender, as appropriate, and Agent.

     

    Notwithstanding
(a) the existence of a Default or an Event of Default, (b) that any of the other
applicable conditions precedent set forth in Section 8.2 hereof have not been
satisfied or (c) any other provision of this Agreement, Agent may at its
discretion and without the consent of the Required Lenders, voluntarily permit
the outstanding Revolving Advances at any time to exceed the Formula Amount by
up to ten percent (10%) of the Formula Amount for up to thirty (30) consecutive
Business Days (the “Out-of-Formula Loans”).  If Agent is willing in
its sole and absolute discretion to make such Out-of-Formula Loans, such
Out-of-Formula Loans shall be payable on demand and shall bear interest at the
Default Rate for Revolving Advances consisting of Domestic Rate Loans; provided
that, if Lenders do make Out-of-Formula Loans, neither Agent nor Lenders shall
be deemed thereby to have changed the limits of Section 2.1(a).  For
purposes of this paragraph, the discretion granted to Agent hereunder shall not
preclude involuntary overadvances that may result from time to time due to the
fact that the Formula Amount was unintentionally exceeded for any reason,
including, but not limited to, Collateral previously deemed to be either
“Eligible Receivables” or “Eligible Domestic Finished Goods Inventory”, as
applicable, becomes ineligible, collections of Receivables applied to reduce
outstanding Revolving Advances are thereafter returned for insufficient funds or
overadvances are made to protect or preserve the Collateral.  In the
event Agent involuntarily permits the outstanding Revolving Advances to exceed
the Formula Amount by more than ten percent (10%), Agent shall use its efforts
to have Borrowers decrease such excess in as expeditious a manner as is
practicable under the circumstances and not inconsistent with the reason for
such excess.  Revolving Advances made after Agent has determined the
existence of involuntary overadvances shall be deemed to be involuntary
overadvances and shall be decreased in accordance with the preceding
sentence.

     

    In
addition to (and not in substitution of) the discretionary Revolving Advances
permitted above in this Section 16.2, the Agent is hereby authorized by
Borrowers and the Lenders, from time to time in the Agent’s sole discretion, (A)
after the occurrence and during the continuation of a Default or an Event of
Default, or (B) at any time that any of the other applicable conditions
precedent set forth in Section 8.2 hereof have not been satisfied, to make
Revolving Advances to Borrowers on behalf of the Lenders which the Agent, in its
reasonable business judgment, deems necessary or desirable (a) to preserve or
protect the Collateral, or any portion thereof, (b) to enhance the likelihood
of, or maximize the amount of, repayment of the Advances and other Obligations,
or (c) to pay any other amount chargeable to Borrowers pursuant to the terms of
this Agreement; provided, that at any time after giving effect to any such
Revolving Advances the outstanding Revolving Advances do not exceed one hundred
and ten percent (110%) of the Formula Amount.

     

    16.3. Successors and Assigns;
Participations; New Lenders.

     

    (a) This
Agreement shall be binding upon and inure to the benefit of Borrowers, Agent,
each Lender, all future holders of the Obligations and their respective
successors and assigns, except that no Borrower may assign or transfer any of
its rights or obligations under this Agreement without the prior written consent
of Agent and each Lender.

     

    (b) Each
Borrower acknowledges that in the regular course of commercial banking business
one or more Lenders may at any time and from time to time sell participating
interests in the Advances to other financial institutions (each such transferee
or purchaser of a participating interest, a “Participant”).  Each
Participant may exercise all rights of payment (including rights of set-off)
with respect to the portion of such Advances held by it or other Obligations
payable hereunder as fully as if such Participant were the direct holder thereof
provided that Borrowers shall not be required to pay to any Participant more
than the amount which it would have been required to pay to Lender which granted
an interest in its Advances or other Obligations payable hereunder to such
Participant had such Lender retained such interest in the Advances hereunder or
other Obligations payable hereunder and in no event shall Borrowers be required
to pay any such amount arising from the same circumstances and with respect to
the same Advances or other Obligations payable hereunder to both such Lender and
such Participant.  Each Borrower hereby grants to any Participant a
continuing security interest in any deposits, moneys or other property actually
or constructively held by such Participant as security for the Participant’s
interest in the Advances.

     

    (c) Any
Lender, with the consent of Agent which shall not be unreasonably withheld or
delayed, may sell, assign or transfer all or any part of its rights and
obligations under or relating to Revolving Advances under this Agreement and the
Other Documents to one or more additional banks or financial institutions and
one or more additional banks or financial institutions may commit to make
Advances hereunder (each a “Purchasing Lender”), in minimum amounts of not less
than $5,000,000, pursuant to a Commitment Transfer Supplement, executed by a
Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for
recording.  Upon such execution, delivery, acceptance and recording,
from and after the transfer effective date determined pursuant to such
Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender thereunder with a Commitment
Percentage as set forth therein, and (ii) the transferor Lender thereunder
shall, to the extent provided in such Commitment Transfer Supplement, be
released from its obligations under this Agreement, the Commitment Transfer
Supplement creating a novation for that purpose.  Such Commitment
Transfer Supplement shall be deemed to amend this Agreement to the extent, and
only to the extent, necessary to reflect the addition of such Purchasing Lender
and the resulting adjustment of the Commitment Percentages arising from the
purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents.  Each Borrower hereby consents to the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents.  Borrowers shall execute and deliver such further
documents and do such further acts and things in order to effectuate the
foregoing.

     

    (d) Any
Lender, with the consent of Agent which shall not be unreasonably withheld or
delayed, may directly or indirectly sell, assign or transfer all or any portion
of its rights and obligations under or relating to Revolving Advances under this
Agreement and the Other Documents to an entity, whether a corporation,
partnership, trust, limited liability company or other entity that (i) is
engaged in making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and (ii) is
administered, serviced or managed by the assigning Lender or an Affiliate of
such Lender (a “Purchasing CLO” and together with each Participant and
Purchasing Lender, each a “Transferee” and collectively the “Transferees”),
pursuant to a Commitment Transfer Supplement modified as appropriate to reflect
the interest being assigned (“Modified Commitment Transfer Supplement”),
executed by any intermediate purchaser, the Purchasing CLO, the transferor
Lender, and Agent as appropriate and delivered to Agent for
recording.  Upon such execution and delivery, from and after the
transfer effective date determined pursuant to such Modified Commitment Transfer
Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the
extent provided in such Modified Commitment Transfer Supplement, have the rights
and obligations of a Lender thereunder and (ii) the transferor Lender thereunder
shall, to the extent provided in such Modified Commitment Transfer Supplement,
be released from its obligations under this Agreement, the Modified Commitment
Transfer Supplement creating a novation for that purpose.  Such
Modified Commitment Transfer Supplement shall be deemed to amend this Agreement
to the extent, and only to the extent, necessary to reflect the addition of such
Purchasing CLO.  Each Borrower hereby consents to the addition of such
Purchasing CLO.  Borrowers shall execute and deliver such further
documents and do such further acts and things in order to effectuate the
foregoing.

     

    (e) Agent
shall maintain at its address a copy of each Commitment Transfer Supplement and
Modified Commitment Transfer Supplement delivered to it and a register (the
“Register”) for the recordation of the names and addresses of each Lender and
the outstanding principal, accrued and unpaid interest and other fees due
hereunder.  The entries in the Register shall be conclusive, in the
absence of manifest error, and each Borrower, Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement.  The Register
shall be available for inspection by any Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior
notice.  Agent shall receive a fee in the amount of $3,500 payable by
the applicable Purchasing Lender and/or Purchasing CLO upon the effective date
of each transfer or assignment (other than to an intermediate purchaser) to such
Purchasing Lender and/or Purchasing CLO.

     

    (f) Each
Borrower authorizes each Lender to disclose to any Transferee and any
prospective Transferee any and all financial information in such Lender’s
possession concerning such Borrower which has been delivered to such Lender by
or on behalf of such Borrower pursuant to this Agreement or in connection with
such Lender’s credit evaluation of such Borrower.

     

    16.4. Application of
Payments.  Agent shall have the continuing and exclusive right
to apply or reverse and re-apply any payment and any and all proceeds of
Collateral to any portion of the Obligations.  To the extent that any
Borrower makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Borrower’s benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.

     

    16.5. Indemnity.  Each
Borrower shall indemnify Agent, each Lender and each of their respective
officers, directors, Affiliates, attorneys, employees and agents from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including fees and disbursements of counsel) which may be
imposed on, incurred by, or asserted against Agent or any Lender in any claim,
litigation, proceeding or investigation instituted or conducted by any
Governmental Body or instrumentality or any other Person with respect to any
aspect of, or any transaction contemplated by, or referred to in, or any matter
related to, this Agreement or the Other Documents, whether or not Agent or any
Lender is a party thereto, except to the extent that any of the foregoing arises
out of the willful misconduct of the party being indemnified (as determined by a
court of competent jurisdiction in a final and non-appealable
judgment).  Without limiting the generality of the foregoing, this
indemnity shall extend to any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including fees and disbursements of counsel) asserted
against or incurred by any of the indemnitees described above in this Section
16.5 by any Person under any Environmental Laws or similar laws by reason of any
Borrower’s or any other Person’s failure to comply with laws applicable to solid
or hazardous waste materials, including Hazardous Substances and Hazardous
Waste, or other Toxic Substances.  Additionally, if any taxes
(excluding taxes imposed upon or measured solely by the net income of Agent and
Lenders, but including any intangibles taxes, stamp tax, recording tax or
franchise tax) shall be payable by Agent, Lenders or Borrowers on account of the
execution or delivery of this Agreement, or the execution, delivery, issuance or
recording of any of the Other Documents, or the creation or repayment of any of
the Obligations hereunder, by reason of any Applicable Law now or hereafter in
effect, Borrowers will pay (or will promptly reimburse Agent and Lenders for
payment of) all such taxes, including interest and penalties thereon, and will
indemnify and hold the indemnitees described above in this Section 16.5 harmless
from and against all liability in connection therewith.

     

    16.6. Notice.  Any
notice or request hereunder may be given to Borrowing Agent or any Borrower or
to Agent or any Lender at their respective addresses set forth below or at such
other address as may hereafter be specified in a notice designated as a notice
of change of address under this Section.  Any notice, request, demand,
direction or other communication (for purposes of this Section 16.6 only, a
“Notice”) to be given to or made upon any party hereto under any provision of
this Loan Agreement shall be given or made by telephone or in writing (which
includes by means of electronic transmission (i.e., “e-mail”) or facsimile
transmission or by setting forth such Notice on a site on the World Wide Web (a
“Website Posting”) if Notice of such Website Posting (including the information
necessary to access such site) has previously been delivered to the applicable
parties hereto by another means set forth in this Section 16.6) in accordance
with this Section 16.6.  Any such Notice must be delivered to the
applicable parties hereto at the addresses and numbers set forth under their
respective names on Section 16.6 hereof or in accordance with any subsequent
unrevoked Notice from any such party that is given in accordance with this
Section 16.6.  Any Notice shall be effective:

     

    (a) In the
case of hand-delivery, when delivered;

     

    (b) If given
by mail, four days after such Notice is deposited with the United States Postal
Service, with first-class postage prepaid, return receipt
requested;

     

    (c) In the
case of a telephonic Notice, when a party is contacted by telephone, if delivery
of such telephonic Notice is confirmed no later than the next Business Day by
hand delivery, a facsimile or electronic transmission, a Website Posting or an
overnight courier delivery of a confirmatory Notice (received at or before noon
on such next Business Day);

     

    (d) In the
case of a facsimile transmission, when sent to the applicable party’s facsimile
machine’s telephone number, if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile
machine;

     

    (e) In the
case of electronic transmission, when actually received;

     

    (f) In the
case of a Website Posting, upon delivery of a Notice of such posting (including
the information necessary to access such site) by another means set forth in
this Section 16.6; and

     

    (g) If given
by any other means (including by overnight courier), when actually
received.

     

    Any
Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently
send a copy thereof to the Agent, and the Agent shall promptly notify the other
Lenders of its receipt of such Notice.

     

    (A)           If
to Agent or PNC at:

     

    PNC Bank,
National Association

    100 West
Road, Suite 319

    Towson,
Maryland  21204

    Attention:
James P. Sierakowski, Vice President

    Telephone:
(410) 832-7554

    Facsimile:
(410) 825-6257

     

    with an
additional copy to:

     

    Blank
Rome LLP

    One Logan
Square

    130 N.
18th Street

    Philadelphia,
Pennsylvania  19103

    Attention:
Lawrence F. Flick, II, Esq.

    Telephone:
(215) 569-5556

    Facsimile:
(215) 832-5556

     

    (B)           If
to a Lender other than Agent, as specified on the signature pages
hereof

     

    (C)           If
to Borrowing Agent or any Borrower:

     

    


    Banner
Aerospace Holding Company I, Inc.

    1750
Tysons Boulevard, Suite 1400

    McLean,
VA  22102

    Attention:                                Warren
Persavich

    Telephone:                                (703)
478-5780

    Facsimile:                                (866)
720-2075

    


    with
additional copies to:

    


    The
Fairchild Corporation

    1750
Tysons Boulevard, Suite 1400

    McLean,
VA 22102

    Attention:                                Donald
E. Miller, Esq.

    Telephone:                                (703)
478-5945

    Facsimile:                                (703)
478-5775

     

    Attention:                                Michael
McDonald

    Telephone:                                (703)
478-5845

    Facsimile:                                (866)
843-8896

     

    Attention:                                Kent
Kelly

    Telephone:                                (703)
478-5928

    Facsimile:                                (866)
720-2074

     

    


     

    16.7. Survival.  The
obligations of Borrowers under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(h), and 16.5
and the obligations of Lenders under Section 14.7, shall survive termination of
this Agreement and the Other Documents and payment in full of the
Obligations.

     

    16.8. Severability.  If
any part of this Agreement is contrary to, prohibited by, or deemed invalid
under Applicable Laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given effect so
far as possible.

     

    16.9. Expenses.  All
costs and expenses including reasonable attorneys’ fees (including the allocated
costs of in house counsel) and disbursements incurred by Agent on its behalf or
on behalf of Lenders (a) in all efforts made to enforce payment of any
Obligation or effect collection of any Collateral, or (b) in connection with the
entering into, modification, amendment, administration and enforcement of this
Agreement, the Subordination Agreement or any consents or waivers hereunder or
thereunder and all related agreements, documents and instruments, or (c) in
instituting, maintaining, preserving, enforcing and foreclosing on Agent’s
security interest in or Lien on any of the Collateral, or maintaining,
preserving or enforcing any of Agent’s or any Lender’s rights hereunder, under
the Subordination Agreement and under all related agreements, documents and
instruments, whether through judicial proceedings or otherwise, or (d) in
defending or prosecuting any actions or proceedings arising out of or relating
to Agent’s or any Lender’s transactions with any Borrower, any Guarantor or
Subordinated Lender or (e) in connection with any advice given to Agent or any
Lender with respect to its rights and obligations under this Agreement, the
Subordination Agreement and all related agreements, documents and instruments,
may be charged to Borrowers’ Account and shall be part of the
Obligations.

     

    16.10. Injunctive
Relief.  Each Borrower recognizes that, in the event any
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, or threatens to fail to perform, observe or
discharge such obligations or liabilities, any remedy at law may prove to be
inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that actual damages are not an adequate
remedy.

     

    16.11. Consequential
Damages.  No party hereto shall be liable to any other party
hereto (or any Affiliate of any such Person) for indirect, punitive, exemplary
or consequential damages arising from any breach of contract, tort or other
wrong as a result of any transaction contemplated under this Agreement or any
Other Document.

     

    16.12. Captions.  The
captions at various places in this Agreement are intended for convenience only
and do not constitute and shall not be interpreted as part of this
Agreement.

     

    16.13. Counterparts; Facsimile
Signatures.  This Agreement may be executed in any number of
and by different parties hereto on separate counterparts, all of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement.  Any signature delivered by a
party by facsimile or electronic transmission shall be deemed to be an original
signature hereto.

     

    16.14. Construction.  The
parties acknowledge that each party and its counsel have reviewed this Agreement
and that the normal rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments, schedules or exhibits
thereto.

     

    16.15. Confidentiality; Sharing
Information.   Agent, each Lender and each Transferee
shall hold all non-public information obtained by Agent, such Lender or such
Transferee pursuant to the requirements of this Agreement in accordance with
Agent’s, such Lender’s and such Transferee’s customary procedures for handling
confidential information of this nature; provided, however, Agent, each Lender
and each Transferee may disclose such confidential information (a) to its
examiners, Affiliates, outside auditors, counsel and other professional
advisors, (b) to Agent, any Lender or to any prospective Transferees, and (c) as
required or requested by any Governmental Body or representative thereof or
pursuant to legal process; provided, further that (i) unless specifically
prohibited by Applicable Law or court order, Agent, each Lender and each
Transferee shall use its reasonable best efforts prior to disclosure thereof, to
notify the applicable Borrower of the applicable request for disclosure of such
non-public information (A) by a Governmental Body or representative thereof
(other than any such request in connection with an examination of the financial
condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant
to legal process and (ii) in no event shall Agent, any Lender or any Transferee
be obligated to return any materials furnished by any Borrower other than those
documents and instruments in possession of Agent or any Lender in order to
perfect its Lien on the Collateral once the Obligations have been paid in full
and this Agreement has been terminated.  Each Borrower acknowledges
that from time to time financial advisory, investment banking and other services
may be offered or provided to such Borrower or one or more of its Affiliates (in
connection with this Agreement or otherwise) by any Lender or by one or more
Subsidiaries or Affiliates of such Lender and each Borrower hereby authorizes
each Lender to share any information delivered to such Lender by such Borrower
and its Subsidiaries pursuant to this Agreement, or in connection with the
decision of such Lender to enter into this Agreement, to any such Subsidiary or
Affiliate of such Lender, it being understood that any such Subsidiary or
Affiliate of any Lender receiving such information shall be bound by the
provisions of this Section 16.15 as if it were a Lender
hereunder.  Such authorization shall survive the repayment of the
other Obligations and the termination of this Agreement.

     

    16.16. Publicity.  Each
Borrower and each Lender hereby authorizes Agent to make appropriate
announcements of the financial arrangement entered into among Borrowers, Agent
and Lenders, including announcements which are commonly known as tombstones, in
such publications and to such selected parties as Agent shall in its sole and
absolute discretion deem appropriate.

     

    16.17. Certifications From Banks
and Participants; USA PATRIOT Act.  Each Lender or assignee or
participant of a Lender that is not incorporated under the Laws of the United
States of America or a state thereof (and is not excepted from the certification
requirement contained in Section 313 of the USA PATRIOT Act and the applicable
regulations because it is both (i) an affiliate of a depository institution or
foreign bank that maintains a physical presence in the United States or foreign
country, and (ii) subject to supervision by a banking authority regulating such
affiliated depository institution or foreign bank) shall deliver to the Agent
the certification, or, if applicable, recertification, certifying that such
Lender is not a “shell” and certifying to other matters as required by Section
313 of the USA PATRIOT Act and the applicable regulations: (1) within 10 days
after the Closing Date, and (2) as such other times as are required under the
USA PATRIOT Act.

     


    
      
        
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    Each of
the parties has signed this Agreement as of the day and year first above
written.

     

    
      	 
      	
              BANNER
      AEROSPACE HOLDING COMPANY I, INC.

            
	 
      	
              By:           ________________________

              Name:                      ________________________

              Title:                      ________________________

            
	 
      	
              D A
      C INTERNATIONAL, INC.

            
	 
      	
              By:           ________________________

              Name:                      ________________________

              Title:                      ________________________

            
	 
      	
              MAPTECH
      AERODATA, LLC

            
	 
      	
              By:           ________________________

              Name:                      ________________________

              Title:                      ________________________

            
	 
      	
              MATRIX
      AVIATION, INC.

            
	 
      	
              By:           ________________________

              Name:                      ________________________

              Title:                      ________________________

            
	 
      	
              NASAM
      INCORPORATED

            
	 
      	
              By:           ________________________

              Name:                      ________________________

              Title:                      ________________________

            
	 
      	
              PROFESSIONAL
      AIRCRAFT ACCESSORIES, INC.

            
	 
      	
              By:           ________________________

              Name:                      ________________________

              Title:                      ________________________

            
	 
      	 
      
	 
      	
              PROFESSIONAL
      AVIATION ASSOCIATES, INC.

            
	 
      	
              By:           ________________________

              Name:                      ________________________

              Title:                      ________________________

            
	 
      	
              GCCUS,
      INC.

            
	 
      	
              By:           ________________________

              Name:                      ________________________

              Title:                      ________________________

            


    


    
      
        
          [SIGNATURE
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              PNC
      BANK, NATIONAL ASSOCIATION,

              As
      Lender and as Agent

            
	 
      	
              By:           ________________________

              Name:                      ________________________

              Title:                      ________________________

              100
      West Road, Suite 319

              Towson,
      Maryland 21204

              Commitment
      Percentage:                                                      100%

            


    

    


     


    
      
        
          [SIGNATURE
PAGE TO REVOLVING CREDIT AND SECURITY AGREEMENT]

          S-

          


          4