Filed by Bowne Pure Compliance






Exhibit 10.2



 






AMENDED AND RESTATED

CREDIT AGREEMENT




— Among —




ASTRONICS CORPORATION

as Borrower




— And —




The Lenders Party Hereto




and




HSBC BANK USA, NATIONAL ASSOCIATION

as Agent, Swingline Lender, and Issuing Bank




and




HSBC BANK USA, NATIONAL ASSOCIATION

BANK OF AMERICA, N.A.

as Lead Arrangers




and




KEYBANK NATIONAL ASSOCIATION

as Documentation Agent





 


DATED: As of January 30, 2009





 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I. DEFINITIONS
	 	 	1	 
	1.1 Definitions
	 	 	1	 
	1.2 Accounting Terms
	 	 	21	 
	1.3 Times of Day
	 	 	21	 
	1.4 Letters of Credit Amounts
	 	 	21	 
	 
	 	 	 	 
	ARTICLE II. THE CREDITS
	 	 	22	 
	2.1 The Revolving Credit and Term Loans
	 	 	22	 
	2.2 The Notes
	 	 	23	 
	2.3 Swingline Loans
	 	 	23	 
	2.4 Letters of Credit
	 	 	25	 
	2.5 Funding of Borrowings
	 	 	32	 
	2.6 Interest
	 	 	33	 
	2.7 Prepayments and Payments
	 	 	35	 
	2.8 Use of Proceeds
	 	 	36	 
	2.9 Special Provisions Governing Libor Loans — Increased Costs
	 	 	36	 
	2.10 Required Termination and Repayment of Libor Loans
	 	 	37	 
	2.11 Taxes
	 	 	38	 
	2.12 Commitment Fee
	 	 	38	 
	2.13 Revolving Credit Commitment Termination and Reduction
	 	 	39	 
	2.14 Payments
	 	 	39	 
	2.15 Payments with Respect to Defaulting Lenders
	 	 	39	 
	2.16 Underwriting Fee
	 	 	40	 
	2.17 Agent Fees
	 	 	40	 
	2.18 Charge to Account
	 	 	40	 
	2.19 Substitution of Lender
	 	 	40	 
	2.20 Yield Protection
	 	 	41	 
	2.21 Changes in Capital Adequacy Regulations
	 	 	41	 
	2.22 Lender Statements; Survival of Indemnity
	 	 	42	 
	2.23 Expansion Option
	 	 	42	 
	 
	 	 	 	 
	ARTICLE III. CONDITIONS TO THE CREDIT
	 	 	44	 
	3.1 No Default
	 	 	44	 
	3.2 Representations and Warranties
	 	 	44	 
	3.3 Proceedings
	 	 	44	 
	3.4 Closing Conditions
	 	 	44	 
	3.5 Conditions to Subsequent Borrowing and Issuance
	 	 	47	 
	3.6 Subsequent Extensions of Credit
	 	 	47	 
	 
	 	 	 	 
	ARTICLE IV. REPRESENTATIONS AND WARRANTIES
	 	 	47	 
	4.1 Good Standing and Authority
	 	 	47	 
	4.2 Valid and Binding Obligation
	 	 	48	 
	4.3 Good Title
	 	 	48	 
	4.4 No Pending Litigation
	 	 	48	 
	4.5 No Consent or Filing
	 	 	48	 






 


- i -









 





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	4.6 No Violations
	 	 	48	 
	4.7 Financial Statements
	 	 	49	 
	4.8 Tax Returns
	 	 	49	 
	4.9 Federal Regulations
	 	 	49	 
	4.10 Compliance with ERISA
	 	 	50	 
	4.11 Subsidiaries; Affiliates
	 	 	50	 
	4.12 Compliance
	 	 	50	 
	4.13 Fiscal Year
	 	 	50	 
	4.14 Default
	 	 	51	 
	4.15 Indebtedness for Borrowed Money
	 	 	51	 
	4.16 Securities
	 	 	51	 
	4.17 Environmental Matters
	 	 	51	 
	4.18 Burdensome Contracts; Labor Relations
	 	 	52	 
	4.19 Liens
	 	 	52	 
	4.20 Intellectual Property
	 	 	52	 
	4.21 Anti-Terrorism Laws
	 	 	53	 
	4.22 Accuracy of Information, etc
	 	 	54	 
	4.23 Solvency
	 	 	54	 
	 
	 	 	 	 
	ARTICLE V. AFFIRMATIVE COVENANTS
	 	 	54	 
	5.1 Payments
	 	 	54	 
	5.2 Financial Reporting Requirements
	 	 	55	 
	5.3 Notices
	 	 	55	 
	5.4 Taxes
	 	 	55	 
	5.5 Insurance
	 	 	56	 
	5.6 Litigation
	 	 	56	 
	5.7 Judgments
	 	 	56	 
	5.8 Corporate Standing
	 	 	56	 
	5.9 Books and Records
	 	 	56	 
	5.10 Compliance with Law
	 	 	56	 
	5.11 Pension Reports
	 	 	57	 
	5.12 Inspections
	 	 	57	 
	5.13 Environmental Compliance
	 	 	57	 
	5.14 Certain Subsidiaries to Become Guarantors
	 	 	58	 
	5.15 Additional Security; Further Assurances
	 	 	58	 
	5.16 Accounting; Reserves; Tax Returns
	 	 	59	 
	5.17 Liens and Encumbrances
	 	 	59	 
	5.18 Defaults and Material Adverse Effects
	 	 	59	 
	5.19 Good Repair
	 	 	59	 
	5.20 Hedge Agreements
	 	 	59	 
	5.21 Existing and IRB Letters of Credit
	 	 	59	 
	5.22 Mortgage Modifications
	 	 	60	 
	5.23 Landlord Waivers
	 	 	60	 
	5.24 Further Actions
	 	 	60	 
	 
	 	 	 	 
	ARTICLE VI. NEGATIVE COVENANTS
	 	 	60	 
	6.1 Indebtedness
	 	 	60	 
	6.2 Encumbrances
	 	 	61	 






 


- ii -









 





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	6.3 Investments and Guaranty Obligations
	 	 	61	 
	6.4 Equity Interest Repurchases
	 	 	62	 
	6.5 Limitation on Certain Restrictive Agreements
	 	 	63	 
	6.6 Material Indebtedness Agreements
	 	 	63	 
	6.7 Consolidation, Merger, Acquisitions, Asset Sales, etc
	 	 	64	 
	6.8 Transactions with Affiliates
	 	 	65	 
	6.9 Disposal of Hazardous Substances
	 	 	65	 
	6.10 Fiscal Year, Fiscal Quarters
	 	 	66	 
	6.11 Anti-Terrorism Laws
	 	 	66	 
	6.12 Changes in Business
	 	 	66	 
	6.13 Minimum Fixed Charge Coverage Ratio
	 	 	66	 
	6.14 Maximum Fiscal Capital Expenditures
	 	 	66	 
	6.15 Maximum Leverage Ratio
	 	 	66	 
	6.16 Minimum Net Worth
	 	 	66	 
	 
	 	 	 	 
	ARTICLE VII. DEFAULT
	 	 	67	 
	7.1 Events of Default
	 	 	67	 
	7.2 Effects of an Event of Default
	 	 	70	 
	7.3 Remedies
	 	 	70	 
	7.4 Application of Certain Payments and Proceeds
	 	 	70	 
	 
	 	 	 	 
	ARTICLE VIII. INDEMNIFICATION — COSTS AND EXPENSES
	 	 	71	 
	8.1 Indemnification
	 	 	71	 
	8.2 Expenses
	 	 	71	 
	 
	 	 	 	 
	ARTICLE IX. THE AGENT AND ISSUING BANK
	 	 	72	 
	9.1 Appointment and Authorization
	 	 	72	 
	9.2 Waiver of Liability of Agent
	 	 	72	 
	9.3 Note Holders
	 	 	73	 
	9.4 Consultation with Counsel
	 	 	73	 
	9.5 Documents
	 	 	73	 
	9.6 Agent and Affiliates
	 	 	74	 
	9.7 Knowledge of Default
	 	 	74	 
	9.8 Enforcement
	 	 	74	 
	9.9 Action by Agent
	 	 	74	 
	9.10 Notices, Defaults, etc
	 	 	74	 
	9.11 Indemnification of Agent
	 	 	74	 
	9.12 Successor Agent
	 	 	75	 
	9.13 Lenders’ Independent Investigation
	 	 	75	 
	9.14 Amendments, Consents
	 	 	75	 
	9.15 Funding by Agent
	 	 	76	 
	9.16 Sharing of Payments
	 	 	76	 
	9.17 Payment to Lenders
	 	 	77	 
	9.18 Tax Withholding Clause
	 	 	77	 
	9.19 USA Patriot Act
	 	 	78	 
	9.20 Issuing Bank
	 	 	78	 
	9.21 Benefit of Article IX
	 	 	78	 






 


- iii -









 





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE X. MISCELLANEOUS
	 	 	78	 
	10.1 Amendment and Restatement; Future Amendments
	 	 	78	 
	10.2 Delays and Omissions
	 	 	78	 
	10.3 Assignments/Participation
	 	 	79	 
	10.4 Successors and Assigns
	 	 	80	 
	10.5 Notices
	 	 	80	 
	10.6 Governing Law
	 	 	81	 
	10.7 Counterparts
	 	 	81	 
	10.8 Titles
	 	 	81	 
	10.9 Inconsistent Provisions
	 	 	81	 
	10.10 Course of Dealing
	 	 	81	 
	10.11 USA Patriot Act Notification
	 	 	81	 
	10.12 JURY TRIAL WAIVER
	 	 	82	 
	10.13 CONSENT TO JURISDICTION
	 	 	82	 






	 	 	 	 	 
	Exhibit A
	 	—	 	Replacement Revolving Note
	Exhibit B
	 	—	 	Replacement Swingline Note
	Exhibit C
	 	—	 	Term Note
	Exhibit D
	 	—	 	Compliance Certificate
	Exhibit E
	 	—	 	Request Certificate
	Exhibit F
	 	—	 	Assignment and Assumption
	Schedule 1
	 	—	 	Employee Benefits Plan
	Schedule 2.1
	 	—	 	Lenders’ Commitments
	Schedule 4.11
	 	—	 	Subsidiaries; Affiliates
	Schedule 6.2
	 	—	 	Liens and Indebtedness
	Schedule 6.3
	 	—	 	Investments and Guaranty Obligations





 


- iv -









 





This AMENDED AND RESTATED CREDIT AGREEMENT dated as of January 30, 2009 between ASTRONICS
CORPORATION, a New York corporation with its principal place of business at 130 Commerce Way, East
Aurora, New York 14052 (“Borrower”) and the several banks and other financial institutions from
time to time party to this Agreement (individually, a “Lender” and collectively, the “Lenders”) and
HSBC BANK USA, NATIONAL ASSOCIATION, a national banking association organized under the laws of the
United States of America with an office at Commercial Banking Department, One HSBC Center, Buffalo,
New York 14203 as Agent for the Lenders, Swingline Lender, Issuing Bank and a Lead Arranger, BANK
OF AMERICA, N.A. as a Lead Arranger, and KEYBANK NATIONAL ASSOCIATION as Documentation Agent.



ARTICLE I.  DEFINITIONS




1.1 Definitions. As used in this Credit Agreement, unless otherwise specified, the
following terms shall have the following respective meanings:



“ABR”
or “Alternate Base Rate” — For any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greater of (i) the Prime Rate, (ii) the Federal Funds
Effective Rate from time to time in effect plus 0.5%, or (iii) the Libor Rate for a one-month
period on such day (or if such day is not a Business Day, the immediately preceding Business Day)
plus 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal
Funds Effective Rate or the Libor Rate shall be effective from and including the effective date of
such change in the Prime Rate, the Federal Funds Effective Rate or the Libor Rate, respectively.



“ABR Loan” — Any Loan for which interest is calculated based on the Alternate Base Rate plus
the Applicable Margin determined from time to time.



“ABR Option” — The Rate Option in which interest is based upon the Alternate Base Rate plus
the Applicable Margin for the applicable Loan.



“Affiliate” or “Affiliates” — Individually or collectively, any Person that directly or
indirectly, through one or more intermediaries, Controls, or is Controlled by, or is under Common
Control with the Person specified. Notwithstanding the foregoing, no individual shall be
considered an Affiliate of a Person solely by reason of such individual’s position as an officer or
director of such Person or of an Affiliate of such Person, and neither the Agents nor any Lender
shall be considered an Affiliate of Borrower or any of Borrower’s Subsidiaries.



“Agent” — HSBC Bank USA, National Association and any successor thereto appointed pursuant to
the terms of this Agreement.



“Agreement” — This Credit Agreement, as the same may from time to time be amended, restated,
supplemented or otherwise modified.


 


 









 





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



“Applicable Commitment Fee Rate” — (i) Initially, until changed in accordance with the
following provisions, the Applicable Commitment Fee Rate shall be 0.375%; and (ii) commencing with
the fiscal quarter of Borrower ended on March 31, 2009, and continuing with each fiscal quarter
thereafter, the Agent shall determine the Applicable Commitment Fee Rate in accordance with the
following matrix, based on the Leverage Ratio:



	 	 	 	 	 	 	 
	 	 	Leverage	 	 	 
	Level	 	Ratio	 	Commitment Fee	 
	 
	 	 	 	 	 	 
	1
	 	< 1.50 to 1.0	 	 	0.300	%
	 
	 	 	 	 	 	 
	2
	 	> 1.50 to 1.0 but < 2.00 to 1.0	 	 	0.375	%
	 
	 	 	 	 	 	 
	3
	 	> 2.00 to 1.0 but <  2.50 to 1.0	 	 	0.500	%
	 
	 	 	 	 	 	 
	4
	 	> 2.50 to 1.0	 	 	0.500	%





In no event will the Applicable Commitment Fee Rate be lower than Level 2 until the end of
Borrower’s second full fiscal quarter following the Closing Date. Changes in the Applicable
Commitment Fee Rate shall become effective three (3) Business Days immediately following the date
of delivery by Borrower to the Agent of a financial statement and a Compliance Certificate required
to be delivered pursuant to Sections 5.2(a) and (b) of this Agreement, and shall be based upon the
Leverage Ratio in effect at the end of the financial period covered by such financial statement and
Compliance Certificate. Notwithstanding the foregoing provisions, during any period when the
Borrower has failed to deliver such a financial statement and Compliance Certificate when due, the
Applicable Commitment Fee Rate shall be applied at Level 4 above as of the first Business Day after
the date on which such financial statement and Compliance Certificate were required to be
delivered, regardless of the Leverage Ratio at such time, until the date the required financial
statement and Compliance Certificate have been delivered. Any changes in the Applicable Commitment
Fee Rate shall be determined by the Agent in accordance with the provisions set forth in this
definition and the Agent will promptly provide notice of such determinations to the Borrower and
the Lenders. Any such determination by the Agent shall be conclusive absent manifest error.




“Applicable Lending Office” — With respect to each Lender, such Lender’s Domestic Lending
Office in the case of an ABR Loan and such Lender’s Libor Lending Office in the case of a Libor
Loan.


 


- 2 -









 





“Applicable Margin” — (i) Initially, until changed in accordance with the following
provisions, the Applicable Margin shall be 1.75% for ABR Loans and 2.75% for Libor
Loans; (ii) commencing with the fiscal quarter of Borrower ended on March 31, 2009, and
continuing with each fiscal quarter thereafter, the Agent shall determine the Applicable Margin in
accordance with the following matrix, based on the Leverage Ratio:



	 	 	 	 	 	 	 	 	 	 	 
	 	 	Leverage	 	 	 	 	 	 
	Level	 	Ratio	 	Libor Rate Option	 	 	ABR Option	 
	 
	 	 	 	 	 	 	 	 	 	 
	1
	 	< 1.50 to 1.0	 	 	2.25	%	 	 	1.25	%
	 
	 	 	 	 	 	 	 	 	 	 
	2
	 	> 1.50 to 1.0 but < 2.00 to 1.0	 	 	2.75	%	 	 	1.75	%
	 
	 	 	 	 	 	 	 	 	 	 
	3
	 	> 2.00 to 1.0 but < 2.50 to 1.0	 	 	3.00	%	 	 	2.00	%
	 
	 	 	 	 	 	 	 	 	 	 
	4
	 	> 2.5 to 1.0	 	 	3.50	%	 	 	2.50	%






In no event will the Applicable Margin be lower than Level 2 until the end of Borrower’s second
full fiscal quarter after the Closing Date. Changes in the Applicable Margin shall become
effective three (3) Business Days immediately following the date of delivery by Borrower to the
Agent of a financial statement and a Compliance Certificate required to be delivered pursuant to
Sections 5.2(a) and (b) of this Agreement, and shall be based upon the Leverage Ratio in effect at
the end of the financial period covered by such financial statement and Compliance Certificate.
Notwithstanding the foregoing provisions, during any period when the Borrower has failed to deliver
such financial statement and Compliance Certificate when due, the Applicable Margin shall be
applied at Level 4 above as of the first Business Day after the date on which such financial
statement and Compliance Certificate were required to be delivered, regardless of the Leverage
Ratio at such time, until the date the required financial statement and Compliance Certificate have
been delivered. Any changes in the Applicable Margin shall be determined by the Agent in
accordance with the provisions set forth in this definition and the Agent will promptly provide
notice of such determinations to the Borrower and the Lenders. Any such determination by the Agent
shall be conclusive absent manifest error.



“Applicable Percentage” — With respect to any Lender, at any time, the percentage of the total
Commitments for all Lenders represented by such Lender’s Commitment. Each Lender’s initial
Applicable Percentage based on the total Commitment as of the Closing Date is set forth on
Schedule 2.1 to this Agreement. If the Commitments have terminated or expired, the Applicable
Percentages shall be determined based upon the total Commitment most recently in effect, giving
effect to any assignments.


 


- 3 -









 





“Asset Sale” — The sale, lease, transfer or other disposition (including by means of sale and
lease-back transactions, and by means of mergers, consolidations, amalgamations and liquidations of
a corporation, partnership or limited liability company of the interests therein of Borrower or any
Subsidiary) by Borrower or any Subsidiary to any Person of Borrower’s or such Subsidiary’s
respective assets, including, without limitation, the sale of any Equity Interests in any
Subsidiary, provided that the term Asset Sale specifically excludes (i) any sales, transfers or
other dispositions of inventory, or obsolete, worn-out or excess furniture, fixtures, equipment or
other property, real or personal, tangible or intangible, in each case in the ordinary course
of business; (ii) any actual or constructive total loss of property or the use thereof, resulting
from destruction, damage beyond repair or other rendition of such property as permanently unfit for
normal use from any casualty or similar occurrence whatsoever; (iii) the destruction or damage of a
portion of such property from any casualty or similar occurrence whatsoever under circumstances in
which such damage cannot reasonably be expected to be repaired, or such property cannot reasonably
be expected to be restored to its condition immediately prior to such destruction or damage, within
ninety (90) days after the occurrence of such destruction or damage or such longer reasonable time
period as determined under the Borrower’s plan of restoration or replacement for such property
established within a 90 day period after such occurrence provided such plan is acceptable to the
Agent in its reasonable judgment; (iv) the condemnation, confiscation or seizure of, or requisition
of title to or use of any property; or (v) in the case of any unmovable property located upon a
leasehold, the termination or expiration of such leasehold.



“Assignment and Assumption” — An assignment and assumption agreement entered into by a Lender
and an assignee and accepted by the Agent, substantially in the form of Exhibit F hereto with all
blanks appropriately completed.



“Astronics Advanced” — Astronics Advanced Electronic Systems Corp., a Washington corporation,
and a Domestic Subsidiary of the Borrower.



“Authorized Officer” — With respect to Borrower or any Guarantor, any of the following
officers: the Chairman, the President, any Vice President, the Chief Executive Officer, the Chief
Financial Officer or the Treasurer, or such other Person as is authorized in writing to act on
behalf of Borrower and is acceptable to the Agent. Unless otherwise qualified, all references
herein to an Authorized Officer shall refer to an Authorized Officer of the Borrower.



“Available Amount” — With respect to any Letter of Credit issued in Dollars, the stated or
face amount of such Letter of Credit to the extent available at the time for drawing (subject to
presentment of all requisite documents) as the same may be increased or decreased from time to time
in accordance with the terms of such Letter of Credit.



“Availability Period” — The period from the Closing Date to, but excluding, the earlier of the
Revolving Credit Maturity Date and the date of termination of the Revolving Credit Commitments.



“Borrower” — As defined in the opening paragraph to this Agreement.



“Borrower Collateral” — As defined in Section 3.4(e) of this Agreement.



“Borrower Financing Statements” — As defined in Section 3.4(e) of this Agreement.



“Borrower Security Agreement” — As defined in Section 3.4(e) of this Agreement.


 


- 4 -









 





“Breakage Fee” — An amount determined by the applicable Lender at the time of a prepayment of
a Libor Loan to be equal to the sum of the costs, losses, expenses and penalties incurred by such
Lender as a result of such prepayment; any loss to any Lender shall be deemed to be an amount
determined by such Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Libor Loan had such event not occurred, for the period from
the date of such event to the last day of the then current Interest Period therefor, over (ii) the
amount of interest which would accrue on such principal amount for such period at the interest rate
which such Lender would bid were it to bid, at the commencement of such period for deposits of
Dollars of a comparable amount and period from other banks in the London Interbank Market. Any
Lender’s calculation of any Breakage Fee shall be conclusive absent manifest error.



“Business
Day” — (a) For all purposes other than as set forth in clause (b) of this definition,
any day excluding Saturday, Sunday and any day on which banks in New York City are authorized by
law or other governmental action to close, and (b) with respect to Libor Loans, any day which is a
Business Day described in clause (a) and which is also a day for trading by and between banks in
U.S. dollar deposits in the London Interbank Eurodollar Market.



“Capital Lease” — As applied to any Person means any lease of any property (whether real,
personal or mixed) by that Person as lessee that, in conformity with GAAP, should be accounted for
as a capital lease on the balance sheet of that Person.



“Capital Lease Obligations” — All obligations under Capital Leases of the Borrower or any of
its Subsidiaries, without duplication, in each case taken at the amount thereof accounted for as
liabilities identified as “capital lease obligations” (or any similar words) on a consolidated
balance sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP.



“Change of Control” — (i) The occupation of a majority of the seats (other than vacant seats)
on the board of directors of Borrower by Persons who were neither (A) nominated by the Board of
Directors of Borrower nor (B) appointed by directors so nominated; (ii) the acquisition of, or, if
earlier, the shareholder or director approval of the acquisition of, ownership or voting control,
directly or indirectly, beneficially or of record, on or after the date of this Agreement, by any
Person or group (within the meaning of Rule 13d-3 of the SEC under the 1934 Act, as then in
effect), other than Kevin Keane and his estate and Immediate Family (as defined below) taken as a
whole, of shares representing more than 20% of the aggregate ordinary power to vote for the
election of directors represented by the issued and outstanding capital stock of Borrower; or
(iii) the occurrence of a change in control, or other similar provision, under or with respect to
any agreement evidencing Material Indebtedness. As used herein, “Immediate Family” means Kevin
Keane’s spouse, children and siblings.



“Closing Date” — January 30, 2009.



“Code” — The Internal Revenue Code of 1986, as amended from time to time, and the regulations
promulgated and the rulings issued thereunder. Section references to the Code are to the Code as
in effect on the date of this Agreement and any subsequent provisions of the Code, amendatory
thereof, supplemental thereto or substituted therefor.


 


- 5 -









 





“Collateral” — Collectively, the Borrower Collateral and the Guarantor Collateral.



“Collateral Documents” — Collectively, the Security Agreements, any Mortgage, any Guaranty and
the Financing Statements.



“Commitments” or "Commitment” — (a) For all Lenders, the aggregate of the Total Revolving
Credit Commitment and Total Term Loan Commitment, and (b) for each Lender, the aggregate of such
Lender’s Revolving Credit Commitment and Term Loan Commitment.



“Commitment Fee” — As defined in Section 2.12 of this Agreement.



“Compliance Certificate” — A certificate of the Borrower substantially in the form of
Exhibit D hereto with all blanks appropriately completed.



“Confidential Information Materials” — The collective reference to the confidential
information with respect to the Borrower and the revolving credit facility evidenced by the
Existing Facility, together with the information provided by, or on behalf of, the Borrower to the
Lenders in connection with this Agreement and the acquisition by Borrower of all of the stock of D
M E.



“Consideration” — In connection with an acquisition, the aggregate consideration paid,
including borrowed funds, cash, the issuance of securities or notes, the assumption or incurring of
liabilities (direct or contingent), excluding however trade payables and short term accruals in the
ordinary course of business, the payment of consulting fees (excluding any fees payable to any
investment banker in connection with such acquisition) or fees for a covenant not to compete and
any other consideration paid for the purchase.



“Consolidated” or “Consolidated Basis” — The consolidation of the accounts of any entity and
its Subsidiaries in accordance with GAAP, including principles of consolidation, consistent with
those applied in the preparation of the consolidated audited financial statements of Borrower
delivered to the Lenders.



“Consolidated Capital Expenditures” — For any period, the aggregate of all expenditures
(whether paid in cash or accrued as liabilities and including in all events amounts expended or
capitalized under Capital Leases and Synthetic Leases but excluding any amount representing
capitalized interest) of Borrower and all Subsidiaries during such period determined on a
Consolidated Basis that may properly be classified as capital expenditures in conformity with GAAP,
provided that such term shall not include any such expenditure in connection with replacement or
repair of assets to the extent that casualty insurance proceeds or the trade-in value of other
equipment were used for such expenditure.


 


- 6 -









 





“Consolidated EBITDA” — For any period, an amount equal to (i) the sum of the amounts for such
period of (A) Consolidated Net Income, (B) Consolidated Interest Expense, (C) provisions for taxes
based on income, (D) total depreciation expense, (E) total amortization expense and (F) other
non-cash items reducing Consolidated Net Income minus (ii) other non-cash items increasing
Consolidated Net Income for such period; provided, however extraordinary
gains, whether cash or non-cash, shall not be included in the Calculation of Consolidated
EBITDA. Notwithstanding anything to the contrary in this definition, for purposes of computing the
Leverage Ratio and Fixed Charge Coverage Ratio hereunder, or in connection with any pro-forma
calculation required by this Agreement, the term “Consolidated EBITDA” shall be computed, on a
consistent basis, to reflect purchases and acquisitions by Permitted Acquisition or otherwise, and
Asset Sales of a business entity or assets constituting a business line or division, made by
Borrower and the Subsidiaries during the relevant period as if they occurred at the beginning of
such period, and Borrower, during the twelve (12) month period following the date of any such
Permitted Acquisition may include in the calculation hereof the necessary portion of the adjusted
historical results of the entities acquired in acquisitions that were achieved prior to the
applicable date of the acquisition for such time period as is necessary for Borrower to have
figures on a Rolling Four-Quarter Basis from the date of determination with respect to such
acquired entities.



“Consolidated Interest Expense” — For any period, total interest expense (including, without
limitation, that which is capitalized and that which is attributable to Capital Leases or Synthetic
Leases) of the Borrower and its Subsidiaries on a consolidated basis with respect to all
outstanding indebtedness of the Borrower and its Subsidiaries, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters of credit and net
costs under hedge agreements computed on a net basis after reduction for any interest income, and
excluding amortization of discount and amortization of debt issuance costs.



“Consolidated Net Income” — For any period, the net income (or loss) of the Borrower and its
Subsidiaries on a consolidated basis for such period taken as a single accounting period determined
in conformity with GAAP.



“Consolidated Net Worth” — At any time, all amounts that, in conformity with GAAP, would be
included under the caption “total stockholders’ equity” (or any like caption) on a consolidated
balance sheet of the Borrower at such time.



“Consolidated Total Assets” — At any date of determination, all amounts that would, in
conformity with GAAP, be set forth opposite the caption “total assets” (or a similar caption) on a
Consolidated balance sheet of Borrower and all Subsidiaries at such date.



“Consolidated Total Funded Debt” — The sum (without duplication) of all Indebtedness of the
Borrower and its Subsidiaries for borrowed money, all as determined on a Consolidated Basis.



“Contingent Obligation” — Of a Person means any agreement, undertaking or arrangement by which
such Person assumes, guaranties, endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any
other Person, or agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person against loss,
including, without limitation, any comfort letter, operating agreement or take-or-pay contract.
The amount of any Contingent Obligation shall be equal to the amount of the obligation that is so
guarantied or supported that is actually outstanding or otherwise due and payable from time to
time, if a fixed and determinable amount
or if there is no fixed or determinable amount, either (x) if a maximum amount is guaranteed,
the maximum amount or (y) if there is no maximum amount, the amount of the obligation that is so
guarantied or supported.


 


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“Control”, “Controlling”, “Controlled by”, and “under Common Control with” — The possession,
directly or indirectly, of the power to either (i) vote 50% or more of the Equity Interests having
voting power for the election of directors, or persons performing similar functions, of a Person or
(ii) direct or cause the direction of the management and policies of a Person, whether by contract
or otherwise; provided however, no Plan or employee stock ownership plan of
Borrower shall be considered to have Control of Borrower or any Subsidiary.



“Default” — Any of the events specified in Article VII whether or not any requirement for the
giving of notice, the lapse of time, or both, as been satisfied.



“Default Rate” — For any day, with respect to any Loan, a rate per annum equal to 2% per annum
above the interest rate that would otherwise be applicable to such Loan and with respect to any
interest, fees and any other sums due hereunder, 2% per annum above the interest rate that would be
applicable to Revolving Loans that are ABR Loans pursuant to Section 2.6.



“Defaulting Lender” — Any Lender that (i) on any borrowing date fails to make available to the
Agent such Lender’s Loans required to be made to Borrower on such borrowing date or (ii) shall not
have made a payment to the Issuing Bank pursuant to Section 2.5 of this Agreement or the Agent
pursuant to Section 2.1(b) or 2.3 of this Agreement. Once a Lender becomes a Defaulting Lender,
such Lender shall continue as a Defaulting Lender until such time as such Defaulting Lender makes
available to the Agent the amount of such Defaulting Lender’s Loans and/or to the Issuing Bank such
payments requested by the Issuing Bank together with all or other amounts required to be paid to
the Agent and/or the Issuing Bank pursuant to this Agreement.



“Designated Hedge Agreement” — Any Hedge Agreement (other than a commodities hedge agreement)
to which Borrower or any Subsidiary is a party and as to which a Lender or any of its Affiliates is
a counterparty that, pursuant to a written instrument signed by the Agent at the request of the
Borrower or any such Lender or Affiliate, has been designated as a Designated Hedge Agreement so
that Borrower’s or such Subsidiary’s counterparty’s credit exposure thereunder will be entitled to
share in the benefits of the Collateral and the Collateral Documents to the extent the Collateral
and such Collateral Documents provide guarantees or security for creditors of Borrower or any
Subsidiary under Designated Hedge Agreements.



“Disposal” — The intentional or unintentional abandonment, discharge, deposit, injection,
dumping, spilling, leaking, storing, burning, thermal destruction or placing of any substance so
that it or any of its constituents may enter the Environment.



“D M E” — D M E Corporation, a Florida corporation, and, after giving effect to the use of the
proceeds of the Term Loan, a Domestic Subsidiary of the Borrower.



“Dollars”, “U.S. Dollars” or “$” — Lawful money of the United States of America.


 


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“Domestic Lending Office” — With respect to any Lender, the office of such Lender specified as
its “Domestic Lending Office” opposite its name on Schedule 2.1 hereto or in the Assignment and
Assumption pursuant to which it became a Lender, as the case may be, or such other office of such
Lender as such Lender may from time to time specify to the Borrower and the Agent.



“Domestic Subsidiary” — Any Subsidiary having any place of business located in the United
States of America.



“ECIDA Bond Projects” — Two projects of LSI whereby LSI (i) acquired 15 acres of land in East
Aurora, New York at an approximate purchase price of $350,000; constructed a 70,000 square foot
manufacturing facility thereon (“East Aurora Facility”) at a cost of approximately $4,700,000; and
purchased new equipment at a cost of approximately $1,450,000; and (ii) constructed a 57,000 square
foot addition to the East Aurora Facility, made related site improvements and acquired related
equipment at a cost of approximately $6,000,000, both of which projects were financed by means of
tax-exempt bonds issued by the Erie County Industrial Development Agency.



“ECIDA Letters of Credit” — The presently outstanding letters of credit in the current amounts
of approximately $2,985,624 and $6,084,000 issued by HSBC Bank for the account of the Borrower and
LSI to support the ECIDA Bond Projects.



“Eligible Assignee” — (i) A Lender, (ii) an Affiliate of a Lender, (iii) a fund that is
administered or managed by a Lender or an Affiliate of a Lender, or by an entity or an Affiliate of
any entity that administers or manages a Lender, and (iv) any other Person (other than a natural
Person) approved by (A) the Agent, (B) each Issuing Bank (but only in the case of any assignment
with respect to the Revolving Credit), and (C) unless an Event of Default has occurred and is
continuing, the Borrower (but only in the case of any assignment with respect to the Revolving
Credit), each such approval not to be unreasonably withheld or delayed; provided, however, that
notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any
Guarantor or any of their Affiliates or Subsidiaries.



“Environment” — Any water including, but not limited to, surface water and ground water or
water vapor; and land including land surface or subsurface; stream sediments; air; fish; wildlife;
plants; and all other natural resources or environmental media.



“Environmental Law” — Any applicable Federal, state, foreign or local statute, law, rule,
regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written
policy and rule of common law now or hereafter in effect and in each case as amended, and any
binding and enforceable judicial or administrative interpretation thereof, including any judicial
or administrative order, consent, decree or judgment issued to or rendered against Borrower or any
Subsidiary relating to the Environment, employee health and safety or Hazardous Substances,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C. §
1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. §
300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and
the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq., the Hazardous Material
Transportation Act, 49 U.S.C. § 5101 et seq. and
the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. (to the extent it regulates
occupational exposure to Hazardous Substances); and any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.


 


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“Environmental
Permits” — All licenses, permits, approvals, authorizations, consents or
registrations required by any applicable Environmental Laws and all applicable judicial and
administrative orders in connection with ownership, lease, purchase, transfer, closure, use and/or
operation of Borrower’s property and/or as may be required for the storage, treatment, generation,
transportation, processing, handling, production or Disposal of Hazardous Substances.



“Equity Interest” — With respect to any Person, any and all shares, interests, participations
or other equivalents, including membership interests (however designated, whether voting or
non-voting) of equity of such Person, including, if such Person is a partnership, partnership
interests (whether general or limited) or any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or distributions of assets of,
such partnership, but in no event will Equity Interest include any debt securities convertible or
exchangeable into equity unless and until actually converted or exchanged.



“ERISA” — The Employee Retirement Income Security Act of 1974, as amended from time to time
and the regulations and rulings promulgated and issued thereunder.



“ERISA Affiliate” — Each Subsidiary and any trade or business (whether or not incorporated)
that, together with Borrower, is treated as a single employer under Section 414(b) or (c) of the
Code or Section 4001(b)(1) of ERISA or, solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 of the Code.



“Event of Default” or “Events of Default” — As defined in Section 7.1 of this Agreement.



“Exchange Act” — The Securities Exchange Act of 1934, as amended.



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



“Existing Bonds” — Collectively, the tax-exempt bonds issued in connection with the New
Hampshire Bond Project and the ECIDA Bond Projects.



“Existing Facility” — The Credit Agreement dated as of May 13, 2008 among the Borrower, the
Lenders, and HSBC Bank as Agent, Swingline Lender, Issuing Bank and Arranger providing for a
$60,000,000 revolving credit facility to Borrower.



“Existing Letter of Credit” — The existing letter of credit in the face amount of
approximately U.S. $1,031,253.40 issued by HSBC Bank to HSBC Bank Canada to secure a term loan to
an Affiliate of the Borrower.


 


- 10 -









 





“Federal Funds Effective Rate” — For any day, the rate per annum (based on a year of 365 days
and actual days elapsed and rounded upward to the nearest 1/100th 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.



“Financial Covenants” — Collectively, the financial covenants set forth in Sections 6.13,
6.14, 6.15 and 6.16 of this Agreement or any modification, amendment or replacement thereof made
after the Closing Date in accordance with Section 10.1 of this Agreement.



“Financing Statements” — Collectively, the Borrower Financing Statements and the Guarantor
Financing Statements.



“Fixed Charge Coverage Ratio” — As of a calculation date, the ratio of the Borrower’s
Consolidated EBITDA minus Consolidated Capital Expenditures minus cash taxes paid and dividends
paid to Consolidated Interest Expense plus the amount of scheduled principal payments, but
excluding any prepayments of principal, paid on long-term Indebtedness, calculated on a Rolling
Four-Quarter Basis as of such calculation date.



“Foreign Subsidiary” — Any Subsidiary that is not a Domestic Subsidiary.



“GAAP” — As of the date of any determination, generally accepted accounting principles as
promulgated by the Financial Accounting Standards Board and/or the American Institute of Certified
Public Accountants or any successor entity or entities thereto, including, without limitation, any
Public Company Accounting Oversight Board established under the Sarbanes-Oxley Act of 2002, and
which are effective as of such date of determination, consistently applied and maintained
throughout the relevant periods and from period to period.



“Governmental Authority” — The government of the United States of America, any other nation or
any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government.



“Guarantor” or “Guarantors” — Individually, each of Astronics Advanced, D M E and LSI, and
collectively, all of them, and any other Subsidiary of Borrower which is required to deliver a
Guaranty hereunder.



“Guarantor Collateral” — As defined in Section 3.4(f) of this Agreement.


 


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“Guarantor Financing Statements” — As defined in Section 3.4(f) of this Agreement.



“Guarantor Security Agreement” — As defined in Section 3.4(f) of this Agreement.



“Guaranty” — A guaranty agreement in form and content reasonably satisfactory to the Agent and
the Lenders evidencing the obligation of a Person to guarantee payment of any Indebtedness and any
other reimbursement, payment or performance obligations of another Person which arise under this
Agreement or any other Loan Document.



“Guaranty Obligations” — As to any Person (without duplication) any obligation of such Person
guaranteeing any Indebtedness (“primary Indebtedness”) of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such
primary Indebtedness or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds for the purchase or payment of any such primary Indebtedness or to maintain
working capital or equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary Indebtedness of the ability of the primary
obligor to make payment of such primary Indebtedness, or (iv) otherwise to assure or hold harmless
the owner of such primary Indebtedness against loss in respect thereof, provided, however, that the
definition of Guaranty Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guaranty Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the primary Indebtedness in
respect of which such Guaranty Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is required to perform
thereunder), as determined by such Person in good faith.



“Hazardous Substances” — Without limitation, any explosives, radioactive materials, friable
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum
products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances and any
other material defined as a hazardous substance in Section 101(14) of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.) the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Section 6901 et seq.), Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable Environmental Law and in
the regulations promulgated thereunder.



“Hedge Agreement” — An interest rate swap, cap or collar agreement, foreign currency exchange
agreement, or any arrangement similar to any of the foregoing between Borrower and any Lender
relating to any Indebtedness under this Agreement, each as providing for the transfer or mitigation
of interest rate or foreign currency risk either generally or under specific contingencies.


 


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“HSBC Bank” — HSBC Bank USA, National Association, and its successors and assigns.



“Indebtedness” — At a particular date, without duplication (i) all indebtedness of such Person
for borrowed money; (ii) all bonds, notes, debentures and similar debt securities of such Person;
(iii) the deferred purchase price of capital assets or services that in accordance with GAAP would
be shown on the liability side of the balance sheet of such Person; (iv) the face amount of all
letters of credit issued for the account of such Person and, without duplication, all drafts drawn
thereunder; (v) all obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances; (vi) all Indebtedness of a second Person secured by any Lien on any property owned by
such first Person, whether or not such indebtedness has been assumed; (vii) all Capitalized Lease
Obligations of such Person; (viii) the present value, determined on the basis of the implicit
interest rate, of all basic rental obligations under all Synthetic Leases of such Person; (ix) all
obligations of such Person to pay a specified purchase price for goods or services whether or not
delivered or accepted, i.e., take-or-pay and similar obligations; (x) all net obligations
of such Person under Hedge Agreements; (xi) the full outstanding balance of trade receivables,
notes or other instruments sold with full recourse (and the portion thereof subject to potential
recourse, if sold with limited recourse), other than in any such case any thereof sold solely for
purposes of collection of delinquent accounts; (xii) the stated value, or liquidation value if
higher, of all redeemable Equity Interests of such Person; and (xiii) all Guaranty Obligations of
such Person (without duplication under clause (vi)); provided, however that (x) neither trade
payables nor other similar accrued expenses, in each case arising in the ordinary course of
business, nor obligations in respect of insurance policies or performance or surety bonds that
themselves are not guarantees of Indebtedness (nor drafts, acceptances or similar instruments
evidencing the same nor obligations in respect of letters of credit supporting the payment of the
same), shall constitute Indebtedness; and (y) the Indebtedness of any Person shall in any event
include (without duplication) the Indebtedness of any other entity (including any general
partnership in which such Person is a general partner) to the extent such Person is liable thereon
as a result of such Person’s ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness provide expressly that such Person is not liable
thereon.



“Interest Period” or “Interest Periods” — Individually, and collectively, with respect to a
Libor Loan, the one, two, three or six month interest periods selected by the Borrower pursuant to
the terms of this Agreement to be applicable to specific Libor Loans from time to time or any such
other periods of such other durations as the Borrower and all Lenders may agree shall be applicable
to specific Libor Loans from time to time; provided, however, that (i) no Interest
Period may be selected for a Revolving Loan that would end after the Revolving Credit Maturity
Date; (ii) no Interest Period may be selected for a Term Loan that would end after the Term Loan
Maturity Date; (iii) if any Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period, such Interest Period
shall end on the last Business Day of such calendar month; (iv) if any Interest Period would
otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; and (v) if any Interest Period would otherwise expire on a day that is not
a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the next preceding
Business Day.


 


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“Investment” — With respect to any Person, any loan, advance or other extension of credit
(other than unsecured normal trade credit extended upon customary terms in the ordinary course of
such Person’s business) or capital contribution to, any purchase or other acquisition of any
security of or interest in, or any other investment in, any other Person.



“IRB Letters of Credit” — Together, the New Hampshire Letter of Credit and the ECIDA Letters
of Credit.



“Issuing Bank” — HSBC Bank, in its capacity as an issuer of Letters of Credit under this
Agreement, and any replacements or successors of HSBC Bank in such capacity as provided in Section
2.4(j) of this Agreement.



“Law” or “Laws” — Any law, constitution, statute, regulation, rule, opinion, ruling,
ordinance, order, injunction, writ, decree, bond or judgment of any Governmental Authority.



“LC Disbursement” — A payment made by any Issuing Bank pursuant to a Letter of Credit.



“LC
Exposure” — At any time, the sum of (i) the aggregate undrawn amount of all outstanding
Letters of Credit at such time plus (ii) the aggregate amount of all LC Disbursements that have not
yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at
any time shall be its Applicable Percentage of the total LC Exposure at such time.



“Lead Arranger” — Individually, and collectively, HSBC Bank and Bank of America, N.A., and any
successor to either of such financial institutions as a Lead Arranger under this Agreement.



“Lenders” — The Persons listed on Schedule 2.1 to this Agreement with a Revolving Credit
Commitment and a Term Loan Commitment and any other Person that shall have become a party hereto
pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption. Unless the context otherwise requires, the term
“Lenders” includes the Swingline Lender.



“Letter of Credit” or “Letters of Credit” — Individually, and collectively, any, and all,
standby or commercial letters of credit issued by HSBC Bank pursuant to this Agreement upon
application by the Borrower including the Existing Letter of Credit and the IRB Letters of Credit.



“Letter of Credit Commitment” — With respect to the Issuing Bank, the amount set forth
opposite such Issuing Bank’s name on Schedule 2.1 hereto under the caption “Letter of Credit
Commitment” or, if the Issuing Bank has entered into one or more Assignments and Assumptions, the
amount set forth for the Issuing Bank in the register maintained by the Agent
as such Issuing Bank’s “Letter of Credit Commitment,” as such amount may be reduced at or
prior to such time pursuant to Section 2.13.


 


- 14 -









 





“Letter of Credit Facility” — At any time, an amount equal to the amount of the Issuing Bank’s
Letter of Credit Commitment at such time, as such amount may be reduced at or prior to such time
pursuant to Section 2.13 less the aggregate Available Amount under all Letters of Credit
outstanding at such time.



“Letter of Credit Sublimit” — The $20,000,000 maximum aggregate Available Amount of all
Letters of Credit which can be outstanding at any one time.



“Leverage Ratio” — The ratio of the Borrower’s Consolidated Total Funded Debt as of a
calculation date to Consolidated EBITDA, calculated on a Rolling Four-Quarter Basis as of such
calculation date.



“Libor Interest Determination Date” — A Business Day that is two (2) Business Days prior to
the commencement of each Interest Period during which the Libor Rate will be applicable.



“Libor Lending Office” — With respect to any Lender, the office of such Lender specified as
its Libor Lending Office” opposite its name on Schedule 2.1 hereto or in the Assignment and
Assumption pursuant to which it became a Lender (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender as such Lender may from time to time specify
to the Borrower and the Agent.



“Libor Loan” — Any Loan on which interest is calculated based on the Libor Rate plus the
Applicable Margin.



“Libor Rate” — The reserve adjusted rate of interest per annum determined by HSBC Bank to be
applicable to any selected Interest Period appearing on Reuters Screen LIBOR01 Page or such other
substitute page that displays such rate or another alternate source selected by the Agent to
determine such rate on a Libor Interest Determination Date in an amount approximately equal to the
amount of the applicable Libor Loan.



“Libor Rate Option” — The Rate Option in which interest is calculated based upon the Libor
Rate.



“Lien” — Any mortgage, deed of trust, pledge, hypothecation, assignment, security interest,
lien, charge or encumbrance, or preference, priority or other security agreement or preferential
arrangement in respect of any asset of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement or any financing lease having
substantially the same economic effect as any of the foregoing).



“Loan” or “Loans” — Individually and collectively, any Revolving Loan and any Term Loan,
whether such is an ABR Loan or a Libor Loan and any Swingline Loan under the Revolving Credit.


 


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“Loan Account” — An account or accounts maintained with the Agent for the Borrower into which
the proceeds of a Revolving Loan and a Term Loan shall be initially deposited pursuant to
Sections 2.1(b) and 2.5 of this Agreement.



“Loan Document” — This Agreement and any other loan, guaranty, mortgage, letter of credit or
collateral document executed and delivered by Borrower, any Guarantor, or any other Subsidiary or
the Lenders in connection with this Agreement including, without limitation, the Notes, any
Guaranty, any Mortgage, the Subordination Agreement, any Letter of Credit or any document in
connection therewith, and the Collateral Documents, as any of the same may be amended, modified,
renewed or replaced from time to time.



“LSI” — Luminescent Systems, Inc., a New York corporation, formerly known as Flex-key
Corporation, and a Subsidiary of the Borrower.



“Material Adverse Effect” — An effect, individually or in the aggregate, that (i) is
materially adverse to the business, assets, financial condition or results of operations of
Borrower and its Subsidiaries, taken as a whole, or (ii) does materially impair the ability of the
Borrower to perform its obligations under this Agreement, or any other Loan Documents, or (iii)
materially impairs the rights and remedies of the Agent, the Swingline Lender, any Issuing Bank or
any of the Lenders under the Loan Documents.



“Material Indebtedness” — Indebtedness owing to a Person or Persons in a single transaction or
related transactions (other than the Loans and Letters of Credit), or obligations in respect of one
or more Hedge Agreements entered into with a Person, of the Borrower and any Subsidiary in an
aggregate principal amount exceeding $3,500,000. For purposes of determining Material
Indebtedness, the principal amount of the obligations of any Person in respect of any Hedge
Agreement at any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that such Person would be required to pay if such Hedge Agreement were terminated at
such time.



“Maximum Limit” — The maximum aggregate amount which the Borrower can borrow from time to time
under the Revolving Credit which on the date hereof is $45,000,000.



“Multiemployer Plan” — A Plan which is a multiemployer plan as defined in Section 4001(a)(3)
of ERISA to which the Borrower, any Person under Common Control with the Borrower, or any Person
Controlled by the Borrower, has an obligation to contribute.



“Multiple Employer Plan” — A Plan subject to Title IV of ERISA and described in Section 4063
of ERISA with respect to which the Borrower or any ERISA Affiliate could have liability under
Section 4064 or 4069 of ERISA in the event such Plan has been or were to be terminated.



“New Hampshire Bond Project” — A project of LSI, whereby LSI constructed and equipped an
80,000 square foot manufacturing facility in Lebanon, New Hampshire which was financed by means of
a tax-exempt bond issued by the Business Authority of the State of New Hampshire.




 


- 16 -











 




“New Hampshire Letter of Credit” — The presently outstanding letter of credit in the current
amount of approximately $4,109,918 issued by HSBC Bank for the account of the Borrower and LSI to
support the New Hampshire Bond Project.



“Non-Material Subsidiary” — Any Subsidiary that has, as of the date of determination, total
assets equal to less than 2-1/2% of Consolidated Total Assets, based on the quarterly financial
statements of Borrower most recently delivered to the Lenders.



“Note” or “Notes” — Individually, any, and collectively, all, of the Revolving Notes, Term
Notes, and the Swingline Note, and any or all replacements and renewals thereof.



“Operating Lease” — As applied to any Person means any lease of any property (whether real,
personal or mixed) by that Person as lessee that, in conformity with GAAP is not accounted for as a
Capital Lease on the balance sheet of that Person.



“Permitted Acquisition” or “Permitted Acquisitions” — As defined in Section 6.7(c) of this
Agreement.



“Permitted Encumbrance” — As defined in Section 6.2 of this Agreement.



“Person” — Any individual, corporation, partnership, limited liability company, joint venture,
trust, unincorporated association, Governmental Authority or other entity, body, organization or
group.



“Plan” — Any employee benefits plan which is covered by Title IV of ERISA and in respect of
which the Borrower or a Commonly Controlled Entity is an “employer” as defined in Section 3(5) of
ERISA, each of which Plans is listed on Schedule 1 to this Agreement.



“Prime Rate” — The rate of interest publicly announced by HSBC Bank from time to time as its
prime rate and is a base rate for calculating interest on certain loans. The Prime Rate may or may
not be the most favorable rate charged by HSBC Bank to its customers from time to time.



“Rate Option” or “Rate Options” — The choice of applicable interest rates and Interest Periods
offered to the Borrower pursuant to this Agreement to establish the interest to be charged on
certain portions of the unpaid principal borrowed hereunder from time to time.



“Related Parties” — With respect to any Person, such Person’s Affiliates and the directors,
officers, employees, agents and advisors of such Person and of such Person’s Affiliates.



“Release” — Release as defined in Section 101(22) of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.), and the
regulations promulgated thereunder.



“Replaced Lender” or “Replacement Lender” — As defined in Section 2.19 of this Agreement.


 


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“Reportable Event” — Any event with regard to a Plan described in Section 4043(b) of ERISA or
in regulations issued thereunder.



“Request Certificate” — A certificate in the form annexed hereto as Exhibit E with all blanks
appropriately completed, and duly executed by the Borrower.



“Required Lenders” — At any time, Lenders that together hold Revolving Credit Exposures,
Unused Revolving Credit Commitments and outstanding principal amounts of the Term Loans
representing at least the Required Percentage (as defined below) of the sum of the Total Revolving
Credit Exposures, Unused Revolving Credit Commitments and outstanding principal amounts of the Term
Loans at such time; provided, however, if any Lender shall be a Defaulting Lender
at such time, there shall be excluded from the determination of Required Lenders at such time (i)
the aggregate principal amount of Loans owing to such Lender (in its capacity as a Lender) and
outstanding at such time, and (ii) the aggregate Commitment of such Lender at such time. For
purposes of this definition, the aggregate principal amount of Swingline Loans owing to the
Swingline Lender, the LC Disbursements owing to the Issuing Bank and the amount available to be
drawn under each Letter of Credit shall be considered to be owed to the Lenders ratably in
accordance with their respective Commitments. As used herein, Required Percentage means at least
two Lenders holding 66-2/3% or more at the time a determination of the Required Lenders is
necessary, of the sum of the Total Revolving Credit Exposures, Unused Revolving Credit Commitments
and outstanding principal amounts of the Term Loans.



“Revolving Credit” — The three-year revolving credit facility (including Revolving Loans,
Swingline Loans and Letters of Credit) made available to the Borrower by the Lenders as provided in
this Agreement.



“Revolving Credit Commitment” — With respect to each Lender, the commitment of such Lender to
make Revolving Loans, to acquire participations in Letters of Credit, and to acquire participations
in Swingline Loans hereunder, as such commitment may be (i) reduced from time to time pursuant to
Section 2.13 of this Agreement, (ii) increased pursuant to Section 2.23 of this Agreement, and
(iii) reduced or increased from time to time pursuant to assignment by or to such Lender pursuant
to Section 10.3 of this Agreement. The initial maximum amount of each Lender’s Revolving Credit
Commitment is set forth on Schedule 2.1 of this Agreement, or in the Assignment and Assumption
pursuant to which such Lender shall have assumed its Revolving Credit Commitment, as applicable.



“Revolving Credit Exposure” — With respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Revolving Loans, LC Exposure and Swingline Exposure
at such time.



“Revolving Credit Maturity Date” — January 30, 2012, which date may be shortened in accordance
with Section 7.2 of this Agreement.



“Revolving Loan” or “Revolving Loans” — Individually and collectively, each Loan by any Lender
to Borrower whether initially made as an ABR Loan or a Libor Loan under Section 2.1 of this
Agreement or arising from Borrower’s request for a Loan to repay a Swingline
Loan under Section 2.3(c) of this Agreement, or arising from Borrower’s request to reimburse
an LC Disbursement under Section 2.4(f) of this Agreement.


 


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“Revolving Note” or “Revolving Notes” — The promissory note or promissory notes of the
Borrower substantially in the form of Exhibit A hereto with all blanks appropriately completed, and
all replacements and renewals thereof, evidencing the promise of the Borrower to repay Revolving
Loans to the applicable Lender.



“Rolling Four-Quarter Basis” — The four most recently completed consecutive fiscal quarters of
the Borrower immediately preceding a calculation date.



“SEC” — The U.S. Securities and Exchange Commission, any successor thereto and any analogous
Governmental Authority.



“Securities Act” — The Securities Act of 1933, as amended.



“Security Agreements” — Collectively, the Borrower Security Agreement and the Guarantor
Security Agreement.



“Seller Notes” — The two unsecured notes issued by the Borrower pursuant to the Stock Purchase
Agreement to the sellers of the stock of D M E in the respective principal amounts of $5,000,000
and $2,000,000, which notes are subordinated to the Indebtedness arising under this Agreement by
the terms of the Subordination Agreement.



“Stock Purchase Agreement” — The Stock Purchase Agreement dated as of January 28, 2009 by and
among the Borrower, D M E and the shareholders of D M E, and the Schedules in connection therewith.



“Subordination Agreement” — The agreement whereby the Seller Notes are subordinated to the
Indebtedness of the Borrower arising under this Agreement, and any amendment, modification or
replacement thereof.



“Subsidiary” — Any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of Borrower in Borrower’s
consolidated financial statements if such financial statements were prepared in accordance with
GAAP as of such date, as well as any corporation of which at least 50% of the voting Equity
Interest is owned by any entity directly, or indirectly through one or more Subsidiaries.



“Swingline Exposure” — At any time for all Lenders, the aggregate principal amount of all
Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall
be its Applicable Percentage of the total Swingline Exposure at such time.



“Swingline Lender” — HSBC Bank, in its capacity as lender of Swingline Loans hereunder, and
any replacement or successor to HSBC Bank in such capacity, as provided in this Agreement.



“Swingline Loan” — A loan made pursuant to Section 2.3 of this Agreement.


 


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“Swingline Note” — A promissory note of Borrower substantially in the form of Exhibit B hereto
with all blanks appropriately completed, and all replacements and renewals thereof evidencing the
promise of the Borrower to repay Swingline Loans to the Swingline Lender.



“Synthetic Lease” — Any lease (i) that is accounted for by the lessee as an Operating Lease
and (ii) under which the lessee is intended to be the “owner” of the leased property for federal
income tax purposes.



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



“Term Loan” or “Term Loans” — Collectively, the term loan made or to be made by the Lenders to
the Borrower and individually, each Lender’s share of such term loan made by such Lender to the
Borrower, on the Closing Date in the aggregate principal amount of $40,000,000 pursuant to Section
2.1(c).



“Term Loan Commitment” — With respect to each Lender the commitment of such Lender to fund its
portion of the Term Loan to the Borrower on the Closing Date. The initial amount of each Lender’s
Term Loan Commitment is set forth on Schedule 2.1 to this Agreement.



“Term Loan Maturity Date” — January 30, 2014, which date may be shortened in accordance with
Section 7.2 of this Agreement.



“Term Note” — The promissory note or promissory notes of the Borrower substantially in the
form of Exhibit C hereto with all blanks appropriately completed, and all replacements and renewals
thereof, evidencing the promise of the Borrower to repay Term Loans to the applicable Lender.



“Total Revolving Credit Commitment” — The sum of the Revolving Credit Commitments of the
Lenders, as in effect from time to time. On the Closing Date, the Total Revolving Credit
Commitment is equal to $45,000,000.



“Total Revolving Credit Exposure” — The total Revolving Credit Exposures of all the Lenders.



“Total Term Loan Commitment” — The sum of the Term Loan Commitments of the Lenders, as in
effect from time to time. On the Closing Date, the Total Term Loan Commitment is equal to
$40,000,000.



“Type” — When used in reference to any Loan or borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such borrowing, is determined by reference to the
Libor Rate or the Alternate Base Rate.


 


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“Unused Revolving Credit Commitment” — With respect to any Lender at any time, (i) such
Lender’s Revolving Credit Commitment at such time minus (ii) the sum of (x) the aggregate principal
amount of all Revolving Loans in each instance made by such Lender (in its
capacity as a Lender) and outstanding at such time, plus (y) such Lender’s Applicable
Percentage of (1) the aggregate Available Amount of all Letters of Credit outstanding at such time,
(2) the aggregate principal amount of all LC Disbursements made by any Issuing Bank and outstanding
at such time, and (3) the aggregate principal amount of all Swingline Loans made by the Swingline
Lender and outstanding at such time.



“USA Patriot Act” — 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.



1.2 Accounting Terms.



(a) Generally. All accounting terms not specifically or completely defined herein shall be construed in
conformity with, and all financial data (including financial ratios and other financial
calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity
with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing Borrower’s audited financial statements previously provided
to the Agent and the Lenders, except as otherwise specifically prescribed herein.



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



1.3
Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern
time (daylight or standard, as applicable).



1.4
Letters of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed
to be the stated amount of such Letter of Credit in effect at such time; provided,
however, that with respect to any Letter of Credit that, by its terms or the terms of any
letter of credit document related thereto, provides for one or more automatic increases in the
stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated
amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is
in effect at such time.


 


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ARTICLE II. THE CREDITS




2.1
The Revolving Credit and Term Loans.



(a) Revolving Loans. Each Lender agrees, severally and not jointly, subject to the terms and conditions and relying
upon the representations and warranties set forth in this Agreement and within the limits hereof,
to make one or more Revolving Loans to the Borrower, and Borrower may make a request for a
Revolving Loan or Revolving Loans from the Lenders, at any one time and from time to time, during
the Availability Period. The Borrower shall not at any time permit, and no Lender shall have any
obligation to permit, the aggregate outstanding principal amounts of all Revolving Loans, Swingline
Loans and the aggregate Available Amount of all Letters of Credit outstanding at such time to
exceed the Maximum Limit or any such Revolving Loan to exceed such Lender’s Unused Revolving Credit
Commitment. The Revolving Loans may be repaid and reborrowed in accordance with the provisions
hereof.



(b) Method for Revolving Loans. When Borrower wants the Lenders to make a Revolving Loan available, the Borrower shall notify
the Agent not later than 1:00 p.m. on the Business Day on which the Revolving Loan is to be funded
in the case of an ABR Loan, and in the case of a Libor Loan not later than two (2) Business Days
prior to the proposed commencement date of the applicable Interest Period. In such notice, which
may be by telephone, confirmed immediately in writing, or telex or telecopier, by means of a
Request Certificate duly completed and executed by an Authorized Officer, the Borrower shall
specify (i) the aggregate amount of the Revolving Loan to be made on a designated date which shall
be in a minimum amount of $100,000 and shall be in whole multiples of $100,000 for amounts in
excess of such minimum amount; (ii) whether the Revolving Loan shall be an ABR Loan or a Libor
Loan, and if a Libor Loan the applicable Interest Period, provided, however, such
Interest Period may in no event overlap more than nine (9) other Interest Periods; and (iii) the
proposed date on which the Revolving Loan is to be funded which shall be a Business Day. Each
Lender shall make available to the Agent in accordance with Section 2.5 hereof, in immediately
available funds, such Lender’s Applicable Percentage of such Loan in accordance with the respective
Revolving Credit Commitment of such Lender. As early as practically possible on the date on which
a Revolving Loan is made and upon fulfillment of the conditions set forth in Article III of this
Agreement, the Agent will make the proceeds of the Revolving Loan available to the Borrower by a
deposit to the applicable Loan Account.



(c) Term Loans. Each Lender agrees, severally and not jointly, subject to the terms and conditions set forth in
this Agreement and relying on the representations and warranties set forth in this Agreement, to
fund in a single advance its portion of the Term Loan in the full amount of its Term Loan
Commitment on the Closing Date. Principal amounts of the Term Loan that are repaid or prepaid may
not be reborrowed.


 


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2.2 The Notes. (a) The Revolving Loans shall be evidenced by the Revolving Notes, executed by an Authorized
Officer and with all blanks appropriately completed, payable as provided therein to the Lenders.
Each Revolving Note may be inscribed by the holder thereof on the schedule attached thereto, and
any continuation thereof, with the date of the making of each Revolving Loan, the amount of each
Revolving Loan, the applicable Rate Options and Interest Periods, all payments of principal, and
the aggregate outstanding principal balance thereof.



(b) The Swingline Loans shall be evidenced by the Swingline Note, executed by an Authorized
Officer with all blanks appropriately completed, payable as provided therein to the Swingline
Lender. The Swingline Note may be inscribed by the holder thereof on the schedule attached thereto
and any continuation thereof with the date of the making of each Swingline Loan, the amount thereof
and all payments of principal, and the aggregate principal balance thereof.



(c) The Term Loans shall be evidenced by the Term Notes, executed by an Authorized Officer
with all blanks appropriately completed, payable as provided therein to the Lenders. The Term
Loans shall be payable in nineteen (19) equal consecutive quarterly principal installments which
aggregate $2,000,000 each commencing on April 1, 2009 and payable on the first day of each July,
October, January and April thereafter, to and including October 1, 2013, and one final installment
on January 2, 2014 in an amount equal to the then unpaid principal balance of the Term Loans. Each
Term Note may be inscribed by the holder thereof on the schedule attached thereto, and any
continuation thereof, with the applicable Interest Periods, all payments of principal, and the
aggregate outstanding principal balance thereof.



Any such inscription on the schedules to any Revolving Note, Term Note, or the Swingline Note made
by the holder thereof shall constitute prima facie evidence of the accuracy of the information so
recorded; provided, however, the failure of any Lender or other holder to make any
such inscription shall not affect the obligations of the Borrower under any Revolving Note, the
Swingline Note or this Agreement.



2.3 Swingline Loans. (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make
Loans (“Swingline Loans”) to Borrower solely for the Swingline Lender’s own account, from time to
time during the Availability Period, up to an aggregate principal amount at any one time
outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline
Loans exceeding $5,000,000 or (ii) the sum of the aggregate Unused Revolving Credit Commitments of
the Lenders at such time being exceeded; provided that the Swingline Lender
shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. The
Swingline Lender shall not make any Swingline Loan in the period commencing one Business Day after
the Swingline Lender shall have received written notice in accordance with Section 10.5 of this
Agreement from the Agent or any Lender that one or more of the conditions contained in Article III
are not then satisfied or a Default or an Event of Default exists and ending upon the satisfaction
or waiver of such condition(s) or cure or waiver of such Default or Event of Default. Swingline
Loans shall bear interest payable monthly on the first calendar day of each month at the ABR Option
from time to time in effect. Each outstanding Swingline Loan shall be payable on the Business Day
following demand therefor or automatically without demand on the Revolving Credit Maturity Date,
together with interest accrued thereon, and shall otherwise be subject to all other terms and
conditions applicable to all Revolving Loans, except that all interest thereon shall be payable to
the Swingline Lender solely for its own account other than in the case of the purchase of a
participation therein in accordance with Section 2.3(c) of this Agreement. Within the foregoing
limits and subject to the terms and conditions set forth herein, Borrower may borrow, repay and
reborrow Swingline Loans.


 


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(b) To request a Swingline Loan, Borrower shall notify the Agent of such request by telephone
(confirmed by telecopy), not later than 1:00 p.m. on the day of a proposed Swingline Loan. Each
such notice shall be irrevocable and shall specify the requested date (which shall be a Business
Day) and amount of the requested Swingline Loan. The Agent will promptly advise the Swingline
Lender of any such notice received from Borrower. The Swingline Lender shall make each Swingline
Loan available to Borrower by means of a credit to the general deposit account of Borrower with the
Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.4(f) of this Agreement, by remittance to such Issuing Bank)
by 3:00 p.m. on the requested date of such Swingline Loan.



(c) At any time after making a Swingline Loan, the Swingline Lender may request Borrower to,
and upon request by the Swingline Lender, Borrower shall, promptly request a Revolving Loan from
all Lenders and apply the proceeds of such Revolving Loan to the repayment of any Swingline Loan
owing by Borrower not later than the Business Day following the Swingline Lender’s request.
Notwithstanding the foregoing, and upon the earlier to occur of (i) three (3) Business Days after
demand for payment is made by the Swingline Lender for a Swingline Loan, and (ii) the Revolving
Credit Maturity Date, if such Swingline Loan has not been paid by Borrower, such Swingline Loan
shall bear interest as an ABR Loan and each Lender (other than the Swingline Lender) shall
irrevocably and unconditionally purchase from the Swingline Lender, without recourse or warranty,
an undivided interest and participation in such Swingline Loan in an amount equal to such Lender’s
Applicable Percentage of such Swingline Loan and promptly pay such amount to the Agent for the
account of the Swingline Lender by wire transfer of immediately available funds in the same manner
as provided in Section 2.5 of this Agreement with respect to Loans made by such Lender, and the
Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders.
Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline
Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, shall be made without any offset, abatement, withholding or reduction
whatsoever and such payment shall be made by the other Lenders
whether or not an Event of Default or a Default is then continuing or any other condition precedent
set forth in Article III is then met and whether or not Borrower has then requested a Revolving Loan in such amount. The Agent
shall notify Borrower of any participations in any Swingline Loan acquired pursuant to this
paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Agent and
not to the Swingline Lender. If any Lender fails to make available to the Agent for the account of
the Swingline Lender, any amounts due to the Swingline Lender from such Lender pursuant to this
Section, the Swingline Lender shall be entitled to recover such amount, together with interest
thereon at the Federal Funds Effective Rate for the first three (3) Business Days after Defaulting
Lender receives such notice and thereafter at the rate for ABR Loans, in either case payable (i) on
demand, (ii) by setoff against any payments made to the Swingline Lender for the account of
Defaulting Lender, or (iii) by payment to the Swingline Lender by the Agent of amounts otherwise
payable to Defaulting Lender under this Agreement. The failure of any Lender to make available to
the Agent for the account of the Swingline Lender its Applicable Percentage of any unpaid Swingline
Loan shall not relieve any other Lender of its obligation hereunder to make available to the Agent
for the account of the Swingline Lender, its Applicable Percentage of any unpaid Swingline Loan on
the date such payment is to be made, but no Lender shall be responsible for the failure of any
other Lender to make available to the Agent for the account of the Swingline Lender its Applicable
Percentage of any unpaid Swingline Loan.


 


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2.4 Letters of Credit.



(a) General. Each Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue Letters of
Credit for the account of the Borrower from time to time on any Business Day during the period from
the Closing Date until two (2) Business Days prior to the Revolving Credit Maturity Date (A) in an
aggregate Available Amount for all Letters of Credit, not to exceed at any time such Issuing Bank’s
Letter of Credit Commitment at such time, and (B) in an Available Amount for each such Letter of
Credit not to exceed an amount equal to the Unused Revolving Credit Commitments of the Lenders at
such time. Within the limits of the Letter of Credit Facility, and subject to the limits referred
to herein, the Borrower may request the issuance of Letters of Credit under this Section, repay any
LC Disbursements resulting from drawings under Letters of Credit pursuant to Section 2.4(f) and
request the issuance of additional Letters of Credit under Section 2.4(c). In the event of any
inconsistency between the terms and conditions of this Agreement and the terms and conditions of
any form of letter of credit application or other agreement submitted by Borrower to, or entered
into by Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions
of this Agreement shall control.



(b) Letter of Credit Fees. The Issuing Bank shall have the right to receive, solely for its own account, and Borrower shall
pay on demand with respect to any Letter of Credit the Issuing Bank’s reasonable and customary
administrative, issuance, amendment, drawing and negotiation charges in connection with letters of
credit. The Issuing Bank shall also be paid a fronting fee which shall accrue at the rate of
0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof
attributable to Unreimbursed LC Disbursements) attributable to Letters of Credit issued
by the Issuing Bank during the Availability Period (“Fronting Fee”). The Fronting Fee shall be
payable to the Issuing Bank quarterly in arrears. For each day during (i) the period beginning on
the date of this Agreement and ending March 31, 2009, (ii) each full calendar quarter thereafter
during the term of this Agreement and (iii) the period beginning on the first day of the calendar
quarter containing the Revolving Credit Maturity Date and ending on the day before the Revolving
Credit Maturity Date, the Borrower shall pay, on the first Business Day following each such
calendar quarter or other time period, to the Agent for the account of each Lender participating in
such Letters of Credit a non-refundable letter of credit fee equal to such Lender’s Applicable
Percentage, on such day, of the product obtained by multiplying (A) that portion of LC Exposure
representing the aggregate Available Amount of Letters of Credit on such day first by (B) the
Applicable Margin then in effect for Libor Loans and then by (C) 1/360.


 


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(c) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions; Reports.
(i) To request the issuance of a Letter of Credit other than the IRB Letters of Credit or the
Existing Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of
Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Agent
(at least two (2) Business Days in advance of the requested date of issuance, amendment, renewal or
extension for a Letter of Credit) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such
Letter of Credit is to expire (which shall comply with paragraph (d) of this Section), the
Available Amount of such Letter of Credit, the Applicable Currency, the name and address of the
beneficiary thereof, the purpose for which such Letter of Credit is to be issued, and such other
information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. Such
notice, to be effective, must be received by the Issuing Bank not later than 2:00 p.m. or the time
agreed upon by such Issuing Bank and the Borrower on the last Business Day on which such notice can
be given under this Section 2.4(c). If requested by the Issuing Bank, the Borrower also shall
submit a letter of credit application on such Issuing Bank’s standard form in connection with any
request for a Letter of Credit.



(ii) A Letter of Credit shall be issued, amended, renewed or extended only if, (x) after
giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not
exceed the Letter of Credit Commitment, and (ii) the sum of the total Revolving Credit Exposures
shall not exceed the Total Revolving Credit Commitment, and the Revolving Credit Exposure of any
Lender shall not exceed such Lender’s Revolving Credit Commitment (y) as of the date of such
issuance amendment, renewal or extension, no order, judgment or decree of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or restrain the Issuing Bank from
issuing the Letter of Credit and no law, rule or regulation applicable to the Issuing Bank and no
request or directive (whether or not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit or request that the Issuing Bank refrain from the
issuance of letters of credit generally or the issuance of that Letter of Credit. Unless the
Issuing Bank has been notified by the Agent or the Required Lenders in writing that a Default or an
Event of Default has occurred and is
continuing, in which case the Issuing Bank shall have no obligation to issue, amend, renew or
extend any Letter of Credit until such notice is withdrawn by the Agent or the Required Lenders
or such Default or Event of Default has been effectively waived in accordance with the provisions
of this Agreement, the Issuing Bank shall, upon fulfillment of the applicable conditions set forth
in Article III, make such Letter of Credit available to the Borrower as agreed between the Issuing
Bank and the Borrower in connection with such issuance.



(iii) The Issuing Bank shall furnish (i) to the Agent on the first Business Day of each week a
written report summarizing issuance and expiration dates of Letters of Credit issued during the
previous week and drawings during such week under all Letters of Credit, (ii) to the Agent, the
Borrower, and each Lender on the first Business Day of each month a written report summarizing
issuance and expiration dates of Letters of Credit issued during the preceding month and drawings
during such month under all Letters of Credit, and (iii) to the Agent, the Borrower, and each
Lender on the first Business Day of each calendar quarter a written report setting forth the
average daily aggregate Available Amount during the preceding calendar quarter of all Letters of
Credit.


 


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(d) Expiration Date. No Letter of Credit shall have an expiration date (including all rights of the Borrower or the
beneficiary to require renewal) later than one (1) Business Day prior to the Revolving Credit
Maturity Date. The foregoing notwithstanding, any standby Letter of Credit may, by its terms, be
renewable annually upon notice (a “Notice of Renewal”) given to the Issuing Bank and the Agent on
or prior to any date for notice of renewal set forth in such Letter of Credit (but in any event at
least two (2) Business Days prior to the date of the proposed renewal of such standby Letter of
Credit) and upon fulfillment of the applicable conditions set forth in Article III unless the
Issuing Bank shall have notified the Borrower (with a copy to the Agent) on or prior to the date
for notice of termination set forth in such Letter of Credit (but in any event at least thirty (30)
Business Days prior to the date of automatic renewal) of its election not to renew such standby
Letter of Credit (a “Notice of Termination”); provided that the terms of each
standby Letter of Credit that is automatically renewable annually shall not permit the expiration
date (after giving effect to any renewal) of such standby Letter of Credit in any event to be
extended to a date later than one (1) Business Day before the Revolving Credit Maturity Date. If
either a Notice of Renewal is not given by the Borrower or a Notice of Termination is given by the
Issuing Bank pursuant to the immediately preceding sentence, such standby Letter of Credit shall
expire on the date on which it otherwise would have been automatically renewed; provided,
however, that even in the absence of receipt of a Notice of Renewal, the Issuing Bank may,
in its discretion unless instructed to the contrary by the Agent or the Borrower, deem that a
Notice of Renewal had been timely delivered and, in such case, a Notice of Renewal shall be deemed
to have been so delivered for all purposes under this Agreement.



(e) Participations. (i) Immediately upon issuance by the Issuing Bank of any Letter of Credit in accordance with the
procedures set forth in Section 2.4(c) of this Agreement, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from the Issuing Bank, without recourse or
warranty, an undivided interest and participation equal to its Applicable Percentage
of such Letter of Credit (including, without limitation, all obligations of the Borrower with
respect thereto) and any security therefor or guaranty pertaining thereto.



(ii) In the event that the Issuing Bank makes any LC Disbursement and the Borrower shall not
have repaid such amount to the Issuing Bank pursuant to Section 2.4(f) of this Agreement, the
Issuing Bank shall promptly notify the Agent and each Lender of such failure, and each Lender shall
promptly and unconditionally pay to the Agent for the account of the Issuing Bank the amount of
such Lender’s Applicable Percentage of the unreimbursed amount of any LC Disbursement in the same
manner as provided in Section 2.5 of this Agreement with respect to Revolving Loans made by such
Lender and the Agent shall promptly pay to such Issuing Bank the amounts so received by it from the
Lenders.


 


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(iii) If any Lender fails to make available to the Issuing Bank any amounts due to the Issuing
Bank pursuant to this Section 2.4(e), the Issuing Bank shall be entitled to recover such amount,
together with interest thereon, at the Federal Funds Effective Rate for the first three (3)
Business Days after Defaulting Lender receives such notice and thereafter at the rate for ABR
Loans, in either case payable (i) on demand, (ii) by setoff against any payments made to such
Issuing Bank for the account of Defaulting Lender or (iii) by payment to the Issuing Bank by the
Agent of amounts otherwise payable to Defaulting Lender under this Agreement. The failure of any
Lender to make available to the Agent for the account of the Issuing Bank its Applicable Percentage
of the unreimbursed amount of any LC Disbursement shall not relieve any other Lender of its
obligation hereunder to make available to the Agent for the account of the Issuing Bank its
Applicable Percentage of the unreimbursed amount of any LC Disbursement on the date such payment is
to be made, but no Lender shall be responsible for the failure of any other Lender to make
available to the Agent for the account of the Issuing Bank its Applicable Percentage of the
unreimbursed amount of any LC Disbursement on the date such payment is to be made.



(iv) Whenever the Issuing Bank receives a payment on account of an LC Disbursement, including
any interest thereon, it shall promptly pay to each Lender which has funded its participating
interest therein, in like funds as received an amount equal to such Lender’s pro rata share thereof
based on the amount funded.



(v) The obligations of a Lender to make payments to the Agent for the account of the Issuing
Bank with respect to LC Disbursements shall be absolute, unconditional and irrevocable, not subject
to any counterclaim, set-off, qualification or exception whatsoever and shall be made in accordance
with the terms and conditions of this Agreement under all circumstances, whether or not an Event of
Default or a Default is then continuing.



(vi) In the event any payment by Borrower received by the Agent with respect to a Letter of
Credit and distributed by the Agent to the Lenders on account of their participations is thereafter
set aside, avoided or recovered from the Agent in connection with any receivership, liquidation,
reorganization or bankruptcy proceeding, each Lender which received such distribution shall, upon
demand by the Agent, contribute such Lender’s Applicable Percentage of the amount set aside,
avoided or recovered together with interest at the rate required to be paid by the Agent upon the
amount required to be repaid by it.



(f) Reimbursement. If the Issuing Bank shall make any LC Disbursement, the Borrower shall reimburse such LC
Disbursement by paying to the Agent for the account of the Issuing Bank an amount equal to such LC
Disbursement not later than 12:00 Noon on the date that such LC Disbursement is made, if the
Borrower shall have received notice by telephone or otherwise of such LC Disbursement prior to
10:00 a.m. on such date, or, if such notice has not been received by the Borrower prior to such
time on such date, then not later than 12:00 Noon on (i) the Business Day that the Borrower
receives such notice, if such notice is received prior to 10:00 a.m. on the day of receipt, or (ii)
the Business Day immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that the
Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with
Section 2.1 or 2.3 of this Agreement that such payment be financed with an ABR Loan or Swingline
Loan in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such
payment shall be discharged and replaced by the resulting ABR Loan or Swingline Loan.


 


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(g) Obligations Absolute. The Borrower’s obligations to reimburse LC Disbursements as provided in paragraph (f) of this
Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this
Agreement, or any term or provision therein, (ii) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement
therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter
of Credit against presentation of a draft or other document that does not comply strictly with the
terms of such Letter of Credit so long as it complies in all material respects, (iv) the existence
of any claim, set-off, defense or other right which Borrower or any Subsidiary may have at any time
against the beneficiary named in a Letter of Credit or any transferee of any Letter of Credit (or
any Person for whom any such transferee may be acting), the Issuing Bank, any Lender, any other
Person, whether in connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transaction (including any underlying transactions between
Borrower, any Subsidiary and the beneficiary named in any Letter of Credit), (v) the occurrence of
any Event of Default or Default, or (vi) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations
hereunder. As among the Borrower, the Issuing Bank and the Lenders, the Borrower assumes all risks
of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries
of the Letters of Credit requested by it. In furtherance and not in limitation of the foregoing,
the Issuing Bank and the Lenders 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 and issuance of any Letter of Credit, even if it should in fact prove to be in any
or all respect invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary
of a Letter of Credit to comply fully with conditions required in order to draw upon such Letter of
Credit so long as such beneficiary is in material compliance with such conditions; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise; (v) errors in interpretation of technical terms; (vi) misapplication
by the beneficiary of a Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (vii) any consequences arising from causes beyond the control of the Issuing Bank or the
Lenders. In addition to amounts payable as elsewhere provided in this Section 2.4, Borrower hereby
agrees to protect, indemnify, pay and save the Agent, the Issuing Bank and each Lender harmless
from and against any and all claims, demands, liabilities, damages, losses, posts, charges and
expenses (including reasonable attorneys’ fees) arising from the claims of third parties against
the Agent or the Issuing Bank in respect of any Letter of Credit requested by the Borrower. In
furtherance and extension and not in limitation of the specific provisions hereinabove set forth,
any action taken or omitted by the Issuing Bank or any Lender under or in connection with the
Letters of Credit or any related certificates, if taken or omitted in good faith, shall not put the
Issuing Bank, the Agent or such Lender under any resulting liability to Borrower or relieve
Borrower of any of their obligations hereunder to the Issuing Bank, the Agent or any Lender.
Notwithstanding anything to the contrary contained in this Section 2.4(g), Borrower shall not have
any obligations to indemnify the Issuing Bank under this Section 2.4(g) in respect of any liability
incurred by the Issuing Bank that is found in a final judgment by a court of competent jurisdiction
to have resulted primarily from the Issuing Bank’s own gross negligence or willful misconduct,
unless such action or inaction on the part of the Issuing Bank which gave rise to the liability was
taken at the request of Borrower or from the wrongful failure to pay the Letter of Credit except if
pursuant to an order from a Governmental Authority (even if such order is later invalidated).


 


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(h) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify
the Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any
failure to give or delay in giving such notice shall not relieve the Borrower of the Borrower’s
obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement.



(i) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then regardless of the time of Borrower’s
receipt of notice of such LC Disbursement, unless the Borrower shall reimburse such LC Disbursement
in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest,
for each day from and including the date such LC Disbursement is made to, but excluding, the date
that Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (f) of this Section, then the default interest rate set forth in Section
2.6(c) of this Agreement shall apply. Interest accrued pursuant to this paragraph shall be for the
account of such Issuing Bank, except that interest accrued on and after the date of
payment by any Lender pursuant to paragraph (e)(ii) or (e)(iii) of this Section to reimburse such
Issuing Bank shall be for the account of such Lender to the extent of such payment.



(j) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Agent,
the replaced Issuing Bank and the successor Issuing Bank. The Agent shall notify the Lenders of
any such replacement of the Issuing Bank. At the time any such replacement shall become effective,
the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank. From
and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all
the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be
deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all
previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit
issued by it prior to such replacement, but shall not be required to issue additional Letters of
Credit.


 


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(k) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrower
receives notice from the Agent or the Required Lenders (or, if the maturity of the Loans has been
accelerated, Lenders with LC Exposure representing greater than fifty percent (50%) of the total LC
Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall
deposit in an interest-bearing account with the Agent, in the name of the Agent and for the benefit
of the Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and
unpaid interest thereon; provided that the obligation to deposit such cash
collateral shall become effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to any of the Borrower described in Section 7.1(d) or (e) of this Agreement. Such
deposit shall be held by the Agent as Collateral for the payment and performance of the obligations
of the Borrower under this Agreement. The Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any interest earned on
the interest-bearing account or on any investment of such deposits, which investments shall be made
at the option and sole discretion of the Agent and at the Borrower’s risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be applied by the Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to
the consent of Lenders with LC Exposure representing greater than fifty percent (50%) of the total
LC Exposure), be applied to satisfy other obligations of the Borrower under this Agreement. If the
Borrower is required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower within three Business Days after all Events of Default have been cured or
waived.



(l) Existing Letter of Credit. The Existing Letter of Credit will remain in effect, and as of the date of this Agreement shall
be a “Letter of Credit” hereunder. The per annum fee applicable thereto will be payable quarterly
in arrears to the Issuing Bank, on the first day of each fiscal quarter of Borrower while such
letter of credit is outstanding, and will be initially determined on the date of this Agreement,
and adjusted on the first day of each fiscal quarter of the Borrower thereafter, based on and equal
to, the then applicable Applicable Margin for the Libor Rate Option for and calculated on the basis
of a 360-day year and actual days elapsed. The Existing Letter of Credit shall also be subject to
HSBC Bank’s normal and customary amendment and drawing fees upon the occurrence of such events.
Except as modified herein and modified on or after the date hereof to provide that the expiry date
thereof will not exceed the Business Day prior to the Revolving Credit Maturity Date, the
applicable reimbursement agreement for the Existing Letter of Credit shall remain in full force and
effect and shall continue to govern the Existing Letter of Credit.



(m) IRB Letters of Credit. The IRB Letters of Credit will remain in effect, and as of the date of this Agreement shall be a
“Letter of Credit” hereunder. The stand-by letter of credit fees applicable to the IRB Letters of
Credit shall be initially determined on the date of this Agreement, and adjusted on the first day
of each fiscal quarter of Borrower thereafter, based on and equal to, the then applicable
Applicable Margin for the Libor Rate Option for and calculated on the basis of a 360-day year and
actual days elapsed, and shall be payable quarterly in arrears on the first day of each fiscal
quarter of the Borrower while such letters of credit are outstanding. The related reimbursement
agreements and bond documents, except as modified herein, and modified on or after the date hereof
to provide that the expiry dates thereof do not exceed the Business Day prior to the Revolving
Credit Maturity Date, and the related bond documents shall remain in full force and effect and
shall continue to govern the IRB Letters of Credit. The Issuing Bank shall refund any fees paid by
the Borrower with respect to any of the IRB Letters of Credit before the date of this Agreement for
any period after the date of this Agreement or provide the Borrower a credit for such fees against
other amounts payable by the Borrower to the Issuing Bank as a Lender hereunder.


 


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2.5 Funding of Borrowings. (a) Each Lender shall fund its Applicable Percentage of each Loan to be made hereunder on the
proposed date thereof by wire transfer of immediately available funds by 2:00 p.m., in the case of
Revolving Loans or Term Loans, to the account most recently designated by the Agent for such
purpose by notice to the Lenders; provided that Swingline Loans shall be made as
provided in Section 2.3 hereof. The Agent will make such Loans available to the Borrower by
promptly crediting the amounts so received, in like funds, to the Loan Account; provided
that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in
Section 2.4(f) of this Agreement shall be remitted by the Agent to the appropriate Issuing Bank and
that Loans made to repay Swingline Loans as provided in Section 2.3 of this Agreement shall be
remitted by the Agent to the Swingline Lender.



(b) Unless the Agent shall have received notice from a Lender in accordance with Section 10.5
of this Agreement that such Lender will not make available to the Agent such Lender’s share of such
borrowing, the Agent may assume that such Lender has made
such share available on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable borrowing available to the
Agent, then the Defaulting Lender and the Borrower severally agree to pay to the Agent forthwith on
demand such corresponding amount with interest thereon, for each day from and including the date
such amount is made available to the Borrower to but excluding the date of payment to the Agent, at
(i) in the case of Defaulting Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Agent in accordance with banking industry rules on interbank compensation or (ii)
in the case of the Borrower, the interest rate applicable to ABR Loans. If a Defaulting Lender
pays such amount to the Agent, then such amount, less any interest paid from such amount to the
Agent, shall constitute such Lender’s Loan included in such borrowing. Any Defaulting Lender shall
pay on demand to the Borrower the amount equal to the excess of the interest actually paid by the
Borrower to the Agent over the interest which would have otherwise been payable by the Borrower to
such Defaulting Lender had such Defaulting Lender funded its share of the applicable borrowing,
plus interest on such amount at the rate applicable to ABR Loans.


 


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2.6
Interest.



(a) Rates. (i) The Revolving Notes shall bear interest until paid in full on the balance of principal
thereof from time to time unpaid, payable in arrears on the first day of each quarter for interest
accrued during the preceding quarter in the case of ABR Loans and in the case of Libor Loans
payable in arrears on the last day of the applicable Interest Period, and in the case of an
Interest Period in excess of three months also payable on the dates that are successively three
months after the commencement of such Interest Period. The Revolving Loans shall bear interest in
accordance with the Rate Option selected by the Borrower pursuant to the terms hereof.



(ii) The Swingline Note shall bear interest until paid in full payable monthly in arrears on
the first day of each month for interest accrued during the preceding month on the balance of
principal from time to time unpaid. The Swingline Loan shall bear interest as provided in Sections
2.3(a) and 2.6(b)(ii) of this Agreement.



(iii) The Term Loan Notes shall bear interest until paid in full on the balance of principal
thereof from time to time unpaid, payable in arrears on the first day of each quarter for interest
accrued during the preceding quarter in the case of ABR Loans and in the case of Libor Loans
payable in arrears on the last day of the applicable Interest Period, and in the case of an
Interest Period in excess of three months also payable on the dates that are successively three
months after the commencement of such Interest Period. The Term Loans shall bear interest in
accordance with the Rate Option selected by the Borrower pursuant to the terms hereof.



(b) Rate Options. (i) Unless the Borrower has selected a Libor Rate in accordance with the provisions of this
Agreement, the Borrower shall be deemed to have selected the ABR Option to apply to any
portion of a Revolving Note or Term Note not subject to a Libor Rate, and such rate shall continue
in effect until the earlier of when a Libor Rate and Interest Period are available and properly
selected, or until the applicable Revolving Note or Term Note is paid in full.



Notice by the Borrower of the selection of a Libor Rate or Interest Period for any Revolving
Loan or Term Loan, the amount subject thereto, and the applicable Interest Periods shall be
irrevocable. Such notice may be given to the Agent by a duly completed Request Certificate
executed by an Authorized Officer of the Borrower.



(ii) The Swingline Note shall bear interest at the ABR Option then in effect and such rate
shall continue until the Swingline Note is paid in full.



(c) Default Rate. Upon notice to the Borrower by the Agent of the occurrence of an Event of Default (which notice
the Agent shall be obligated to give at the direction of the Required Lenders) and during the
continuance thereof and after maturity, whether by acceleration or otherwise, the Revolving Notes,
the Term Notes and Swingline Note shall bear interest at the applicable Default Rate. Overdue fees
and other amounts payable by the Borrower under this Agreement other than principal (“Overdue
Amounts”) shall also bear interest at the applicable Default Rate. In no event shall the rate of
interest on the Revolving Notes, Term Notes or the Swingline Note, or the rate of interest
applicable to Overdue Amounts, exceed the maximum rate of interest authorized by law.


 


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(d) Late Charge. Upon notice to the Borrower by the Agent of the failure to make any regularly scheduled payment
of interest or principal on any Revolving Loan or Term Loan within ten (10) days of the due date
thereof (which notice the Agent shall be obligated to give at the direction of the Required
Lenders), the Borrower promises to pay to the Agent for the benefit of the Lenders a late charge
equal to five percent (5%) of the amount of any such overdue amount.



(e) Computation of Interest. Interest on ABR Loans shall be calculated on the basis of a year of 365 days, or 366 days during
a leap year, for the actual number of days elapsed. Interest on Libor Loans shall be calculated on
the basis of the actual number of days elapsed in a year of 360 days, which will result in a higher
effective annual rate. If any of the Notes are not paid when due, whether because such Notes
become due on a Saturday, Sunday or bank holiday or for any other reason, the Borrower will pay
interest thereon at the aforesaid rate until the date of actual receipt of payment by the holder of
the Notes.



(f) Rate Conversions and Continuations. For any Revolving Loan or Term Loan, the Borrower may elect to convert any portion of (i) an ABR
Loan to a Libor Loan, or (ii) a Libor Loan to an ABR Loan, or to continue any Libor Loan or ABR
Loan as a new loan of the same Type; provided, however, Libor Loans may only be
converted to ABR Loans or continued on the expiration date of the applicable Interest Period.



Subject to the foregoing, with respect to a Revolving Loan or Term Loan, the Borrower may
elect to convert any ABR Loan to a Libor Loan, or, to continue a Libor Loan as a new Libor Loan, by
Borrower giving irrevocable notice of such election to the Agent by 1:00 p.m. at least two (2)
Business Days prior to the requested rate change date and, in the case of any Libor Loan, such
conversion or continuation shall take place on the last day of the applicable Interest Period with
respect to the Revolving Loan or Term Loan being so converted or continued. Such notice may be
given by a duly completed and executed Request Certificate. Each such request to convert or
continue shall include the requested rate change date (which shall be a Business Day), the Rate
Option selected, and the amount to be converted or continued (which shall be in a principal amount
of $100,000 or more and in whole multiples of $100,000 in the case of conversion to, or
continuation as, a Libor Loan). If no Event of Default or Default is then existing at such time,
and the Borrower is in compliance with the terms of this Agreement as evidenced by the Agent’s
receipt of a properly completed and executed Request Certificate, such conversion or continuation
shall be made on the requested rate change date, subject to the foregoing limitations in connection
with the conversion or continuation of Libor Loans.



The Agent shall not incur any liability to Borrower in acting upon any telephonic notice which
the Agent believes to have been given by a duly authorized officer or other designated
representative of Borrower, and which is confirmed by delivery to the Agent from the Borrower or
the Borrower of a written or facsimile notice signed by Borrower or the Borrower, or for otherwise
acting in good faith hereunder.


 


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2.7 Prepayments and Payments.



(a) Optional Prepayments.



(i) ABR Loans. Borrower shall have the right to prepay at any time without premium
all or any portion of the ABR Loans.



(ii) Libor Loans. Borrower shall have the right to prepay without premium all or any
portion of the Libor Loans on the expiration day of the applicable Interest Period. If any Libor
Loan is prepaid at any other time, Borrower shall pay to the applicable Lender an amount equal to
the Breakage Fee within 10 days of notice thereof from the Agent, setting forth the amount of such
Breakage Fee.



All prepayments of the Revolving Loans or Term Loans shall be subject to a minimum amount of
$100,000, and incremental multiples of $100,000 thereafter.



(b) Mandatory Prepayments.



(i) Net Proceeds. Borrower shall make a mandatory prepayment to the Agent for the
account of the Lenders in accordance with their Applicable Percentages, promptly upon receipt
thereof, equal to (1) all (100%) of the Net Proceeds received by the Borrower or any Subsidiary
from (i) any Asset Sale (other than as described in (ii) hereof) in excess of $1,000,000 unless the
proceeds of such sale are reinvested in assets within one hundred twenty (120) days of the
occurrence of such Asset Sale; (ii) insurance, condemnation and similar recoveries other than such
recoveries that, within ninety (90) days after receipt thereof, are applied in the ordinary course
of business toward repair or replacement of the damaged property or such longer reasonable time
period as determined under the Borrower’s plan of restoration or replacement for such property
established within a ninety (90) day period after such occurrence provided such plan is acceptable
to the Agent in its reasonable judgment; and (iii) the reversion of Plan assets from an over-funded
Plan, but only to the extent of such over-funding and (2), at any time the Leverage Ratio is
greater than 2.00:1.00, fifty percent (50%) of the Net Proceeds received by the Borrower or any
Subsidiary from the issuance of any Equity Interests in Borrower or any Subsidiary (other than an
issuance to the Borrower by any Subsidiary or an issuance to a Subsidiary by another Subsidiary).
Borrower shall give to the Agent written notice of the occurrence of an event requiring a mandatory
prepayment hereunder promptly, but not later than within thirty (30) days after the occurrence of
such an event.



(ii) Revolving Credit Commitments Exceeded. If on any date, the Revolving Credit
Exposures of the Lenders exceed the Total Revolving Credit Commitment, or the Revolving Credit
Exposure of any Lender exceeds such Lender’s Revolving Credit Commitment, or the aggregate
principal amount of Swingline Loans exceeds the Swingline Commitment, or the total LC Exposure
exceeds the Letter of Credit Commitment, then in each case the Borrower shall, upon request
made by the Agent, prepay on such date the principal amount of Loans in an aggregate amount equal
to such excess or, in the case where total LC Exposure exceeds the Letter of Credit Commitment, pay
to the Agent an amount in cash equal to such excess to be held as security for the reimbursement
obligations of the Borrower in respect of Letters of Credit pursuant to a cash collateral agreement
to be entered into in form and substance reasonably satisfactory to the Agent, the Borrower and the
Issuing Bank.


 


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In the event of any repayment or prepayment of any Loan (other than a repayment or prepayment
of an ABR Loan prior to the end of the Availability Period with no related Revolving Credit
Commitment reduction), the Borrower shall pay all accrued interest on the principal amount repaid
or prepaid on the date of such repayment or prepayment.



The proceeds of any mandatory prepayments paid to or for the account of the Lenders as
provided herein shall be applied by the Lender entitled thereto on the applicable Indebtedness
hereunder, without any premium or penalty (except for applicable Breakage Fees), first to accrued
interest, fees and expenses payable on the Term Loans and the Revolving Loans, then to principal of
the Term Loans in the inverse order of the scheduled maturities thereof, then to principal of the
Revolving Loans.



2.8 Use of Proceeds. Borrower covenants to the Lenders that Borrower will use the proceeds borrowed under the
Revolving Credit to refinance the indebtedness of Borrower under the Existing Facility; to
partially refinance up to approximately $1,450,000 of an existing loan facility of D M E with PNC
Business Credit; and for Borrower’s ongoing working capital and business requirements including
Permitted Acquisitions other than the acquisition of the stock of D M E pursuant to the Stock
Purchase Agreement. The proceeds of the Term Loan shall be used solely for the acquisition of all
of the stock of D M E pursuant to the Stock Purchase Agreement.



2.9 Special Provisions Governing Libor Loans — Increased Costs. (a) In the event that on any Libor Interest Determination Date, any Lender shall have
determined (which determination shall be final, conclusive and binding) that:



(1) by reason of conditions in the London Interbank Market or of conditions affecting the
position of such Lender in such market occurring after the date hereof, adequate fair means do not
exist for establishing the Libor Rate, or



(2) by reason of (i) changes in any applicable law or governmental rule, regulation, guideline
or order (or any written interpretation thereof and including any new law or governmental rule,
regulation, guideline or order but excluding any of the foregoing relating to Taxes referred to in
Section 2.11 of this Agreement), or (ii) other circumstances affecting the Lenders or the London
Interbank Market or the position of the Lenders in such market (such as, but not limited to,
official reserve requirements), the Libor Rate does not represent the effective pricing to the
Lenders for U.S. dollar deposits of comparable amounts for the relevant period due to such
increased costs; then, and in either such event, the Lenders shall on such date (and in any event
as soon as possible after being notified of a new Interest Period) give notice by telephone,
confirmed in writing, to the Borrower or the Borrower and the Agent of such determination.



(b) Thereafter, the Borrower shall pay to the applicable Lender upon written request therefor,
such additional amounts as such Lender shall reasonably determine to be required to compensate such
Lender for such increased costs. A certificate as to such additional amounts submitted to the
Borrower and the Agent by a Lender shall, absent manifest error, and if prepared on a good faith
reasonable basis, be final, conclusive and binding upon the Borrower and such Lender.


 


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(c) In lieu of paying to a Lender such additional amounts as required by this Section 2.9, the
Borrower may exercise the following options:



(1) If such determination by a Lender relates only to a Libor Loan then being requested by the
Borrower pursuant to the terms hereof, the Borrower may, on such Libor Interest Determination Date
by giving notice by telephone to such Lender, withdraw such request, or



(2) The Borrower may, by giving notice by telephone to a Lender require such Lender to make
the Libor Loan then being requested in the form of an ABR
Loan or to convert its outstanding Libor Loan that is so affected into an ABR Loan at the end of
the then current Interest Period.



2.10 Required Termination and Repayment of Libor Loans. (a) In the event a Lender shall have reasonably determined, at any time (which determination
shall be final, conclusive and binding but shall be made only after consultation with the Borrower
and the Agent), that the making or continuation of any or all of the Libor Loans hereunder:



(1) has become unlawful by compliance by Lender in good faith with any applicable law,
governmental rule, regulation, guideline or order, or



(2) would cause Lender severe hardship as a result of a contingency occurring after the date
hereof which materially and adversely affects the London Interbank Market (such as, but not limited
to disruptions resulting from political or economic events); then, and in either such event, such
Lender shall on such date (and in any event as soon as possible after making such determination)
give telephonic notice to the Borrower and the Agent, confirmed in writing, of such determination,
identifying which of the Libor Loans was so affected.



(b) The Borrower then shall, upon the termination of the then current Interest Period
applicable to each Libor Loan so affected or, if earlier, when required by law, repay each such
affected Libor Loan, together with all interest accrued thereon.



(c) In lieu of the repayment to the applicable Lender required by Section 2.10(b) of this
Agreement, the Borrower may exercise the following options:



(1) If the determination by such Lender relates only to a Libor Loan then being requested by
Borrower pursuant to the terms hereof, the Borrower may, on such date by giving notice by telephone
to such Lender, withdraw such request, or



(2) The Borrower may, by Borrower giving notice by telephone to such Lender, require the
Lender to make the Libor Loan then being requested in the form of an ABR Loan, or to convert its
outstanding Libor Loan or Loans that are so affected into an ABR Loan at the end of the then
current Interest Period applicable to each such Libor Loan (or at such earlier time as repayment is
otherwise required to be made pursuant to the terms hereof). Such notice shall pertain only to the
Libor Loan outstanding or to be outstanding during each such affected Interest Period.


 


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2.11 Taxes. If any Taxes shall be payable, or ruled to be payable, by or to any Governmental Authority, by,
or in respect of any amount owing to, any Lender which has complied with Section 9.18 of this
Agreement, relating to any of the transactions contemplated by this Agreement (including, but not
limited to, execution, delivery, performance, enforcement, or payment of principal or interest of
or under the Notes or the making of any Libor Loan), by reason of any now existing or
hereafter enacted statute, rule, regulation or other determination (excluding any Taxes imposed on
or measured by the net income of any Lender), the Borrower will:



(a) pay on written request therefor all such Taxes, including interest and penalty, if any,



(b) promptly furnish the Agent and the Lenders with evidence of any such payment, and



(c) indemnify and hold the Agent and the Lenders and any holder or holders of the Notes
harmless and indemnified against any liability or liabilities with respect to or in connection with
any such Taxes or the payment thereof or resulting from any delay or omission to pay such Taxes.



Without prejudice to the survival of any other agreement of the Borrower under this Agreement, the
agreement and obligations of the Borrower contained in this Section 2.11 shall survive the
termination of this Agreement.



2.12 Commitment Fee. For each day during (i) the period beginning on the date of this Agreement and ending March 31,
2009, (ii) each full calendar quarter thereafter during the term of this Agreement and (iii) the
period beginning on the first day of the calendar quarter containing the Revolving Credit Maturity
Date and ending on the day before the Revolving Credit Maturity Date, the Borrower shall pay, on
demand, following each such calendar quarter or other time period, to the Agent for the account of
each Lender a fee equal to the sum of the Applicable Commitment Fee Rate times the actual
average daily amount by which the Total Revolving Credit Commitment on each such day exceeds the
sum of (x) the outstanding amount of Revolving Loans and (y) the outstanding amount of the total LC
Exposure of the Lenders multiplied by 1/360.


 


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2.13 Revolving Credit Commitment Termination and Reduction. (a) Unless previously terminated, the Revolving Credit Commitment shall terminate on the
Revolving Credit Maturity Date.



(b) The Borrower may, at any time by three (3) Business Days prior written notice from the
Borrower to the Agent, state the Borrower’s desire to reduce the Maximum Limit to any amount which
is not less than the aggregate of the then outstanding principal amount of Revolving Loans,
Swingline Loans and the aggregate Available Amount of all Letters of Credit outstanding at such
time, if any. Any reductions of the Maximum Limit shall not be reinstated at any future date and
any partial reduction shall be in the amount of $1,000,000 and in incremental multiples of
$1,000,000 thereafter. Two Business Days after receipt of such reduction notice, the obligation of
the Lenders to make Revolving Loans hereunder or purchase participations in Swingline Loans or
Letters of Credit hereunder shall be limited to the Maximum Limit as reduced pursuant to said
notice. Any such reduction of the Revolving Credit Commitment shall be accompanied by payment of
any applicable Breakage Fees.



2.14 Payments. All payments of interest, principal, fees and other expenses by the Borrower under this
Agreement unless otherwise specified shall be made in lawful currency of the United States of
America, and in immediately available funds without counterclaim or setoff and free and clear and
without reduction for any present or future income, stamp or other Taxes, deductions or
withholdings, all of which shall be paid by the Borrower for its own account except as otherwise
provided in Section 9.18 of this Agreement. All payments shall be made not later than 12:00 Noon
on the due date at the Agent’s office. All payments (unless stated herein otherwise) shall be
applied first to the payment of all fees, expenses and other amounts due to the Lenders (excluding
principal and interest), then to accrued interest, and the balance on account of outstanding
principal; provided, however, that after a Default or an Event of Default, payments
will be applied to the obligations of Borrower to the Lenders as the applicable Lender determines
in its sole discretion.



2.15 Payments with Respect to Defaulting Lenders. No payments of principal, interest or fees delivered to the Agent for the account of any
Defaulting Lender shall be delivered by the Agent to such Defaulting Lender. Instead, such
payments shall, for so long as such Defaulting Lender shall be a Defaulting Lender, be held by the
Agent, and the Agent is hereby authorized and directed by all parties hereto to hold such funds in
escrow and apply such funds as follows:



(a) First, if applicable, to any payments due to the Issuing Bank pursuant to Section
2.4(e) of this Agreement or the Agent under Section 2.1(b), Section 2.3 or Section 2.5 of this
Agreement; and



(b) Second, to Loans required to be made by such Defaulting Lender on any borrowing
date to the extent such Defaulting Lender fails to make such Loans; and



(c) Third, to the payment of any amount due to the Borrower under Section 2.5(b) of
this Agreement.



Notwithstanding the foregoing, upon the termination of the Commitments and the payment and
performance of all of the Indebtedness and other obligations of the Borrower under this Agreement
(other than those owing to a Defaulting Lender), any funds then held in escrow by the Agent
pursuant to the preceding sentence shall be distributed to each Defaulting Lender, pro rata in
proportion to amounts that would be due to each Defaulting Lender but for the fact that it is a
Defaulting Lender.


 


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2.16 Underwriting Fee. Upon the execution of this Agreement by all of the parties hereto, the Lenders shall have
earned, and the Borrower shall be obligated to pay on such date to the Agent for the account of the
Lenders the Remaining Underwriting Fee as set forth in the Fee Letter dated as of January 20, 2009
among the Borrower, HSBC Bank, Bank of America, N.A. and KeyBank National Association (the “Fee
Letter”).



2.17 Agent Fees. The Borrower shall pay to the Agent for its own account the agency fees in the amounts and on
the dates set forth in the Fee Letter.



2.18 Charge to Account. On the date that any principal or interest on the Notes or any fees or charges payable under
this Agreement are due, the Borrower authorizes HSBC Bank to debit account number 770-804683 of
the Borrower maintained with HSBC Bank on such date in an amount equal to such unpaid principal,
interest, fees or charges, as applicable.



2.19 Substitution of Lender. If (a) the obligation of any Lender to make or maintain Libor Loans has been suspended pursuant
to Section 2.10 of this Agreement when not all Lenders’ obligations to do so have been suspended,
(b) any Lender has demanded compensation under Sections 2.9 or 2.10 of this Agreement, or Yield
Protection under Section 2.20 of this Agreement or a payment for a change in Capital Adequacy
Regulations under Section 2.21 of this Agreement, in each case when all Lenders have not done so,
(c) any Lender is a Defaulting Lender or (d) any payment of Taxes by the Borrower is required under
Section 2.11 hereof, the Borrower shall have the right, if no Default then exists, to replace such
Lender (a “Replaced Lender”) with one or more other lenders (each, a “Replacement Lender”)
reasonably acceptable to the Agent, provided that (i) at the time of any replacement pursuant to
this Section 2.19, each Replacement Lender shall enter into one or more Assignment and Assumptions
pursuant to which the Replacement Lender shall acquire the Commitments and outstanding Loans and
other obligations of the Replaced Lender and, in connection therewith, shall pay to the Replaced
Lender in respect thereof an amount equal to the sum of (A) the amount of principal of, and all
accrued interest on, all outstanding Loans of the Replaced Lender, (B) the amount of all accrued,
but theretofore unpaid, fees and expenses, if applicable, owing to the Replaced Lender hereunder
and (C) the amount which would be payable by the Borrower to the Replaced Lender pursuant to
Section 2.7(a)(ii) of this Agreement, if any, if the Borrower prepaid at the time of such
replacement all of the Loans of such Replaced Lender outstanding at such time and (ii) all
obligations of the Borrower under this Agreement and the other Loan Documents then owing to the
Replaced Lender (other than those specifically described in clause (i) above in respect of which
the assignment purchase price has been, or is concurrently being, paid) shall be paid in full by
the Borrower to such Replaced Lender concurrently with such replacement. Upon the execution of the
respective Assignment and Assumption, the payment of amounts referred to in clauses (i) and (ii)
above and, if so requested by the Replacement Lender, delivery to the Replacement Lender of the
appropriate Note or Notes executed by the Borrower, the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to constitute a Lender hereunder. The provisions of
this Agreement shall continue to govern the rights and obligations of a Replaced Lender with
respect to any Loans made or any other actions taken by such Replaced Lender while it was a Lender.
Nothing herein shall release any Defaulting Lender from any obligation it may have to the
Borrower, the Agent, the Issuing Bank, Swingline Lender or any other Lender.


 


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2.20 Yield Protection. If the introduction of any change in, or change in the interpretation of, after the date of this
Agreement, any law or any governmental or quasi governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any change or modification thereof,



(a) has the effect of changing the basis of taxation of payments to any Lender in respect of
its Loans or other amounts due it hereunder (excluding income taxes and franchise taxes (imposed in
lieu of income taxes) imposed on the Agent or any Lender as a result of a present or former
connection between the Agent or such Lender and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority thereof or therein, other than
any such connection arising solely from the Agent or such Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, this Agreement or any other
Loan Document), or



(b) has the effect of increasing or deeming applicable any reserve, assessment, insurance
charge, special deposit or similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender, or



(c) imposes any other condition the result of which is to increase the cost to any Lender of
making, funding or maintaining loans or reduces any amount receivable by any Lender in connection
with loans, or requires any Lender to make any payment calculated by reference to the amount of
loans held or interest received by it (excluding for such purpose “Taxes” as to which Section 2.11
shall apply), by an amount reasonably deemed material by such Lender,



then, within fifteen (15) days of demand by such Lender, the Borrower shall pay such Lender that
portion of such increased expense incurred or reduction in an amount received which such Lender
reasonably determines is attributable to making, funding and maintaining its Loans or its
Commitments.



2.21 Changes in Capital Adequacy Regulations. If a Lender reasonably determines the amount of capital required or expected to be maintained by
such Lender or any corporation controlling such Lender is increased as a result of a Change (as
defined below), then, within fifteen (15) days of demand by such Lender, the Borrower shall pay
such Lender the amount necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender determines is attributable to this Agreement,
its Loans or its obligation to make Loans hereunder (after taking into account such Lender’s
policies as to capital adequacy). As used herein, “Change” means (a) any change after the date of
this Agreement in the Risk Based Capital Guidelines (as defined below) or (b) any adoption of or
change in any other law, governmental or quasi governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be maintained by any Lender
or any corporation controlling any Lender. “Risk Based Capital Guidelines” means (i) the risk
based capital guidelines in effect in the United States of America on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations promulgated by
regulatory authorities outside the United States of America implementing the July 1988 report
of the Basel Committee on Banking Regulation and Supervisory Practices Entitled “International
Convergence of Capital Measurements and Capital Standards,” including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.


 


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2.22 Lender Statements; Survival of Indemnity. To the extent reasonably possible, each Lender shall designate an alternate office, branch or
Affiliate with respect to its Libor Loans to reduce any liability of Borrower to such Lender under
Sections 2.9, 2.11, 2.20 and 2.21 of this Agreement, so long as such designation is not
disadvantageous to such Lender in any material respect. If any amount is due to a Lender under
Section 2.9, 2.11, 2.20 or 2.21 of this Agreement, then such Lender shall deliver a written
statement to the Borrower (with a copy to the Agent) as to the amount due. Such written statement
shall set forth in reasonable detail the calculations upon which such Lender determined such amount
and shall state that amounts determined in accordance with such procedures are being charged by
such Lender to other Borrower with credit facilities similar to this Agreement and credit
characteristics comparable to the Borrower as determined by such Lender and shall be final,
conclusive and binding on the Borrower in the absence of manifest error. Determination of amounts
payable under such sections in connection with a Libor Loans shall be calculated as though each
Lender funded such Loans through the purchase of a deposit of the type and maturity corresponding
to the deposit used as a reference in determining the interest rate applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in
any written statement of any Lender shall be payable on demand after receipt by the Borrower of
such written statement. The obligations of the Borrower under Sections 2.9, 2.20 and 2.21 of this
Agreement shall survive payment of the Indebtedness under this Agreement and termination of this
Agreement. The Borrower shall have no obligation to compensate any Lender with respect to amounts
provided in Sections 2.20 and 2.21 of this Agreement with respect to any period prior to the date
which is ninety (90) days prior to the date such Lender delivers its written statement hereunder
requesting compensation.



2.23 Expansion Option.



(a) Request for Increase. Provided there exists no Event of Default, and no Event of Default would be caused thereby and
the Total Revolving Credit Commitment has not been previously reduced in accordance with Section
2.13 hereof, upon notice to the Agent and the Lenders, the Borrower may on the Closing Date and
from time to time thereafter prior to the Revolving Credit Maturity Date request an increase in the
Revolving Credit Commitments so long as, after giving effect thereto, the Total Revolving Credit
Commitment does not exceed $65,000,000, and no such increase shall result in any increase in the
Letter of Credit Sublimit or the Swingline Sublimit. The Agent may arrange for any such increase
to be provided by one or more Lenders (each Lender so agreeing to an increase in its Revolving
Credit Commitment, an “Increasing Lender”) or by one or more new banks, financial institutions or
other entities (each such new bank, financial institution or other entity, an “Augmenting Lender”),
to increase their existing Revolving Credit Commitment or extend a Revolving Credit Commitment, as
the case may be; provided that each Augmenting Lender shall be subject to the
reasonable approval of the Agent and the Borrower, and each Increasing Lender and each Augmenting
Lender executes documentation in form and content satisfactory to the Agent to either become a party to this Agreement or reflect the increase of
such Lender’s Revolving Credit Commitment under this Agreement. At the time of sending a notice
requesting an increase in the Revolving Credit Commitments, the Agent shall specify the time period
within which each Lender is requested to respond which shall in no event be less than ten (10)
Business Days from the date of delivery of such notice to the Lenders (“Notice Period”).




 


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(b) Lender Elections to Increase. Each Lender shall notify the Agent within the Notice
Period whether or not it agrees to increase its Revolving Credit Commitment and the amount thereof.
Any Lender not responding within such time period shall be deemed to have declined to increase its
Revolving Credit Commitment (any Lender declining to increase its Revolving Credit Commitment, a
“Non-Increasing Lender”).



(c) Notifications by Agent and Borrower. The Agent shall notify the Borrower and each
Lender of the Lenders’ responses to each request made hereunder. The Agent shall notify the
Borrower and the Lenders of the name of each Augmenting Lender and the applicable Revolving Credit
Commitment of such Lender.



(d) Effective Date and Allocations. If the Revolving Credit Commitments are increased as
provided in this Section, the Agent and the Borrower shall determine the effective date (“Increase
Effective Date”) and the final allocation of such increase. The Agent shall promptly notify the
Lenders of the final allocation of such increase and the Increase Effective Date.



(e) Conditions to Effectiveness of Increase. As a condition precedent to such increase,
the Borrower shall deliver to the Agent a certificate dated as of the Increase Effective Date (in
sufficient copies for each Lender) signed by an Authorized Officer of Borrower (i) certifying and
attaching the resolutions adopted by Borrower approving or consenting to such increase, and
(ii) certifying that, before and after giving effect to such increase, (A) the representations and
warranties contained in Article IV and the other Loan Documents are true and correct on and as of
the Increase Effective Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct as of such earlier
date, and except that for purposes of this Section 2.23, the representations and warranties
contained in Section 4.7 shall be deemed to refer to the most recent statements furnished pursuant
to clauses (a) and (b), respectively, of Section 5.2, and (B) no Event of Default or Default
exists.



(f) Revolving Credit Commitment Adjustments. Each of the parties hereto agrees that the
Agent may, in consultation with Borrower, take any and all actions as may be reasonably necessary
to ensure that after giving effect to any increase in the Revolving Credit Commitments pursuant to
this Section, the outstanding Loans (if any) are held by the Lenders with Revolving Credit
Commitments in accordance with their new Applicable Percentages of the Revolving Credit as shown on
an updated Schedule 2.1 which will be attached to this Agreement. This may be accomplished at the
discretion of the Agent: (i) by requiring the outstanding Loans to be prepaid with the proceeds of
new Loans; (ii) by causing the Non-Increasing Lenders to assign portions of their outstanding Loans
to Increasing Lenders and Augmenting Lenders; (iii) by permitting the Loans outstanding at the time
of any increase in the Revolving Credit Commitment pursuant to this Section 2.23 to remain
outstanding until the last days of the respective Interest Periods, therefor, even though the
Lenders would hold such Loans
other than in accordance with their new Applicable Percentages of the Revolving Credit; or (iv) by
any combination of the foregoing.


 


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ARTICLE III. CONDITIONS TO THE CREDIT




The Lenders’ agreement to lend, contained in this Agreement, shall be effective only upon
fulfillment of the following conditions at or prior to the Closing Date or such date or time as
specifically provided herein.



3.1 No Default. (i) There not existing at the time a Loan is to be made any Event of
Default or Default and (ii) such Lender not reasonably believing that any Event of Default or
Default so exists or, if such Loan is made, will occur or exist.



3.2 Representations and Warranties. (i) Each representation and warranty made in this
Agreement being true and correct as of the Closing Date and, except to the extent updated in a
certificate executed by an Authorized Officer of Borrower and received by each Lender before the
time a Loan is to be made, as of such time, (ii) each other representation and warranty made to any
Lender by or on behalf of the Borrower pursuant to any Loan Document before the time such Loan is
to be made being true and correct in all material respects as of the date thereof, (iii) each
financial statement provided to any Lender by or on behalf of the Borrower pursuant to any Loan
Document before the time such Loan is to be made having fairly presented the financial information
it purports to reflect as of the date thereof and (iv) such Lender not reasonably believing that
(A) any such representation or warranty, except to the extent so updated, was or is other than true
and correct in all material respects as of any date or time of determination of the truth or
correctness thereof, (B) any event or condition the occurrence, non-occurrence, existence or
non-existence of which is a subject of any such representation or warranty would have any Material
Adverse Effect or (C) any such financial statement did not so fairly present such information as of
the date thereof.



3.3 Proceedings. Such Lender being satisfied as to each corporate or other proceeding of
the Borrower or any Subsidiary in connection with any transaction contemplated by this Agreement.



3.4 Closing Conditions. The receipt by each Lender on the date of this Agreement, or the
Swingline Lender or the Issuing Bank, as appropriate, unless otherwise indicated, of the following,
in form and substance satisfactory to each Lender:



(a) A Revolving Note and Term Note payable to the order of such Lender, appropriately
completed and duly executed by the Borrower;



(b) A request for the Revolving Loan determined by the Agent to meet the requirements for such
a request set forth in Section 2.1 of this Agreement;



(c) A Swingline Note payable to the order of the Swingline Lender appropriately completed and
duly executed by the Borrower;


 


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(d) Each of the Guarantors shall have executed and delivered to the Agent a Guaranty;



(e) Borrower (i) shall have executed and delivered to Agent an amended and restated security
agreement (“Borrower Security Agreement”) in form and content satisfactory to the Agent granting to
the Agent for the benefit of the Lenders, the Agent and the Issuing Bank, security interests
(“Borrower Security Interests”) in all of Borrower’s personal property and fixtures (other than the
14,535 shares of common stock of Tel-Instrument Electronics Corp. currently owned by Borrower),
including 100% of the issued and outstanding Equity Interest in each Domestic Subsidiary other than
Astronics Air LLC, whether now owned or hereafter acquired, wherever located, and any and all
proceeds thereof (“Borrower Collateral”), as continuing collateral security for the payment of any
and all Indebtedness and liabilities, whether now existing or hereafter incurred, of the Borrower
to the Agent, the Lenders and the Issuing Bank arising under this Agreement and the Loan Documents,
including the IRB Letters of Credit, the Existing Letter of Credit, and the documents executed and
delivered in connection therewith; and (ii) hereby authorizes the Agent to file appropriate
financing statements (“Borrower Financing Statements”) to perfect the Borrower Security Interests,
which Borrower Security Interests shall, at the time of the execution of this Agreement, be
superior to all other liens and security interests in such property except as to liens and security
interests approved by the Agent;



(f) Each Guarantor (i) shall have executed and delivered to the Agent an amended and restated
security agreement (together, the “Guarantor Security Agreement”) in form and content satisfactory
to the Agent granting to the Agent for the benefit of the Lenders and the Issuing Bank, security
interests (“Guarantor Security Interests”) in all of Guarantor’s respective personal property and
fixtures, including 100% of the issued and outstanding Equity Interest in each Domestic Subsidiary,
and 65% of the issued and outstanding Equity Interest in Luminescent Systems of Canada Inc.,
whether now owned or hereafter acquired, wherever located, and any and all proceeds thereof
(collectively, the “Guarantor Collateral”), as continuing collateral security for the payment of
any and all Indebtedness and liabilities, whether now existing or hereafter incurred, of the
Guarantor to the Agent, the Lenders and the Issuing Bank arising under its Guaranty and the Loan
Documents, including the IRB Letters of Credit, the Existing Letter of Credit, and the documents
executed and delivered in connection therewith; and (ii) hereby authorizes the Agent to
file appropriate financing statements (together, the “Guarantor Financing Statements”) to perfect
the Guarantor Security Interests, which Guarantor Security Interests shall, at the time of the
execution of this Agreement, be superior to all other liens and security interests in such property
except as to liens and security interests approved by the Agent;



(g) An opinion of Hodgson Russ LLP, counsel to the Borrower, addressed to the Agent, each
Lender and counsel to the Agent, and in form and content satisfactory to the Agent as to the
matters referred to in Article IV of this Agreement;



(h) Evidence that each of the Borrower and the Guarantors are (i) in good standing under the
Law of the jurisdiction in which it is organized and (ii) duly qualified and in good standing as a
foreign Person of its type authorized to do business in each jurisdiction in which such
qualification is necessary except where the failure to so qualify would not have any Material
Adverse Effect;


 


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(i) A copy of the certificate or articles of incorporation or organization, by-laws, operating
or partnership agreement or other charter, organizational or governing document of each of the
Borrower and the Guarantors, and certified by their respective Secretary, or a Person having
functions with respect to it similar to those of the Secretary of a corporation, to be complete and
accurate;



(j) Evidence of the taking and the continuation in full force and effect of each corporate or
other action of the Borrower and each Guarantor, or any other Person necessary to authorize the
obtaining of all Loans by the Borrower, the execution, delivery and performance of each Loan
Document by each Person other than any Lender and the imposition or creation of each security
interest, mortgage and other lien and encumbrance imposed or created pursuant to any Loan Document;



(k) Evidence (i) that no asset subject to any mortgage, security interest or other lien or
encumbrance pursuant to any Collateral Document is subject to any other security interest, mortgage
or other lien or encumbrance, except for Permitted Encumbrances, and (ii) of the making of each
recording and filing, and of the taking of each other action, deemed necessary or desirable by the
Agent at the sole option of the Agent to perfect or otherwise establish, preserve or protect the
priority of any such security interest, mortgage or other lien or encumbrance;



(l) Evidence that each requirement contained in any Loan Document with respect to insurance is
being met;



(m) Each additional agreement, instrument and other writing (including, but not limited to,
each agreement, instrument and other writing intended to be filed or recorded with any Governmental
Authority to perfect or otherwise establish, preserve or protect the priority of any security
interest, mortgage or other lien or encumbrance created or imposed pursuant to any Loan Document;



(n) Evidence that the Borrower has satisfied each of the Initial Conditions set forth in the
Commitment Letter dated as of January 20, 2009 among the Borrower, HSBC Bank, Bank of America, N.A.
and KeyBank National Association including, without limitation, that the acquisition of all of the
stock of D M E has been closed in accordance with the terms of the Stock Purchase Agreement;



(o) Payment of all costs and expenses incurred as of the Closing Date by the Agent and payable
pursuant to this Agreement, or arrangements for payment satisfactory to the Agent for payment
thereof having been made;



(p) The Seller Notes and Subordination Agreement shall be in form and substance satisfactory
to the Agent and the Lenders; and



(q) The Borrower and the Guarantors shall have provided to the Agent and the Lenders such
other items and shall have satisfied such other conditions as may be reasonably required by the
Agent or the Lenders.


 


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3.5 Conditions to Subsequent Borrowing and Issuance. The obligation of the appropriate
Lender to make a Loan to Borrower or issue or renew a Letter of Credit (collectively, “Issuance”)
and the right of the Borrower to request a Loan or Issuance after the date of this Agreement shall
each be subject to the further conditions that on the date of the making of such Loan or such
Issuance:



(a) Each of the conditions listed in Section 3.4 shall have been satisfied or waived in
accordance with this Agreement.



(b) The following statements shall be true and the Agent shall have received a Request
Certificate signed by an Authorized Officer of Borrower dated the date of such Loan or Issuance
stating that:



(i) there does not exist at the time such Loan or Issuance is to be made any Event of Default,
Default or Material Adverse Effect; and



(ii) each representation and warranty made in this Agreement and any Loan Document to which
the Borrower is a party and in any certificate, document or financial or other statement furnished
at any time thereunder is true, correct and complete in all material respects (without duplication
of materiality qualifiers) with the same effect as though such representations and warranties had
been made as of the time such Loan or Issuance is to be made, except to the extent any such
representation and warranty relates solely to an earlier date or to the extent any such
representation and warranty has been updated in a certificate executed by an Authorized Officer and
received by the Agent and the Lenders before the time such Loan or Issuance is to be made, and any
such updated representation and warranty is acceptable to the Required Lenders.



(c) The Agent shall have received such other approvals, opinions or documents as the Agent may
reasonably, in both time and scope, request, and all legal matters incident to such Loan or
Issuance shall be satisfactory to counsel to the Agent.



3.6 Subsequent Extensions of Credit. Subsequent to the satisfaction of the conditions set
forth herein, each request to the Agent for a Loan or Letter of Credit after the date hereof shall
constitute confirmation by the Borrower of all the factual matters set forth in the form of
Compliance Certificate as of the date of such request in the same manner as if a written Compliance
Certificate had been delivered, and such factual matters shall be true in all material respects on
the date such Loan or Letter of Credit is made or issued. No Loan or Letter of Credit shall be
made if such certification is not made without qualification.



ARTICLE IV. REPRESENTATIONS AND WARRANTIES





The Borrower makes the following representations and warranties:



4.1 Good Standing and Authority. Borrower, each Guarantor and each other Subsidiary is a
corporation, duly organized, validly existing, and in good standing under the laws of the state of
its incorporation or other place of organization; has powers and authority
to transact the business in which it is engaged; is duly licensed or qualified and in good standing
in each jurisdiction in which the conduct of such business requires such licensing or such
qualification except where failure to qualify would not reasonably be expected to have a Material
Adverse Effect; and has all necessary power and authority to enter this Agreement and to execute,
deliver and perform this Agreement, any Note and any other document executed in connection with
this Agreement, all of which have been duly authorized by all proper and necessary corporate and
shareholder action.


 


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4.2 Valid and Binding Obligation. This Agreement, the Notes and any other document
executed in connection herewith have been duly executed and delivered by the Borrower and
constitute the legal, valid and binding obligations of the Borrower and each Guarantor, as the case
may be, enforceable against the Borrower or such Guarantor, as the case may be, in accordance with
their respective terms.



4.3 Good Title. Each of the Borrower, each Guarantor and each other Subsidiary has good
and marketable title to all of its assets, none of which is subject to any mortgage, indenture,
pledge, lien, conditional sale contract, security interest, encumbrance, claim, trust or charge
except Permitted Encumbrances.



4.4 No Pending Litigation. There are not any actions, suits, proceedings (whether or not
purportedly on behalf of the Borrower or any Guarantor or any other Subsidiary) or investigations
pending or, to the knowledge of the Borrower, threatened against the Borrower, any Guarantor or any
other Subsidiary or any basis therefore which reasonably could be expected to have a Material
Adverse Effect, or which question the validity of this Agreement, the Notes or other documents
required by this Agreement, or any action taken or to be taken pursuant to any of the foregoing.



4.5 No Consent or Filing. No consent, license, approval or authorization of, or
registration, declaration or filing with, any court, Governmental Authority or other Person is
required on the part of the Borrower or any Subsidiary in connection with the valid execution,
delivery or performance of this Agreement, the Notes or other documents required by this Agreement
or in connection with any of the transactions contemplated thereby other than the filing of
financing statements in connection with the Borrower Security Agreement and the Guarantor Security
Agreement.



4.6 No Violations. Neither the Borrower nor any Guarantor or other Subsidiary is in
violation of any term of its certificate of incorporation or by-laws or other organizational
documents, or of any mortgage, borrowing agreement, the Subordination Agreement or the Seller
Notes, or any other instrument or agreement pertaining to Indebtedness for borrowed money which
might reasonably be expected to result in a Material Adverse Effect, and will not result in the
creation of any Lien upon any properties or assets except in favor of the Agent and the Lenders.
Neither the Borrower nor any Guarantors or other Subsidiary is in violation of any term of any
other indenture, instrument, or agreement to which it is a party or by which it may be bound,
resulting, or which might reasonably be expected to result, in a Material Adverse Effect. Neither
the Borrower nor any Subsidiary is in violation of any order, writ, judgment, injunction or decree
of any court of competent jurisdiction or of any statute, rule or regulation of any competent
governmental authority which might reasonably be expected to
result in a Material Adverse Effect. The execution and delivery of this Agreement, the Notes and
other documents required by this Agreement and the performance of all of the same is and will be in
compliance with the foregoing and will not result in any violation or result in the creation of any
mortgage, lien, security interest, charge or encumbrance upon any properties or assets except in
favor of the Agent and the Lenders. There exists no fact or circumstance not disclosed in this
Agreement, in the documents furnished in connection herewith, the Borrower’s filings under the
Exchange Act, or in the financial projections furnished to the Lenders which has, or could
reasonably be expected to have, a Material Adverse Effect, except those facts and circumstances
which generally affect all Persons engaged in the Borrower’s lines of business.


 


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4.7 Financial Statements. The Borrower has furnished to the Lenders Consolidated financial
statements showing the Borrower’s and all Subsidiaries’ financial condition as of December 31, 2007
and the results of operations and their cash flows for the fiscal year then ended audited by Ernst
& Young LLP, which statements fairly present their Consolidated financial position and the results
of their operations as of the date and for the period referred to and have been prepared in
accordance with GAAP consistently applied throughout the interval involved. Since the date of such
financial statements to the date of execution hereof, there have not been any materially adverse
changes in the Consolidated financial condition of the Borrower and the Subsidiaries from that
disclosed in such financial statements. None of the property or assets shown in the Consolidated
financial statements delivered to the Lenders has been materially adversely affected as the result
of any fire, explosion, accident, flood, drought, storm, earthquake, condemnation, requisition,
statutory or regulatory change, act of God, or act of public enemy or other casualty, whether or
not insured.



4.8 Tax Returns. The Borrower, the Guarantors and any other Domestic Subsidiaries have
duly filed all federal and other tax returns required to be filed except where an extension has
been obtained and has duly paid all taxes required by such returns through its fiscal year ending
December 31, 2007. Federal income tax liability of the Borrower, the Guarantors and the other
Domestic Subsidiaries has been reviewed by the United States Internal Revenue Service through its
fiscal year ending December 31, 2004, and the Borrower has not received any assessments by the
Internal Revenue Service or other taxing authority for additional unpaid taxes.



4.9 Federal Regulations. Neither the Borrower nor any Guarantor or any other Subsidiary is
engaged principally, or as one of its important activities, in the business of extending or
arranging for the extension of credit for the purpose of purchasing or carrying “margin stock” (as
defined in Regulation U issued by the Board of Governors of the Federal Reserve System). Except
for the stock owned by the Borrower and described on Schedule 6.3, neither the Borrower nor any
Guarantor or other Subsidiary owns nor intends to carry or purchase any such “margin stock”, and
the Borrower will not use the proceeds of any Loan or Letters of Credit to purchase or carry (or
refinance any borrowing the proceeds of which were used to purchase or carry) any such “margin
stock”. Neither the Borrower nor any Guarantor or other Subsidiary is subject to regulation with
respect to the incurrence of Indebtedness under the Investment Company Act of 1940, as amended, the
Interstate Commerce Act as amended, the Federal Power Act, as amended, the Energy Policy Act of
2005, as amended, or any applicable state public utility law.


 


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4.10 Compliance with ERISA. Compliance by the Borrower with the provisions hereof and in
the incurrence of the Indebtedness under this Agreement will not involve any prohibited transaction
within the meaning of ERISA or Section 4975 of the Code. The Borrower and their Subsidiaries
(i) have fulfilled all obligations under minimum funding standards of ERISA and the Code with
respect to each Plan, (ii) have satisfied all respective contribution obligations in respect of
each Multiemployer Plan and each Multiple Employer Plan, (iii) are in compliance with all other
applicable provisions of ERISA and the Code with respect to each Plan, each Multiemployer Plan and
each Multiple Employer Plan, except to the extent failure to comply has not had, and will not have,
a Material Adverse Effect and (iv) have not incurred any liability under the Title IV of ERISA to
the PBGC with respect to any Plan, any Multiemployer Plan, any Multiple Employer Plan, or any trust
established thereunder. No Plan or trust created thereunder has been terminated. There has been
no Reportable Event with respect to any Plan or trust created thereunder or with respect to any
Multiemployer Plan or Multiple Employer Plan, which Reportable Event will or could result in the
termination of such Plan, Multiemployer Plan or Multiple Employer Plan and give rise to a material
liability of the Borrower or any ERISA Affiliate in respect thereof. Neither Borrower nor any
ERISA Affiliate is at the date of this Agreement, or has been at any time within the two years
preceding the date of this Agreement, an employer required to contribute to any Multiemployer Plan
or Multiple Employer Plan, or a “contributing sponsor” (as such term is defined in Section 4001 of
ERISA) in any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor any ERISA
Affiliate has any contingent liability with respect to any post-retirement “welfare benefit plan”
(as such term is defined in ERISA) except as has been disclosed in accordance with GAAP in the
financial statements delivered to the Lenders in accordance with this Agreement.



4.11 Subsidiaries; Affiliates. The Borrower has no (a) Subsidiaries except (i) as listed
on Schedule 4.11 to this Agreement or (b) Affiliates, other than its Subsidiaries.



4.12 Compliance. The present and anticipated conduct of the business and operations of the
Borrower and each Subsidiary and the present and anticipated ownership and use of each asset of the
Borrower and each Subsidiary are in compliance in each material respect with each applicable
statute, regulation and other law (including, but not limited to, the Environmental Protection Act,
the Occupational Health and Safety Act, the Comprehensive Environmental Response, Compensation and
Liability Act and the Resource Conservation and Recovery Act), except where noncompliance would not
result in a Material Adverse Effect. Each authorization, approval, permit, consent, franchise and
license from, each registration and filing with, each declaration, report and notice to, and each
other act by or relating to, any Person necessary for the present or anticipated conduct of the
business or operations of the Borrower and each Subsidiary or for the present or anticipated
ownership or use of any material asset of the Borrower and each Subsidiary has been duly obtained,
made, given or done, and is in full force and effect, except where failure to so obtain, make, give
or do would not have a Material Adverse Effect.



4.13 Fiscal Year. The fiscal year of the Borrower is the year ending December 31.


 


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4.14 Default. There does not exist any Default or Event of Default as of the Closing Date
nor will any Default or Event of Default begin to exist immediately after the execution and
delivery hereof.



4.15 Indebtedness for Borrowed Money. As of the Closing Date, the Borrower and its
Subsidiaries have no Indebtedness arising from the borrowing of any money, except for Indebtedness
(a) to the Lenders under this Agreement, (b) the Seller Notes, (c) outstanding on the date of this
Agreement pursuant to any lease, loan or credit facility fully and accurately described in
Schedule 6.2 to this Agreement, (d) incurred with the prior written consent of the Agent, and (e)
owing to the Borrower or a Subsidiary.



4.16 Securities. Each outstanding share of stock, debenture, bond, note and other security
of the Borrower has been validly issued in full compliance with each statute, regulation and other
law, and, if a share of stock, is fully paid and nonassessable.



4.17 Environmental Matters. (a) No above ground or underground storage tanks
containing Hazardous Substances are or have been located on any property owned, leased or operated
by the Borrower or any Subsidiary, except for storage tanks containing diesel fuel, gasoline or
waste oil, which tanks are in material compliance with all applicable laws, rules and regulations.



(b) No property owned, leased or operated by the Borrower or any Subsidiary is or has been
used for the storage or Disposal of any Hazardous Substance, except in the ordinary course of its
business in material compliance with applicable Environmental Laws, or for the treatment of
Hazardous Substances.



(c) No unpermitted Release of a Hazardous Substance has occurred or is threatened on, at, from
or near any property owned, leased or operated by the Borrower or any Subsidiary, except where such
unpermitted Release does not have, and could not reasonably be expected to have, a Material Adverse
Effect.



(d) Neither the Borrower nor any Subsidiary is subject to any existing, pending or threatened
suit or claim, notice of material violation or any investigation under any Environmental Law, that
in any such case could reasonably be expected to result in a Material Adverse Effect.



(e) The Borrower and each Subsidiary are in compliance with all Environmental Laws, except
where noncompliance does not have, and could not be reasonably expected to have, a Material Adverse
Effect.



(f) All Environmental Permits have been obtained and are in full force and effect, except
where the failure to obtain such Environmental Permit is not likely to have a Material Adverse
Effect.


 


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(g) There are no agreements, consent orders, decrees, judgment, license or permit conditions
or other orders or directives of any federal, state or local court,
governmental agency or authority relating to the past, present or future ownership, use,
operation, sale, transfer or conveyance of any property owned, leased or operated by the Borrower
or any Subsidiary which required any material change in condition or any work, repairs,
construction, containment, clean up, investigation, study, removal or other remedial action or
material capital expenditures with respect to such property.



4.18 Burdensome Contracts; Labor Relations. Neither the Borrower nor any Subsidiary (a) is
subject to any burdensome contract, agreement, corporate restriction, judgment, decree or order,
(b) is a party to any labor dispute affecting any bargaining unit or other group of employees
generally, (c) is subject to any strike, slowdown, walk out or other concerted interruptions of
operations by employees of the Borrower or any Subsidiary, whether or not relating to any labor
contracts, (d) is subject to any pending or, to the knowledge of the Borrower, threatened, unfair
labor practice complaint, before the National Labor Relations Board, (e) is subject to any pending
or, to the knowledge of the Borrower, threatened grievance or arbitration proceeding arising out of
or under any collective bargaining agreement, (f) is subject to any significant pending or, to the
knowledge of the Borrower, threatened strike, labor dispute, slowdown or stoppage, or (g) is, to
the knowledge of the Borrower, involved or subject to any union representation organizing or
certification matter with respect to the employees of the Borrower or any Subsidiary, except (with
respect to any matter specified in any of the above clauses) for such matters as, individually or
in the aggregate, which have not had or will not have a Material Adverse Effect.



4.19 Liens. Once executed and delivered, each of the Collateral Documents creates, as
security for the Indebtedness of the Borrower to the Lenders or the obligations for the Guarantors
under their respective Guaranty, a valid and enforceable, and upon making the filings and
recordings referenced in the next sentence, perfected Lien on all of the Collateral subject thereto
from time to time, in favor of the Agent for the benefit of the Lenders, superior to and prior to
the rights of all third persons and subject to no other Liens, except that the Collateral under the
Collateral Documents may be subject to Permitted Encumbrances. No filings or recordings are
required in order to perfect the Liens created under any Collateral Document except for filings or
recordings required in connection with any such Collateral Document that shall have been made, or
for which satisfactory arrangements have been made, upon or prior to the execution and delivery
thereof. All recording, stamp, intangible or other similar taxes required to be paid by any Person
under applicable legal requirements or other laws applicable to the property encumbered by the
Collateral Documents in connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement thereof have been paid.



4.20 Intellectual Property. Each of the Borrower, the Guarantors and other Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, service marks, copyrights, technology,
know-how and process necessary for the conduct of its business as currently conducted
(collectively, the “Intellectual Property”) except for those the failure to own or license which
has not had or will not have a Material Adverse Effect. No claim has been asserted and is pending
by any person challenging or questioning the use by the Borrower, any Guarantor or any other
Subsidiaries of any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does Borrower, any Guarantor or any other Subsidiaries know of any valid
basis for any such claim, to the knowledge of the Borrower the use of such Intellectual
Property by the Borrower, any Guarantors and any other Subsidiaries does not infringe on the rights
of any Person, and, to the knowledge of the Borrower, no such Intellectual Property of the
Borrower, any Guarantor and any other Subsidiaries has been infringed, misappropriated or diluted
by any other Person except for such claims, infringements, misappropriation and dissolution that,
in the aggregate, has not had or will not have a Material Adverse Effect.


 


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4.21 Anti-Terrorism Laws.



(a) General. Neither the Borrower, any Guarantor, nor any of their Subsidiaries or
Affiliates, 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 the Borrower, any Guarantor nor any of their
Subsidiaries or Affiliates or their respective agents acting or benefiting in any capacity in
connection with the Loans or other transactions hereunder, is any of the following (each a “Blocked
Person”):



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



(2) 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;



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



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



(5) 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




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



Neither the Borrower, any Guarantor nor any other Subsidiary or Affiliate of the Borrower or,
to the knowledge of the Borrower, any of its agents acting in any capacity in connection with the
Loans or other transactions hereunder (i) conducts any business or engages in making or receiving
any contributions 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.


 


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4.22 Accuracy of Information, etc. No statement or information contained in this
Agreement, any other Loan Document, the Confidential Information Materials or any other certificate
furnished by or on behalf of Borrower or the Guarantors to the Agent or the Lenders, or any of
them, for use in connection with the transactions contemplated by this Agreement or the other Loan
Documents, contained as of the date such statement, information or certificate was so furnished (or
in the case of the Confidential Information Materials, as of the date of this Agreement), any
untrue statement of a material fact or omitted to state a material fact necessary to make the
statements contained herein or therein not misleading in any material respect. The financial
statements contained in the materials referenced above, in conformity with GAAP, require management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. In addition, the projections and
pro forma financial information contained in the materials referenced above are not guarantees of
future performance and are subject to factors, risks and uncertainties, the impact or occurrence of
which could cause actual results to differ materially from the expected results described in the
projections and pro forma financial information.



4.23 Solvency. The Borrower has received consideration that is the reasonable equivalent
value of the obligations and liabilities that the Borrower has incurred to the Agent, the Issuing
Bank and the Lenders under the Loan Documents. The Borrower now has capital sufficient to carry on
its business and transactions and all business and transactions in which it is about to engage and
is now solvent and able to pay its debts as they mature and the Borrower, as of the Closing Date
and after the closing of the transactions contemplated by the Stock Purchase Agreement, owns
property having a value, both at fair valuation and at present fair salable value, greater than the
amount required to pay the Borrower’s debts; and the Borrower is not entering into the Loan
Documents with the intent to hinder, delay or defraud its creditors. For purposes of this Section,
“debt” means any liability on a claim, and “claim” means (y) right to payment
whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (z) right to
an equitable remedy for breach of performance if such breach gives rise to a payment, whether or
not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.



ARTICLE V. AFFIRMATIVE COVENANTS




As long as this Agreement is in effect and until such time as the Commitments have been
terminated, no Notes remain outstanding and the Loans, together with all interest, fees, charges
and expenses under the Loan Documents have been paid in full, the Borrower will:



5.1 Payments. Duly and punctually pay the principal of and interest on all Indebtedness
and all fees incurred by Borrower pursuant to this Agreement in the manner set forth in this
Agreement.


 


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5.2 Financial Reporting Requirements. Furnish to the Agent and each Lender (a) within
forty-five (45) days after the end of each quarter of each of its fiscal years, unaudited financial
statements of the Borrower and its Subsidiaries, which statements shall
consist of Consolidated and summary consolidating balance sheets as of the end of such quarter, and
related statements of income, covering the period from the end of the Borrower’s immediately
preceding fiscal year to the end of such quarter certified to be correct by the President or
Vice-President-Finance and Treasurer of the Borrower, who shall also furnish to the Agent and each
Lender a duly completed and executed Compliance Certificate; (b) within ninety (90) days after the
end of each of its fiscal years, audited Consolidated financial statements of the Borrower and its
Subsidiaries, which shall consist of a Consolidated and consolidating balance sheet as of the end
of such year and the related statements of income, retained earnings and cash flows covering such
fiscal year, audited by and together with an opinion of, in the case of such Consolidated financial
statements, Ernst & Young LLP, or other independent certified public accountants satisfactory to
the Agent, together with a Compliance Certificate from the President or Vice President-Finance and
Treasurer of the Borrower; (c) promptly, after their preparations copies of all such proxy
statements, financial statements and reports which the Borrower sends to its stockholders, and
copies of all regular, periodic and special reports, as well as all registration statements, which
the Borrower files with the Securities and Exchange Commission; (d) promptly after the filing
thereof with the Pension Benefit Guaranty Corporation, a copy of each annual report filed with
respect to each Plan; (e) by the end of each of its fiscal years, a forecast of the statements of
income and cash flows as of and through the close of its following fiscal year of the Borrower and
the Subsidiaries; and (f) such additional information, reports or statements (including, without
limitation, a duly completed and executed Compliance Certificate) as the Agent may from time to
time reasonably request regarding the financial and business affairs of the Borrower and the
Subsidiaries.



5.3 Notices. Promptly notify the Agent in writing of (a) any pending or future audits of
the Borrower’s or any Guarantor’s or other Subsidiary’s federal income tax return by the Internal
Revenue Service as soon as the Borrower has knowledge thereof, and the results of each such audit
after its completion if such results could reasonably be expected to have a Material Adverse
Effect; and (b) any default by the Borrower or any Guarantor or other Subsidiary in the performance
of, or any modifications of, any of the terms or conditions contained in this Agreement, any other
agreement, mortgage, indenture or instrument to which the Borrower or any Guarantor or other
Subsidiary is a party or which is binding upon the Borrower or any Guarantor or other Subsidiary
and of any default by the Borrower or any Guarantor or other Subsidiary in the payment of any of
its Indebtedness. The Borrower shall not, however, be required to so notify the Agent of potential
or actual defaults in payment of any such Indebtedness or the performance under, or of
modifications of terms or provisions of, those documents or agreements pertaining to its
transactions in the ordinary course of business which do not have a Material Adverse Effect or
constitute a Default or an Event of Default.



5.4 Taxes. Promptly pay and discharge all of its taxes, assessments and other governmental
charges (including any charged or assessed on the issuance of the Notes) prior to the date on which
penalties are attached thereto, establish adequate reserves for the payment of such taxes,
assessments and governmental charges and make all required withholding and other tax deposits;
provided, however, that nothing herein contained shall be interpreted to require the payment of any
tax, assessment or charge so long as its validity is being contested in good faith and by
appropriate proceedings diligently conducted.


 


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5.5 Insurance. (a) Keep, and cause each Subsidiary to keep, all its property so insurable
insured at all times with responsible insurance carriers against fire, theft and other risks in
coverage, form and amount consistent with industry standards and reasonably satisfactory to the
Agent and the Lenders; (b) keep, and cause each Subsidiary to keep, adequately insured at all times
in reasonable amounts with responsible insurance carriers against liability on account of damage to
persons or property and under all applicable worker’s compensation laws; (c) promptly deliver to
the Agent certificates of insurance, with appropriate endorsements designating the Agent as a
lender’s loss payee and additional insured as requested by the Agent; and (d) cause each such
insurance policy to contain a thirty (30) day notice of cancellation or material change in coverage
provision satisfactory to the Agent.



5.6 Litigation. Promptly notify the Agent in writing as soon as the Borrower has knowledge
thereof, of the institution or filing of any litigation, action, suit, claim, counterclaim, or
administrative proceeding against, or investigation of, the Borrower or any Subsidiary to which the
Borrower or any Subsidiary is a party by or before any regulatory body or governmental agency (a)
the outcome of which could reasonably be expected to have a Material Adverse Effect or could
reasonably be expected to materially and adversely affect the Borrower’s ability to fulfill its
obligations hereunder or which involves more than $3,500,000 unless adequately covered by
insurance, or (b) which questions the validity of this Agreement, the Notes or any action taken or
to be taken pursuant to any of the foregoing; and furnish or cause to be furnished to the Agent
such information regarding the same as the Agent may request.



5.7 Judgments. Promptly notify the Agent in writing as soon as the Borrower has knowledge
thereof, of any judgment, order or award of any court, agency or other governmental agency or any
arbitrator, (a) the outcome of which could reasonably be expected to have a Material Adverse Effect
or could reasonably be expected to materially and adversely affect the Borrower’s ability to
fulfill its obligations hereunder or which involves more than $3,500,000 unless adequately covered
by insurance, or (b) renders invalid this Agreement, any Note or any action taken or to be taken
pursuant to any of the foregoing, and furnish or cause to be furnished to the Agent such
information regarding the same as the Agent may request.



5.8 Corporate Standing. Maintain, and cause each Subsidiary to maintain, its corporate,
partnership or limited liability company existence in good standing and remain or become duly
licensed or qualified and in good standing in each jurisdiction in which the conduct of its
business requires such qualification or licensing, except where the failure to be so licensed or
qualified and in good standing would not have a Material Adverse Effect; provided, however, nothing
in this Section shall be deemed to prohibit any transaction permitted by Section 6.7 of this
Agreement.



5.9 Books and Records. Keep proper books and records in accordance with generally accepted
accounting principles consistently applied and notify the Agent promptly in writing of any proposed
change in the location at which such books and records are maintained.



5.10 Compliance with Law. Comply, and cause each Subsidiary to comply, with all applicable
laws and governmental rules and regulations, except where the failure to so comply does not have,
and would not be reasonably expected to have, a Material Adverse Effect.


 


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5.11 Pension Reports. With respect to each Plan, the Borrower will furnish the following
to the Agent as soon as possible and in any event within thirty days after the Borrower knows or
has reason to know of (a) the occurrence of any Reportable Event with respect to such Plan or (b)
the institution of proceedings or the taking of any other action by the Pension Benefit Guaranty
Corporation or the Borrower or any Subsidiary to terminate, withdraw or partially withdraw from any
Plan and, with respect to a Multiemployer Plan, the reorganization (as defined in Section 4241 of
ERISA) or insolvency (as defined in Section 4245 of ERISA) of such Plan, and in addition to such
notice, deliver to the Agent whichever of the following may be applicable: (i) a certificate of the
President or Vice President-Finance and Treasurer of the Borrower setting forth details known to
the Borrower as to such Reportable Event, together with a copy of any notice thereof that is
required to be filed with Pension Benefit Guaranty Corporation, or (ii) any notice delivered by the
Pension Benefit Guaranty Corporation evidencing its intent to institute such proceedings or any
notice to Pension Benefit Guaranty Corporation that such Plan is to be terminated, as the case may
be.



5.12 Inspections. Upon request of the Agent, permit any officer, employee, accountant,
attorney or other agent of the Agent upon reasonable notice and during regular business hours to
(a) visit and inspect each of the premises of the Borrower and each Subsidiary, (b) examine, audit,
copy and make extracts from each accounting record of the Borrower, and (c) discuss the business,
operations, assets, affairs and condition (financial or other) of the Borrower and each Subsidiary
with a responsible officer of the Borrower and with the independent accountants of the Borrower.



5.13 Environmental Compliance. (a) Comply with all Environmental Laws except where
the failure to comply could not reasonably be expected to have a Material Adverse Effect.



(b) Promptly notify the Agent in the event of the Disposal of any Hazardous Substance at any
property owned, leased or operated by the Borrower or any Subsidiary, or in the event of any
Release, or threatened Release, of a Hazardous Substance, on, at or from any such Property, except
when such Disposal or Release is in the ordinary course of the Borrower’s or such Subsidiary’s
business and in compliance with all applicable Environmental Laws or could not reasonably be
expected to have a Material Adverse Effect.



(c) Deliver promptly to the Agent (i) copies of any non-routine, material documents received
from the United States Environmental Protection Agency or any state, county or municipal
environmental or health agency concerning the Borrower’s or any Guarantor’s operations except
documents of general applicability; and (ii) copies of any documents submitted by the Borrower or
any Subsidiary to the United States Environmental Protection Agency or any state, county or
municipal environmental or health agency concerning its operations, except submissions in the
ordinary course of business.


 


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5.14 Certain Subsidiaries to Become Guarantors. In the event that at any time after the
Closing Date Borrower creates, holds, acquires or at any time has any Subsidiary (other than a
Non-Material Subsidiary and a Foreign Subsidiary to which Section 5.15(b) applies) that is not a
Guarantor, Borrower will immediately, but in any event within five (5)
Business Days, notify the Agent in writing of such event, identifying the Subsidiary in question
and referring specifically to the rights of the Agent and the Lenders under this Section. Borrower
will, within fifteen (15) days following request therefor from the Agent (who may give such request
on its own initiative or upon request by the Required Lenders), cause such Subsidiary to deliver to
the Agent, in sufficient quantities for the Lenders, (i) a Guaranty duly executed by such
Subsidiary, and (ii) if such Subsidiary is a corporation, resolutions of the Board of Directors of
such Subsidiary, certified by the Secretary or an Assistant Secretary of such Subsidiary as duly
adopted and in full force and effect, authorizing the execution and delivery of such Guaranty, or
if such Subsidiary is not a corporation, such other evidence of the authority of such Subsidiary to
execute such a Guaranty as the Agent may reasonably request. If any Subsidiary is required to
provide a security agreement, whether pursuant to Section 5.15 or otherwise, such Subsidiary shall
also be subject to the requirements of this Section 5.14.




5.15 Additional Security; Further Assurances.



(a) Additional Security. Subject to subpart (b) below, if Borrower or any Domestic
Subsidiary (other than a Non-Material Subsidiary and other than Astronics Air LLC with respect to
its existing ownership of a corporate aircraft) acquires, owns or holds any personal or real
property (other than the vacant land currently owned by LSI and commonly known as 0 Commerce Way or
VL Commerce Way, East Aurora, New York and consisting of SBL Numbers 175.10-1-3.111 and
175.11-1-9.1) that is not at the time included in the Collateral, the Borrower will promptly notify
the Agent in writing of such event, identifying the property or interests in question and referring
specifically to the rights of the Agent and the Lenders under this Section, and Borrower will, or
will cause such Domestic Subsidiary to, within 30 days following a request by the Agent (or such
longer period as the Agent shall deem reasonable under the circumstances), grant to the Agent for
the benefit of the Lenders and grant to HSBC Bank as issuer of the IRB Letters of Credit and the
Existing Letter of Credit, on a pari passu basis, a Lien on such personal or real property pursuant
to the terms of such security agreements, mortgages, assignments or other documents as the Agent
deems appropriate (collectively, the “Additional Security Document”). Furthermore, the Borrower
shall cause to be delivered to the Agent and HSBC Bank such resolutions and other related documents
as may be reasonably requested by the Agent and HSBC Bank in connection with the execution,
delivery and recording of any such Additional Security Document, all of which documents shall be in
form and substance reasonably satisfactory the Agent and HSBC Bank.



(b) Foreign Subsidiaries. In the event that Borrower or any existing Subsidiary acquires
any other Foreign Subsidiary other than a Non-Material Subsidiary, or any Foreign Subsidiary which
is a Non-Material Subsidiary ceases to be a Non-Material Subsidiary, the Borrower will, or will
cause such existing Subsidiary to, if so requested by the Agent, pledge to the Agent for the
benefit of the Lenders, the Agent and the Issuing Bank 65% of the Equity Interests in any such
Foreign Subsidiary.



(c) Further Assurances. Borrower will, and will cause each Subsidiary, at the
expense of Borrower, to make, execute, endorse, acknowledge, file and/or deliver to the Agent from
time to time such conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, and other assurances or instruments and take such further steps relating to any
Collateral covered by any of the Loan Documents as the Agent may
reasonably require. If at any time the Agent determines, based on applicable law, that all
applicable taxes (including, without limitation, mortgage recording taxes or similar charges) were
not paid in connection with the recordation of any mortgage or deed of trust, the Borrower shall
promptly pay the same upon demand.


 


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5.16 Accounting; Reserves; Tax Returns. Cause each of the Borrower and any Subsidiary at
all times to (i) maintain a system of accounting established and administered in material
accordance with GAAP, and (ii) file each tax return it is required to file except where the failure
to so file will not and has not had a Material Adverse Effect.



5.17 Liens and Encumbrances. Promptly upon acquiring knowledge or reason to know in the
ordinary course of its business that any asset of Borrower or any Subsidiary has or may become
subject to any Lien other than Permitted Encumbrances, provide to each Lender a certificate
executed by an Authorized Officer of Borrower and specifying the nature of such Lien and what
action Borrower has taken, is taking or proposes to take with respect thereto.



5.18 Defaults and Material Adverse Effects. Promptly upon acquiring knowledge or reason to
know in the ordinary course of its business of the occurrence or existence of (i) any Event of
Default or Default or (ii) any event or condition that has had or will have any Material Adverse
Effect, provide to each Lender a certificate executed by an Authorized Officer and specifying the
nature of such Event of Default, Default, event or condition, the date of occurrence or period of
existence thereof and what action the Borrower has taken, is taking or proposes to take with
respect thereto.



5.19 Good Repair. The Borrower will, and will cause each of its Subsidiaries to, ensure
that its material properties and equipment used or useful in its business in whomsoever’s
possession they may be, are kept in good repair, working order and condition, normal wear and tear
excepted, and that from time to time there are made in such properties and equipment all needful
and proper repairs, renewals, replacements, extensions, additions, betterments and improvements
thereto, to the extent and in the manner customary for companies in similar businesses.



5.20 Hedge Agreements. Within ninety (90) days of the Closing Date, Borrower will have
entered into one or more Hedge Agreements with one or more of the Lenders to hedge not less than
fifty percent (50%) of the aggregate principal amount of the Term Loans, and provided evidence
thereof to the Agent.



5.21 Existing and IRB Letters of Credit. Within forty-five (45) days of the Closing Date,
Borrower will have caused the (i) expiry dates of the IRB Letters of Credit and Existing Letter of
Credit to have been amended to a date not later than the Business Day prior to the Revolving Credit
Maturity Date; and (ii) fees payable under the reimbursement agreements for the IRB Letters of
Credit and the Existing Letter of Credit to have been amended to conform to the provisions hereof
applicable to other Letters of Credit and to provide that such fees shall be payable as provided in
Section 2.4(l) and (m) of this Agreement, with the consent of all parties thereto, as applicable,
and in compliance with all disclosure and other requirements in the bond documents applicable
thereto.


 


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5.22 Mortgage Modifications. Borrower will, and, if necessary, will have caused the Erie
County Industrial Development Agency (“ECIDA”) to, execute and deliver to the Agent mortgage
modification agreements in form and content satisfactory to the Borrower and the Agent, and the
ECIDA for those mortgages to which the ECIDA is a party, for each of the existing mortgages which
currently secure any of the IRB Letters of Credit whereby the liens of such mortgages are spread to
cover the Term Loan Indebtedness under this Agreement.



5.23 Landlord Waivers. Within forty-five (45) days of the Closing Date, Borrower will
obtain and deliver to the Agent executed landlord waivers, in form and substance satisfactory to
the Agent, from all of the landlords with respect to any material inventory or equipment of D M E
located at a location that is not owned by D M E, as deemed necessary or desirable by the Agent, to
preserve and protect the rights of the Agent in Collateral.



5.24 Further Actions. Promptly upon the request of the Agent, execute and deliver or
cause to be executed and delivered each writing, and take or cause to be taken each other action,
that the Agent shall deem necessary or desirable at the sole option of the Agent to perfect or
otherwise preserve or protect the priority of any security interest, mortgage or other lien or
encumbrance imposed or created pursuant to any Loan Document or to correct any error in any Loan
Document.



ARTICLE VI. NEGATIVE COVENANTS




As long as this Agreement is in effect and until such time as the Commitments have been
terminated, no Notes remain outstanding and the Loans, together with all interest, fees, charges
and expenses under the Loan Documents have been paid in full:



6.1 Indebtedness. Neither the Borrower nor any Subsidiary will create, incur, assume or
suffer to exist any Indebtedness except (a) to the Agent and the Lenders, (b) the Seller Notes,
(c) as set forth on Schedule 6.2 attached hereto, (d) Indebtedness owed by a Subsidiary to the
Borrower or to another Subsidiary or by the Borrower to a Subsidiary, in each case made in the
ordinary course of business including, without limitation, in connection with a Permitted
Acquisition, (e) Indebtedness not in excess of $3,000,000 outstanding at any one time incurred for
Capital Leases of fixed assets or fixed asset purchases, (f) unsecured Indebtedness, exclusive of
the Seller Notes, not exceeding $3,500,000 outstanding at any one time that is subordinated to the
Indebtedness of the Borrower to the Lenders under this Agreement in a manner reasonably
satisfactory to the Agent and (g) any other Indebtedness not exceeding $3,500,000 outstanding at
any one time; provided that Borrower or any Subsidiary may exchange, refinance or refund any such
Indebtedness described in clause (c) hereof if the aggregate principal amount thereof (or
Capitalized Lease Obligation in the case of a Capital Lease or present value, based on the implicit
rate, in the case of a Synthetic Lease) is not increased (other than in connection with the
capitalization of interest).


 


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6.2 Encumbrances. Neither the Borrower nor any Subsidiary will create, incur, assume or
suffer to exist any mortgage, lien, security interest, pledge or other encumbrance on any of its
property or assets, whether now owned or hereafter owned or acquired, except in favor of the Agent
or a trustee for the benefit of the Agent and except for the
following permitted encumbrances (collectively, the “Permitted Encumbrances”): (a) any lease of
any asset as a lessor in the ordinary course of its business and without interference with the
conduct of its business or operations, (b) any pledge or deposit made by the Borrower or any
Subsidiary in the ordinary course of its business (i) in connection with any workers’ compensation,
unemployment insurance, social security or similar statute, regulation or other law or (ii) to
secure the payment of any indebtedness, liability or obligation in connection with any letter of
credit, bid, tender, trade or government contract, lease, surety, appeal or performance bond or
statute, regulation or other law, or of any similar indebtedness, liability or obligation, not
incurred in connection with the borrowing of any money or in connection with the deferral of the
payment of the purchase price of any asset, (c) any attachment, levy or similar lien with respect
to the Borrower or any Subsidiary arising in connection with any action or other legal proceeding
so long as (i) the validity of the claim or judgment secured thereby is being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted, (ii) adequate
reserves have been appropriately established for such claim or judgment, (iii) the execution or
other enforcement of such attachment, levy or similar lien is effectively stayed and (iv) neither
such claim or judgment nor such attachment, levy or similar lien has a Material Adverse Effect, (d)
any statutory lien in favor of the United States for any amount paid to the Borrower or any
Subsidiary as a progress payment pursuant to any government contract, (e) any statutory lien
securing the payment of any tax, assessment, fee, charge, fine or penalty imposed by any government
or political subdivision upon the Borrower or any Subsidiary or upon any of its respective assets
but not yet due to be paid (excluding any lien arising under ERISA), (f) any statutory lien
securing the payment of any claim or demand of any materialman, mechanic, carrier, warehouseman,
garageman or landlord against the Borrower or any Subsidiary, but not yet due to be paid, (g) any
reservation, exception, encroachment, easement, right-of-way, covenant, condition, restriction,
lease or similar title exception or encumbrance affecting title to any real property of the
Borrower or any Subsidiary but not interfering with the conduct of its business or operations, (h)
liens listed on Schedule 6.2 hereto and (i) liens on assets securing Indebtedness permitted by
Section 6.1(a), (e), (f) or (g) hereof.



6.3 Investments and Guaranty Obligations. Neither the Borrower nor any Subsidiary will,
directly or indirectly, (i) make or commit to make any Investment or (ii) be or become obligated
under any guaranty other than a Guaranty, except for the following permitted investments
(collectively, the “Permitted Investments”):



(a) Investments by Borrower or any Subsidiary in (i) Cash and Cash Equivalents (each as
defined under GAAP) including any readily marketable direct obligation of the United States
maturing within one year after the date of acquisition thereof, (ii) any time deposit maturing
within one year after the date of acquisition thereof and issued by any banking institution that is
authorized to conduct a banking business under any statute of the United States or any state
thereof, or with respect to a Foreign Subsidiary authorized to conduct a banking business under any
statute of the foreign country in which such Foreign Subsidiary is formed or organized or any
political subdivision thereof, and has a combined capital and surplus of not less than
$100,000,000, (iii) any demand or savings deposit with any such institution, (iv) any Dollar
deposits in the London Interbank Market with such banking institution or any subsidiary of any such
banking institution, and (v) any commercial paper rated at least A-1 by Standard & Poor’s Ratings
Group or P-1 by Moody’s Investor Services, Inc.;


 


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(b) to the extent not permitted by the foregoing, Investments existing as of the Closing Date
and described on Schedule 6.3 hereto; and



(c) intercompany advances or loans permitted by Section 6.1 or Contingent Obligations incurred
by a Subsidiary or by the Borrower, with respect to the obligations of the Borrower or any
Subsidiary, entered into in the ordinary course of business or in connection with a Permitted
Acquisition and any other Investment (i) of Borrower or any Subsidiary in any Subsidiary existing
as of the Closing Date, (ii) of Borrower in any Guarantor made after the Closing Date, (iii) of any
Guarantor in any Guarantor made after the Closing Date, (iv) to fund the consideration directly
relating to a Permitted Acquisition, including, without limitation, capital contributions made by
the Borrower in a Subsidiary, or by any Subsidiary in another Subsidiary, or purchases made by the
Borrower of the Equity Interests of a Subsidiary, or by any Subsidiary of the Equity Interests of
another Subsidiary, in connection with a Permitted Acquisition subject, however, to any limits
applicable to a Permitted Acquisition under Section 6.7(c) of this Agreement, or (v) not exceeding
$3,500,000 in the aggregate over the term of this Agreement.



6.4 Equity Interest Repurchases. Neither the Borrower nor any Subsidiary will, directly or
indirectly make any repurchase or repurchases of Equity Interests in the Borrower or any Subsidiary
except for (a) the repurchase by a Subsidiary of Equity Interests owned by the Borrower or another
Subsidiary and (b) repurchases made in accordance with the following procedures that do not exceed
$6,000,000 in the aggregate over the term of this Agreement (“Aggregate Limit”). When Borrower
intends to make any repurchase or repurchases, Borrower will execute and deliver to the Agent and
the Lenders before consummating such repurchase or repurchases a Compliance Certificate certifying
(i) the maximum dollar amount of the repurchases that the Borrower may make so that the statements
hereafter set forth are true (“Maximum Repurchase Amount”) and the dollar amount that the Borrower
intends in fact to repurchase, which must be an amount equal to or less than the Maximum Repurchase
Amount, (ii) that, as of the date of execution and delivery of the Compliance Certificate, there
does not exist, and there will not occur as a direct or indirect result of the consummation of
repurchases in the Maximum Repurchase Amount, any Event of Default or Default, (ii) that Borrower
is in compliance with the Financial Covenants as of the last fiscal quarter of Borrower most
recently ended for which financial statements are then available or required to be delivered under
Section 5.2 of this Agreement, (iii) that, based on pro-forma projections covering the four fiscal
quarters of Borrower following the date of such Compliance Certificate, Borrower will be in
compliance with the Financial Covenants upon and after consummation of repurchases in the Maximum
Repurchase Amount, (iv) that Available Cash Flow (as defined in the next paragraph) as then
computed less the Maximum Repurchase Amount is equal to a number greater than 0; (v) the amount of
such repurchases which Borrower has made from the date of this Agreement through the date of the
Compliance Certificate (“Past Repurchase Amount”), and (vi) that the sum of the Maximum Repurchase
Amount and the Past Repurchase Amount does not exceed the Aggregate Limit. Provided Borrower
complies with the foregoing and there is no Default or Event of Default then in existence, Borrower
may make such repurchases up to the Maximum Repurchase Amount from the date of such Compliance
Certificate until the later of the date which is (i) the last day of the fiscal quarter in which
such
Compliance Certificate is executed and delivered to the Agent and the Lenders or (ii) 60 days
following such execution and delivery of the Compliance Certificate, and thereafter may only
repurchase Equity Interests by delivering a new Compliance Certificate and repeating the foregoing
procedures, which may be repeated throughout the term of this Agreement.


 


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“Available Cash Flow” means the amount equal to Borrower’s Consolidated EBITDA less the sum of
Borrower’s Consolidated Capital Expenditures, cash taxes, Consolidated Interest Expense, scheduled
principal payments (excluding prepayments of principal) paid on long term Indebtedness and
dividends, in each case for the twelve month period ending as of the last fiscal quarter period of
the Borrower for which financial statements are then available or required to be delivered under
Section 5.2 of this Agreement.



6.5 Limitation on Certain Restrictive Agreements. Neither the Borrower nor any Subsidiary
will, directly or indirectly, enter into, incur or permit to exist or become effective, any
“negative pledge” covenant or other agreement, restriction or arrangement that prohibits, restricts
or imposes any condition upon (a) the ability of Borrower or any Subsidiary to create, incur or
suffer to exist any Lien upon any of its property or assets as security for Indebtedness, or
(b) the ability of any such Subsidiary to make dividends or distributions or any other interest or
participation in its profits owned by the Borrower or any Subsidiary, or pay any Indebtedness owed
to the Borrower or a Subsidiary, or to make loans or advances to the Borrower or any other
Subsidiaries, or transfer any of its property or assets to the Borrower or any other Subsidiaries,
except for such restrictions existing under or by reason of (i) applicable law, (ii) this Agreement
and the other Loan Documents, (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest, (iv) customary provisions restricting assignment of any
licensing agreement entered into in the ordinary course of business, (v) customary provisions
restricting the transfer or further encumbering of assets subject to Liens permitted under
Section 6.2, (vi) customary restrictions affecting only a Subsidiary under any agreement or
instrument governing any of the Indebtedness of a Subsidiary permitted pursuant to Section 6.1,
(vii) any document relating to Indebtedness secured by a Permitted Encumbrance, insofar as the
provisions thereof limit grants of junior liens on the assets securing such Indebtedness, and
(viii) any Operating Lease or Capital Lease, insofar as the provisions thereof limit grants of a
security interest in, or other assignments of, the related leasehold interest to any other Person.




6.6 Material Indebtedness Agreements.



(a) Amendments. Neither the Borrower nor any Subsidiary will amend, restate, supplement or
otherwise modify the Seller Notes (except in accordance with the provisions of the Subordination
Agreement), or any Material Indebtedness without the prior written consent of the Agent if any such
amendment, restatement, supplement or other modification would materially impact the rights or
remedies of the Agent and the Lenders hereunder.


 


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(b) Prepayment and Refinance of Other Debt, etc. After the Closing Date, the Borrower will
not, and will not permit any Subsidiary to, make (or give any notice in respect thereof) any
voluntary or optional payment or prepayment or redemption or acquisition for value of (including,
without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying when due) or exchange of,
or refinance or refund, any Indebtedness of Borrower or its Subsidiaries that has an outstanding
principal balance (or Capitalized Lease Obligation, in the case of a Capital Lease or present
value, based on the implicit interest rate, in the case of a Synthetic Lease) greater than
$3,500,000 (other than the Indebtedness and intercompany loans and advances among Borrower and its
Subsidiaries); provided that (a) Borrower or any Subsidiary may exchange refinance
or refund any such Indebtedness if the aggregate principal amount thereof (or Capitalized Lease
Obligation, in the case of a Capital Lease or present value, based on the implicit interest rate,
in the case of a Synthetic Lease) is not increased (other than in connection with the
capitalization of interest) and (b) the Borrower or any Subsidiary may make any such payment or
prepayment or redemption or acquisition for value if any such payment or prepayment or redemption
or acquisition for value is made with the proceeds of the sale of Equity Interests in Borrower
remaining after Borrower has made any mandatory prepayment of the Indebtedness required pursuant to
Section 2.7(b)(i)(2) of this Agreement. Notwithstanding the foregoing, Borrower will not, and will
not permit any Subsidiary to make any payments or prepayments on the Seller Notes except in
accordance with the provisions of the Subordination Agreement.



6.7 Consolidation, Merger, Acquisitions, Asset Sales, etc. Neither the Borrower nor any
Subsidiary will (1) wind up, liquidate or dissolve its affairs, (2) enter into any transaction of
merger or consolidation, (3) make or otherwise effect any acquisition of all or substantially all
of the assets or Equity Interests of any other Person, or assets constituting all or substantially
all of a division or product line of any other Person, other than Permitted Acquisitions set forth
in Section 6.7(c), (4) sell or otherwise dispose of any of its property or assets outside the
ordinary course of business, or otherwise make or otherwise effect any Asset Sale, or (5) agree to
do any of the foregoing at any future time, except the following shall be permitted (collectively,
6.7(a) and 6.7(b) being “Permitted Dispositions”):



(a) Certain Intercompany Mergers. If no Default or Event of Default shall have occurred
and be continuing or would result therefrom, (i) the merger, consolidation or amalgamation of any
Domestic Subsidiary with or into Borrower, provided Borrower is the surviving or continuing or
resulting corporation; (ii) the merger, consolidation or amalgamation of any Domestic Subsidiary
with or into any Guarantor, provided that the surviving or continuing or resulting corporation is a
Guarantor, (iii) the merger, consolidation or amalgamation of any existing Foreign Subsidiary with
or into any other existing Foreign Subsidiary; (iv) any Asset Sale by Borrower or any Guarantor to
Borrower or any Guarantor, (v) any Asset Sale by any Foreign Subsidiary to Borrower or any
Guarantor; or (vi) any Asset Sale by any existing Foreign Subsidiary to any other existing Foreign
Subsidiary.



(b) Other Dispositions. If no Default or Event of Default shall have occurred and be
continuing or would result therefrom, and no Material Adverse Effect has occurred or will result
therefrom, the Borrower or any Subsidiary may consummate any Asset Sale, provided that: (i) the
consideration for each such Asset Sale represents fair value and any non-cash consideration
qualifies as a Permitted Investment hereunder and the aggregate of all such non-cash consideration
does not exceed $3,500,000 over the term of this Agreement; and (ii) the cumulative aggregate value
of the assets subject to Asset Sales does not exceed $1,000,000 in any one fiscal year (excluding
for purposes of computing such maximum amount
conveyances of mere record title to any asset to a Governmental Authority to save taxes where
Borrower or any Subsidiary has an option to require reconveyance of such property for a nominal
price) for all such transactions completed during any fiscal year.


 


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(c) Permitted Acquisitions. Any acquisition by Borrower or any Subsidiary of all or
substantially all of the assets or Equity Interests of any other Person (the “Target”) in a related
line of business, or assets constituting all or substantially all of a division or product line of
a Target in a related line of business, so long as Borrower delivers to the Agent and the Lenders a
certificate in form and content satisfactory to the Agent (“Acquisition Certificate”) indicating
that (i) immediately prior to contracting for or consummating such acquisition there does not
exist, and there does not occur as a direct or indirect result of the consummation of such
acquisition, any Event of Default or Default, (ii) Borrower is in compliance with the Financial
Covenants on a pro-forma basis as of the last fiscal quarter of Borrower most recently ended for
which financial statements are then available or required to be delivered under Section 5.2 of this
Agreement assuming the acquisition had been consummated during such quarter, and Borrower
demonstrates based on pro-forma projections covering the four fiscal quarters of the Borrower
following the date of such Acquisition Certificate that Borrower will be in compliance with the
Financial Covenants upon and after consummation of such acquisition, (iii) such acquisition is
being completed on a non-hostile basis without opposition from the board of directors, managers or
equity owners of the Target, (iv) with respect to any assets or Equity Interest of any Person
acquired directly or indirectly pursuant to any such acquisition, there are no liens thereon other
than Permitted Encumbrances, and (v) the aggregate Consideration paid by Borrower and all
Subsidiaries in connection with any such acquisition does not exceed $5,000,000 (including any
investments made pursuant to Section 6.3(c)(iv), and the aggregate Consideration for all such
acquisitions during the term of this Agreement does not exceed $17,500,000 (including any
investments made pursuant to Section 6.3(c)(iv), unless specifically consented to by the Required
Lenders (each such acquisition, a “Permitted Acquisition” and all such acquisitions, the “Permitted
Acquisitions”).



6.8
Transactions with Affiliates. Neither the Borrower nor any Subsidiary will enter into
any transaction or series of transactions with any Affiliate (other than, in the case of the
Borrower, any Subsidiary, and in the case of a Subsidiary, the Borrower or another Subsidiary)
(each, an “Affiliate Transaction”), except for transactions in the ordinary course of business upon
fair and reasonable terms no less favorable to the Borrower or any Subsidiary than would apply in a
comparable arm’s length transaction with a Person who is not an Affiliate, and agreements and
transactions with and payments to officers, directors and shareholders that are either (i) entered
into in the ordinary course of business and not prohibited by any of the provisions of this
Agreement or that are expressly permitted by the provisions of this Agreement, or (ii) entered into
outside the ordinary course of business, approved by the directors or shareholders of the Borrower,
and not prohibited by any of the provisions of this Agreement or in violation of any law, rule or
regulation.



6.9 Disposal of Hazardous Substances. Neither the Borrower nor any Subsidiary will suffer,
cause or permit the Disposal of Hazardous Substances at any property owned, leased or operated by
the Borrower or any Subsidiary, except in the ordinary course of the Borrower’s business in
material compliance with applicable Environmental Laws.


 


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6.10 Fiscal Year, Fiscal Quarters. Neither the Borrower nor any Subsidiary will change
its, or permit any Guarantor or other Subsidiary to change its, fiscal year or fiscal quarters
(other than the fiscal year or fiscal quarters of a Person that becomes a Subsidiary, at the time
such Person becomes a Subsidiary, to conform to Borrower’s, any Subsidiary’s fiscal year and fiscal
quarters).



6.11 Anti-Terrorism Laws. Neither the Borrower nor any Subsidiary shall be subject to or
in violation of any law, regulation, or list of any government agency (including without
limitation, the U.S. Office of Foreign Asset Control list, Executive Order No. 13224 or the USA
Patriot Act) that prohibits or limits the conduct of business with or the receiving of funds, goods
or services to or for the benefit of certain Persons specified therein or that prohibits or limits
any Lender or any Issuing Bank from making any advance or extension of credit to the Borrower or
from otherwise conducting business with the Borrower.



6.12 Changes in Business. Neither the Borrower nor any Subsidiary will engage in any
business if, as a result, the general nature of the business, taken on a Consolidated Basis, which
would then be engaged in by the Borrower and any Subsidiary, would be substantially changed from
the general nature of the business engaged in by the Borrower and any Subsidiary on the Closing
Date.



6.13 Minimum Fixed Charge Coverage Ratio. The Borrower will not permit, as of the end of
each fiscal quarter of Borrower ending on or after December 31, 2008, the Borrower’s Fixed Charge
Coverage Ratio to be less than 1.25 to 1.0.



6.14 Maximum Fiscal Capital Expenditures. The Borrower will not permit Consolidated
Capital Expenditures to be made or incurred in excess of $10,000,000 for Borrower’s 2008 fiscal
year or in any one fiscal year thereafter.



6.15 Maximum Leverage Ratio. The Borrower will not permit, as of the end of each fiscal
quarter ending on or after December 31, 2008, the Leverage Ratio to exceed 2.75 to 1.0.



6.16 Minimum Net Worth. The Borrower will not permit the Consolidated Net Worth of the
Borrower and its Subsidiaries to be less than the amount of $57,300,000 (“Base Amount”) as of
September 30, 2008, or less than the then applicable Base Amount as of the end of each fiscal
quarter thereafter. The initial Base Amount will remain in effect until December 31, 2009. The
Base Amount will be increased annually, as of each December 31, commencing December 31, 2009, by
adding to the Base Amount then in effect 50% of Borrower’s Consolidated Net Income for the fiscal
year of Borrower ending on such date. This covenant will be tested quarterly as of the end of each
fiscal quarter of Borrower commencing December 31, 2008. No decrease in the Base Amount will be
made for any Consolidated Net Loss incurred by Borrower and its Subsidiaries. For purposes of
determining the Borrower’s Consolidated Net Worth hereunder, the actual amount of the Borrower’s
write-off of Borrower’s Eclipse inventory, tooling and related equipment up to $6,000,000 in the
aggregate during Borrower’s 2008 or 2009 fiscal years will be added to Borrower’s Consolidated Net
Worth as otherwise determined in accordance with GAAP to the extent such write-off has negatively
impacted such determination of Borrower’s Consolidated Net Worth.


 


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ARTICLE VII. DEFAULT




7.1 Events of Default. The occurrence of any one or more of the following events shall
constitute an event of default (individually, “Event of Default,” or, collectively, “Events of
Default”):



(a) Nonpayment. Nonpayment within three (3) Business Days after the same becomes due
whether by acceleration or otherwise of (i) principal of, or interest on, any of the Notes;
(ii) any charge, fee or premium provided for hereunder; or (iii) any reimbursement obligation in
connection with any Letter of Credit, the Existing Letter of Credit or the IRB Letters of Credit.



(b) Negative Covenants. Default in the observance of any of the covenants or agreements of
the Borrower contained in Article VI.



(c) Other Covenants. Default in the observance of any of the covenants or agreements of
the Borrower contained in this Agreement or any other Loan Document, other than those specified in
Sections 5.1 and 7.1(b) hereof, which is not remedied within thirty (30) days after notice thereof
by the Agent to the Borrower.



(d) Voluntary Insolvency Proceedings. If the Borrower or any Subsidiary (i) shall file a
petition or request for liquidation, reorganization, arrangement, adjudication as a bankrupt,
relief as a debtor or other relief under the bankruptcy, insolvency or similar laws of the United
States of America or any state or territory thereof or any foreign jurisdiction, now or hereafter
in effect; (ii) shall make a general assignment for the benefit of creditors; (iii) shall consent
to the appointment of a receiver or trustee for the Borrower or any Subsidiary or any of the
Borrower’s or any Subsidiary’s assets, including, without limitation, the appointment of or taking
possession by a “custodian” as defined in the federal Bankruptcy Code; (iv) shall make any, or send
notice of any intended, bulk sale; or (v) shall execute a consent to any other type of insolvency
proceeding (under the federal Bankruptcy Code or otherwise) or any formal or informal proceeding
for the dissolution or liquidation of, or settlement of claims against or winding up of affairs of,
the Borrower or any Guarantor or other Subsidiary.



(e) Involuntary Insolvency Proceedings. The appointment of a receiver, trustee, custodian
or officer performing similar functions for the Borrower or any Subsidiary or any of the Borrower’s
or any Subsidiary’s assets, including, without limitation, the appointment of or taking possession
by a “custodian” as defined in the federal Bankruptcy Code; or the filing against the Borrower or
any Subsidiary of a request or petition for liquidation, reorganization, arrangement, adjudication
as a bankrupt or other relief under the bankruptcy, insolvency or similar laws of the United States
of America or any state or territory thereof or any foreign jurisdiction, now or hereafter in
effect; or the institution against the Borrower or any Subsidiary of any other type of insolvency
proceeding (under the federal Bankruptcy Code or otherwise) or of any formal or informal proceeding
for the dissolution or liquidation of, settlement of claims against or winding up of affairs of the
Borrower or any Subsidiary, and the failure to have such appointment vacated or such filing,
petition or proceeding dismissed within ninety (90) days after such appointment, filing or
institution.


 


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(f) Representations. If any certificate, statement, representation, warranty or financial
statement furnished by or on behalf of the Borrower or any Subsidiary pursuant to or in connection
with this Agreement or as an inducement to the Agent and the Lenders to enter into this Agreement
or any other lending agreement with the Borrower shall prove to have been false in any material
respect at the time as of which the facts therein set forth were represented, or to have omitted
any substantial contingent or unliquidated liability or claim against the Borrower or any
Subsidiary required to be stated therein, or if on the date of the execution of this Agreement
there shall have been any materially adverse change in any of the facts disclosed by any such
statement or certificate, which change shall not have been disclosed by the Borrower to Lenders at
or prior to the time of such execution.



(g) Cross Default Under Other Agreements. If the Borrowers or any of their Subsidiaries
shall (i) default in any payment with respect to any of the Existing Bonds, the IRB Letters of
Credit, the Existing Letter of Credit (collectively, the “Existing Indebtedness”) or any Material
Indebtedness (other than this Agreement), and such default shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to such Existing
Indebtedness or such Material Indebtedness; or (ii) default in the observance or performance of any
agreement or condition relating to any such Existing Indebtedness or such Material Indebtedness or
contained in any instrument or agreement evidencing, securing or relating thereto (and all grace
periods applicable to such observance, performance or condition shall have expired), or any other
event shall occur or condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Existing Indebtedness or such Material
Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause any such Existing
Indebtedness or such Material Indebtedness to become due prior to its stated maturity; or such
Existing Indebtedness or such Material Indebtedness of the Borrowers or any of their Subsidiaries
shall be due and payable, or shall be required to be prepaid (other than by a regularly scheduled
required prepayment or redemption), prior to the stated maturity thereof; or (iii) without
limitation of the foregoing clauses, default in any payment obligation under a Designated Hedge
Agreement, and such default shall continue after the applicable grace period, if any, specified in
such Designated Hedge Agreement or any other agreement or instrument relating thereto.



(h) Judgments. If any judgment or judgments (other than any judgment for which it is fully
insured) against the Borrower or any Subsidiary in an aggregate amount in excess of $3,500,000
remains unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period of thirty
(30) days after entry thereof.



(i) Pension Default.



(1) The Borrower or any of its Subsidiaries (or any officer or director thereof) shall engage
in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan,



(2) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), shall exist
with respect to any Plan,


 


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(3) with respect to any Multiemployer Plan, the Borrower or any Commonly Controlled Entity
fails to make a contribution required to be made thereto, or withdraws therefrom, where in either
event the liability of the Borrower or such Commonly Controlled Entity is in excess of $100,000,



(4) a Reportable Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Plan which
is not a Multiemployer Plan, which Reportable Event or institution of proceedings is, in the
reasonable opinion of the Agent, likely to result in the termination of such Plan for purposes of
Title IV of ERISA and, in the case of a Reportable Event, the continuance of such Reportable Event
unremedied for ten (10) days after notice of such Reportable Event pursuant to Section 4043(a), (c)
or (d) of ERISA is given or the continuance of such proceedings for ten (10) days after
commencement thereof, as the case may be,




(5) any Plan shall terminate for purposes of Title IV of ERISA, or



(6) any other similar event or condition shall exist which, together with all other events or
conditions in clauses (1) through (5) above, if any, would subject the Borrower or any of its
Subsidiaries to any tax, penalty or other liabilities under ERISA in the aggregate material in
relation to the business, operations, property or financial or other condition of the Borrower and
its Subsidiaries taken as a whole.



(j) Change in Control. If there occurs a Change in Control.



(k) Challenge to Loan Documents. If Borrower or any Subsidiary shall challenge the
validity and binding effect of any provision of any of the Loan Documents or shall state its
intention to make such a challenge of any of the Loan Documents or any of the Collateral Documents
shall for any reason (except to the extent permitted by its express terms) cease to be perfected or
lose the priority of the Lien granted thereunder or cease to be effective.



(l) Guarantor Default. Any Guaranty shall cease, for any reason, to be in full force and
effect or any Guarantor or the Borrower shall so assert in writing.



(m) Senior Indebtedness. If (1) the Indebtedness under this Agreement shall cease to be
“Senior Indebtedness” under and as defined in the Subordination Agreement, (2) any Indebtedness
other than the Indebtedness under this Agreement shall constitute “Senior Indebtedness” under and
as defined in the Subordination Agreement, (3) any holder of the Seller Notes fails to comply with
the provisions of the Subordination Agreement in a manner which could adversely effect the rights
or remedies of the Agent or the Lenders under the Subordination Agreement, or (4) the Subordination
Agreement shall, in whole or in part, cease to be effective or legal, valid and binding on the
holders of the Seller Notes.


 


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7.2 Effects of an Event of Default. (a) Upon the happening of one or more Events of
Default (except a default with respect to the Borrower or any Subsidiary under either Section
7.1(d) or 7.1(e) hereof), the Agent may by notice to the Borrower require the principal of
the Notes then outstanding to be immediately payable, together with all interest thereon and fees
and expenses accruing under this Agreement. Upon such declaration, any obligations the Agent and
the Lenders may have to the Borrower hereunder shall be immediately canceled and the Notes shall
become immediately due and payable without presentation, demand or further notice of any kind to
the Borrower.



(b) Upon the happening of one or more Events of Default under Section 7.1(d) or 7.1(e) hereof with
respect to the Borrower or any Subsidiary, the Notes shall become immediately payable without
presentation, demand or notice of any kind to the Borrower.



(c) No termination of this Agreement will relieve or discharge Borrower of its duties, obligations
and covenants hereunder until all of the Indebtedness hereunder has been indefeasibly paid in full.



7.3 Remedies. Upon the occurrence and during the continuance of any Event of Default or
upon any termination of this Agreement as a result of an Event of Default, then any of the Lenders
and the Agent shall have all of their rights under this Agreement or otherwise under law. In
addition to, and without limitation of, any rights of the Lenders under applicable law, if any
Event of Default occurs, any and all deposits (including all account balances, whether provisional
or final and whether or not collected or available) and any other Indebtedness at any time held or
owing by any Lender to or for the credit or account of Borrower may be offset and applied toward
the payment of the Indebtedness of the Borrower due under this Agreement or the Loan Documents.



7.4 Application of Certain Payments and Proceeds. All payments and other amounts received
by the Agent or any Lender through the exercise of remedies hereunder or under the other Loan
Documents shall, unless otherwise required by the terms of the other Loan Documents or by
applicable law, be applied as follows:



(i) first, to the payment of all expenses (to the extent not otherwise paid by the Borrower or
any of the Guarantors) incurred by the Agent and the Lenders in connection with the exercise of
such remedies, including, without limitation, all reasonable costs and expenses of collection,
reasonable attorneys’ fee and expenses, court costs and any foreclosure expenses;




(ii) second, to the payment pro rata of interest then accrued on the outstanding Loans;



(iii) third, to the payment pro rata of any fees then accrued and payable to the Agent, any
Issuing Bank or any Lender under this Agreement in respect of the Loans or the Letters of Credit;



(iv) fourth, to the payment pro rata of (A) the principal balance then owing on the
outstanding Loans, (B) the amounts then due under Designated Hedge Agreements to creditors of the
Borrower or any Subsidiary, subject to confirmation by the Agent of any calculations of termination
or other payment amounts being made in accordance with
normal industry practice, (C) the principal amount of the outstanding Letters of Credit (to be
held and applied by the Agent as security for the reimbursement obligations in respect thereof) and
(D) the unreimbursed amount of any LC Disbursements including drawings on the IRB Letters of Credit
and the Existing Letter of Credit;


 


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(v) fifth, to the payment to the Lenders of any amounts then accrued and unpaid under
Sections 2.9, 2.10 and 2.11 of this Agreement, and if such proceeds are insufficient to pay such
amounts in full, to the payment of such amounts pro rata;



(vi) sixth, to the payment pro rata of all other amounts owed by the Borrower to the Agent, to
any Issuing Bank or any Lender under this Agreement or any other Loan Document, and to any
counterparties under Designated Hedge Agreements of the Borrower and any Subsidiary, and if such
proceeds are insufficient to pay such amounts in full, to the payment of such amounts pro rata; and



(viii) finally, any remaining surplus after all of the Indebtedness has been paid in full, to
the Borrower or to whomsoever shall be lawfully entitled thereto.



ARTICLE VIII. INDEMNIFICATION — COSTS AND EXPENSES




8.1 Indemnification. The Borrower agrees to indemnify, defend, and hold harmless the
Agent, the Lenders and their respective Related Parties from and against any and all liabilities,
claims, damages, penalties, expenditures, losses, or charges incurred in connection with this
Agreement, including, but not limited to, the use of, or proposed use of, the proceeds borrowed
under this Agreement, and all costs of investigation, monitoring, legal representation, remedial
response, removal, restoration or permit acquisition, which may now or in the future be undertaken,
suffered, paid, awarded, assessed, or otherwise incurred by the Agent, any Lender or their
respective Related Parties, or any other Person as a result of the presence of, Release of or
threatened Release of Hazardous Substances on, in, under or near the property owned or operated by
the Borrower or any Subsidiary except to the extent resulting from the gross negligence or willful
misconduct of the indemnified party. The liability of the Borrower under the covenants of this
Section is not limited by any exculpatory provisions in this Agreement and shall survive repayment
of the Notes, or any transfer or termination of this Agreement regardless of the means of such
transfer or termination, with respect to acts or omissions or a Release occurring before such
repayment, transfer or termination.



8.2 Expenses. The Borrower shall reimburse the Agent promptly for all of its out-of-pocket
expenses including, without limitation, reasonable counsel fees, filing fees, appraisal fees and
recording fees incurred in connection with this Agreement and with any indebtedness subject hereto
and for any taxes which the Agent may be required to pay in connection with the execution and
delivery of this Agreement and the Notes. The Borrower shall further reimburse the Agent promptly
for any reasonable expenses, including counsel fees and out-of-pocket expenses, incident to the
enforcement of any provision of this Agreement, the Notes or any other document executed in
connection with this Agreement or in connection with any Letter of Credit. Without limiting the
Borrower’s obligation to reimburse the Agent pursuant to this Section 8.2, the Borrower hereby
irrevocably authorizes the Agent to make
Revolving Loans to the Borrower and to use the proceeds thereof to pay any amount owed by the
Borrower under this Section 8.2 upon the failure of the Borrower to make such payment, and the
Agent agrees to notify the Borrower of the making of such Revolving Loans. Any such Revolving
Loans shall be made (i) in the minimum amount necessary and (ii) without regard to the requirements
of this Agreement with respect to notice or minimum amount.


 


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ARTICLE IX. THE AGENT AND ISSUING BANK




9.1 Appointment and Authorization. Each Lender hereby irrevocably appoints HSBC Bank as
Agent, and HSBC Bank accepts such appointment. Each Lender hereby irrevocably authorizes the Agent
to take such action as such agent on its behalf and to exercise such powers hereunder as are
delegated to such agent by the terms hereof, together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its Related Parties shall be liable for any action taken or
omitted to be taken by such agent or them hereunder or in connection herewith, except for such
agent’s or their own gross negligence or willful misconduct as determined in a final judgment by a
court of competent jurisdiction. The Agent (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and in the other Loan Documents, and shall not by
reason of this Agreement or any other Loan Documents be a trustee or fiduciary for any Lender; (b)
shall not be responsible to any Lender for any recitals, statements, representations or warranties
contained in this Agreement or in any of the other Loan Documents, or in any certificate or other
document referred to or provided for in, or received by any Lender under, this Agreement or any
other Loan Documents, or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Documents or any other document referred to or
provided for herein or therein or for any failure by Borrower, or any other Person to perform any
of its obligations hereunder or thereunder; and (c) shall not be responsible to any Lender for any
action taken or omitted to be taken by it hereunder or under any other Loan Documents or under any
other document or instrument referred to or provided for herein or therein or in connection
herewith or therewith, except in the event of such agent’s own gross negligence or willful
misconduct, as determined by a final judgment of a court of competent jurisdiction. The Agent may
employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agent or attorneys-in-fact selected by it in good faith. In administering the Letters
of Credit, the Issuing Bank shall not be under any liability to any Lender, except for such Issuing
Bank’s own gross negligence or willful misconduct, as determined in a final non-appealable decision
of a court of competent jurisdiction or as set forth in Section 2.4 of this Agreement.



9.2 Waiver of Liability of Agent. The Agent shall not have any liability or, as the case
may be, any duty or obligation:



(a) To Borrower on account of any failure of any Lender to perform, or the delay of any Lender
in the performance of, any of its respective obligations under this Agreement or any of the Loan
Documents or any of the other documents in connection herewith;



(b) To any Lender on account of any failure or delay in performance by Borrower or any other
Lender of any of their respective obligations under this Agreement or any of the Loan Documents or
any of the other documents in connection herewith;


 


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(c) To any Lender to provide either initially or on a continuing basis any information with
respect to Borrower or any of its Affiliates or Subsidiaries or its condition, or for analyzing or
assessing or omitting to analyze or assess the status, creditworthiness or prospects of Borrower or
any of the Affiliates of Borrower or any Subsidiaries, provided, however, the Agent
shall promptly provide to each Lender a copy of the documents delivered by Borrower to the Agent
pursuant to Section 5.2 of this Agreement;



(d) To any Lender to investigate whether or not any Default or Event of Default has occurred
(and the Agent may assume that, until Agent shall have actual knowledge or shall have received
notice from any Lender or Borrower, to the contrary, no such Default or Event of Default has
occurred);



(e) To any Lender to account for any sum or profit or any property of any kind received by the
Agent or any Issuing Bank arising out of any present or future banking or other relationship with
Borrower or any of the Affiliates of Borrower or any Subsidiaries, or with any other Person except
the relationship established pursuant to this Agreement or the Loan Documents;



(f) To any Lender to disclose to any Person any information relating to Borrower or any of the
Affiliates of Borrower or any Subsidiaries received by the Agent or any Issuing Bank, if in any
such party’s reasonable determination (such determination to be conclusive), such disclosure would
or might constitute a breach of any law or regulation or be otherwise actionable by suit against
such agent or any Issuing Bank by Borrower or any other Person;



(g) To take any action or refrain from taking any action other than as expressly required by
this Agreement and the Loan Documents; and



(h) To commence any legal action or proceeding arising out of or in connection with this
Agreement or the Loan Documents until either of the Agent or the Issuing Bank, shall have been
indemnified to the Agent’s or the Issuing Bank’s satisfaction against any and all costs, claims and
expenses (including, but not limited to, attorneys’ fees and expenses) in respect of such legal
action or proceeding.



9.3 Note Holders. The Agent may treat the payee of any Note as the holder thereof until
written notice of transfer shall have been filed with it, signed by such payee and in form
satisfactory to the Agent.



9.4 Consultation with Counsel. The Agent may consult with legal counsel selected by the
Agent and shall not be liable for any action taken or suffered in good faith by the Agent in
accordance with the opinion of such counsel.



9.5 Documents. The Agent shall not be under any duty to examine into or pass upon the
validity, effectiveness, genuineness or value of any Loan Documents or any other documents
furnished pursuant hereto or in connection herewith or the value of any Collateral obtained
hereunder, and the Agent shall be entitled to assume that the same are valid, effective and genuine
and what they purport to be.


 


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9.6 Agent and Affiliates. With respect to the Loans, the Agent shall have the same rights
and powers hereunder as any other Lender and may exercise the same as though it were not the Agent,
and the Agent and its Affiliates may accept deposits from, lend money to and generally engage in
any kind of business with Borrower, any Guarantor or any other Subsidiary or any Affiliate thereof
including, without limitation, entering into any kind of Hedge Agreement with respect to the Loans.



9.7 Knowledge of Default. It is expressly understood and agreed that the Agent and each
Issuing Bank shall be entitled to assume that no Default or Event of Default has occurred and is
continuing, unless the Agent or such Issuing Bank has been notified by a Lender in writing that
such Lender believes that a Default or Event of Default has occurred and is continuing and
specifying the nature thereof.



9.8 Enforcement. In the event any remedy may be exercised with respect to this Agreement
or the Loan Documents, the Agent shall have the sole right of enforcement and each Lender agrees
that no Lender shall have any right individually to enforce any provision of this Agreement or the
Loan Documents, or make demand under this Agreement or the Loan Documents; provided,
that any Issuing Bank or the Agent on behalf of such Issuing Bank may make demand upon
Borrower as an Issuing Bank.



9.9 Action by Agent. So long as the Agent shall be entitled, pursuant to Section 9.7 of
this Agreement, to assume that no Default or Event of Default shall have occurred and be
continuing, the Agent shall be entitled to use its discretion with respect to exercising or
refraining from exercising any rights which may be vested in it by, or with respect to taking or
refraining from taking any action or actions which it may be able to take under or in respect of,
this Agreement. The Agent shall incur no liability under or in respect of this Agreement by acting
upon any notice, certificate, warranty or other paper or instrument believed by it to be genuine or
authentic or to be signed by the proper party or parties, or with respect to anything which it may
do or refrain from doing in the reasonable exercise of its judgment, or which may seem to it to be
necessary or desirable in the premises.



9.10 Notices, Defaults, etc. In the event that the Agent shall have acquired actual
knowledge of any Default or Event of Default, the Agent shall promptly notify the Lenders and shall
take such action and assert such rights under this Agreement as the Required Lenders shall direct
and the Agent shall inform the other Lenders in writing of the action taken. The Agent may take
such action and assert such rights as it deems to be advisable, in its discretion, for the
protection of the interests of the holders of the Notes.



9.11 Indemnification of Agent. The Lenders agree to indemnify the Agent (to the extent not
reimbursed by the Borrower), ratably according to their respective Applicable Percentages 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 the Agent in its capacity as the Agent in any way relating to or
arising out of this Agreement or any Loan Document or any action taken or omitted by the Agent with
respect to this Agreement or any Loan Document, provided no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorney fees and expenses) or
disbursements resulting from the Agent’s gross negligence or willful misconduct as determined in a
final judgment by a court of competent jurisdiction or from any action taken or omitted by the
Agent in any capacity other than as the Agent under this Agreement.


 


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9.12 Successor Agent. The Agent may resign as the Agent hereunder by giving not fewer than
thirty (30) days prior written notice to the Borrower and the Lenders. If the Agent shall resign
under this Agreement, then either (a) the Required Lenders shall appoint from among the Lenders a
successor administrative agent for the Lenders (with the consent of the Borrower so long as an
Event of Default has not occurred and which consent shall not be unreasonably withheld), or (b) if
a successor administrative agent shall not be so appointed and approved within the thirty (30) day
period following the Agent’s notice to the Lenders of its resignation, then the Agent shall appoint
a successor administrative agent who shall serve as the Agent until such time as the Required
Lenders appoint a successor administrative agent. Upon its appointment, such successor
administrative agent shall succeed to the rights, powers and duties as the Agent, and the term
“Agent” shall mean such successor effective upon its appointment, and the former Agent’s rights,
powers and duties as the Agent shall be terminated without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement.



9.13 Lenders’ Independent Investigation. Each Lender, by its signature to this Agreement,
acknowledges and agrees that the Agent has made no representation or warranty, express or implied,
with respect to the creditworthiness, financial condition, or any other condition of Borrower or
any Subsidiary, or with respect to the statements contained in the Confidential Information
Materials or in any other oral or written communication between the Agent and such Lender. Each
Lender represents that it has made and shall continue to make its own independent investigation of
the creditworthiness, financial condition and affairs of the Borrower and any Subsidiary in
connection with the extension of credit hereunder, and agrees that the Agent has no duty or
responsibility, either initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto (other than such notices as may be expressly required to be
given by the Agent to the Lenders hereunder), whether coming into its possession before the
granting of the first Loans hereunder or at any time or times thereafter.



9.14 Amendments, Consents. No amendment, modification, termination or waiver of any
provision of any Loan Document nor consent to any variance therefrom, shall be effective unless the
same shall be in writing and signed by the Agent and the Lenders or Required Lenders, as
appropriate, and then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. Anything herein to the contrary notwithstanding, no
amendment, modification, termination or waiver shall increase the amount of any Commitment of any
Lender without the written consent of such Lender or increase the total Commitment without the
consent of all of the Lenders, and the unanimous consent of the Lenders shall be required with
respect to (a) the extension or postponement of the Revolving Credit Maturity Date or the Term Loan
Maturity Date, the payment dates of interest thereunder, or the payment of facility or other fees
or amounts payable hereunder, (b) any reduction in the rate of interest on the Notes, or in any
amounts of principal or interest due on any Note or the payment of facility or other fees hereunder
or any change in the manner of pro rata application of
any payments made by the


 


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Borrower
to the Lenders hereunder, (c) any change in any percentage voting
requirement, voting rights, or the Required Lenders definition in this Agreement, (d) the release
of any material Collateral other than in connection with a Permitted Disposition which the Agent
alone may release, or (e) any amendment to this Section 9.14; provided, however,
only the consent of the Required Lenders shall be required for a waiver involving (i) the
applicability of any post-Event of Default interest rate increase or the applicability of interest
on Overdue Amounts as provided in Section 2.6(c) of this Agreement, (ii) any reduction in the
amount of Net Proceeds required to be applied to prepay the Loans as provided in Section 2.7(b) of
this Agreement or (iii) any other amendment hereunder or under the other Loan Documents which does
not specifically require unanimous consent of the Lenders. Notice of amendments or consents
ratified by the Required Lenders hereunder shall immediately be forwarded by the Agent to all
Lenders. Each Lender or other holder of a Note shall be bound by any amendment, waiver or consent
obtained as authorized by this Section, regardless of its failure to agree thereto. A Defaulting
Lender shall not be entitled to give instructions to the Agent or to approve, disapprove, consent
to or vote on any matters relating to this Agreement and the other Loan Documents. All amendments,
waivers and other modifications of this Agreement and the other Loan 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 any Revolving Credit
Exposures, Term Credit Commitment and Unused Revolving Credit Commitment. A Defaulting Lender
shall be deemed to have satisfied in full a default when and if, as a result of application of
payments as provided in Section 2.15 of this Agreement, the Lenders’ respective pro rata shares of
all outstanding Loans and unpaid reimbursement obligations have returned to those in effect
immediately prior to such default and without giving effect to the nonpayment causing such default.



9.15 Funding by Agent. Unless the Agent shall have been notified in writing by any Lender
not later than 4:00 p.m. on the day before the day on which Loans are requested by Borrower to be
made that (or, if the request for a Loan is made by Borrower on the date such Loan is to be made,
then not later than 2:00 p.m. on such day) such Lender will not make its ratable share of such
Loans, the Agent may assume that such Lender will make its ratable share of the Loans, and in
reliance upon such assumption the Agent may (but in no circumstances shall be required to) make
available to the Borrower a corresponding amount. If and to the extent that any Lender fails to
make such payment on such date, such Lender shall pay such amount to the Agent on demand, together
with interest thereon, as set forth in Section 2.5(b) of this Agreement.



9.16 Sharing of Payments. If any Lender obtains any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) with respect to the Loans
in excess of its pro rata share of such payments shared by all Lenders, such Lender shall forthwith
purchase from the other Lenders participation in the Loans made by them as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of them;
provided, however, if all or any portion of such excess payment is hereafter
recovered from such purchasing Lender, such purchase from the other Lenders shall be rescinded and
each other Lender shall repay to the purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Lender’s ratable share of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount recovered.
Borrower agrees that any Lender purchasing a participation from another Lender pursuant to this
Section 9.16 may, to the fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as if such Lender were
the direct creditor of Borrower in the amount of such participation.


 


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9.17 Payment to Lenders. Except as otherwise set forth in Sections 2.3(c), 2.4(e), 2.15
and 9.16 of this Agreement, promptly after receipt from Borrower of any principal or interest
payment on the Notes or any fees payable under, or in connection with, this Agreement (other than
fees payable to the Agent for the account of the Agent), the Agent shall promptly distribute to
each Lender that Lender’s ratable share of the funds so received. If the Agent fails to distribute
collected funds received by 2:00 p.m. on any Business Day prior to the end of the same Business
Day, or to distribute collected funds received after 2:00 p.m. on any Business Day by the end of
the next Business Day, the funds shall bear interest until distributed at the Federal Funds
Effective Rate.



9.18 Tax Withholding Clause. Each Lender that is organized under the laws of a
jurisdiction other than the United States of America, any State thereof or the District of Columbia
(a “Foreign Lender”) (including any replacement or successor Lender hereunder) shall:



(a) at least five (5) Business Days before the date of the initial payment to be made by
Borrower under this Agreement to such Lender, deliver to the Borrower and the Agent (i) two duly
completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, or successor
applicable form, as the case may be, certifying that it is entitled to receive under this Agreement
without deduction or withholding of any United States federal income taxes and (ii) an Internal
Revenue Service Form W-8BEN, or any successor applicable form, certifying that it is entitled to an
exemption from United States backup withholding tax;



(b) deliver to the Borrower and the Agent two further copies of any such form or certification
at least five (5) Business Days before the date that any such form or certification expires or
becomes obsolete and after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Agent and the Borrower;



(c) obtain such extensions of time for filing and complete such forms certifications as may
reasonably be requested by the Borrower or the Agent; and



(d) file amendments to such forms as and when required unless an event (including, without
limitation, any change in treaty, law or regulation) has occurred after the date such Person
becomes a Lender hereunder which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and such Lender so
advises the Borrower and the Agent; provided, however, that the Borrower may rely upon such forms
provided to the Borrower for all periods prior to the occurrence of such event. Furthermore, the
Borrower shall not be required to pay any additional amounts to a Foreign Lender pursuant to
Section 2.11, and shall be permitted to reduce any payment required to be made to any Lender by any
present or future income, stamp or other Taxes, deductions or withholdings (that otherwise would
not be permitted to reduce such payment pursuant to the provisions of Section 2.14 of this
Agreement), if such additional amounts or present or future income, stamp or other Taxes,
deductions or withholdings would
not have arisen or would not have been required to have been withheld, but for a failure by
such Foreign Lender to comply with the provisions of this Section 9.18.


 


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9.19 USA Patriot Act. Each Lender or assignee or participant of a Lender that is not
organized 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 (a) an affiliate of a depository institution or foreign
bank that maintains a physical presence in the United States or foreign country, and (b) 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: (i) within 10 days after the Closing Date, and
(ii) at such other times as re required under the USA Patriot Act.



9.20 Issuing Bank. Each Lender acknowledges and agrees that the provisions of this
Article IX shall apply to the Issuing Bank, in its capacity as issuer of any Letter of Credit, in
the same manner as such provisions are expressly stated to apply to the Agent.



9.21 Benefit of Article IX. The provisions of this Article IX are intended solely for the
benefit of the Agent, the Issuing Bank and the Lenders. The Borrower shall not be entitled to rely
on any such provisions or assert any such provisions in a claim, or as a defense, against the
Agent, the Issuing Bank or any Lender. The Borrower acknowledges and consents to the foregoing
provisions of this Article IX.



ARTICLE X. MISCELLANEOUS




10.1 Amendment and Restatement; Future Amendments. This Agreement amends and restates in
its entirety that certain Credit Agreement dated as of May 13, 2008 among Borrower, the Lenders and
HSBC Bank as Agent, Swingline Lender, Issuing Bank and Arranger and is intended by the parties as
the final, complete and exclusive statement of the transactions evidenced by this Agreement. All
prior or contemporaneous promises, agreements and understandings, whether oral or written, are
deemed to be superseded by this Agreement, and no party is relying on any promise, agreement or
understanding not set forth in this Agreement. No modification, rescission, waiver, release or
amendment of any provision of this Agreement shall be made except by a written agreement or as
otherwise provided in Section 9.14 of this Agreement, subscribed by an Authorized Officer of the
Borrower and by authorized officers of the Required Lenders (or all the Lenders, if applicable),
and the Agent.



10.2 Delays and Omissions. No course of dealing and no delay or omission by the Agent or
the Lenders in exercising any right or remedy hereunder or with respect to any Indebtedness of the
Borrower to shall operate as a waiver thereof or of any other right or. remedy, and no single or
partial exercise thereof shall preclude any other or further exercise thereof or the exercise of
any other right or remedy. The Agent and the Lenders may remedy any Event of Default in any
reasonable manner without waiving the Event of Default remedied and without waiving any other prior
or subsequent Event of Default by Borrower and shall be
reimbursed for their expenses in so remedying such Event of Default. All rights and remedies of
the Lenders and the Agent hereunder are cumulative.


 


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10.3 Assignments/Participation. (a) The Borrower shall not assign or otherwise
transfer any of its rights pursuant to this Agreement without the prior written consent of the
Agent, and any such assignment or other transfer without such prior written consent shall be void.



(b) Any Lender may, in accordance with applicable law, at any time sell to one or more Persons
who would qualify as an Eligible Assignee (each, a “Participant”) participating interests in any
Revolving Loan or Term Loan owing to such Lender, any Revolving Note or Term Note held by such
Lender, any Commitment of such Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of participating interests to a Participant,
such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain
solely responsible to the other parties hereto for the performance of such obligations, such Lender
shall remain the holder of any such Revolving Loan or Revolving Note or Term Loan or Term Note for
all purposes under the Loan Documents, all amounts payable by Borrower under this Agreement shall
be determined as if such Lender had not sold such participating interests, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under the Loan Documents. In no event shall any Participant have any right
to approve any amendment or waiver of any provision of any Loan Document, or any consent to any
departure by Borrower or any Guarantor therefrom, except to the extent that such amendment, waiver
or consent would reduce the principal of, or interest on, the Loans or any fees payable hereunder,
or postpone the Revolving Credit Maturity Date or Term Loan Maturity Date, in each case to the
extent subject to such participation.



(c) Any Lender may, in the ordinary course of its business and in accordance with applicable
law, at any time assign to an Eligible Assignee all or any part of its rights and obligations under
the Loan Documents. Such assignment shall be pursuant to an Assignment and Assumption. The
consent of the Agent and the Borrower shall be required prior to an assignment becoming effective
if so required for the assignee to be an “Eligible Assignee”. Each such assignment shall be in an
amount not less than the lesser of (i) $5,000,000 for each portion of the Revolving Credit
Commitment and Term Loan Commitment of such assigning Lender, or (ii) the remaining amount of the
assigning Lender’s Commitment (calculated as at the date of such assignment). Upon (i) delivery to
the Agent of an Assignment and Assumption, together with any consents required above, and (ii)
payment of a $3,500 fee to the Agent for processing such assignment, such assignment shall become
effective on the effective date specified in such Assignment and Assumption. On and after the
effective date of such assignment, such Eligible Assignee shall for all purposes be a Lender to
this Agreement and any other Loan Document executed by the Lenders and shall have all the rights
and obligations of a Lender under the Loan Documents, to the same extent as if it were an original
party hereto, and no further consent or action by the Borrower, the Lenders or the Agent shall be
required to release the transferor Lender, and the transferor Lender shall be released without any
further action, with respect to the Commitments and Revolving Loans assigned to such Eligible
Assignee. Any assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 10.3(c) shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in accordance with
Section 10.3(b) of this Agreement. Upon the consummation of any assignment to an Eligible Assignee
pursuant to this Section 10.3(c), the transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that replacement Revolving Notes, or Term Notes if applicable, are
issued to such transferor Lender and new Revolving Notes or Term Notes or, as appropriate,
replacement Revolving Notes or replacement Term Notes, are issued to such Eligible Assignee, in
each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to
such assignment.



(d) Any Lender may at any time pledge or assign all or any portion of its rights under the
Loan Documents to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or assignment or enforcement thereof
shall release Lender from its obligations under any of the Loan Documents.



 


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10.4 Successors and Assigns. Borrower, Guarantor, Subsidiary, Lenders and Agent as such
terms are used herein shall include the legal representatives, successors and assigns of those
parties.



10.5 Notices. Any notice, request or demand to or upon the respective parties hereto to be
effective shall be in writing, unless otherwise expressly provided herein, and shall be deemed to
have been given or made when delivered by hand or by facsimile (with a copy by regular mail), one
(1) Business Day after being delivered to a courier for overnight delivery or three (3) Business
Days after being deposited in the first class United States mail, addressed as follows, or to such
other address as may be hereafter notified by the respective parties hereto:



	 	 	 	 
	 	To the Borrower:

	 	Astronics Corporation
	 	 

	 	130 Commerce Way
	 	 

	 	East Aurora, New York 14052
	 	 

	 	Attn: David C. Burney, Vice President-Finance and Treasurer
	 	 

	 	Facsimile No. 716-805-1286
	 	 

	 	Telephone No. 716-805-1599 ext. 159
	 	 
	 	 
	 	(With a copy 

which shall not 

itself constitute 

notice to):

	 	Hodgson Russ LLP

The Guaranty Building

140 Pearl Street, Suite 100

Buffalo, New York 14202-4040
	 	 

	 	Attention: Victoria J. Saxon, Esq.
	 	 

	 	Facsimile No. 716-849-0349
	 	 

	 	Telephone No. 716-848-1755
	 	 
	 	 
	 	To HSBC Bank:

	 	HSBC Bank USA, National Association
	 	 

	 	Commercial Banking Department
	 	 

	 	One HSBC Center
	 	 

	 	Buffalo, New York 14203
	 	 

	 	Attn: Mark F. Zeis, Senior Vice President
	 	 

	 	Facsimile No. 716-841-6782

Telephone No. 716-841-2132
	 	 
	 	 
	 	(With a copy 

which shall not 

itself constitute 

notice to):

	 	Phillips Lytle LLP

3400 HSBC Center

Buffalo, New York 14203

Attention: Raymond H. Seitz, Esq.
	 	 

	 	Facsimile No. 716-852-6100
	 	 

	 	Telephone No. 716-847-7065






 


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10.6 Governing Law. This Agreement, the transactions described herein and the obligations
of the parties hereto shall be construed under, and governed by, the internal laws of the State of
New York without regard to principles of conflicts of law.



10.7 Counterparts. This Agreement may be executed in any number of counterparts and by the
Agent, the Lenders and the Borrower on separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together constitute one and the
same Agreement.



10.8 Titles. Titles to the sections of this Agreement are solely for the convenience of
the parties, and are not an aid in the interpretation of this Agreement or any part thereof.



10.9 Inconsistent Provisions. The terms of this Agreement and any related agreements,
instruments or other documents shall be cumulative except to the extent that they are specifically
inconsistent with each other, in which case the terms of this Agreement shall prevail.



10.10 Course of Dealing. Without limitation of the foregoing, the Agent and the Lenders
shall have the right, but not the obligation, at all times to enforce the provisions of this
Agreement and all other documents executed in connection herewith in strict accordance with their
terms, notwithstanding any course of dealing or performance by the Lenders or the Agent in
refraining from so doing at any time and notwithstanding any custom in the banking trade. Any
delay or failure by the Lenders or the Agent at any time or times in enforcing its rights under
such provisions in strict accordance with their terms shall not be construed as having created a
course of dealing or performance modifying or waiving the specific provisions of this Agreement.



10.11 USA Patriot Act Notification. Each Lender hereby notifies the Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56), such Lender is required
to obtain, verify and record information that identifies Borrower, which information includes the
name and address of Borrower and other information that will allow such Lender to identify Borrower
in accordance with the USA Patriot Act (collectively, the
“Customer Identification Materials”). Borrower has delivered to the Agent, and the Agent
acknowledges receipt from the Borrower of, the Customer Identification Materials requested by the
Agent to satisfy the Agent’s regulatory requirements with respect thereto. Borrower consents to
the dissemination of such Customer Identification Materials by the Agent to each Lender.


 


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10.12 JURY TRIAL WAIVER. BORROWER, THE AGENT AND EACH LENDER, HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY THEY MAY HAVE IN ANY ACTION OR
PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS AGREEMENT OR ANY LOAN DOCUMENT OR THE
TRANSACTIONS RELATED HERETO. BORROWER REPRESENTS AND WARRANTS THAT NEITHER ANY REPRESENTATIVE OF
THE AGENT OR ANY LENDER NOR THE AGENT NOR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE AGENT OR ANY LENDER WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL
WAIVER. BORROWER ACKNOWLEDGES THAT THE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.



10.13 CONSENT TO JURISDICTION. BORROWER, THE AGENT AND EACH LENDER AGREE THAT ANY ACTION
OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY BE COMMENCED IN THE SUPREME COURT OF
NEW YORK IN ERIE COUNTY, OR IN THE DISTRICT COURT OF THE UNITED STATES IN THE WESTERN DISTRICT OF
NEW YORK, AND THE BORROWER WAIVES PERSONAL SERVICE OF PROCESS AND AGREES THAT A SUMMONS AND
COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE PROPERLY SERVED AND SHALL
CONFER PERSONAL JURISDICTION IF SERVED BY REGISTERED OR CERTIFIED MAIL TO THE BORROWER, OR AS
OTHERWISE PROVIDED BY THE LAWS OF THE STATE OF NEW YORK OR THE UNITED STATES.



[SIGNATURE PAGE FOLLOWS]




 


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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their duly
authorized officers, all as of January 30, 2009.



	 	 	 	 	 
	 	ASTRONICS CORPORATION

 	 
	 	By:  	/s/ David C. Burney
 	 
	 	 	David C. Burney 	 
	 	 	Vice President — Finance and Treasurer 	 
	 
	 	HSBC BANK USA, NATIONAL ASSOCIATION,

as Agent, Swingline Lender, Lender, Issuing Bank

and a Lead Arranger

 	 
	 	By:  	/s/ Mark F. Zeis
 	 
	 	 	Mark F. Zeis 	 
	 	 	Senior Vice President 	 
	 
	 	BANK OF AMERICA, N.A., as a Lender 

and a Lead Arranger

 	 
	 	By  	/s/ Michael R. Nowicki
 	 
	 	 	Michael R. Nowicki 	 
	 	 	Senior Vice President 	 
	 
	 	KEYBANK NATIONAL ASSOCIATION, as a Lender

and Documentation Agent

 	 
	 	By:  	/s/ Mark F. Wachowiak
 	 
	 	 	Mark F. Wachowiak 	 
	 	 	Vice President 	 



[SIGNATURE PAGE TO ASTRONICS CREDIT AGREEMENT]




 


 









 







EXHIBIT A




REPLACEMENT REVOLVING NOTE




	 	 	 
	 

	 	Buffalo, New York
	$                    

	 	January 30, 2009






FOR VALUE RECEIVED, the undersigned, ASTRONICS CORPORATION (“Borrower”) hereby unconditionally
promises to pay, on or before January 30, 2012, to the order of                                          (“Lender”) at
the Commercial Banking Department office of the Agent (as defined in the Credit Agreement as
hereinafter defined) at One HSBC Center, Buffalo, New York 14203, or at the holder’s option, at
such other place as may be designated by the holder, in lawful money of the United States of
America, a principal sum equal to the lesser of                                                             
($                                        ) or the aggregate unpaid principal amount of all Revolving Loans made by
Lender to the Borrower from time to time under an Amended and Restated Credit Agreement, dated of
as of January 30, 2009, among the Borrower, HSBC Bank USA, National Association as agent, for
itself, the Lender and other lending institutions and issuing banks now or hereafter parties
thereto, as the same may hereafter be amended, supplemented, renewed, restated, replaced or
otherwise modified from time to time (“Credit Agreement”) as evidenced by the inscriptions made on
the schedule attached hereto, or any continuation thereof (“Schedule”). The Borrower further
promises to pay interest on the unpaid principal amount hereof from time to time at the rates and
at such times as are specified in the Credit Agreement. All capitalized terms used herein and not
otherwise defined herein shall have the meanings specified in the Credit Agreement.



The Lender and each holder of this Note are authorized to inscribe on the Schedule, the date
of the making of each Revolving Loan, the amount of each Revolving Loan, the applicable Rate
Options and Interest Periods, all payments on account of principal and the aggregate outstanding
principal balance of this Note from time to time unpaid. Each entry set forth on the Schedule
shall be prima facie evidence of the facts so set forth. No failure by the Lender or any holder of
this Note to make, and no error in making, any inscriptions on the Schedule shall affect Borrower’s
obligation to repay the full principal amount loaned to or for the account of Borrower, or the
Borrower’s obligation to pay interest thereon at the agreed upon rate.



If any payment on this Note becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day, and the Borrower will pay
interest thereon at the then applicable rate until the date of actual receipt of such installment
by the holder of this Note.



No failure by the holder to exercise, and no delay in exercising, any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by the holder of any
right or powers hereunder preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the holder as herein specified
are cumulative and not exclusive of any other rights or remedies which the holder may
otherwise have.


 


 









 





No modification, rescission, waiver, release or amendment of any provision of this Note shall
be made except by a written agreement subscribed by a duly authorized officer of the Borrower and
the holder hereof.



Borrower waives diligence, presentment, protest and demand, and also notice of protest,
demand, dishonor and nonpayment of this Note.



This Note evidences a borrowing under the Credit Agreement to which reference is hereby made
with respect to interest rate options and periods, prepayments of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified, and rights of acceleration of the
principal hereof on the occurrence of certain events. The obligations of the Borrower under this
Note, and the obligations of the Guarantors under the Loan Documents, are secured by the Collateral
referred to in the Collateral Documents.



Borrower agrees to pay on demand all reasonable costs and expenses incurred by the holder in
enforcing this Note or in collecting the indebtedness evidenced hereby, including, without
limitation, if the holder retains counsel for any such purpose, reasonable attorneys’ fees and
expenses.



This Note is issued in replacement and substitution for, but not in payment of, a Revolving
Note dated as of May 13, 2008 in the amount of $                     issued by the Borrower to Lender.



This Note shall be construed under, and governed by, the internal laws of the State of New
York without regard to principles of conflicts of laws.



	 	 	 	 	 
	 	ASTRONICS CORPORATION

 	 
	 	By:  	
 	 
	 	 	David C. Burney 	 
	 	 	Vice President — Finance and Treasurer 	 
	 




 


- 2 -









 







SCHEDULE




LOANS, RATE OPTIONS AND PAYMENTS OF PRINCIPAL




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	DATE LOAN	 	AMOUNT OF	 	 	 	 	 	AMOUNT OF	 	AGGREGATE	 	 
	 	 	MADE, 	 	LOAN MADE,	 	INTEREST	 	 	 	PRINCIPAL	 	UNPAID	 	NOTATION
	 	 	CONTINUED OR	 	CONTINUED OR	 	PERIOD	 	DUE	 	PAID OR	 	PRINCIPAL	 	MADE BY
	TYPE OF LOAN	 	CONVERTED	 	CONVERTED	 	DATES	 	DATE	 	PREPAID	 	BALANCE	 	AND DATE
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 







 


 









 







EXHIBIT B




REPLACEMENT SWINGLINE NOTE




	 	 	 
	 

	 	Buffalo, New York
	$5,000,000.00

	 	January 30, 2009






FOR VALUE RECEIVED, the undersigned, ASTRONICS CORPORATION, a New York business corporation
having its principal place of business at 130 Commerce Way, East Aurora, New York 14052
(“Borrower”) promises to pay, ON DEMAND, to the order of HSBC BANK USA, NATIONAL ASSOCIATION
(“Swingline Lender”) at the Commercial Banking Department office of the Agent (as defined in the
Credit Agreement, as hereinafter defined) at One HSBC Center, Buffalo, New York 14203, in lawful
money of the United States and in immediately available funds, the lesser of (i) the principal
amount of Five Million Dollars ($5,000,000) or (ii) the aggregate amount of all unpaid Swingline
Loans made by Swingline Lender to Borrower as shown on the schedule on the reverse side of this
Note or any continuation schedule (“Schedule”) together with interest as provided in the next
paragraph. In this Note, any capitalized term not defined in this Note has the meaning defined in
an Amended and Restated Credit Agreement, dated as of January 30, 2009, among the Borrower, HSBC
Bank USA, National Association as agent, for itself, the Swingline Lender and other lending
institutions and issuing banks now or hereafter parties thereto, as the same may hereafter be
amended, supplemented, renewed, restated, replaced or otherwise modified from time to time (“Credit
Agreement”).



From and including the date of this Note to but not including the date the outstanding
principal amount of this Note is paid in full, the Borrower shall pay to the Agent for the account
of the holder of this Note (“Holder”) interest on such outstanding principal amount at a rate per
year that shall on each day prior to demand be equal to the ABR Option from time to time in effect
pursuant to the Credit Agreement. After an unsatisfied demand for payment, this Note shall bear
interest at a per annum rate of interest equal to 2% in excess of the Prime Rate from time to time
in effect. In no event shall such interest be payable at a rate in excess of the maximum rate of
interest permitted by applicable law. A payment of such interest shall become due on the first day
of each calendar month, beginning on March 1, 2009 and on the date this Note is repaid in full.
Interest shall be calculated on the basis of a 365-day year or 366-day year, as applicable, for the
actual number of days elapsed.



The Holder is authorized to inscribe on the Schedule the date of each Swingline Loan made
hereunder, each repayment of principal and the aggregate unpaid principal balance of this Note.
Each entry set forth on the Schedule shall be prima facie evidence of the facts so set forth. No
failure by the Holder to make, and no error by the Holder in making, any inscription on the
Schedule shall affect the Borrower’s obligation to repay the full amount advanced on this Note to
or for the account of the Borrower, or Borrower’s obligation to pay interest thereon at this agreed
upon rate.


 


 









 





If any payment on this Note becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day, and the Borrower will pay
interest thereon at the then applicable rate until the date of actual receipt of such installment
by the holder of this Note.



No failure by the holder to exercise, and no delay in exercising, any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by the holder of any
right or powers hereunder preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the holder as herein specified are cumulative and
not exclusive of any other rights or remedies which the holder may otherwise have.



No modification, rescission, waiver, release or amendment of any provision of this Note shall
be made except by a written agreement subscribed by a duly authorized officer of the Borrower and
the holder hereof.



Borrower waives diligence, presentment, protest and demand, and also notice of protest,
demand, dishonor and nonpayment of this Note.



This Note is the Swingline Note referred to in the Credit Agreement and is otherwise entitled
to the benefits of the Credit Agreement. The obligations of the Borrower under this Note, and the
obligations of the Guarantors under the Loan Documents, are secured by the Collateral referred to
in the Collateral Documents.



Borrower agrees to pay on demand all reasonable costs and expenses incurred by the holder in
enforcing this Note or in collecting the indebtedness evidenced hereby, including, without
limitation, if the holder retains counsel for any such purpose, reasonable attorneys’ fees and
expenses.



This Note is issued in replacement and substitution for, but not in payment of a Swingline
Note dated as of May 13, 2008 in the amount of $10,000,000 issued by the Borrower to Lender.



This Note shall be construed under, and governed by, the internal laws of the State of New
York without regard to principles of conflicts of laws.



	 	 	 	 	 
	 	ASTRONICS CORPORATION

 	 
	 	By:  	
 	 
	 	 	David C. Burney 	 
	 	 	Vice President — Finance and Treasurer 	 
	 




 


- 2 -









 







SCHEDULE




SWINGLINE LOANS AND PAYMENTS OF PRINCIPAL




	 	 	 	 	 	 	 	 	 
	 	 	 	 	AMOUNT OF	 	AGGREGATE	 	 
	 	 	 	 	PRINCIPAL	 	UNPAID	 	 
	 	 	PRINCIPAL	 	PAID OR	 	PRINCIPAL	 	INSCRIPTION
	DATE	 	AMOUNT	 	REPAID	 	BALANCE	 	MADE BY
	 

	 	 
	 	 
	 	 
	 	 







 


 











 




EXHIBIT C




TERM NOTE




	 	 	 
	$                    

	 	Buffalo, New York 

January 30, 2009






FOR VALUE RECEIVED, the undersigned, ASTRONICS CORPORATION (“Borrower”) hereby unconditionally
promises to pay to the order of                      (“Lender”), at the Commercial Banking Department
Office of the Agent (as defined in the Credit Agreement as hereinafter defined) at One HSBC Center,
Buffalo, New York 14203, or at Lender’s option, at such other place as may be designated from time
to time by the Lender, the principal sum of
                     Dollars ($                    ) in lawful money
of the United States of America, in twenty (20) quarterly installments of principal as follows:
nineteen (19) equal consecutive quarterly principal installments of $                     each commencing on
April 1, 2009, and payable on the first day of each July, October, January and April thereafter, to
and including October 1, 2013, and one (1) final installment on January 30, 2014 in an amount equal
to the then unpaid principal balance hereof, together with interest as provided below.



The Borrower further promises to pay interest on the unpaid principal amount hereof from time
to time at the rates and on the dates determined in accordance with the provisions of an Amended
and Restated Credit Agreement dated as of January 30, 2009 among the Borrower, HSBC Bank USA,
National Association, as agent, for itself, the Lender, and the other lending institutions and
issuing banks now or hereafter parties thereto, as the same may hereafter be amended, supplemented,
renewed, replaced or otherwise modified (“Credit Agreement”). All capitalized terms used herein
and not otherwise defined herein shall have the meanings specified in the Credit Agreement.



After maturity, whether by acceleration or otherwise, this Note shall bear interest at a rate
per annum equal to two percent (2%) plus the rate of interest otherwise applicable on this Note;
provided, however, in no event shall the rate of interest on this Note exceed the maximum rate
authorized by applicable law.



The holder hereof is authorized to inscribe on the schedule attached to this Note or any
continuation thereof (“Schedule”) the amount of each repayment of principal, the amount and, the
date of the continuation or conversion of any Libor Loan or ABR Loan, and the dates on which each
Interest Period shall begin and end. Each entry on the Schedule shall be prima facie evidence of
the facts so set forth. No failure by the holder to make, and no error by the holder in making,
any inscription on the Schedule shall affect the undersigned’s obligation to repay the full
principal amount advanced by the holder to or for the account of the undersigned or the
undersigned’s obligation to pay interest thereon at the agreed upon rate.



If any installment of this Note is not paid when due, whether because such installment becomes
due on a Saturday, Sunday or bank holiday or for any other reason, the
Borrowers will pay interest thereon at the aforesaid rate until the date of actual receipt of such
installment by the holder of this Note.


 


 









 





The Borrower may not prepay at any time any portion of the principal hereof which is a Libor
Loan until the end of the applicable Interest Period except upon payment of the Breakage Fee as set
forth in the Agreement and payment of all accrued interest on the principal so prepaid to the date
of such prepayment. Any partial prepayment of principal shall be applied upon installments of this
Note in inverse order of maturity.



No failure by the holder hereof to exercise, and no delay in exercising, any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the holder
of any right or power hereunder preclude any other or further exercise thereof or the exercise of
any other right or power. The rights and remedies of the holder as herein specified are cumulative
and not exclusive of any other rights or remedies which the holder may otherwise have.



No modification, rescission, waiver, release or amendment of any provision of this Note shall
be made except by a written agreement subscribed by duly authorized officers of the Borrowers and
the holder hereof.



This Note is a Term Note as referred to in the Credit Agreement, to which reference is hereby
made with respect to interest rate provisions, mandatory and voluntary prepayments, prepayment
premiums, collateral and rights of acceleration of the principal hereof on the occurrence of
certain events.



Borrower hereby waives diligence, presentment, protest and demand, and also notice of protest,
demand, dishonor and nonpayment of this Note.



Borrower agrees to pay all costs and expenses incurred by the holder in enforcing this Note or
in collecting the indebtedness evidenced hereby, including, without limitation, if the holder
retains counsel for any such purpose, reasonable attorneys’ fees and expenses.



This Note shall be construed under, and governed by, the internal laws of the State of New
York without regard to principles of conflicts of laws.



	 	 	 	 	 	 	 
	 	 	ASTRONICS CORPORATION
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

David C. Burney
Vice President — Finance and Treasurer
	 	 






 


- 2 -









 





SCHEDULE




LOANS, RATE OPTIONS AND PAYMENTS OF PRINCIPAL




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	DATE LOAN	 	AMOUNT OF	 	 	 	 	 	AMOUNT OF	 	AGGREGATE	 	 
	 	 	MADE,	 	LOAN MADE,	 	INTEREST	 	 	 	PRINCIPAL	 	UNPAID	 	NOTATION
	 	 	CONTINUED OR	 	CONTINUED OR	 	PERIOD	 	DUE	 	PAID OR	 	PRINCIPAL	 	MADE BY
	TYPE OF LOAN	 	CONVERTED	 	CONVERTED	 	DATES	 	DATE	 	PREPAID	 	BALANCE	 	AND DATE
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 






 


 









 





EXHIBIT D




COMPLIANCE CERTIFICATE




ASTRONICS CORPORATION (“Borrower’) hereby certifies to HSBC BANK USA, NATIONAL ASSOCIATION
(“HSBC Bank”) as Agent and the Lenders pursuant to an Amended and Restated Credit Agreement between
the Borrower and the Agent and the Lenders dated as of January 30, 2009 (“Agreement”), that:




	 	1.	 	Capitalized terms not defined herein shall have the meanings set forth in the Agreement.






	 	2.	 	The Borrower has complied with all the terms, covenants and conditions to be performed or
observed by it contained in the Agreement and the Loan Documents.






	 	3.	 	There exists no Default or Event of Default or Material Adverse Effect on the date hereof
or, if applicable, after giving effect to the Loan made, continued or converted on the date hereof.






	 	4.	 	The representations and warranties contained in the Agreement, in any Loan Document or in
any certificate, document or financial or other statement furnished at any time thereunder are
true, correct and complete in all material respects with the same effect as though such
representations and warranties had been made on the date hereof, except to the extent that any such
representation and warranty relates solely to an earlier date (in which case such representation
and warranty shall be true, correct and complete on and as of such earlier date).






	 	5.	 	There is no unsatisfied reimbursement obligation of the Borrower in connection with any
Letter of Credit.




 


 









 











	 	6.	 	As of the date hereof and for the period ending date set forth below, the computations,
ratios and calculations set forth in this Certificate are true and correct:
	 
	 	 	 	Period Ending Date:                     





	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	§6.13 Minimum Fixed Charge Coverage Ratio
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Consolidated Fixed Charge Coverage Ratio
	 	 	 	 	 	=	                     :1.0	 
	 
	 	 	 	 	 	 	 	 
	Required: 
 1.25 to 1.0
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	§6.14 Maximum Capital Expenditures
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Consolidated Capital Expenditures
	 	 	 	 	 	$	                           	 
	 
	 	 	 	 	 	 	 	 
	Required: 
 $10,000,000
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	§6.15 Maximum Leverage Ratio
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Consolidated Leverage Ratio
	 	 	 	 	 	=	                     :1.0   	 
	 
	 	 	 	 	 	 	 	 
	Required: 
 2.75 to 1.0
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	§6.16 Minimum Net Worth
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Consolidated Net Worth
	 	$	                    	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Eclipse Write-Offs
	 	$	                    	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Total
	 	 	 	 	 	$	                           	 
	 
	 	 	 	 	 	 	 	 
	Required: 
 $57,300,000 increased
by 50% of Consolidated Net Income after 12/31/08
(Add to Consolidated Net Worth the actual Eclipse
Write-Offs for 2008 and 2009 (but  $6,000,000 in the
aggregate) for the purpose of determining compliance)
	 	 	 	 	 	 	 	 







WITNESS the signature of a duly authorized officer of the Borrower on                     , 20       .



	 	 	 	 	 
	 	ASTRONICS CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 




 


- 2 -











 




EXHIBIT E




REQUEST CERTIFICATE




Revolving Loans and Term Loans




The undersigned hereby certifies to HSBC Bank USA, National Association (“HSBC Bank”) in
accordance with the terms of an Amended and Restated Credit Agreement dated as of January 30, 2009
among Astronics Corporation (“Borrower”), HSBC Bank as Agent and the Lenders:




The undersigned requests or has requested by telephone or facsimile notice a:



	 	 	 	 	 	 	 
	 

	 	o Revolving Loan
	 	o Term Loan	 	 
	 
	 	 	 	 	 	 
	 

	 	(Check One)
	 	(Check One)	 	 
	 
	 	 	 	 	 	 
	 

	 	o new loan
	 	o new loan	 	 
	 

	 	o conversion
	 	o conversion	 	 
	 

	 	o continuation
	 	o continuation	 	 
	 
	 	 	 	 	 	 
	 

	 	of a
	 	of a	 	 
	 
	 	 	 	 	 	 
	 

	 	(Check One)
	 	(Check One)	 	 
	 
	 	 	 	 	 	 
	 

	 	o Libor Loan
	 	o Libor Loan	 	 
	 

	 	o ABR Loan
	 	o ABR Loan	 	 
	 
	 	 	 	 	 	 
	 

	 	to a or as a
	 	to a or as a	 	 
	 
	 	 	 	 	 	 
	 

	 	(Check One)
	 	(Check One)	 	 
	 
	 	 	 	 	 	 
	 

	 	o Libor Loan
	 	o Libor Loan	 	 
	 

	 	o ABR Loan
	 	o ABR Loan	 	 






in the amount of $                     for an Interest Period, if applicable, of




	 	 	 	 	 	 	 	 	 
	 	 	 	 	(Check One)	 	 	 	 
	 
	 

	 	 	 	o one month.	 	 	 	 
	 

	 	 	 	o two months.	 	 	 	 
	 

	 	 	 	o three months.
	 	 
	 	 
	 

	 	 	 	o six months.	 	 	 	 






The proposed loan/conversion/continuation is to be made on                     , 20       which is a Business
Day.


 


 









 





WITNESS the signature of the undersigned authorized signatory of the Borrower this                      day of
                    ,
20     .



	 	 	 	 	 	 	 
	 	 	ASTRONICS CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 





 


- 2 -









 





EXHIBIT F




ASSIGNMENT AND ASSUMPTION




Reference is made to an Amended and Restated Credit Agreement, dated as of January 30, 2009,
among Astronics Corporation, HSBC Bank USA, National Association as agent, for itself and the other
lending institutions and issuing banks now or hereafter parties thereto, as the same may hereafter
be amended, supplemented, renewed, restated, replaced or otherwise modified from time to time
(“Credit Agreement”). Terms defined in the Credit Agreement are used herein as defined therein.



The Assignor identified on Schedule 1 hereto (“Assignor”) and the Assignees identified on
Schedule 1 hereto (each, an “Assignee”, and collectively, the “Assignees”) agree as follows:



1. Assignor hereby irrevocably sells and assigns to the Assignees, without recourse to
Assignor, and each Assignee hereby irrevocably purchases and assumes from Assignor, without
recourse to Assignor, as of the Effective Date (as defined below), the interest described on
Schedule 1 hereto (each, an “Assigned Interest”, and collectively, the “Assigned Interests”) in and
to Assignor’s rights and obligations under the Credit Agreement with respect to those credit
facilities contained in the Credit Agreement as are set forth on Schedule 1 hereto (“Assigned
Facility”) in a principal amount for each Assigned Facility as set forth on Schedule 1 hereto.



2. Assignor (i) represents and warrants that (A) it is legally authorized to enter into this
Assignment and Assumption, (B) as of the date hereof, its Revolving Credit Commitment is
$                    , and its Applicable Percentage is                     %, the aggregate outstanding principal balance of
its Revolving Loans is $                    , and the aggregate outstanding balance of its Term Loan is
$                    , in each case after giving effect to the assignment contemplated hereby, (ii) makes no
representation or warranty, express or implied and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Credit Agreement, any
other Loan Document or any other instrument or document furnished pursuant thereto, or the
execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto
or the attachment, perfection or priority of any security interest or mortgage, other than that it
has not created any adverse claim upon the interest being assigned by it hereunder and that such
interest is free and clear of any such adverse claim; and (iii) makes no representation or warranty
and assumes no, responsibility with respect to the financial condition of the Borrower or any of
its Subsidiaries or any other obligation or the performance or observance by the Borrower, any of
its Subsidiaries or any other Person primarily or secondarily liable in respect of the Obligations
under the Credit Agreement, any other Loan Document or any other instrument or document furnished
pursuant hereto or thereto.


 


 









 





3. Each of the Assignees (i) represents and warrants that (A) it is duly and legally
authorized to enter into this Assignment and Assumption, (B) the execution, delivery and
performance of this Assignment and Assumption do not conflict with any provision of law or of the
charter or by-laws of such Assignee, or of any agreement binding on such Assignee, and (C) all
acts, conditions and things required to be done and performed and to have occurred prior to the
execution, delivery and performance of this Assignment and Assumption, and to render the same the
legal, valid and binding obligation of such Assignee, enforceable against it in accordance with its
terms, have been done and performed and have occurred in due and strict compliance with all
applicable laws; (ii) confirms that it has received a copy of the Credit Agreement, together with
copies of the financial statements delivered pursuant to Section 5.2 thereof, if any, the other
Loan Documents, and such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Assumption; (iii) agrees that it
will, independently and without reliance upon the Assignor, the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Credit Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto or thereto; (iv) appoints
and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and
discretion under the Credit Agreement, the Notes or any other instrument or document furnished
pursuant hereto or thereto as are delegated to the Agent by the terms thereof, together with such
powers as are incidental thereto; (v) acknowledges that it has made arrangements with the Assignor
satisfactory to such Assignee with respect to its pro rata share of letter of credit fees in
respect of outstanding Letters of Credit; and (vi) agrees that it will be bound by the provisions
of the Credit Agreement and will perform in accordance with its terms all the obligations which by
the terms of the Credit Agreement are required to be performed by it as a Lender including, if it
is organized under the laws of a jurisdiction outside the United States of America, its obligation
pursuant to Section 9.18 of the Credit Agreement to deliver the forms prescribed by the Internal
Revenue Service of the United States certifying as to such Assignee’s exemption from United States
withholding taxes with respect to all payments to be made to such Assignee under the Credit
Agreement, or such other documents as are necessary to indicate that all such payments are subject
to such tax at a rate reduced by an applicable tax treaty.



4. On the Effective Date (as defined below), the Assignor shall return to the Borrower the
Revolving Note or Term Note payable to Assignor which is being changed as the result of this
Assignment and Assumption, stamped “Replaced”.



5. The effective date for this Assignment and Assumption shall be the Effective Date of the
Assignment described in Schedule 1 hereto (the “Effective Date”). Schedule 2.1 to the Credit
Agreement shall thereupon be replaced by a new Schedule 2.1.



 


 









 





6. From and after the Effective Date, the Agent shall make all payments in respect of the
Assigned Interests (including payments of principal, interest, fees and other amounts) to the
Assignees that accrue subsequent to the Effective Date. The Assignor and the Assignees shall make
directly between themselves any appropriate adjustments in payments for periods prior to the
Effective Date by the Agent or with respect to the making of this assignment.



7. From and after the Effective Date, (i) each of the Assignees shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Assumption,
have the rights and obligations of a Lender thereunder and under the Notes and shall be bound by
the provisions thereof, and (ii) the Assignor shall, to the extent provided in this Assignment and
Assumption, relinquish its rights and be released from its obligations under the Credit Agreement.
Notwithstanding anything to the contrary contained herein, the Assignor shall retain its right to
be indemnified pursuant to Section 8.1 of the Credit Agreement with respect to any claims or
actions arising prior to the Effective Date.



8. This Assignment and Assumption may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the parties hereto may
execute this Assignment and Assumption by signing any such counterpart.



[SIGNATURE PAGE FOLLOWS]





 


 











 




IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption to be
executed as of                     , 20____ 

by their respective duly authorized officers.



	 	 	 	 	 	 
	ASSIGNOR:	 	 
	 
	 	 	 	 	 
	By:
	 	 	 	 	 
	 

	 	 
	 

	Name: 	 	 	 
	 

	 	 	 
	 

	Title:	 	 	 
	 

	 	 	 
	 
	 	 	 	 	 
	ASSIGNEE:	 	 
	 
	 	 	 	 	 
	By:
	 	 	 	 	 
	 

	 	 
	 

	Name: 	 	 	 
	 

	 	 	 
	 

	Title:	 	 	 
	 

	 	 	 





 


- 4 -









 





SCHEDULE 1

to

Assignment and Assumption





	I. As to the Revolving Credit in respect of which an interest is being assigned:





	 	 	 	 
	Percentage interest assigned:
	 	                    %	 
	 	 	 	 
	Assignee’s Revolving Credit Commitment:
	$	                    	 
	 	 	 	 
	Aggregate outstanding principal amount of
Revolving Loans assigned:
	$	                    	 
	 	 	 	 
	Principal amount of Revolving Note
payable to Assignee:
	$	                    	 
	 	 	 	 
	Principal amount of Revolving Note
payable to Assignor:
	$	                    	 







	II. As to the Term Loan in respect of which an interest is being assigned:





	 	 	 	 
	Percentage interest assigned:
	 	                    %	 
	 	 	 	 
	Assignee’s Term Loan Commitment:
	$	                    	 
	 	 	 	 
	Aggregate outstanding principal amount of
Term Loan assigned:
	$	                    	 
	 	 	 	 
	Principal amount of Term Note
payable to Assignee:
	$	                    	 
	 	 	 	 
	Principal amount of Term Note
payable to Assignor:
	$	                    	 





Effective
Date of Assignment                                         , 200_




	 	 	 	 	 	 	 	 	 	 	 
	[NAME OF ASSIGNOR], as Assignor	 	 	 	[NAME OF ASSIGNEE], as Assignee	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	, 	 200_
	 	Dated:	 	 	, 	200_
	 

	 	 

	 	 
	 	 	 	 

	 	 





 


 









 





	 	 	 
	 

	 	Domestic Lending Office:
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	Libor Lending Office:
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 






Accepted this                      day of

                                        , 200_



	 	 	 	 	 	 	 
	ASTRONICS CORPORATION, as Borrower	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	HSBC BANK USA, NATIONAL ASSOCIATION, as Agent	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





 


- 2 -









 





SCHEDULE 1




EMPLOYEE BENEFITS PLAN




Atro Companies’ Profit Sharing/401K Plan





 


 









 




SCHEDULE 2.1




LENDERS’ COMMITMENTS




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Revolving Credit	 	 	Term Credit	 	 	Total	 	 	Applicable	 
	Lender	 	Commitments	 	 	Commitments	 	 	Commitments	 	 	Percentage	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	HSBC Bank USA, N.A.
	 	$	18,529,411.76	 	 	$	16,470,588.24	 	 	$	35,000,000	 	 	 	41.176470588	%
	Bank of America, N.A.
	 	$	18,529,411.76	 	 	$	16,470,588.24	 	 	$	35,000,000	 	 	 	41.176470588	%
	KeyBank National
Association
	 	$	7,941,176.48	 	 	$	7,058,823.52	 	 	$	15,000,000	 	 	 	17.647058823	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	$	45,000,000.00	 	 	$	40,000,000.00	 	 	$	85,000,000	 	 	 	1.00000	%






Applicable Lending Offices:




	 	 	 	 	 
	Lender	 	Domestic Lending Office	 	Libor Lending Office
	 
	 	 	 	 
	HSBC Bank USA, National
Association

	 	One HSBC Center

Buffalo, NY 14203
	 	One HSBC Center

Buffalo, NY 14203
	 
	 	 	 	 
	Bank of America, N.A.

	 	2001 Clayton Road

Concord, CA 94520
	 	2001 Clayton Road

Concord, CA 94520
	 

	 	Attn: Anna Maria Finn

         Credit Service Rep.
	 	Attn: Anna Maria Finn

         Credit Service Rep.
	 
	 	 	 	 
	KeyBank National
Association

	 	50 Fountain Plaza, 17th Floor

Buffalo, NY 14202
	 	50 Fountain Plaza, 17th Floor

Buffalo, NY 14202






ISSUING BANK’S COMMITMENT




	 	 	 	 	 
	 	 	Letter of Credit	 
	Issuing Bank	 	Commitment	 
	 
	 	 	 	 
	HSBC Bank USA, National Association
	 	$	20,000,000	 





 


 









 





SCHEDULE 4.11




SUBSIDIARIES; AFFILIATES




A. Subsidiaries of Astronics Corporation:




	 	 	 	 	 	 	 
	Company	 	Incorporated	 	% Owned	 
	 
	 	 	 	 	 	 
	Luminescent Systems, Inc.
	 	New York	 	 	100	%
	 
	 	 	 	 	 	 
	Luminescent Systems Europe B.V.B.A.
	 	Belgium	 	 	50	%
	 
	 	 	 	 	 	 
	Astronics Advanced Electronic Systems Corp.
	 	Washington	 	 	100	%
	 
	 	 	 	 	 	 
	Astronics Air LLC *
	 	New York	 	 	100	%
	 
	 	 	 	 	 	 
	D M E Corporation
	 	Florida	 	 	100	%






B. Subsidiaries of Luminescent Systems, Inc.:




	 	 	 	 	 	 	 
	Luminescent Systems Europe B.V.B.A.
	 	Belgium	 	 	50	%
	 
	 	 	 	 	 	 
	Luminescent Systems of Canada Inc.
	 	Canada	 	 	100	%








	 	 	 
	*	 	Sole asset is a single-engine aircraft



 


 









 





SCHEDULE 6.2




LIENS AND INDEBTEDNESS




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Due
	Property/Equipment	 	Owner	 	Lien Held By	 	Type	 	Balance	 	 	Date
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Lot 27, Centerra
	 	Luminescent	 	HSBC Bank	 	IRB *	 	$	4,109,918	 	 	06/18
	Business Park
	 	Systems, Inc.	 	 	 	 	 	 	 	 	 	 
	4 Lucent Drive 

Lebanon, New Hampshire
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	130 Commerce Way
	 	Luminescent	 	HSBC Bank	 	IRB *	 	$	2,985,624	 	 	12/19
	East Aurora, New York
	 	Systems, Inc.	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Luminescent	 	HSBC Bank	 	IRB *	 	$	6,084,000	 	 	4/27
	 
	 	Systems, Inc.	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Unsecured Loan
	 	Astronics	 	Empire State	 	Loan	 	$	37,762.40	 	 	3/1/11
	 
	 	Corporation	 	Development	 	 	 	 	 	 	 	 
	 
	 	 	 	Corporation	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Unsecured Loan
	 	Luminescent	 	HSBC Bank	 	Loan	 	$	1,031,253.40	 	 	Demand,
	Backed by Existing
	 	Systems Canada	 	Canada	 	 	 	 	 	 	 	no later
	Letter of Credit
	 	Inc.	 	 	 	 	 	 	 	 	 	8/31/15
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Capitalized Lease/Secured
	 	D M E Corporation	 	US Bancorp	 	Lease	 	$	117,517.80	 	 	2012
	Equipment Loan
Covering
 Telephone System
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	D M E Dell Equipment
	 	D M E Corporation	 	Dell Financial	 	Secured	 	$	100,000	 	 	 
	 
	 	 	 	Service L.P.	 	Revolver	 	 	Maximum	 	 	 









	 	 	 
	*	 	Each of the IRB transactions are variable rate bond transactions backed by one of the IRB Letters
of Credit.



 


 









 





SCHEDULE 6.3




INVESTMENTS AND GUARANTY OBLIGATIONS




14,535 shares of common stock of Tel-Instrument Electronics Corp., which is traded on the American
Stock Exchange, with an approximate value as of January 2, 2009 of $3.090 per share.