Exhibit 10.1


 




 





 


CREDIT AGREEMENT


 


Dated as of May 2, 2005


 


among


 


AXSYS TECHNOLOGIES, INC.,


as the Borrower,


 


THE SUBSIDIARY GUARANTORS PARTY HERETO,


as Subsidiary Guarantors,


 


FLEET NATIONAL BANK,

A BANK OF AMERICA COMPANY

as the Lender and the L/C Issuer


 


and


 


FLEET NATIONAL BANK,

A BANK OF AMERICA COMPANY

as Collateral Agent


 




 





 





















 


TABLE OF
CONTENTS


 


	
  ARTICLE I.

  	
  DEFINITIONS AND ACCOUNTING
  TERMS

  	
   

  
	
  1.01

  	
  Defined
  Terms

  	
   

  
	
  1.02

  	
  Other Interpretive Provisions

  	
   

  
	
  1.03

  	
  Accounting Terms

  	
   

  
	
  1.04

  	
  Rounding

  	
   

  
	
  1.05

  	
  Times
  of Day

  	
   

  
	
  1.06

  	
  Letter of Credit Amounts

  	
   

  
	
  1.07

  	
  Resolution of Drafting
  Ambiguities

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  THE COMMITMENT AND OTHER
  CREDIT EXTENSIONS

  	
   

  
	
  2.01

  	
  The
  Loans

  	
   

  
	
  2.02

  	
  Borrowings, Conversions and
  Continuations of Committed Revolving Loans; Continuations of Term Loan B

  	
   

  
	
  2.03

  	
  Letters of Credit

  	
   

  
	
  2.04

  	
  Prepayments; Accelerated
  Maturity of Term Loan B

  	
   

  
	
  2.05

  	
  Termination or Reduction of Commitment

  	
   

  
	
  2.06

  	
  Repayment of Loans

  	
   

  
	
  2.07

  	
  Interest; Pricing Flex; Required
  Interest Rate Hedge

  	
   

  
	
  2.08

  	
  Fees

  	
   

  
	
  2.09

  	
  Computation of Interest and Fees

  	
   

  
	
  2.10

  	
  Evidence of Debt

  	
   

  
	
  2.11

  	
  Method of Payment, Direct Debits,
  Payment Date Adjustments, Application of Payments

  	
   

  
	
  2.12

  	
  All Loans and Letters of Credit to
  Constitute One Obligation

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  TAXES,
  YIELD PROTECTION AND ILLEGALITY

  	
   

  
	
  3.01

  	
  Taxes

  	
   

  
	
  3.02

  	
  Illegality

  	
   

  
	
  3.03

  	
  Inability to Determine Rates

  	
   

  
	
  3.04

  	
  Increased Costs

  	
   

  
	
  3.05

  	
  Compensation for Losses

  	
   

  
	
  3.06

  	
  Mitigation Obligations

  	
   

  
	
  3.07

  	
  Survival

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
  CONDITIONS
  PRECEDENT TO CREDIT EXTENSIONS

  	
   

  
	
  4.01

  	
  Conditions of Initial Credit Extension

  	
   

  
	
  4.02

  	
  Conditions to all Credit Extensions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
  5.01

  	
  Existence, Qualification and Power;
  Compliance with Laws

  	
   

  
	
  5.02

  	
  Authorization; No Contravention

  	
   

  
	
  5.03

  	
  Governmental Authorization; Other
  Consents

  	
   

  
	
  5.04

  	
  Binding Effect

  	
   

  
	
  5.05

  	
  Financial Statements; No Material
  Adverse Effect; No Internal Control Event

  	
   

  
	
  5.06

  	
  Litigation

  	
   

  
	
  5.07

  	
  No Default

  	
   

  
	
  5.08

  	
  Ownership of Property; Liens

  	
   

  
	
  5.09

  	
  Environmental Compliance

  	
   

  



 


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  5.10

  	
  Insurance

  	
   

  
	
  5.11

  	
  Taxes

  	
   

  
	
  5.12

  	
  ERISA Compliance

  	
   

  
	
  5.13

  	
  Subsidiaries; Equity Interests

  	
   

  
	
  5.14

  	
  Margin Regulations; Investment Company
  Act; Public Utility Holding Company Act

  	
   

  
	
  5.15

  	
  Disclosure

  	
   

  
	
  5.16

  	
  Compliance with Laws

  	
   

  
	
  5.17

  	
  Intellectual Property

  	
   

  
	
  5.18

  	
  Solvency

  	
   

  
	
  5.19

  	
  Security Documents

  	
   

  
	
  5.20

  	
  Acquisition Documents; Representations
  and Warranties in Acquisition Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  AFFIRMATIVE
  COVENANTS

  	
   

  
	
  6.01

  	
  Financial Statements

  	
   

  
	
  6.02

  	
  Certificates; Other Information

  	
   

  
	
  6.03

  	
  Notices

  	
   

  
	
  6.04

  	
  Payment of Obligations

  	
   

  
	
  6.05

  	
  Preservation of Existence, Etc.

  	
   

  
	
  6.06

  	
  Maintenance of Properties

  	
   

  
	
  6.07

  	
  Maintenance of Insurance

  	
   

  
	
  6.08

  	
  Compliance with Laws

  	
   

  
	
  6.09

  	
  Books and Records

  	
   

  
	
  6.10

  	
  Inspection Rights

  	
   

  
	
  6.11

  	
  Use of Proceeds

  	
   

  
	
  6.12

  	
  Additional Collateral; Additional
  Guarantors

  	
   

  
	
  6.13

  	
  Collateral

  	
   

  
	
  6.14

  	
  Defend Collateral

  	
   

  
	
  6.15

  	
  Primary Operating Accounts

  	
   

  
	
  6.16

  	
  Security Interests; Further Assurances

  	
   

  
	
  6.17

  	
  Information Regarding Collateral

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  NEGATIVE
  COVENANTS

  	
   

  
	
  7.01

  	
  Liens

  	
   

  
	
  7.02

  	
  Investments

  	
   

  
	
  7.03

  	
  Indebtedness

  	
   

  
	
  7.04

  	
  Fundamental Changes

  	
   

  
	
  7.05

  	
  Asset Sales

  	
   

  
	
  7.06

  	
  Restricted Payments

  	
   

  
	
  7.07

  	
  Change in Nature of Business

  	
   

  
	
  7.08

  	
  Transactions with Affiliates

  	
   

  
	
  7.09

  	
  Burdensome Agreements

  	
   

  
	
  7.10

  	
  Use of Proceeds

  	
   

  
	
  7.11

  	
  General Partner

  	
   

  
	
  7.12

  	
  Financial Covenants

  	
   

  
	
  7.13

  	
  Payment of Telic Earn-Out Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  GUARANTEE

  	
   

  
	
  8.01

  	
  The Guarantee

  	
   

  
	
  8.02

  	
  Obligations Unconditional

  	
   

  
	
  8.03

  	
  Reinstatement

  	
   

  



 


ii





















 


	
  8.04

  	
  Subrogation; Rights of Reimbursement;
  Subordination

  	
   

  
	
  8.05

  	
  Remedies

  	
   

  
	
  8.06

  	
  Instrument for the Payment of Money

  	
   

  
	
  8.07

  	
  Continuing Guarantee

  	
   

  
	
  8.08

  	
  General Limitation on Guaranteed
  Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  EVENTS OF
  DEFAULT AND REMEDIES

  	
   

  
	
  9.01

  	
  Events of Default

  	
   

  
	
  9.02

  	
  Remedies Upon Event of Default

  	
   

  
	
  9.03

  	
  Application of Funds

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  MISCELLANEOUS

  	
   

  
	
  10.01

  	
  Amendments, Etc.

  	
   

  
	
  10.02

  	
  Notices; Effectiveness; Electronic
  Communication

  	
   

  
	
  10.03

  	
  No Waiver; Cumulative Remedies

  	
   

  
	
  10.04

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  
	
  10.05

  	
  Payments Set Aside

  	
   

  
	
  10.06

  	
  Successors and Assigns

  	
   

  
	
  10.07

  	
  Treatment of Certain Information;
  Confidentiality

  	
   

  
	
  10.08

  	
  Right of Setoff

  	
   

  
	
  10.09

  	
  Interest Rate Limitation

  	
   

  
	
  10.10

  	
  Counterparts; Integration;
  Effectiveness

  	
   

  
	
  10.11

  	
  Survival of Representations and
  Warranties

  	
   

  
	
  10.12

  	
  Severability

  	
   

  
	
  10.13

  	
  Governing Law; Jurisdiction; Etc.

  	
   

  
	
  10.14

  	
  Waiver of Jury Trial

  	
   

  
	
  10.15

  	
  USA PATRIOT Act Notice

  	
   

  
	
  10.16

  	
  Replacement of a Note or other Loan
  Documents

  	
   

  
	
  10.17

  	
  Obligations Absolute

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  	
   

  



 


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  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.01(a)

  	
  Transaction
  Costs Related to the Acquisition

  	
   

  
	
  1.01(b)

  	
  Subsidiary
  Guarantors

  	
   

  
	
  4.01(a)(xii)

  	
  Landlord Access
  Agreements

  	
   

  
	
  5.05

  	
  Supplement to
  Interim Financial Statements

  	
   

  
	
  5.06

  	
  Litigation

  	
   

  
	
  5.09

  	
  Environmental
  Matters

  	
   

  
	
  5.13

  	
  Subsidiaries;
  Other Equity Investments

  	
   

  
	
  5.17

  	
  Intellectual
  Property Matters

  	
   

  
	
  5.20

  	
  Acquisition
  Documents

  	
   

  
	
  7.01

  	
  Existing Liens

  	
   

  
	
  7.02

  	
  Existing
  Investments

  	
   

  
	
  7.03

  	
  Existing
  Indebtedness

  	
   

  
	
  10.02

  	
  Lender’s Office;
  Certain Addresses for Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
  Form of

  	
   

  
	
   

  	
   

  	
   

  
	
  A

  	
  Committed
  Revolving Loan Notice

  	
   

  
	
  B

  	
  Compliance
  Certificate

  	
   

  
	
  C

  	
  Joinder
  Agreement

  	
   

  
	
  D

  	
  Landlord Access
  Agreement

  	
   

  
	
  E-1

  	
  Perfection
  Certificate

  	
   

  
	
  E-2

  	
  Perfection
  Certificate Supplement

  	
   

  
	
  F

  	
  Revolving Loan Note

  	
   

  
	
  G

  	
  Security
  Agreement

  	
   

  
	
  H

  	
  Term Loan A Note

  	
   

  
	
  I

  	
  Term Loan B Note

  	
   

  
	
  J

  	
  Term Loan B
  Notice

  	
   

  



 


iv





















 


CREDIT
AGREEMENT


 


This CREDIT AGREEMENT (“Agreement”)
is entered into as of May 2, 2005, between AXSYS
TECHNOLOGIES, INC., a Delaware corporation (the “Borrower”),
the Subsidiary Guarantors (such term and each other capitalized term used but
not defined herein having the meaning given to it in Article I), FLEET NATIONAL BANK, A BANK OF AMERICA COMPANY, as the lender
(the “Lender”) and as the L/C Issuer, and FLEET
NATIONAL BANK, A BANK OF AMERICA COMPANY, as collateral agent (in
such capacity, the “Collateral Agent”) for the Secured Parties.


 


WITNESSETH:


 


WHEREAS, the Borrower has entered into a stock
purchase agreement, dated March 23, 2005 (as amended, supplemented or
otherwise modified from time to time in accordance with the provisions hereof
and thereof, the “Acquisition Agreement”),
with the individuals listed as sellers on the signature page thereto to
acquire (the “Acquisition”) all of
the issued and outstanding shares of capital stock or other equity interests of
Diversified Optical Products, Inc., a New York corporation (the “Target”); and


 


WHEREAS, the Borrower has requested the Lender to
extend credit in the form of (a) Term Loans on the Closing Date, in an
aggregate principal amount not in excess of $55,000,000, and (b) revolving
extensions of credit at any time and from time to time prior to the Maturity
Date of the Commitment, in an aggregate principal amount at any time
outstanding not in excess of $15,000,000, which shall include a $2,000,000
sub-facility to be available for the issuance of Letters of Credit; and


 


WHEREAS, the Borrower has requested the L/C Issuer to
issue Letters of Credit, in an aggregate face amount at any time outstanding
not in excess of $2,000,000 to support payment obligations incurred in the
ordinary course of business by Borrower and its Subsidiaries; and


 


WHEREAS, the proceeds of the Loans are to be used in
accordance with Section 6.11.


 


NOW, THEREFORE, the Lender is willing to extend such
credit to the Borrower and the L/C Issuer is willing to issue letters of credit
for the account of the Borrower or any of its Subsidiaries on the terms and
subject to the conditions set forth herein. 
Accordingly, the parties hereto agree as follows:


 


ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS


 


1.01                        Defined
Terms.  
As used in this Agreement, the following terms shall have the meanings
set forth below:


 


“Acquisition”
shall have the meaning assigned to such term in the first recital hereto.


 


“Acquisition Agreement”
shall have the meaning assigned to such term in the first recital hereto.


 


“Acquisition Consideration” means
the purchase consideration for any Permitted Acquisition and all other payments
by Borrower or any of its Subsidiaries in exchange for, or as


 


1





















 


part
of, or in connection with, any Permitted Acquisition, whether paid in cash or
by exchange of Equity Interests or of properties or otherwise and whether
payable at or prior to the consummation of such Permitted Acquisition or
deferred for payment at any future time, whether or not any such future payment
is subject to the occurrence of any contingency, and includes any and all
payments representing the purchase price and any assumptions of Indebtedness, “earn-outs”
and other agreements to make any payment the amount of which is, or the terms
of payment of which are, in any respect subject to or contingent upon the
revenues, income, cash flow or profits (or the like) of any person or business;
provided that any such
future payment that is subject to a contingency shall be considered Acquisition
Consideration only to the extent of the reserve, if any, required under GAAP at
the time of such sale to be established in respect thereof by Borrower or any
of its Subsidiaries.


 


“Acquisition Documents” means the
collective reference to the Acquisition Agreement and the other documents
listed on Schedule 5.20.


 


“Affiliate” means,
with respect to any Person, another Person that directly, or indirectly through
one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.


 


“Agreement”
means this Credit Agreement.


 


“Anticipated Term Loan
B Prepayment Date” means November 2, 2005.


 


“Applicable Rate”
means the following percentages per annum (subject to additional increases
pursuant to Section 2.07(d)), based upon the Consolidated Leverage
Ratio as set forth in the most recent Compliance Certificate received by the
Lender pursuant to Section 6.02(b):


 


Applicable Rate


 


	
  Pricing Level

  	
   

  	
  Consolidated Leverage Ratio

  	
   

  	
  Eurodollar Rate and

  Standby Letters of Credit

  	
   

  	
  Base Rate

  
	
  1

  	
   

  	
  £ 1.24:1

  	
   

  	
  1.00%

  	
   

  	
  0%

  
	
  2

  	
   

  	
  > 1.24:1 but £ 1.74:1

  	
   

  	
  1.25%

  	
   

  	
  0%

  
	
  3

  	
   

  	
  > 1.74:1 but £ 2.24:1

  	
   

  	
  1.75%

  	
   

  	
  0%

  
	
  4

  	
   

  	
  > 2.24:1 but £ 2.75:1

  	
   

  	
  2.25%

  	
   

  	
  0%

  
	
  5

  	
   

  	
  >2.75:1

  	
   

  	
  2.75%

  	
   

  	
  0%

  



 


Any increase or decrease
in the Applicable Rate resulting from a change in the Consolidated Leverage
Ratio shall become effective as of the first day of the first month immediately
following the date a Compliance Certificate is delivered pursuant to Section 6.02(b);
provided, however, that if a Compliance Certificate is not
delivered when due in accordance with such Section, then Pricing Level 5 shall
apply as of the first day after the date on which such Compliance Certificate
was required to have been delivered until such Compliance Certificate is
delivered and the Applicable Rate is adjusted as provided above.  The Applicable Rate in effect from the
Closing Date through the Initial Applicable Rate Adjustment Date shall be
determined based upon Pricing Level 5.


 


“Asset Sale” means (a) any
conveyance, sale, lease, sublease, assignment, transfer or other disposition
(including by way of merger or consolidation and including any sale and


 


2





















 


leaseback
transaction) of any asset (excluding sales of inventory and dispositions of
cash equivalents, in each case, in the ordinary course of business) by the
Borrower or any of its Subsidiaries and (b) any issuance or sale of any
Equity Interests of any Subsidiary of the Borrower, in each case, to any person
other than (i) the Borrower, (ii) any Subsidiary Guarantor or (iii) other
than for purposes of Section 7.05, any other Subsidiary of
Borrower.


 


“Assignee” has the
meaning specified in Section 10.06(b).


 


“Attributable
Indebtedness” means, on any date, (a) in respect of any capital lease
of any Person, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP, and (b) in
respect of any Synthetic Lease Obligation, the capitalized amount of the
remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP
if such lease were accounted for as a capital lease.


 


“Audited Financial
Statements” means the audited consolidated balance sheet of the Borrower
and its Subsidiaries for the fiscal year ended December 31, 2004, and the
related consolidated statements of income or operations, shareholders’ equity
and cash flows for such fiscal year of the Borrower and its Subsidiaries,
including the notes thereto.


 


“Availability Period”
means the period from and including the Closing Date to the earliest of (a) the
Maturity Date of the Commitment, (b) the date of termination of the
Commitment pursuant to Section 2.05, and (c) the date of
termination of the commitment of the Lender to make Revolving Loans and of the
obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 9.02.


 


“Bailee Letter” shall have the
meaning assigned thereto in the Security Agreement.


 


“Bank of America”
means Bank of America, N.A. and its successors.


 


“Base Rate”  means for any day a fluctuating
rate per annum equal to the rate of interest in effect for such day as publicly
announced from time to time by Bank of America as its “prime rate.”  The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.  Any change in such
rate announced by Bank of America shall take effect at the opening of business
on the day specified in the public announcement of such change.


 


“Base Rate Loan”
means a Loan that bears interest based on
the Base Rate.


 


“Borrower” has the
meaning specified in the introductory paragraph hereto.


 


“Borrowing” means
a borrowing consisting of simultaneous Committed Revolving Loans of the same
Type and, in the case of Eurodollar Rate Loans, having the same Interest Period
made the Lender pursuant to Section 2.01(a).


 


“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the
state where the Lender’s Office is located and, if such day relates to any
Eurodollar Rate Loan, means


 


3





















 


any
such day on which dealings in Dollar deposits are conducted by and between
banks in the London interbank eurodollar market.


 


“Cash Collateralize”
has the meaning specified in Section 2.03(f).


 


“Casualty Event” means any loss of
title or any loss of or damage to or destruction of, or any condemnation or
other taking (including by any Governmental Authority) of, any property of the
Borrower or any of its Subsidiaries.  “Casualty
Event” shall include but not be limited to any taking of all or any part of any
real property of any person or any part thereof, in or by condemnation or other
eminent domain proceedings pursuant to any law, or by reason of the temporary
requisition of the use or occupancy of all or any part of any real property of
any person or any part thereof by any Governmental Authority, civil or
military.


 


“Change in Law”
means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority, or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental
Authority.


 


“Change of Control”
means an event or series of events by which:


 


(a)                                  any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act, but excluding any employee benefit plan of such person or its
subsidiaries, and any person or entity acting in its capacity as trustee, agent
or other fiduciary or administrator of any such plan) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a person or group shall be deemed to have “beneficial ownership” of all
securities that such person or group has the right to acquire (such right, an “option
right”), whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of 35% or more of the Voting Stock of
the Borrower on a fully-diluted basis (and taking into account all such
securities that such person or group has the right to acquire pursuant to any
option right);


 


(b)                                 during
any period of 12 consecutive months, a majority of the members of the board of
directors or other equivalent governing body of the Borrower cease to be
composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of
such election or nomination at least a majority of that board or equivalent
governing body or (iii) whose election or nomination to that board or
other equivalent governing body was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election
or nomination at least a majority of that board or equivalent governing body
(excluding, in the case of both clause (ii) and clause (iii), any
individual whose initial nomination for, or assumption of office as, a member
of that board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the board of directors);
or


 


4





















 


(c)                                  any
Person or two or more Persons acting in concert shall have acquired by contract
or otherwise, or shall have entered into a contract or arrangement that, upon
consummation thereof, will result in its or their acquisition of the power to
exercise, directly or indirectly, Control of the Borrower, or control over the
Voting Stock of the Borrower on a fully-diluted basis (and taking into account
all such securities that such Person or group has the right to acquire pursuant
to any option right) representing 35% or more of the combined voting power of
such securities.


 


“Closing Date”
means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.


 


“Code” means the
Internal Revenue Code of 1986, as amended.


 


“Collateral”
means, collectively, all property pledged or granted as collateral pursuant to
the Security Agreement on the Closing Date or thereafter pursuant to Section 6.12
and all other property of whatever kind and nature pledged as collateral under
any Security Document.


 


“Collateral Agent”
shall have the meaning assigned to such term in the preamble hereto and
includes each other Person appointed as the successor thereto.


 


“Commitment” means
the Lender’s obligation to make Committed Revolving Loans to the Borrower
pursuant to Section 2.01(a) and L/C Credit Extensions pursuant
to Section 2.03, in an aggregate principal amount at any one time
outstanding not to exceed $15,000,000, as such amount may be adjusted from time
to time in accordance with this Agreement.


 


“Committed Revolving
Loan” has the meaning specified in Section 2.01(a).


 


“Committed Revolving
Loan Notice” means a notice of (a) a Borrowing, (b) a conversion
of Committed Revolving Loans from one Type to the other, or (c) a
continuation of Committed Revolving Loans as Eurodollar Rate Loans, in each
case pursuant to Section 2.02(a), which, if in writing, shall be
substantially in the form of Exhibit A.


 


“Compliance
Certificate” means a certificate substantially in the form of Exhibit B.


 


“Consolidated Capital
Expenditures” means, for any period, for the Borrower and its Subsidiaries
on a consolidated basis, the aggregate of all expenditures during such period
that, in accordance with GAAP, are or should be included in “additions to
property, plant and equipment” or similar items reflected in the consolidated
balance sheet of Borrower and its Subsidiaries for such period (including the
amount of assets leased in connection with any capital lease); provided, however, that Consolidated Capital Expenditures shall not
include (a) Capital Expenditures relating to the James Webb Space
Telescope to the extent such Capital Expenditures are actually funded, without
recourse to the Borrower or any of its Subsidiaries, by a Governmental
Authority or a prime contractor of a Governmental Authority, (b) any other
Capital Expenditures to the extent funded, without recourse to the Borrower or
any of its Subsidiaries, by a third party, (c) expenditures made with Net
Cash Proceeds of Asset Sales in accordance with Section 2.04(d)(iii),
(d) expenditures made in connection with the replacement, substitution or
restoration of assets pursuant to Section 2.04(d)(iv), and (e) any
portion of such increase attributable solely to acquisitions of property, plant
and equipment in connection with the Acquisition and Permitted Acquisitions.


 


5





















 


“Consolidated Current Assets”
means, as at any date of determination, the total assets of the Borrower and
its Subsidiaries which may properly be classified as current assets on a
consolidated balance sheet of the Borrower and its Subsidiaries in accordance
with GAAP.


 


“Consolidated Current Liabilities”
means, as at any date of determination, the total liabilities of the Borrower
and its Subsidiaries which may properly be classified as current liabilities on
a consolidated balance sheet of the Borrower and its Subsidiaries in accordance
with GAAP.


 


“Consolidated Current
Maturity of Long-Term Debt” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the aggregate of all Consolidated Funded
Indebtedness paid or payable during the applicable period; provided, however,
Consolidated Current Maturity of Long-Term Debt shall be calculated on a Pro
Forma Basis to give effect to any Permitted Acquisition consummated at any time
on or after the first day of such period as if the Permitted Acquisition had
been effected on the first day of such period.


 


“Consolidated EBITDA”
means, for any period, for the Borrower and its Subsidiaries on a consolidated
basis, an amount equal to Consolidated Net Income for such period plus (a) the
following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated
Interest Charges for such period, (ii) the provision for Federal, state,
local and foreign income taxes payable by the Borrower and its Subsidiaries for
such period, (iii) depreciation and amortization expense, (iv) other
non-recurring expenses of the Borrower and its Subsidiaries reducing such
Consolidated Net Income which do not represent a cash item in such period or
any future period (excluding any non-cash charge that results in an accrual of
a reserve for cash charges in any future period), (v) the effects of the
write up of inventory by the application of the purchase method of accounting, (vi) one-time
costs and expenses directly incurred in connection with this Agreement and the
Acquisition (not to exceed $5,000,000 as estimated and more particularly
described on Schedule 1.01(a)) and any Permitted Acquisition (not to
exceed an amount agreed to by the Lender in writing), (vii) to the extent
actually reimbursed in cash during such period, expenses incurred to the extent
covered by the indemnification provisions of the Acquisition Agreement and any
agreement in connection with a Permitted Acquisition, and (viii) non-cash
expenses in respect of stock options, and minus (b) the following
to the extent included in calculating such Consolidated Net Income: (i) Federal,
state, local and foreign income tax credits of the Borrower and its
Subsidiaries for such period and (ii) all non-cash items increasing
Consolidated Net Income for such period (other than the accrual of revenue, the
recording of receivables in the ordinary course of business and net adjustments
to accrued expenses not to exceed $150,000 during each Test Period without the
consent of the Lender, which consent shall not be unreasonably withheld.


 


Other than for purposes
of calculating Excess Cash Flow, Consolidated EBITDA shall be calculated on a
Pro Forma Basis to give effect to the Acquisition, any Permitted Acquisition
and any Asset Sales (other than any dispositions in the ordinary course of
business) consummated at any time on or after the first day of the Test Period
thereof as if the Acquisition and each such Permitted Acquisition had been
effected on the first day of such period and as if each such Asset Sale had
been consummated on the day prior to the first day of such period.


 


“Consolidated Fixed
Charge Coverage Ratio” means, for any Test Period, the ratio of (a) (i) Consolidated
EBITDA for such Test Period, minus (ii) Federal, state, local and
foreign income taxes paid in cash by the Borrower and its Subsidiaries during
such Test Period (net of


 


6





















 


any
cash refund in respect of income taxes actually received during such Test
Period), minus (iii) Restricted Payments to the extent paid in cash
or other property (other than Equity Interests) made during such Test Period, minus
(iv) Consolidated Capital Expenditures made during such Test Period to the
extent not financed with Indebtedness permitted under Section 7.03(e),
to (b) the sum of (i) Consolidated Current Maturity of
Long-Term Debt for such Test Period, but only to the extent consisting of
regularly-scheduled payments for such period and specifically excluding any
prepayment thereof, the accelerated maturity of Term Loan B pursuant to Section 2.04(e) and
the payment due upon the final maturity of Term Loan B, plus (ii) Consolidated
Interest Charges for such Test Period, plus (iii) any and all Telic
Earn-Out Payments made during such Test Period.


 


For purposes of
calculating the Consolidated Fixed Charge Coverage Ratio: (A) for the Test
Period ending on the second fiscal quarter end of the Borrower in 2005,
Consolidated Current Maturity of Long-Term Debt for such Test Period shall be
assumed to be $5,000,000 and Consolidated Interest Charges for such Test Period
shall be assumed to be $3,500,000; (B) for the Test Period ending on the
third fiscal quarter end of the Borrower in 2005, Consolidated Current Maturity
of Long-Term Debt and Consolidated Interest Charges for such Test Period shall
be assumed to be an amount equal to the product of (1) the actual amount
of Consolidated Current Maturity of Long-Term Debt and Consolidated Interest
Charges paid or payable by the Borrower and its Subsidiaries during said third
fiscal quarter, multiplied by (2) four; (C) for the Test
Period ending on the fourth fiscal quarter end of the Borrower in 2005,
Consolidated Current Maturity of Long-Term Debt and Consolidated Interest
Charges for such Test Period shall be assumed to be an amount equal to the
product of (1) the actual amount of Consolidated Current Maturity of
Long-Term Debt and Consolidated Interest Charges paid or payable by the
Borrower and its Subsidiaries during the last two fiscal quarters of such Test
Period, multiplied by (2) two; and (D) for the Test Period
ending on the first fiscal quarter end of the Borrower in 2006, Consolidated
Current Maturity of Long-Term Debt and Consolidated Interest Charges for such
Test Period shall be assumed to be an amount equal to the product of (1) the
actual amount of Consolidated Current Maturity of Long-Term Debt and
Consolidated Interest Charges paid or payable by the Borrower and its
Subsidiaries during the last three fiscal quarters of such Test Period, multiplied
by (2) a fraction, the numerator of which shall be four and the
denominator of which shall be 3.


 


“Consolidated
Funded Indebtedness” means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including Obligations hereunder) and all obligations evidenced
by bonds, debentures, notes, loan agreements or other similar instruments, (b) all
purchase money Indebtedness, (c) all direct obligations arising under
letters of credit (including standby and commercial), bankers’ acceptances,
bank guaranties, surety bonds and similar instruments, (d) all obligations
in respect of the deferred purchase price of property or services (other than
trade accounts payable in the ordinary course of business or consistent with
reasonable past practices), (e) Attributable Indebtedness in respect of
capital leases and Synthetic Lease Obligations, and (f) without
duplication, all Guarantees with respect to outstanding Indebtedness of the
types specified in clauses (a) through (e) above of Persons other
than the Borrower or any Subsidiary; provided that “Consolidated
Funded Indebtedness” shall not include any of the Telic Earn-Out
Payments. The Indebtedness of any Person shall include the Indebtedness
of any other entity (including any partnership in which such person is a
general partner) to the extent such Person is liable therefor


 


7





















 


as a
result of such Person’s ownership interest in or other relationship with such
entity, except (other than in the case of general partner liability) to the
extent that the terms of such Indebtedness expressly provide that such Person
is not liable therefore.


 


“Consolidated Interest
Charges” means, for any period, for the Borrower and its Subsidiaries on a
consolidated basis, the sum of, without duplication, (a) all interest,
premium payments, debt discount, fees, charges and related expenses of the
Borrower and its Subsidiaries in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
and (b) the portion of rent expense of the Borrower and its Subsidiaries
with respect to such period under capital leases that is treated as interest in
accordance with GAAP.


 


Consolidated Interest
Charges shall be calculated on a Pro Forma Basis to give effect to any
Indebtedness incurred, assumed or permanently repaid or extinguished during the
relevant Test Period in connection with any Permitted Acquisition as if such
incurrence, assumption, repayment or extinguishing had been effected on the
first day of such period.


 


“Consolidated
Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated
Funded Indebtedness as of such date to (b) Consolidated
EBITDA for the Test Period then most recently ended.


 


“Consolidated Net
Income” means, for any period, the consolidated net income (or loss) of the
Borrower and its Subsidiaries determined on a consolidated basis in accordance
with GAAP; provided that
there shall be excluded from such net income (to the extent otherwise included
therein), without duplication, (a) any gain (or loss), together with any
related provisions for taxes on any such gain (or the tax effect of any such
loss), realized during such period by the Borrower or any of its Subsidiaries
upon any Asset Sale (other than any dispositions in the ordinary course of
business) by the Borrower or any of its Subsidiaries, (b) unrealized gains
and losses for such period with respect to any swap, cap, collar, forward or
similar arrangement in respect of interest rates, foreign exchange or commodity
prices, and (c) any extraordinary gain (or extraordinary loss (including, without
limitation, in respect of discontinued operations) approved by the Lender in
its sole but reasonable discretion), together with any related provision
for taxes on any such gain (or the tax effect of any such loss), recorded or
recognized by the Borrower or any of its Subsidiaries during such period.


 


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


 


“Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.


 


“Control Agreement” shall have the
meaning assigned to such term in the Security Agreement.


 


“Credit Extension”
means each of the following: (a) a Borrowing, (b) the extension of
each Term Loan hereunder, and (c) an L/C Credit Extension.


 


8





















 


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


 


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


 


“Default Rate”
means (a) when used with respect to Obligations other than Letter of
Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2%
per annum; and (b) when used with respect to Letter of Credit Fees, a rate
equal to the Applicable Rate plus 2% per annum.


 


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


 


“Environmental Laws”
means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.


 


“Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrower, any other Loan Party or any of their respective
Subsidiaries directly or indirectly resulting from or based upon (a) violation
of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure
to any Hazardous Materials, (d) the release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.


 


“Equity Interests”
means, with respect to any Person, all of the shares of capital stock of (or
other ownership or profit interests in) such Person, all of the warrants,
options or other rights for the purchase or acquisition from such Person of
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the securities convertible into or exchangeable for shares of
capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares,
warrants, options, rights or other interests are outstanding on any date of
determination.


 


“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.


 


“ERISA Affiliate”
means any trade or business (whether or not incorporated) under common control
with the Borrower within the meaning of Section 4001(a)(14) of ERISA.


 


“ERISA Event”
means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject
to Section 4063


 


9





















 


of
ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
to which the Borrower or an ERISA Affiliate is obligated to make contributions
at the time of such notification is in reorganization; (d) the filing of a
notice of intent to terminate a Pension Plan under Section 4041 of ERISA
if all plan benefits under the Pension Plan exceed plan assets by more than the
Threshold Amount, the treatment of a Plan amendment as a termination under
Sections 4041 or 4041A of ERISA if all plan benefits under the Pension Plan
exceed plan assets by more than the Threshold Amount, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an
event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate in
excess of the Threshold Amount; (g) the posting of security with respect
to a Pension Plan pursuant to Section 307 of ERISA, or (h) the
imposition of a Lien pursuant to Section 302(f) of ERISA with respect
to any Pension Plan.


 


“Eurodollar Base Rate”
has the meaning specified in the definition of Eurodollar Rate.


 


“Eurodollar Rate”
means for any Interest Period with respect to a Eurodollar Rate Loan, a rate
per annum determined by the Lender pursuant to the following formula:


 


	
  Eurodollar
  Rate =

  	
   

  	
  Eurodollar Base Rate

  	
   

  
	
   

  	
   

  	
  1.00 – Eurodollar Reserve Percentage

  	
   

  



 


Where,


 


“Eurodollar
Base Rate” means, for such Interest Period, the rate per annum equal to the
British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by
Reuters (or other commercially available source providing quotations of BBA
LIBOR as designated by the Lender from time to time) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, for Dollar deposits (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period.  If such rate is not available at such time
for any reason, then the “Eurodollar Base Rate” for such Interest Period shall
be the rate per annum determined by the Lender to be the rate at which deposits
in Dollars for delivery on the first day of such Interest Period in same day
funds in the approximate amount of the Eurodollar Rate Loan being made,
continued or converted by Bank of America and with a term equivalent to such
Interest Period would be offered by Bank of America’s London Branch to major
banks in the London interbank eurodollar market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.


 


“Eurodollar
Reserve Percentage” means, for any day during any Interest Period, the
reserve percentage (expressed as a decimal, carried out to five decimal places)
in effect on such day, whether or not applicable to the Lender, under regulations
issued from time to time by the FRB for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to


 


10





















 


Eurocurrency funding (currently referred to as “Eurocurrency
liabilities”).  The Eurodollar Rate for
each outstanding Eurodollar Rate Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.


 


“Eurodollar Rate Loan”
means a Loan that bears interest at a rate based on the Eurodollar Rate.


 


“Event of Default”
has the meaning specified in Section 9.01.


 


“Excess Cash Flow”
means, with respect to
each fiscal year of the Borrower, in each case without duplication, (a) Consolidated
EBITDA for such fiscal year, minus (b) Federal, state, local and
foreign income taxes paid in cash by the Borrower and its Subsidiaries during
such fiscal year (net of any cash refund in respect of income taxes actually
received during such period), minus (c) Restricted Payments made
during such fiscal year to the extent permitted hereunder, minus (d) Consolidated
Capital Expenditures made during such fiscal year to the extent not financed
with Indebtedness permitted under Section 7.03(e), minus (e) Consolidated
Current Maturity of Long-Term Debt for such fiscal year, minus (f) Consolidated
Interest Charges for such fiscal year, minus (g) the amount of any
increase in the Borrower’s net working capital, if any, plus the amount
of any decrease in the Borrower’s net working capital, if any. For purposes
hereof, (x) “net working capital” means, as of any date of determination, the
sum of (i) Consolidated Current Assets as of such date less cash
and cash equivalents of the Borrower and its Subsidiaries on such date, minus (ii) Consolidated
Current Liabilities as of such date less Consolidated Current Maturity
of Long-Term Debt for the fiscal year in question, and (y) net working capital shall be calculated as of December 31
of the fiscal year in question and compared against net working capital as of December 31
of the immediately preceding fiscal year.


 


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


 


“Excluded Taxes”
means, with respect to the Lender or any other recipient of any payment to be
made by or on account of any obligation of the Borrower hereunder, (a) taxes
imposed on or measured by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision thereof) under the laws of which
such recipient is organized or in which its principal office is located or, in
the case of any the Lender, in which its applicable Lending Office is located
and (b) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction in which the Borrower is located.


 


“Existing
Credit Agreement” means that certain Credit Agreement dated as of April 8,
2004 among the Borrower, the guarantors party thereto and the Lender.


 


“Existing
Letters of Credit” means the standby letters of credit issued by the Lender
on behalf of the Borrower as more particularly described on Schedule 7.03.


 


“Foreign Subsidiary” means a
Subsidiary that is organized under the laws of a jurisdiction other than the
United States or any state thereof or the District of Columbia.


 


“FRB” means the
Board of Governors of the Federal Reserve System of the United States.


 


11





















 


“GAAP” means
generally accepted accounting principles in the United States set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession in the United
States, that are applicable to the circumstances as of the date of
determination, consistently applied.


 


“Governmental
Authority” means the government of the United States or any other nation,
or of 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 (including
any supra-national bodies such as the European Union or the European Central
Bank).


 


“Guarantee” means,
as to any Person, any (a) obligation, contingent or otherwise, of such
Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation payable or performable by another Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or
services for the purpose of assuring the obligee in respect of such
Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into
for the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or (b) Lien
on any assets of such Person securing any Indebtedness or other obligation of
any other Person, whether or not such Indebtedness or other obligation is
assumed by such Person (or any right, contingent or otherwise, of any holder of
such Indebtedness to obtain any such Lien). 
The amount of any Guarantee shall be deemed to be an amount equal to the
stated or determinable amount of the related primary obligation, or portion
thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a
corresponding meaning.


 


“Guaranteed Obligations” shall have
the meaning assigned to such term in Section 8.01.


 


“Guarantees” means
the guarantees issued pursuant to Article VIII by the Subsidiary
Guarantors.


 


“Hazardous Materials”
means all explosive or radioactive substances or wastes and all hazardous or
toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.


 


“Indebtedness”
means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:


 


12





















 


(a)                                  all
obligations of such Person for borrowed money and all obligations of such
Person evidenced by bonds, debentures, notes, loan agreements or other similar
instruments;


 


(b)                                 all
direct or contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers’ acceptances, bank guaranties,
surety bonds and similar instruments;


 


(c)                                  net
obligations of such Person under Swap Contracts in the aggregate;


 


(d)                                 all
obligations of such Person to pay the deferred purchase price of property or
services (excluding trade accounts payable and accrued obligations incurred in
the ordinary course of business on normal trade terms and not overdue by more
than 90 days and excluding trade accounts payable and accrued obligations,
whether or not overdue, the payment of which is subject to a bona fide dispute
by such Person);


 


(e)                                  indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse,
but limited to the fair market value of such property;


 


(f)                                    capital
leases and Synthetic Lease Obligations;


 


(g)                                 all
obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interest in such Person or any other
Person, valued, in the case of a redeemable preferred interest, at the greater
of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and


 


(h)                                 all
Guarantees of such Person in respect of any of the foregoing.


 


For all purposes hereof,
the Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such person is a general partner) to
the extent such Person is liable therefor as a result of such Person’s
ownership interest in or other relationship with such entity, except (other
than in the case of general partner liability) to the extent that the terms of
such Indebtedness expressly provide that such Person is not liable therefore.  The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date.  The amount of
any capital lease or Synthetic Lease Obligation as of any date shall be deemed
to be the amount of Attributable Indebtedness in respect thereof as of such
date.


 


“Indemnified Taxes”
means Taxes other than Excluded Taxes.


 


“Indemnitees” has
the meaning specified in Section 10.04(b).


 


“Information” has
the meaning specified in Section 10.07.


 


“Initial Applicable
Rate Adjustment Date” means the earlier to occur of (a) the first day
of the first month immediately following the date a Compliance Certificate is
delivered pursuant to Section 6.02(b) for the fiscal quarter
of the Borrower ending on October 1, 2005, or (b) the


 


13





















 


first
day of the first month immediately following the date a Compliance Certificate
is delivered pursuant to Section 6.02(b) for the fiscal
quarter of the Borrower during which the Borrower prepaid in full all
Obligations arising under Term Loan B.


 


“Intellectual Property” shall have
the meaning assigned to such term in the Security Agreement.


 


“Interest Payment Date”
means, (a) as to any Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Loan and the Maturity Date; provided, however,
that if any Interest Period for a Eurodollar Rate Loan exceeds three months,
the respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any
Base Rate Loan, the first Business Day of each month and the Maturity Date.


 


“Interest Period”
means, (a) as to each Committed Revolving Loan that is a Eurodollar Rate
Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed
or converted to or continued as a Eurodollar Rate Loan and ending on the date
one, two, three or six months thereafter, as selected by the Borrower in its
Committed Revolving Loan Notice; (b) as to Term Loan A, successive periods
of three months, the first of which shall commence on the date such Term Loan
is disbursed and each successive period to commence on the first day
immediately following the last day of the immediately preceding Interest
Period, with the last such Interest Period ending on the Maturity Date of Term
Loan A; and (c) as to Term Loan B, the period commencing on the date such
Eurodollar Rate Loan is disbursed or continued as a Eurodollar Rate Loan and
ending on the date one, two or three months thereafter, as selected by the
Borrower in its Term Loan B Notice; provided that the foregoing
provisions relating to Interest Periods are subject to the following:


 


(i)                                     any
Interest Period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day
falls in another calendar month, in which case such Interest Period shall end
on the next preceding Business Day;


 


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


 


(iii)                               no
Interest Period with respect to any Loan shall extend beyond the Maturity Date
of such Loan; and


 


(iv)                              with
respect to Term Loan B, no Interest Period shall end after the next
regularly-scheduled principal payment date set forth in the Term Loan B Note.


 


“Internal Control
Event” means a material weakness in, or fraud that involves management or
other employees who have a significant role in, the Borrower’s internal
controls over financial reporting, in each case as described in the Securities
Laws.


 


“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
capital stock or other


 


14





















 


securities
of another Person, (b) a loan, advance or capital contribution to,
Guarantee or assumption of debt of, or purchase or other acquisition of any
other debt or equity participation or interest in, another Person, including
any partnership or joint venture interest in such other Person and any
arrangement pursuant to which the investor Guarantees Indebtedness of such
other Person, or (c) the purchase or other acquisition (in one transaction
or a series of transactions) of assets of another Person that constitute a
business unit.  For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.


 


“IRS” means the
United States Internal Revenue Service.


 


“ISP” means, with
respect to any Letter of Credit, the “International Standby Practices 1998”
published by the Institute of International Banking Law & Practice (or
such later version thereof as may be in effect at the time of issuance).


 


“Issuer Documents”
means with respect to any Letter of Credit, the Letter of Credit Application,
and any other document, agreement and instrument entered into by the L/C Issuer
and the Borrower or any Subsidiary or in favor the L/C Issuer and relating to
any such Letter of Credit.


 


“Joinder Agreement” means a joinder
agreement, substantially in the form of Exhibit C.


 


“Landlord Access Agreement” means a
Landlord Access Agreement, substantially in the form of Exhibit D,
or such other form as may reasonably be acceptable to the Lender.


 


“Laws” means,
collectively, all international, foreign, Federal, state and local statutes,
treaties, rules, guidelines, regulations, ordinances, codes and administrative
or judicial precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and all applicable
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.


 


“Lender” has the
meaning specified in the introductory paragraph hereto.


 


“Lender’s Office”
means the Lender’s address and, as applicable, account as set forth on Schedule 10.02,
or such other address or account as the Lender may from time to time notify to
the Borrower.


 


“L/C Borrowing”
means an extension of credit resulting from a drawing under any Letter of
Credit which has not been reimbursed on the date when made or refinanced as a
Borrowing.


 


“L/C Credit Extension”
means, with respect to any Letter of Credit, the issuance thereof or extension
of the expiry date thereof, or the increase of the amount thereof.


 


“L/C Issuer” means
the Lender in its capacity as issuer of Letters of Credit hereunder, or any
successor issuer of Letters of Credit hereunder.


 


“L/C Obligations”
means, as at any date of determination, the aggregate amount available to be
drawn under all outstanding Letters of Credit plus the aggregate of all
Unreimbursed


 


15





















 


Amounts,
including all L/C Borrowings.  For
purposes of computing the amount available to be drawn under any Letter of
Credit, the amount of such Letter of Credit shall be determined in accordance
with Section 1.06.  For all
purposes of this Agreement, if on any date of determination a Letter of Credit
has expired by its terms but any amount may still be drawn thereunder by reason
of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be
deemed to be “outstanding” in the amount so remaining available to be drawn.


 


“Letter of Credit”
means any letter of credit issued hereunder and shall include the Existing Letters of
Credit. A Letter of Credit may be a commercial letter of credit or a
standby letter of credit.


 


“Letter of Credit
Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer.


 


“Letter of Credit
Expiration Date” means the day that is not later than 180 days following the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).


 


“Letter of Credit Fee”
has the meaning specified in Section 2.03(h).


 


“Letter of Credit
Sublimit” means an amount equal to $2,000,000. The Letter of Credit
Sublimit is part of, and not in addition to, the Commitment.


 


“Lien” means any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), charge, or preference, priority or other security
interest or preferential arrangement in the nature of a security interest of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any easement, right of way or other encumbrance on title
to real property, and any financing lease having substantially the same
economic effect as any of the foregoing).


 


“Loan” means an
extension of credit by the Lender to the Borrower under Article II
in the form of a Committed Revolving Loan or a Term Loan.


 


“Loan Documents”
means all now existing or hereafter arising instruments, loan agreements and
any other agreements and documents governing, evidencing, guarantying, securing
or otherwise relating to any or all of the Obligations, together with all
amendments, modifications, renewals or extensions thereof, including without
limitation, this Agreement, the Notes, the Security Documents, and all other
promissory notes, guaranties, mortgages, security documents, deeds to secure
debt, deeds of trust, pledges, assignments, contracts, negative pledges, powers
of attorney, landlord waivers and trust account agreements, whenever executed
and delivered to the Lender, with respect to the transactions contemplated by
this Agreement.


 


“Loan Parties”
means, collectively, the Borrower and each Subsidiary Guarantor.


 


“Material Adverse
Effect” means (a) a material adverse change in, or a material adverse
effect upon, the results of operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries
taken as a whole; (b) a material impairment of the ability of any Loan
Party to fully and timely perform its obligations under any Loan Document to
which it is a party; (c) material impairment of the rights of or benefits
or remedies available to


 


16





















 


the
Lender or the Collateral Agent under any Loan Document; or (d) a material
adverse effect on the Collateral or the Liens in favor of the Collateral Agent
(for its benefit and for the benefit of the other Secured Parties) on the
Collateral or the priority of such Liens.


 


“Maturity Date”
means, (a) with respect to the Commitment, May 2, 2008; (b) with
respect to Term Loan A, May 2, 2010; and (c) with respect to Term
Loan B, May 2, 2007 (subject, however, to Section 2.04(e)).


 


“Merger Agreement”
means that certain Agreement and Plan of Merger, dated as of April 5,
2004, by and among the Borrower, Bifocal Acquisition Corp., a Massachusetts
corporation and wholly-owned Subsidiary of the Borrower, Telic and the prior
shareholders of Telic.


 


“Multiemployer Plan”
means any employee benefit plan of the type described in Section 4001(a)(3) of
ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to
make contributions, or during the preceding five plan years, has made or been
obligated to make contributions.


 


“Net Cash Proceeds” means:


 


(a)                                  with
respect to any Asset Sale (other than any issuance or sale of Equity Interests),
the cash proceeds received by the Borrower or any of its Subsidiaries
(including cash proceeds subsequently received (as and when received by the
Borrower or any of its Subsidiaries) in respect of non-cash consideration
initially received) net of (i) selling expenses (including reasonable brokers’
fees or commissions, legal, accounting and other professional and transactional
fees, transfer and similar taxes and the Borrower’s good faith estimate of
income taxes paid or payable in connection with such sale); (ii) amounts
provided as a reserve, in accordance with GAAP, against (x) any
liabilities under any indemnification obligations associated with such Asset
Sale or (y) any other liabilities retained by the Borrower or any of its
Subsidiaries associated with the properties sold in such Asset Sale (provided that, to the extent and
at the time any such amounts are released from such reserve, such amounts shall
constitute Net Cash Proceeds); (iii) Borrower’s good faith estimate of
payments required to be made with respect to unassumed liabilities relating to
the properties sold within 90 days of such Asset Sale (provided that, to the extent such
cash proceeds are not used to make payments in respect of such unassumed
liabilities within 90 days of such Asset Sale, such cash proceeds shall
constitute Net Cash Proceeds); and (iv) the principal amount, premium or
penalty, if any, interest and other amounts on any Indebtedness for borrowed
money which is secured by a Lien on the properties sold in such Asset Sale (so
long as such Lien was permitted to encumber such properties under the Loan
Documents at the time of such sale) and which is repaid with such proceeds
(other than any such Indebtedness assumed by the purchaser of such properties);


 


(b)                                 with
respect to any issuance or sale of Equity Interests of the Borrower or in any
Subsidiary of Borrower, the cash proceeds thereof, net of customary fees,
commissions, costs and other expenses incurred in connection therewith; and


 


(c)                                  with
respect to any Casualty Event, the cash insurance proceeds, condemnation awards
and other compensation received in respect thereof, net of all


 


17





















 


reasonable costs
and expenses incurred in connection with the collection of such proceeds,
awards or other compensation in respect of such Casualty Event.


 


“Note” means the
Revolving Loan Note, the Term Loan A Note or the Term Loan B Note, as the
context requires.


 


“Obligations” means all loans, advances, interest
(including interest accruing during the pendency of any proceeding under any
Debtor Relief Law naming such Person as the debtor in such proceeding,
regardless of whether such interest is an allowed claim in such proceeding),
Indebtedness (including fees and other monetary obligations incurred or
accruing during the pendency of any proceeding under any Debtor Relief Law
naming such Person as the debtor in such proceeding, regardless of whether such
fees and other monetary obligations are allowed claims in such proceeding),
liabilities, obligations, guaranties, indemnities, covenants and duties at any
time owing by any Loan Party to the Lender or to any of the Lender’s direct and
indirect Affiliates and Subsidiaries, of every kind and description, whether or
not evidenced by any note or other instrument, whether or not for the payment
of money, whether direct or indirect, primary or secondary, absolute or
contingent, due or to become due, now existing or hereafter arising, including,
but not limited to, the Loans, all obligations of any Loan Party arising with
respect to the Letters of Credit, all obligations of any Loan Party under any
Swap Contract, foreign exchange agreement and/or controlled disbursement check
cashing or other cash management agreement, and all other Indebtedness,
liabilities and obligations arising under this Agreement and the other Loan
Documents, and all reasonable costs, expenses, fees, charges and attorneys’
(both outside and in-house), paralegals’ and professional fees incurred in
connection with any of the foregoing, or in any way connected with, involving
or relating to the preservation, enforcement, protection or defense of, or
realization under this Agreement, any Note, any of the other Loan Documents,
any related agreement, document or instrument, any of the Collateral, and the
rights and remedies hereunder or thereunder, including without limitation, all reasonable
costs, expenses and fees incurred in connection with any “workout” or default
resolution negotiations involving legal counsel or other professionals and
further in connection with any re-negotiation or restructuring of the
Indebtedness evidenced by this Agreement, the Notes and/or any of the other
Loan Documents.


 


“Organization
Documents” means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction); (b) with
respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.


 


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


 


18





















 


“Outstanding Amount”
means, (a) with respect to the Committed Revolving Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of any Committed Revolving Loan
occurring on such date; and (b) with respect to any L/C Obligations on any
date, the amount of such L/C Obligations on such date after giving effect to
any L/C Credit Extension occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a result
of any reimbursements by the Borrower of Unreimbursed Amounts.


 


“Participant” has
the meaning specified in Section 10.06(c).


 


“PBGC” means the
Pension Benefit Guaranty Corporation.


 


“Pension Plan”
means any “employee pension benefit plan” (as such term is defined in Section 3(2) of
ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA
and is sponsored or maintained by the Borrower or any ERISA Affiliate or to
which the Borrower or any ERISA Affiliate contributes or has an obligation to
contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of
ERISA, has made contributions at any time during the immediately preceding five
plan years.


 


“Perfection Certificate” means a
certificate in the form of Exhibit E-l or any other form approved
by the Collateral Agent, as the same shall be supplemented from time to time by
a Perfection Certificate Supplement or otherwise.


 


“Perfection Certificate Supplement”
means a certificate supplement in the form of Exhibit E-2 or any
other form approved by the Collateral Agent.


 


“Permitted
Acquisitions” means acquisitions by the Borrower or any Subsidiary of
Borrower (excluding the Acquisition) of not less than 100% of the outstanding
Equity Interests of any corporation, partnership, limited liability company, a
division of any corporation or limited liability company or any similar
business unit (or of substantially all the assets and business of any of the
foregoing) (each, an “acquisition”) so long as (i) in the case of
each such acquisition of Equity Interests, such acquisition was not preceded by
an unsolicited tender offer for such Equity Interests by the Borrower or any of
its affiliates; (ii) the corporation, partnership, limited liability
company, division, business or assets, as applicable, to be acquired by the
Borrower or such Subsidiary is predominantly in the Borrower’s or such
Subsidiary’s existing lines of business or businesses reasonably related or
complimentary thereto, (iii) the total Acquisition Consideration to be
paid by the Borrower for such acquisition (net of that portion, if any, of such
consideration contributed to the Borrower by its shareholders as subordinated
debt or as equity) does not exceed $5,000,000 and the aggregate amount
of the Acquisition Consideration for all Permitted Acquisitions since the
Closing Date shall not exceed $10,000,000; (iv) the Borrower shall have delivered to the Lender a
certificate certifying that at the time of and immediately after giving effect
to such acquisition, (1) no Default or Event of Default has occurred and
is continuing, and (2) the Borrower shall be in compliance with all of its
financial covenants set forth herein and the Borrower shall have provided evidence of such compliance to the
Lender on a pro  forma combined basis; (v) such acquisition
does not result in any change in the management of the Borrower which is deemed
material in the reasonable opinion of the Lender; and (vi) the assets or
business being acquired by the Borrower or such Subsidiary shall have had a
positive EBITDA for the twelve-month fiscal period immediately


 


19





















 


preceding the date of such acquisition (with EBITDA
being calculated in a manner consistent with the calculation of Consolidated
EBITDA).


 


“Person” means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.


 


“Plan” means any “employee
benefit plan” (as such term is defined in Section 3(3) of ERISA)
other than a Multiemployer Plan contributed to by the Borrower or, with respect
to any such plan that is subject to Section 412 of the Code or Title IV of
ERISA, contributed to by any ERISA Affiliate.


 


“Pro Forma Basis”
means on a basis in accordance with GAAP and Regulation S-X promulgated under
the Securities Act and otherwise reasonably satisfactory to the Lender.


 


“Registered Public
Accounting Firm” has the meaning specified in the Securities Laws and shall
be independent of the Borrower as prescribed by the Securities Laws.


 


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


 


“Reportable Event”
means any of the events set forth in Section 4043(c) of ERISA, other
than events for which the 30 day notice period has been waived.


 


“Request for Credit
Extension” means (a) with respect to a Borrowing, conversion or
continuation of a Committed Revolving Loan, a Committed Revolving Loan Notice,
and (b) with respect to an L/C Credit Extension, a Letter of Credit
Application.


 


“Responsible Officer”
means the chief executive officer, president, chief financial officer,
treasurer or assistant treasurer of a Loan Party and any other officer or
similar officer thereof with responsibility for the administration of the
obligations of such Loan Party in respect of this Agreement. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.


 


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


 


“Revolving Loan Note”
means the promissory note made by the Borrower in favor of the Lender,
substantially in the form of Exhibit F.


 


“Sarbanes-Oxley”
means the Sarbanes-Oxley Act of 2002.


 


20





















 


“SEC” means the
United States Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.


 


“Secured Parties” means,
collectively, the Lender, the L/C Issuer, the Collateral Agent and each party
to a Swap Contract relating to any of the Loans if at the date of entering into
such Swap Contract such person was the Lender or an Affiliate of the Lender and
such person executes and delivers to the Collateral Agent a letter agreement in
form and substance reasonably acceptable to the Collateral Agent pursuant to
which such person (a) appoints the Collateral Agent as its agent under the
applicable Loan Documents and (ii) agrees to be bound by  such provisions of the Loan Documents as the
Collateral Agent requires.


 


“Securities Act” means the
Securities Act of 1933, amended and in effect on any applicable date hereunder.


 


“Securities Laws”
means the Securities Act, the Exchange Act, Sarbanes-Oxley and the applicable
accounting and auditing principles, rules, standards and practices promulgated,
approved or incorporated by the SEC or the Public Company Accounting Oversight
Board, as each of the foregoing may be amended and in effect on any applicable
date hereunder.


 


“Security Agreement”
means a Security Agreement substantially in the form of Exhibit G
among the Loan Parties and the Collateral Agent for the benefit of the Secured
Parties.


 


“Security Documents”
means the Security Agreement, each account control agreement and each other
security document, pledge agreement or instrument delivered in accordance with
applicable local or foreign law to grant a valid, perfected security interest
in any property as collateral for the Obligations.


 


“Subordinated
Debt” means Indebtedness that is payable on such terms and subordinated to
the Obligations in such manner as is satisfactory to the Lender, in its sole
discretion, pursuant to the terms of the instruments evidencing such
Indebtedness or subordination agreements which are in form and content
satisfactory to the Lender, in its sole discretion.


 


“Subsidiary” of a
Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by such
Person.  Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Borrower.


 


“Subsidiary Guarantor”
means each Subsidiary (including, without limitation, Telic) listed on Schedule 1.01(b),
and each other Subsidiary that is or becomes a party to this Agreement pursuant
to Section 6.12.


 


“Swap Contract”
means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index


 


21





















 


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


 


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


 


“Synthetic Lease
Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property (other than an agreement which
would be treated under GAAP solely as an operating lease) creating obligations
that do not appear on the balance sheet of such Person but which, upon the
insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).


 


“Target” shall
have the meaning assigned to such term in the first recital hereto.


 


“Taxes” means all
present or future taxes, levies, imposts, duties, deductions, withholdings, assessments,
fees or other charges imposed by any Governmental Authority, including any
interest, additions to tax or penalties applicable thereto.


 


“Telic” means
Telic Optics, Inc., a Massachusetts corporation and wholly-owned
Subsidiary of the Borrower.


 


“Telic Earn-Out
Payments” means the contingent payments required to be made by the Borrower
to the prior shareholders of Telic in an aggregate amount not to exceed
$4,000,000 pursuant to Section 1.9 of the Merger Agreement.


 


“Term Loan” means
Term Loan A or Term Loan B, as the context may require.


 


“Term Loan Note”
means the Term Loan A Note or the Term Loan B Note, as the context may require.


 


“Term Loan A” has
the meaning specified in Section 2.01(b).


 


22





















 


“Term Loan A Note”
means the promissory note made by the Borrower in favor of the Lender,
substantially in the form of Exhibit H.


 


“Term Loan B” has
the meaning specified in Section 2.01(c).


 


“Term Loan B Note”
means the promissory note made by the Borrower in favor of the Lender,
substantially in the form of Exhibit I.


 


“Term Loan B Notice”
means a notice of a continuation of Term Loan B as a Eurodollar Rate Loan
pursuant to Section 2.02(a), which, if in writing, shall be
substantially in the form of Exhibit J.


 


“Test Period” means, at any time,
the four consecutive fiscal quarters of the Borrower then last ended (in each
case taken as one accounting period).


 


“Threshold Amount”
means $1,000,000.


 


“Total Outstandings”
means the aggregate Outstanding Amount of all Committed Revolving Loans and all
L/C Obligations.


 


“Type” means, with
respect to a Committed Revolving Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.


 


“Unfunded Pension
Liability” means the amount by which the current liability (as defined in Section 412(l)(7) of
the Code) under a Pension Plan for such Pension Plan’s most recent fiscal year
exceeds the fair market value of the Plan’s assets as of the end of such fiscal
year.


 


“United States”
and “U.S.” mean the United States of America.


 


“Unreimbursed Amount”
has the meaning specified in Section 2.03(c)(i).


 


“Voting Stock” means, with respect
to any person, any class or classes of Equity Interests pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the Board of Directors or equivalent governing
body of such person.


 


1.02                        Other Interpretive Provisions.   With reference to this Agreement and each other Loan
Document, unless otherwise specified herein or in such other Loan Document:


 


(a)                                  The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”  The word “will”
shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document
(including any Organization Document) shall be construed as referring to such
agreement, instrument or other document as from time to time amended, restated,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any


 


23





















 


other Loan Document), (ii) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (iii) the
words “herein,” “hereof” and “hereunder,” and words of
similar import when used in any Loan Document, shall be construed to refer to
such Loan Document in its entirety and not to any particular provision thereof,
(iv) all references in a Loan Document to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, the Loan Document in which such references appear, (v) any
reference to any law shall include all statutory and regulatory provisions
consolidating, amending, replacing or interpreting such law and any reference
to any law or regulation shall, unless otherwise specified, refer to such law
or regulation as amended, modified or supplemented from time to time, and (vi) the
words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.


 


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


 


(c)                                  Section headings
herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Document.


 


1.03                        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 the Audited
Financial Statements, 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 any Loan
Document, and either the Borrower or the Lender shall so request, the Lender
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 Lender); 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 Lender 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.


 


1.04                        Rounding.   Any financial ratios required to be maintained by
the Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).


 


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


 


24





















 


1.06                        Letter 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 Issuer 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.


 


1.07                        Resolution of Drafting
Ambiguities.   Each Loan Party
acknowledges and agrees that it was represented by counsel in connection with
the execution and delivery of the Loan Documents to which it is a party, that
it and its counsel reviewed and participated in the preparation and negotiation
hereof and thereof and that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation hereof or thereof.


 


ARTICLE II.

THE COMMITMENT AND OTHER CREDIT EXTENSIONS


 


2.01                        The Loans.   (a)   Committed Revolving Loans.  Subject to
the terms and conditions set forth herein, the Lender agrees to make revolving
loans (each such loan, a “Committed Revolving Loan”) to the Borrower
from time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of the
Commitment provided, however, that after giving effect to any
Borrowing, the Total Outstandings shall not exceed the Commitment. Within the
limits of the Commitment, and subject to the other terms and conditions hereof,
the Borrower may borrow under this Section 2.01, prepay under Section 2.05,
and reborrow under this Section 2.01. Committed Revolving Loans may
be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.


 


(b)                                 Term
Loan A.   Subject to the terms and conditions set forth
herein, the Lender, agrees to extend to the Borrower a term loan in the
principal amount of $20,000,000 (“Term
Loan A”). Except as otherwise provided herein, Term Loan A shall
only be a Eurodollar Rate Loan.


 


(c)                                  Term
Loan B.   Subject to the terms and conditions set forth
herein, the Lender, agrees to extend to the Borrower a term loan in the
principal amount of $35,000,000 (“Term
Loan B”). Except as otherwise provided herein, Term Loan B shall
only be a Eurodollar Rate Loan.


 


2.02                        Borrowings, Conversions and
Continuations of Committed Revolving Loans; Continuations of Term Loan B.


 


(a)                                  Each
Borrowing, each conversion of a Committed Revolving Loan from one Type to the
other, and each continuation of a Committed Revolving Loan that is a Eurodollar
Rate Loan shall be made upon the Borrower’s irrevocable notice to the Lender,
which may be given by telephone.  Each
such notice must be received by the Lender not later than 11:00 a.m. (i) three
Business Days prior to the requested date of any Borrowing of, conversion to or
continuation of a Committed Revolving Loan as a Eurodollar Rate Loan or of any
conversion of a Committed Revolving Loan from a Eurodollar Rate Loan to a Base
Rate Loan, and (ii) on the requested date of any Borrowing of a Base Rate
Loan.  Each telephonic notice by the
Borrower pursuant to this


 


25





















 


Section 2.02(a) must
be confirmed promptly by delivery to the Lender of a written Committed
Revolving Loan Notice, appropriately completed and signed by a Responsible
Officer of the Borrower.  Each Borrowing
of, conversion to or continuation of a Committed Revolving Loan as a Eurodollar
Rate Loan shall be in a principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof.  Except as
provided in Sections 2.03(c) and 2.04(c), each Borrowing of
or conversion of a Committed Revolving Loan that is a Eurodollar Loan to a Base
Rate Loan shall be in a principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof.  Each
Committed Revolving Loan Notice (whether telephonic or written) shall specify (i) whether
the Borrower is requesting a Borrowing, a conversion of a Committed Revolving
Loan from one Type to the other, or a continuation of a Committed Revolving
Loan that is a Eurodollar Rate Loan, (ii) the requested date of such
Borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of the Committed Revolving Loan
to be borrowed, converted or continued, (iv) the Type of Committed
Revolving Loan to be borrowed or to which an existing Committed Revolving Loan
is to be converted, and (v) if applicable, the duration of the Interest
Period with respect thereto.  If the
Borrower fails to specify a Type of Committed Revolving Loan in a Committed
Revolving Loan Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Committed
Revolving Loan shall be made as, or converted to, a Base Rate Loan.  Any such automatic conversion to a Base Rate
Loan shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loan.  If the Borrower requests a Borrowing of,
conversion to, or continuation of a Eurodollar Rate Loan in any such Committed
Revolving Loan Notice, but fails to specify an Interest Period, it will be
deemed to have specified an Interest Period of one month.


 


(b)                                 Following
receipt of a Committed Revolving Loan Notice, the Lender shall advance the
Committed Revolving Loan by crediting the account of the Borrower on the books
of the Lender with the amount of such Loan (other than in connection with
funding the Acquisition, which shall be pursuant to wire transfer of such funds
in accordance with written instructions provided to the Lender by the
Borrower); provided, however, that if, on the date the Committed
Revolving Loan Notice with respect to such Borrowing is given by the Borrower,
there are L/C Borrowings outstanding, then the proceeds of such Borrowing, first,
shall be applied to the payment in full of any such L/C Borrowings, and second,
shall be made available to the Borrower as provided above.


 


(c)                                  After
giving effect to all Borrowings, all conversions of Committed Revolving Loans
from one Type to the other, and all continuations of Committed Revolving Loans
as the same Type, there shall not be more than five Interest Periods in effect
with respect to Committed Revolving Loans.


 


(d)                                 The
Borrower shall designate the initial Interest Period applicable to Term Loan B
by delivering a written request thereof to the Lender not later than 11:00 a.m.
at least three Business Days prior to the requested date for the Lender’s
disbursement thereof. Each continuation of Term Loan B as a Eurodollar Rate
Loan shall be made upon the Borrower’s irrevocable notice to the Lender, which
may be given by telephone.  Each such
notice must be received by the Lender not later than 11:00 a.m. three
Business Days prior to the requested date of any such continuation.  Each telephonic notice by the Borrower
pursuant to this Section 2.02(c) must be confirmed promptly by
delivery to the Lender of a written Term Loan B Notice, appropriately completed
and signed by a Responsible Officer of the Borrower.  Each Term Loan


 


26





















 


B
Notice (whether telephonic or written) shall specify (i) the requested
date of such continuation (which shall be a Business Day), and (ii) the
duration of the Interest Period with respect thereto.  If the Borrower fails to specify an Interest
Period in any Term Loan B Notice, it will be deemed to have specified an
Interest Period of one month.


 


(e)                                  Except
as otherwise provided herein, a Eurodollar Rate Loan may be continued or
converted only on the last day of an Interest Period for such Eurodollar Rate
Loan.  During the existence of a Default,
no Loan may be requested as, converted to or continued as a Eurodollar Rate
Loan.


 


(f)                                    The
Lender shall promptly notify the Borrower of the interest rate applicable to
any Interest Period for Eurodollar Rate Loans upon determination of such
interest rate.  At any time that Base
Rate Loans are outstanding, the Lender shall notify the Borrower of any change
in the Lender’s prime rate used in determining the Base Rate promptly following
the public announcement of such change.


 


2.03                        Letters of
Credit.


 


(a)                                  The
Letter of Credit Commitment.


 


(i)                                     Subject
to the terms and conditions set forth herein, the L/C Issuer agrees, (A) from
time to time on any Business Day during the period from the Closing Date until
the Letter of Credit Expiration Date, to issue Letters of Credit for the
account of the Borrower or its Subsidiaries, and to amend Letters of Credit
previously issued by it, in accordance with subsection (b) below, and
(B) to honor drawings under the Letters of Credit; provided that
after giving effect to any L/C Credit Extension with respect to any Letter of
Credit, (y) the Total Outstandings shall not exceed the Commitment, and (z) the
Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit
Sublimit.  Each request by the Borrower
for the issuance or amendment of a Letter of Credit shall be deemed to be a
representation by the Borrower that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding
sentence.  Within the foregoing limits,
and subject to the terms and conditions hereof, the Borrower’s ability to
obtain Letters of Credit shall be fully revolving, and accordingly the Borrower
may, during the foregoing period, obtain Letters of Credit to replace Letters
of Credit that have expired or that have been drawn upon and reimbursed. The Existing Letters of Credit shall be
deemed to have been issued pursuant hereto, and from and after the Closing Date
shall be subject to and governed by the terms and conditions hereof.


 


(ii)                                  The
L/C Issuer shall not issue any Letter of Credit, if:


 


(A)                              subject
to Section 2.03(b)(iii), the expiry date of such requested Letter
of Credit would occur more than twelve months after the date of issuance,
unless the Lender has approved such expiry date; or


 


(B)                                the
expiry date of such requested Letter of Credit would occur after the Letter of
Credit Expiration Date,


 


27





















 


(iii)                               The
L/C Issuer shall not be under any obligation to issue any Letter of Credit if:


 


(A)                              any
order, judgment or decree of any Governmental Authority or arbitrator shall by
its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter
of Credit, or any Law applicable to the L/C Issuer or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the L/C Issuer with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the
L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or
expense which was not applicable on the Closing Date and which the L/C Issuer
in good faith deems material to it;


 


(B)                                the
issuance of such Letter of Credit would violate one or more policies of the L/C
Issuer;


 


(C)                                except
as otherwise agreed by the L/C Issuer, such Letter of Credit is in an initial
stated amount less than $50,000, in the case of a commercial Letter of Credit,
or $100,000, in the case of a standby Letter of Credit;


 


(D)                               such
Letter of Credit is to be denominated in a currency other than Dollars; or


 


(E)                                 such Letter of Credit contains any provisions
for automatic reinstatement of the stated amount after any drawing thereunder.


 


(iv)                              The
L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be
permitted at such time to issue such Letter of Credit in its amended form under
the terms hereof.


 


(v)                                 The
L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the
L/C Issuer would have no obligation at such time to issue such Letter of Credit
in its amended form under the terms hereof, or (B) the beneficiary of such
Letter of Credit does not accept the proposed amendment to such Letter of
Credit.


 


(b)                                 Procedures
for Issuance and Amendment of Letters of Credit.


 


(i)                                     Each
Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower delivered to the L/C Issuer in the form of a Letter of
Credit Application, appropriately completed and signed by a Responsible Officer
of the Borrower.  Such Letter of Credit
Application must be received by the L/C Issuer not later than 11:00 a.m.
at least two Business Days (or such later date and time as the L/C Issuer may
agree in a particular instance in its sole discretion) prior to the proposed
issuance date or date of amendment, as the case may be.  In the case of a request for an initial
issuance of a Letter of Credit, such Letter of Credit Application shall specify
in form and detail satisfactory to the L/C Issuer: (A) the proposed
issuance date of the requested


 


28





















 


Letter of Credit (which shall be a Business Day); (B) the amount
thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary
in case of any drawing thereunder; (F) the full text of any certificate to
be presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as the L/C Issuer may reasonably require.  In the case of a request for an amendment of
any outstanding Letter of Credit, such Letter of Credit Application shall
specify in form and detail reasonably satisfactory to the L/C Issuer (A) the
Letter of Credit to be amended; (B) the proposed date of amendment thereof
(which shall be a Business Day); (C) the nature of the proposed amendment;
and (D) such other matters as the L/C Issuer may require.  Additionally, the Borrower shall furnish to
the L/C Issuer and the Lender such other documents and information
pertaining to such requested Letter of Credit issuance or amendment, including
any Issuer Documents, as the L/C Issuer or the Lender may reasonably require.


 


(ii)                                  Unless
the L/C Issuer has knowledge that one or more applicable conditions contained
in Article IV shall not then be satisfied, then, subject to the
terms and conditions hereof, the L/C Issuer shall, on the requested date, issue
a Letter of Credit for the account of the Borrower or the applicable Subsidiary
or enter into the applicable amendment, as the case may be, in each case in
accordance with the L/C Issuer’s usual and customary business practices.


 


(iii)                               Promptly
after its delivery of any Letter of Credit or any amendment to a Letter of
Credit to an advising bank with respect thereto or to the beneficiary thereof,
the L/C Issuer will also deliver to the Borrower a true and complete copy of
such Letter of Credit or amendment.


 


(c)                                  Drawings
and Reimbursements.


 


(i)                                     Upon
receipt from the beneficiary of any Letter of Credit of any notice of a drawing
under such Letter of Credit, the L/C Issuer shall notify the Borrower
thereof.  Not later than 1:00 p.m.
on the date of any payment by the L/C Issuer under a Letter of Credit (each
such date, an “Honor Date”), the Borrower shall reimburse the L/C Issuer
in an amount equal to the amount of such drawing.  In such event, the Borrower shall be deemed
to have requested a Borrowing of a Base Rate Loan to be disbursed on the Honor
Date in an amount equal to the unreimbursed drawing (the “Unreimbursed
Amount”), without regard to the minimum and multiples specified in Section 2.02
for the principal amount of the Base Rate Loan, but subject to the amount of
the unutilized portion of the Commitment and the conditions set forth in Section 4.02
(other than the delivery of a Committed Revolving Loan Notice).  Any notice given by the L/C Issuer pursuant
to this Section 2.03(c)(i) may be given by telephone if
immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.


 


(ii)                                  With
respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing
of a Base Rate Loan because the conditions set forth in Section 4.02
cannot be satisfied or for any other reason, the Borrower shall be deemed to
have incurred from the L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at the
Default Rate.


 


29





















 


(d)                                 Obligations
Absolute.   The obligation of the Borrower to
reimburse the L/C Issuer for each drawing under each Letter of Credit and to
repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:


 


(i)                                     any
lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other Loan Document;


 


(ii)                                  the
existence of any claim, counterclaim, setoff, defense or other right that the
Borrower may have at any time against any beneficiary or any transferee of such
Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;


 


(iii)                               any
draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; or any loss
or delay in the transmission or otherwise of any document required in order to
make a drawing under such Letter of Credit;


 


(iv)                              any
payment by the L/C Issuer under such Letter of Credit against presentation of a
draft or certificate that does not strictly comply with the terms of such
Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit
to any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of such
Letter of Credit, including any arising in connection with any proceeding under
any Debtor Relief Law; or


 


(v)                                 any
other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, including any other circumstance that might otherwise constitute
a defense available to, or a discharge of, the Borrower.


 


The Borrower shall
promptly examine a copy of each Letter of Credit and each amendment thereto
that is delivered to it and, in the event of any claim of noncompliance with
the Borrower’s instructions or other irregularity, the Borrower will
immediately notify the L/C Issuer.  The
Borrower shall be conclusively deemed to have waived any such claim against the
L/C Issuer and its correspondents unless such notice is given as aforesaid.
Nothing is this Section 2.03(d) shall be construed to excuse the
gross negligence or willful misconduct of the L/C Issuer to the extent the L/C
Issuer may be liable to the Borrower for the same in accordance with Section 2.03(e).


 


(e)                                  Role
of L/C Issuer.   The
Borrower agrees that, in paying any drawing under a Letter of Credit, the L/C
Issuer shall not have any responsibility to obtain any document (other than any
sight draft, certificates and documents expressly required by the Letter of
Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such
document.  The Borrower hereby assumes
all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude the


 


30





















 


Borrower’s
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. 
None of the L/C Issuer, any of its Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable or
responsible for any of the matters described in clauses (i) through (v) of
Section 2.03(d); provided, however, that anything in
such clauses to the contrary notwithstanding, the Borrower may have a claim
against the L/C Issuer, and the L/C Issuer may be liable to the Borrower, to
the extent, but only to the extent, of any direct, as opposed to consequential
or exemplary, damages suffered by the Borrower which the Borrower proves were
caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C
Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit.  In furtherance and
not in limitation of the foregoing, the L/C Issuer may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary, and the
L/C Issuer shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.


 


(f)                                    Cash
Collateral.   Upon the request of the L/C Issuer, (i) if
the L/C Issuer has honored any full or partial drawing request under any Letter
of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if,
as of the Letter of Credit Expiration Date, any L/C Obligation for any reason
remains outstanding, the Borrower shall, in each case, immediately Cash
Collateralize the then Outstanding Amount of all L/C Obligations.  Sections 2.04 and 8.02(c) set
forth certain additional requirements to deliver Cash Collateral
hereunder.  For purposes of this Section 2.03,
Section 2.04 and Section 9.02(c),
“Cash Collateralize” means to pledge and deposit with or deliver to the
L/C Issuer, as collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance reasonably
satisfactory to the L/C Issuer. 
Derivatives of such term have corresponding meanings.  The Borrower hereby grants to the L/C Issuer,
a security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing.  Cash
Collateral shall be maintained in blocked, non-interest bearing deposit
accounts at the Lender.


 


(g)                                 Applicability
of ISP and UCP.   Unless otherwise
expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is
issued (including any such agreement
applicable to an Existing Letter of Credit), (i) the rules of
the ISP shall apply to each standby Letter of Credit, and (ii) the rules of
the Uniform Customs and Practice for Documentary Credits, as most recently
published by the International Chamber of Commerce at the time of issuance
shall apply to each commercial Letter of Credit.


 


(h)                                 Letter
of Credit Fees and Processing Charges.   The
Borrower shall pay to the Lender a Letter of Credit fee (the “Letter of
Credit Fee”) a Letter of Credit fee (the “Letter of Credit Fee”) (i) for each commercial Letter of
Credit equal to 1/2 of 1% per annum times the daily amount available to
be drawn under such Letter of Credit, and (ii) for each standby
Letter of Credit equal to the Applicable Rate times the daily amount
available to be drawn under such Letter of Credit.  For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  Letter of Credit Fees shall be (i) computed
on a quarterly basis in arrears and (ii) due and payable on the first
Business Day after the end of each March,
June, September and


 


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December, commencing with the first such date
to occur after the issuance of such Letter of Credit, on the Letter of Credit
Expiration Date and thereafter on demand. If there is any change in the
Applicable Rate during any quarter, the daily amount available to be drawn
under each standby Letter
of Credit shall be computed and multiplied by the Applicable Rate separately
for each period during such quarter that such Applicable Rate was in effect.
Notwithstanding anything to the contrary contained herein, while any Event of
Default exists, all Letter of Credit Fees shall, at the option of the Lender,
accrue at the Default Rate. In addition, the Borrower shall pay directly to the
L/C Issuer for its own account the customary issuance, presentation, amendment
and other processing fees, and other standard costs and charges, of the L/C
Issuer relating to letters of credit as from time to time in effect.  Such customary fees and standard costs and
charges are due and payable within three Business Days after demand and are
nonrefundable.


 


(i)                                     Conflict
with Issuer Documents.   In the event of any conflict between the terms
hereof and the terms of any Issuer Document, the terms hereof shall control.


 


(j)                                     Letters of Credit Issued for Subsidiaries.   Notwithstanding that a Letter of Credit issued
or outstanding hereunder is in support of any obligations of, or is for the
account of, a Subsidiary, the Borrower shall be obligated to reimburse the L/C
Issuer hereunder for any and all drawings under such Letter of Credit.  The Borrower hereby acknowledges that the
issuance of Letters of Credit for the account of Subsidiaries inures to the
benefit of the Borrower, and that the Borrower’s business derives substantial
benefits from the businesses of such Subsidiaries.


 


2.04                        Prepayments; Accelerated
Maturity of Term Loan B.


 


(a)                                  Voluntary
Prepayment of Committed Revolving Loans.   The
Borrower may, upon notice to the Lender, at any time or from time to time
voluntarily prepay any Committed Revolving Loan in whole or in part without
premium or penalty; provided that (i) such notice must be received
by the Lender not later than 1:00 p.m. (A) two Business Days prior to
any date of prepayment of a Committed Revolving Loan that is a Eurodollar Rate
Loan and (B) on the date of prepayment of a Committed Revolving Loan that
is a Base Rate Loan; and (ii) any prepayment of a Committed Revolving Loan
shall be in a principal amount of $500,000 or a whole multiple of $100,000 or,
if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and
amount of such prepayment and the Type(s) of Committed Revolving Loan(s) to be
prepaid.  If such notice is given by the
Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified
therein.  Any prepayment of a Committed
Revolving Loan that is a Eurodollar Rate Loan shall be accompanied by all
accrued interest on the amount prepaid, together with any additional amounts
required pursuant to Section 3.05.


 


(b)                                 Mandatory
Prepayment of Committed Revolving Loans. 
 If for any reason the Total
Outstandings at any time exceed the Commitment then in effect, the Borrower
shall immediately prepay Committed Revolving Loans and/or Cash Collateralize
the L/C Obligations in an aggregate amount equal to such excess; provided,
however, that the Borrower shall not be required to Cash Collateralize
the L/C Obligations pursuant to this Section 2.04(b) unless
after the prepayment in full of the Loans the Total Outstandings exceed the
Commitment then in effect.


 


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(c)                                  Voluntary
Prepayment of a Term Loan.   The Borrower may, upon notice to the Lender,
at any time or from time to time voluntarily prepay a Term Loan in whole or in
part without premium or penalty; provided that (i) such notice must
be received by the Lender not later than 1:00 p.m. (A) two Business
Days prior to any date of prepayment of such Term Loan if such Loan is then a
Eurodollar Rate Loan and (B) on the date of prepayment of such Term Loan
is such Loan is then a Base Rate Loan; (ii) any prepayment of a Term Loan
shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof or, if less, the entire principal amount thereof then
outstanding; and (iii) any partial prepayment of a Term Loan shall be
applied to principal installments due thereunder in the inverse order of
maturity and shall not relieve the Borrower’s obligation to make regularly
scheduled principal payments thereunder. Each such notice shall specify the
Term Loan being prepaid and the date and amount of such prepayment.  If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.  Any prepayment of a Term Loan that is a
Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount
prepaid, together with any additional amounts required pursuant to Section 3.05.


 


(d)                                 Mandatory
Prepayment of a Term Loan.


 


(i)                                     Excess
Cash Flow.   No later than ten Business Days after the
date on which the financial statements with respect to such fiscal year occurs
are delivered pursuant to Section 6.01(a), commencing with the fiscal year of the Borrower ending on December 31,
2005, the Borrower shall make prepayments of the Term Loans in an
aggregate principal amount equal to 50% of Excess Cash Flow for such fiscal
year unless the Consolidated Leverage Ratio for the Test Period ending on the
last day of such fiscal year is equal to or less than 2.00 to 1.00, in which
case no such prepayment shall be required.


 


(ii)                                  Equity Offering.   Upon the issuance, sale or exchange of any
Equity Interests of the Borrower, the Borrower shall prepay Term Loan B in an
amount equal to one hundred percent (100%) of the Net Cash Proceeds of any such
issuance, sale or exchange up to an aggregate amount applied to principal of
$35,000,000. Any prepayment of Term Loan B required under this clause (ii), to
the extent applied to principal, shall be applied by the Lender to the
outstanding principal installments of Term Loan B in the inverse order of the
maturity.


 


(iii)                               Asset Sales.   Not later than three Business Days
following the receipt of any Net Cash Proceeds of any Asset Sale (other that
Asset Sales permitted under Section 7.05(b) or 7.05(d))
by the Borrower or any of its Subsidiaries, the Borrower shall prepay the Term Loans in an amount equal to one
hundred percent (100%) of such Net Cash Proceeds; provided that:


 


(A)                              so
long as no Default shall then exist or would arise therefrom, such proceeds up
to a maximum of $500,000 per Asset Sale (or series of related Asset Sales) and
$1,500,000 in the aggregate for all such Asset Sales over the term of this
Agreement shall not be required to be so applied on such date so long as (x)
the Borrower shall have delivered to the Lender a certificate executed by a
Responsible Officer of the Borrower on or prior to such date stating that such
proceeds are expected to be used, no later than one 365 days following the
date of


 


33





















 


receipt of such proceeds, to acquire fixed or capital assets in replacement of the disposed assets
(the “Replacement Assets”), (y) the Borrower or any Subsidiary Guarantor
shall have entered into a commitment to purchase the Replacement Assets within
270 days of receipt of such proceeds, and (z) the acquisition of such
Replacement Assets is consummated within 365 days of receipt of such proceeds;
provided that if the
property subject to such Asset Sale constituted Collateral under the Security
Documents, then all property purchased with the Net Cash Proceeds thereof
pursuant to this subsection shall be made subject to the Lien of the applicable
Security Documents in favor of the Collateral Agent, for its benefit and for
the benefit of the other Secured Parties in accordance with Sections 6.12
and 6.16; and


 


(B)                                if
any portion of such Net Cash Proceeds shall not be so applied within such 365-day
period, such unused portion shall be applied on the last day of such period as
a mandatory prepayment of the Term Loans as provided in Section 2.04(d)(v).


 


(iv)                              Casualty
Events.   Not later than three Business Days following
the receipt of any Net Cash Proceeds from a Casualty Event by the Borrower or
any of its Subsidiaries, the Borrower
shall prepay the Term Loans in an amount equal to one hundred percent (100%) of
such Net Cash Proceeds; provided
that:


 


(A)                              so
long as no Default shall then exist or arise therefrom, such proceeds up to a
maximum of $500,000 in any fiscal year and $1,500,000 in the aggregate over the
term of this Agreement shall not be required to be so applied on such date so
long as the Borrower shall have delivered to the Lender a certificate executed
by a Responsible Officer of the Borrower on or prior to such date stating that
such proceeds are expected to be used, no later than 365 days following
the date of receipt of such proceeds, to repair, replace or restore any
property in respect of which such Net Cash Proceeds were paid, and (y) the repair, replacement or restoration
of such property is completed within such 365-day period; provided that if the property
subject to such Casualty Event constituted Collateral under the Security
Documents, then all property purchased with the Net Cash Proceeds thereof pursuant
to this subsection shall be made subject to the Lien of the applicable
Security Documents in favor of the Collateral Agent, for its benefit and for
the benefit of the other Secured Parties in accordance with Sections 6.12
and 6.16; and


 


(B)                                if
any portion of such Net Cash Proceeds shall not be so applied within such 365-day
period, such unused portion shall be applied on the last day of such period as
a mandatory prepayment of the Term Loans as provided in Section 2.04(d)(v).


 


(v)                                 Application
of Prepayments.   Any prepayment of the Term Loans required
under clauses (i), (iii) or (iv) of this subsection (d), to the
extent applied to principal, shall be applied by the Lender first to Term Loan
B (100% to the outstanding principal installments of Term Loan B in the inverse
order of the maturity thereof until paid in full), and second, to the Term Loan
A (100% to the outstanding principal installments of Term Loan A in the inverse
order of the maturity thereof).


 


34





















 


(e)                                  Accelerated
Maturity of Term Loan B.   In accordance with Section 6.10,
the Borrower acknowledges the Lender’s intention to conduct after the Closing
Date a field examination of the accounts receivable and inventory of the
Borrower and its Subsidiaries, all at the sole cost and expense of the Borrower
(the “Post Closing Examination”). If, for any reason, the results of the
Post Closing Examination are unsatisfactory to the Lender in its sole
discretion, the Borrower acknowledges and agrees that the Lender shall have the
right, in its sole discretion, to accelerate the Maturity Date of Term Loan B
to the later to occur of (i) June 30, 2005, or (ii) sixty days
after the Lender’s notice to the Borrower that it has received the results of
such Post Closing Examination and that such results are not satisfactory.


 


2.05                        Termination
or Reduction of Commitment.   The
Borrower may, upon notice to the Lender, terminate the Commitment, or from time
to time permanently reduce the Commitment; provided that (i) any
such notice shall be received by the Lender not later than 11:00 a.m. five
Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $2,500,000 or any whole
multiple of $500,000 in excess thereof, (iii) the Borrower shall not
terminate or reduce the Commitment if, after giving effect thereto and to any
concurrent prepayments hereunder, the Total Outstandings would exceed the
Commitment, and (iv) if, after giving effect to any reduction of the
Commitment, the Letter of Credit Sublimit exceeds the amount of the Commitment,
such Sublimit shall be automatically reduced by the amount of such excess.  All fees accrued until the effective date of
any termination of the Commitment shall be paid on the effective date of such
termination.


 


2.06                        Repayment
of Loans.


 


(a)                                  The Borrower shall
repay to the Lender on the Maturity Date of the Commitment the aggregate
principal amount of the Committed Revolving Loans outstanding on such date.


 


(b)                                 If not sooner paid,
the Borrower shall repay to the Lender the principal amount of each Term Loan
in accordance with the applicable Term Loan Note.


 


2.07                        Interest;
Pricing Flex; Required Interest Rate Hedge.


 


(a)                                  Subject to the
provisions of subsection (b) below, (i) each Eurodollar Rate
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; and (ii) each Base Rate
Loan shall bear interest on the outstanding principal amount thereof at a rate
per annum equal to the Base Rate plus the Applicable Rate.


 


(b)                                 (i)                                     If
any amount of principal of any Loan is not paid when due (after giving effect
to any applicable grace periods), whether at stated maturity, by acceleration
or otherwise, such amount shall thereafter bear interest at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws.


 


(ii)                                  If
any amount (other than principal of any Loan) payable by the Borrower under any
Loan Document is not paid when due (after giving effect to any applicable grace
periods), whether at stated maturity, by acceleration or otherwise, then upon
the request of the Lender, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.


 


35





















 


(iii)                               At
the option of the Lender, while any Event of Default exists, the Borrower shall
pay interest on the principal amount of all outstanding Obligations hereunder
at a fluctuating interest rate per annum at all times equal to the Default Rate
to the fullest extent permitted by applicable Laws.


 


(iv)                              Accrued
and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.


 


(c)                                  Interest on each Loan
shall be due and payable in arrears on each Interest Payment Date applicable
thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable
in accordance with the terms hereof before and after judgment, and before and
after the commencement of any proceeding under any Debtor Relief Law.


 


(d)                                 Notwithstanding
anything herein to the contrary, unless (i) Term Loan B is repaid in full
on or before the Anticipated Term Loan B Prepayment Date, or (ii) the
Lender is able to assign or participate a proportionate part of the Commitment
and outstanding Loans in an amount not less than $35,000,000 to a financial
institution acceptable to the Lender, effective on the Anticipated Term Loan B
Prepayment Date, the Applicable Rate for all Loans at all Pricing Levels shall
automatically increase, without notice to or consent of the Borrower, by .25%
per annum above the interest rate otherwise applicable thereto. In addition,
unless either of the conditions set forth in clause (i) or (ii) above
has been satisfied, on the four month and the six month anniversary dates of
the Anticipated Term Loan B Prepayment Date, the Applicable Rate for all Loans
at all Pricing Levels shall again automatically increase, without notice to or
consent of the Borrower, by .25% each (or .50% in total) above the interest
rate otherwise applicable thereto.


 


(e)                                  The Borrower shall be
required to hedge the floating interest expense of Term Loan A for the full
term thereof by maintaining or more Swap Contracts with the Lender (or with
another financial institution approved by the Lender in writing), in an aggregate
notional amount of $20,000,000, with the Borrower making fixed rate payments
and receiving floating rate payments to offset changes in the variable interest
expenses of Term Loan A, all upon such terms and subject to such conditions as
shall be acceptable to the Lender. The Borrower acknowledges and affirms its
election to enter into a Swap Contract with the Lender for the purposes
described above.


 


2.08                        Fees.   In addition to certain fees and charges
described in subsection (h) of Section 2.03:


 


(a)                                  Commitment Fee for
Committed Revolving Loan.   With respect to the Commitment, the Borrower
shall pay to the Lender a commitment fee equal to the 0.25% per annum times
the actual daily amount by which the Commitment exceeds the Total Outstandings.
Such commitment fee shall accrue at all times during the Availability Period,
including at any time during which one or more of the conditions in Article IV
is not met, and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with
the first such date to occur after the Closing Date, and on the Maturity
Date.  The commitment fee due under this
subsection (a) shall be calculated quarterly in arrears.


 


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(b)                                 Commitment Fee for
Term Loan A.   With respect to Term Loan A, the Borrower
shall pay to the Lender a commitment fee equal to $200,000. Such commitment fee
shall be due and payable on the date this Agreement is executed by the parties
hereto and shall be fully earned when paid and not refundable for any reason
whatsoever (it being expressly acknowledged that the Borrower has paid to the
Lender $25,000 of such fee, which shall be credited against such amount due and
payable on the date of this Agreement).


 


(c)                                  Initial Commitment
Fee for Term Loan B.   With respect to Term Loan B, the Borrower
shall pay to the Lender a commitment fee equal to $212,500. Such commitment fee
shall be due and payable on the date this Agreement is executed by the parties
hereto and shall be fully earned when paid and not refundable for any reason
whatsoever.


 


(d)                                 Additional
Commitment Fee for Term Loan B.   With respect to Term Loan B, in the event Term
Loan B is not repaid in full on or before the Anticipated Term Loan B
Prepayment Date, the Borrower shall pay to the Lender an additional commitment
fee equal to $312,500. Such additional commitment fee shall be due and payable
on the Anticipated Term Loan B Prepayment Date (assuming Term Loan has not been
repaid in full) and shall be fully earned when paid and not refundable for any
reason whatsoever.


 


2.09                        Computation
of Interest and Fees.   All
computations of interest for Base Rate Loans when the Base Rate is determined
by the Lender’s “prime rate” shall be made on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed.  All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed (which
results in more fees or interest, as applicable, being paid than if computed on
the basis of a 365-day year).  Interest
shall accrue on each Loan for the day on which the Loan is made, and shall not
accrue on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid, provided that any Loan that is repaid on the same day
on which it is made shall, subject to Section 2.11(a), bear
interest for one day.  Each determination
by the Lender of an interest rate or fee hereunder shall be conclusive and
binding for all purposes, absent manifest error.


 


2.10                        Evidence
of Debt.


 


The Credit Extensions made by the Lender
shall be evidenced by, in addition to this Agreement, the Notes applicable
thereto and one or more accounts or records maintained by the Lender in the
ordinary course of business.  The
accounts or records maintained by the Lender shall be conclusive absent
manifest error of the amount of the Credit Extensions made by the Lender to the
Borrower and the interest and payments thereon. 
Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Obligations.


 


2.11                        Method
of Payment, Direct Debits, Payment Date Adjustments, Application of Payments.


 


(a)                                  Method
of Payment.   All payments to be made
by the Borrower shall be made without condition or deduction for any
counterclaim, defense, recoupment or setoff. 
Except as otherwise expressly provided herein, all payments by the
Borrower hereunder shall be made the Lender, for the account of the Lender to
which such payment is at the Lender’s Office in Dollars and in immediately
available funds not later than 2:00 p.m. on the date specified
herein.  All


 


37





















 


payments received by the Lender after 2:00 p.m. shall be deemed
received on the next succeeding Business Day and any applicable interest or fee
shall continue to accrue; provided that any payments effected by
automatic debit to an account of the Borrower that is cleared overnight shall
be deemed to have been timely paid.


 


(b)                                 Direct
Debits.   Notwithstanding subsection (a) above,
the Borrower hereby agree that the Lender may directly debit any demand deposit
account of any Loan Party held by the Lender for any amount due and payable
under this Agreement or any other Loan Document, including, without limitation,
principal, interest, fees and charges, provided that the Lender shall
only debit the Borrower’s main operating concentration account maintained with
the Lender so long as amounts contained therein are sufficient to pay such
amount or amounts then due and payable.


 


(c)                                  Payment
Date Adjustments.   Whenever any
payment of principal of, or interest on, any Base Rate Loan shall be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day. Whenever any payment of principal of, or interest on,
any Eurodollar Rate Loan shall be due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case the date for
payment thereof shall be the next preceding Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest and
fees thereon shall be payable for such extended time.


 


(d)                                 Application
of Payments.   All payments
(including prepayments) by or on behalf of the Borrower hereunder and under any
other Loan Document shall be applied first to the payment of all fees, expenses
and other amounts due to the Lender (excluding principal and interest), then to
accrued interest, and the balance on account of outstanding principal; provided,
however, that after the occurrence of an Event of Default, payments will
be applied to the Obligations in such manner and order of priority as the
Lender determines in its sole discretion.


 


2.12                        All Loans and Letters of Credit to Constitute
One Obligation.


 


The Loans and Letters of Credit shall
constitute one general Obligation of the Borrower and shall be secured by the
Lender’s Lien upon all of the Collateral.


 


ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY


 


3.01                        Taxes.


 


(a)                                  Payments Free of
Taxes.   Any and all payments by or
on account of any obligation of the Borrower hereunder or under any other Loan
Document shall be made free and clear of and without reduction or withholding
for any Indemnified Taxes or Other Taxes, provided that if the Borrower
shall be required by applicable law to deduct any Indemnified Taxes (including
any Other Taxes) from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the Lender
or L/C Issuer, as the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall timely pay


 


38





















 


the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.


 


(b)                                 Payment of Other
Taxes by the Borrower.   Without
limiting the provisions of subsection (a) above, the Borrower shall
timely pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.


 


(c)                                  Indemnification by
the Borrower.   The Borrower shall indemnify the Lender and
the L/C Issuer, within 10 days after demand therefor, for the full amount of
any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) paid by the Lender or the L/C Issuer, as the case may be, and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to the Borrower by the Lender or the L/C Issuer,
shall be conclusive absent manifest error.


 


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


 


(e)                                  Treatment of
Certain Refunds.   If the Lender or the L/C Issuer determines, in
its sole discretion, that it has received a refund of any Taxes or Other Taxes
as to which it has been indemnified by the Borrower or with respect to which
the Borrower has paid additional amounts pursuant to this Section, it shall pay
to the Borrower an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Lender or the L/C Issuer, as
the case may be, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund), provided
that the Borrower, upon the request of the Lender or the L/C Issuer, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the Lender or
the L/C Issuer in the event the Lender or the L/C Issuer is required to repay such
refund to such Governmental Authority. 
This subsection shall not be construed to require the Lender or the
L/C Issuer to make available its tax returns (or any other information relating
to its taxes that it deems confidential) to the Borrower or any other Person.


 


3.02                        Illegality.   If the Lender determines that any Law has
made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for the Lender or its applicable Lending Office to make, maintain or
fund Eurodollar Rate Loans, or to determine or charge interest rates based upon
the Eurodollar Rate, or any Governmental Authority has imposed material
restrictions on the authority of the Lender to purchase or sell, or to take
deposits of, Dollars in the London interbank market, then, on notice thereof by
the Lender to the Borrower, any obligation of the Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until the Lender notifies the Borrower that the circumstances
giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrower
shall, upon demand from the Lender, prepay or, if applicable, convert all


 


39





















 


Eurodollar Rate Loans of the Lender to Base Rate Loans, either on the
last day of the Interest Period therefor, if the Lender may lawfully continue
to maintain such Eurodollar Rate Loans to such day, or immediately, if the
Lender may not lawfully continue to maintain such Eurodollar Rate Loans.  Upon any such prepayment or conversion, the
Borrower shall also pay accrued interest on the amount so prepaid or converted.


 


3.03                        Inability
to Determine Rates.   If the Lender
determines that for any reason in connection with any request for a Eurodollar
Rate Loan or any request for a conversion to or continuation thereof or a
continuation of a Term Loan as a Eurodollar Rate Loan that (a) Dollar
deposits are not being offered to banks in the London interbank eurodollar
market for the applicable amount and Interest Period of such Eurodollar Rate
Loan, (b) adequate and reasonable means do not exist for determining the
Eurodollar Rate for any requested Interest Period with respect to a proposed or
existing Eurodollar Rate Loan, or (c) the Eurodollar Rate for any
requested Interest Period with respect to a proposed or existing Eurodollar
Rate Loan does not adequately and fairly reflect the cost to the Lender of
funding or continuing such Loan, the Lender will promptly so notify the
Borrower.  Thereafter, the obligation of
the Lender to make or maintain Eurodollar Rate Loans shall be suspended until
the Lender revokes such notice.  Upon
receipt of such notice, (a) the Borrower may revoke any pending request
for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or,
failing that, will be deemed to have converted such request into a request for
a Borrowing of Base Rate Loans in the amount specified therein, and (b) each
Term Loan shall be automatically converted, without notice, on the last
Business Day of the then current Interest Period applicable thereto, to a Base
Rate Loan.


 


3.04                        Increased
Costs.


 


(a)                                  Increased Costs
Generally.   If any Change in Law shall:


 


(i)                                     impose,
modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for
the account of, or credit extended or participated in by, the Lender (except
any reserve requirement contemplated by Section 3.04(e)) or the L/C
Issuer;


 


(ii)                                  subject
the Lender or the L/C Issuer to any tax of any kind whatsoever with respect to
this Agreement, any Letter of Credit, any participation in a Letter of Credit
or any Eurodollar Rate Loan made by it, or change the basis of taxation of
payments to the Lender or the L/C Issuer in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 3.01 and the
imposition of, or any change in the rate of, any Excluded Tax payable by the
Lender or the L/C Issuer); or


 


(iii)                               impose
on the Lender or the L/C Issuer or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Rate Loans
made by the Lender or any Letter of Credit or participation therein;


 


and the result of any of the foregoing shall be to increase the cost to
the Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining
its obligation to make any such Loan), or to increase the cost to the Lender or
the L/C Issuer of participating in, issuing or maintaining any Letter of Credit
(or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by the
Lender or the L/C Issuer hereunder (whether of principal, interest or any other
amount) then, upon request of the


 


40





















 


Lender or the L/C Issuer, the Borrower will pay to the Lender or the
L/C Issuer, as the case may be, such additional amount or amounts as will
compensate the Lender or the L/C Issuer, as the case may be, for such
additional costs incurred or reduction suffered.


 


(b)                                 Capital
Requirements.   If the Lender or the L/C Issuer determines
that any Change in Law affecting the Lender or the L/C Issuer or any Lending
Office of the Lender or the Lender’s or the L/C Issuer’s holding company, if
any, regarding capital requirements has or would have the effect of reducing
the rate of return on the Lender’s or the L/C Issuer’s capital or on the
capital of the Lender’s or the L/C Issuer’s holding company, if any, as a
consequence of this Agreement, the Commitments, the Loans, or the Letters of
Credit, to a level below that which the Lender or the L/C Issuer or the Lender’s
or the L/C Issuer’s holding company could have achieved but for such Change in
Law (taking into consideration the Lender’s or the L/C Issuer’s policies and
the policies of the Lender’s or the L/C Issuer’s holding company with respect
to capital adequacy), then from time to time the Borrower will pay to the
Lender or the L/C Issuer, as the case may be, such additional amount or amounts
as will compensate the Lender or the L/C Issuer or the Lender’s or the L/C
Issuer’s holding company for any such reduction suffered.


 


(c)                                  Certificates for
Reimbursement.   A certificate of the Lender or the L/C Issuer
setting forth the amount or amounts necessary to compensate the Lender or the
L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or
(b) of this Section and delivered to the Borrower shall be conclusive
absent manifest error.  The Borrower
shall pay the Lender or the L/C Issuer, as the case may be, the amount shown as
due on any such certificate within 10 days after receipt thereof.


 


(d)                                 Delay in Requests.   Failure
or delay on the part of the Lender or the L/C Issuer to demand compensation
pursuant to the foregoing provisions of this Section shall not constitute
a waiver of the Lender’s or the L/C Issuer’s right to demand such compensation,
provided that the Borrower shall not be required to compensate the
Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for
any increased costs incurred or reductions suffered more than six months prior
to the date that the Lender or the L/C Issuer, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions
and of the Lender’s or the L/C Issuer’s intention to claim compensation
therefor (except that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the six-month period referred to above shall
be extended to include the period of retroactive effect thereof).


 


3.05                        Compensation
for Losses.   Upon demand of the
Lender from time to time, the Borrower shall promptly compensate the Lender for
and hold the Lender harmless from any loss, cost or expense incurred by it as a
result of:


 


(a)                                  any continuation,
conversion, payment or prepayment of any Loan other than a Base Rate Loan on a
day other than the last day of the Interest Period for such Loan (whether
voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or


 


(b)                                 any failure by the
Borrower (for a reason other than the failure of such the Lender to make a
Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate
Loan on the date or in the amount notified by the Borrower,


 


41





















 


including any loss
of anticipated profits and any loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain such Loan or from fees payable
to terminate the deposits from which such funds were obtained.  The Borrower shall also pay any customary
administrative fees charged by the Lender in connection with the foregoing.


 


For purposes of
calculating amounts payable by the Borrower to the Lender under this Section 3.05,
each the Lender shall be deemed to have funded each Eurodollar Rate Loan made
by it at the Eurodollar
Base Rate used in determining the Eurodollar Rate for such Loan by a
matching deposit or other borrowing in the London interbank eurodollar market
for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded.


 


3.06                        Mitigation
Obligations.


 


If the Lender requests compensation under Section 3.04,
or the Borrower is required to pay any additional amount to the Lender or any
Governmental Authority for the account of the Lender pursuant to Section 3.01,
or if the Lender gives a notice pursuant to Section 3.02, then the
Lender shall use reasonable efforts to designate a different Lending Office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of the Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice
pursuant to Section 3.02, as applicable, and (ii) in each
case, would not subject the Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to the Lender.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by the Lender in connection with any
such designation or assignment.


 


3.07                        Survival.   All of the Borrower’s obligations under this
Article III shall survive termination of the Aggregate Commitments
and repayment of all other Obligations hereunder.


 


ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS


 


4.01                        Conditions
of Initial Credit Extension.   The
obligation of the Lender to make its initial Credit Extension hereunder is
subject to satisfaction of the following conditions precedent:


 


(a)                                  The Lender’s receipt
of the following, each of which shall be originals or facsimile transmissions
(followed promptly by originals) unless otherwise specified, each properly
executed by a Responsible Officer of the signing Loan Party, each dated the
Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance
satisfactory to the Lender:


 


(i)                                     executed
counterparts of this Agreement, the Security Agreement, the Swap Contract
relating to Term Loan A and the Perfection Certificate;


 


(ii)                                  the
Notes executed by the Borrower in favor of the Lender;


 


(iii)                               such
certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of each Loan Party as the Lender may


 


42





















 


require evidencing the identity, authority
and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party;


 


(iv)                              such
documents and certifications as the Lender may reasonably require to evidence
that each Loan Party is duly organized or formed, and that each of the Borrower
and the Subsidiary Guarantors is validly existing, in good standing and
qualified to engage in business in each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires such
qualification, except to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect;


 


(v)                                 a
favorable opinion of Jones Day, counsel to the Loan Parties, addressed to the
Lender, as to the matters concerning the Loan Parties and the Loan Documents as
the Lender may reasonably request;


 


(vi)                              a
certificate of a Responsible Officer of each Loan Party either (A) attaching
copies of all consents, licenses and approvals required in connection with the
execution, delivery and performance by such Loan Party and the validity against
such Loan Party of the Loan Documents to which it is a party, and such
consents, licenses and approvals shall be in full force and effect, or (B) stating
that no such consents, licenses or approvals are so required;


 


(vii)                           a
certificate signed by a Responsible Officer of the Borrower certifying (A) that
the conditions specified in Sections 4.02(a) and (b) have
been satisfied, and (B) that there has been no event or circumstance since
the date of the Audited Financial Statements that has had or could be
reasonably expected to have, either individually or in the aggregate, a
Material Adverse Effect;


 


(viii)                        all
certificates, agreements or instruments representing or evidencing the
Securities Collateral (as such term is defined in the Security Agreement)
accompanied by instruments of transfer and stock powers undated and endorsed,
by an effective endorsement, in blank;


 


(ix)                                all
other certificates, agreements, including control agreements, or instruments
necessary to perfect the Collateral Agent’s security interest in all Chattel
Paper, all Instruments, all Deposit Accounts (other than petty cash accounts
not exceeding $50,000 in aggregate cash balances at any time outstanding) and
all Investment Property of each Loan Party (as each such term is defined in the
Security Agreement and to the extent required by the Security Agreement);


 


(x)                                   UCC
financing statements in appropriate form for filing under the UCC, intellectual
property documents in appropriate form for filing with the United States Patent
and Trademark Office and United States Copyright Office or equivalent foreign
office and such other documents under applicable Law in each jurisdiction as
may be necessary or appropriate or, in the opinion of the Collateral Agent,
desirable to perfect the Liens created, or purported to be created, by the
Security Documents;


 


(xi)                                certified
copies of UCC, United States Patent and Trademark Office and United States
Copyright Office, tax and judgment lien searches, bankruptcy and pending


 


43





















 


lawsuit searches or equivalent reports or
searches, each of a recent date listing all effective financing statements,
lien notices or comparable documents that name any Loan Party as debtor and
that are filed in those state and county jurisdictions in which any property of
any Loan Party is located and the state and county jurisdictions in which any
Loan Party is organized or maintains its principal place of business and such
other searches that the Collateral Agent deems necessary or appropriate, none
of which encumber the Collateral covered or intended to be covered by the
Security Documents (other than Liens permitted under Section 7.01);


 


(xii)                             with
respect to each location set forth on Schedule 4.01(a)(xii), a Landlord
Access Agreement or Bailee Letter, as applicable; provided that no such Landlord Access Agreement or Bailee
Letter shall be required with respect to any real property that could not be
obtained after the Loan Party that is the lessee or owner of the inventory
stored with the applicable landlord or bailee thereof shall have used all
commercially reasonable efforts to do so;


 


(xiii)                          evidence
acceptable to the Collateral Agent of payment or arrangements for payment by
the Loan Parties of all applicable recording taxes, fees, charges, costs and
expenses required for the recording of the Security Documents; and


 


(xiv)                         a copy
of, or a certificate as to coverage under, the insurance policies required by Section 6.07
and the applicable provisions of the Security Documents, each of which shall be
endorsed or otherwise amended to include a “standard” or “New York” lender’s
loss payable or mortgagee endorsement (as applicable) and shall name the
Collateral Agent, on behalf of the Secured Parties, as additional insured, in
form and substance reasonably satisfactory to the Collateral Agent.


 


(b)                                 With respect to the
Acquisition, the Lender shall have reviewed, and be reasonably satisfied with,
the final terms and conditions of the Acquisition Agreement and all documents
related thereto and the Acquisition shall be consummated on the date hereof in
all material respects in accordance with the terms hereof and of the Acquisition
Agreement (as so reviewed and approved by the Lender), without waiver or
amendment of any such terms that has not been previously approved by the Lender
unless and to the extent that any such waiver or amendment could not reasonably
be deemed to be materially adverse to the interests of the Lender.


 


(c)                                  The Lender shall have
reviewed, and be reasonably satisfied with:


 


(i)                                     the
Borrower’s calculation of Consolidated EBITDA for the Test Period ending on the
first fiscal quarter end of the Borrower in 2005 on a Pro Forma combined basis
(after giving effect to the Borrower’s acquisition of the Target and of Telic),
which Pro Forma Consolidated EBITDA shall be in an amount of not less than
$18,900,000; and


 


(ii)                                  the
Borrower’s calculation of the Consolidated Fixed Charge Coverage Ratio for the
Test Period ending on the first fiscal quarter end of the Borrower in 2005 on a
Pro Forma combined basis (after giving effect to the Borrower’s acquisition of
the Target and of Telic), which Pro Forma Consolidated Fixed Charge Coverage
Ratio shall not be less than 1.15-to-1.00.


 


44





















 


(d)                                 The total purchase
price to be paid by Borrower to acquire the shares of Target under the
Acquisition Agreement shall not exceed $60,000,000 (exclusive of adjustments in
an amount not in excess of $500,000).


 


(e)                                  The Closing Date
shall occur on or prior to May 31, 2005.


 


(f)                                    Any fees required
to be paid on or before the Closing Date shall have been paid.


 


(g)                                 Unless waived by the
Lender, the Borrower shall have paid all fees, charges and disbursements of
counsel to the Lender to the extent invoiced in reasonable detail prior to or
on the Closing Date, plus such additional amounts of such fees, charges and
disbursements as shall constitute its reasonable estimate of such fees, charges
and disbursements incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude a final
settling of accounts between the Borrower and the Lender).


 


The Borrower and the Lender acknowledge and
agree that the Existing Credit Agreement shall be deemed terminated and of no
further force and effect immediately upon the execution and delivery of this
Agreement by the parties hereto, except that the Lender shall continue to be
entitled to the benefits of Article IV (subject to the limitations in Section 4.7)
and Sections 11.1, 12.1, 12.2 and 12.9 of the Existing Credit Agreement in
accordance with the terms thereof.


 


4.02                        Conditions
to all Credit Extensions.   The
obligation of the Lender to honor any Request for Credit Extension (other than
a Committed Revolving Loan Notice requesting only a conversion of Committed
Revolving Loans to the other Type or a continuation of Committed Revolving
Loans as Eurodollar Rate Loans) or make a Term Loan is subject to the following
conditions precedent:


 


(a)                                  The representations
and warranties of the Borrower and each other Loan Party contained in Article V
or any other Loan Document, or which are contained in any document furnished at
any time under or in connection herewith or therewith, shall be true and
correct in all material respects on and as of the date of such Credit
Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier date, and except that for
purposes of this Section 4.02, the representations and warranties
contained in subsections (a) and (b) of Section 5.05
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 6.01.


 


(b)                                 No Default shall
exist, or would result from such proposed Credit Extension or from the
application of the proceeds thereof.


 


(c)                                  The Lender and, if
applicable, the L/C Issuer shall have received a Request for Credit Extension
in accordance with the requirements hereof.


 


Each Request for Credit Extension (other than
a Committed Revolving Loan Notice requesting only a conversion of Committed
Revolving Loans to the other Type or a continuation of Committed Revolving
Loans as Eurodollar Rate Loans) submitted by the Borrower shall be deemed to be
a representation and warranty that the conditions specified in Sections 4.02(a) and
(b) have been satisfied on and as of the date of the applicable
Credit Extension.


 


45





















 


ARTICLE V.

REPRESENTATIONS AND WARRANTIES


 


Each Loan Party represents and warrants to
the Lender, the L/C Issuer and the Collateral Agent (with reference to the Loan
Party or Loan Parties being references thereto after giving effect to the
Acquisition) that:


 


5.01                        Existence,
Qualification and Power; Compliance with Laws.   Each Loan Party (a) is duly organized
or formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite
power and authority and all requisite governmental licenses, authorizations,
consents and approvals to (i) own or lease its assets and carry on its
business and (ii) execute, deliver and perform its obligations under the
Loan Documents to which it is a party, (c) is duly qualified and is
licensed and in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license, and (d) is in compliance with all
Laws; except in each case referred to in clause (b)(i), (c) or (d), to the
extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect.


 


5.02                        Authorization;
No Contravention.   The execution,
delivery and performance by each Loan Party of each Loan Document to which such
Person is party, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of
any of such Person’s Organization Documents; (b) conflict with or result
in any breach or contravention of, or the creation of any Lien under, or
require any payment to be made under (i) any Contractual Obligation to
which such Person is a party or affecting such Person or the properties of such
Person or any of its Subsidiaries or (ii) any order, injunction, writ or
decree of any Governmental Authority or any arbitral award to which such Person
or its property is subject; or (c) violate any Law.  Each Loan Party is in compliance with all
Contractual Obligations referred to in clause (b)(i), except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.


 


5.03                        Governmental
Authorization; Other Consents.   No
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person (except as could
not reasonably be expected to have a Material Adverse Effect) is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, any Loan Party of this Agreement or any other Loan
Document (other than UCC and other filings in respect of the Collateral
contemplated by this Agreement and the other Loan Documents).


 


5.04                        Binding
Effect.   This Agreement has been,
and each other Loan Document, when delivered hereunder, will have been, duly
executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms, except as enforceability thereof
may be limited by applicable Debtor Relief Laws and general principles of
equity, whether considered at law or in equity.


 


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5.05                        Financial
Statements; No Material Adverse Effect; No Internal Control Event.


 


(a)                                  The Audited Financial
Statements (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein; (ii) fairly present in all material respects the financial
condition of the Borrower and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; and (iii) show all material indebtedness and
other liabilities, direct or contingent, of the Borrower and its Subsidiaries
as of the date thereof, including liabilities for taxes, material commitments
and Indebtedness.


 


(b)                                 The unaudited consolidated
and consolidating balance sheets of the Borrower and its Subsidiaries dated April 2,
2005, and the related consolidated and consolidating statements of income or
operations, shareholders’ equity and cash flows for the fiscal quarter ended on
that date (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present in all material respects the financial
condition of the Borrower and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby, subject, in the case of
clauses (i) and (ii), to the absence of footnotes and to normal year-end
audit adjustments.  Schedule 5.05
sets forth all material indebtedness and other liabilities, direct or
contingent, of the Borrower and its Subsidiaries as of the date of such
financial statements, including liabilities for taxes, material commitments and
Indebtedness.


 


(c)                                  Since the date of the
Audited Financial Statements, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.


 


(d)                                 Since the date of the
Audited Financial Statements, no Internal Control Event has occurred.


 


(e)                                  The consolidated and
consolidating forecasted balance sheet and statements of income and cash flows
of the Borrower and its Subsidiaries delivered pursuant to Section 6.01(c) for
the fiscal year of the Borrower ending on December 31, 2005 were prepared
in good faith on the basis of the assumptions stated therein, which assumptions
were considered by management of the Borrower to be reasonable at the time
prepared in light of the conditions existing at such time.


 


5.06                        Litigation.   There are no actions, suits, proceedings,
claims or disputes pending or, to the knowledge of the Borrower, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against the Borrower or any of its Subsidiaries or against any
of their properties or revenues that (a) purport to affect or pertain to
this Agreement or any other Loan Document, or any of the transactions
contemplated hereby, or (b) except as specifically disclosed in Schedule 5.06,
either individually or in the aggregate, if determined adversely, could
reasonably be expected to have a Material Adverse Effect.


 


5.07                        No
Default.   Neither the Borrower nor
any Subsidiary is in default under or with respect to any Contractual
Obligation that could, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. 
No Default has occurred and is


 


47





















 


continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.


 


5.08                        Ownership
of Property; Liens.   Each of the
Borrower and each Subsidiary has good record and marketable title in fee simple
to, or valid leasehold interests in, all of its properties and other assets,
except for such defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  The properties and other assets of the
Borrower and its Subsidiaries are subject to no Liens, other than Liens
permitted by Section 7.01 and Liens permitted by the Security
Documents.


 


5.09                        Environmental
Compliance.   Except as specifically
disclosed in Schedule 5.09, the Borrower and its Subsidiaries are
in compliance with Environmental Laws and there are no claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties, except in each case as
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.


 


5.10                        Insurance.   The properties of the Borrower and its
Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of the Borrower, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Borrower or the applicable Subsidiary operates.


 


5.11                        Taxes.   The Borrower and its Subsidiaries have filed
all Federal, state and other material tax returns and reports required to be
filed, and have paid all Federal, state and other material taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable, except those which are
being contested in good faith by appropriate proceedings diligently conducted
and for which adequate reserves have been provided in accordance with
GAAP.  There is no proposed tax
assessment against the Borrower or any Subsidiary that would, if made, have a
Material Adverse Effect.  Neither any
Loan Party nor any Subsidiary thereof is party to any tax sharing agreement.


 


5.12                        ERISA
Compliance.


 


(a)                                  Each Plan is in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other Federal or state Laws. 
Each Plan that is intended to qualify under Section 401(a) of
the Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with respect
thereto and, to the best knowledge of the Borrower, nothing has occurred which
would prevent, or cause the loss of, such qualification.  The Borrower and each ERISA Affiliate have
made all contributions required under Section 412 of the Code and Section 302(e) of
ERISA to each Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to Section 412
of the Code has been made with respect to any Plan.


 


(b)                                 There are no pending
or, to the best knowledge of the Borrower, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect to any Plan
that could reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan
that has resulted or could reasonably be expected to result in a Material
Adverse Effect.


 


48





















 


(c)                                  (i)  No ERISA
Event has occurred or is reasonably expected to occur; (ii) no Pension
Plan has any Unfunded Pension Liability in excess of $250,000; (iii) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither
the Borrower nor any ERISA Affiliate has engaged in a transaction that would be
subject to Sections 4069 or 4212(c) of ERISA.


 


5.13                        Subsidiaries;
Equity Interests.   As of the Closing
Date, the Borrower has no Subsidiaries other than those specifically disclosed
in Part (a) of Schedule 5.13, and all of the outstanding
Equity Interests in such Subsidiaries have been validly issued, are fully paid
and nonassessable and are owned by a Loan Party in the amounts specified on Part (a) of
Schedule 5.13 free and clear of all Liens.  The Borrower has no equity investments in any
other corporation or entity other than those specifically disclosed in Part (b) of
Schedule 5.13.  All of the
outstanding Equity Interests in the Borrower have been validly issued and are
fully paid and nonassessable.


 


5.14                        Margin
Regulations; Investment Company Act; Public Utility Holding Company Act.


 


(a)                                  The Borrower is not
engaged and will not engage, principally or as one of its important activities,
in the business of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the FRB), or extending credit for the purpose of
purchasing or carrying margin stock.


 


(b)                                 None of the Borrower,
any Person Controlling the Borrower, or any Subsidiary (i) is a “holding
company,” or a “subsidiary company” of a “holding company,” or an “affiliate”
of a “holding company” or of a “subsidiary company” of a “holding company,”
within the meaning of the Public Utility Holding Company Act of 1935, or (ii) is
or is required to be registered as an “investment company” under the Investment
Company Act of 1940.


 


5.15                        Disclosure.   The Borrower has disclosed to the Lender all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  No report,
financial statement, certificate or other factual information furnished
(whether in writing or orally by a Responsible Officer) by or on behalf of any
Loan Party to the Lender in connection with the transactions contemplated
hereby and the negotiation of this Agreement or delivered hereunder or under
any other Loan Document (in each case, as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that, with respect to any projected or forward looking financial information,
the Borrower represents only that such information was prepared in good faith
based upon assumptions believed to be reasonable at the time.


 


49





















 


5.16                        Compliance
with Laws.   Each of the Borrower and
each Subsidiary is in compliance in all material respects with the requirements
of all Laws and all orders, writs, injunctions and decrees applicable to it or
to its properties, except in such instances in which (a) such requirement
of Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.


 


5.17                        Intellectual
Property.   (a)     Each Loan Party owns, or is licensed to use, all
Intellectual Property necessary for or useful in the conduct of its business as
currently conducted, except for those the failure of which to own or license,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.  Except as set
forth on Schedule 5.17, no material claim has been asserted and is
pending by any person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does any Loan Party know of any valid basis for any such
claim.  The use of such Intellectual
Property by each Loan Party does not infringe the rights of any person, except
for such claims and infringements that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.


 


(b)                                 Except pursuant to
licenses and other user agreements entered into by each Loan Party in the
ordinary course of business that are listed in Schedules 13(a) and 13(b) to
the Perfection Certificate, on and as of the date hereof (i) each Loan
Party owns and possesses the right to use, and has done nothing to authorize or
enable any other person to use, any Copyright, Patent or Trademark (as such
terms are defined in the Security Agreement) listed in Schedules 13(a) and
13(b) to the Perfection Certificate or any other Intellectual Property
used or useful in the conduct of its business as presently conducted and (ii) all
registrations listed in Schedules 13(a) and 13(b) to the Perfection
Certificate are valid and in full force and effect.


 


(c)                                  To each Loan Party’s
knowledge, on and as of the date hereof, except as set forth on Schedule 5.17,
(i) there is no material violation by others of any right of such Loan
Party with respect to any Copyright, Patent or Trademark listed in Schedules 13(a) and
13(b) to the Perfection Certificate or any other Intellectual Property
pledged by it under the name of such Loan Party, (ii) such Loan Party is
not infringing upon, misappropriating or violating any Copyright, Patent,
Trademark or other Intellectual Property of any person other than such
infringement, misappropriation or violation that, individually or in the
aggregate, could not reasonably be expected to materially adversely affect the
value or utility of the Intellectual Property or any portion thereof material
to the use and operation of the Collateral, and (iii) no proceedings have
been instituted or are pending against such Loan Party or threatened, and no
claim against such Loan Party has been received by such Loan Party, alleging
any such violation, except as may be set forth in Schedule 5.17.


 


5.18                        Solvency.   The Borrower is and shall at all times
continue to (a) have capital sufficient to carry on its business and
transactions and (b) be able to pay its debts as they mature.


 


5.19                        Security
Documents.   (a)    The Security Documents are effective to
create in favor of the Collateral Agent for the benefit of the Secured Parties,
legal, valid and enforceable Liens on, and security interests in, the
Collateral and, when (i) financing statements and other filings in
appropriate form are filed in the offices specified on Schedule 6 to the
Perfection Certificate and (ii) upon the taking of possession or control
by the Collateral Agent of the


 


50





















 


Collateral with respect to which a security interest may be perfected
only by possession or control (which possession or control shall be given to
the Collateral Agent to the extent possession or control by the Collateral
Agent is required by each Security Agreement), the Liens created by the
Security Documents shall constitute fully perfected Liens on, and security
interests in, all right, title and interest of the grantors thereunder in the
Collateral (other than such Collateral in which a security interest cannot be
perfected under the UCC as in effect at the relevant time in the relevant jurisdiction),
in each case subject to no Liens other than Liens permitted under Section 7.01.


 


(b)                                 When (i) the
Security Agreement or a short form thereof is filed in the United States Patent
and Trademark Office and the United States Copyright Office, and (ii) with
respect to the Intellectual Property Collateral (as defined in such Security
Agreement) other than copyrights and copyright registrations, financing
statements in appropriate form are filed in the offices specified on Schedule 6
to the Perfection Certificate, the Liens created by such Security Agreement
shall constitute (or continue to constitute, as the case may be) fully
perfected Liens on, and security interests in, all right, title and interest of
the grantors thereunder in the Intellectual Property Collateral (as defined in
such Security Agreement), in each case subject to no Liens (other than Liens
permitted under Section 7.01) or adverse claims.


 


(c)                                  Each Security
Document delivered pursuant to Sections 6.12 and 6.16 will,
upon execution and delivery thereof, be effective to create in favor of the
Collateral Agent, for the benefit of the Secured Parties, legal, valid and
enforceable Liens on, and security interests in, all of the Loan Parties’
right, title and interest in and to the Collateral thereunder, and when all
appropriate filings or recordings are made in the offices identified in Schedule 6
to the Perfection Certificate and as may otherwise be required under applicable
law, such Security Document will constitute fully perfected Liens on, and
security interests in, all right, title and interest of the Loan Parties in
such Collateral, to the extent perfection can be obtained by filing UCC
financing statements, other than with respect to Intellectual Property, in
which a security interest may be perfected by filing, recording or registering
a security agreement, financing statement or analogous document in the United
States Patent and Trademark Office or the United States Copyright Office or
equivalent foreign office, as applicable, in each case subject to no Liens
other than Liens permitted under Section 7.01.


 


5.20                        Acquisition
Documents; Representations and Warranties in Acquisition Agreement.   (a)                                              Schedule 5.20
lists (i) each exhibit, schedule, annex or other attachment to the Acquisition
Agreement and (ii) each agreement, certificate, instrument, letter or
other document contemplated by the Acquisition Agreement or any item referred
to in clause (i) to be entered into, executed or delivered or to
become effective in connection with the Acquisition or otherwise entered into,
executed or delivered in connection with the Acquisition.  The Lender have been furnished true and
complete copies of each Acquisition Document to the extent executed and
delivered on or prior to the Closing Date.


 


(b)                                 All representations
and warranties of the Borrower set forth in the Acquisition Agreement were true
and correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of the Closing Date as if such representations and warranties were made on and
as of such date, unless stated to relate to a specific earlier date, in which
case such representations and warranties shall be true and correct in all
material respects as of such earlier date.


 


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ARTICLE VI.

AFFIRMATIVE COVENANTS


 


So long as the Lender shall have any
Commitment hereunder, any Loan or other Obligation hereunder shall remain
unpaid or unsatisfied (other than contingent obligations for which no claim
have been asserted), or any Letter of Credit shall remain outstanding, each
Loan Party shall, and shall (except in the case of the covenants set forth in Sections
6.01, 6.02, and 6.03) cause each of its Subsidiaries to:


 


6.01                        Financial
Statements.   Deliver to the Lender,
in form and detail satisfactory to the Lender:


 


(a)                                  as soon as available,
but in any event within 90 days after the end of each fiscal year of the
Borrower (but no later than the date on which the Borrower is required to file
a Form 10-K under the Exchange Act), a consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal
year, and the related consolidated and consolidating statements of income or
operations, shareholders’ equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal
year, all prepared in accordance with Regulation S-X under the Securities Act
and accompanied by (i) a report and opinion of a Registered Public
Accounting Firm of nationally recognized standing reasonably acceptable to the
Lender, which report and opinion shall be prepared in accordance with GAAP and
applicable Securities Laws and shall not be subject to any “going concern” or
like qualification or exception or any qualification or exception as to the
scope of such audit and (ii) if applicable, an attestation report of such
Registered Public Accounting Firm as to the Borrower’s internal controls
pursuant to Section 404 of Sarbanes-Oxley expressing a conclusion to which
the Lender do not object, and such consolidating statements to be certified by
a Responsible Officer of the Borrower to the effect that such statements are
fairly stated in all material respects when considered in relation to the
consolidated financial statements of the Borrower and its Subsidiaries; and


 


(b)                                 as
soon as available, but in any event within 45 days after the end of each of the
first three fiscal quarters of each fiscal year of the Borrower (but no later
than the date on which Borrower is required to file a Form 10-Q under the
Exchange Act), commencing with the fiscal quarter ended April 2, 2005, (i) a
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal quarter, and the related consolidated
and consolidating statements of income or operations, shareholders’ equity and
cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal
year then ended, setting forth in each case in comparative form the figures for
the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all prepared in accordance
with Regulation S-X under the Securities Act and accompanied by a certificate
of a Responsible Officer of the Borrower stating that such consolidated
statements fairly present the financial condition, results of operations,
shareholders’ equity and cash flows of the Borrower and its Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes, and that such statements are fairly stated in all
material respects when considered in relation to the consolidated financial
statements of the Borrower and its Subsidiaries.


 


(c)                                  as
soon as available, but in any event within 45 days after the end of each of the
each fiscal quarter of each fiscal year of the Borrower, a detailed, aged trial balance of all of the


 


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accounts receivable of
Borrower and its Subsidiaries existing as of the last day of such fiscal
quarter, specifying the names, addresses, face value, dates of invoices and due
dates for each account debtor obligated on an account receivable so listed,
together with a funded/unfunded backlog report in form and substance
satisfactory to the Lender.


 


(d)                                 as
soon as available, but in any event within 30 days prior to the end of each
fiscal year of the Borrower (commencing with the fiscal year ended December 31,
2005), financial and operating budgets and projections of the Borrower and its
Subsidiaries for the immediately following fiscal year, broken out on a
quarterly basis, including without limitation, income statements, balance
sheets and statements of cash flows.


 


As to any information contained in materials furnished
pursuant to Section 6.02, the Borrower shall not be separately
required to furnish such information under clause (a) or (b) above,
but the foregoing shall not be in derogation of the obligation of the Borrower
to furnish the information and materials described in clauses (a) and (b) above
at the times specified therein.


 


6.02                        Certificates;
Other Information.   Deliver to the
Lender, in form and detail satisfactory to the Lender:


 


(a)                                  concurrently with the
delivery of the financial statements referred to in Section 6.01(a),
a certificate of a Responsible Officer of the Borrower setting forth the
information required pursuant to the Perfection Certificate Supplement, but
only if there has been a material change in such information since the date of
the Perfection Certificate or latest Perfection Certificate Supplement;


 


(b)                                 concurrently with the
delivery of the financial statements referred to in Sections 6.01(a) and
(b), a duly completed Compliance Certificate
signed by a Responsible Officer of the Borrower;


 


(c)                                  promptly after any request
by the Lender, copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of the Borrower by independent accountants in
connection with the accounts or books of the Borrower or any Subsidiary, or any
audit of any of them; and


 


(d)                                 promptly, such
additional information regarding the business, financial or corporate affairs
of any Loan Party, or compliance with the terms of the Loan Documents, as the Lender
may from time to time reasonably request.


 


Documents required to be delivered pursuant
to Section 6.01(a) or (b) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (i) on which the Borrower posts such documents, or provides a
link thereto on the Borrower’s website on the Internet at the website address
listed on Schedule 10.02; or (ii) on which such documents are
posted on the Borrower’s behalf on an Internet or intranet website, if any, to
which the Lender has access; provided that: (i) the Borrower shall
deliver paper copies of such documents if requested by the Lender and (ii) the
Borrower shall notify the Lender (by telecopier or electronic mail) of the
posting of any such documents and provide to the Lender by electronic mail
electronic versions (i.e., soft copies) of such documents.  Notwithstanding anything contained herein, in
every instance the Borrower shall be required to provide paper copies of the
Compliance Certificates required by Section 6.02(b) to the
Lender.


 


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6.03                        Notices.   Promptly upon a Responsible Officer
obtaining knowledge thereof, notify the Lender:


 


(a)                                  of the occurrence of
any Default;


 


(b)                                 of any matter that has
resulted or could reasonably be expected to result in a Material Adverse
Effect, including (i) breach or non-performance of, or any default under,
a Contractual Obligation of the Borrower or any Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between the
Borrower or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Borrower or any Subsidiary, including pursuant to any applicable
Environmental Laws;


 


(c)                                  of the occurrence of
any ERISA Event;


 


(d)                                 of any material change
in accounting policies or financial reporting practices by the Borrower or any
Subsidiary;


 


(e)                                  of the occurrence of
any Internal Control Event;


 


(f)                                    of the occurrence of
a Casualty Event in excess of $250,000; and


 


(g)                                 (i) the
incurrence of any material Lien (other than Liens permitted under Section 7.01)
on, or claim asserted against any of the Collateral or (ii) the occurrence
of any other event which could reasonably be expected to materially affect the
value of the Collateral.


 


Each notice pursuant to this Section shall
be accompanied by a statement of a Responsible Officer of the Borrower setting
forth a reasonably detailed description of the occurrence referred to therein
and stating what action the Borrower has taken and proposes to take with
respect thereto.  Each notice pursuant to
Section 6.03(a) shall describe with particularity any and all
provisions of this Agreement and any other Loan Document that have been
breached.


 


6.04                        Payment
of Obligations.   Pay and discharge
as the same shall become due and payable, all its obligations and liabilities,
including (a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings diligently conducted and adequate
reserves in accordance with GAAP are being maintained by the Borrower or such
Subsidiary; (b) all lawful claims which, if unpaid, would by law become a
Lien upon its property; and (c) all Indebtedness, as and when due and
payable, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.


 


6.05                        Preservation
of Existence, Etc.   (a) Preserve,
renew and maintain in full force and effect its legal existence and good
standing under the Laws of the jurisdiction of its organization except in a
transaction permitted by Section 7.04 or 7.05; (b) take
all reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) preserve or renew all of its registered


 


54





















 


patents, trademarks, trade names and service marks, the
non-preservation of which could reasonably be expected to have a Material
Adverse Effect.


 


6.06                        Maintenance
of Properties.   (a) Maintain, preserve
and protect all of its material properties and equipment necessary in the
operation of its business in good working order and condition, ordinary wear
and tear excepted; and (b) make all necessary repairs thereto and renewals
and replacements thereof except, in each case, where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.


 


6.07                        Maintenance
of Insurance.   (a)                         Keep its insurable property
adequately insured at all times by financially sound and reputable insurers;
maintain such other insurance, to such extent and against such risks as is
customary with companies in the same or similar businesses operating in the
same or similar locations, including insurance with respect to properties
material to the business of the Loan Parties against such casualties and
contingencies and of such types and in such amounts with such deductibles as is
customary in the case of similar businesses operating in the same or similar
locations, including (i) physical hazard insurance on an “all risk” basis,
(ii) commercial general liability against claims for bodily injury, death
or property damage covering any and all insurable claims, (iii) explosion
insurance in respect of any boilers, machinery or similar apparatus
constituting Collateral, (iv) business interruption insurance, (v) worker’s
compensation insurance and such other insurance as may be required by any Law
and (vi) such other insurance against risks as the Lender may from time to
time require (such policies to be in such form and amounts and having such
coverage as may be reasonably satisfactory to the Lender and the Collateral
Agent); provided that
with respect to physical hazard insurance, neither the Collateral Agent nor the
applicable Loan Party shall agree to the adjustment of any claim thereunder
without the consent of the other (such consent not to be unreasonably withheld
or delayed); provided, further, that (x) so long as
no Event of Default shall have occurred and be continuing at such time, no
consent of the Lender shall be required for claims which do not exceed $150,000
in the aggregate over the term of this Agreement, and (y) no consent of any
Loan Party shall be required during an Event of Default.


 


(b)                                 All such insurance
shall (i) provide that no cancellation, material reduction in amount or
material change in coverage thereof shall be effective until at least
30 days after receipt by the Collateral Agent of written notice thereof, (ii) name
the Collateral Agent as additional insured on behalf of the Secured Parties (in
the case of liability insurance) or loss payee (in the case of property
insurance), as applicable, pursuant to endorsements satisfactory to the
Collateral Agent, (iii) if reasonably requested by the Collateral Agent
and available to the Borrower on commercially reasonable terms, include a
breach of warranty clause, (iv) contain a waiver of subrogation in favor
of the Collateral Agent and (v) be reasonably satisfactory in all other respects
to the Collateral Agent.


 


(c)                                  Notify the Collateral
Agent immediately whenever any separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under
this Section 6.07 is taken out by any Loan Party; and promptly
deliver to the Collateral Agent a duplicate original copy of such policy or
policies.


 


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6.08                        Compliance
with Laws.   Comply in all material
respects with the requirements of all Laws and all orders, writs, injunctions
and decrees applicable to it or to its business or property, except in such
instances in which (a) such requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings
diligently conducted; or (b) the failure to comply therewith could not reasonably
be expected to have a Material Adverse Effect.


 


6.09                        Books
and Records.   (a)  Maintain
proper books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Borrower or
such Subsidiary, as the case may be; and (b) maintain such books of record
and account in material conformity with all applicable requirements of any
Governmental Authority having regulatory jurisdiction over the Borrower or such
Subsidiary, as the case may be.


 


6.10                        Inspection
Rights.   Permit representatives and
independent contractors of the Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at the expense of the Borrower and at such reasonable times during normal
business hours, upon reasonable advance notice to the Borrower; provided,
however, that when an Event of Default exists the Lender (or any of its
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice; and provided  further that any and all inspections
will be conducted in accordance with government rules and regulations
relating to confidentiality, security clearance and like provisions to the
extent applicable to the business and properties of the Borrower and its
Subsidiaries. Notwithstanding the foregoing, so long as no Event of Default has
occurred and is continuing, the Lender shall not make such inspections more
frequently than once per calendar year and without material disruption to the
Borrower and its Subsidiaries.


 


6.11                        Use
of Proceeds.   Use the proceeds of
the Credit Extensions (a) to finance in part the Acquisition, (b) to
pay fees and expenses incurred in connection with the Acquisition and entering
into this Credit Agreement, (c) to refinance existing Indebtedness owing
to the Lender, and (d) for general corporate purposes not in contravention
of any Law or of any Loan Document.


 


6.12                        Additional
Collateral; Additional Guarantors.   (a)                                                                   Subject
to this Section 6.12, with respect to any property acquired after
the Closing Date by any Loan Party that is intended to be subject to the Lien
created by any of the Security Documents but is not so subject, promptly (and
in any event within 30 days after the acquisition thereof) (i) execute
and deliver to the Lender and the Collateral Agent such amendments or
supplements to the relevant Security Documents or such other documents as the
Lender or the Collateral Agent shall deem necessary or advisable to grant to
the Collateral Agent, for its benefit and for the benefit of the other Secured
Parties, a Lien on such property subject to no Liens other than Liens permitted
under Section 7.01, and (ii) take all actions necessary to
cause such Lien to be duly perfected to the extent required by such Security
Document in accordance with all applicable Law, including the filing of
financing statements in such jurisdictions as may be reasonably requested by
the Collateral Agent and, if requested by the Collateral Agent pursuant to the
Security Agreement, causing the Lien of the Collateral Agent to be noted on any
certificate of title covering any Collateral. The Borrower shall otherwise take
such actions and execute and/or deliver to the


 


56





















 


Collateral Agent such documents
as the Lender or the Collateral Agent shall require to confirm the validity,
perfection and priority of the Lien of the Security Documents against such
after-acquired property.


 


(b)                                 With respect to any
person that is or becomes a Subsidiary after the Closing Date (including, but
not limited to, the Target), promptly (and in any event within 30 days
after such person becomes a Subsidiary) (i) deliver to the Collateral
Agent the certificates, if any, representing all of the Equity Interests of
such Subsidiary, together with undated stock powers or other appropriate
instruments of transfer executed and delivered in blank by a duly authorized
officer of the holder(s) of such Equity Interests, and all intercompany notes
owing from such Subsidiary to any Loan Party together with instruments of
transfer executed and delivered in blank by a duly authorized officer of such
Loan Party, (ii) cause such new Subsidiary (A) to execute a Joinder
Agreement or such comparable documentation to become a Subsidiary Guarantor and
a joinder agreement to the applicable Security Agreement, substantially in the
form annexed thereto or, in the case of a Foreign Subsidiary, execute a
security agreement compatible with the laws of such Foreign Subsidiary’s
jurisdiction in form and substance reasonably satisfactory to the Collateral
Agent, (B) to take all actions necessary or advisable in the opinion of
the Lender or the Collateral Agent to cause the Lien created by the applicable
Security Agreement to be duly perfected to the extent required by such
agreement in accordance with all applicable Law, including the filing of
financing statements in such jurisdictions as may be reasonably requested by
the Lender or the Collateral Agent and (C) in the event any Subsidiary is
a partnership or limited liability company, causing such partnership or limited
liability company to elect to have its partnership or limited liability company
interests treated as securities governed by Article 8 of the Uniform
Commercial Code and (iii) comply with the applicable provisions of clause (c) of
this Section 6.12 with respect to each real property owned in fee
by such Subsidiary.  Notwithstanding the
foregoing, no Foreign Subsidiary shall be required to take the actions
specified in clause (i)-(iii) of this Section 6.12(b), to
the extent that doing so would constitute an investment of earnings in United
States property under Section 956 (or a successor provision) of the Code,
which investment would or could reasonably be expected to trigger a material
increase in the taxable income of a United States shareholder of such
Subsidiary pursuant to Section 951 (or a successor provision) of the Code,
as reasonably determined by the Borrower and the Collateral Agent; provided that this exception shall not
apply to (A) Voting Stock of any Subsidiary which is a first-tier
controlled foreign corporation (as defined in Section 957(a) of the
Code) representing up to 65% of the total voting power of all outstanding
Voting Stock of such Subsidiary and (B) any portion of the Equity Interests
not constituting Voting Stock of any such Subsidiary, except that any such
Equity Interests constituting “stock entitled to vote” within the meaning of
Treasury Regulation Section 1.956-2(c)(2) shall be treated as Voting
Stock for purposes of this Section 6.12(b).


 


(c)                                  Promptly grant to the
Collateral Agent, within 60 days of the acquisition thereof, a security
interest in and mortgage on each real property owned in fee by such Loan Party
as is acquired by such Loan Party after the Closing Date, as additional
security for the Obligations.  Such
mortgages shall be granted pursuant to documentation reasonably satisfactory in
form and substance to the Lender and the Collateral Agent and shall constitute
valid and enforceable perfected Liens subject only to Liens permitted under Section 7.01
and other Liens acceptable to the Collateral Agent.  The mortgages or instruments related thereto
shall be duly recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect the Liens in favor
of the Collateral Agent required to be granted pursuant to the


 


57





















 


mortgages and all taxes, fees and other charges payable in connection
therewith shall be paid in full.  Such
Loan Party shall otherwise take such actions and execute and/or deliver to the
Collateral Agent such documents as the Lender or the Collateral Agent shall
require to confirm the validity, perfection and priority of the Lien of any
existing mortgage or new mortgage against such after-acquired real property
(including a Title Policy, a Survey and local counsel opinion (in form and
substance reasonably satisfactory to the Lender and the Collateral Agent) in
respect of such mortgage).


 


6.13                        Collateral.   (a) Preserve the Collateral in normal
operating condition and order, ordinary wear and tear excepted, and not permit
it to be materially abused or misused, (b) not allow any of the Collateral
to be affixed to real estate unless such affixed Collateral is subject to a
first priority Lien in favor of the Lender or, if such real estate is leased by
such Loan Party, is subject to a Landlord Access Agreement, (c) upon
request of the Lender after the occurrence and during the continuance of an
Event of Default, prepare to deliver all proceeds of the Collateral to the
Lender immediately upon receipt in the identical form received without
commingling with other property, and (d) allow the Lender at reasonable
times, upon prior notice and as often as reasonably requested to inspect the
Collateral and to inspect and copy all records relating to the Collateral, all
at the Borrower’s sole cost and expense, but subject to the provisions of Section 6.10.


 


6.14                        Defend
Collateral.   Defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein and, in the event the Lender’s Lien in such Collateral, or
any material part thereof, could reasonably be expected to be impaired by an
adverse decision, allow the Lender to contest or defend any such claim or
demand, at the sole cost of the Borrower, in the name of the relevant Loan
Party and pay, upon demand, the Lender’s reasonable costs, charges and expenses,
including, without limitation reasonable attorneys’ fees in connection
therewith.


 


6.15                        Primary
Operating Accounts.   Establish and
maintain at all times after the date hereof all of its primary operating
accounts with the Lender, except that the Loan Parties may establish and
maintain petty cash accounts not exceeding $50,000 in aggregate cash balances
at any time outstanding.


 


6.16                        Security
Interests; Further Assurances.   Promptly,
upon the reasonable request of the Collateral Agent or the Lender, at the
Borrower’s expense, execute, acknowledge and deliver, or cause the execution,
acknowledgment and delivery of, and thereafter register, file or record, or
cause to be registered, filed or recorded, in an appropriate governmental
office, any document or instrument supplemental to or confirmatory of the
Security Documents or otherwise deemed by the Collateral Agent reasonably
necessary or desirable for the continued validity, perfection and priority of
the Liens on the Collateral covered thereby subject to no other Liens except as
permitted by the applicable Security Document, or obtain any consents or
waivers as may be necessary or appropriate in connection therewith and shall
take such other action as may be reasonably requested by the Collateral Agent.  Deliver or cause to be delivered to the
Lender and the Collateral Agent from time to time such other documentation,
consents, authorizations, approvals and orders in form and substance reasonably
satisfactory to the Lender and the Collateral Agent as the Lender and the
Collateral Agent shall reasonably deem necessary to perfect or maintain the
Liens on the Collateral pursuant to the Security Documents.  Upon the exercise by the Collateral Agent or
the Lender of any power, right, privilege or remedy pursuant to any Loan
Document which requires any consent, approval, registration, qualification or


 


58





















 


authorization of any Governmental Authority execute and deliver all
applications, certifications, instruments and other documents and papers that
the Collateral Agent or the Lender may require.


 


6.17                        Information
Regarding Collateral.   (a)                               Not
effect any change (i) in any Loan Party’s legal name, (ii) in the
location of any Loan Party’s chief executive office, (iii) in any Loan
Party’s identity or organizational structure, (iv) in any Loan Party’s
Federal Taxpayer Identification Number or organizational identification number,
if any, or (v) in any Loan Party’s jurisdiction of organization (in each
case, including by merging with or into any other entity, reorganizing,
dissolving, liquidating, reorganizing or organizing in any other jurisdiction
(except as otherwise provided hereunder)), until (A) it shall have given
the Collateral Agent and the Lender not less than 30 days’ prior written
notice (in the form of an Officers’ Certificate), or such lesser notice period
agreed to by the Collateral Agent, clearly describing such change and providing
such other information in connection therewith as the Collateral Agent or the
Lender may reasonably request and (B) it shall have taken all action
reasonably satisfactory to the Collateral Agent to maintain the perfection and
priority of the security interest of the Collateral Agent for the benefit of
the Secured Parties in the Collateral, if applicable.  Each Loan Party agrees to promptly provide
the Collateral Agent with certified Organizational Documents reflecting any of
the changes described in the preceding sentences.  Each Loan Party also agrees to promptly
notify the Collateral Agent of any change in the location of any office in
which it maintains books or records relating to Collateral owned by it or any
office or facility at which Collateral is located (including the establishment
of any such new office or facility), other than (x) changes in the location of
such Collateral to real property owned by a Loan Party or to leased property
subject to a Landlord Access Agreement, and (y) changes in the location of
inventory to the location of third party vendors of such Loan Party solely for
the purpose of further processing, but only so long as the value of such
inventory for all Loan Parties does not exceed $1,000,000 in the aggregate.


 


(b)                                 If required pursuant
to Section 6.02(a), deliver to the Lender and the Collateral Agent
a Perfection Certificate Supplement concurrently with the delivery of financial
statements pursuant to Section 6.01(a).


 


ARTICLE VII.

NEGATIVE COVENANTS


 


So long as the Lender shall have any
Commitment hereunder, any Loan or other Obligation hereunder shall remain
unpaid or unsatisfied (other than contingent obligations for which no claim
have been asserted), or any Letter of Credit shall remain outstanding, each
Loan Party shall not, nor shall it permit any of its Subsidiaries to, directly
or indirectly:


 


7.01                        Liens.   Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, other than the following:


 


(a)                                  Liens pursuant to any
Loan Document;


 


(b)                                 Liens existing on the
date hereof and listed on Schedule 7.01 and any renewals or
extensions thereof, provided that (i) the property covered thereby
is not changed, (ii) the amount secured or benefited thereby is not
increased, (iii) the direct or any contingent obligor with


 


59





















 


respect thereto is not changed, and (iv) any renewal or extension
of the obligations secured or benefited thereby is permitted by Section 7.03(b);


 


(c)                                  Liens for taxes not
yet due or which are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP;


 


(d)                                 carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business which are not overdue for a period
of more than 60 days or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person;


 


(e)                                  pledges or deposits
in the ordinary course of business in connection with workers’ compensation,
unemployment insurance and other social security legislation, other than any
Lien imposed by ERISA;


 


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


 


(g)                                 easements,
rights-of-way, restrictions and other similar encumbrances affecting real
property which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of the applicable Person;


 


(h)                                 Liens securing
judgments for the payment of money not constituting an Event of Default under Section 9.01(h);
and


 


(i)                                     Liens securing
Indebtedness permitted under Section 7.03(e); provided that (i) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness and (ii) the Indebtedness secured thereby does not
exceed the cost or fair market value of the property being acquired on the date
of acquisition.


 


7.02                        Investments.   Make any Investments, except:


 


(a)                                  Investments held by
the Borrower or such Subsidiary Guarantor in the form of (i) prime
commercial paper due within one (1) year from the date of purchase and
payable in United States dollars, (ii) certificates of deposit in United
States commercial banks (having capital resources in excess of $20,000,000.00)
due within one (1) year from the date of purchase and payable in United
States dollars, (iii) obligations of the United States government or any
agency thereof, (iv) obligations guaranteed directly by the United States
government, (v) repurchase agreements of United States commercial banks
(having capital resources in excess of $20,000,000.00) for terms of less than
one (1) year, (vi) eurodollar deposits with maturities of ninety (90)
days or less, or (vii) investments in money market funds which at the time
of investment are considered “Investment Grade” in accordance with the rating
systems employed by either Moody’s Investors Service, Inc or Standard &
Poor’s;


 


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(b)                                 advances to officers,
directors and employees of the Borrower and Subsidiaries in an aggregate amount
not to exceed $50,000 at any time outstanding, for travel, entertainment,
relocation and analogous ordinary business purposes;


 


(c)                                  Investments (i) by
the Borrower in any Subsidiary Guarantor, and (ii) by a Subsidiary
Guarantor in another Subsidiary Guarantor; provided that any such Investment in the form of a loan or
advance, if intended to be evidenced by an intercompany note, shall be
evidenced by an intercompany note in form and substance reasonably satisfactory
to the Lender, which note shall be pledged by such Loan Party as Collateral
pursuant to the Security Documents;


 


(d)                                 Investments
consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course
of business, and Investments received in satisfaction or partial satisfaction
thereof from financially troubled account debtors to the extent reasonably
necessary in order to prevent or limit loss;


 


(e)                                  Guarantees permitted
by Section 7.03;


 


(f)                                    the Acquisition;


 


(g)                                 so long as no Default
shall have occurred and be continuing at the time of any such Investment or
would result therefrom, Permitted Acquisitions;


 


(h)                                 deposits in connection
with leases in the ordinary course of business;


 


(i)                                     Investments in
securities of trade creditors or customers in the ordinary course of business
and consistent with the Borrower’s or such Subsidiary’s past practices that are
received in settlement of bona fide
disputes or pursuant to any plan of reorganization or liquidation or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers;


 


(j)                                     Investments
resulting from the consummation of the actions and transactions permitted under
Section 7.04; and


 


(k)                                  Investments
outstanding on the Closing Date and identified on Schedule 7.02.


 


7.03                        Indebtedness.   Create, incur, assume or suffer to exist any
Indebtedness, except:


 


(a)                                  Indebtedness under
the Loan Documents;


 


(b)                                 Indebtedness
outstanding on the date hereof and listed on Schedule 7.03 and any
refinancings, refundings, renewals or extensions thereof; provided that (i) the
amount of such Indebtedness is not increased at the time of such refinancing,
refunding, renewal or extension except by an amount equal to a reasonable
premium or other reasonable amount paid, and fees and expenses reasonably
incurred, in connection with such refinancing and by an amount equal to any
existing commitments unutilized thereunder and (ii) the terms relating to
principal amount, amortization, maturity, collateral (if any) and subordination
(if any), and other material terms taken as a whole, of any such refinancing,
refunding, renewing or extending Indebtedness, and of any agreement entered
into and of any instrument issued in connection therewith, are no less
favorable in any material respect to the Loan Parties or the Lender than the
terms of any agreement or instrument governing the Indebtedness being
refinanced, refunded, renewed or


 


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extended and the interest rate applicable to any such refinancing,
refunding, renewing or extending Indebtedness does not exceed the then
applicable market interest rate;


 


(c)                                  Guarantees of the
Borrower or any Subsidiary Guarantor in respect of Indebtedness otherwise
permitted hereunder of the Borrower or any Subsidiary Guarantor;


 


(d)                                 obligations
(contingent or otherwise) of the Borrower or any Subsidiary Guarantor existing
or arising under any Swap Contract with the Lender (or with another financial
institution approved by the Lender in writing), provided that (i) such
obligations are (or were) entered into by such Person in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or reasonably
anticipated by such Person, or changes in the value of securities issued by
such Person, and not for purposes of speculation or taking a “market view;” and
(ii) such Swap Contract does not contain any provision exonerating the
non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party;


 


(e)                                  Indebtedness in
respect of capital leases, Synthetic Lease Obligations and purchase money
obligations for fixed or capital assets within the limitations set forth in Section 7.01(i);
provided, however, that the aggregate amount of all such
Indebtedness at any one time outstanding shall not exceed $2,500,000;


 


(f)                                    unsecured
Indebtedness permitted by Section 7.02(c) so long as such
Indebtedness is subordinated to the Obligations in accordance with the terms
and conditions of the relevant intercompany note and Section 8.04(d);


 


(g)                                 Indebtedness in connection
with the financing of insurance premiums in the ordinary course of business;


 


(h)                                 Indebtedness arising
in connection with endorsement of instruments for deposit in the ordinary
course of business;


 


(i)                                     Indebtedness
payable to suppliers and other trade creditors in the ordinary course of
business on ordinary and customary trade terms and which is not past due by
more than 90 days unless subject to a bona fide dispute;


 


(j)                                     the Telic Earn-Out
Payments;


 


(k)                                  unsecured
Subordinated Debt otherwise approved by the Lender in writing; and


 


(l)                                     other unsecured
Indebtedness of the Borrower or any Subsidiaries in an aggregate amount for the
Borrower and all of its Subsidiaries not to exceed $250,000 at any time
outstanding.


 


7.04                        Fundamental
Changes.   Except for the
Acquisition, merge, dissolve, liquidate, consolidate with or into another
Person, or dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:


 


(a)                                  any Subsidiary may
merge with (i) the Borrower, provided that the Borrower shall be
the continuing or surviving Person, or (ii) any one or more other
Subsidiary; provided that


 


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when any Subsidiary Guarantor is merging with another Subsidiary that
is not a Subsidiary Guarantor, the Subsidiary Guarantor shall be the continuing
or surviving Person;


 


(b)                                 any Subsidiary may
dispose of all or substantially all of its assets (upon voluntary liquidation
or otherwise) to the Borrower or to another Subsidiary; provided that if
the transferor in such a transaction is a Subsidiary Guarantor, then the
transferee must either be the Borrower or another Subsidiary Guarantor; and


 


(c)                                  the Borrower or any
Subsidiary Guarantor of Borrower may consummate a Permitted Acquisition.


 


7.05                        Asset
Sales.   Effect any Asset Sale, or
agree to effect any Asset Sale, except that the following shall be permitted:


 


(a)                                  dispositions of used,
worn out, obsolete or surplus assets in the ordinary course of business and the
abandonment or other disposition of Intellectual Property that is, in the
reasonable judgment of the Borrower, no longer economically practicable to
maintain or useful in the conduct of the business of the Borrower and its
Subsidiaries taken as a whole;


 


(b)                                 dispositions of
property by any Subsidiary to the Borrower or to a Subsidiary Guarantor;


 


(c)                                  Asset Sales permitted
by Section 7.04;


 


(d)                                 non-exclusive licenses
of Intellectual Property granted by any Loan Party in the ordinary course of
business and not interfering in any material respect with the ordinary conduct
of business of the Loan Parties;


 


(e)                                  and other Asset
Sales, including without limitation any disposition of the Equity Interests of
a Subsidiary, the aggregate consideration received in respect of which pursuant
to this clause (g) shall not exceed $500,000 in the aggregate over
the term of this Agreement and shall not exceed $250,000 with respect to any
single Asset Sale; and


 


(f)                                    dispositions of
property by any Subsidiary that is not a Subsidiary Guarantor to the Borrower
or to another Subsidiary.


 


provided, however,
that any disposition pursuant to clauses (a), (c), (d) or (e) shall
be for fair market value.


 


7.06                        Restricted
Payments.   Declare or make, directly
or indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, or issue or sell any Equity Interests, except that, so
long as no Default shall have occurred and be continuing at the time of any
action described below or would result therefrom:


 


(a)                                  each Subsidiary may
make Restricted Payments to the Borrower or to a Subsidiary Guarantor that is
such Subsidiary’s parent;


 


(b)                                 the Borrower and each
Subsidiary may declare and make dividend payments or other distributions
payable solely in the common stock or other common Equity Interests of such
Person;


 


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(c)                                  the Borrower may
issue and sell shares of its common stock so long as the net proceeds thereof
are applied to the prepayment of the Term Loan B to the extent required under Section 2.04(d)(ii);


 


(d)                                 the Borrower may
declare or pay cash dividends to its stockholders and purchase, redeem or
otherwise acquire for cash Equity Interests issued by it, in each case only if
the Consolidated Leverage Ratio is not greater than 2.50 to 1.00 after giving
Pro Forma effect to such dividends as if such dividends were paid on the first
day of the relevant period, provided that if the Consolidated Leverage
Ratio would be greater than 2.50 to 1.00 after giving Pro Forma effect to such
dividends as if such dividends were paid on the first day of the relevant
period, the Borrower may declare or pay cash dividends to its stockholders and
purchase, redeem or otherwise acquire for cash Equity Interests issued by it,
but only in an aggregate amount not to exceed $20,000 in any fiscal year; and


 


(e)                                  the Borrower may
purchase, redeem or otherwise acquire for cash during any fiscal year Equity
Interests issued by it from cash proceeds it actually receives during such
fiscal year from the sale of options to buy Equity Interests in the Borrower.


 


7.07                        Change
in Nature of Business.   Engage in
any material line of business substantially different from those lines of
business conducted by the Borrower and its Subsidiaries on the date hereof or
any business substantially related or incidental thereto.


 


7.08                        Transactions
with Affiliates.   Enter into,
directly or indirectly, any transaction or series of related transactions,
whether or not in the ordinary course of business, with any Affiliate other
than on terms and conditions not materially less favorable (considered as a
whole) to the Borrower or such Subsidiary as would reasonably be obtained by
the Borrower or such Subsidiary at that time in a comparable arm’s-length
transaction with a person other than an Affiliate, except (a) transactions
between or among the Borrower and one or more Subsidiary Guarantors, and (b) reasonable
and customary director, officer and employee compensation (including bonuses)
and other benefits (including retirement, health, stock option and other
benefit plans) and indemnification arrangements, in each case approved by the
Board of Directors or a duly authorized committee thereof.


 


7.09                        Burdensome
Agreements.   Enter into any
Contractual Obligation (other than this Agreement or any other Loan Document)
that (a) limits the ability (i) of any Subsidiary Guarantor to make
Restricted Payments to the Borrower or any other Subsidiary Guarantor or to
otherwise transfer property to the Borrower or any Subsidiary Guarantor, (ii) of
any Subsidiary Guarantor to Guarantee the Indebtedness of the Borrower or (iii) of
the Borrower or any Subsidiary Guarantor to create, incur, assume or suffer to
exist Liens on property of such Person; provided, however, that
this clause (iii) shall not prohibit (A) any negative pledge incurred
or provided in favor of any holder of Indebtedness permitted under Section 7.03(e) solely
to the extent any such negative pledge relates to the property financed by or
the subject of such Indebtedness, or (B) restrictions existing under or by
reason of (i) applicable law, (ii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest, (iii) customary
provisions restricting assignment of any licensing agreement entered into in
the ordinary course of business, (iv) 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, (v) restrictions on the transfer
of any asset pending the sale of such asset and (vi) customary provisions
in partnership agreements, limited liability company organizational


 


64





















 


documents, joint venture agreements and other similar agreements
entered into the ordinary course of business that restrict the transfer of
capital stock in partnerships, limited liability companies, joint ventures or
similar Persons; or (b) requires the grant of a Lien to secure an
obligation of such Person if a Lien is granted to secure another obligation of
such Person.


 


7.10                        Use
of Proceeds.   Use the proceeds of
any Credit Extension, whether directly or indirectly, and whether immediately,
incidentally or ultimately, to purchase or carry margin stock (within the
meaning of Regulation U of the FRB) or to extend credit to others for the
purpose of purchasing or carrying margin stock or to refund indebtedness
originally incurred for such purpose.


 


7.11                        General
Partner.   Become a general partner
of any partnership.


 


7.12                        Financial
Covenants.


 


(a)                                  Quarterly
Consolidated EBITDA.   Permit Consolidated EBITDA for any full fiscal
quarter, commencing with the fiscal quarter ending April 2, 2005, to be
less than $3,750,000.


 


(b)                                 Consolidated Fixed
Charge Coverage Ratio.   Permit the Consolidated Fixed Charge Coverage
Ratio, for any Test Period ending during any period in the table set forth
below, to be less than the ratio set forth opposite such period in the table
below:


 


	
  Test Period

  	
   

  	
  Fixed Charge Coverage Ratio

  
	
   

  	
   

  	
   

  
	
  Closing Date through and including the date immediately preceding the
  date of the Borrower’s second fiscal quarter end in 2006

  	
   

  	
  1.15-to-1.00

  
	
   

  	
   

  	
   

  
	
  The date of the Borrower’s second fiscal quarter end in 2006 and
  thereafter

  	
   

  	
  1.25-to-1.00

  



 


(c)                                  Consolidated
Leverage Ratio.  Permit the
Consolidated Leverage Ratio, at any date during any period set forth in the
table below, to exceed the ratio set forth opposite such period in the table
below:


 


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  Test Period

  	
   

  	
  Maximum Consolidated

  Leverage Ratio

  
	
   

  	
   

  	
   

  
	
  Closing Date through and including December 30, 2005

  	
   

  	
  3.50-to-1.00

  
	
   

  	
   

  	
   

  
	
  December 31, 2005 through and including the date immediately
  preceding the date of the Borrower’s second fiscal quarter end in 2006

  	
   

  	
  3.25-to-1.00

  
	
   

  	
   

  	
   

  
	
  The date of the Borrower’s second fiscal quarter end in 2006 through
  and including the date immediately preceding the date of the Borrower’s
  second fiscal quarter end in 2007

  	
   

  	
  3.00-to1.00

  
	
   

  	
   

  	
   

  
	
  The date of the Borrower’s second fiscal quarter end in 2007 and
  thereafter

  	
   

  	
  2.50-to-1.00

  



 


7.13                        Payment
of Telic Earn-Out Payments.   Make
any Telic Earn-Out Payment, except that, so long as no Default shall have
occurred and be continuing at the time of any such payment or would result
therefrom, the Borrower may make a Telic Earn-Out Payment (which together with
all prior Telic Earn-Out Payments made by Borrower shall not exceed
$4,000,000), but only if the Borrower is in compliance with the Consolidated
Fixed Charge Coverage Ratio as of the Test Period ending on its fiscal quarter
end immediately preceding the date of such payment on a pro forma basis to give
effect to such payment as if made on the last day of such fiscal quarter end.


 


ARTICLE VIII.

GUARANTEE


 


8.01                     The
Guarantee.   The Subsidiary
Guarantors hereby, jointly and severally guarantee, each as a primary obligor
and not merely as a surety, to each Secured Party and their respective
successors and assigns, the prompt payment in full when due (whether at stated
maturity, by required prepayment, declaration, demand, by acceleration or
otherwise) of the principal of and interest (including any interest, fees,
costs or charges that would accrue but for the provisions of the Title 11 of
the United States Code after any bankruptcy or insolvency petition under Title
11 of the United States Code) on the Loans made by the Lender to, and the Notes
held by the Lender of, the Borrower, and the prompt payment and performance of
all other Obligations from time to time owing to the Secured Parties by any
Loan Party under any Loan Document in each case strictly in accordance with the
terms thereof (such obligations being herein collectively called the “Guaranteed Obligations”).  The Subsidiary Guarantors hereby jointly and
severally agree that if the Borrower or other Subsidiary Guarantor(s) shall
fail to pay


 


66





















 


and perform in full when due
(whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, the Subsidiary Guarantors will promptly pay the same in
cash and/or perform the same, as the case may be, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or renewal
of any of the Guaranteed Obligations, the same will be promptly paid in full
when due (whether at extended maturity, by acceleration or otherwise) in accordance
with the terms of such extension or renewal.


 


8.02                        Obligations
Unconditional.   The obligations of
the Subsidiary Guarantors under Section 8.01 shall constitute a
guaranty of payment and to the fullest extent permitted by applicable Law, are
absolute, irrevocable and unconditional, joint and several, irrespective of the
value, genuineness, validity, regularity or enforceability of the Guaranteed
Obligations of the Borrower under this Agreement, the Notes, any of the other
Loan Documents, or any other agreement or instrument referred to herein or
therein, or any substitution, release or exchange of any other guarantee of or
security for any of the Guaranteed Obligations, and, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable discharge
or defense of a surety or Guarantor (except for payment in full or release by
the Lender in accordance with the terms of the applicable Loan Documents).  Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Subsidiary Guarantors hereunder
which shall remain absolute, irrevocable and unconditional under any and all
circumstances as described above:


 


(i)                                     at any time or
from time to time, without notice to the Subsidiary Guarantors, the time for
any performance of or compliance with any of the Guaranteed Obligations shall
be extended, or such performance or compliance shall be waived;


 


(ii)                                  any of the acts
mentioned in any of the provisions of this Agreement or the Notes or any other
Loan Document or any other agreement or instrument referred to herein or
therein shall be done or omitted;


 


(iii)                               the maturity of any of
the Guaranteed Obligations shall be accelerated, or any of the Guaranteed
Obligations shall be amended in any respect, or any right under the Loan Documents
or any other agreement or instrument referred to herein or therein shall be
amended or waived in any respect or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or exchanged
in whole or in part or otherwise dealt with;


 


(iv)                              any
Lien or security interest granted to, or in favor of, the Lender, the L/C
Issuer or the Collateral Agent as security for any of the Guaranteed
Obligations shall fail to be perfected; or;


 


(v)                                 any
modification, amendment, rescission, or waiver of, or consent to departure
from, any of the Loan Documents or all or any of the Guaranteed Obligations
(except to the extent any such Loan Document or Guaranteed Obligation is so
modified or amended); or


 


(vi)                              the
release of any other Subsidiary Guarantor.


 


Each Subsidiary Guarantor hereby expressly waives diligence,
presentment, demand of payment, protest and all notices whatsoever, and any
requirement that any Secured Party exhaust any right, power or remedy or
proceed against the Borrower under this Agreement, the Notes, any of the other
Loan Documents, or any other agreement or instrument referred to herein or
therein, or against any other person under any other guarantee of, or security
for, any of the Guaranteed


 


67





















 


Obligations.  Each Subsidiary
Guarantor waives any and all notice of the creation, renewal, extension,
waiver, termination or accrual of any of the Guaranteed Obligations and notice
of or proof of reliance by any Secured Party upon this Guarantee or acceptance
of this Guarantee, and the Guaranteed Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Guarantee, and all dealings between the Borrower and the Secured
Parties shall likewise be conclusively presumed to have been had or consummated
in reliance upon this Guarantee.  This
Guarantee shall be construed as a continuing, absolute, irrevocable and
unconditional guarantee of payment without regard to any right of offset with
respect to the Guaranteed Obligations at any time or from time to time held by
the Secured Parties, and the obligations and liabilities of the Subsidiary
Guarantors hereunder shall not be conditioned or contingent upon the pursuit by
the Secured Parties or any other person at any time of any right or remedy
against the Borrower or against any other person which may be or become liable
in respect of all or any part of the Guaranteed Obligations or against any
collateral security or guarantee therefor or right of offset with respect
thereto.  This Guarantee shall remain in
full force and effect and be binding in accordance with and to the extent of
its terms upon the Subsidiary Guarantors and the successors and assigns
thereof, and shall inure to the benefit of the Secured Parties, and their respective
successors and assigns, notwithstanding that from time to time during the term
of this Agreement there may be no Guaranteed Obligations outstanding.  To the extent permitted by applicable law,
each Subsidiary Guarantor hereby expressly waives any and all suretyship
defenses to which it might otherwise be entitled.


 


8.03                        Reinstatement.   The obligations of the Subsidiary Guarantors
under this Article VIII shall be automatically reinstated if and to
the extent that for any reason any payment by or on behalf of the Borrower or
other Loan Party in respect of the Guaranteed Obligations is rescinded or must
be otherwise restored by any holder of any of the Guaranteed Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or otherwise.


 


8.04                        Subrogation;
Rights of Reimbursement; Subordination.  
(a)            Each Subsidiary
Guarantor hereby agrees that until the indefeasible payment and satisfaction in
full in cash of all Guaranteed Obligations and the expiration and termination
of the Commitment of the Lender under this Agreement and the Lender’s Swap
Contract it shall waive any claim and shall not exercise any right or remedy,
direct or indirect, arising by reason of any performance by it of its guarantee
in Section 8.01, whether by subrogation or otherwise, against the
Borrower or any other guarantor of any of the Guaranteed Obligations or any
security for any of the Guaranteed Obligations.


 


(b)                                 If any payment is made
by a Subsidiary Guarantor or from its property, such Subsidiary Guarantor shall
be entitled, subject to and upon payment in full of the Obligations, (i) to
demand and enforce reimbursement for the full amount of such payment from the
Borrower and (ii) to demand and enforce contribution in respect of such
payment from each other Subsidiary Guarantor that has not paid its fair share
of such payment, as necessary to ensure that (after giving effect to any
enforcement of reimbursement rights provided hereby) each Subsidiary Guarantor
pays its fair share of the unreimbursed portion of such payment.  For this purpose, the “fair share” of each
Subsidiary Guarantor as to any unreimbursed payment shall be determined based
on an equitable apportionment of such unreimbursed payment among all Subsidiary
Guarantors based on the relative value of their assets and any other equitable
considerations deemed appropriate by a court of competent jurisdiction.


 


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(c)                                  If and whenever
(after payment in full of the Obligations and delivery of notification thereof
to the Collateral Agent) any right of reimbursement or contribution becomes
enforceable by any Subsidiary Guarantor against any other Subsidiary Guarantor
under Section 8.04(b), such Subsidiary Guarantor shall be entitled,
subject to and upon payment in full of the Obligations, to be subrogated
(equally and ratably with all other Subsidiary Guarantors entitled to
reimbursement or contribution from any other Subsidiary Guarantor as set forth
in this Section 8.04) to any security interest that may then be
held by the Collateral Agent upon any Collateral granted to it under the
Security Documents.  Such right of
subrogation shall be enforceable solely against the Subsidiary Guarantors, and
not against the Collateral Agent or any other Secured Party, and neither the
Collateral Agent nor any other Secured Party shall have any duty whatsoever to
warrant, ensure or protect any such right of subrogation or to obtain, perfect,
maintain, hold, enforce or retain any Collateral for any purpose related to any
such right of subrogation.  If
subrogation is demanded by any Subsidiary Guarantor, then (after payment in
full in cash of the Obligations, the termination of the Commitment, the
expiration or termination of the Lender’s Swap Contract and the discharge or cash
collateralization (at 100% of the aggregate undrawn amount) of all outstanding
Letters of Credit) the Collateral Agent shall deliver to the Subsidiary
Guarantors making such demand, or to a representative of such Subsidiary
Guarantors or of the Subsidiary Guarantors generally, an instrument reasonably
satisfactory to the Collateral Agent transferring, on a quitclaim basis without
any recourse, representation, warranty or obligation whatsoever, whatever
security interest the Collateral Agent then may hold in whatever Collateral may
then exist that was not previously released or disposed of by the Collateral
Agent (provided that such
Subsidiary Guarantors shall prepare and deliver the initial draft of such
instrument to the Collateral Agent).


 


(d)                                 Any Indebtedness of
any Subsidiary Guarantor permitted pursuant to Section 7.03(f) and
all rights and claims arising under this Section 8.04 or based upon
or relating to any other right of reimbursement, indemnification, contribution
or subrogation that may at any time arise or exist in favor of any Subsidiary
Guarantor as to any payment on account of the Obligations made by it or
received or collected from its property shall be fully subordinated in all
respects to the prior payment in full in cash of all of the Obligations, the
termination of the Commitment, the termination or expiration of the Lender’s
Swap Contract and the discharge or cash collateralization (at 100% of the
aggregate undrawn amount) of all outstanding Letters of Credit.  Until payment in full in cash of the
Obligations, the termination of the Commitment, the termination or expiration
of the Lender’s Swap Contract and the discharge or cash collateralization (at
100% of the aggregate undrawn amount) of all outstanding Letters of Credit, no
Subsidiary Guarantor shall demand or receive any collateral security or, upon
and during the continuance of any Default or Event of Default, any payment or
distribution whatsoever (whether in cash, property or securities or otherwise)
on account of any such right or claim. 
If any such payment or distribution is made or becomes available to any
Subsidiary Guarantor in any bankruptcy case or receivership, insolvency or
liquidation proceeding, such payment or distribution shall be delivered by the
person making such payment or distribution directly to the Collateral Agent,
for application to the payment of the Obligations.  If any such payment or distribution is
received by any Subsidiary Guarantor, it shall be held by such Subsidiary
Guarantor in trust, as trustee of an express trust for the benefit of the
Secured Parties, and shall forthwith be transferred and delivered by such
Subsidiary Guarantor to the Collateral Agent, in the exact form received and,
if necessary, duly endorsed.


 


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(e)                                  The obligations of
the Subsidiary Guarantors under the Loan Documents, including their liability
for the Obligations and the enforceability of the security interests granted
thereby, are not contingent upon the validity, legality, enforceability,
collectibility or sufficiency of any right of reimbursement, contribution or
subrogation arising under this Section 8.04.  The invalidity, insufficiency,
unenforceability or uncollectibility of any such right shall not in any respect
diminish, affect or impair any such obligation or any other claim, interest,
right or remedy at any time held by the Collateral Agent or any other Secured
Party against any Subsidiary Guarantor or its property.  The Secured Parties make no representations
or warranties in respect of any such right and shall have no duty to assure,
protect, enforce or ensure any such right or otherwise relating to any such
right.


 


(f)                                    Each Subsidiary
Guarantor reserves any and all other rights of reimbursement, contribution or
subrogation at any time available to it as against any other Subsidiary
Guarantor, but (i) the exercise and enforcement of such rights shall be
subject to Section 8.04(d) and (ii) neither the
Collateral Agent nor any other Secured Party shall at any time have any duty or
liability whatsoever in respect of any such right, except as provided in Section 8.04(c).


 


8.05                        Remedies.   The Subsidiary Guarantors jointly and
severally agree that, as between the Subsidiary Guarantors and the Lender, the
obligations of the Borrower under this Agreement and the Notes may be declared
to be forthwith due and payable as provided in Article IX (and
shall be deemed to have become automatically due and payable in the
circumstances provided in said Article IX) for purposes of Section 8.01,
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable)
as against the Borrower and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Borrower) shall forthwith
become due and payable by the Subsidiary Guarantors for purposes of Section 8.01.


 


8.06                        Instrument
for the Payment of Money.   Each
Subsidiary Guarantor hereby acknowledges that the guarantee in this Article VIII
constitutes an instrument for the payment of money, and consents and agrees
that the Lender or the Collateral Agent, at its sole option, in the event of a
dispute by such Subsidiary Guarantor in the payment of any moneys due
hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213.


 


8.07                        Continuing
Guarantee.   The guarantee in this Article VIII
is a continuing guarantee of payment, and shall apply to all Guaranteed
Obligations whenever arising.


 


8.08                        General
Limitation on Guaranteed Obligations.  
In any action or proceeding involving any state corporate limited
partnership or limited liability company law, or any applicable state, federal
or foreign bankruptcy, insolvency, reorganization or other law affecting the
rights of creditors generally, if the obligations of any Subsidiary Guarantor
under Section 8.01 would otherwise be held or determined to be
void, voidable, invalid or unenforceable, or subordinated to the claims of any
other creditors, on account of the amount of its liability under Section 8.01,
then, notwithstanding any other provision to the contrary, the amount of such
liability shall, without any further action by such Subsidiary Guarantor, any
other Loan Party or any other person, be automatically limited and reduced to
the highest amount that is valid and enforceable and not subordinated to the
claims of other creditors as determined in such action or proceeding.


 


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ARTICLE IX.

EVENTS OF DEFAULT AND REMEDIES


 


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


 


(a)                                  Non-Payment.   The
Borrower or any other Loan Party fails to pay (i) when and as required to
be paid herein, any amount of principal of or interest on any Loan or any L/C
Obligation, or (ii) within five days after the same becomes due, any other
amount payable hereunder or under any other Loan Document; or


 


(b)                                 Specific Covenants.
  Any Loan Party fails to perform or observe any
term, covenant or agreement contained in any of Section 6.01, 6.02,
6.03, 6.05, 6.10, 6.11,  6.12, 6.13, 6.15,
6.16 or 6.17 or Article VII; or


 


(c)                                  Other Defaults.   Any
Loan Party fails to perform or observe any other covenant or agreement (not
specified in subsection (a) or (b) above) contained in any Loan
Document on its part to be performed or observed and such failure continues for
30 days; or


 


(d)                                 Representations and
Warranties.   Any representation, warranty, certification or
statement of fact made or deemed made by or on behalf of the Borrower or any
other Loan Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be incorrect or misleading in
any material respect when made or deemed made; or


 


(e)                                  Cross-Default.   (i) The
Borrower or any Subsidiary (A) fails to make any payment when due (whether
by scheduled maturity, required prepayment, acceleration, demand, or otherwise)
in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder
and Indebtedness under Swap Contracts) having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing
to all creditors under any combined or syndicated credit arrangement) of more
than the Threshold Amount, or (B) fails to observe or perform any other
agreement or condition relating to any such Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating thereto,
or any other event occurs, the effect of which default or other event is to
cause, or to permit the holder or holders of such Indebtedness or the
beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to be demanded or to become due
or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded; or (ii) there
occurs under any Swap Contract an Early Termination Date (as defined in such Swap
Contract) resulting from (A) any event of default under such Swap Contract
as to which the Borrower or any Subsidiary is the Defaulting Party (as defined
in such Swap Contract) or (B) any Termination Event (as so defined) under
such Swap Contract as to which the Borrower or any Subsidiary is an Affected
Party (as so defined) and, in either event, the Swap Termination Value owed by
the Borrower or such Subsidiary as a result thereof is greater than the
Threshold Amount; or


 


(f)                                    Insolvency
Proceedings, Etc.   Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an


 


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assignment for the benefit of creditors; or applies for or consents to
the appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or
consent of such Person and the appointment continues undischarged or unstayed
for 60 calendar days; or any proceeding under any Debtor Relief Law relating to
any such Person or to all or any material part of its property is instituted
without the consent of such Person and continues undismissed or unstayed for 60
calendar days, or an order for relief is entered in any such proceeding; or


 


(g)                                 Inability to Pay
Debts; Attachment.   (i) The Borrower or any Subsidiary
becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or
execution or similar process is issued or levied against all or any material
part of the property of any such Person and is not released, vacated or fully
bonded within 45 days after its issue or levy; or


 


(h)                                 Judgments.   There
is entered against the Borrower or any Subsidiary (i) a final judgment or
order for the payment of money in an aggregate amount exceeding the Threshold
Amount (to the extent not covered by independent third-party insurance as to
which the insurer does not dispute coverage), or (ii) any one or more
non-monetary final judgments that have, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect and, in
either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of thirty
consecutive days during which a stay of enforcement of such judgment, by reason
of a pending appeal or otherwise, is not in effect; or


 


(i)                                     ERISA.   (i) An
ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which
has resulted or could reasonably be expected to result in liability of the
Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan
or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the
Borrower or any ERISA Affiliate fails to pay when due, after the expiration of
any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of the Threshold Amount; or


 


(j)                                     Invalidity
of Loan Documents.   Any Loan Document or any material provisions
thereof shall at any time and for any reason be declared by a court of
competent jurisdiction to be null and void, or a proceeding shall be commenced
by any Loan Party or any other person, or by any Governmental Authority, seeking
to establish the invalidity or unenforceability thereof (exclusive of questions
of interpretation of any provision thereof), or any Loan Party shall repudiate
or deny any portion of its liability or obligation for the Obligations other
than in connection with a sale of the Equity Interests of a Subsidiary to the
extent permitted hereunder;


 


(k)                                  Collateral
Matters.   Any Security Document shall at any time after
its execution and delivery and for any reason cease to create a valid and
perfected first priority (except as otherwise expressly provided in this
Agreement or such Security Document) security interest in and to the property
purported to be subject to such Security Document; provided,
however, that the Lender’s failure to file any continuation or other
financing statement which is required by law to be filed to continue the first
priority perfected Lien of the Lender under any of the Security Documents shall
not constitute an Event of Default hereunder;


 


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(l)                                     Acquisition.   The
Acquisition shall not have occurred on the Closing Date in accordance with the
terms and conditions of the Acquisition Agreement; or


 


(m)                               Change of Control.   There
occurs any Change of Control.


 


9.02                        Remedies
Upon Event of Default.   If any Event
of Default occurs and is continuing, the Lender may take any or all of the
following actions:


 


(a)                                  declare
the Commitment of the Lender to make Loans and any obligation of the L/C Issuer
to make L/C Credit Extensions to be terminated, whereupon such Commitment and
obligation shall be terminated;


 


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


 


(c)                                  require
that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to
the then Outstanding Amount thereof); and


 


(d)                                 exercise
all rights and remedies available to it and the Lender under the Loan
Documents;


 


provided,
however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of the Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further
act of the Lender.


 


9.03                        Application
of Funds.   After the exercise of
remedies provided for in Section 9.02 (or after the Loans have
automatically become immediately due and payable and the L/C Obligations have
automatically been required to be Cash Collateralized as set forth in the
proviso to Section 9.02), the proceeds received by the Collateral
Agent in respect of any sale of, collection from or other realization upon all
or any part of the Collateral pursuant to the exercise by the Collateral Agent
of its remedies shall be applied, in full or in part, together with any other
sums then held by the Collateral Agent pursuant to this Agreement, promptly by
the Collateral Agent as follows:


 


(a)                                  First, to the
payment of all reasonable costs and expenses, fees, commissions and taxes of
such sale, collection or other realization, including compensation to the
Collateral Agent and its agents and counsel, and all expenses, liabilities and
advances made or incurred by the Collateral Agent in connection therewith and
all amounts for which the Collateral Agent is entitled to indemnification
pursuant to the provisions of any Loan Document, together with interest on each
such amount at the highest rate then in effect under this Agreement from and
after the date such amount is due, owing or unpaid until paid in full;


 


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(b)                                 Second, to the
payment of all other reasonable costs and expenses of such sale, collection or
other realization including compensation to the other Secured Parties and their
agents and counsel and all costs, liabilities and advances made or incurred by
the other Secured Parties in connection therewith, together with interest on
each such amount at the highest rate then in effect under this Agreement from
and after the date such amount is due, owing or unpaid until paid in full;


 


(c)                                  Third, without
duplication of amounts applied pursuant to clauses (a) and (b) above,
to the indefeasible payment in full in cash, pro
rata, of interest, Letter of Credit Fees and other amounts constituting
Obligations (other than principal and L/C Obligations) in each case equally and
ratably in accordance with the respective amounts thereof then due and owing;


 


(d)                                 Fourth, to the
indefeasible payment in full in cash, pro
rata, of the principal amount of the Obligations (including
Reimbursement Obligations);


 


(e)                                  Fifth, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate
undrawn amount of Letters of Credit; and


 


(f)                                    Sixth, the
balance, if any, after all of the Obligations (other than contingent indemnity
obligations for which no claim has been asserted) have been indefeasibly paid
in full, to the Borrower or as otherwise required by Law.


 


Subject to Section 2.03(c), amounts used to Cash
Collateralize the aggregate undrawn amount of Letters of Credit pursuant to
clause Fifth above shall be applied to satisfy drawings under such
Letters of Credit as they occur.  If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above. In the event that
any such proceeds are insufficient to pay in full the items described in
clauses (a) through (e) of this Section 9.03, the
Loan Parties shall remain liable, jointly and severally, for any deficiency.


 


ARTICLE X.

MISCELLANEOUS


 


10.01                 Amendments,
Etc.   No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent to any
departure by the Borrower or any other Loan Party therefrom, shall be effective
unless in writing signed by the Lender and the Borrower or the applicable Loan
Party, as the case may be, and each such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.


 


10.02                 Notices;
Effectiveness; Electronic Communication.


 


(a)                                  Notices Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by facsimile, and all notices and other communications expressly permitted
hereunder to be given by telephone shall be made to the address, facsimile
number, electronic mail address or telephone number specified for such Person
on Schedule 10.02. Notices sent by hand or


 


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overnight courier service, or mailed by certified or registered mail,
shall be deemed to have been given when received; notices sent by facsimile
shall be deemed to have been given when sent (except that, if not given during
normal business hours for the recipient, shall be deemed to have been given at
the opening of business on the next business day for the recipient).  Notices delivered through electronic
communications to the extent provided in subsection (b) below, shall
be effective as provided in such subsection (b).


 


(b)                                 Electronic
Communications.   Notices and other communications to the Lender
and the L/C Issuer hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Lender. Unless the Lender otherwise prescribes, (i) notices
and other communications sent to an e-mail address shall be deemed received
upon the sender’s receipt of an acknowledgement from the intended recipient
(such as by the “return receipt requested” function, as available, return
e-mail or other written acknowledgement), provided that if such notice
or other communication is not sent during the normal business hours of the
recipient, such notice or communication shall be deemed to have been sent at
the opening of business on the next business day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such
notice or communication is available and identifying the website address
therefor.


 


(c)                                  Change of Address,
Etc.   Each party may change its address, telecopier
or telephone number for notices and other communications hereunder by notice to
the other parties hereto.


 


(d)                                 Reliance by the
Lender and L/C Issuer.   The Lender and the L/C Issuer shall be
entitled to rely and act upon any notices (including telephonic Committed
Revolving Loan Notices) purportedly given by or on behalf of the Borrower even
if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof.  The Borrower shall indemnify the Lender and
the L/C Issuer and the Related Parties of each of them from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of a Responsible Officer of the
Borrower.  All telephonic notices to and
other telephonic communications with the Lender may be recorded by the Lender,
and each of the parties hereto hereby consents to such recording.


 


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


 


10.04                 Expenses;
Indemnity; Damage Waiver.


 


(a)                                  Costs and Expenses.  The Loan Parties agree, jointly and
severally, to pay (i) all reasonable out-of-pocket expenses incurred by
the Lender and its Affiliates (including the reasonable fees, charges and
disbursements of counsel), in connection with the preparation,


 


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negotiation, execution, delivery and administration of this Agreement
and the other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the L/C Issuer in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment
thereunder and (iii) all reasonable out-of-pocket expenses incurred by the
Lender or the L/C Issuer (including the fees, charges and disbursements of any
counsel), and shall pay all fees and time charges for attorneys who may be
employees of the Lender or the L/C Issuer, in connection with the enforcement
or protection of its rights (A) in connection with this Agreement and the
other Loan Documents, including its rights under this Section, or (B) in
connection with the Loans made or Letters of Credit issued hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.


 


(b)                                 Indemnification by
the Borrower.   The Loan Parties agree, jointly and severally,
to indemnify the Lender and the L/C Issuer, and each Related Party of any of
the foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the reasonable fees,
charges and disbursements of any counsel for any Indemnitee), and agree,
jointly and severally, to indemnify and hold harmless each Indemnitee from all
reasonable fees and time charges and disbursements for attorneys who may be
employees of any Indemnitee, incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by the Borrower or any other Loan Party
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties
hereto of their respective obligations hereunder or thereunder, the
consummation of the transactions contemplated hereby or thereby, (ii) any
Loan or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the L/C Issuer to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any
actual or alleged presence or release of Hazardous Materials on or from any
property owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by the
Borrower or any other Loan Party, and regardless of whether any Indemnitee is a
party thereto, in all cases, whether or not caused by or arising, in whole or
in part, out of the comparative, contributory or sole negligence of the
Indemnitee; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee or (y) result
from a claim brought by the Borrower or any other Loan Party against an Indemnitee
for breach in bad faith of such Indemnitee’s obligations hereunder or under any
other Loan Document, if the Borrower or such Loan Party has obtained a final
and nonappealable judgment in its favor on such claim as determined by a court
of competent jurisdiction.


 


(c)                                  Waiver of
Consequential Damages, Etc.   To the fullest extent permitted by applicable
law, each Loan Party agrees not to assert, and hereby waives, any claim against
any Indemnitee, on any theory of liability, for special, indirect, consequential
or punitive damages (as


 


76





















 


opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement, any other Loan Document or any
agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof.  No Indemnitee referred to in
subsection (b) above shall be liable for any damages arising from the
use by unintended recipients of any information or other materials distributed
by it through telecommunications, electronic or other information transmission
systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.


 


(d)                                 Payments.   All
amounts due under this Section shall be payable not later than ten
Business Days after demand therefor.


 


(e)                                  Survival.   The
agreements in this Section shall survive the termination of the Commitment
and the repayment, satisfaction or discharge of all the other Obligations.


 


10.05                 Payments
Set Aside.   To the extent that any
payment by or on behalf of any Loan Party is made to the Lender or the L/C
Issuer, or the Lender exercises its right of setoff, and such payment or the
proceeds of such setoff or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Lender or the L/C Issuer in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such setoff had not occurred.


 


10.06                 Successors
and Assigns.


 


(a)                                  Successors and
Assigns Generally.   The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Loan Party
may assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Lender. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (c) of this Section and,
to the extent expressly contemplated hereby, the Related Parties of the Lender
and the L/C Issuer) any legal or equitable right, remedy or claim under or by
reason of this Agreement.


 


(b)                                 Assignments by the
Lender.   Each Loan Party hereby agrees that the Lender,
in its sole discretion, shall have the right at any time and from time to time,
with the consent of the Borrower so long as such assignment is made at a time
when no Event of Default has occurred and is then continuing (which consent
will not in any instance be unreasonably withheld or delayed), to assign all or
a portion of the Lender’s rights and/or obligations under this Agreement
(including all or a portion of the Commitment and/or the Loans owing to it) to
one or more banks or other financial institutions (each, an “Assignee”). Upon the execution and
delivery of appropriate assignment documentation, amendments and any other
documentation required by the Lender in connection with such assignment, and
the payment by Assignee of the purchase price agreed to by the Lender and such
Assignee, such Assignee shall be a party to this Agreement and, to the extent
of the interest


 


77





















 


assigned by such assignment, have the rights and obligations of the
Lender under this Agreement, and the Lender shall, to the extent of the
interest assigned by such assignment, be released from its obligations under
this Agreement (and, in the case of an assignment covering all of the Lender’s
rights and obligations under this Agreement, the Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections
3.01, 3.04, 3.05, and 9.04 with respect to facts and
circumstances occurring prior to the effective date of such assignment.  Upon request, each Loan Party (at its
expense) agrees that it shall execute, or cause to be executed, such documents,
including without limitation, amendments to this Agreement and to any other
Loan Document, as the Lender shall deem necessary to effect the foregoing.  In addition, at the request of the Lender and
any such Assignee, the Borrower (at its expense) shall issue one or more new
Notes, as applicable, to any such Assignee and, if the Lender has retained any
of its rights and obligations following such assignment, to the Lender, which
new Notes shall be issued in replacement of, but not in discharge of, the
Obligations evidenced by the Notes held by the Lender prior to such assignment
which are being replaced and shall reflect the amount of any Loan held by such
Assignee and the Lender after giving effect to such assignment. Notwithstanding
any other provisions of this Agreement to the contrary, the Lender may not
sell, assign or transfer all or any part of its rights under this Agreement if
such sale, assignment or transfer would result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code.


 


(c)                                  Participations by
the Lender.   The Lender may at any time, without the
consent of, or notice to, the Borrower or any other Loan Party, sell
participations to any Person (each, a “Participant”) in all or a portion
of the Lender’s rights and/or obligations under this Agreement (including all
or a portion of the Commitment and/or the Loans owing to it); provided
that (i) the Lender’s obligations under this Agreement shall remain unchanged,
(ii) the Lender shall remain solely responsible to the Borrower hereto for
the performance of such obligations and (iii) the Borrower shall continue
to deal solely and directly with the Lender in connection with such rights and
obligations under this Agreement. Each Loan Party agrees that each Participant
shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were the Lender and had
acquired its interest by assignment pursuant to subsection (b) of
this Section.


 


(d)                                 Certain Pledges.   The
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement (including under the Note) to secure
obligations of the Lender, including any pledge or assignment to secure obligations
to a Federal Reserve Bank; provided that no such pledge or assignment
shall release the Lender from any of its obligations hereunder or substitute
any such pledgee or assignee for the Lender as a party hereto.


 


10.07                 Treatment
of Certain Information; Confidentiality.  
The Lender and the L/C Issuer agree to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, advisors and representatives (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d) to
any other party hereto, (e) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any
Assignee of or Participant in,


 


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or any prospective Assignee of or Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating
to the Borrower and its obligations, (g) with the consent of the Borrower
or (h) to the extent such Information (x) becomes publicly available other
than as a result of a breach of this Section or (y) becomes available to
the Lender, the L/C Issuer or any of their respective Affiliates on a
nonconfidential basis from a source other than the Borrower.


 


For purposes of this Section, “Information”
means (i) all financial information received from the Borrower or any
Subsidiary and (ii) all other information received from the Borrower or
any Subsidiary relating to the Borrower or any Subsidiary or any of their
respective businesses that is clearly identified at the time of delivery as
confidential, other than any such information that is available to the Lender
or the L/C Issuer on a nonconfidential basis prior to disclosure by the
Borrower or any Subsidiary. Any Person required to maintain the confidentiality
of Information as provided in this Section shall be considered to have
complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.


 


Each of the Lender and the L/C Issuer
acknowledges that (a) the Information may include material non-public
information concerning the Borrower or a Subsidiary, as the case may be, (b) it
has developed compliance procedures regarding the use of material non-public
information and (c) it will handle such material non-public information in
accordance with applicable Law, including Federal and state securities Laws.


 


10.08                 Right
of Setoff.   If an Event of Default
shall have occurred and be continuing, the Lender, the L/C Issuer and each of
their respective Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by applicable law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final,
in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by the Lender, the L/C Issuer or any such Affiliate
to or for the credit or the account of the Borrower or any other Loan Party
against any and all of the obligations of the Borrower or such Loan Party now
or hereafter existing under this Agreement or any other Loan Document to the
Lender or the L/C Issuer, irrespective of whether or not the Lender or the L/C
Issuer shall have made any demand under this Agreement or any other Loan
Document and although such obligations of the Borrower or such Loan Party may
be contingent or unmatured or are owed to a branch or office of the Lender or
the L/C Issuer different from the branch or office holding such deposit or
obligated on such indebtedness.  The
rights of the Lender, the L/C Issuer and their respective Affiliates under this
Section are in addition to other rights and remedies (including other
rights of setoff) that the Lender, the L/C Issuer or their respective
Affiliates may have.  The Lender and the
L/C Issuer agrees to notify the Borrower promptly after any such setoff and
application, provided that the failure to give such notice shall not
affect the validity of such setoff and application.


 


10.09                 Interest
Rate Limitation.   Notwithstanding
anything to the contrary contained in any Loan Document, the interest paid or
agreed to be paid under the Loan Documents shall not exceed the maximum rate of
non-usurious interest permitted by applicable Law (the “Maximum Rate”).  If the Lender shall receive interest in an
amount that exceeds the Maximum Rate, the excess interest shall be applied to
the principal of the Loans or, if it exceeds such unpaid principal, refunded to
the Borrower.  In determining whether the
interest contracted for, charged, or received by the Lender exceeds the Maximum
Rate, such Person may, to the extent permitted


 


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by applicable Law, (a) characterize any payment that is not
principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.


 


10.10                 Counterparts;
Integration; Effectiveness.   This
Agreement may be executed in counterparts (and by different parties hereto in
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof.  Except as provided in Section 4.01,
this Agreement shall become effective when it shall have been executed by the
Lender and when the Lender shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a
signature page of this Agreement by facsimile transmission or electronic
imaging shall be effective as delivery of a manually executed counterpart of
this Agreement.


 


10.11                 Survival
of Representations and Warranties.   All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith
or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been
or will be relied upon by the Lender, regardless of any investigation made by
the Lender or on their behalf and notwithstanding that the Lender may have had
notice or knowledge of any Default at the time of any Credit Extension, and
shall continue in full force and effect as long as any Loan or any other
Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit
shall remain outstanding.


 


10.12                 Severability.   If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to
replace the illegal, invalid or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.


 


10.13                 Governing
Law; Jurisdiction; Etc.


 


(a)                                  GOVERNING LAW.   THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.


 


(b)                                 SUBMISSION TO
JURISDICTION.   THE BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO


 


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THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING IN THIS
AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER
OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR
ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.


 


(c)                                 WAIVER OF VENUE.
  THE BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (B) OF THIS SECTION. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.


 


(d)                                SERVICE OF PROCESS.
  EACH PARTY HERETO IRREVOCABLY CONSENTS
TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.


 


10.14                 Waiver
of Jury Trial.   EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


 


10.15                 USA
PATRIOT Act Notice.   The Lender hereby
notifies the Borrower and each other Loan Party that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L.


 


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107-56 (signed into law October 26, 2001)) (the “Act”), it
is required to obtain, verify and record information that identifies the
Borrower and each other Loan Party, which information includes the name and
address of the Borrower and each other Loan Party and other information that
will allow the Lender to identify the Borrower in accordance with the Act.


 


10.16                 Replacement
of a Note or other Loan Documents.   Upon
receipt by the Borrower of an affidavit and indemnity agreement of an officer
of the Lender as to the loss, theft, destruction, or mutilation of any Note or
any other Loan Document to which any Loan Party is a party which is not of
public record, and, in the case of loss, theft, destruction, or mutilation,
upon cancellation of such Note or other Loan Document, the applicable Loan
Party will execute and deliver, in lieu thereof, a replacement Note or other
Loan Document in the same principal amount thereof and otherwise of like tenor.


 


10.17                 Obligations
Absolute.   To the fullest extent
permitted by applicable law, all obligations of the Loan Parties hereunder
shall be absolute, unconditional and irrevocable and shall not be affected,
modified, released, discharged or impaired, in whole or in part under any
circumstances, irrespective of any or all of the following:


 


(vii)                           any lack of validity or
enforceability of all or any portion of this Agreement, any of the other Loan
Documents or any other agreement or any instrument relating hereto;


 


(viii)                        the failure to give notice to
any Loan Party (except as otherwise specifically provided herein) of the
occurrence of a Default or an Event of Default;


 


(ix)                                any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Obligations;


 


(x)                                   the
existence of any claim, setoff, defense or other right that any Loan Party may
have (other than prior payment in full in cash);


 


(xi)                                any
modification, amendment, rescission, or waiver of, or consent to departure
from, any of the Loan Documents or all or any of the Obligations (except to the
extent any such Loan Document or Obligation is so modified or amended);


 


(xii)                             any
exchange, release or non-perfection of any Collateral or other collateral, or
any release of any party primarily or secondarily liable on any of the
Obligations, including without limitation, any Subsidiary Guarantor, or any
amendment or waiver of or consent to departure from the Guarantee hereunder or
any other guarantee of all or any of the Obligations;


 


(xiii)                          any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation or the like of any Loan Party;


 


(viii)                        any exercise or non-exercise,
or any waiver of any right, remedy, power or privilege under or in respect
hereof or any Loan Document; or


 


(ix)                                any other circumstance
or happening whatsoever, whether or not similar to any of the foregoing,
including without limitation, any other circumstance that might otherwise


 


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constitute a defense available to, or a discharge of, any Loan Party or
of any other party primarily or secondarily liable on any of the Obligations.


 


Without limiting the generality of the
foregoing, it is expressly understood and agreed that the absolute and
unconditional obligation of the Borrower set forth above shall not be construed
as a waiver by the Borrower of any claims or defenses it may have against the
Lender.


 


 


REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


THE NEXT
PAGE IS A SIGNATURE PAGE


 


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


 


 


	
   

  	
  AXSYS TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David A. Almeida

  	
   

  
	
   

  	
  Name:

  	
  David A. Almeida

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  SPEEDRING SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David A. Almeida

  	
   

  
	
   

  	
  Name: 

  	
  David A. Almeida

  	
   

  
	
   

  	
  Title: 

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  SPEEDRING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David A. Almeida

  	
   

  
	
   

  	
  Name:

  	
  David A. Almeida

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  PRECISION AEROTECH, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David A. Almeida

  	
   

  
	
   

  	
  Name:

  	
  David A. Almeida

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TELIC OPTICS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David A. Almeida

  	
   

  
	
   

  	
  Name:

  	
  David A. Almeida

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  FLEET NATIONAL BANK, A BANK OF

  
	
   

  	
  AMERICA COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew S. Latham

  	
   

  
	
   

  	
  Name:

  	
  Matthew S. Latham

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President