EX-10.1






Exhibit 10.1




 





CREDIT AGREEMENT




Dated as of March 11, 2009




by and between




GLOBECOMM SYSTEMS INC.




and




CITIBANK, N.A.




 















 





TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	SECTION 1.01. Definitions
	 	 	1	 
	SECTION 1.02. Accounting Terms
	 	 	15	 
	 
	 	 	 	 
	ARTICLE II LOANS
	 	 	15	 
	SECTION 2.01. Revolving Credit Loans
	 	 	15	 
	SECTION 2.02. Revolving Credit Note
	 	 	16	 
	SECTION 2.03. Term Loans
	 	 	16	 
	SECTION 2.04. Term Loan Notes
	 	 	17	 
	SECTION 2.05. Letters of Credit
	 	 	17	 
	 
	 	 	 	 
	ARTICLE III INTEREST RATE; FEES AND PAYMENTS; USE OF PROCEEDS
	 	 	20	 
	SECTION 3.01. Interest Rate
	 	 	20	 
	SECTION 3.02. Use of Proceeds
	 	 	22	 
	SECTION 3.03. Prepayments
	 	 	22	 
	SECTION 3.04. Fees
	 	 	23	 
	SECTION 3.05. Inability to Determine Interest Rate
	 	 	23	 
	SECTION 3.06. Illegality
	 	 	24	 
	SECTION 3.07. Increased Costs
	 	 	24	 
	SECTION 3.08. Indemnity
	 	 	25	 
	SECTION 3.09. Taxes
	 	 	25	 
	SECTION 3.10. Payments
	 	 	26	 
	SECTION 3.11. Disbursement of Loans
	 	 	26	 
	SECTION 3.12. Manner of Payment
	 	 	26	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES
	 	 	26	 
	SECTION 4.01. Organization, Corporate Powers, etc. 
	 	 	26	 
	SECTION 4.02. Authorization of Borrowing, Enforceable Obligations
	 	 	27	 






ii









 






	 	 	 	 	 
	SECTION 4.03. Financial Condition
	 	 	27	 
	SECTION 4.04. Taxes
	 	 	28	 
	SECTION 4.05. Title to Properties
	 	 	28	 
	SECTION 4.06. Litigation
	 	 	28	 
	SECTION 4.07. Agreements
	 	 	28	 
	SECTION 4.08. Compliance with ERISA
	 	 	28	 
	SECTION 4.09. Federal Reserve Regulations; Use of Proceeds
	 	 	29	 
	SECTION 4.10. Approval
	 	 	29	 
	SECTION 4.11. Subsidiaries and Affiliates
	 	 	29	 
	SECTION 4.12. Hazardous Materials
	 	 	29	 
	SECTION 4.13. Investment Company Act
	 	 	30	 
	SECTION 4.14. No Default
	 	 	30	 
	SECTION 4.15. Material Contracts
	 	 	30	 
	SECTION 4.16. Permits and Licenses
	 	 	30	 
	SECTION 4.17. Compliance with Law
	 	 	30	 
	SECTION 4.18. Disclosure
	 	 	30	 
	SECTION 4.19. Security Documents
	 	 	30	 
	SECTION 4.20. Globecomm UK
	 	 	30	 
	 
	 	 	 	 
	ARTICLE V CONDITIONS OF LENDING
	 	 	31	 
	SECTION 5.01. Conditions To Initial Loans
	 	 	31	 
	SECTION 5.02. Conditions to Term Loans:
	 	 	32	 
	SECTION 5.03. Conditions to All Loans and Letters of Credit
	 	 	32	 
	 
	 	 	 	 
	ARTICLE VI AFFIRMATIVE COVENANTS
	 	 	33	 
	SECTION 6.01. Corporate Existence, Properties, etc
	 	 	33	 
	SECTION 6.02. Payment of Indebtedness, Taxes, etc.
	 	 	34	 
	SECTION 6.03. Financial Statements, Reports, etc. Furnish to the Bank

	 	 	34	 
	SECTION 6.04. Access to Premises and Records
	 	 	35	 
	SECTION 6.05. Notice of Adverse Change
	 	 	36	 
	SECTION 6.06. Notice of Default
	 	 	36	 
	SECTION 6.07. Notice of Litigation
	 	 	36	 






iii









 






	 	 	 	 	 
	SECTION 6.08. ERISA
	 	 	36	 
	SECTION 6.09. Compliance with Applicable Laws
	 	 	36	 
	SECTION 6.10. Subsidiaries
	 	 	37	 
	SECTION 6.11. Default in Other Agreements
	 	 	37	 
	SECTION 6.12. Operating Accounts
	 	 	37	 
	SECTION 6.13. Environmental Laws
	 	 	37	 
	 
	 	 	 	 
	ARTICLE VII NEGATIVE COVENANTS
	 	 	38	 
	SECTION 7.01. Liens
	 	 	38	 
	SECTION 7.02. Indebtedness
	 	 	39	 
	SECTION 7.03. Guaranties
	 	 	39	 
	SECTION 7.04. Sale of Assets
	 	 	40	 
	SECTION 7.05. Sale of Notes
	 	 	40	 
	SECTION 7.06. Loans and Investments
	 	 	40	 
	SECTION 7.07. Nature of Business
	 	 	40	 
	SECTION 7.08. Sale and Leaseback
	 	 	40	 
	SECTION 7.09. Federal Reserve Regulations
	 	 	40	 
	SECTION 7.10. Accounting Policies and Procedures
	 	 	40	 
	SECTION 7.11. Hazardous Materials
	 	 	40	 
	SECTION 7.12. Limitations on Fundamental Changes
	 	 	41	 
	SECTION 7.13. Financial Covenants
	 	 	41	 
	SECTION 7.14. Subordinated Debt
	 	 	41	 
	SECTION 7.15. Dividends
	 	 	41	 
	SECTION 7.16. Transactions with Affiliates
	 	 	42	 
	SECTION 7.17. Impairment of Security Interest
	 	 	42	 
	SECTION 7.18. Negative Pledge
	 	 	42	 
	 
	 	 	 	 
	ARTICLE VIII EVENTS OF DEFAULT
	 	 	42	 
	SECTION 8.01. Events of Default
	 	 	42	 
	 
	 	 	 	 
	ARTICLE IX MISCELLANEOUS
	 	 	44	 
	SECTION 9.01. Notices
	 	 	44	 
	SECTION 9.02. Survival of Agreement
	 	 	45	 






iv









 






	 	 	 	 	 
	SECTION 9.03. Expenses of the Bank
	 	 	46	 
	SECTION 9.04. No Waiver of Rights by the Bank
	 	 	46	 
	SECTION 9.05. Applicable Law
	 	 	46	 
	SECTION 9.06. Submission to Jurisdiction; Jury Waiver
	 	 	46	 
	SECTION 9.07. Extension of Maturity
	 	 	47	 
	SECTION 9.08. Modification of Agreement
	 	 	47	 
	SECTION 9.09. Severability
	 	 	47	 
	SECTION 9.10. Sale of Participations, Assignments
	 	 	47	 
	SECTION 9.11. Reinstatement; Certain Payments
	 	 	48	 
	SECTION 9.12. Right of Setoff
	 	 	48	 
	SECTION 9.13. Counterparts
	 	 	48	 
	SECTION 9.14. Headings
	 	 	48	 
	SECTION 9.15. Construction
	 	 	48	 
	SECTION 9.16. USA PATRIOT Act
	 	 	48	 
	SECTION 9.17. Termination
	 	 	48	 
	SECTION 9.18. Confidentiality
	 	 	48	 






v









 





SCHEDULES




	 	 	 	 	 
	Schedule I

	 	-
	 	Subsidiaries and Affiliates
	Schedule II

	 	-
	 	Liens
	Schedule III

	 	-
	 	Existing Indebtedness
	Schedule IV

	 	-
	 	Existing Guaranties
	Schedule V

	 	-
	 	Existing Letters of Credit
	Schedule VI

	 	-
	 	Litigation, etc.
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	Exhibit A

	 	-
	 	Form of Revolving Credit Note
	Exhibit B

	 	-
	 	Form of Term Loan Note
	Exhibit C

	 	-
	 	Form of Guaranty
	Exhibit D

	 	-
	 	Form of Pledge Agreement [re: Non-Domestic Subsidiary]
	Exhibit E

	 	-
	 	Form of Security Agreement
	Exhibit F

	 	-
	 	Form of Opinion of Counsel






vi









 





     CREDIT AGREEMENT dated as of March 11, 2009, by and between GLOBECOMM SYSTEMS INC., a Delaware
corporation (the “Company”) and CITIBANK N.A., a national banking association (the “Bank”).



RECITALS




     WHEREAS, the Bank previously made a line of credit available to the Company pursuant to a Line
of Credit Letter dated December 31, 2007 (as amended, the “Prior Agreement”);



     WHEREAS, the Company has requested that the Prior Agreement be amended and restated as
hereinafter provided;



     WHEREAS, the Bank is willing to agree to such amendment and restatement and to extend credit
to the Company on the terms and conditions set forth herein.



     NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the
Company and the Bank hereby agree that the Prior Agreement shall be, and hereby is, amended and
restated in its entirety and the Company and the Bank hereby further agree as follows:



ARTICLE I




DEFINITIONS AND ACCOUNTING TERMS




     SECTION 1.01. Definitions. As used herein, the following words and terms shall have
the following meanings:



     “Acquisition” means the acquisition of (i) a controlling equity interest in another Person
(including the purchase of an option, warrant or convertible or similar type security to acquire
such a controlling interest at the time it becomes exercisable by the holder thereof), whether by
purchase of such equity interest or upon exercise of an option or warrant for, or conversion of
securities into, such equity interest, or (ii) assets of another Person which constitute all or
substantially all of the assets of such Person or of a line or lines of business conducted by such
Person.



     “Affiliate” shall mean with respect to any Person, any corporation, partnership, limited
liability company, limited liability partnership, joint venture, trust or unincorporated
organization which, directly or indirectly, controls or is controlled by or is under common control
with such Person. For the purpose of this definition, “control” of a Person shall mean the power,
direct or indirect, to direct or cause the direction of the management or policies of such Person
whether through the ownership of voting securities by contract or otherwise; provided that, in any
event, any person who owns directly or indirectly 15% or more of the securities having ordinary
voting power for the election of directors or other governing body of a corporation or 10% or more
of the membership or other ownership interest of any Person (other than as a limited partner of
such other Person) will be deemed to control such corporation or other Person.













 





     “Aggregate Letters of Credit Outstanding” shall mean on the date of determination thereof, the
sum of (a) the aggregate maximum amount which is available or available in the future to be drawn
under all outstanding Letters of Credit under this Agreement plus (b) the aggregate amount
of any payments made by the Bank under any Letter of Credit issued pursuant to this Agreement that
has not been reimbursed by the Company or the relevant Letter of Credit Party.



     “Aggregate Outstandings” shall mean, on the date of determination thereof, the sum of (i) the
Aggregate Letters of Credit Outstanding plus (ii) outstanding principal amount of the Revolving
Credit Loans plus (iii) the outstanding principal amount of the Term Loans.



     “Agreement” shall mean this Credit Agreement dated as of March 11, 2009, as it may hereafter
be amended, restated, supplemented or otherwise modified from time to time in accordance with the
terms hereof.



     “Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the
Prime Rate in effect on such day and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.



     “Alternate Base Rate Loans” shall mean Loans at such times as they are being made and/or
maintained at a rate of interest based on the Alternate Base Rate.



     “Applicable Margin” shall mean (a) with respect to a Libor Rate Loan, the percentage set forth
below under the heading “LIBOR Margin” opposite the applicable ratio, and (b) with respect to an
Alternate Base Rate Loan, the percentage set forth below under the heading “ABR Margin” opposite
the applicable ratio.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ABR	 	MARGIN	 	LIBOR	 	MARGIN
	 	 	Revolving	 	 	 	 	 	Revolving	 	 
	 	 	Credit Loans	 	Term Loans	 	Credit Loans	 	 
	 	 	(360 day	 	(360 day	 	(360 day	 	Term Loans
	Leverage Ratio	 	basis)	 	basis)	 	basis)	 	(360 day basis)
	Less than or equal to
0.25:1.00
	 	 	0.00	%	 	 	0.00	%	 	 	1.75	%	 	 	2.00	%
	Greater than 0.25:1.00 but
less than or equal to
0.50:1.00
	 	 	0.00	%	 	 	0.00	%	 	 	2.00	%	 	 	2.25	%
	Greater than 0.50:1.00 but
less than or equal to
0.75:1.00
	 	 	0.00	%	 	 	0.25	%	 	 	2.25	%	 	 	2.50	%
	Greater than 0.75:1.00
	 	 	0.25	%	 	 	0.50	%	 	 	2.50	%	 	 	2.75	%






2









 




Notwithstanding the foregoing, during the period commencing on the Closing Date and ending on the
date of reset of the Applicable Margin in accordance with this paragraph, the ABR Margin and the
LIBOR Margin shall be determined based upon a Leverage Ratio of 0.27:1.00. The Applicable Margin
will be set or reset with respect to each Loan on the date which is five (5) Business Days
following the date of receipt by the Administrative Agent of the financial statements referred to
in Section 6.03(a) and Section 6.03(b) together with a certificate of the Financial Officer of the
Company certifying the Leverage Ratio and setting forth the calculation thereof in detail;
provided, however, (a) the Applicable Margin will first be reset based on the financial statements
for the fiscal quarter ending March 31, 2009, and (b) if any such financial statement and
certificate are not received by the Administrative Agent within the time period required pursuant
to Section 6.03(a) or Section 6.03(b), as the case may be, the Applicable Margin will be set or
reset, unless the rate of interest specified in Section 3.01(c) is in effect, based on a Leverage
Ratio of greater than 0.75:1.00 from the date such financial statements and certificate were due
until the date which is five (5) Business Days following the receipt by the Administrative Agent of
such financial statements and certificate, and provided, further, that the Bank shall not in any
way be deemed to have waived any Default or Event of Default, including without limitation, an
Event of Default resulting from the failure of the Company to comply with Section 7.13 of this
Agreement, or any rights or remedies hereunder or under any other Loan Document in connection with
the foregoing proviso. During the occurrence and continuance of a Default or an Event of Default,
no downward adjustment, and only upward adjustments, shall be made to the Applicable Margin.




     “Borrowing Date” shall mean, with respect to any Loan, the date on which such Loan is
disbursed to the Company.



     “Business Day” shall mean any day that is not a Saturday, Sunday or legal holiday, on which
banks in New York City, New York are not required or authorized by law or other governmental action
to close; provided that, when used in connection with a Libor Loan, the term “Business Day” shall
also exclude any day on which banks are not open for dealings in dollar deposits in the London
inter bank market.



     “Capital Lease” shall mean (i) any lease of property, real or personal, if the then present
value of the minimum rental commitment thereunder should, in accordance with Generally Accepted
Accounting Principles, be capitalized on the balance sheet of the lessee, and (ii) any other such
lease the obligations of which are required to be capitalized on the balance sheet of the lessee.



     “Change of Control” shall mean any event which results in (i) any Person, or two or more
Persons acting in concert, acquiring beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended), directly
or indirectly, of securities of the Company (or other securities convertible into such securities)
representing 50% or more of the combined voting power of all securities of the Company entitled to
vote in the election of directors; or (ii) the individuals who, as of the date hereof, constitute
the Board of Directors of the Company, together with those who first become directors subsequent to
such date, provided the recommendation, election or nomination for election to the Board of
Directors of such subsequent directors was approved by a vote of at least a majority of the
directors then still in office who were either directors as of the date hereof



3









 







or who recommendation, election or nomination for election was previously so approved, ceasing
for any reason to constitute a majority of the members of the Board of Directors of the Company.



     “Chief Financial Officer” shall mean the Chief Financial Officer of the Company.



     “Closing Date” shall mean March 11, 2009.



     “Code” shall mean the Internal Revenue Code of 1986, as amended and in effect from time to
time.



     “Commercial Letter of Credit” shall mean any commercial letter of credit issued for the
account of a Person for the purpose of providing the primary payment mechanism in connection with
the purchase of materials, goods, or services by such Person.



     “Commercial Letter of Credit Commitment” shall mean the obligation of the Bank to issue
Commercial Letters of Credit on the terms herein described in an aggregate amount up to
$20,000,000.



     “Commitments” shall mean, collectively, the Revolving Credit Commitment, the Standby Letter of
Credit Commitment, the Commercial Letter of Credit Commitment and the Term Loan Commitment.



     “Consolidated” shall mean, as applied to any financial or accounting term, such term
determined on a consolidated basis in accordance with Generally Accepted Accounting Principles for
the Company and its Subsidiaries.



     “Consolidated Capital Base” shall mean, on a Consolidated basis for the Company and its
Subsidiaries, the sum of (i) shareholders equity, as reflected on the Consolidated balance sheet of
the Company and its Subsidiaries plus (ii) Subordinated Debt minus the sum of (x)
intangible assets, (y) items recorded as “due from” shareholders, employees, or affiliates of the
Company, and (z) investments in affiliates other than the Guarantors, all as determined in
accordance with Generally Accepted Accounting Principles, applied on a consistent basis.



     “Consolidated Current Portion of Long Term Debt” shall mean for the Company and its
Subsidiaries on a Consolidated basis, current portion of long term debt as reflected on the
Consolidated balance sheet of the Company and its Subsidiaries as determined in accordance with
Generally Accepted Accounting Principles, applied on a consistent basis.



     “Consolidated Debt Service Coverage Ratio” shall mean, on any date of determination, the ratio
of (a) Consolidated EBITDA to (b) the sum of (i) the Consolidated Current Portion of Long Term Debt
plus (ii) Consolidated Interest Expense. All of the foregoing categories shall be determined on a
Consolidated basis for the Company and its Subsidiaries in accordance with Generally Accepted
Accounting Principles applied on a consistent basis and shall be calculated (without duplication)
with respect to the four fiscal quarters ending on or most recently ended prior to the date of
determination thereof.



4









 





     “Consolidated EBITDA” shall mean, on any date of determination, Consolidated Net Income
(whether income or loss) for such period, plus the sum, without duplication, of (a) Consolidated
Interest Expense, (b) depreciation and amortization expenses or charges, and (c) all income taxes
to any government or governmental instrumentality expensed on the Company’s and any Subsidiaries
books (whether paid or accrued), minus all extraordinary or unusual gains, in each case, determined
on a Consolidated basis for the Company and its Subsidiaries in accordance with Generally Accepted
Accounting Principles applied on a consistent basis. All of the foregoing categories shall be
calculated (without duplication) over the four fiscal quarters ending on or most recently ended
prior to the date of determination thereof.



     “Consolidated Interest Expense” shall mean the Consolidated interest expense of the Company
and its Subsidiaries, determined in accordance with Generally Accepted Accounting Principles,
applied on a consistent basis.



     “Consolidated Leverage Ratio” shall mean the ratio of Consolidated Unsubordinated Liabilities
to Consolidated Capital Base.



     “Consolidated Liquidity Ratio” shall mean the ratio of (a) the sum of (i) Consolidated
Unrestricted Cash plus (ii) Consolidated Net Accounts Receivables to (b) the sum of,
without duplication, (i) Consolidated Current Portion of Long Term Debt plus (ii) the
Aggregate Letters of Credit Outstanding, other than cash secured letters of credit, plus
(iii) Consolidated current liabilities, all as determined for the Company and its Subsidiaries on a
Consolidated basis in accordance with Generally Accepted Accounting Principles, applied on a
consistent basis.



     “Consolidated Net Accounts Receivable” shall mean, any and all rights to payment for goods
sold or leased or for services rendered, including accounts, contract rights, general intangibles
and any such right evidenced by chattel paper, instruments or documents, minus any reserves held by
the Company or any its Subsidiaries in connection with such accounts receivable (including reserves
for bad debts), all determined with respect to the Company and its Subsidiaries, on a Consolidated
basis in accordance with Generally Accepted Accounting Principles, applied on a consistent basis.



     “Consolidated Net Income” shall mean, for any period, the net income (or net loss) of the
Company and its Subsidiaries on a Consolidated basis for such period determined in accordance with
Generally Accepted Accounting Principles applied on a consistent basis.



     “Consolidated Subordinated Indebtedness” shall mean the Consolidated Subordinated Indebtedness
of the Company and its Subsidiaries, determined in accordance with Generally Accepted Accounting
Principles, applied on a consistent basis.



     “Consolidated Total Liabilities” shall mean all of the liabilities of the Company and its
Subsidiaries, on a Consolidated basis, including all items which, in accordance with Generally
Accepted Accounting Principles would be included on the liability side of the balance sheet
determined in accordance with Generally Accepted Accounting Principles applied on a consistent
basis.



     “Consolidated Unrestricted Cash” shall mean all cash and cash equivalents of the Company and
its Subsidiaries, on a Consolidated basis, held at the Bank or any Affiliate of the



5









 







Bank which is not subject to any restriction on usage or subject to any Lien other than a Lien
in favor of the Bank or such Affiliate.



     “Consolidated Unsubordinated Liabilities” shall mean for the Company and its Subsidiaries,
Consolidated Total Liabilities less Consolidated Subordinated Indebtedness, all as
determined in accordance with Generally Accepted Accounting Principles.



     “Debt Issuance” means the incurrence, issuance or sale by the Company or any of its
Subsidiaries of any Indebtedness (including, without limitation, any debt securities, whether in a
public offering of such securities or otherwise), including, without limitation, any Subordinated
Debt, but excluding issuance of any Indebtedness permitted under Section 7.02(a) through
(e).



     “Default” shall mean any event or condition which upon notice, lapse of time, or both, would
constitute an Event of Default.



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



     “Domestic Subsidiary” shall mean any Subsidiary of the Company or any Guarantor organized
under the laws of any state of the United States of America.



     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time
to time. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and
any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted
therefore.



     “ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA) which together
with the Company or any Guarantor would be deemed to be a member of the same “controlled group”
within the meaning of Section 414(b), (c), (m) and (o) of the Code.



     “Equity Issuance” means the issuance, sale or other disposition by the Company or any of its
Subsidiaries of any of its shares of capital stock of (or other ownership or profit interests in)
such Person, and any rights, warrants or options to purchase or acquire any shares of such equity
interest or any other security or instrument representing, convertible into or exchangeable for any
equity interests in the Company or any of its Subsidiaries.



     “Eurocurrency Reserve Requirement” shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number one minus the
aggregate (without duplication) of the rates (expressed as a decimal) of reserve requirements in
effect on such day (including, without limitation, basic, supplemental, marginal and emergency
reserves, under any regulations of the Board of Governors of the Federal Reserve System or any
other governmental authority having jurisdiction with respect thereto) as from time to time in
effect, dealing with reserve requirements prescribed for eurocurrency funding (currently referred
to as “eurocurrency liabilities” in Regulation D) maintained by the Bank. For purposes hereof each
Libor Rate Loan shall be deemed to constitute a “eurocurrency liability” as defined in Regulation
D, and subject to the reserve requirements of “Regulation D,” without benefit of credit or
proration, exemptions or offsets which might otherwise be available to the Bank from time to time
under Regulation D.



6









 





     “Event of Default” shall mean any Event of Default set forth in Article VIII.



     “Executive Officer” shall mean any of the Chief Executive Office, the President, or the Chief
Financial Officer of the Company or any Guarantor, as applicable, and their respective successors,
if any, designated by the Board of Directors of the Company or such Guarantor.



     “Existing Letters of Credit” shall mean those certain Letters of Credit described on Schedule
V hereto.



     “Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal
fund brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Bank from three Federal fund brokers of
recognized standing selected by the Bank.



     “First-Tier Subsidiary” shall mean, with respect to any Person, a Subsidiary of such Person
that is directly owned by such Person.



     “Fiscal Quarter” shall mean the fiscal quarter of the Company, which will be the fiscal
quarters ending as of March 31, September 30 and December 31 in each year.



     “Fiscal Year” shall mean the fiscal year of the Company, which will be the period commencing
July 1 of any calendar year and ending on June 30 of the following calendar year.



     “Globecomm Maryland” shall mean Globecomm Services Maryland LLC, a Delaware limited liability
company.



     “Governmental Authority” shall mean any nation or government, any state, province, city or
municipal entity or other political subdivision thereof, and any governmental, executive,
legislative, judicial, administrative or regulatory agency, department, authority, instrumentality,
commission, board or similar body, whether federal, state, provincial, territorial, local or
foreign.



     “Guarantors” shall mean, collectively, Globecomm Network Services Corporation, a Delaware
corporation, GSI Properties, Inc., a New York corporation, Globecomm Maryland, Turbo, Cachendo,
LLC, a Delaware limited liability company, and each Domestic Subsidiary which, from time to time,
is required to execute a Guaranty in accordance with Section 6.10.



     “Guaranty” shall mean the Guaranty of All Liability, substantially in the form attached hereto
as Exhibit C, to be executed and delivered on the Closing Date by each Guarantor, as such
Guaranty may be further amended to add any Domestic Subsidiary required to become a guarantor
thereunder pursuant to Section 6.10 hereof , as same may be amended, restated, supplemented or
modified, from time to time.



     “Hazardous Materials” includes, without limit, any flammable explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or related
materials defined in the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials



7









 







Transportation Act, as amended (49) U.S.C. Sections 1801, et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 9601, et
seq.), and in the regulations adopted and publications promulgated pursuant thereto, or any
other federal, state or local environmental law, ordinance, rule or regulation.



     “Hedging Agreement” means any interest rate swap, collar, cap, floor or forward rate agreement
or other agreement regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Company or any Guarantor, and any confirming letter
executed pursuant to such agreement, all as amended, supplemented, restated or otherwise modified
from time to time.



     “Indebtedness” shall mean, without duplication, as to any Person (a) indebtedness for borrowed
money; (b) indebtedness for the deferred purchase price of property or services; (c) indebtedness
evidenced by bonds, debentures, notes or other similar instruments; (d) obligations and liabilities
secured by a Lien upon property owned by such Person, whether or not owing by such Person and even
though such Person has not assumed or become liable for the payment thereof; (e) obligations and
liabilities directly or indirectly guaranteed by such Person; (f) obligations or liabilities
created or arising under any conditional sales contract or other title retention agreement with
respect to property used and/or acquired by such Person; (g) obligations of such Person as lessee
under Capital Leases; (h) net liabilities of such Person under Hedging Agreements and foreign
currency exchange agreements, as calculated on a basis reasonably satisfactory to the Bank and in
accordance with commercially accepted practice; (i) all obligations of such Person in respect of
bankers’ acceptances; (j) all obligations, contingent or otherwise of such Person as an account
party in respect of letters of credit; and (k) all liabilities which would be reflected on a
balance sheet of such Person, prepared in accordance with Generally Accepted Accounting Principles.



     “Interest Payment Date” shall mean (a) as to any Alternate Base Rate Loan, the first day of
each calendar month, commencing April 1, 2009, (b) as to any Libor Rate Loan, at the option of the
Bank, (i) the first day of each calendar month, commencing April 1, 2009, and on the last day of
the Interest Period applicable thereto or (ii) the last day of the Interest Period applicable
thereto, and (c) the date the Term Loan is otherwise paid in full or in part.



     “Interest Period” shall mean with (I) with respect to any Libor Rate Loan:



     (a) initially, the period commencing on the date such Libor Rate Loan is made and ending one,
two or three months thereafter, as selected by the Company in its notice of borrowing as provided
in Section 2.01(b), or in its notice of conversion as provided in Section 3.01(f); and



     (b) thereafter, each period commencing on the last day of the next preceding Interest Period
applicable to such Libor Rate Loan and ending one, two or three months thereafter, as selected by
the Company by irrevocable written notice to the Bank not later than 11:00 a.m. three Business Days
prior to the last day of the then current Interest Period with respect to such Libor Rate Loan;
provided, however, that all of the foregoing provisions relating to Interest Periods are subject to
the following:




     (i) if any Interest Period pertaining to a Libor Rate Loan would otherwise



8









 







end on a day which is not a Business Day, the Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such Interest Period shall end on
the immediately preceding Business Day;




     (ii) if the Company shall fail to give notice as provided in clause (b) above, the
Company shall be deemed to have requested conversion of the affected Libor Rate Loan to an
Alternate Base Rate Loan on the last day of the then current Interest Period with respect
thereto;




     (iii) 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 a calendar month;




     (iv) no more than four (4) Interest Periods may exist at any one time; and




     (v) the Company shall select Interest Periods so as not to require a payment or
prepayment of any Libor Rate Loan during an Interest Period for such Libor Rate Loan.



     “Letter of Credit” shall mean any Commercial Letter of Credit or Standby Letter of Credit
issued by the Bank for the account of a Letter of Credit Party, or any of them, pursuant to the
terms of this Agreement.



     “Letter of Credit Party” shall mean the Company or any Guarantor.



     “Libor Rate Loan” shall mean Loans at such time as they are made and/or being maintained at a
rate of interest based upon Reserve Adjusted Libor.



     “Lien” shall mean any lien (statutory or otherwise), security interest, mortgage, deed of
trust, pledge, charge, conditional sale, title retention agreement, Capital Lease or other
encumbrance or similar right of others, or any agreement to give any of the foregoing.



     “Loan Documents” shall mean, collectively, this Agreement, the Notes, the Guaranty, Security
Documents, and each other agreement executed in connection with the transactions contemplated
hereby or thereby.



     “Loans” shall mean, collectively, the Revolving Credit Loans and the Term Loans.



     “Material Adverse Effect” shall mean a material adverse effect on (a) the business,
operations, properties or condition (financial or otherwise) of the Company or any Guarantor, or
(b) the ability of the Company or any Guarantor to perform any of their respective material
obligations under any Loan Document to which they are a party.



     “Material Contract” shall mean, with respect to any Person, each contract, instrument or
agreement to which such Person is a party which is not entered into in the ordinary course of such
Person’s business and which is material to the business, operations, properties or condition
(financial or otherwise) of such Person.



9









 





     “Non-Domestic Person” shall mean any Person which is not organized under the laws of any state
of the United States of America.



     “Non-Domestic Subsidiary” shall mean any Subsidiary of the Company or any Guarantor which is
not a Domestic Subsidiary.



     “Notes” shall mean, collectively, the Revolving Credit Note and the Term Loan Notes. “Note”
shall mean the Revolving Credit Note and each Term Loan Note individually.



     “Obligations” shall mean all obligations, liabilities and indebtedness of the Company to the
Bank, whether now existing or hereafter created, absolute or contingent, direct or indirect, due or
not, whether created directly or acquired by assignment or otherwise, arising under or in
connection with this Agreement and the other Loan Documents, including, without limitation, all
obligations, liabilities and indebtedness of the Company with respect to the principal of and
interest on the Loans, reimbursement of Letters of Credit, obligations under any Hedging Agreement
and foreign currency exchange agreements relating to the Indebtedness of the Company arising under
this Agreement, and the payment and performance of all other obligations, liabilities, and
indebtedness of the Company to the Bank hereunder (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of the United States
Bankruptcy Code, and interest that but for the filing of a petition in bankruptcy with respect to
the Company, would accrue on such obligations, whether or not a claim is allowed against the
Company for such interest in the related bankruptcy proceeding), under the Notes or with respect to
the Loans, including without limitation all fees, costs, expenses and indemnity obligations
hereunder. Notwithstanding anything to the contrary, the term Obligations when used in the
Guaranty and the Security Documents shall include each Letter of Credit Party’s reimbursement
obligations with respect to all Letters of Credit.



     “Officer’s Certificate” shall mean a certificate signed by an Executive Officer of the
Company.



     “Payment Office” shall mean the Bank’s office located at 730 Veterans Memorial Highway,
Hauppauge, New York 11788, Attention: Relationship Officer — Globecomm Systems Inc. or such other
office hereinafter designated by the Bank as its Payment Office.



     “PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section
4002 of ERISA, or any successor thereto.



     “Permitted Acquisition” shall mean any acquisition (whether by merger or otherwise) by the
Company or any Guarantor of more than 50% of the outstanding capital stock, membership interests,
partnership interests or other similar ownership interests of a Person which is engaged in a line
of business similar to the business (or reasonable extensions thereof) of the Company or such
Guarantor or the purchase of all or substantially all of the assets owned by such Person or the
purchase of a division, business unit or product line of a Person; provided (a) the Bank shall have
received, simultaneously with the closing of such Permitted Acquisition, those documents required
to be delivered pursuant to Section 6.10 hereof; (b) the Bank shall have received evidence
reasonably satisfactory to it that the shares or other interests in the Person, or the assets of
the Person, which is the subject of the Permitted Acquisition are, or will be promptly following
the closing of such Permitted Acquisition, free and clear of all Liens, except Permitted



10









 







Liens, including, without limitation, with respect to the acquisition of shares or other
equity interests, free of any restrictions on transfer other than restrictions applicable to the
sale of securities under federal and state securities laws and regulations generally; (c) the Bank
shall have received not less than five (5) Business Days preceding the closing of such Permitted
Acquisition, the documentation governing the proposed acquisition, including, without limitation,
the purchase agreement with respect thereto, together with such other additional documentation or
information with respect to the proposed acquisition as the Bank may reasonably require; (d) no
Default or Event of Default shall have occurred and be continuing immediately prior to or would
occur after giving effect to the Acquisition on a pro forma basis and the Bank
shall have received projections and pro forma financial statements showing that no Default or Event
of Default shall have occurred after giving effect to such acquisition; (e) the acquisition has
either (i) been approved by the Board of Directors or other governing body of the Person which is
the subject of the acquisition or (ii) been recommended for approval by the Board of Directors or
other governing body of such Person to the shareholders or other members of such Person and
subsequently approved by the shareholders or such members if shareholder or such member approval is
required under applicable law or the by-laws, certificate of incorporation or other governing
instruments of such Person; (f) prior to the closing of any such acquisition, the Company shall
have delivered evidence to the Bank that, on a pro forma basis, (i) the Company
will be in compliance with the financial condition covenants of Section 7.13 hereof upon completion
of such Acquisition; (g) evidence that the Person that is the subject of such Permitted Acquisition
does not have a negative EBITDA, as calculated on a rolling four-quarter basis, (h) the aggregate
purchase price (excluding consideration consisting of the Company’s common stock) paid in
connection with all Permitted Acquisitions during the term of this Agreement shall not exceed the
Term Loan Commitment; and (i) not more than two (2) Permitted Acquisitions may be consummated prior
to the Term Loan Commitment Expiration Date, of which only one (1) Permitted Acquisition may
involve the acquisition of ownership interests of a Non-Domestic Person or the purchase of all or
substantially all of the assets owned by such Non-Domestic Person.



     “Permitted Liens” shall mean those Liens described in Section 7.01 hereof.



     “Permitted Investments” shall mean (i) direct obligations of the United States of America or
any governmental agency thereof, provided that such obligations mature within one year from the
date of acquisition thereof; (ii) dollar denominated certificates of time deposit maturing within
one year issued by any commercial bank organized and existing under the laws of the United Sates or
any state thereof and having aggregate capital and surplus in excess of $1,000,000,000; (iii)
money market mutual funds having assets in excess of $2,500,000,000; or (iv) commercial paper rated
not less than P-1 or A-1 or their equivalent by Moody’s Investor Services, Inc. or Standard &
Poor’s Rating Group, respectively.



     “Person” shall mean any natural person, corporation, limited liability company, limited
liability partnership, business trust, joint venture, association, company, partnership or
Governmental Authority.



     “Plan” shall mean any multi-employer or single-employer plan defined in Section 4001 of ERISA,
which is maintained, or at any time during the five calendar years preceding the date of this
Agreement was maintained for employees of the Company, any Guarantor or an ERISA Affiliate.



11









 





     “Pledge Agreements” shall mean, collectively, those Pledge Agreements, substantially in the
form attached hereto as Exhibit D, which may be hereinafter executed and delivered by the
Company or a Guarantor with respect to any Non-Domestic Subsidiaries in accordance with Section
6.10 hereof, as same may hereafter be amended, restated, supplemented or otherwise modified, from
time to time.



     “Prime Rate” shall mean the rate per annum publicly announced by the Bank from time to time as
its prime rate in effect at its principal office, each change in the Prime Rate shall be effective
on the date such change is announced to become effective.



     “Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System
as the same may be amended or supplemented from time to time.



     “Reportable Event” shall mean an event described in Section 4043(b) of ERISA with respect to a
Plan as to which the 30 day notice requirement has not been waived by the PBGC.



     “Reserve Adjusted Libor” shall mean with respect to the Interest Period pertaining to a Libor
Rate Loan, a rate per annum equal to the product (rounded upwards to the next higher 1/16 of one
percent) of (a) the annual rate of interest at which Dollar deposits of an amount equal to the
amount of the portion of the proposed Libor Rate Loan and for a period equal to the Interest Period
applicable thereto which appears on Telerate Page 3750 at approximately 11:00 A.M. (London time) on
the second Business Day prior to the commencement of such Interest Period, multiplied by (b) the
Eurocurrency Reserve Requirement.



     If the rate described in clause (a) above does not appear on the Telerate system on any
applicable interest determination date, then the rate described in clause (a) shall be determined
by reference to the rate for deposits in Dollars of an amount equal to the amount of the proposed
Libor Rate Loan for a period substantially equal to the Interest Period on the Reuters Page “LIBO”
(or such other page as may replace the LIBO Page on that service for the purpose of displaying such
rates), as of 11:00 a.m. (London Time) on the date that is three Business Days prior to the
beginning of such Interest Period.



     If both the Telerate and Reuters system are unavailable, then the rate described in clause (a)
for that date will be determined on the basis of the offered rates for deposits in U.S. dollars for
a period of time comparable to such applicable Interest Period which are offered by four major
banks selected by the Bank in the London interbank market at approximately 11:00 a.m. (London time)
on the day that is three Business Days preceding the first day of such Interest Period. The
principal London office of each of the four major banks will be requested to provide a quotation of
its U.S. dollar deposit offered rate. If at least two such quotations are provided, the rate
described in clause (a) for that date will be the arithmetic mean of the quotations. If fewer than
two quotations are provided as requested, the rate described in clause (a) for that date will be
determined on the basis of the rates quoted for loans in U.S. dollars to leading European banks for
a period of time comparable to such Interest Period offered by major banks in New York, New York at
approximately 11:00 a.m. (New York, New York time) on the day that is three Business Days preceding
the first day of such Interest Period. In the event that the Bank is unable to obtain any such
quotation as provided above, it will be deemed that Reserve Adjusted Libor pursuant to a Libor Rate
Loan cannot be determined.



12









 





     “Revolving Credit Commitment” shall mean the obligation of the Bank to make Revolving Credit
Loans to the Company in an aggregate amount not to exceed $7,500,000.



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



     “Revolving Credit Commitment Termination Date” shall mean the earlier of (a) the Term Loan
Commitment Expiration Date and (b) March 9, 2010.



     “Revolving Credit Loans” shall have the meaning set forth in Section 2.01 hereof.



     “Revolving Credit Note” shall have the meaning set forth in Section 2.02 hereof.



     “SBLC Rate” shall mean the percentage set forth below opposite the average daily balance of
cash and cash equivalents maintained in money market and certificates of deposit with the Bank
during the applicable fiscal quarter:



	 	 	 	 	 
	Amount of Cash and Cash Equivalents	 	SBLC Rate
	Less than $5,000,000
	 	 	1.75	%
	Greater than or equal to $5,000,000, but less than $35,000,000
	 	 	1.50	%
	Greater than or equal to $35,000,000
	 	 	1.25	%






     “Security Agreements” shall mean, collectively, the General Security Agreement, substantially
in the form attached hereto as Exhibit E, to be executed and delivered on the Closing Date
by the Company and each Guarantor and, thereafter, by each Person who may be required to execute
the same pursuant to Section 6.10 hereof, as same may be amended, restated, supplemented or
otherwise modified, from time to time.



     “Security Documents” shall mean the Security Agreements, the Pledge Agreements, and each other
collateral security document delivered to the Bank hereunder.



     “Solvent” shall mean with respect to the Company or a Guarantor, as applicable, as of the date
of determination thereof that (i) the amount of the “present fair saleable value” of the assets of
such Person (including goodwill) will, as of such date, exceed the amount of all “liabilities of
such Person, contingent or otherwise,” as of such date, as such quoted terms are determined in
accordance with applicable federal and state laws governing determinations of the insolvency of
debtors, (ii) the present fair saleable value of the assets of such Person (including goodwill)
will, as of such date, be greater than the amount that will be required on its debts as such debts
become absolute and matured, (iii) such Person will not have as of such date, an unreasonably small
amount of capital with which to conduct its business, and (iv) such Person will be able to pay its
debts as they mature.



     “Standby Letter of Credit” shall mean any letter of credit issued to support an obligation



13









 







of a Person and which may be drawn on only upon the failure of such Person to perform such
obligation or other contingency.



     “Standby Letter of Credit Commitment” shall mean the obligation of the Bank to issue Standby
Letters of Credit on the terms herein described in an aggregate amount up to $30,000,000.



     “Subordinated Debt” or “Subordinated Indebtedness” shall mean all debt which is subordinated
in right of payment to the prior indefeasible payment in full of the Obligations of the Company
and/or any Guarantor to the Bank, on terms reasonably satisfactory to and approved in writing by
the Bank.



     “Subsidiaries” shall mean with respect to any Person any corporation, association or other
business entity more than 50% of the voting stock or other ownership interest of which is at the
time owned or controlled, directly or indirectly, by such Person or one or more of its Subsidiaries
or a combination thereof.



     “Telerate Page 3750” shall mean the display designated as “Page 3750” on the Associated
Press-Dow Jones Telerate Service (or such other page as may replace Page 3750 on the Associated
Press-Dow Jones Telerate Service or such other service as may be nominated by the British Bankers’
Association as the information vendor for the purpose of displaying British Bankers’ Association
interest settlement rates for Dollar deposits). Each Reserve Adjusted Libor rate based on the rate
displayed on Telerate Page 3750 shall be subject to corrections, if any, made in such rate and
displayed by the Associated Press-Dow Jones Telerate Service within one hour of the time when such
rate is first displayed by such service.



     “Term Loan” shall have the meaning set forth in Section 2.03.



     “Term Loan Commitment” shall mean the Bank’s obligation to make Term Loans on or prior to the
Term Loan Commitment Expiration Date in an amount not to exceed $25,000,000.



     “Term Loan Commitment Expiration Date” shall mean shall mean the earlier of (a) the Revolving
Credit Commitment Termination Date and (b) March 9, 2010.



     “Term Loan Maturity Date” shall mean, with respect to any Term Loan, a period not to exceed
five years from the applicable Borrowing Date as selected by the Company in its notice of
borrowing.



     “Term Loan Notes” shall have the meaning set forth in Section 2.04.



     “Total Credit Commitment” shall mean $50,000,000.



     “Turbo” shall mean Turbo Logic Associates, LLC, a Delaware limited liability company.



     “Type” shall mean as to any Loan its status as an Alternate Base Rate Loan or a Libor Rate
Loan.



14









 





     “Unfunded Current Liability” of any Plan shall mean the amount, if any, by which the present
value of the accrued benefits under the Plan as of the close of its most recent plan year exceeds
the fair market value of the assets allocable thereto, determined in accordance with Section 412 of
the Code.



     SECTION 1.02. Accounting Terms. Except as otherwise herein specifically provided,
each accounting term used herein shall have the meaning given to it under Generally Accepted
Accounting Principles. “Generally Accepted Accounting Principles” or “GAAP” shall mean those
generally accepted accounting principles and practices which are recognized as such by the
American Institute of Certified Public Accountants acting through the Financial Accounting
Standards Board (“FASB”) or through other appropriate boards or committees thereof and which are
consistently applied for all periods so as to properly reflect the Consolidated financial
condition, and the Consolidated results of operations and cash flows of the Company and its
Subsidiaries except that any accounting principle or practice required to be changed by the FASB
(or other appropriate board or committee of the FASB) in order to continue as a generally accepted
accounting principle or practice may be so changed. Any dispute or disagreement between the
Company and the Bank relating to the determination of Generally Accepted Accounting Principles
shall, in the absence of manifest error, be conclusively resolved for all purposes hereof by the
written opinion with respect thereto, delivered to the Bank, of nationally recognized independent
certified public accountants selected by the Company and reasonably acceptable to the Bank for the
purpose of auditing the periodic Consolidated financial statements of the Company and its
Subsidiaries.



ARTICLE II

LOANS




     SECTION 2.01. Revolving Credit Loans. (a) Subject to the terms and conditions, and
relying upon the representations and warranties, set forth herein, the Bank agrees to make loans
(individually a “Revolving Credit Loan” and, collectively, the “Revolving Credit Loans”) to the
Company at any time or from time to time on or after the date hereof and until the Revolving Credit
Commitment Termination Date in an aggregate principal amount at any time outstanding not in excess
of the Revolving Credit Commitment, provided, however, that no Revolving Credit
Loan shall be made if, after giving effect to such Revolving Credit Loan, the Aggregate
Outstandings would exceed the Total Credit Commitment in effect at such time. During the Revolving
Credit Commitment Period, the Company may from time to time borrow, repay and reborrow hereunder on
or after the date hereof and prior to the Revolving Credit Commitment Termination Date, subject to
the terms, provisions and limitations set forth herein. The Revolving Credit Loans may be (i)
Libor Rate Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof.



          (b) The initial Revolving Credit Loan made by the Bank shall be made against delivery to the
Bank of the Revolving Credit Note, payable to the order of the Bank, as referred to in Section 2.02
hereof. The Bank will make available each requested Revolving Credit Loan to the Company by
crediting the proceeds thereof into an account of the Company at the Payment Office on the date and
in the amount set forth in the applicable notice of borrowing.




          (c) The Company shall give the Bank irrevocable written notice (or telephonic notice promptly
confirmed in writing) not later than 12:00 noon, New York, New York time, three Business Days prior
to the date of each proposed Libor Rate Loan under this Section 2.01





15









 







or prior to 12:00 noon New York, New York time on the date of each proposed Alternate Base
Rate Loan under this Section 2.01. Such notice shall be irrevocable and shall specify (i) the
amount and Type of the proposed borrowing, (ii) the proposed use of the loan proceeds, (iii) the
initial Interest Period if a Libor Rate Loan, and (iv) the proposed Borrowing Date. Except for
borrowings which utilize the full remaining amount of the Revolving Credit Commitment, each
borrowing of an Alternate Base Rate Loan shall be in an amount not less than $200,000 or, whole
multiples of $100,000 in excess thereof. Each borrowing of a Libor Rate Loan shall be in an amount
not less than $500,000 or whole multiples of $100,000 in excess thereof.




          (d) The Company shall have the right, upon not less than three Business Days’ prior written
notice to the Bank, to terminate the Revolving Credit Commitment or from time to time to
permanently reduce the amount of the Revolving Credit Commitment; provided, however, that no such
termination or reduction shall be permitted if, after giving effect thereto and to any prepayments
of the Revolving Credit Loans made on the effective date thereof, the aggregate principal amount of
the Revolving Credit Loans outstanding would exceed the Revolving Credit Commitment as then
reduced; provided, further, that any such termination or reduction requiring prepayment of any
Libor Rate Loan shall be made only on the last day of the Interest Period with respect thereto.
Any such reduction shall be in the amount of $500,000 or whole multiples of $100,000 in excess
thereof, and shall reduce permanently the amount of the Revolving Credit Commitment then in effect.




          (e) The Revolving Credit Commitment shall automatically terminate on the Revolving Credit
Commitment Termination Date. Upon such termination, the Company shall immediately repay in full
the principal amount of the Revolving Credit Loans then outstanding, together with all accrued
interest thereon and all other amounts due and payable hereunder.




     SECTION 2.02. Revolving Credit Note. The Revolving Credit Loans made by the Bank shall
be evidenced by the Revolving Credit Note, appropriately completed, duly executed and delivered on
behalf of the Company and payable to the order of the Bank in a principal amount equal to the
Revolving Credit Commitment. The date and amount of each Revolving Credit Loan, the Type and the
date and amount of each payment or prepayment of principal of each Revolving Credit Loan shall be
recorded on the grid schedule annexed to the Revolving Credit Note, and the Company authorizes the
Bank to make such recordation; provided, however, that the failure of the Bank to
set forth each such Revolving Credit Loan, payment and other information on such grid shall not in
any manner affect the obligation of the Company to repay each Revolving Credit Loan made by the
Bank in accordance with the terms of the Revolving Credit Note and this Agreement. The Revolving
Credit Note, the grid schedule and the books and records of the Bank shall constitute conclusive
evidence of the information so recorded absent manifest error. The aggregate unpaid amount of the
Revolving Credit Loans of the Bank at any time shall be the principal amount owing on the Revolving
Credit Note of the Company at such time.



     SECTION 2.03. Term Loans. (a) Subject to the terms and conditions set forth in this
Agreement, the Bank agrees to make up to two (2) loans (individually, a “Term Loan” and,
collectively, the “Term Loans”) to the Company at any time and from time to time during the Term
Loan Commitment Period, in an aggregate principal amount outstanding not to exceed the Term Loan
Commitment, provided, however, that no Term Loan shall be made if, after giving
effect to such Term Loan, the Aggregate Outstandings would exceed the Total Credit



16









 







Commitment in effect at such time, and provided, further, that any Term Loan
made to finance an Acquisition relating to the acquisition of ownership interests of a Non-Domestic
Person or the purchase of all or substantially all of the assets owned by such Non-Domestic Person
or the purchase of a division, business unit or product line of a Non-Domestic Person shall not
exceed $12,500,000. Each borrowing of a Term Loan shall be in a minimum principal amount of
$5,000,000. Availability under the Term Loan Commitment shall be reduced by an amount equal to the
aggregate outstanding principal amount of the Term Loans. The Term Loans may be (i) Libor Rate
Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof.



          (b) The Company shall give the Bank irrevocable written notice (or telephonic notice promptly
confirmed in writing) not later than 12:00 noon, New York, New York time, three Business Days prior
to the date of each proposed Libor Rate Loan under this Section 2.03 or prior to 12:00 noon New
York, New York time on the date of each proposed Alternate Base Rate Loan under this Section 2.03.
Such notice shall be irrevocable and shall specify (i) the amount and Type of the proposed
borrowing, (ii) the initial Interest Period if a Libor Rate Loan, (iii) the proposed Borrowing Date
and the (iv) the proposed Term Loan Maturity Date provided that such date shall not exceed five (5)
years from the Borrowing Date of such Term Loan.




     SECTION 2.04. Term Loan Notes. Each Term Loan to the Company shall be evidenced by a
promissory note of the Company (individually a “Term Loan Note” and, collectively, the
“Term Loan Notes”), substantially in the form attached hereto as Exhibit B, each
appropriately completed, duly executed and delivered on behalf of the Company and payable to the
order of the Bank in a principal amount equal to the amount of such Term Loan advanced on the
applicable Borrowing Date. Each Term Loan Note shall (a) be stated to mature on the applicable
Term Loan Maturity Date, (b) bear interest from the date thereof until paid in full on the unpaid
principal amount thereof from time to time outstanding as provided in Section 3.01 and (c) be
payable in such number of consecutive equal monthly installments so that the amount of such Term
Loan shall be full amortized by the applicable Term Loan Maturity Date and such installments shall
commence on the first day of the month following the Borrowing Date of such Term Loan and on the
first day of each month thereafter, provided that the outstanding principal amount of each Term
Loan shall be due and payable on the applicable Term Loan Maturity Date, together with interest
thereon as of such date. Each Term Loan shall bear interest from the date of funding thereof until
paid in full on the unpaid principal amount thereof from time to time outstanding at the applicable
interest rate per annum specified in Section 3.01. The date and amount of each Term Loan , the
Type and the date and amount of each payment or prepayment of principal of such Term Loan shall be
recorded on a schedule annexed to such Term Loan Note, and the Company authorizes the Bank to make
such recordation; provided, however, that the failure of the Bank to set forth
payments and other information in such grid shall not in any manner affect the obligation of the
Company to repay each Term Loan made by the Bank in accordance with the terms of this Agreement.
Each Term Loan Note, the grid schedule and the books and records of the Bank shall constitute
conclusive evidence of the information so recorded absent manifest error.



     SECTION 2.05. Letters of Credit.



          (a) Generally. Subject to the terms and conditions set forth in this Agreement, upon
the written request of a Letter of Credit Party in accordance herewith, the Bank shall issue, at
any time during the Revolving Credit Commitment Period for the account of such Letter of



17









 







Credit Party, (i) Commercial Letters of Credit, in an aggregate amount not to exceed the
Commercial Letter of Credit Commitment and (ii) Standby Letters of Credit, in an aggregate amount
not to exceed the Standby Letter of Credit Commitment. Notwithstanding the foregoing, no Letter of
Credit shall be issued or created if, after giving effect to the same, Aggregate Outstandings would
exceed the Total Credit Commitment. The Company agrees that it shall be jointly and severally
obligated with any other Letter of Credit Party for all Letters of Credit issued by the Bank
hereunder regardless of whether the Company is the named account party for such Letter of Credit.
Notwithstanding anything contained herein to the contrary, the Bank shall be under no obligation to
issue a Letter of Credit, if any order, judgment or decree of any court, arbitrator or governmental
authority shall purport by its terms to enjoin, restrict or restrain the Bank in any respect
relating to the issuance of such Letter of Credit or a similar letter of credit, or any law, rule,
regulation, policy, guideline or directive (whether or not having the force of law) from any
governmental authority with jurisdiction over the Bank shall prohibit or direct the Bank in any
respect relating to the issuance of such Letter of Credit or similar letter of credit, or shall
impose upon the Bank with respect to any Letter of Credit any restrictions, any reserve or capital
requirement or any loss, cost or expense not reimbursed by the Company and/or the applicable Letter
of Credit Party to the Bank. Each request for issuance of a Letter of Credit shall be in writing
and shall be received by the Bank by no later than 12:00 p.m. on the day which is at least two
Business Days prior to the proposed date of issuance. Such issuance shall occur by no later than
5:00 p.m. on the proposed date of issuance (assuming proper prior notice as aforesaid). Subject to
the terms and conditions contained herein, the expiry dates, the type of Letter of Credit (i.e.,
Commercial Letter of Credit or Standby Letter of Credit), the purpose, the amounts and the
beneficiaries of the Letters of Credit will be as designated by the applicable Letter of Credit
Party. Each Letter of Credit issued by the Bank hereunder shall identify: (i) the dates of
issuance and expiry of such Letter of Credit, (ii) the amount of such Letter of Credit (which shall
be a sum certain, although partial drawings shall be permitted), (iii) the beneficiary and account
party of such Letter of Credit, and (iv) the drafts and other documents necessary to be presented
to the Bank upon drawing thereunder. The Company and each Letter of Credit Party agrees to
execute and deliver to the Bank such further documents and instruments in connection with any
Letter of Credit issued hereunder (including without limitation, applications therefore and the
Bank’s Master Letter of Credit Agreement) as the Bank in accordance with its customary practices
may reasonably request.



          (b) Expiration Date. Each Commercial Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the issuance of such
Commercial Letter of Credit (or, in the case of any renewal or extension thereof, one year after
such renewal or extension) and (ii) the Revolving Credit Commitment Termination Date. Each Standby
Letter of Credit shall expire not later than the close of business on the date four years after the
date of the issuance of such Standby Letter of Credit, provided that if the Letter of Credit Party
so requests in any Letter of Credit application, the Bank may, in its sole and absolute discretion,
agree to issue a Standby Letter of Credit that has an automatic extension provision, as may be
described in the Bank’s Master Letter of Credit Agreement, provided that such Standby Letter of
Credit must permit the Bank to prevent any such extension at least once in each twelve-month period
by giving notice to the beneficiary thereof not later that a day during such twelve-month period to
be agreed upon at the time such Standby Letter of Credit is issued. If this Agreement shall
terminate, whether upon the Revolving Credit Commitment Termination Date or by reason of the
occurrence and continuance of an Event of Default or otherwise, the Company shall either (x)
arrange for any new lender to indemnify the Bank for the



18









 







Aggregate Letters of Credit Oustanding in a manner and pursuant to such documents satisfactory
to the Bank in its sole discretion or (y) deposit in an account with the Bank an amount in cash
equal to the Aggregate Letters of Credit Outstanding as of such date plus any accrued and unpaid
interest thereon. Such deposit shall be held by the Bank as collateral for the payment and
performance of the obligations of the Company under this Agreement. The Bank shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such accounts.



          (c) Drawings Under Letters of Credit. The applicable Letter of Credit Party and the
Company hereby absolutely and unconditionally promise to pay to the Bank on the date of any drawing
under a Letter of Credit, in immediately available funds from its accounts, the amount of such
drawing under such Letter of Credit. If the Company and the applicable Letter of Credit Party so
request by a notice of borrowing delivered to the Bank not later than 12:00 noon (New York, New
York time) on the date of the drawing under a Letter of Credit in accordance with the terms hereof
and if each of the conditions precedent to the making of a Loan set forth in Article V of this
Agreement has been satisfied, on the Business Day on which a drawing under a Letter of Credit
occurs, the amount of such drawing, plus interest thereon, for which the Bank has not been
reimbursed by the Company and/or the relevant Letter of Credit Party, shall become a Revolving
Credit Loan bearing interest at the Alternate Base Rate made by the Bank to the Company on such
day.



          (d) Letter of Credit Obligations Absolute. (i) The obligations of the Company and the
relevant Letter of Credit Party to reimburse the Bank as provided hereunder in respect of drawings
or payments under Letters of Credit shall rank pari passu with the obligations of the
Company to repay the Loans hereunder, shall be absolute and unconditional under any and all
circumstances and shall be secured pro rata with the other Obligations pursuant to the
Security Documents in accordance with the provisions of the Security Documents. Without limiting
the generality of the foregoing, the obligation of the relevant Letter of Credit Party to reimburse
the Bank in respect of drawings under Letters of Credit shall not be subject to any defense based
on the non-application or misapplication by the beneficiary of the proceeds of any such payment or
the legality, validity, regularity or enforceability of the Letters of Credit or any related
document or any dispute between or among the Company and/or the relevant Letter of Credit Party, or
any of them, the beneficiary of any Letter of Credit or any financing institution or other party to
which any Letter of Credit may be transferred. The Bank may accept or pay any draft presented to
it under any Letter of Credit regardless of when drawn and whether or not negotiated, if such
draft, accompanying certificate or documents and any transmittal advice are presented or negotiated
on or before the expiry date of the Letter of Credit or any renewal or extension thereof then in
effect, and conforms to the terms and conditions of such Letter of Credit. Furthermore, neither
the Bank nor any of its correspondents shall be responsible, as to any document presented under a
Letter of Credit which appears to be regular on its face, and appears on its face to conform to the
terms of the Letter of Credit, for the validity or sufficiency of any signature or endorsement, for
delay in giving any notice or failure of any instrument to bear adequate reference to the Letter of
Credit, or for failure of any Person to note the amount of any draft on the reverse of the Letter
of Credit. The Bank shall have the right, in its sole discretion, to decline to accept any
documents and to decline making payment under any Letter of Credit if the documents presented are
not in strict compliance with the terms of such Letter of Credit.



               (ii) Any action, inaction or omission on the part of the Bank or any of its correspondents
under or in connection with any Letter of Credit or the related



19









 







instruments, documents or property, if in good faith and in conformity with such laws,
regulations or commercially reasonable customs as are applicable, shall be binding upon the Company
and the other Letter of Credit Parties and shall not place the Bank or any of its correspondents
under any liability to the Company or any other Letter of Credit Party, or any of them, in the
absence of (i) gross negligence or willful misconduct by the Bank or its correspondents or (ii) the
failure by the Bank to pay under a Letter of Credit after presentation of a draft and documents
strictly complying with such Letter of Credit unless the Bank is prohibited from making such
payment pursuant to a court order. The Bank’s rights, powers, privileges and immunities specified
in or arising under this Agreement are in addition to any heretofore or at any time hereafter
otherwise created or arising, whether by statute or rule of law or contract. All Letters of Credit
issued hereunder will, except to the extent otherwise expressly provided hereunder, be governed by
the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce, Publication No. 500, and any subsequent revisions thereof.



          (e) Existing Letters of Credit. The Company and the Bank agrees that, from and after
the Closing Date, subject to the satisfaction of the conditions precedent to the initial Loans
hereunder as set forth in Article V hereof, the Existing Letters of Credit shall be Letters of
Credit for all purposes under this Agreement.



          (f) Letters of Credit Issued for Guarantors. Notwithstanding that a Letter of Credit
issued or outstanding hereunder is in support of any obligations of, or is for the account of, a
Letter of Credit Party other than the Company, the Company shall be obligated to reimburse the Bank
hereunder for any and all drawings under such Letter of Credit. The Company hereby acknowledges
that the issuance of Letters of Credit for the account of any other Letter of Credit Party inures
to the benefit of the Company, and that the Company’s business derives substantial benefits from
the businesses of such other Letter of Credit Parties.



ARTICLE III

INTEREST RATE; FEES AND PAYMENTS; USE OF PROCEEDS




     SECTION 3.01. Interest Rate.



          (a) Each Alternate Base Rate Loan shall bear interest for the period from the date thereof on
the unpaid principal amount thereof at a fluctuating rate per annum equal to the Alternate Base
Rate plus the Applicable Margin.



          (b) Each Libor Rate Loan shall bear interest for the Interest Period applicable thereto on the
unpaid principal amount thereof at a rate per annum equal to the Reserve Adjusted Libor determined
for each Interest Period thereof in accordance with the terms hereof plus the Applicable Margin.



          (c) Upon the occurrence and during the continuance of an Event of Default the outstanding
principal amount of the Loans (excluding any defaulted payment of principal accruing interest in
accordance with clause (d) below), shall, at the option of the Bank, bear interest payable on
demand at a rate of interest 2% per annum in excess of the interest rate otherwise then in effect
or, if no rate is in effect, 2% per annum in excess of the Alternate Base Rate.



20









 





          (d) If the Company shall default in the payment of the principal of or interest on any portion
of the Loans or any other amount becoming due hereunder, interest, fees, expenses or otherwise, the
Company shall pay interest on such defaulted amount accruing from the date of such default (without
reference to any period of grace) up to and including the date of actual payment (after as well as
before judgment) at a rate of 2% per annum in excess of the rate otherwise in effect or, if no rate
is in effect, 2% per annum in excess of the Alternate Base Rate.



          (e) The Company may elect from time to time to convert all or a portion of an outstanding Loan
from a Libor Rate Loan to a Alternate Base Rate Loan, by giving the Bank at least three Business
Day’s prior irrevocable written notice of such election, provided that any such conversion of Libor
Rate Loans shall only be made on the last day of an Interest Period with respect thereto. The
Company may elect from time to time to convert the outstanding Loan from an Alternate Base Rate
Loan to a Libor Rate Loan by giving the Bank irrevocable written notice of such election not later
than 11:00 a.m. (New York, New York time), three Business Days prior to the date of the proposed
conversion, with respect to a Libor Rate Loan. All or any part of outstanding Alternate Base Rate
Loans may be converted as provided herein, provided that each conversion shall be in a principal
amount of $500,000 or whole multiples of $500,000 in excess thereof, with respect to Revolving
Credit Loans, or $1,000,000 or whole multiples of $1,000,000 in excess thereof, with respect to
Term Loans, and further provided that no Default or Event of Default shall have occurred and be
continuing. Any conversion to or from any Libor Rate Loans hereunder shall be in such amounts and
be made pursuant to such elections so that, after giving effect thereto, the aggregate principal
amount of all Libor Rate Loans which are (x) Revolving Credit Loan, having the same Interest Period
shall not be less than $500,000 and (y) Term Loans, having the same Interest Period shall not be
less than $1,000,000.



          (f) Any Libor Rate Loan in a minimum principal amount of $500,000, with respect to a Revolving
Credit Loan, or $1,000,000, with respect to a Term Loan, may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by the Company with the notice
provisions contained in the definition of Interest Period; provided, that no Libor Rate Loan may be
continued as such when any Default or Event of Default has occurred and is continuing, but shall be
automatically converted to an Alternate Base Rate Loan on the last day of the Interest Period in
effect when the Bank is notified, or otherwise has actual knowledge, of such Default or Event of
Default.



          (g) If the Company shall fail to select the duration of any Interest Period for any Libor Rate
Loan in accordance with the definition of “Interest Period” set forth in Section 1.01, the Company
shall be deemed to have selected an Interest Period of one month.



          (h) No Loan may be funded as a Libor Rate Loan, or converted to or continued as a Libor Rate
Loan, with an Interest Period that extends beyond the Term Loan Maturity Date, with respect to a
Term Loan or the Revolving Credit Commitment Termination Date, with respect to the Revolving Loans.



          (i) Anything in this Agreement or in any Note to the contrary notwithstanding, the obligation
of the Company to make payments of interest shall be subject to the limitation that payments of
interest shall not be required to be paid to the Bank to the extent that the charging or receipt
thereof would not be permissible under the law or laws applicable to the Bank limiting the rates of
interest that may be charged or collected by the Bank. In each such event payments of interest
required to be paid to the Bank shall be calculated at the highest rate



21









 







permitted by applicable law until such time as the rates of interest required hereunder may
lawfully be charged and collected by the Bank. If the provisions of this Agreement or any Note
would at any time otherwise require payment by the Company to the Bank of any amount of interest in
excess of the maximum amount then permitted by applicable law, the interest payments to the Bank
shall be reduced to the extent necessary so that the Bank shall not receive interest in excess of
such maximum amount. To the extent that, pursuant to the foregoing sentence, the Bank shall
receive interest payments hereunder or under any Note in an amount less than the amount otherwise
provided herein or in any Note, such deficit (hereinafter called the “Interest Deficit”) will
accumulate and will be carried forward (without interest) until the termination of this Agreement.
Interest otherwise payable to the Bank hereunder and under any Note for any subsequent period shall
be increased by such maximum amount of the Interest Deficit that may be so added without causing
the Bank to receive interest in excess of the maximum amount then permitted by applicable law.



          (j) Interest on each Loan shall be payable in arrears on each Interest Payment Date and shall
be calculated on the basis year of 360 days and shall be payable for the actual days elapsed. Any
rate of interest on the Loans or other Obligations which is computed on the basis of the Alternate
Base Rate shall change when and as the Alternate Base Rate changes in accordance with the
definition thereof. Each determination by the Bank of an interest rate or fee hereunder shall,
absent manifest error, be conclusive and binding for all purposes.



     SECTION 3.02. Use of Proceeds. The proceeds of the Revolving Credit Loans shall be
solely used to finance the working capital needs and general corporate purposes of the Company in
the ordinary course of business. The proceeds of the Term Loans shall be used by the Company to
finance up to ninety percent (90%) of the purchase price to be paid by the Company in connection
with a Permitted Acquisition. Letters of Credit shall be issued by the Bank for the account of the
applicable Letter of Credit Party and shall be issued for purposes in connection with, and in the
ordinary course of, the business of such Letter of Credit Party consistent with historical purposes
of such Letter of Credit Party prior to the date hereof.



     SECTION 3.03. Prepayments.



          (a) Voluntary. The Company may at any time and from time to time prepay the then
outstanding portion of a Term Loan, in whole or in part, without premium or penalty, except as
provided in Section 3.08 hereof, upon written notice to the Bank (or telephonic notice promptly
confirmed in writing) not later than 11:00 a.m. New York, New York time, three Business Days before
the date of prepayment with respect to prepayments of Libor Rate Loans, or 11:00 a.m. New York, New
York time on the proposed date of prepayment with respect to Alternate Base Rate Loans. Each
notice shall be irrevocable and shall specify the date and amount of prepayment and whether such
prepayment is of Libor Rate Loans or Alternate Base Rate Loans or a combination thereof, and if a
combination thereof, the amount of prepayment allocable to each. If such notice is given, the
Company shall make such prepayment, and the amount specified in such notice shall be due and
payable, on the date specified therein. Each partial prepayment pursuant to this Section 3.03
hereof shall be in a principal amount of (i) $1,000,000 or whole multiples of $1,000,000 in excess
thereof with respect to Libor Rate Loans and (ii) $1,000,000 or whole multiples of $1,000,000 in
excess thereof with respect to Alternate Base Rate Loans. All prepayments shall be accompanied by
accrued interest on the principal amount being prepaid to the date of prepayment.



22









 





          (b) Mandatory. The Company shall apply the net cash proceeds (after costs and
expenses) realized by the Company upon any Debt Issuance or Equity Issuance to prepay the
outstanding Term Loans hereunder. Such net proceeds shall be paid to the Bank promptly upon the
closing of any such Debt Issuance or Equity Issuance and will be applied by the Bank to the
remaining installments of the outstanding Term Loans in the inverse order of maturity. Such
prepayments shall be applied first to the Term Loan having the latest maturity date until paid in
full, and thereafter to the remaining Term Loans in inverse order of their respective maturity
dates.



       All prepayments shall be applied, first to Alternate Base Rate Loans outstanding and second,
to Libor Rate Loans outstanding, in such order as the Bank shall determine in its sole and absolute
discretion. All prepayments shall be accompanied by accrued interest on the principal amount being
prepaid to the date of prepayment. All partial prepayments of the Term Loans shall be applied to
the remaining installments of principal in inverse order of maturity.



     SECTION 3.04. Fees.



          (a) The Company agrees to pay to the Bank a non-refundable upfront fee of $62,500, which fee
shall be payable on the Closing Date.



          (b) The Company shall pay to the Bank a commission with respect to each Standby Letter of
Credit equal to the product of (i) the applicable SBLC Rate on the date of issuance multiplied by
(ii) the face amount of such  Standby Letter of Credit, which commission shall be payable as
follows: twenty five percent (25%) of the aggregate commission shall be payable on the issuance of
such Standby Letter of Credit and twenty five percent (25%) of the aggregate commission shall be
payable on the first day of following three quarterly periods thereafter. The Company shall pay to
the Bank, with respect to each Commercial Letter of Credit 0.25% of the stated amount of such
Commercial Letter of Credit upon its issuance and 0.25% of the amount drawn under such Letter of
Credit or, in the event of termination or expiration, available to be drawn under such Commercial
Letter of Credit. In addition, the Company shall pay to the Bank, on demand, all customary fees
charged by the Bank with respect to the issuance, processing and administration of Letters of
Credit (including, without limitation, amendments, renewals or extensions of letters of credit),
all subject to such standard minimums now or hereinafter in effect.



          (c) Simultaneously with the funding of a Term Loan, the Company agrees to pay to the Bank a
nonrefundable structuring fee equal to one-quarter of one percent (0.25%) of the amount of such
Term Loan.



     SECTION 3.05. Inability to Determine Interest Rate. In the event that the Bank shall
have determined (which determination shall be conclusive and binding upon the Company) that, by
reason of circumstances affecting the London interbank market, adequate and reasonable means do not
exist for ascertaining the Reserve Adjusted Libor applicable pursuant to Section 3.01(b) for any
requested Interest Period with respect to (a) the making of a Libor Rate Loan, (b) a Libor Rate
Loan that will result from the requested conversion of an Alternate Base Rate Loan to a Libor Rate
Loan or a Libor Rate Loan of one type into a Libor Rate Loan of another type, or (c) the
continuation of a Libor Rate Loan beyond the expiration of the then current Interest Period with
respect thereto, the Bank shall forthwith give notice by telephone of such



23









 







determination, promptly confirmed in writing, to the Company of such determination. Until the
Bank notifies the Company that the circumstances giving rise to the suspension described herein no
longer exist (which notification shall be given promptly by the Bank either verbally or in writing
and, if verbally, promptly confirmed in writing,), the Company shall not have the right to request
or continue a Libor Rate Loan or to convert an Alternate Base Rate Loan to a Libor Rate Loan.



     SECTION 3.06. Illegality. Notwithstanding any other provisions herein, if any
introduction of or change in any law, regulation, treaty or directive or in the interpretation or
application thereof shall make it unlawful for the Bank to make or maintain Libor Rate Loans as
contemplated by this Agreement, the Bank shall forthwith give notice by telephone of such
circumstances, promptly confirmed in writing, and (a) the commitment of the Bank to make and to
allow conversion to or continuations of Libor Rate Loans shall forthwith be cancelled for the
duration of such illegality and (b) the Loans then outstanding as Libor Rate Loans, if any, shall
be converted automatically to Alternate Base Rate Loans on the next succeeding last day of each
Interest Period applicable to such Libor Rate Loans or within such earlier period as may be
required by law. The Company shall pay to the Bank, upon demand, any additional amounts required
to be paid pursuant to Section 3.08 hereof.



     SECTION 3.07. Increased Costs.



     (a) In the event that any introduction of or change in, on or after the date hereof, any
applicable law, regulation, treaty, order, directive or in the interpretation or application
thereof (including, without limitation, any request, guideline or policy, whether or not having the
force of law, of or from any central bank or other governmental authority, agency or
instrumentality and including, without limitation, Regulation D), by any authority charged with the
administration or interpretation thereof shall occur, which:




     (i) shall subject the Bank to any tax of any kind whatsoever with respect to this
Agreement, any Note, any Loan, or change the basis of taxation of payments to the Bank of
principal, interest, fees or any other amount payable hereunder (other than any tax that is
measured with respect to the overall net income of the Bank or lending office of the Bank
and that is imposed by the United States of America, or any political subdivision or taxing
authority thereof or therein, or by any jurisdiction in which the Bank’s lending office is
located, or by any jurisdiction in which the Bank is organized, has its principal office or
is managed and controlled); or




     (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory
loan or similar requirement (whether or not having the force of law) against assets held by,
or deposits or other liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of the Bank; or




     (iii) shall impose on the Bank any other condition, or change therein directly relating
to this Agreement, any Note or any Loan; and the result of any of the foregoing is to
increase the cost to the Bank of making, renewing or maintaining or participating in
advances or extensions of credit hereunder or to reduce any amount receivable hereunder, in
each case by an amount which the Bank deems material, then, in



24









 







any such case, the Company shall pay the Bank, upon demand, such additional amount or
amounts as will reimburse the Bank for such increased costs or reduction.



     (b) If the Bank shall have determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in the interpretation
or administration thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by the Bank (or any lending office
of the Bank) or the Bank’s holding company, with any request or directive regarding capital
adequacy (whether or not having the force of the law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return on the Bank’s
capital or on the capital of the Bank’s holding company as a consequence of its obligations
hereunder to a level below that which the Bank could have achieved but for such adoption, change or
compliance (taking into consideration the Bank’s policies and the policies of the Bank’s holding
company with respect to capital adequacy) by an amount deemed by the Bank to be material, then from
time to time, the Company shall pay to the Bank, the additional amount or amounts as will reimburse
the Bank or the Bank’s holding company for such reduction directly relating to this Agreement, any
Note or any Loan. The Bank’s determination of such amounts, upon presentation thereof to the
Company, shall be conclusive and binding on the Company absent manifest error.



     (c) A certificate of the Bank setting forth the basis and calculation of any such
determination, and the amount or amounts payable pursuant to Sections 3.07(a) and 3.07(b) above,
shall be conclusive absent manifest error. The Company shall pay the Bank the amount shown as due
on any such certificate within 10 days after receipt thereof.



     SECTION 3.08. Indemnity. The Company agrees to indemnify the Bank and to hold the
Bank harmless from any loss, cost or expense which the Bank may sustain or incur, including,
without limitation, interest or fees payable by the Bank to lenders of funds obtained by it in
order to maintain Libor Rate Loans hereunder, as a consequence of (a) default by the Company in
payment of the principal amount of or interest on any Libor Rate Loan, (b) default by the Company
to accept or make a borrowing of a Libor Rate Loan or a conversion into or continuation of a Libor
Rate Loan after the Company has requested such borrowing, conversion or continuation, (c) default
by the Company in making any prepayment of any Libor Rate Loan after the Company gives a notice in
accordance with Section 3.03 of this Agreement and/or (d) the making of any payment or prepayment
(whether mandatory or optional) of a Libor Rate Loan or the making of any conversion of a Libor
Rate Loan to an Alternate Base Rate Loan on a day which is not the last day of the applicable
Interest Period with respect thereto. A certificate of the Bank setting forth the basis, the
calculation of any such determination and such amounts shall be conclusive absent manifest error.
The Company shall pay the Bank the amount shown as due on any certificate within ten days after
receipt thereof.



     SECTION 3.09. Taxes. Except as required by law, all payments made by the Company
under this Agreement shall be made free and clear of, and without reduction for or on account of,
any present or future taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding income and franchise taxes imposed on the Bank by (i) the United States of America or any
political subdivision or taxing authority thereof or therein, (ii) the jurisdiction under the laws
of which the Bank is organized or in which it has its principal



25









 







office or is managed and controlled or any political subdivision or taxing authority thereof
or therein, or (iii) any jurisdiction in which the Bank’s lending office is located or any
political subdivision or taxing authority thereof or therein (such non-excluded taxes being called
“Taxes”). If any Taxes are required to be withheld from any amounts payable to the Bank
hereunder, or under any Note, the amount so payable to the Bank shall be increased to the extent
necessary to yield to the Bank (after payment of all Taxes and free and clear of all liability in
respect of such Taxes) interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement and the Notes. Whenever any Taxes are payable by the Company,
as promptly as possible thereafter, the Company shall send to the Bank, as the case may be, a
certified copy of an original official receipt showing payment thereof. If the Company fails to
pay Taxes when due to the appropriate taxing authority or fails to remit to the Bank the required
receipts or other required documentary evidence, the Company shall indemnify the Bank for any
incremental taxes, interest or penalties that may become payable by the Bank as a result of any
such failure together with any actual expenses payable by the Bank in connection therewith.



     SECTION 3.10. Payments. All payments (including prepayments) to be made by the
Company on account of principal, interest, fees and reimbursement obligations shall be made without
set-off or counterclaim and shall be made to the Bank, at the Payment Office of the Bank in Dollars
in immediately available funds not later than 12:00 noon, New York, New York time, on the date on
which they are payable. The Bank may, in its sole discretion, directly charge principal and
interest payments due in respect of the Loans to the Company’s accounts at the Payment Office or
other office of the Bank. Except as otherwise provided in the definition of “Interest Period”, if
any payment hereunder becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such extension.



     SECTION 3.11. Disbursement of Loans. The Bank shall make the Loans available to the
Company at the Payment Office by crediting the account of the Company with such amount and in like
funds.



     SECTION 3.12. Manner of Payment. The Bank may (but shall not be obligated to) debit
any deposit account of the Company with the Bank for the amount of any such payment. The Bank may
in its sole discretion directly charge one or more of the Company’s accounts at the Payment Office
or other office of the Bank for all interest and principal payments due in respect of the Loans and
all fees payable hereunder. Except as otherwise provided in the definition of “Interest Period”,
if any payment hereunder becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such extension.



ARTICLE IV

REPRESENTATIONS AND WARRANTIES




     In order to induce the Bank to enter into this Agreement and to make the Loans herein provided
for, the Company represents and warrants to the Bank that:



     SECTION 4.01. Organization, Corporate Powers, etc. The Company and each



26









 







Guarantor (i) is a corporation duly incorporated, or a limited liability company duly formed,
validly existing and in good standing under the laws of the state of its incorporation or
formation, (ii) has the power and authority to own properties and to carry on its business as now
being conducted, (iii) is duly qualified to do business in every jurisdiction wherein the conduct
of its business or the ownership of its properties are such as to require such qualification, (iv)
has the power to execute and perform each of the Loan Documents to which it is a party, (v) with
respect to the Company, has the power to borrow hereunder and to execute and deliver the Notes, and
(vi) is in compliance with all applicable federal, state and local laws, rules and regulations
except where the failure to be in compliance could not reasonably be expected to have a Material
Adverse Effect.



     SECTION 4.02. Authorization of Borrowing, Enforceable Obligations. The execution,
delivery and performance by the Company of this Agreement, and the other Loan Documents to which it
is a party, the borrowings by the Company hereunder, and the execution, delivery and performance of
each Guarantor of the Loan Documents to which such Guarantor is a party, (a) have been duly
authorized by all requisite corporate or limited liability company action, (b) will not violate or
require any consent under (i) any provision of law applicable to the Company or any Guarantor, any
governmental rule or regulation, or the Certificate of Incorporation, By-laws, or other
organizational documents, as applicable, of the Company or any Guarantor or (ii) any order of any
court or other agency of government binding on the Company or any Guarantor or any indenture,
agreement or other instrument to which the Company or any Guarantor is a party, or by which the
Company or any Guarantor or any of its property is bound, and (c) will not be in conflict with,
result in a breach of or constitute (with due notice and/or lapse of time) a default under, any
such indenture, agreement or other instrument, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the property or assets of the Company or
any Guarantor other than as contemplated by this Agreement or the other Loan Documents. This
Agreement and each other Loan Document to which the Company and each Guarantor is a party,
constitutes a legal, valid and binding obligation of the Company and each Guarantor as the case may
be, enforceable against the Company and each Guarantor, as the case may be, in accordance with its
terms.



     SECTION 4.03. Financial Condition. The Company has heretofore furnished to the Bank
(a) the audited Consolidated balance sheet of Company and its Subsidiaries and the related audited
statements of income, retained earnings and cash flow of Company and its Subsidiaries prepared by
Ernst & Young, LLP, certified accountants, for the fiscal year ended June 30, 2008 and (b) the
unaudited Consolidated balance sheet of the Company and its Subsidiaries and the related unaudited
statements of income, retain earning and cash flow of the Company and its Subsidiaries for the
six-month period ended December 31, 2008 (collectively, the “financial statements”). The financial
statements were prepared in conformity with Generally Accepted Accounting Principles and, to the
Company’s knowledge, fairly present the financial position and results of operations of the Company
and its Subsidiaries as of the date of such financial statements and for the periods to which they
relate and, since the date of such financial statements, no material adverse change in the
business, operations or assets or condition (financial or otherwise) of the Company and its
Subsidiaries has occurred. The Company shall deliver to the Bank a certificate by the Chief
Financial Officer of the Company to that effect on the Closing Date. There are no obligations or
liabilities, contingent or otherwise, of the Company and its Subsidiaries which are not reflected
on such statements other than obligations incurred in the ordinary course of the Company’s business
since the date of such financial



27









 







statements or specifically disclosed elsewhere in this Agreement or any schedule hereto,
subject, however, to normal year-end adjustments with respect to the unaudited financial statements
referred to above.



     SECTION 4.04. Taxes. The Company and each Guarantor has filed or caused to be filed
all federal, state and local tax returns which are required to be filed, and has paid or has caused
to be paid all taxes as shown on said returns or on any assessment received by them, to the extent
that such taxes have become due, except taxes which are being contested in good faith and which are
reserved against in accordance with Generally Accepted Accounting Principles.



     SECTION 4.05. Title to Properties. The Company and each Guarantor has good and
marketable title to their respective properties and assets, except for such properties and assets
as have been disposed of since the date of such financial statements as no longer used or useful in
the conduct of their respective business or as have been disposed of in the ordinary course of
business, and all such properties and assets are free and clear of all Liens, except as permitted
by Section 7.01.



     SECTION 4.06. Litigation.



          (a) There are no actions, suits or proceedings (whether or not purportedly on behalf of the
Company or any Guarantor) pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Guarantor at law or in equity or before or by any Governmental
Authority, which involve any of the transactions contemplated herein or which, if adversely
determined against the Company or such Guarantor, could reasonably be expected to result in a
Material Adverse Effect.



          (b) Neither the Company nor any Guarantor is in default with respect to any judgment, writ,
injunction, decree, rule or regulation of any Governmental Authority, other than as set forth on
Schedule VI hereto.



     SECTION 4.07. Agreements. Neither the Company nor any Guarantor is a party to any
agreement or instrument or subject to any charter or other corporate restriction or any judgment,
order, writ, injunction, decree or regulation which could reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Guarantor is in default in any manner which could have
a Material Adverse Effect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument to which it is a party.



     SECTION 4.08. Compliance with ERISA. Each Plan is in compliance with ERISA; no Plan
is insolvent or in reorganization, no Plan has an Unfunded Current Liability, and no Plan has an
accumulated or waived funding deficiency or permitted decreases in its funding standard account
within the meaning of Section 412 of the Code; neither the Company nor any ERISA Affiliate nor any
Guarantor has incurred any material liability to or on account of a Plan pursuant to Section 515,
4062, 4063, 4064, 4201 or 4204 of ERISA or expects to incur any liability under any of the
foregoing sections on account of the termination of participation in or contributions to any such
Plan, no proceedings have been instituted to terminate any Plan, no condition exists which presents
a risk to the Company or any Guarantor of incurring a liability to or on account of a Plan pursuant
to the foregoing provisions of ERISA and the Code; no lien imposed under the Code or ERISA on the
assets of the Company or any Guarantor exists or is



28









 







likely to arise on account of any Plan; and the Company, and each Guarantor may terminate
contributions to any other employee benefit plans maintained by them without incurring any material
liability to any person interested therein.



     SECTION 4.09. Federal Reserve Regulations; Use of Proceeds.



          (a) Neither the Company nor any Guarantor is engaged principally in, nor has as one of its
important activities, the business of extending credit for the purpose of purchasing or carrying
any “margin stock” (within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System of the United States, as amended to the date hereof). If requested by the Bank, the
Company will, and will cause each Guarantor to, furnish to the Bank such a statement on Federal
Reserve Form U-1.



          (b) No part of the proceeds of any Loan will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately, (i) to purchase or to carry margin stock or to
extend credit to others for the purpose of purchasing or carrying margin stock, or to refund
indebtedness originally incurred for such purposes, or (ii) for any purpose which violates or is
inconsistent with the provisions of the Regulations T, U, or X of the Board of Governors of The
Federal Reserve System.



          (c) The proceeds of the Loans shall be used solely for the purposes permitted under Section
3.02.



     SECTION 4.10. Approvals. No registration with or consent or approval of, or other
action by, any Governmental Authority or any other Person is required in connection with the
execution, delivery and performance of this Agreement by the Company or any Guarantor, or with the
execution and delivery of other Loan Documents to which it is a party or, with respect to the
Company, the borrowings hereunder.



     SECTION 4.11. Subsidiaries and Affiliates. Attached hereto as Schedule I is a
correct and complete list of the Company’s Subsidiaries and Affiliates showing as to each
Subsidiary and Affiliate, its name, the jurisdiction of its incorporation or formation, its
shareholders or other owners of an interest in each Subsidiary and the number of outstanding shares
or other ownership interest owned by each shareholder or other owner of an interest. Lyman
Maryland Properties, LLC, a Utah limited liability company, was dissolved on or about February 25,
2008.



     SECTION 4.12. Hazardous Materials. Except as set forth in environmental reports
provided to the Bank, the Company and each Guarantor are each in compliance with all federal, state
or local laws, ordinances, rules or regulations governing Hazardous Materials and (a) neither the
Company nor any Guarantor has used Hazardous Materials on, from, or affecting any property now
owned or occupied by the Company or any Guarantor in any manner which violates federal, state or
local laws, ordinances, rules or regulations governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of Hazardous Materials; and (b) to the
best knowledge of the Company and each Guarantor, no prior owner of any such property or any
tenant, subtenant, prior tenant or prior subtenant has used Hazardous Materials on, from, or
affecting such property in any manner which violates federal, state or local laws, ordinances,
rules or regulations governing the use, storage, treatment,



29









 







transportation, manufacture, refinement, handling, production or disposal of Hazardous
Materials, except where failure to so comply could not reasonably be expected to have a Material
Adverse Effect.



     SECTION 4.13. Investment Company Act. Neither the Company nor any Guarantor is an
“investment company”, or a company “controlled” by an “investment company”, within the meaning of
the Investment Company Act of 1940, as amended.



     SECTION 4.14. No Default. No event has occurred and is continuing and no condition
exists which constitutes a Default or an Event of Default.



     SECTION 4.15. Material Contracts. Each Material Contract of the Company and each
Guarantor (i) is in full force and effect and is binding upon and enforceable against the Company
or each Guarantor, as the case may be, and, to the knowledge of the Company, all other parties
thereto in accordance with its terms, and (ii) there exists no default under any Material Contract
by the Company or any Guarantor or, to the knowledge of the Company, by any other party thereto
which has not been fully cured or waived.



     SECTION 4.16. Permits and Licenses. Each of the Company and each Guarantor has all
obtained all material licenses, permits, franchises, or other governmental authorizations necessary
to the ownership of its property or to the conduct of its activities, and shall obtain all such
licenses, permits, franchises, or other governmental authorizations as may be required in the
future to the extent that the failure to obtain them would materially and adversely affect the
ability of the Company or any Guarantor to conduct its activities as currently conducted, or in the
future may be conducted, or the condition (financial or otherwise) of the Company or any Guarantor.



     SECTION 4.17. Compliance with Law. The Company and each Guarantor are each in
compliance with all laws, rules, regulations, orders and decrees which are applicable to the
Company or any Guarantor, or to any of their respective properties, which the failure to comply
with could reasonably be expected to have a Material Adverse Effect.



     SECTION 4.18. Disclosure. No representation or warranty of the Company or any
Guarantor contained in this Agreement, any other Loan Document, or any other document, certificate
or written statement furnished to the Bank by or on behalf of the Company or any Guarantor for use
in connection with the transactions contemplated by this Agreement contains any untrue statement of
material fact or omits to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances in which they were made.



     SECTION 4.19. Security Documents. To the best of its knowledge, each Security
Document executed by the Company and the Guarantor shall constitute a valid and continuing lien on
and security interest in the collateral referred to in such Security Document in favor of the Bank
prior to all other Liens, claims and right of all other Persons, other than Permitted Liens, and
shall be enforceable as such against all other Persons.



     SECTION 4.20. Globecomm UK and Lyman Maryland Properties. Globecomm Systems Europe
Ltd., a United Kingdom corporation, and Lyman Maryland Properties, LLC, a



30









 







Utah limited liability company, have each been dissolved and are no longer in existence.



ARTICLE V

CONDITIONS OF LENDING




     SECTION 5.01. Conditions To Initial Loans. The obligation of the Bank to make the
Loans hereunder is subject to the following conditions precedent:



          (a) Revolving Credit Note. On or prior to the Closing Date, the Bank shall have
received the Revolving Credit Note duly executed by the Company.



          (b) Other Loan Documents. On or prior to the Closing Date, the Bank shall have
received (i) the Guaranties duly executed by each of the Guarantors, and (ii) the Security
Documents, each duly executed by the Company and each Guarantor, as applicable, along with
financing statements on form UCC-1 describing the collateral covered by the Security Agreement.



          (c) Supporting Documents. The Bank shall have received on or prior to the Closing
Date (a) a certificate of the Secretary or an Assistant Secretary of the Company and of each
Guarantor dated the Closing Date and certifying (i) that attached thereto is a true and complete
copy (including any amendments thereto) of the Certificate of Incorporation and the By-laws or the
Articles of Organization and the Operating Agreement, as applicable, of the Company or such
Guarantor; (ii) that attached thereto is a true and complete copy of resolutions adopted by the
Board of Directors of the Company and each Guarantor, authorizing the execution, delivery and
performance of this Agreement and of each Loan Document to be delivered on the Closing Date to
which it is a party and, with respect to the Company, the borrowings hereunder; and (iii) the
incumbency and specimen signature of each officer of the Company and each Guarantor executing each
Loan Document to which the Company or a Guarantor is a party and any certificates or instruments
furnished pursuant hereto or thereto, and a certification by another officer of the Company and
each Guarantor as to the incumbency and signature of the Secretary or Assistant Secretary of the
Company and each Guarantor; and (b) such other documents as the Bank may reasonably request.



          (d) Opinion of Counsel. On the Closing Date, the Bank shall have received a written
opinion of counsel for the Company and the Guarantors dated the Closing Date and addressed to the
Bank substantially in the form of Exhibit F attached hereto.



          (e) No Material Adverse Changes. There shall not have occurred in the sole opinion of
the Bank reasonably applied, any material adverse change in the business, operations, performance,
properties or condition, financial or otherwise, of the Company or any Guarantor since December 31,
2008.



          (f) Fees. The Company shall have paid all costs and expenses incurred by the Bank in
connection with the negotiation, preparation and execution of the Loan Documents (including,
without limitation, the expenses and reasonable fees of counsel).



          (g) Assets Free from Liens. Prior to the Closing Date, the Bank shall have received
UCC-1 financing statement, tax and judgment lien searches evidencing that the



31









 







Company’s and each Guarantor’s accounts receivable, inventory, equipment and all other assets
of the Company and each Guarantor are free and clear of all Liens except Permitted Liens.



          (h) Insurance. The Bank shall receive, on or prior to the Closing Date, certificates
of insurance covering the personal property and the business of the Company and the Guarantors
(including with respect to general liability and products liability insurance), which certificates
shall designate the Bank as a loss payee and additional insured, in form and substance reasonably
satisfactory to the Bank together with copies of the related insurance policies with proper
endorsements to reflect the Bank’s interests.



          (i) Due Diligence. The Bank shall have results satisfactory to it of its due
diligence checkings with respect the Company, the Guarantors, including, without limitation,
litigation checkings, customer checkings, bank checkings, judgment, tax and bankruptcy searches, in
all jurisdictions deemed necessary by the Bank and its counsel.



          (j) Completion of Proceedings. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the transactions contemplated by
the Loan Documents shall be reasonably satisfactory in form and substance to the Bank and its
counsel.



          (k) Other Information, Documentation. The Bank shall receive such other consents,
approvals and further information and documentation as it may reasonably require, including, but
not limited, to any information or documentation relating to compliance by the Company and each
Guarantor with the requirements of all federal, state and local laws, ordinances, rules,
regulations or policies governing the use, storage, treatment, transportation, refinement,
handling, production or disposal of Hazardous Materials.



     SECTION 5.02. Conditions to Term Loans The obligation of the Bank to make any Term
Loan hereunder is subject to the conditions precedent set forth in Sections 5.01 and 5.03 of this
Article V and the following conditions precedent:



          (a) Term Loan Note. The Company shall deliver to the Bank a duly executed Term Loan
Note appropriately completed in an amount equal to the aggregate principal amount of the Term Loan
to be funded on a Borrowing Date.



          (b) Acquisition Documents. The Bank shall have received the information and documents
required to be delivered to the Bank as described in the definition of Permitted Acquisition.



     SECTION 5.03. Conditions to All Loans and Letters of Credit. The obligation of the
Bank to make each Loan hereunder and the obligation of the Bank to issue, amend, renew or extend
any Letter of Credit, including, without limitation, the initial Loan and Existing Letters of
Credit, are subject to the conditions precedent set forth in Section 5.01 and, to the extent
applicable, the conditions in Sections 5.02, and the following conditions precedent:



          (a) Representations and Warranties. The representations and warranties by the Company
and each Guarantor pursuant to this Agreement and the Loan Documents to which



32









 







each is a party shall be true and correct in all material respects on and as of the Borrowing
Date or the date of issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, with the same effect as though such representations and warranties had been made on and
as of such date and an Executive Officer shall deliver a certificate to the Bank with respect
thereto.



          (b) No Default. The Company and each Corporate Guarantor shall be in compliance with
all the terms and provisions set forth herein or in any other Loan Document on their part to be
observed or performed, and no Default or Event of Default, shall have occurred and be continuing on
the Borrowing Date or on the date of issuance, amendment, renewal or extension of a Letter of
Credit or will result after giving effect to the Loan requested or the requested issuance,
amendment, renewal or extension of a Letter of Credit.



          (c) Availability. After giving effect to any requested Revolving Credit Loan or
Letter of Credit, the Aggregate Outstandings shall not exceed the Total Credit Commitment.



          (d) Notice of Borrowing. The Bank shall have received a notice of borrowing duly
executed by an Executive Officer of the Company with respect to the requested Loan or issuance,
amendment, renewal or extension of the requested Letter of Credit.



          (e) Additional Documentation. With respect to the issuance, amendment, renewal or
extension of any Letter of Credit, the Bank shall have received the documents and instruments
requested by the Bank in accordance with the last sentence of Section 2.05(a).



ARTICLE VI

AFFIRMATIVE COVENANTS




     The Company covenants and agrees with the Bank that so long as any Loan remains in effect or
any of the principal of or interest on any Note or any other Obligations hereunder shall be unpaid
it will, and will cause each Guarantor to:



     SECTION 6.01. Corporate Existence, Properties, etc. Do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence, rights and
franchises and comply with all laws applicable to it; at all times maintain, preserve and protect
all franchises and trade names and preserve all of its property used or useful in the conduct of
its business and keep the same in good repair, working order and condition (ordinary wear and tear
excepted), and from time to time make, or cause to be made, all needful and proper repairs,
renewals, replacements, betterments and improvements thereto so that the business carried on in
connection therewith may be properly and advantageously conducted at all times; at all times keep
its insurable properties adequately insured and maintain (i) insurance to such extent and against
such risks, including fire, as is customary with companies in the same or similar businesses, (ii)
workmen’s compensation insurance in the amount required by applicable law, and (iii) public
liability insurance, which shall include product liability insurance, in the amount customary with
companies in the same or similar business against claims for personal injury or death on properties
owned, occupied or controlled by it, (iv) such other assistance as may be required by law or may be
reasonably required by the Bank. Each such policy of insurance of the Company and its Subsidiaries
shall name the Bank as a loss payee, additional insured and mortgagee, as the case may be, and
shall provide for at least thirty (30) days’ prior written notice to the Bank of any modification
or cancellation of such policies. The Company shall provide to



33









 







the Bank promptly upon receipt thereof evidence of the annual renewal of each such policy.



     SECTION 6.02. Payment of Indebtedness, Taxes, etc.



          (a) Pay all indebtedness and obligations, now existing or hereafter arising, as and when due
and payable, except where (i) the validity, amount, or timing thereof is being contested in good
faith and by appropriate proceedings, which proceedings shall include good faith negotiations, (ii)
the Company or such Guarantor has set aside on its books adequate reserves with respect thereto in
accordance with Generally Accepted Accounting Principles, and (iii) the failure to make such
payment pending such contest could not reasonably be expected to have a Material Adverse Effect;
provided that the Company and each Guarantor will pay or cause to be paid all such
indebtedness and obligations upon the commencement of proceedings to foreclose any lien which has
attached as security therefore.



          (b) Pay and discharge or cause to be paid and discharged promptly all taxes, assessments and
government charges or levies imposed upon it or upon its income and profits, or upon any of its
property, real, personal or mixed, or upon any part thereof, before the same shall become in
default, as well as all lawful claims for labor, materials and supplies or otherwise which, if
unpaid, might become a lien or charge upon such properties or any part thereof; provided,
however, that neither the Company nor any Guarantor shall be required to pay and discharge
or cause to be paid and discharged any such tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings, and the Company or
such Guarantor, as the case may be, shall have set aside on its books adequate reserves determined
in accordance with Generally Accepted Accounting Principles with respect to any such tax,
assessment, charge, levy or claim so contested; and further, provided that, subject
to the foregoing provisos, the Company and each Guarantor will pay or cause to be paid all such
taxes, assessments, charges, levies or claims upon the commencement of proceedings to foreclose any
lien which has attached as security therefore.



     SECTION 6.03. Financial Statements, Reports, etc. Furnish to the Bank:



          (a) as soon as available and in any event within seventy five (75) days of the end of the
fiscal year of the Company, the audited consolidated financial statements of the Company and its
Subsidiaries which shall include the consolidated balance sheet of the Company and its Subsidiaries
as of the end of such fiscal year, together with the consolidated statement of income and statement
of cash flows for the Company and its Subsidiaries for such fiscal year and as of the end of and
for the prior fiscal year, all prepared in accordance with Generally Accepted Accounting Principles
and accompanied by an opinion thereon of Ernst & Young, LLP or other nationally recognized
independent certified public accountants reasonably acceptable to the Bank (the “Auditor”) which
opinion shall not include a going concern explanatory paragraph, or a qualification or exception as
to the scope of the audit,



          (b) as soon as available and in any event within sixty (60) days after the end of each of the
first, second and third fiscal quarters of the Company, the unaudited consolidated financial
statements of the Company and its Subsidiaries, which shall include the unaudited consolidated
balance sheet of the Company and its Subsidiaries as of the end of each such quarter, together with
the consolidated statement of income and statement of cash flows of the Company and its
Subsidiaries for each such quarter and for the period commencing at the end of



34









 







the previous fiscal year and ending with the end of such quarter, all in reasonable detail
stating in comparative form the respective figures for the corresponding date and period in the
previous fiscal year, all prepared by or under the supervision of the Chief Financial Officer of
the Company in accordance with Generally Accepted Accounting Principles;



          (c) a certificate prepared and signed by the Auditor with each delivery required by clause (a)
and a certificate prepared and signed by the Chief Financial Officer with each delivery required by
clause (a) and (b), stating whether the Auditor or Chief Financial Officer, as the case may be,
shall have obtained knowledge of any Default or Event of Default, together with a certificate of
the Chief Financial Officer of the Company demonstrating that as of the last day of the relevant
fiscal year or quarter, as applicable, the Company was in compliance with the financial condition
covenants set forth in Section 7.13 hereof;



          (d) on or prior to the twenty-fifth (25th) day of each fiscal quarter of the Company a
detailed schedule describing all accounts receivable and accounts payable of the Company and its
Subsidiaries certified by the Chief Financial Officer of the Company and current as of the last
Business Day of the preceding month, all in form satisfactory to the Bank;



          (e) promptly after filing thereof, copies of all financial statements and reports that the
Company sends to its shareholders, and copies of all regular, periodic and special financial
information, proxy materials, reports and other information which the Company or any Guarantor
shall file with the Securities and Exchange Commission;



          (f) promptly after submission to any government or regulatory agency, all documents and
information furnished to such government or regulatory agency other than such documents and
information prepared in the normal course of business and which could not reasonably be expected to
result in a Material Adverse Effect;



          (g) promptly, from time to time, such other information regarding the operations, business
affairs and condition, financial or otherwise, of the Company or any Guarantor as the Bank may
reasonably request; and



          (h) The Bank acknowledges and agrees that the Company may satisfy the requirements of clauses
(a) and (b) above by delivering to the Bank copies of the Company’s annual and quarterly reports on
Forms 10K and 10Q, respectively.



     SECTION 6.04. Access to Premises and Records. Maintain financial records in
accordance with Generally Accepted Accounting Principles and permit representatives of the Bank to
have access during normal business hours to the premises of the Company (and upon reasonable
advance notice so long as no Default or Event of Default has occurred and is then continuing) and
each Guarantor upon request, and to examine and make excerpts from the minute books, books of
accounts, reports and other records and to discuss the affairs, finances and accounts of the
Company and the Guarantors with their respective principal officers or with their respective
independent accountants and to conduct such field audits (including, without limitation, field
audits of the Company’s and each Guarantor’s accounts receivable and their respective books and
records and inspection, examination and verification of the collateral for the Loans) at the
Company’s expense, as such representatives reasonably deem necessary, provided, the Company
shall bear the cost of not more than one (1) such audit in any calendar



35









 







year unless an Event of Default has occurred, in which case, the Company shall also bear the
cost of an audit, if any, performed by the Bank in connection with such Event of Default.



     SECTION 6.05. Notice of Adverse Change. Promptly notify the Bank in writing of (a)
any change in the business or the operations which, in the good faith judgment of such officer,
could reasonably be expected to have a Material Adverse Effect disclosing the nature thereof, and
(b) any information which indicates that any financial statements which are the subject of any
representation contained in this Agreement, or which are furnished to the Bank pursuant to this
Agreement, fail, in any material respect, to present fairly the financial condition and results of
operations purported to be presented therein, disclosing the nature thereof.



     SECTION 6.06. Notice of Default. Promptly notify the Bank of any Default or Event of
Default which shall have occurred, which notice shall include a written statement as to such
occurrence, specifying the nature thereof and the action which is proposed to be taken with respect
thereto.



     SECTION 6.07. Notice of Litigation. Give the Bank prompt written notice of any
action, suit or proceeding at law or in equity or by or before any governmental instrumentality or
other agency which, if adversely determined against the Company or any Guarantor on the basis of
the allegations and information set forth in the complaint or other notice of such action, suit or
proceeding, or in the amendments thereof, if any, could reasonably be expected to have a Material
Adverse Effect.



     SECTION 6.08. ERISA. Promptly deliver to the Bank a certificate by the Chief
Financial Officer setting forth details as to such occurrence and such action, if any, which the
Company, such Guarantor or such ERISA Affiliate is required or proposes to take, together with any
notices required or proposed to be given to or filed with or by the Company, such Guarantor, ERISA
Affiliate, the PBGC, a Plan participant or the Plan Administrator, with respect thereto: that a
Reportable Event has occurred, that an accumulated funding deficiency has been incurred or an
application may be or has been made to the Secretary of the Treasury for a waiver or modification
of the minimum funding standard (including any required installment payments) or an extension of
any amortization period under Section 412 of the Code with respect to a Plan, that a Plan has been
or may be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA, that
a Plan has an Unfunded Current Liability giving rise to a lien under ERISA, that proceedings may
be or have been instituted to terminate a Plan, that a proceeding has been instituted pursuant to
Section 515 of ERISA to collect a delinquent contribution to a Plan, or that the Company, any
Guarantor or any ERISA Affiliate will or may incur any liability (including any contingent or
secondary liability) to or on account of the termination of or withdrawal from a Plan under Section
4062, 4063, 4064, 4201 or 4204 of ERISA. The Company will deliver to the Bank a complete copy of
the annual report (Form 5500) of each Plan required to be filed with the Internal Revenue Service.
In addition to any certificates or notices delivered to the Bank pursuant to the first sentence
hereof, copies of annual reports and any other notices received by the Company or any Guarantor
required to be delivered to the Bank hereunder shall be delivered to the Bank no later than 10 days
after the later of the date such report or notice has been filed with the Internal Revenue Service
or the PBGC, given to Plan participants or received by the Company or a Guarantor.



     SECTION 6.09. Compliance with Applicable Laws. Comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority.



36









 





     SECTION 6.10. SubsidiariesSECTION 6.11. . Give the Bank prompt written notice of the
creation, establishment or acquisition, in any manner, of any Subsidiary not existing as a
Subsidiary on the Closing Date. The Company or a Guarantor, as appropriate, (a) shall execute a
Pledge Agreement (or such other agreement as shall be required by the Bank), as applicable, with
respect to 65% of the capital stock or other ownership interest of each First-Tier Subsidiary of
such Person which is or becomes a Non-Domestic Subsidiary, (b) shall cause each Subsidiary of such
Person which is a Domestic Subsidiary to execute a joinder agreement with respect to the Guaranty
and the Security Agreement, pursuant to which such Subsidiary becomes a “Guarantor” and “Grantor”
under the Guaranty and the Security Agreement, respectively, (c) shall deliver an opinion of
counsel, simultaneously with the delivery of (i) any Pledge Agreement executed pursuant to clause
(a) above, that such Pledge Agreement is valid and enforceable in the jurisdiction of formation of
such Non-Domestic Subsidiary, provided that if such opinion, in connection with the delivery of any
Pledge Agreement executed pursuant to clause (a) above cannot be provided, the Company, such
Guarantor or such Non-Domestic Subsidiary, as appropriate, shall execute any additional documents
that may be required in order to perfect the lien granted by such Pledge Agreement in such
jurisdiction and to enable such counsel to deliver an acceptable opinion with respect thereto and
(ii) the joinder agreement executed pursuant to clause (b) above, an Opinion of Counsel,
substantially in the form of Exhibit F hereto, with respect to such new Domestic
Subsidiary; in the case of both (a), (b) and (c) within ten (10) Business Days after the creation,
establishment or acquisition of such Domestic Subsidiary or Non-Domestic Subsidiary and in
connection therewith shall deliver or cause to be delivered such proof of corporate action,
incumbency of officers and other documents as are consistent with those delivered as to each
Domestic Subsidiary or Non-Domestic Subsidiary pursuant to Section 5.01 hereof on the Closing Date,
or as the Bank may request, each in form and substance satisfactory to the Bank, provided that the
Company and the Bank agree that the Company shall deliver to the Bank, within thirty (30) days of
the Closing Date, those documents and agreements described herein which are to be provided with
respect to B.V. Mach 6 B.V., a wholly-owned Non-Domestic Subsidiary of the Company.



     SECTION 6.11. Default in Other AgreementsSECTION 1.01. . Promptly notify the Bank of
any default in the performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which the Company or any Guarantor is a
party which could reasonably be expected to have a Material Adverse Effect.



     SECTION 6.12. Operating Accounts. Maintain its primary operating account at the Bank.



     SECTION 6.13. Environmental Laws.



          (a) Comply with and ensure compliance by all tenants and subtenants of their respective
properties with the requirements of all federal, state and local laws, ordinances, rules,
regulations or policies governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect, provide to the Bank all
documentation in connection with such compliance that the Bank may reasonably request, and defend,
indemnify, and hold harmless the Bank, its employees, agents, officers, and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements, damages, costs, or
expenses of whatever kind or nature, known or unknown, contingent or otherwise, arising out of, or
in any way related to, (i) the presence, disposal, release, or



37









 







threatened release of any Hazardous Materials on any property owned or occupied by the Company
or any Guarantor; (ii) any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Materials; (iii) any lawsuit brought or
threatened, settlement reached, or government order relating to such Hazardous Materials, and/or
(iv) any violation of laws, orders, regulations, requirements, or demands of government
authorities, or any policies or requirements of the Bank of which the Company has been notified,
which are based upon or in any way related to such Hazardous Materials including, without
limitation, reasonable attorney fees and consultant fees, investigation and laboratory fees, court
costs, and litigation expenses, except to the extent that any of the foregoing results from the
gross negligence or willful misconduct of the party seeking indemnification.



     (b) Execute and cause each Guarantor to execute any and all documentation with respect to
environmental matters as the Bank may reasonably request and such documentation shall be in form
and substance reasonably satisfactory to the Bank.



     SECTION 6.14. Landlord Waiver. Use its best efforts to deliver to the Bank, within ten (10)
Business Days from the Closing Date, a landlord waiver with respect to its premises located at 63
Oser Avenue, Hauppauge, New York, in a form reasonably satisfactory to the Bank.



ARTICLE VII

NEGATIVE COVENANTS




     The Company covenants and agrees with the Bank that so long as any Loan remains in effect or
any of the principal of or interest on any Note or any other Obligations hereunder shall be unpaid,
they will not, and will not cause or permit any Guarantor, directly or indirectly, to:



     SECTION 7.01. Liens. Incur, create, assume or suffer to exist any Lien on any of their
respective assets now or hereafter owned, other than:



          (a) Liens existing on the date hereof as set forth on Schedule II attached hereto but
not any renewals or extensions thereof;



          (b) deposits under workmen’s compensation, unemployment insurance and social security laws;



          (c) Liens for taxes, assessments, fees or other governmental charges or the claims of material
men, mechanics, carriers, warehousemen, landlords and other similar persons, the payment of which
is not overdue or is being contested in good faith by appropriate proceedings (provided that the
Company or such Guarantor has set aside on its books adequate reserves with respect thereto in
accordance with GAAP (if any are so required), consistently applied, and the failure to make
payment pending such contest could not reasonably be expected to result in a Material Adverse
Effect;



          (d) purchase money Liens for fixed or capital assets; provided, in each case, (x) no Default
or Event of Default shall have occurred and be continuing or shall occur as a result of the grant
of the proposed Lien, and (y) such purchase money Lien does not exceed 100% of the purchase price
and encumbers only the property being acquired;



38









 





          (e) Liens granted to the Bank and any of its Affiliates, including renewals and extensions
thereof; and



          (f) any attachment, judgment or similar Lien arising in connection with any court or
governmental proceeding, provided that the execution or other enforcement of such Lien is
effectively stayed within thirty (30) days and the claims secured thereby are being contested in
good faith by appropriate proceedings.



     SECTION 7.02. Indebtedness. Incur, create, assume or suffer to exist or otherwise
become liable with respect to any Indebtedness, other than:



          (a) Indebtedness incurred prior to the date hereof as described in Schedule III
attached hereto but not including any renewals or extensions thereof;



          (b) Indebtedness to the Bank and any of its Affiliates, including renewals and extensions
thereof;



          (c) Indebtedness for trade payables incurred in the ordinary course of business provided such
payables shall be paid or discharged when due;



          (d) taxes, assessments or other governmental charges or levies not yet delinquent or which are
being contested in good faith by appropriate proceedings; provided, however, that adequate reserves
with respect thereto are maintained on the books of the Company or any Guarantor in accordance with
Generally Accepted Accounting Principles;



          (e) Indebtedness secured by purchase money liens as permitted under Section 7.01(d); and



          (f) Subordinated Debt, to the extent permitted by Section 7.14 hereof.



     SECTION 7.03. Guaranties. Guarantee, endorse, become surety for, or otherwise in any
way become or be responsible for the Indebtedness or obligations of any Person, whether by
agreement to maintain working capital or equity capital or otherwise maintain the net worth or
solvency of any Person or by agreement to purchase the Indebtedness of any other Person, or
agreement for the furnishing of funds, directly or indirectly, through the purchase of goods,
supplies or services for the purpose of discharging the Indebtedness of any other Person or
otherwise, or enter into or be a party to any contract for the purchase of merchandise, materials,
supplies or other property if such contract provides that payment for such merchandise, materials,
supplies or other property shall be made regardless of whether delivery of such merchandise,
supplies or other property is ever made or tendered except:



          (a) guaranties executed prior to the date hereof as described on Schedule IV attached
hereto but not including any renewals or extension thereof;



          (b) endorsements of negotiable instruments for collection or deposit in the ordinary course of
business; and



39









 





          (c) guaranties of any Indebtedness under this Agreement or any other Indebtedness owing to the
Bank or any of its Affiliates, including renewals and extensions thereof.



     SECTION 7.04. Sale of Assets. Sell, assign, lease, transfer or otherwise dispose of
any of their now owned or hereafter acquired respective properties and assets, whether or not
pursuant to an order of a federal agency or commission, except for (i) the sale, assignment, lease,
transfer or other disposition of inventory, each in the ordinary course of business, and (ii) the
sale or other disposition of properties or assets no longer used or useful in the conduct of their
respective businesses.



     SECTION 7.05. Sale of Notes. Sell, transfer, discount or otherwise dispose of notes,
accounts receivable or other obligations owing to the Company or any Guarantor, with or without
recourse, except for collection in the ordinary course of business.



     SECTION 7.06. Loans and Investments. Make or commit to make any advance, loan,
extension of credit, or capital contribution to or purchase or hold beneficially any stock or other
securities, or evidence of Indebtedness of, purchase or acquire all or a substantial part of the
assets of, make or permit to exist any interest whatsoever in, any other Person, provided (i) the
Company or any Guarantor may consummate a Permitted Acquisition and may invest in Permitted
Investments, (ii) the Company may make investments, loans and advances to the Guarantors and (iii)
a Guarantor may make investments, loans and advances to the Company or another Guarantor.



     SECTION 7.07. Nature of Business. Change or alter the nature of its business, in any
material respect, from the nature of the business engaged in by it on the date hereof.



     SECTION 7.08. Sale and Leaseback. Enter into any arrangement, directly or indirectly,
with any Person whereby it shall sell or transfer any property, whether real or personal, used or
useful in its business, whether now owned or hereafter acquired, if at the time of such sale or
disposition it intends to lease or otherwise acquire the right to use or possess (except by
purchase) such property or like property for a substantially similar purpose.



     SECTION 7.09. Federal Reserve Regulations. Permit any Loan or the proceeds of any
Loan to be used for any purpose which violates or is inconsistent with the provisions of
Regulations T, U or X of the Board of Governors of the Federal Reserve System.



     SECTION 7.10. Accounting Policies and Procedures; Tax Status. Permit any change in
the accounting policies and procedures the Company or any Guarantor, including a change in fiscal
year, without the prior written consent of the Bank; provided, however, that any policy or
procedure required to be changed by the FASB (or other board or committee of the FASB in order to
comply with Generally Accepted Accounting Principles) may be so changed.



     SECTION 7.11. Hazardous Materials. Cause or permit any of its properties or assets to
be used to generate, manufacture, refine, transport, treat, store, handle, dispose, transfer,
produce or process Hazardous Materials, except in material compliance with all applicable federal,
state and local laws or regulations, or cause or permit, as a result of any intentional or
negligent act or omission on the part of the Company, any Guarantor or any tenant or subtenant, a
release of Hazardous Materials in violation of applicable law or regulation onto such property



40









 







or asset or onto any other property, in a manner that could reasonably be expected to lead to
the imposition on the Company, such Guarantor or such property or asset of any liability or lien of
any nature whatsoever under any Environmental Law.



     SECTION 7.12. Limitations on Fundamental Changes. Merge or consolidate with, or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its assets (whether now or hereafter acquired) to any Person, or
acquire all or substantially all of the assets or the business of any Person or liquidate, wind up
or dissolve or suffer any liquidation or dissolution, provided that, (a) the Company may consummate
a Permitted Acquisition and (b) so long as no Event of Default has occurred and is then continuing
and the Company has provided prior written notice to the Bank, any Subsidiary of the Company may
merge with (i) the Company, provided that the Company shall be the continuing or surviving
Person, or (ii) any one or more other Subsidiaries of the Company, provided that a Guarantor may
only merge with and into another Guarantor.



     SECTION 7.13. Financial Covenants.



          (a) Minimum Debt Service Coverage Ratio. Permit the Consolidated Debt Service
Coverage Ratio to be less than 1.50:1.00, determined quarterly with respect to the most recently
concluded four fiscal quarters for which financial statements have been delivered pursuant to
Article VI hereof.



          (b) Minimum Consolidated Liquidity Ratio. Permit the Consolidated Liquidity Ratio to
be less than 1.00:1.00, at any time.



          (c) Minimum Consolidated Capital Base. Permit the Consolidated Capital Base of the
Company and its Subsidiaries to be less than an amount equal to (i) $100,000,000 plus (ii)
75% of the Consolidated Net Income of the Company and its Subsidiaries plus (iii) 75% of
the net proceeds received from any Subordinated Debt or any Equity Issuance, all for the period
commencing January 1, 2009 and ending on the date of calculation.



          (d) Maximum Consolidated Leverage Ratio: Permit the Consolidated Leverage Ratio to be
more than 1.00:1.00, at any time.



          (e) Consolidated Unrestricted Cash. Maintain in deposit accounts with the Bank or any
Affiliate of the Bank, Consolidated Unrestricted Cash in an amount less than the sum of
$15,000,000.



     SECTION 7.14. Subordinated Debt. Directly or indirectly prepay, defease, purchase,
redeem, or otherwise acquire any Subordinated Debt, without the prior written consent of the Bank.



     SECTION 7.15. Dividends. Declare any dividend on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of stock of the Company or any
Guarantor, whether now or hereafter outstanding, other than non-cash dividends, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash, securities or
property or in obligations of the Company or any Guarantor or in any combination thereof, or



41









 







permit any Affiliate to make any payment on account of, or purchase or otherwise acquire, any
shares of any class of the stock of the Company or any Guarantor from any Person.



     SECTION 7.16. Transactions with Affiliates. Enter into any transaction, including,
without limitation, the purchase, sale, or exchange of property or the rendering of any service,
with any Affiliate, except in the ordinary course of and pursuant to the reasonable requirements of
the Company’s or any of the Guarantor’s business and upon fair and reasonable terms no less
favorable to the Company or such Guarantor than they would obtain in a comparable arms-length
transaction with a Person not an Affiliate.



     SECTION 7.17. Impairment of Security Interest. Take or omit to take any action which
might or would have the result of effecting or impairing the security interest in any property
subject to a security interest in favor of the Bank and neither the Company nor any Guarantor shall
grant to any person any interest whatsoever in any property subject to a security interest in favor
of the Bank.



     SECTION 7.18. Negative Pledge. Permit any lien, mortgage, security interest or
encumbrance to exist upon any of the Company’s or any Guarantor’s real property, including, without
limitation, their respective real property located in Hauppauge, New York and Laurel, Maryland.



ARTICLE VIII

EVENTS OF DEFAULT




     SECTION 8.01. Events of Default. In the case of the happening of any of the following
events (each an “Event of Default”):



          (a) failure by the Company to pay:




          (i) the principal of any Loan or any reimbursement obligations with respect to a
drawing under any Letter of Credit as and when due and payable; or




          (ii) interest on any Loan and any fees or other amounts payable under this Agreement
and any other Loan Document, as and when due and payable, and such failure to pay shall
continue for two (2) Business Days;



          (b) default shall be made in the due observance or performance of any covenant, condition or
agreement of the Company or any Guarantor to be performed




          (i) pursuant to Article 6 of this Agreement (other than Section 6.03, Section 6.04,
Section 6.06, Section 6.10 and Section 6.13 hereof) and, in the case of this sub clause (i)
only, such default shall continue unremedied for a period of ten (10) consecutive days or




          (ii) pursuant to any other provision of this Agreement or any other Loan Document that
is not specifically addressed in Sections 8.01(a), (b)(i), (c) or (d) hereof;



          (c) any representation or warranty made or deemed made in this Agreement or



42









 







any other Loan Document shall prove to be false or misleading in any material respect when
made or given or when deemed made or given pursuant to the terms hereof;



          (d) any report, certificate, financial statement or other instrument furnished in connection
with this Agreement or any other Loan Document or the borrowings hereunder, shall prove to be false
or misleading in any material respect when made or given or when deemed made or given pursuant to
the terms hereof;



          (e) (i) default in the performance or compliance in respect of any agreement or condition
relating to (x) any other Indebtedness of the Company or any Guarantor in excess of $150,000 (other
than as described in clause (y) below), individually or in the aggregate, if the effect of such
default is to accelerate the maturity of such Indebtedness or to permit the holder or obligee
thereof (or a trustee on behalf of such holder or obligee) to cause such Indebtedness to become due
prior to the stated maturity thereof or (y) any Indebtedness of the Company or any Guarantor owing
to the Bank or any Bank Affiliate (other than the Notes) or (ii) any Indebtedness in excess of
$150,000, individually or in the aggregate, shall not be paid when due (beyond any applicable grace
period and subject to Section 6.02 hereof);



          (f) the Company or any Guarantor shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code or any other federal or state
bankruptcy, insolvency or similar law, (ii) consent to the institution of, or fail to controvert in
a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii)
apply for or consent to the employment of a receiver, trustee, custodian, sequestrator or similar
official for the Company or any Guarantor or for a substantial part of its property; (iv) file an
answer admitting the material allegations of a petition filed against it in such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) take corporate action for the purpose
of effecting any of the foregoing, (vii) become unable or admit in writing its inability or fail
generally to pay its debts as they become due or (viii) take corporate action for the purpose of
effecting any of the foregoing;



          (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in
a court of competent jurisdiction seeking (i) relief in respect of the Company or any Guarantor or
of a substantial part of their respective property, under Title 11 of the United States Code or any
other federal or state bankruptcy insolvency or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator or similar official for the Company or any Guarantor or for a
substantial part of their property, or (iii) the winding-up or liquidation of the Company or any
Guarantor and such proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall continue unstayed and in effect for 60
days;



          (h) One or more orders, judgments or decrees for the payment of money in excess of $150,000 in
the aggregate shall be rendered against the Company or any Guarantor and the same shall not have
been paid in accordance with such judgment, order or decree and either (i) an enforcement
proceeding shall have been commenced by any creditor upon such judgment, order or decree, or (ii)
there shall have been a period of thirty (30) days during which a stay of enforcement of such
judgment order or decree, by reason of pending appeal or otherwise, was not in effect;



43









 





          (i) any Plan shall fail to maintain the minimum funding standard required for any Plan year or
part thereof or a waiver of such standard or extension of any amortization period is sought or
granted under Section 412 of the Code, any Plan is, shall have been terminated or the subject of
termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability, a
Reportable Event shall have occurred with respect to a Plan or the Company, any Guarantor, or any
ERISA Affiliate shall have incurred a liability to or on account of a Plan under Section 515, 4062,
4063, 4063, 4201 or 4204 of ERISA, and there shall result from any such event or events the
imposition of a lien upon the assets of the Company or any Guarantor, the granting of a security
interest, or a liability to the PBGC or a Plan or a trustee appointed under ERISA or a penalty
under Section 4971 of the Code;



          (j) any provision of any Loan Document shall for any reason cease to be in full force and
effect in accordance with its terms or the Company, or any Guarantor shall so assert in writing or
any of the Liens purported to be granted pursuant to any Security Document shall fail or cease for
any reason to be legal, valid and enforceable liens on the collateral purported to be covered
thereby or shall fail or cease to have the priority purported to be created thereby;



          (k) a Change of Control shall occur; or



          (l) the Company or any Guarantor shall default in the punctual payment of any sum payable with
respect to, or in the observance or performance of any of the terms and conditions of, any
agreement between such Person and the Bank or any of its Affiliates (other than with respect to
this Agreement and any other Loan Document) beyond any applicable grace period referred to therein
or subject to the express waiver thereof by the Bank;


then, at any time thereafter during the continuance of any such event, the Bank may, without notice
to the Company or any Guarantor, (i) terminate the Commitments and the Loans and declare the Notes,
both as to principal and interest, to be forthwith due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived, anything contained
herein or in the Notes to the contrary notwithstanding; provided, however, that if
an event specified in Section 8.01(f) and (g) shall have occurred, the Loans shall automatically
terminate and the Notes shall be immediately due and payable; and (ii) exercise any or all of the
rights and remedies afforded to the Bank by the Uniform Commercial Code or otherwise possessed by
the Bank. With respect to all Letters of Credit that shall not have expired or presentment for
honor shall not have occurred, the Company shall provide the Bank with Cash Collateral in an amount
equal to the aggregate undrawn amount of such Letters of Credit. Such Cash Collateral shall be
used to reimburse the Bank for drawings under Letters of Credit for which the Bank has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Company at such time or, if the maturity of the Loans has been
accelerated, be applied to satisfy other Obligations, with any amount remaining after such
satisfactions to be returned to the Company or paid to such other party as may legally be entitled
to the same.




ARTICLE IX

MISCELLANEOUS




     SECTION 9.01. Notices. Any notice shall be in writing and shall be conclusively
deemed to have been received by a party hereto and to be effective on the day on which



44









 







delivered to such party at the address set forth below, or, in the case of telecopy notice,
when acknowledged as received, or if sent by registered or certified mail, on the third Business
Day after the day on which mailed in the United States, addressed to such party at said address:



          (a)      if to the Bank, at



Citibank, N.A.

730 Veterans Memorial Highway

Hauppauge, New York 11788

Attention: Relationship Officer –Globecomm Systems Inc.

Telecopy: (631) 265-4888



With copies to:



Farrell Fritz, P.C.

1320 RexCorp Plaza

Uniondale, New York 11556-1320

Attention: Robert C. Creighton

Telecopy: (516) 227-0777




          (b)      if to the Company, at



Globecomm Systems Inc.

45 Oser Avenue

Hauppauge, New York 11788

Attention: Chief Financial Officer

Telecopy: (631) 951-3241



With copies to:



Goldman & Associates, LLP

666 Old Country Road

Garden City, New York 11530

Attention: Ronald G. Goldman, Esq. 

Telecopy: (516) 228-8349




- and -





	 	(c)	 	as to each such party at such other address as such party shall
have designated to the other in a written notice complying as to delivery with
the provisions of this Section 9.01.





     SECTION 9.02. Survival of Agreement. All covenants, agreements, representations and
warranties made herein and in the other Loan Documents and in the certificates delivered pursuant
hereto or thereto shall survive the making by the Bank of the Loans herein contemplated and the
execution and delivery to the Bank of the Notes evidencing the Loans and shall continue in full
force and effect so long as any Note is outstanding and unpaid. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to



45









 







include the successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Company and the Guarantors which are contained in this Agreement shall bind
and inure to the benefit of the respective successors and assigns of the Bank. The Company may not
assign or transfer any of its interest under this Agreement, the Notes or any other Loan Document
without the prior written consent of the Bank.



     SECTION 9.03. Expenses of the Bank. The Company agrees (i) to indemnify, defend and
hold harmless the Bank and its officers, directors, employees, agents, advisors and affiliates
(each, an “indemnified person”) from and against any and all losses, claims, damages, liabilities
or judgments to which any such indemnified person may be subject and arising out of or in
connection with the Loan Documents, the financings contemplated hereby, the use of any proceeds of
such financings or any related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any of such indemnified persons is a party
thereto, and to reimburse each of such indemnified persons upon demand for any expenses, including
reasonable legal fees, incurred in connection with the investigation or defending any of the
foregoing; provided that the foregoing indemnity will not, as to any indemnified person, apply to
losses, claims, damages, liabilities, judgments or related expenses to the extent arising from the
willful misconduct or gross negligence of such indemnified person; and (ii) to reimburse the Bank
from time to time, upon demand, all out-of-pocket expenses (including reasonable expenses of its
due diligence investigation, along with disbursements and reasonable fees of counsel and the
allocated costs of internal counsel) incurred in connection with the financings contemplated under
this Agreement, the preparation, execution and delivery of this Agreement and the other Loan
Documents, any amendments and waivers hereof or thereof, the security arrangements contemplated
thereby and the enforcement thereof. The provisions of this Section 9.03 shall survive termination
of this Agreement.



     SECTION 9.04. No Waiver of Rights by the Bank. Neither any failure nor any delay on
the part of the Bank in exercising any right, power or privilege hereunder or under the Notes or
any other Loan Document shall operate as a waiver thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise of any other right, power or privilege.



     SECTION 9.05. Applicable Law. THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.



     SECTION 9.06. Submission to Jurisdiction; Jury Waiver. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE STATE OF NEW YORK, COUNTY OF NEW
YORK, COUNTY OF NASSAU AND COUNTY OF SUFFOLK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT
AND RELATED TO OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
COMPANY HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY
SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS



46









 







IMPROPER, OR THAT THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT OR
INSTRUMENT REFERRED TO HEREIN OR THEREIN WHERE THE SUBJECT MATTER THEREOF MAY NOT BE LITIGATED IN
OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY AGREES NOT TO (i) SEEK
AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY
OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT AND
(ii) ASSERT ANY COUNTERCLAIM IN ANY SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH COUNTERCLAIM
CONSTITUTES A COMPULSORY OR MANDATORY COUNTERCLAIM UNDER APPLICABLE RULES OF CIVIL PROCEDURE. THE
COMPANY AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE
ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.
EACH PARTY HERETO WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY
OTHER LOAN DOCUMENT.



     SECTION 9.07. Extension of Maturity. Except as otherwise expressly provided herein,
whenever a payment to be made hereunder shall fall due and payable on any day other than a Business
Day, such payment may be made on the next succeeding Business Day, and such extension of time shall
be included in computing interest.



     SECTION 9.08. Modification of Agreement. No modification, amendment or waiver of any
provision of this Agreement, any Note or any other Loan Document, nor consent to any departure by
the Company or any Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Bank and the Company or such Guarantor, as the case may be, and then such
waiver or consent shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Company in any case shall entitle the Company to any other or
further notice or demand in the same, similar or other circumstance unless required by the terms of
this Agreement.



     SECTION 9.09. Severability. In case any one or more of the provisions contained in
this Agreement, any Note or in any other Loan Document should be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby.



     SECTION 9.10. Sale of Participations, Assignments. The Bank reserves the right to
sell participations in or to sell and assign its rights, duties or obligations with respect to the
Loans to such banks, lending institutions or other parties as it may choose and without the consent
of the Company, provided that the Bank shall notify the Company promptly following such
participation or assignment. The Bank may furnish any information concerning the Company or any
Guarantor in its possession from time to time to any assignee or participant (or proposed assignee
or participant), provided that the Bank shall notify any such assignee or participant (or proposed
assignee or participant) in connection with any contemplated participation in, or assignment of,
the Loans, that such information may be confidential and that such transferee or participant shall
treat such information as such and otherwise comply with Section 9.18 below.



47









 





     SECTION 9.11. Reinstatement; Certain Payments. If claim is ever made upon the Bank
for repayment or recovery of any amount or amounts received by the Bank in payment or on account of
any of the Obligations under this Agreement, the Bank shall give prompt notice of such claim to the
Company, and if the Bank repays all or part of said amount by reason of (i) any judgment, decree or
order of any court or administrative body having jurisdiction over the Bank or any of its property,
or (ii) any settlement or compromise of any such claim effected by the Bank with any such claimant,
then and in such event the Company agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon the Company notwithstanding the cancellation of any Note or other
instrument evidencing the Obligations under this Agreement or the termination of this Agreement,
and the Company shall be and remain liable to the Bank hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been received by the Bank.



     SECTION 9.12. Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Bank and each other Affiliate of the Bank are each hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank to or for the credit or the account of the Company
against any and all the Obligations. The rights of the Bank under this Section 9.12 are in
addition to other rights and remedies (including, without limitation, other rights of setoff) which
the Bank may have.



     SECTION 9.13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, taken together, shall
constitute one and the same instrument.



     SECTION 9.14. Headings. Section headings used herein are for convenience of reference
only and are not to affect the construction of or be taken into consideration in interpreting this
Agreement.



     SECTION 9.15. Construction. This Agreement is the result of negotiations between, and
has been reviewed by, the Company and the Bank and their respective counsel. Accordingly, this
Agreement shall be deemed to be the product of each party hereto, and no ambiguity shall be
construed in favor of or against either the Company or the Bank.



     SECTION 9.16. USA PATRIOT Act. The Bank hereby notifies the Company that pursuant to
the requirements of USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that identifies the
Company, which information includes the name and address of the Company and other information that
will allow the Bank to identify the Company in accordance with the Act.



     SECTION 9.17. TerminationSECTION 9.18. . The obligations of the Company hereunder
shall terminate and be released upon the indefeasible payment in full of the Obligations, provided
that the provisions of Sections 3.07, 3.08, 3.09, 9.03 and 9.11 shall survive and remain in full
force and effect regardless of the repayment of the Loans or the termination of this Agreement or
any provision hereof.



     SECTION 9.18. Confidentiality. The Bank agrees to keep confidential all non-public
information, materials and documents furnished by the Company, the Guarantors and their respective
Subsidiaries to the Bank pursuant to this Agreement, provided that, in the case of



48









 







information received from the Company, a Guarantor or any Subsidiary after the date hereof, such
information is clearly identified at the time of delivery as confidential (the “Confidential
Information”). Notwithstanding the foregoing, the Bank shall be permitted to disclose Confidential
Information (a) to its Affiliates and to such of its and its Affiliate’s officers, directors,
employees, agents, representatives and professional advisors in any of the transactions
contemplated by, or the administration of, this Agreement; (b) to the extent required by applicable
laws and regulations or by any subpoena or similar legal process, or requested by any governmental
agency or authority; (c) to the extent such Confidential Information (i) becomes publicly available
other than as a result of a breach of this Section 9.18 by the disclosing party, or (ii) becomes
available to the Bank on a non-confidential basis from a source other than the Company, the
Guarantor or their respective Subsidiaries which to the Bank’s knowledge is not prohibited from
disclosing such Confidential Information to the Bank by a contractual or other legal obligation;
(d) to the extent the Company, the Guarantors or any of their respective Subsidiaries shall have
consented to such disclosure in writing; (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, or (f) to any
prospective transferee or participant in connection with any contemplated transfer of this
Agreement and the Notes or any interest therein provided such transferee or participant agrees to
treat the Confidential Information in a manner consistent with this Section 9.18. Nothing herein
shall prohibit the disclosure of Confidential Information in connection with any litigation or
where such disclosure is pursuant to applicable laws, regulations, court order or similar legal
process; provided, however, in the event that the Bank is requested or required by law to disclose
any of the Confidential Information, the Bank shall provide the Company with written notice, unless
notice is prohibited by law, of any such request or requirement so that the Company may seek a
protective order or other appropriate remedy; provided that no such notification shall be required
in respect of any disclosure to regulatory authorities having jurisdiction over such party.



[signature page follows]




49









 





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




	 	 	 	 	 
	 	 	GLOBECOMM SYSTEMS INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Andrew C. Melfi 
	 

	 	 	 	 
	 

	 	Name:
	 	Andrew C. Melfi
	 

	 	Title:
	 	Chief Financial Officer
	 
	 	 	 	 
	 	 	CITIBANK, N.A.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Stuart N. Berman 
	 
	 	 	 	 
	 

	 	Name:
	 	Stuart N. Berman
	 

	 	Title:
	 	Vice President






50









 





SCHEDULES TO THE CREDIT AGREEMENT




Schedule I (Subsidiaries and Affiliates)

 





Globecomm Network Services Corp., Delaware corporation, 100% owned by Globecomm Systems Inc.




GSI Properties Corp., New York corporation, 100% owned by Globecomm Systems Inc.




Globecomm Services Maryland LLC, Delaware limited liability company, 100% owned by Globecomm
Systems Inc.




Turbo Logic Associates LLC, Delaware limited liability company, 100% owned by Globecomm
Services Maryland LLC




Cachendo LLC, Delaware limited liability company, 100% owned by Globecomm Systems Inc.




B.V. Mach 6, a Netherlands B.V., 100% owned by Globecomm Systems Inc.



 
Schedule II (Liens existing on the date hereof)
 




     Other than for liens to Citibank, none



 Schedule III (Indebtedness incurred prior to the date hereof)




     Other than for indebtedness to Citibank, none



 Schedule IV (guaranties executed prior to the date hereof)




     Other than for guaranties to Citibank, none



 Schedule V (Existing Letters of Credit)




     (see excel spreadsheet attached)


Schedule VI (defaults with respect to any judgment, writ, injunction, decree, rule or
regulation of any Governmental Authority)




     None.