Document:

Exhibit
4.1

 

 

 

CREDIT AGREEMENT

 

dated as of
September    , 2003,

 

by and among

 

TESSCO TECHNOLOGIES
INCORPORATED,

CARTWRIGHT COMMUNICATIONS COMPANY,

TESSCO SERVICE SOLUTIONS, INC.,

TESSCO INCORPORATED,

TESSCO COMMUNICATIONS INCORPORATED,

WIRELESS SOLUTIONS INCORPORATED,

TESSCO BUSINESS SERVICES, LLC,

as Borrowers,

 

the Lenders referred to herein,

 

and

 

WACHOVIA BANK, NATIONAL
ASSOCIATION,

as Administrative Agent

 

and

 

SUNTRUST BANK,

as Arrangement Agent

 

 

 

 

CREDIT
AGREEMENT

 

 

CREDIT
AGREEMENT, dated as of the    th day of September, 2003, by and
among (a) TESSCO TECHNOLOGIES INCORPORATED, a Delaware corporation (“TESSCO”),
CARTWRIGHT COMMUNICATIONS COMPANY a Delaware corporation, TESSCO SERVICE
SOLUTIONS, INC., a Delaware corporation, TESSCO INCORPORATED, a Delaware
corporation, TESSCO COMMUNICATIONS INCORPORATED, a Delaware corporation,
WIRELESS SOLUTIONS INCORPORATED, a Maryland corporation, and TESSCO BUSINESS
SERVICES, LLC, a Delaware limited liability company, (all of the aforementioned
entities, including TESSCO, being hereinafter called collectively the
“Borrowers”); (b) the Lenders who are or may become a party to this
Agreement;  (c) WACHOVIA BANK, NATIONAL
ASSOCIATION, as Administrative Agent for the Lenders, (d) SUNTRUST BANK, as
Arrangement Agent.

 

STATEMENT OF
PURPOSE

 

The Borrowers
have requested, and the Lenders have agreed, to extend certain credit
facilities to the Borrowers on the terms and conditions of this Agreement.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties hereto, such parties hereby agree
as follows:

 

 

ARTICLE I

 

DEFINITIONS

 

 

SECTION 1.1                 Definitions.  The following terms when used in this Agreement
shall have the meanings assigned to them below:

 

“Account Debtor” means any Person who may become obligated to
any Borrower under, with respect to, or on account of, an Account.

 

“Accounts” means all “accounts,” as such term is defined in the
UCC, now owned or hereafter acquired by any Borrower, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by chattel paper, or
instruments), (including any such obligations that may be characterized as an
account or contract right under the UCC), (b) all of each Borrower’s rights in,
to and under all purchase orders or receipts for goods or services, (c) all of
each Borrower’s rights to any goods represented by any of the foregoing
(including unpaid sellers’ rights of rescission, replevin, reclamation and

 

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stoppage in transit and rights
to returned, reclaimed or repossessed goods), (d) all rights to payment due to
any Borrower for property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance issued or to be issued, for a secondary
obligation incurred or to be incurred, for energy provided or to be provided,
for the use or hire of a vessel under a charter or other contract, arising out
of the use of a credit card or charge card, or for services rendered or to be
rendered by such Borrower or in connection with any other transaction (whether
or not yet earned by performance on the part of such Borrower), (e) all health
care insurance receivables and (f) all collateral security of any kind, given
by any Account Debtor or any other Person with respect to any of the foregoing.

 

“Affiliate”
means, with respect to any Person, any other Person which directly or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such first Person or any of its Subsidiaries.

 

“Agent”
means Wachovia in its capacity as Administrative Agent hereunder, and any
successor thereto appointed pursuant to Section 12.9.

 

“Agent’s
Office” means the office of the Agent specified in or determined in
accordance with the provisions of Section 13.1(c).

 

“Aggregate
Commitment” means the aggregate amount of the Lenders’ Commitments
hereunder, as such amount may be reduced or modified at any time or from time
to time pursuant to the terms hereof. 
On the Closing Date, the Aggregate Commitment shall be Thirty Million
Dollars ($30,000,000).

 

“Agreement”
means this Credit Agreement, as amended, restated or otherwise modified in
accordance with the provisions of Section 13.11 hereof.

 

“Applicable
Law” means all applicable provisions of constitutions, laws, statutes,
ordinances, rules, treaties, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities and all orders
and decrees of all courts and arbitrators.

 

“Applicable
Margin” has the meaning assigned thereto in Section 4.1(c).

 

“Application”
means an application, in the form of the Issuing Lender’s then standard form of
application for a Letter of Credit or such other form as may be reasonably
specified by the Issuing Lender from time to time, requesting the Issuing
Lender to issue a Letter of Credit.

 

“Arrangement
Agent” means SunTrust Bank, in its capacity as Arrangement Agent.

 

“Asset Disposition”
means the disposition of the assets of any Borrower or any Subsidiary, whether
by sale, lease, transfer or other disposition (including any such disposition
effected by way of merger or consolidation).

 

“Assignment
and Acceptance” has the meaning assigned thereto in Section 13.10.

 

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“Available
Commitment” means, as to any Lender at any time, an amount equal to (a)
such Lender’s Commitment less (b) such Lender’s Extensions of Credit.

 

“Available
Funds” means the gross balance of collected funds in the Management
Account, less instruments presented for payment and installments of interest
then due and payable hereunder.

 

“Benefitted
Lender” has the meaning set forth in Section 4.5.

 

“Borrowing Base” means, as of any date of
determination an amount equal to the sum at such time of:

 

(a)                                  80% of the book value of Eligible
Accounts; and

 

(b)                                 50% of the book value of Eligible
Inventory valued at the lower of cost (determined on a first-in, first-out basis)
or market, in accordance with GAAP; provided that the amount advanced against
Eligible Inventory shall in no event exceed the lesser of 50% of all
outstanding Loans or $15,000,000; in each case, less the Static Inventory
Reserve and any other reserves from time to time reasonably established by the
Agent; provided that such reserves shall be reasonable under the facts and
circumstances then applicable to the Borrowers and their Inventory and
Accounts.

 

“Borrowing
Date” means the date upon which any Non-Cash Management Loan is to be made.

 

“Borrowers”
has the meaning given to such term in the Preamble hereto.

 

“Business
Day” means (a) for all purposes other than as set forth in clause (b)
below, any day other than a Saturday, Sunday or legal holiday on which banks in
Charlotte, North Carolina, Baltimore, Maryland and New York, New York are open
for the conduct of their commercial banking business, and (b) with respect to
all notices and determinations in connection with, and payments of principal
and interest on, any Loan bearing interest at a rate based upon the LIBOR Rate,
any day that is a Business Day described in clause (a) and that is also a day
for trading by and between banks in Dollar deposits in the London interbank
market.

 

“Business
Premises” means each business premises of any Borrower identified on Schedule 1.1
hereto and each business premises of any Borrower acquired after the date
hereof.

 

“Capital
Asset” means, with respect to the Borrowers and their Subsidiaries, any
asset that should, in accordance with GAAP, be classified and accounted for as
a capital asset on a Consolidated balance sheet of the Borrowers and their
Subsidiaries.

 

“Capital Expenditures” means, with
respect to any Person, all expenditures (by the expenditure of cash or the
incurrence of indebtedness) by such Person during any measuring period for any
fixed assets or improvements or for replacements, substitutions or additions
thereto, that have a useful life of more than one (1) year and that are
required to be capitalized under GAAP.

 

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“Capital
Lease” means, with respect to the Borrowers and their Subsidiaries, any
lease of any property that should, in accordance with GAAP, be classified and
accounted for as a capital lease on a Consolidated balance sheet of the
Borrowers and their Subsidiaries.

 

“Cash Flow” means, as to any Person,
such Person’s net income after taxes and any dividends plus interest expense,
plus depreciation, amortization and other non-cash charges to income, less any
capital expenditures not financed, less any non-cash income.

 

“Cash
Management Loan” means a Loan made pursuant to Section 2.2(b) hereof.

 

“Change in
Control” has the meaning assigned thereto in Section 11.1(g).

 

“Closing
Date” means the date of this Agreement or such later Business Day upon
which each condition described in Section 5.2 shall be satisfied or waived
in all respects in a manner acceptable to the Agent and the Lenders, in their
reasonable discretion.

 

“Code”
means the Internal Revenue Code of 1986, and the rules and regulations
thereunder, each as amended, supplemented or otherwise modified.

 

“Commitment”
means, as to any Lender, the obligation of such Lender to make Loans to and
issue or participate in Letters of Credit issued for the account of the
Borrowers hereunder in an aggregate principal or face amount at any time
outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1
hereto, as the same may be reduced or modified at any time or from time to time
pursuant to the terms hereof.

 

“Commitment
Percentage” means, as to any Lender at any time, the ratio of (a) the
amount of the Commitment of such Lender to (b) the Aggregate Commitment of all
of the Lenders.

 

“Consolidated”
means, when used with reference to financial statements or financial statement
items of the Borrowers and their Subsidiaries, such statements or items on a
consolidated basis in accordance with applicable principles of consolidation
under GAAP.

 

“Contracts” means all “contracts,” as such term
is defined in the UCC, now owned or hereafter acquired by any Borrower, in any
event, including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Borrower may now or hereafter have any right, title or interest, including any
agreement relating to the terms of payment or the terms of performance of any
Account.

 

“Credit
Facility” means the collective reference to the Revolving Credit Facility
and the L/C Facility.

 

“Debt”
means, with respect to the Borrowers and their Subsidiaries at any date and
without duplication, the sum of the following calculated in accordance with
GAAP:  (a) all liabilities, obligations
and indebtedness for borrowed money including but not limited to obligations
evidenced by bonds, debentures, notes or other similar instruments of any such
Person, (b) all obligations to pay the deferred purchase price of property or
services of any such Person, (c) all obligations of any such

 

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Person as lessee under Capital
Leases, (d) all Debt of any other Person secured by a Lien on any asset of any
such Person, (e) all Guaranty Obligations of any such Person, (f) all
obligations, contingent or otherwise, of any such Person relative to the face
amount of letters of credit, whether or not drawn, including without limitation
any Reimbursement Obligation, and banker’s acceptances issued for the account
of any such Person, (g) all obligations of any such Person to redeem,
repurchase, exchange, defease or otherwise make payments in respect of capital
stock or other securities of such Person and (h) all obligations incurred by
any such Person pursuant to Hedging Agreements.

 

“Debt Service” means, for any Person for any
period, (a) interest expense for such period, plus (b) current maturities
of long term debt and payments due under capital leases for such period.

 

“Default”
means any of the events specified in Section 11.1 which, with the passage
of time, the giving of notice or any other condition, would constitute an Event
of Default.

 

“Dollars”
or “$” means, unless otherwise qualified, dollars in lawful currency of the
United States.

 

“EBITDA” means the Borrowers’ combined earnings before interest,
taxes, depreciation, amortization and other non-cash charges to income.

 

“Eligible Account” means, as of any time, all Accounts of any
Borrower which meet the following criteria (and such additional criteria as may
be added by the Lenders in their reasonable discretion upon prior written
notice to the Borrowers; provided that such additional criteria are reasonable
under the facts and circumstances then applicable to the Borrowers and their
Accounts) at the time of creation and continue to meet such criteria at all times
to the reasonable satisfaction of the Lenders:

 

(a)                                  the Account arises
from the sale of goods or the performance of services by such Borrower in the
ordinary course of its business;

 

(b)                                 such
Borrower’s right to receive payment is absolute and is not contingent upon the
fulfillment of any condition whatsoever;

 

(c)                                  the
Account Debtor’s obligation to pay the applicable invoice is not subject to
such Borrower’s completion of further performance under the applicable Contract
and is not subject to the equitable lien of a surety bond issuer. The Agent and
the Lenders acknowledge and agree that in the ordinary course of the Borrowers’
business, all or substantially all of the Account Debtors have a right to
return purchased inventory for a period of up to thirty (30) days for repair or
replacement and that the Borrowers provide warranties in respect of Inventory
sold and for which payment is otherwise due. 
Accordingly, the Agent and the Lenders agree that no Account shall be
deemed ineligible solely because of this return or replacement policy, or any
warranty or other return or replacement policy implemented in the ordinary
course of the Borrowers’ business;

 

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(d)                                 no
defense, counterclaim, setoff or dispute is asserted and pending as to such
Account; provided, however, that in the event the same shall have been asserted
and is pending and the Account otherwise qualifies as an Eligible Account, the
Account shall nevertheless be an Eligible Account to the extent that the
defense, counterclaim, setoff, or dispute shall not have been asserted or is no
longer pending;

 

(e)                                  the
Account is a true and correct statement of bona fide indebtedness incurred in
the amount of the Account for merchandise sold to or services rendered and
accepted by the applicable Account Debtor;

 

(f)                                    an
invoice, consistent as to form with sound business practices, has been sent or
delivered to the applicable Account Debtor;

 

(g)                                 the
Account is owned by such Borrower and is not subject to any right, claim,
security interest or other interest of any other Person except for Permitted
Liens (other than Permitted Liens set forth in Section 10.3(d), (e),
(h)(ii), (j), (k) or (l));

 

(h)                                 the
Account does not arise from a sale to any director, officer, other employee or
Affiliate of any Borrower;

 

(i)                                     the
Account Debtor is not located in a foreign country unless payment thereof is
assured by a letter of credit or insurance reasonably satisfactory to the
Lenders as to form, amount and issuer;

 

(j)                                     the
Account does not arise with respect to goods that are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may
be conditional;

 

(k)                                  the
Account Debtor has not failed to pay the Account within the earlier of 60 days
following its due date or 90 days following its original invoice date, and the
Account is not in default as a result of any matter other than failure to pay
within such time periods;

 

(l)                                     the
Account is not owed by an Account Debtor that suspends business, makes a
general assignment for the benefit of creditors or fails to pay its debts
generally as they come due;

 

(m)                               the
Account is not owed by an Account Debtor that is the subject of a petition
filed by or against the Account Debtor under any bankruptcy law or any other
federal, state or foreign (including any provincial) receivership, insolvency
relief or other law or laws for the relief of debtors;

 

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(n)                                 the Account is not
owed by an Account Debtor from whom 50% or more of the Dollar amount of all
Accounts owing are ineligible under the other criteria set forth herein;

 

(o)                                 All
of the representations or warranties in the Loan Documents with respect to the
Account are true in all material respects as of the date made or deemed made;

 

(p)                                 the
Account is not evidenced by a judgment, Instrument or Chattel Paper; and

 

(q)                                 the
Account is not payable in any currency other than Dollars.

 

“Eligible
Assignee” means, with respect to any assignment of the rights, interest and
obligations of a Lender hereunder, a Person that is at the time of such
assignment (a) a commercial bank organized under the laws of the United States
or any state thereof, having combined capital and surplus in excess of
$500,000,000, (b) a commercial bank organized under the laws of any other
country that is a member of the Organization of Economic Cooperation and
Development, or a political subdivision of any such country, having combined
capital and surplus in excess of $500,000,000, (c) a finance company, insurance
company or other financial institution which in the ordinary course of business
extends credit of the type extended hereunder and that has total assets in
excess of $1,000,000,000, (d) already a Lender hereunder (whether as an
original party to this Agreement or as the assignee of another Lender), (e) the
successor (whether by transfer of assets, merger or otherwise) to all or
substantially all of the commercial lending business of the assigning Lender,
or (f) any other Person that has been approved in writing as an Eligible
Assignee by the Borrowers and the Agent.

 

“Eligible Inventory” means, as of any time, all Inventory of any
Borrower which meets the following criteria (and such additional criteria as
may be added by the Lenders in their reasonable discretion upon prior written
notice to the Borrowers; provided that such additional criteria, and the
addition thereof, are reasonable under the facts and circumstances then
applicable to the Borrowers and their Inventory) at the time of creation and
continues to meet such criteria at all times to the reasonable satisfaction of
the Lenders:

 

(a)                                  the Inventory is
owned by the Borrower free and clear of all Liens and rights of any other
Person (including the rights of a purchaser that has made progress payments and
the rights of a surety that has issued a bond to assure such Borrower’s
performance with respect to that Inventory) except for Permitted Liens (other
than Permitted Liens set forth in Section 10.3(d), (e), (h)(ii), (j), (k)
or (l));

 

(b)                                 the Inventory is not
placed on consignment or in transit;

 

(c)                                  the Inventory is not
covered by a negotiable document of title, unless such document is in the
possession of the applicable Borrower, free and clear of all Liens except for
Permitted Liens (other than Permitted Liens set forth in Section 10.3(d),
(e), (h)(ii), (j), (k) or (l));

 

8

 

(d)                                 the Inventory is not
excess, obsolete, unsalable, shopworn, seconds, damaged or unfit for sale, as
determined by the Lenders in their reasonable discretion;

 

(e)                                  the Inventory does
not consist of display items or packing or shipping materials, manufacturing
supplies, or work-in-process Inventory;

 

(f)                                    the Inventory does
not consist of goods which have been returned by the buyer and which are not
salable in the ordinary course of the Borrowers’ business;

 

(g)                                 the Inventory is of a
type held for sale in the ordinary course of such Borrower’s business;

 

(h)                                 the representations or
warranties pertaining to the Inventory set forth in the Loan Documents are true
and accurate in all material respects when made or deemed made;

 

(i)                                     the Inventory does
not consist of Hazardous Materials (except for Hazardous Materials which are
handled, stored, processed, assembled and otherwise held in compliance with all
applicable Environmental Laws) or goods that can be transported or sold only
with licenses that are not generally available; and

 

(j)                                     the Inventory is
covered by casualty insurance reasonably acceptable to the Lenders.

 

“Employee Benefit Plan” means any
employee benefit plan within the meaning of Section 3(3) of ERISA which
(a) is maintained for the employees of the Borrowers or any ERISA Affiliate or (b)
has at any time within the preceding six years been maintained for the
employees of the Borrowers or any current or former ERISA Affiliate.

 

“Environmental
Laws” means any and all federal, state and local laws, statutes,
ordinances, rules, regulations, permits, licenses, approvals, interpretations
and orders of courts or Governmental Authorities, relating to the protection of
human health or the environment, including, but not limited to, requirements
pertaining to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, handling, reporting, licensing, permitting,
investigation or remediation of Hazardous Materials.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, and the rules and
regulations thereunder, each as amended, supplemented or otherwise modified.

 

9

 

“ERISA
Affiliate” means any Person who together with the Borrowers is treated as a
single employer within the meaning of Section 414(b), (c), (m) or (o) of
the Code or Section 4001(b) of ERISA.

 

“Eurodollar
Reserve Percentage” means, for any day, the percentage, if any, (expressed
as a decimal and rounded upwards, if necessary, to the next higher 1/100th of
1%) which is in effect for such day as prescribed by the Federal Reserve Board
(or any successor) for determining the maximum reserve requirement (including
without limitation any basic, supplemental or emergency reserves) in respect of
eurocurrency liabilities or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.

 

“Event of
Default” means any of the events specified in Section 11.1, provided
that any requirement for passage of time, giving of notice, or any other
condition, has been satisfied.

 

“Excess
Funds” means, at any time, the amount by which the Available Funds exceed
the Target Balance.

 

“Existing
Facility” means the revolving credit facility initially established by
certain of the Borrowers, and others, and NationsBank, N.A. (predecessor in
interest to Bank of America, N.A.), pursuant to a Financing Agreement dated
March 31, 1995, as the same may from time to time have been amended,
restated, supplemented, or otherwise modified.

 

“Extensions
of Credit” means, as to any Lender at any time, an amount equal to the sum
of (a) the aggregate principal amount of all Loans made by the Lender then
outstanding, (b) the Lender’s Commitment Percentage of the L/C Obligations then
outstanding and (c) the Lender’s Commitment Percentage of the Unsettled Loans.

 

“FDIC”
means the Federal Deposit Insurance Corporation, or any successor thereto.

 

“Federal
Funds Rate” means, the rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) representing the daily effective federal funds
rate as quoted by the Agent and confirmed in Federal Reserve Board Statistical
Release H.15 (519) or any successor or substitute publication selected by the
Agent.  If, for any reason, such rate is
not available, then “Federal Funds Rate” shall mean a daily rate which is
determined, in the opinion of the Agent, to be the rate at which federal funds
are being offered for sale in the national federal funds market at 9:00 a.m.
(Baltimore time).  Rates for weekends or
holidays shall be the same as the rate for the immediately preceding Business
Day.

 

“Fiscal
Year” means the fiscal year of the Borrowers and their Subsidiaries of 52
or 53 weeks ending on the Sunday following, on, or between March 26 and
April 1 of each calendar year.

 

“Funded Debt” means any indebtedness of the Borrowers and their
operating Subsidiaries to any person for borrowed moneys, which is shown on the
balance sheet of the Borrowers as a liability under GAAP.

 

10

 

“GAAP”
means generally accepted accounting principles, as recognized by the American
Institute of Certified Public Accountants and the Financial Accounting
Standards Board, consistently applied and maintained on a consistent basis for
the Borrowers and their Subsidiaries throughout the period indicated and
consistent with the prior financial practice of the Borrowers and their
Subsidiaries.

 

“Governmental
Approvals” means all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and reports to, all Governmental
Authorities.

 

“Governmental
Authority” means any nation, province, state or political subdivision
thereof, and any government or any Person exercising executive, legislative,
regulatory or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.

 

“Guaranty
Obligation” means, with respect to the Borrowers and their Subsidiaries,
without duplication, any obligation, contingent or otherwise, of any such
Person pursuant to which such Person has directly or indirectly guaranteed any
Debt or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of any such Person (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, or by agreement to keep well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement condition or otherwise) or (b) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, that the term Guaranty
Obligation shall not include endorsements for collection or deposit in the
ordinary course of business.

 

“Hazardous
Materials” means any substances or materials (a) which are or become
defined as hazardous wastes, hazardous substances, pollutants, contaminants,
chemical substances or mixtures or toxic substances under any Applicable Law,
(b) which are toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise harmful to human health or the environment
and are or become regulated by any Governmental Authority, (c) the
presence of which require investigation or remediation under any Applicable
Law, (d) the discharge or emission or release of which requires a permit or
license under any Applicable Law or other Governmental Approval, (e) which
are deemed to constitute a nuisance or a trespass or to pose a health or safety
hazard to persons or neighboring properties, (f) which consist of
underground or aboveground storage tanks, whether empty, filled or partially
filled with any substance, or (g) which contain, without limitation,
asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel,
natural gas or synthetic gas.

 

“Hedging
Agreement” means any agreement with respect to an interest rate swap,
collar, cap, floor or a 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 Borrowers, and any confirming letter executed
pursuant to such hedging agreement, all as amended, restated or otherwise
modified.

 

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 “Interest
Expense” means, for any period, total interest expense (including, without
limitation, interest expense attributable to capital leases) determined on a
Consolidated basis, without duplication, for the Borrowers and their
Subsidiaries in accordance with GAAP.

 

“Inventory” means all “inventory,” as such term
is defined in the UCC, now owned or hereafter acquired by any Borrower,
wherever located, and in any event including inventory, merchandise, goods and
other personal property that are held by or on behalf of any Borrower for sale
or lease or are furnished or are to be furnished under a contract of service,
or that constitute raw materials, work in process, finished goods, returned
goods, or materials or supplies of any kind, nature or description used or
consumed or to be used or consumed in such Borrower’s business or in the
processing, production, packaging, promotion, delivery or shipping of the same,
including all supplies and embedded software.

 

“Investment” means overnight
repurchase agreements through Wachovia Investment Securities, with a minimum
investment of $1,000.

 

“Issuing
Lender” means Wachovia, in its capacity as issuer of any Letter of Credit,
or any successor thereto.

 

“L/C
Commitment” means Five Million Dollars ($5,000,000).

 

“L/C
Facility” means the letter of credit facility established pursuant to
Article III hereof.

 

“L/C
Obligations” means, at any time, an amount equal to the sum of (a) the
aggregate undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to Section 3.5.

 

“L/C
Participants” means the collective reference to all of the Lenders other
than the Issuing Lender.

 

“Lender”
means each Person executing this Agreement as a Lender set forth on the
signature pages hereto and each Person that hereafter becomes a party to this
Agreement as a Lender pursuant to Section 13.10.

 

“Lending
Office” means, with respect to any Lender, the office of such Lender
maintaining such Lender’s Commitment Percentage of the Loans.

 

“Letters of
Credit” has the meaning assigned thereto in Section 3.1.

 

“LIBOR”
means, at any time, the rate of interest per annum determined on the basis of
the rate for deposits in Dollars for a one-month period which appears on the
Telerate Page 3750 (rounded upward, if necessary, to the nearest one-sixteenth
of one percent (1/16%)).

 

“LIBOR Rate”
means a rate per annum (rounded upwards, if necessary, to the next higher
1/100th of 1%) determined by the Agent pursuant to the following formula:

 

12

 

	
  LIBOR Rate =

  	
  LIBOR

  	
   

  	
   

  
	
   

  	
  1.00-Eurodollar Reserve Percentage

  	
   

  

 

“Lien”
means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset.  For the purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other title retention agreement relating to such
asset.

 

“Loan
Documents” means, collectively, this Agreement, the Note, the Applications,
any Hedging Agreement with any Lender which is now or hereafter permitted or
required hereunder, and each other document, instrument, certificate and
agreement executed and delivered by any Borrower, any Subsidiary or their
counsel in connection with this Agreement or otherwise referred to herein or contemplated
hereby, all as may be amended, restated or otherwise modified.

 

“Loans” means any loan made to the
Borrowers pursuant to Section 2.1, and all such loans collectively as the
context requires.

 

“Management
Account” means the Borrowers’ deposit account number 2000113833602 at
Wachovia.

 

“Material
Adverse Effect” means, with respect to the Borrowers, a material adverse
effect on the properties, business, prospects, operations or condition
(financial or otherwise) of the Borrowers, on a Consolidated basis, or on the
ability of the Borrowers, taken as a whole, to perform their obligations under
the Loan Documents.

 

“Multiemployer
Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA to which any Borrower or any ERISA Affiliate is making, or is accruing an
obligation to make, contributions within the preceding six years.

 

“Net Amount” means, as of the date of
any Report, the amount payable by or to each Lender such that, after giving
effect thereto, such Lender shall have funded the Loans in an amount equal to
its Commitment Percentage of the outstanding principal amount thereof on such
date.

 

“Net Casualty Proceeds” means the
gross proceeds from and casualty or condemnation proceeds remaining after
payment of all expenses (including attorneys’ fees) incurred in connection with
the collection of such gross proceeds and taxes payable in connection
therewith.

 

“Net Proceeds” means gross proceeds
(cash or non-cash) or other consideration paid to, or received by, any Borrower
from (a) any Asset Disposition (including, without limitation, any issuance or
assumption of Debt or the issuance of securities), net of customary and
reasonable settlement costs, fees, expenses and taxes payable in connection
with such Asset Disposition or (b) any sale, issuance, or other offering of
Debt or securities net of customary and reasonable costs, fees, and expenses.

 

13

 

“Net Worth” means, with respect to any Person
as of any date of determination, the book value of the assets of such Person, minus
the sum of (a) reserves applicable thereto, and (b) all of such Person’s
liabilities on a Consolidated basis (including accrued and deferred income
taxes), all as determined in accordance with GAAP.

 

“Non-Cash Management Loan” means any Loan other
than a Cash Management Loan made pursuant to Section 2.2(b) hereof.

 

“Note” means the Revolving Credit Note
made by the Borrowers payable to the order of the Lenders in care of the Agent,
substantially in the form of Exhibit A hereto, evidencing the Revolving
Credit Facility, and any amendments and modifications thereto, any substitutes
therefor, and any replacements, restatements, renewals or extension thereof, in
whole or in part.

 

“Notice of
Borrowing” has the meaning assigned thereto in Section 2.3(a).

 

“Obligations”
means, in each case, whether now in existence or hereafter arising: (a) the
principal of and interest on (including interest accruing after the filing of
any bankruptcy or similar petition) the Loans, (b) the L/C Obligations, (c) all
payment and other obligations owing by the Borrowers to any Lender or the Agent
under any Hedging Agreement with any Lender which is permitted or required
hereunder, and (d) all other fees and commissions (including reasonable attorney’s
fees), charges, indebtedness, loans, liabilities, financial accommodations,
obligations, covenants and duties owing by the Borrowers to the Lenders or the
Agent, of every kind, nature and description, direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated or
unliquidated, and whether or not evidenced by any note, in each case under or
in respect of this Agreement, the Note, any Letter of Credit or any of the
other Loan Documents.

 

“Officer’s
Compliance Certificate” has the meaning assigned thereto in
Section 7.2.

 

“Other
Taxes” has the meaning assigned thereto in Section 4.9(b).

 

“PBGC” means the Pension Benefit
Guaranty Corporation or any successor agency.

 

“Pension
Plan” means any Employee Benefit Plan, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412 of
the Code and which (a) is maintained for employees of the Borrowers or any
ERISA Affiliates or (b) has at any time within the preceding six years been
maintained for the employees of the Borrowers or any of their current or former
ERISA Affiliates.

 

“Permitted
Acquisition” means the acquisition or purchase of, or investment in, any
Person, any operating division or unit of any Person, or the capital stock or
operational assets of any Person or the combination with any Person by any
Borrower or any Subsidiary (each individually, a “Subject Transaction”)
regardless of the structure of the Subject Transaction, provided that either
(1) such acquisition, purchase, investment, or combination is approved by the
Banks in writing prior to consummation, or (2) such acquisition, purchase,
investment or combination meets the following criteria:

 

14

 

(a)                                  the
aggregate purchase price of, investment in, acquisition expenditures relating
to (excluding customary and reasonable transaction costs) and assumed
liabilities in connection with all such Subject Transactions, in the aggregate,
shall not exceed at any time or in any circumstance $5,000,000,

 

(b)                                 such
Subject Transaction shall not otherwise constitute, give rise to, or occur
during the continuance of a Default or an Event of Default,

 

(c)                                  the
Borrowers shall have furnished financial projections in form and content reasonably
acceptable to the Lenders which give effect to such Subject Transaction and
which project that such Subject Transaction would not cause a Default or Event
of Default (provided that the Lenders agree that such projections shall not
constitute a guaranty of actual performance),

 

(d)                                 if
and to the extent the Subject Transaction consists of the purchase or
acquisition of a Person which is to be a Subsidiary of a Borrower or merged
into a Subsidiary of a Borrower created for the express purpose of consummating
the proposed acquisition, the Borrower shall comply with the provisions of
Section 8.12, and

 

(e)                                  if
the Subject Transaction involves the merger or consolidation of a Borrower with
any other party, the applicable Borrower will be the surviving entity in any
such merger or consolidation.

 

“Permitted
Asset Disposition” means any one of the following Asset Dispositions;
provided that no such Asset Disposition shall be permitted at any time
following the occurrence of a Default or an Event of Default or if and to the
extent any such Asset Disposition would give rise to a Default or an Event of
Default, unless otherwise agreed in writing by the Lenders:

 

(a)                                  an
Asset Disposition for which the sum of (A) the Net Proceeds to be paid to or
received by the Borrower and/or any Subsidiary with respect to such Asset
Disposition, plus (B) the aggregate amount of all Net Proceeds paid to or
received by any or all of the Borrowers and/or any or all Subsidiaries, is less
than or equal to $1,000,000 during any Fiscal Year;

 

(b)                                 sales
of Inventory in the ordinary course of business,

 

(c)                                  the
licensing of patents, trademarks and/or copyrights, in the ordinary course of
business,

 

(d)                                 dispositions
of worn, used, surplus or obsolete tangible property in the ordinary course of
business,

 

(e)                                  dispositions
of assets (including Net Casualty Proceeds) to the extent such assets are
replaced with assets of similar kind and function, provided that the
replacement assets shall be purchased no later than ninety (90) days following
the Asset Disposition, the replacement assets shall be free and clear of Liens
other than Permitted Liens that are not Liens securing purchase money, finance,
or capital lease arrangements, and the Borrowers shall give the Lenders at
least ten (10) days prior written notice of such Asset Disposition, except for
an Asset Disposition which constitutes a casualty,

 

15

 

(f)                                    intercompany
sales, leases or other dispositions of assets among and between the Borrowers;
and

 

(g)                                 the
sale of any Capital Assets acquired by any Borrower or any Subsidiary and the
leaseback of such assets within thirty (30) days of acquisition, but only as
contemplated and required as part of an intended Capital Lease transaction at
the time of acquisition.

 

“Permitted
Lien” means a lien permitted by the provisions of Section 10.3.

 

“Person”
means an individual, corporation, limited liability company, partnership,
association, trust, business trust, joint venture, joint stock company, pool,
syndicate, sole proprietorship, unincorporated organization, Governmental
Authority or any other form of entity or group thereof.

 

“Prime Rate”
means, at any time, the rate of interest per annum publicly announced from time
to time by Wachovia as its prime rate. 
Each change in the Prime Rate shall be effective as of the opening of
business on the day such change in the Prime Rate occurs.  The parties hereto acknowledge that the rate
announced publicly by Wachovia as its Prime Rate is an index or base rate and
shall not necessarily be its lowest or best rate charged to its customers or
other banks.

 

“Register”
has the meaning assigned thereto in Section 13.10(d).

 

“Reimbursement
Obligation” means the obligation of the Borrowers to reimburse the Issuing
Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit.

 

“Report”
has the meaning set forth in Section 2.3.

 

“Required
Lenders” means, at any date, any combination of holders of at least
fifty-one percent (51%) of the aggregate Commitment Percentages.

 

“Responsible
Officer” means any of the following: the chief executive officer or chief
financial officer of any Borrower or any other officer of a Borrower reasonably
acceptable to the Agent.

 

“Revolving
Credit Facility” means the revolving credit facility established pursuant
to Article II hereof.

 

“Scheduled Maturity Date” has the
meaning given to such term in Section 2.6.

 

“Settlement
Date” has the meaning given to such term in Section 2.3(b) hereof.

 

“Solvent”
means, as to the Borrowers and their Subsidiaries on a particular date, that
any such Person (a) has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage
and is able to pay its debts as they mature, (b) owns property having a value,
both at fair valuation and at present fair saleable value, greater than the

 

16

 

amount required to pay its probable liabilities (including
contingencies), and (c) does not believe that it will incur debts or
liabilities beyond its ability to pay such debts or liabilities as they mature.

 

“Static
Inventory Reserve” means, at any time, a reserve in the amount of 2.5% of
the total book value of the Borrowers’ Inventory.

 

“Subordinated
Debt” means the collective reference to Debt on Schedule 6.1(s)
hereof designated as Subordinated Debt and any other Debt of any Borrower or
any Subsidiary subordinated in right and time of payment to the Obligations on
terms satisfactory to the Required Lenders.

 

“Subsidiary”
means as to any Person, any corporation, partnership, limited liability company
or other entity of which more than fifty percent (50%) of the outstanding
capital stock or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other managers of such
corporation, partnership, limited liability company or other entity is at the
time, directly or indirectly, owned by or the management is otherwise
controlled by such Person (irrespective of whether, at the time, capital stock
or other ownership interests of any other class or classes of such corporation,
partnership, limited liability company or other entity shall have or might have
voting power by reason of the happening of any contingency).  Unless otherwise qualified references to
“Subsidiary” or “Subsidiaries” herein shall refer to those of the Borrowers.

 

“SunTrust”
means SunTrust Bank and its successors.

 

“Tangible
Net Worth” means, with respect to any Person at any date, the Net Worth of
such Person at such date, excluding, however, from the
determination of the total assets at such date, (a) all goodwill, capitalized
organizational expenses, capitalized research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other intangible items, (b) all unamortized debt
discount and expense, (c) treasury stock, (d) any write-up in the book value of
any asset resulting from a revaluation thereof, and (e) all loans or advances to
officers, Affiliates, and related parties.

 

“Target
Balance” means $0.00.

 

“Taxes”
has the meaning assigned thereto in Section 4.9(a).

 

“Termination
Date” means the earliest of the dates referred to in Section 2.6.

 

“Termination
Event” means:  (a) a “Reportable
Event” described in Section 4043 of ERISA, or (b) the withdrawal of the
Borrowers or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a “substantial employer” as defined in Section 4001(a)(2) of
ERISA, or (c) the termination of a Pension Plan, the filing of a notice of
intent to terminate a Pension Plan or the treatment of a Pension Plan amendment
as a termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate, or the appointment of a trustee with respect to, any
Pension Plan by the PBGC, or (e) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the termination of,
or the appointment of a trustee to administer, any Pension 

 

16

 

Plan, or (f) the partial or complete withdrawal of the Borrowers or any
ERISA Affiliate from a Multiemployer Plan, or (g) the imposition of a Lien
pursuant to Section 412 of the Code or Section 302 of ERISA, or (h)
any event or condition which results in the reorganization or insolvency of a
Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i) any event or
condition which results in the termination of a Multiemployer Plan under
Section 4041A of ERISA or the institution by PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.

 

“Total Debt”
means, as of any date of determination with respect to the Borrowers and their
Subsidiaries on a Consolidated basis without duplication, the sum of all Debt
of the Borrowers and their Subsidiaries.

 

“Uniform
Customs” means the Uniform Customs and Practice for Documentary Credits
(1994 Revision), International Chamber of Commerce Publication No. 500.

 

“UCC”
means the Uniform Commercial Code as in effect in the State of Maryland, as
amended, restated or otherwise modified.

 

“United
States” means the United States of America.

 

“Unsettled
Loan” means any Cash Management Loan for which settlement has not yet been
made under Section 2.3(b).

 

“Wachovia”
means Wachovia Bank, National Association, a national banking association, and
its successors.

 

“Wholly-Owned”
means, with respect to a Subsidiary, that all of the shares of capital stock or
other ownership interests of such Subsidiary are, directly or indirectly, owned
or controlled by a Borrower and/or one or more of its Wholly-Owned
Subsidiaries.

 

SECTION 1.2                                                   General.  Unless
otherwise specified, a reference in this Agreement to a particular section,
subsection, Schedule or Exhibit is a reference to that section,
subsection, Schedule or Exhibit of this Agreement.  Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, the feminine and the
neuter.

 

SECTION 1.3                                                   Other
Definitions and Provisions

 

(a)                                  Use
of Capitalized Terms.  Unless
otherwise defined therein, all capitalized terms defined in this Agreement
shall have the defined meanings when used in this Agreement, the Note and the
other Loan Documents or any certificate, report or other document made or
delivered pursuant to this Agreement.

 

(b)                                 Miscellaneous.  The words “hereof”, “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.

 

17

 

ARTICLE II

 

REVOLVING CREDIT FACILITY

 

SECTION 2.1                                                  Loans.  Subject to
the terms and conditions of this Agreement, each Lender severally agrees to
make Loans to the Borrowers from time to time from the Closing Date through the
Termination Date as requested by the Borrowers in accordance with the terms of
Section 2.2; provided, that (a) the aggregate principal amount of
all outstanding Loans (after giving effect to any amount requested) shall not
exceed the lesser of the Aggregate Commitment or the Borrowing Base, less
the sum of all outstanding L/C Obligations and (b) the principal amount of
outstanding Loans from any Lender to the Borrowers shall not at any time exceed
such Lender’s Commitment less the sum of such Lender’s Commitment
Percentage of outstanding L/C Obligations and the Lender’s Commitment
Percentage of Unsettled Loans.  Subject
to the terms and conditions hereinafter set forth, each Loan by a Lender shall
be in a principal amount equal to such Lender’s Commitment Percentage of the
aggregate principal amount of Loans requested on such occasion.  Subject to the terms and conditions hereof,
the Borrowers may borrow, repay and reborrow Loans hereunder until the
Termination Date.

 

SECTION 2.2                                                  Borrowing
Procedure.

 

(a)                                  Except
as hereinafter provided, all requests by the Borrowers for Loans shall be made
by notice in writing (a “Notice of Borrowing”) in the form attached hereto as Exhibit
B, accompanied by such information and documents concerning, as applicable,
the amount of the Loan and the applicable Borrowing Date, the Borrowers’
financial condition, and/or other matters as the Lenders may from time to time
require.  The Borrowers agree that they
shall not request (a) any Loan that would cause the outstanding principal
balance of the Loans to exceed the lesser of the Aggregate Commitment or the
Borrowing Base, less the amount of any outstanding L/C Obligations. If for any
reason the sum of the outstanding Loans shall nevertheless exceed the lesser of
the Aggregate Commitment or the Borrowing Base less the outstanding L/C
Obligations, the Borrowers shall remain liable for the entire amount
outstanding, with interest, fees, and charges thereon as provided herein, and
the Borrowers shall immediately upon demand pay to the Agent for the benefit of
the Lenders the amount of such excess, with interest thereon as provided
herein.

 

(b)                                 (i)  In order to accommodate the Borrowers’
desire to manage their cash by initiating borrowings and payments under
Wachovia’s Target Plus cash management program, borrowings and payments of
Loans may be requested and made as described in this Section 2.2(b).
Wachovia will monitor the Management Account on each Business Day to determine
the amount of Excess Funds, if any, in the Management Account, and the
Borrowers authorize Wachovia to transfer Excess Funds from the Management
Account and apply the same in the following order of priority: first in payment
of Loans then outstanding, and second, to purchase the Investment (or increase
the amount of the existing Investment) to the extent that minimum investment
requirements are met.

 

18

 

(ii)                                  If Wachovia
determines on any Business Day that the amount of Available Funds is, or would
upon presentment of instruments and obligations then currently held by Wachovia
pending presentment be, less than the Target Balance, the Borrowers authorize
Wachovia to liquidate the Investment, in whole or in part in accordance with
the minimum investment requirements associated with the Investment, and
transfer the proceeds of such liquidation to the Management Account in order to
cause Available Funds to equal at least the Target Balance.  If after liquidation of the entire
Investment and transfer of the liquidation proceeds to the Management Account,
Available Funds are, or would upon presentment as aforesaid be, still less than
the Target Balance, Wachovia shall, provided that all of the terms and
conditions of this Agreement applicable to the Borrowers have been met,
simultaneously make a Cash Management Loan in the amount necessary to cause the
Available Funds to equal at least the Target Balance, without the necessity of
any formal request therefor to be made by the Borrowers, and the proceeds of
such Cash Management Loan will be simultaneously deposited by Wachovia in the
Management Account and simultaneously applied insofar as necessary to satisfy
instruments presented against the Borrowers’ account for payment (including,
without limitation, authorized electronic funds transfers), and to satisfy due
and unpaid Obligations of the Borrowers hereunder relating to the payment of interest
(without the necessity for the Borrowers to provide direction to Wachovia to
make payment of such interest, which direction shall be presumed unless and
until the Lenders may be notified to the contrary at any time by the Borrowers,
and which payments shall, assuming sufficient Available Funds following
application of the above procedures, be automatic), such that the balance in
the Management Account will not actually go below the Target Balance.

 

(iii)                               The Borrowers shall pay
to Wachovia a monthly service charge for the services to be performed by
Wachovia under its Target Plus cash management program, which charge shall be
determined from time to time according to the schedule of such charges
which may be established from time to time by Wachovia.  The Borrowers acknowledge that the services
to be performed by Wachovia under its Target Plus cash management program are
provided as a service accommodation to the Borrowers and do not, and shall not,
constitute conditions to or considerations for the Obligations, and, therefore,
none of the Agent, Wachovia, or any other Lender shall be liable to the
Borrowers and the Borrowers shall not be entitled to any reduction in interest
charged to the Borrowers on the Loans on account of any failure of Wachovia to
make any Investment for the Borrowers or to cause any reduction to be made in
the principal amount of Loans outstanding; provided, however, that Wachovia
shall be responsible to the Borrowers for any loss or liability that the
Borrowers sustain as a result of the gross negligence or willful misconduct of
Wachovia in the operation of the program. 
Nothing herein contained shall be construed to limit, diminish, or in
any way impair any security interest, lien, or right of setoff of the Agent for
the benefit of the Lenders, or any Lender. 
Wachovia makes no warranties, express or implied, as to any
Investment.  The Lenders acknowledge and
agree that the monthly service charge paid by the Borrowers to Wachovia under
this Section 2.2 shall be for the account of Wachovia only and shall not
be shared by the Lenders in accordance with their Commitment Percentages or
otherwise.

 

(iv)                              At any time Wachovia may
terminate the operation of the Target Plus cash management program without
prior notice to the Borrowers; provided, however, that Wachovia shall endeavor
to give prior notice to the Borrowers of any proposed termination. After
termination of such program, the Borrowers may request Loans only in accordance
with the provisions of Section 2.2(a).

 

19

 

SECTION 2.3                                                  Funding
Procedure.

 

(a)                                  Non-Cash Management Loans.  Upon receipt from the Borrowers
of a request for a Non-Cash Management Loan, Agent shall promptly notify each
Lender thereof by fax or other written notice. 
Each Lender will make the amount of its Commitment Percentage of each
such Loan requested available to Agent, for the account of the Borrowers, at
the office of Agent located at 7 St. Paul Street, Baltimore, Maryland 21202 at
11:00 a.m., Baltimore time, on the Borrowing Date requested by the Borrowers in
funds immediately available to Agent; provided, however, that each Lender’s
Commitment Percentage of each Loan shall be due no earlier than 11:00 a.m.,
Baltimore time, on the Business Day following the giving of notice to such
Lender concerning such Loan.

 

Unless
the Agent and the Borrowers shall have been notified in writing by any Lender
prior to a Borrowing Date that such Lender will not make the amount which would
constitute its Commitment Percentage of the Non-Cash Management Loan to be made
on such date available to Agent, Agent may assume that such Lender has made
such amount available to Agent on such Borrowing Date and Agent may, in
reliance upon such assumption, make available to the Borrowers a corresponding
amount.  If such amount is made
available to Agent on a date after such Borrowing Date, such Lender shall pay
to Agent on demand an amount equal to the product of (A) a fraction, the
numerator of which is the daily average Fed Funds Rate during such period and
the denominator of which is 365, times (B) the amount of such
Lender’s Commitment Percentage of such Loan, times (C) the number
of days that elapse from and including such Borrowing Date to the date on which
such Lender’s Commitment Percentage of such Loan shall have become immediately
available to Agent.  A certificate of
Agent submitted to any Lender with respect to any amounts owing under this
Subsection 2.3(a) shall be conclusive, absent manifest error.  If such Lender’s Commitment Percentage of
such Loan is not in fact made available to Agent by such Lender within three
Business Days of such Borrowing Date, Agent shall be entitled to recover such
amount with interest thereon at the rate per annum applicable to Loans
hereunder, on demand, from the Borrowers (without prejudice to the Borrowers’
rights against such Lender).  Nothing
herein shall be deemed to relieve any Lender from its obligation to fund its
Commitment Percentage of any Loans hereunder or to prejudice any rights that
the Borrowers may have against any Lender as a result of any default by such
Lender hereunder.  No Lender shall be
responsible for any default of another Lender in respect of the other Lender’s
obligation to fund Loans hereunder nor shall the Commitment of any Lender
hereunder be increased as a result of such default of any other Lender.  Each Lender shall be obligated to the extent
provided herein regardless of the failure of any other Lender to fulfill its
obligations hereunder.

 

(b)                                 Cash Management Loans.  On the last Business Day of each week,
or more frequently if Agent so elects, Agent will give to each Lender a written
report (“Report”) indicating the aggregate principal amount of Cash
Management Loans outstanding for each day from and including the day of the
last Report, the aggregate principal amount of Cash Management Loans extended
since the date of the last Report, the amount of payments received by the Agent
and/or Wachovia from or on behalf of the Borrowers since the date of the last
Report and applied against Cash Management Loans, the Net Amount and/or
such other matters 

 

20

 

as may be
agreed upon by the Agent and the Lenders from time to time.  Each date upon which a Report is given is
hereinafter called a “Settlement Date.” Upon the giving of each Report, the Net
Amount shall be paid by each Lender to Wachovia  (or if Wachovia is no longer the Agent, to the Agent for
transmission to Wachovia) or by Wachovia (or if Wachovia is no longer the
Agent, by the Agent following its receipt thereof from Wachovia) to each
Lender in immediately available funds, as appropriate.  If any Lender shall fail to pay to Agent the
Net Amount on or before the Business Day following the receipt of the Report
with respect thereto, such Lender shall pay to Wachovia (or if Wachovia is no
longer the Agent, then to the Agent for transmission to Wachovia) on
demand an amount equal to the product of (i) a fraction, the numerator of
which is the daily average Fed Funds Rate during such period and the
denominator of which is 365, times (ii) the Net Amount, times
(iii) the number of days that elapse from and including the Business Day
following the giving of the applicable Report to the date on which such
Lender’s Net Amount shall have become immediately available to the Agent.  A certificate of Agent submitted to any
Lender with respect to any amounts owing under this
Subsection 2.3(b) shall be conclusive, absent manifest error.

 

Notwithstanding the foregoing provisions of
this Subsection 2.3(b), in no event shall a Lender be obligated to fund
any Loan to the extent funding such Lender’s portion of such Loan would cause
that portion of the outstanding amount of all Loans funded by such Lender plus
the Lender’s Commitment Percentage of all outstanding L/C Obligations to exceed
such Lender’s Commitment Amount.

 

SECTION 2.4                                                  Repayment
of Loans.

 

(a)                                  Repayment
on Termination Date.  The Borrowers
shall repay the outstanding principal amount of all Loans in full on the
Termination Date, together with all accrued but unpaid interest thereon.

 

(b)                                 Mandatory
Repayment of Excess Loans.  If at
any time the outstanding principal amount of all Loans exceeds the lesser of
the Aggregate Commitment or the Borrowing Base less the sum of all
outstanding L/C Obligations (the amount of such excess being here called a
“Borrowing Base Deficiency”), the Borrowers shall immediately repay to the
Agent for the account of the Lenders, an amount equal to such excess, with each
such repayment applied first to the principal amount of outstanding
Loans, and second to provide cash collateral for the outstanding balance of the
L/C Obligations; provided, however, that if such Borrowing Base Deficiency
results from the imposition by the Lenders of new criteria for the determination
of Eligible Accounts or Eligible Inventory or new reserves, as provided in this
Agreement, the Borrowers shall have a period of fifteen (15) days from the date
of such Borrowing Base Deficiency to make such payment.  Such cash collateral shall be applied in
accordance with Section 11.2(b). 
Each such repayment shall be accompanied by any amount required to be
paid pursuant to Section 4.9 hereof.

 

(c)                                  Optional
Repayments.  The Borrowers may, at
their option, prepay, in whole or in part, the Loans at any time without
penalty or premium; provided, however, that the Agent may, in the Agent’s
discretion, apply each prepayment first to the payment of accrued and 

 

21

 

unpaid interest, fees and other
charges payable in connection with the Loans and then to the payment of the
principal balance of such Loans.

 

SECTION 2.5                                                  Note.  The
obligation of the Borrowers to repay the Loans shall be evidenced by a single
Revolving Credit Note executed by the Borrowers payable to the order of the
Lenders in care of the Agent.

 

SECTION 2.6                                                  Termination
of Credit Facility.  The Credit Facility shall terminate on the
earliest of (a) the date of termination by the Agent on behalf of the Lenders
pursuant to Section 11.2(a), or (b) September   , 2006 (the
“Scheduled Maturity Date”), or (c) delivery of written notice of termination by
TESSCO; provided, however, that, at the request of TESSCO, the Lenders may
extend the Scheduled Maturity Date by twelve months at any time by giving the
Borrowers written notice of a new Scheduled Maturity Date.  Without limiting the generality of the
preceding sentence, at the end of each twelve-month period after any Scheduled
Maturity Date, the Lenders will elect whether to extend the Scheduled Maturity
Date by twelve months.  Notwithstanding
the foregoing or any failure to notify the Borrowers of a new Scheduled
Maturity Date, any Loans made or Letters of Credit issued under the Credit
Facility after the Scheduled Maturity Date shall be governed by the Loan
Documents.  In the event that the Credit
Facility is terminated by delivery of written notice of termination by TESSCO
prior to the third anniversary of the Closing Date, the Borrowers shall pay to
the Lenders (for pro rata distribution) a termination fee equal to (a) thirty
(30) basis points (.3%) of the Aggregate Commitment if the Credit Facility is
terminated prior to the first anniversary of the Closing Date; (b) twenty (20)
basis points (.2%) of the Aggregate Commitment if the Credit Facility is terminated
on or after the first anniversary of the Closing Date and before the second
anniversary of the Closing Date, and (c) ten (10) basis points (.1%) of the
Aggregate Commitment if the Credit Facility is terminated on or after the
second anniversary of the Closing Date and before the third anniversary of the
Closing Date.

 

SECTION 2.7                                                  Use
of Proceeds.  The Borrowers shall use the proceeds of the Loans solely to
refinance the Existing Facility and for working capital, Capital Expenditures,
and Permitted Acquisitions by the Borrowers, including the payment of fees and
expenses incurred in connection with such transactions, and to purchase not
more than $10,000,000 of issued and outstanding stock during the term of the
Credit Facility.

 

 

ARTICLE III

 

LETTER OF CREDIT FACILITY

 

SECTION 3.1                                                  L/C
Commitment.  Subject to the terms and conditions hereof, the Issuing Lender,
in reliance on the agreements of the other Lenders set forth in
Section 3.4(a), agrees to issue commercial or standby letters of credit
(“Letters of Credit”) for the account of the Borrowers on any Business Day from
the Closing Date through but not including the Termination Date in such form as
may be approved from time to time by the Lenders; provided, that the
Issuing Lender shall have no obligation to issue any Letter of Credit if, after
giving effect to such 

 

22

 

issuance, (a) the L/C Obligations would exceed the L/C Commitment or
(b) the Available Commitment of any Lender would be less than zero.  Each Letter of Credit shall (i) be
denominated in Dollars, (ii) be a commercial or standby letter of credit issued
to support obligations of any Borrower, contingent or otherwise, incurred in
the ordinary course of business, (iii) expire on a date satisfactory to the
Issuing Lender, which date shall be no later than the earlier of  (1) the Termination Date or (2) one year
after the issuance of such Letter of Credit and (iv) be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
Maryland.  The Issuing Lender shall not
at any time be obligated to issue any Letter of Credit hereunder if (a) such
issuance would conflict with, or cause the Issuing Lender or any L/C Participant
to exceed any limits imposed by, any Applicable Law, or (b) if any Lender
notifies the Issuing Lender, within two (2) Business Days after receipt of the
Application therefor, of such Lender’s objection to the issuance of the Letter
of Credit.  References herein to “issue”
and derivations thereof with respect to Letters of Credit shall also include
extensions or modifications of any existing Letters of Credit, unless the
context otherwise requires.

 

SECTION 3.2                                                  Procedure
for Issuance of Letters of Credit.  The Borrowers may from time to time request
that the Issuing Lender issue a Letter of Credit by delivering to the Lenders
an Application therefor, completed to the satisfaction of the Issuing Lender
and the other Lenders, and such other certificates, documents and other papers
and information as the Issuing Lender or the other Lenders may request.  Upon receipt of any Application, the Issuing
Lender shall process such Application and the certificates, documents and other
papers and information delivered to it in connection therewith in accordance
with its customary procedures and shall, subject to Section 3.1 and
Article V hereof, promptly issue the Letter of Credit requested thereby
(but in no event shall the Issuing Lender be required to issue any Letter of
Credit earlier than three (3) Business Days after its receipt of the
Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed by the
Issuing Lender and the Borrowers.  The
Issuing Lender shall promptly furnish to the Borrowers and the other Lenders a
copy of such Letter of Credit and the final Application.

 

SECTION 3.3                                                  Fees.  With
respect to any Letter of Credit, the Borrowers shall pay to the Agent, for the
account of the Issuing Lender, the Issuing Lender’s standard fees in connection
with letters of credit, as in effect from time to time. With respect to each
standby Letter of Credit, the Borrowers shall pay to the Agent, for the account
of the L/C Participants, a fee equal to 1.5% per annum of the face amount of
the standby Letter of Credit for the period of time the Letter of Credit will
be outstanding.

 

SECTION 3.4                                                  L/C
Participations.

 

(a)                                  The
Issuing Lender irrevocably agrees to grant and hereby grants to each L/C
Participant, and, to induce the Issuing Lender to issue Letters of Credit
hereunder, each L/C Participant irrevocably agrees to accept and purchase and
hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant’s own account and risk
an undivided interest equal to such L/C Participant’s Commitment Percentage in
the Issuing Lender’s obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by the Issuing Lender
thereunder.  Each L/C Participant
unconditionally and 

 

23

 

irrevocably agrees with the
Issuing Lender that, if a draft is paid under any Letter of Credit for which
the Issuing Lender is not reimbursed in full by the Borrowers in accordance
with the terms of this Agreement, such L/C Participant shall pay to the Issuing
Lender upon demand at the Issuing Lender’s address for notices specified herein
an amount equal to such L/C Participant’s Commitment Percentage of the amount
of such draft, or any part thereof, which is not so reimbursed.

 

(b)                                 Upon
becoming aware of any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit,
the Issuing Lender shall notify each L/C Participant of the amount and due date
of such required payment and each such L/C Participant shall pay to the Issuing
Lender the amount specified on the applicable due date.  If any such amount is paid to the Issuing
Lender after the date such payment is due, such L/C Participant shall pay to
the Issuing Lender on demand, in addition to such amount, the product of (i)
such amount, times (ii) the daily average Federal Funds Rate as
determined by the Agent during the period from and including the date such
payment is due to the date on which such payment is immediately available to
the Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360.  A certificate of the Issuing
Lender with respect to any amounts owing under this Section 3.4(b) shall
be conclusive in the absence of manifest error.  With respect to payment to the Issuing Lender of the unreimbursed
amounts described in this Section 3.4(b), if the L/C Participants receive
notice that any such payment is due (A) prior to 1:00 p.m. (Baltimore time) on
any Business Day, such payment shall be due that Business Day, and (B) after
1:00 p.m. (Baltimore time) on any Business Day, such payment shall be due on
the following Business Day.

 

(c)                                  At
any time after the Issuing Lender has made payment under any Letter of Credit
and has received from any L/C Participant its Commitment Percentage of such
payment in accordance with this Section 3.4, if the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from
the Borrowers or otherwise, or any payment of interest on account thereof, the
Issuing Lender will distribute to such L/C Participant its pro  rata
share thereof; provided, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the Issuing
Lender, such L/C Participant shall return to the Issuing Lender the portion
thereof previously distributed by the Issuing Lender to it.

 

SECTION 3.5                                                  Reimbursement
Obligation of the Borrowers.  The Borrowers agree to reimburse the Issuing
Lender on each date on which the Issuing Lender notifies the Borrowers in
writing of the date and amount of a draft paid under any Letter of Credit for
the amount of (a) such draft so paid and (b) any taxes, fees, charges or other
costs or expenses, if any, reasonably incurred by the Issuing Lender in
connection with such payment.  Each such
payment shall be made to the Issuing Lender at its address for notices
specified herein in lawful money of the United States and in immediately
available funds.  Interest shall be
payable on any and all amounts remaining unpaid by the Borrowers under this
Article III from the date such amounts become payable (whether at stated
maturity, by acceleration or otherwise) until payment in full at the rate which
would be payable on any outstanding Loans which were then overdue.  If the Borrowers fail to timely reimburse
the Issuing Lender on the date the Borrowers receive the notice referred to in
this Section 3.5, the Borrowers shall be deemed to have timely given a
Notice of Borrowing hereunder to the Agent requesting the Lenders to make a
Loan on such date in an 

 

24

 

amount equal to the amount of such drawing and, regardless of whether
the conditions precedent specified in Article V have been satisfied, the
Lenders shall make Loans in such amount, the proceeds of which shall be applied
to reimburse the Issuing Lender for the amount of the related drawing and costs
and expenses.

 

SECTION 3.6                                                  Obligations
Absolute. 
The Borrowers’ obligations under this Article III (including
without limitation the Reimbursement Obligation) shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment that the Borrowers may have or have had
against the Issuing Lender or any beneficiary of a Letter of Credit.  The Borrowers also agree with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrowers’
Reimbursement Obligation under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrowers and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of a Borrower against any
beneficiary of such Letter of Credit or any such transferee.  The Issuing Lender shall not be liable for
any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit, except for errors or omissions caused by the Issuing Lender’s
gross negligence or willful misconduct. 
The Borrowers agree that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit or the related drafts
or documents, if done in the absence of gross negligence or willful misconduct
and in accordance with the standards of care specified in the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of
Maryland, shall be binding on the Borrowers and shall not result in any
liability of the Issuing Lender to the Borrowers.  The responsibility of the Issuing Lender to the Borrowers in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such
presentment are in conformity with such Letter of Credit.

 

SECTION 3.7                                                  Effect
of Application.  To the extent that any provision of any Application related to any
Letter of Credit is inconsistent with the provisions of this Agreement, the
provisions of this Agreement shall apply.

 

 

ARTICLE IV

 

GENERAL LOAN PROVISIONS

 

SECTION 4.1                                                  Interest;
Late Charges, Etc.

 

(a)                                  Subject to the
provisions of Subsection 4.1(d) hereof, the aggregate amount of all Loans
shall bear interest at a floating and fluctuating per annum rate of interest
equal to the applicable LIBOR Rate plus the Applicable Margin.

 

25

 

(b)                                 Accrued
interest on the Loans shall be payable monthly on the first (1st) day of
each month commencing on November 1, 2003.

 

(c)                                  The
Applicable Margin provided for in Section 4.1(a) with respect to the Loans
shall for each fiscal quarter be determined by reference to the Borrowers’
ratio of Funded Debt to EBITDA as of the end of the fiscal quarter immediately
preceding the delivery of the applicable Officer’s Compliance Certificate as
follows:

 

	
  Funded
  Debt to EBITDA

  	
   

  	
  Applicable Margin

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greater than
  2.0

  	
   

  	
  2.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than or
  equal to 2.0 but greater than 1.5

  	
   

  	
  1.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than or
  equal to 1.5

  	
   

  	
  1.50

  	
  %

  

 

Adjustments, if any, in the Applicable Margin shall be made by the
Agent on the tenth (10th) Business Day after receipt by the Agent of quarterly
financial statements for the Borrowers and their Subsidiaries and the
accompanying Officer’s Compliance Certificate setting forth the ratio of Funded
Debt to EBITDA of the Borrowers and their Subsidiaries as of the most recent
fiscal quarter end.  Subject to
Section 4.1(d), in the event the Borrowers fail to deliver such financial
statements and certificate within the time required by Section 7.2 hereof,
the Applicable Margin shall be the highest Applicable Margin set forth above
until the delivery of such financial statements and certificate.

 

(d)                                 Default
Rate.  Subject to Section 11.3,
upon the occurrence and during the continuance of an Event of Default, all
outstanding Loans shall bear interest at a rate per annum three percent (3%) in
excess of the rate then applicable to Loans. 
Interest shall continue to accrue on the Note after the filing by or
against any or all of the Borrowers of any petition seeking any relief in
bankruptcy or under any act or law pertaining to insolvency or debtor relief,
whether state, federal or foreign.

 

(e)                                  Interest Payment
and Computation.  All interest
rates, fees and commissions provided hereunder shall be computed on the basis
of a 360-day year and assessed for the actual number of days elapsed.  The interest rate payable hereunder shall be
adjusted daily upon any change in the LIBOR Rate or the Prime Rate, as
applicable.

 

(f)                                    Maximum Rate.  In no contingency or event whatsoever shall
the aggregate of all amounts deemed interest hereunder or under the Note
charged or collected pursuant to the terms of this Agreement or pursuant to the
Note exceed the highest rate permissible under any Applicable Law which a court
of competent jurisdiction shall, in a final determination, deem applicable
hereto.  In the event that such a court
determines that the Lenders have charged or received interest hereunder in
excess of the highest applicable rate, the rate in effect hereunder shall
automatically be reduced to the maximum rate permitted by Applicable Law and
the Lenders shall at the Agent’s option (i) promptly refund to the Borrowers
any interest received by the Lenders in 

 

26

 

excess of the maximum lawful
rate or (ii) shall apply such excess to the principal balance of the
Obligations.  It is the intent hereof
that the Borrowers not pay or contract to pay, and that neither the Agent nor
any Lender receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by the Borrowers under
Applicable Law.

 

SECTION 4.2                                                  Fees.

 

(a)                                  Origination
Fee.  On the Closing Date,
the Borrowers shall pay to the Agent for the benefit of the Lenders an
origination fee of $150,000.

 

(b)                                 Unused
Availability Fee.  At the end of
each fiscal quarter of the Borrowers, and on the Termination Date, the
Borrowers shall pay to the Agent, in arrears, for the ratable benefit of the
Lenders, a facility fee equal to twelve and one-half (12.5) basis points
(.125%) of the first $10,000,000 of the daily unused portion of the Credit Facility
for the previous quarter, and twenty-five (25) basis points (.25%) of the
remaining average daily unused portion of the Credit Facility for the previous
quarter. For purposes of the calculation of this fee, outstanding L/C
obligations will be treated as outstanding Loans.

 

(c)                                  Arrangement
Fee.  The Borrowers shall pay to
SunTrust Bank, as the Arrangement Agent, a fee of $60,000, payable $20,000 on
the Closing Date, $20,000 one year from the Closing Date and $20,000 two years
from the Closing Date; provided, however, that if the Credit Facility is
terminated prior to the date that is two years from the Closing Date, the
entire unpaid balance of the Arrangement Fee shall be due and payable upon
termination.

 

(d)                                 Administrative
Agent’s Fee.  The Borrower shall pay
to the Agent a fee of $45,000, payable $15,000 on the Closing Date, $15,000 one
year from the Closing Date and $15,000 two years from the Closing Date;
provided, however, that if the Credit Facility is terminated prior to the date
that is two years from the Closing Date, the entire unpaid balance of the
Agent’s fee shall be due and payable upon termination.  The Borrowers shall continue to pay to the
Agent, on each anniversary of the Closing Date, beginning on the third
anniversary of the Closing Date, so long as the Credit Facility remains in
effect, a fee of $15,000.

 

(e)                                  Extension
Fee.  In connection with each
extension of the Scheduled Maturity Date, the Borrowers shall pay to the
Lenders an extension fee equal to .125% of the maximum amount of the Credit
Facility.

 

(f)                                    Late
Charge.  The Borrowers shall pay a
late charge equal to five percent (5%) of any payment of principal and/or
interest that is more than fifteen (15) days late.

 

SECTION 4.3                                                  Manner
of Payment.  Each payment by the Borrowers on account of the principal of or
interest on the Loans or of any fee, commission or other amounts (including the
Reimbursement Obligation) payable to the Lenders under this Agreement or the
Note shall be made not later than 1:00 p.m. (Baltimore, Maryland time) on the
date specified for payment under this Agreement to the Agent at the Agent’s
Office for the account of the Lenders (other than as set forth below) pro
rata in accordance with their respective Commitment Percentages (except
as 

 

27

 

specified below), in Dollars, in immediately available funds and
without any set-off, counterclaim or deduction whatsoever.  Any payment received after such time but
before 2:00 p.m. (Baltimore time) on such day shall be deemed a payment on such
date for the purposes of Section 11.1, but for all other purposes shall be
deemed to have been made on the next succeeding Business Day.  Any payment received after 2:00 p.m. (Baltimore,
Maryland time) shall be deemed to have been made on the next succeeding
Business Day for all purposes.  Upon
receipt by the Agent of each such payment, the Agent shall distribute to each
Lender at its address for notices set forth herein its pro  rata
share of such payment in accordance with such Lender’s Commitment Percentage
(except as specified below) and shall wire advice of the amount of such credit
to each Lender.  Each payment to the
Agent of the Issuing Lender’s fees or L/C Participants’ commissions shall be
made in like manner, but for the account of the Issuing Lender or the L/C
Participants, as the case may be.  Each
payment to the Agent of Agent’s fees or expenses shall be made for the account
of the Agent and any amount payable to any Lender under any Section of
this Agreement relating to payments due to the Lenders shall be paid to the
Agent for the account of the applicable Lender.  If any payment under this Agreement or the Note shall be
specified to be made upon a day which is not a Business Day, it shall be made
on the next succeeding day which is a Business Day and such extension of time
shall in such case be included in computing any interest if payable along with
such payment.

 

Anything in
the foregoing to the contrary notwithstanding, the portion of any interest
payment remitted to any Lender with respect to any Cash Management Loan shall
be equal only to interest on the amount advanced by such Lender, at the
applicable rate, from the date such Lender advances its Percentage Commitment
of such Loan.

 

SECTION 4.4                                                  Crediting
of Payments and Proceeds.  In the event that the Borrowers shall fail
to pay any of the Obligations when due and the Obligations shall have been
accelerated pursuant to Section 11.2, all payments received by the Lenders
upon the Note and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be applied first to all expenses then due
and payable by the Borrowers hereunder, then to all indemnity obligations then
due and payable by the Borrowers hereunder, then to all Agent’s and Issuing
Lender’s fees then due and payable, then to all commitment and other fees and
commissions then due and payable, then to accrued and unpaid interest on any
Unsettled Loans to Wachovia, then to the principal amount of any Unsettled
Loans outstanding, then to accrued and unpaid interest on the remainder of the
Loans and the Reimbursement Obligation (pro  rata in accordance
with all such amounts due), then to the principal amount of the remaining Loans
and the Reimbursement Obligation (pro  rata in accordance with all
such amounts due) and then to the cash collateral account described in
Section 11.2(b) hereof to the extent of any L/C Obligations then
outstanding, in that order.

 

SECTION 4.5                                                  Adjustments.  If any
Lender (a “Benefitted Lender”) shall at any time receive any payment of all or
part of the Obligations owing to it, or interest thereon, or if any Lender
shall at any time receive any collateral in respect to the Obligations owing to
it (whether voluntarily or involuntarily, by set-off or otherwise) in a greater
proportion than any such payment to and collateral received by any other
Lender, if any, in respect of the Obligations owing to such other Lender, or
interest thereon, such Benefitted Lender shall purchase for cash from the other
Lenders such portion of each such other Lender’s Extensions of Credit, or shall

 

28

 

provide such other Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such Benefitted Lender to
share the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned
to the extent of such recovery, but without interest.  The Borrowers agree that each Lender so purchasing a portion of
another Lender’s Extensions of Credit may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such portion as fully as
if such Lender were the direct holder of such portion.

 

SECTION 4.6                                                  Nature
of Obligations of Lenders Regarding Loans and Letters of Credit; Assumption by
the Agent.  The obligations of the Lenders under this Agreement to make the
Loans and issue or participate in Letters of Credit are several and are not
joint or joint and several.  The failure
of any Lender to make available its Commitment Percentage of any Loan requested
by the Borrowers shall not relieve it or any other Lender of its obligation, if
any, hereunder to make its Commitment Percentage of such Loan available on the
Borrowing Date, but no Lender shall be responsible for the failure of any other
Lender to make its Commitment Percentage of such Loan available on the
Borrowing Date.

 

SECTION 4.7                                                  Changed
Circumstances.

 

(a)                                  Circumstances
Affecting LIBOR Rate Availability. 
If at any time the Agent determines that the LIBOR Rate cannot be
adequately and reasonably determined, which determination shall be conclusive
and binding upon the Borrowers, the Agent shall immediately give notice thereof
to the Borrowers.  Thereafter, the
interest rate applicable to the Loans shall be converted to the Prime Rate. The
interest rate applicable to the Credit Facility shall remain at such converted
rate until the Agent shall notify the Borrowers that the circumstances giving
rise to such condition no longer exist.

 

(b)                                 Laws Affecting
LIBOR Rate Availability.  If, after
the date hereof, the introduction of, or any change in, any Applicable Law 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 any Lender (or any of their respective
Lending Offices) with any request or directive (whether or not having the force
of law) of any such Authority, central bank or comparable agency, shall make it
unlawful or impossible for any of the Lenders (or any of their respective
Lending Offices) to honor its obligations hereunder to make or maintain any
Loan bearing interest at a rate based upon the LIBOR Rate, such Lender shall
promptly give written notice thereof to the Agent and the Agent shall promptly
give notice to the Borrowers and the other Lenders.  Thereafter, until the Agent notifies the Borrowers that such
circumstances no longer exist, the interest rate applicable to the Loans shall
be converted to the sum of the Prime Rate plus the Applicable Margin.

 

(c)                                  Increased Costs.  If, after the date hereof, the introduction
of, or any change in, any Applicable Law, or 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 any of the Lenders (or any of their respective Lending Offices)
with any 

 

29

 

request or directive (whether
or not having the force of law) of such Authority, central bank or comparable
agency:

 

(i)                                     shall subject any
of the Lenders (or any of their respective Lending Offices) to any tax, duty or
other charge with respect to the Note, any Letter of Credit or Application or
shall change the basis of taxation of payments to any of the Lenders (or any of
their respective Lending Offices) of the principal of or interest on the Note,
Letter of Credit or Application or any other amounts due under this Agreement
in respect thereof (except for changes in the rate of tax on the overall net
income of any of the Lenders or any of their respective Lending Offices imposed
by the jurisdiction in which such Lender is organized or is or should be
qualified to do business or such Lending Office is located); or

 

(ii)                                  shall impose, modify
or deem applicable any reserve (including, without limitation, any imposed by
the Board of Governors of the Federal Reserve System), special deposit,
insurance or capital or similar requirement against assets of, deposits with or
for the account of, or credit extended by any of the Lenders (or any of their
respective Lending Offices) or shall impose on any of the Lenders (or any of
their respective Lending Offices) or the foreign exchange and interbank markets
any other condition affecting the Note;

 

and the result of any of the foregoing is to increase the costs to any
of the Lenders of maintaining any Loan at a rate of interest based upon the
LIBOR Rate or issuing or participating in Letters of Credit or to reduce the
yield or amount of any sum received or receivable by any of the Lenders under
this Agreement or under the Note in respect of a Loan or Letter of Credit or
Application, then such Lender shall promptly notify the Agent, and the Agent
shall promptly notify the Borrowers in writing of such fact and demand
compensation therefor and, within fifteen (15) days after such notice by the
Agent, the Borrowers shall pay to such Lender such additional amount or amounts
as will compensate such Lender or Lenders for such increased cost or reduction.  The Agent will promptly notify the Borrowers
of any event of which it has knowledge which will entitle such Lender to
compensation pursuant to this Section 4.7(c); provided, that the
Agent shall incur no liability whatsoever to the Lenders or the Borrowers in
the event it fails to do so.  The amount
of such compensation shall be determined, in the applicable Lender’s reasonable
discretion, based upon the assumption that such Lender funded its Commitment
Percentage of the Loans in the London interbank market and using any reasonable
attribution or averaging methods that such Lender deems appropriate and
practical.  A certificate of such Lender
setting forth the basis for determining such amount or amounts necessary to
compensate such Lender shall be forwarded to the Borrowers by the Agent ten
(10) Business Days prior to the date upon which the Borrowers are required to
make any payment set forth in the certificate and shall be conclusively
presumed to be correct save for manifest error.

 

SECTION 4.8                                                  Capital
Requirements.  If either (a) the introduction of, or any change in, or in the
interpretation of, any Applicable Law or (b) compliance with any guideline or
request from any central bank or comparable agency or other Governmental
Authority (whether or not having the force of law), has or would have the
effect of reducing the rate of return on the capital of, or has affected or
would affect the amount of capital required to be maintained by, any Lender or
any corporation controlling such Lender as a consequence of, or with reference
to the Commitments and other commitments of this type, below the rate which the
Lender or such other 

 

30

 

corporation could have achieved but for such introduction, change or
compliance, then within ten (10) Business Days after written demand by any such
Lender, the Borrowers shall pay to such Lender from time to time as specified
by such Lender additional amounts sufficient to compensate such Lender or other
corporation for such reduction.  A
certificate as to such amounts submitted to the Borrowers and the Agent by such
Lender shall, in the absence of manifest error, be presumed to be correct and
binding for all purposes.

 

SECTION 4.9                                                  Taxes.

 

(a)                                  Payments Free and
Clear.  Any and all payments by the
Borrowers hereunder or under the Note or the Letters of Credit shall be made
free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholding, and all liabilities
with respect thereto excluding, (i) in the case of each Lender and the Agent,
income and franchise taxes imposed by the jurisdiction under the laws of which
such Lender or the Agent (as the case may be) is organized or is or should be
qualified to do business or any political subdivision thereof and (ii) in the
case of each Lender, income and franchise taxes imposed by the jurisdiction of
such Lender’s Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as “Taxes”).  If the Borrowers shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under the
Note or any Letter of Credit to any Lender or the Agent, (A) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 4.9) such Lender or the Agent (as the case may be) receives
an amount equal to the amount such party would have received had no such
deductions been made, (B) the Borrowers shall make such deductions, (C)
the Borrowers shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law, and (D) the
Borrowers shall deliver to the Agent evidence of such payment to the relevant
taxing authority or other authority in the manner provided in
Section 4.9(d).

 

(b)                                 Stamp
and Other Taxes.  In addition, the
Borrowers shall pay any present or future stamp, registration, recordation or
documentary taxes or any other similar fees or charges or excise or property
taxes, levies of the United States or any state or political subdivision
thereof or any applicable foreign jurisdiction which arise from any payment
made hereunder or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement, the Loans, the Letters of Credit, the other
Loan Documents, or the perfection of any rights or security interest in respect
thereto (hereinafter referred to as “Other Taxes”).

 

(c)                                  Indemnity.  The Borrowers shall indemnify each Lender
and the Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes and Other Taxes imposed by any jurisdiction on amounts
payable under this Section 4.9) paid by such Lender or the Agent (as the
case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. 
Such indemnification shall be made within thirty (30) days from the date
such Lender or the Agent (as the case may be) makes written demand therefor.

 

(d)                                 Evidence
of Payment.  Within thirty (30) days
after the date of any payment of Taxes or Other Taxes, the Borrowers shall
furnish to the Agent, at its address referred to in 

 

31

 

Section 13.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence
of payment satisfactory to the Agent.

 

(e)                                  Delivery
of Tax Forms.  Each Lender organized
under the laws of a jurisdiction other than the United States or any state
thereof shall deliver to the Borrowers, with a copy to the Agent, on the
Closing Date or concurrently with the delivery of the relevant Assignment and
Acceptance, as applicable, (i) two United States Internal Revenue Service Forms
4224 or Forms 1001, as applicable (or successor forms) properly completed and
certifying in each case that such Lender is entitled to a complete exemption
from withholding or deduction for or on account of any United States federal
income taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form, as the case may be, to establish an exemption from United
States backup withholding taxes.  Each
such Lender further agrees to deliver to the Borrowers, with a copy to the
Agent, a Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms
or manner of certification, as the case may be, on or before the date that any
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrowers, certifying in the case of a Form 1001 or 4224 that such Lender is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes (unless in any such case
an event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders such forms inapplicable or the exemption to which such
forms relate unavailable and such Lender notifies the Borrowers and the Agent
that it is not entitled to receive payments without deduction or withholding of
United States federal income taxes) and, in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding tax.

 

(f)                                    Survival.  Without prejudice to the survival of any
other agreement of the Borrowers hereunder, the agreements and obligations of
the Borrowers contained in this Section 4.9 shall survive the payment in
full of the Obligations and the termination of the Commitments.

 

SECTION 4.10                                           The
Borrowers’ Representatives.  Each of the Borrowers hereby represents and
warrants to the Agent and the Lenders that each of them will derive benefits,
directly and indirectly, from the proceeds of each Loan and Letter of Credit,
both in its separate capacity and as a member of the integrated group to which
each of the Borrowers belong, since the successful operation of the integrated
group is dependent upon the continued successful performance of the functions
of the integrated group as a whole.  For
administrative convenience, TESSCO is hereby irrevocably appointed by each of
the Borrowers as agent for each of the Borrowers for the purpose of requesting
Loans and Letters of Credit hereunder from the Agent and the Lenders, receiving
the proceeds of Loans and disbursing the proceeds of Loans among the
Borrowers.  In its capacity as such
agent, TESSCO shall have the power and authority through its authorized officer
or officers to (i) endorse any check for the proceeds of any Loan for and on
behalf of each of the Borrowers and in the name of each of the Borrowers, and
(ii) instruct the Agent or the Lenders to credit the proceeds of any Loan
directly to a banking account of any of the Borrowers which shall evidence the
making of such Loan and shall constitute the acknowledgement by each of the Borrowers
of the receipt of the proceeds of such Loan. 
By reason of the foregoing, the Agent and each Lender is hereby
irrevocably authorized by each of the Borrowers to make Loans to the Borrowers
and issue Letters of Credit for the account of the 

 

32

 

Borrowers pursuant to this Agreement upon the request of any one of the
persons who is authorized to do so under the provisions of any applicable
corporate resolutions of TESSCO. 
Neither the Agent nor any Lender assumes any responsibility or liability
for any errors, mistakes and/or discrepancies in any oral, telephonic, written
or other transmissions of any instructions, orders, requests and confirmations
between the Agent or any Lender and any one or more of the Borrowers in
connection with any Loan, Letter of Credit or other transaction pursuant to the
provisions of this Agreement, except for acts of gross negligence and/or
willful misconduct.

 

 

ARTICLE V

 

CLOSING; CONDITIONS OF CLOSING AND BORROWING

 

SECTION 5.1                                                  Closing. The closing shall take place at the offices of
Ober, Kaler, Grimes & Shriver, a professional corporation at a date and
time upon which the parties hereto shall mutually agree.

 

SECTION 5.2                                                  Conditions
to Closing and Initial Loan.  The obligation of the Lenders to close this
Agreement and to make the initial Loan or issue the initial Letter of Credit is
subject to the satisfaction or waiver of each of the following conditions:

 

(a)                                  Executed
Loan Documents.  This Agreement, the
Note, and the other Loan Documents shall have been duly authorized, executed
and delivered to the Agent by the parties thereto, shall be in full force and
effect and no default shall exist thereunder, and the Borrowers shall have
delivered original counterparts of each Loan Document (except the Note) to the
Lenders.

 

(b)                                 Closing
Certificates; etc.

 

(i)                                     Officer’s
Certificate of the Borrowers.  The
Lenders shall have received a certificate from a Responsible Officer of each of
the Borrowers, in form and substance reasonably satisfactory to the Lenders, to
the effect that all representations and warranties of such Borrower contained
in this Agreement and the other Loan Documents are true, correct and complete
in all material respects; that such Borrower is not in violation of any of the
covenants contained in this Agreement and the other Loan Documents; that, after
giving effect to the transactions contemplated by this Agreement, no Default or
Event of Default has occurred and is continuing; and that such Borrower has
satisfied each of the closing conditions.

 

(ii)                                  Certificate
of Secretary of the Borrowers.  The
Lenders shall have received a certificate of the secretary or assistant
secretary of each of the Borrowers certifying as to the incumbency and
genuineness of the signature of each officer of such Borrower executing Loan
Documents to which it is a party and certifying that attached thereto is a
true, correct and complete copy of (A) the articles of incorporation (or
articles of organization in the case of a limited liability company Borrower)
of such Borrower and all amendments thereto, certified as of a recent date by
the appropriate Governmental Authority in its jurisdiction of incorporation or
organization, (B) the 

 

33

 

bylaws of such Borrower as in effect on the date of such
certifications, (C) resolutions duly adopted by the Board of Directors (or
Board of Managers, as applicable) of such Borrower authorizing the borrowings
contemplated hereunder and the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party, and (D) each
certificate required to be delivered pursuant to Section 5.2(b)(iii).

 

(iii)                               Certificates
of Good Standing.  To the extent
requested by the Lenders, the Lenders shall have received long-form
certificates as of a recent date of the good standing of each of the Borrowers
under the laws of its jurisdiction of organization and each other jurisdiction
where any of the Borrowers is qualified to do business and a certificate of the
relevant taxing authorities of such jurisdictions certifying that such Person
has filed required tax returns and owes no delinquent taxes.

 

(iv)                              Opinions
of Counsel.  The Lenders shall have
received favorable opinions of counsel to the Borrowers addressed to the
Lenders with respect to the Borrowers, the Loan Documents and such other
matters as the Lenders shall reasonably request.

 

(v)                                 Tax
Forms.  The Lenders shall have
received copies of the United States Internal Revenue Service forms required by
Section 4.9(e) hereof.

 

(c)                                               Lien
Searches; Insurance, Etc.

 

(i)                                     Lien
Search. The Lenders shall have received the results of a Lien search
(including a search as to judgments, pending litigation and tax matters) made
against each of the Borrowers under the UCC (or applicable judicial docket) as
in effect in any state in which any of its assets are located, indicating among
other things that its assets are free and clear of any Lien except for
Permitted Liens.

 

(ii)                                  Hazard
and Liability Insurance.  The
Lenders shall have received certificates of insurance, evidence of payment of
all insurance premiums for the current policy year of each, and, if requested
by the Lenders, copies (certified by a Responsible Officer) of all insurance
policies in the form required by this Agreement and otherwise in form and
substance reasonably satisfactory to the Lenders in all respects.

 

(d)                                              Consents;
Defaults.

 

(i)                                     Governmental
and Third Party Approvals.  The
Borrowers shall have obtained all necessary approvals, authorizations and
consents of any Person and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by this Agreement
and the other Loan Documents.

 

(ii)                                  No
Injunction, Etc.  No action,
proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before any Governmental Authority to enjoin,
restrain, or prohibit, or to obtain substantial damages in respect of, or which
is related to or arises out of this Agreement or the other Loan Documents or
the consummation of the transactions 

 

34

 

contemplated hereby or thereby, or which, in the Lenders’ sole
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement and such other Loan Documents.

 

(iii)                               No
Event of Default.  No Default or
Event of Default shall have occurred and be continuing.

 

(e)                                               Financial
Matters.

 

(i)                                     Financial
Statements.  The Lenders shall have
received the audited Consolidated and consolidating financial statements of the
Borrowers and their Subsidiaries for the fiscal year ending March 30,
2003, and the unaudited Consolidated and consolidating financial statements of
the Borrowers and their Subsidiaries for the fiscal quarter ending
June 29, 2003, all in form and substance reasonably satisfactory to the
Lenders.

 

(ii)                                  Payment
at Closing.  The Borrowers shall
have paid the fees set forth or referenced in Section 4.2 and any other
accrued and unpaid fees or commissions due hereunder (including, without
limitation, reasonable legal fees and expenses) to the Agent and the Lenders,
and to any other Person such amount as may be due thereto in connection with
the transactions contemplated hereby, including all taxes, fees and other
charges in connection with the execution, delivery, recording, filing and
registration of any of the Loan Documents.

 

(f)                                                 Miscellaneous.

 

(i)                                     Notice
of Borrowing.  If applicable, the
Agent shall have received a Notice of Borrowing from the Borrowers in
accordance with Section 2.3(a).

 

(ii)                                  Proceedings
and Documents.  All opinions,
certificates and other instruments and all proceedings in connection with the
transactions contemplated by this Agreement shall be reasonably satisfactory in
form and substance to the Lenders.  The
Lenders shall have received copies of all other instruments and other evidence
as the Lenders may reasonably request, in form and substance reasonably
satisfactory to the Lenders, with respect to the transactions contemplated by
this Agreement and the taking of all actions in connection therewith.

 

(iii)                               Existing
Facility.  The Existing Facility
shall be repaid in full and terminated and all collateral security therefor (if
any) shall be released, and the Agent shall have received a pay-off letter in
form and substance reasonably satisfactory to it evidencing such repayment,
termination, reconveyance and release.

 

(iv)                              Due
Diligence and Other Documents.  The
Borrowers shall have delivered to the Agent such other documents, certificates
and opinions as the Lenders may reasonably request.

 

SECTION 5.3                                                                    Conditions
to All Loans and Letters of Credit.  The obligation of the Lenders to make any
Loan or Letter of Credit is subject to the satisfaction of the following
conditions precedent on the relevant borrowing or issue date, as applicable:

 

35

 

 

(a)                                  Continuation
of Representations and Warranties. 
The representations and warranties contained in Article VI shall be
true and correct on and as of such borrowing or issuance date with the same
effect as if made on and as of such date; except for any representation and
warranty made as of an earlier date, which representation and warranty shall
remain true and correct as of such earlier date.  The Borrowers shall have the right from time to time, with the
consent of the Lenders, to modify or supplement any of the Schedules (including
the provision of new Schedules) referred to in this Agreement, and following
any such modification or supplement with the consent of the Lenders, the
representations in this Agreement shall be deemed to refer to such Schedules as
so modified or supplemented; provided, that the Borrowers shall be deemed to
have represented at the time of delivery of any such modification or supplement
that such modifications or supplements do not relate to circumstances which
individually or in the aggregate have resulted in a Material Adverse Change or
which would result in a Default or an Event of Default.

 

(b)                                 No
Existing Default.  No Default or
Event of Default shall have occurred and be continuing hereunder (i) on the
Borrowing Date with respect to such Loan or after giving effect to the Loan to
be made on such date or (ii) on the issue date with respect to such Letter of
Credit or after giving effect to such Letter of Credit on such date.

 

(c)                                  Officer’s
Compliance Certificate; Additional Documents.  The Agent shall have received the current Officer’s Compliance
Certificate and each additional document, instrument, legal opinion or other
item of information reasonably requested by it.

 

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF THE
BORROWERS

 

SECTION 6.1                                                  Representations
and Warranties.  To induce the Agent and the Lenders to enter into
this Agreement and to induce the Lenders to make Loans and issue Letters of
Credit, the Borrowers hereby represent and warrant to the Agent and the Lenders
both before and after giving effect to the transactions contemplated hereunder
that:

 

(a)                                  Organization;
Power; Qualification.  Each of the
Borrowers is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, has the power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted and is duly qualified and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification and authorization and where
failure to be so qualified would have a material adverse effect on such
Borrower.  The jurisdictions in which
the Borrowers are organized and qualified to do business as of the Closing Date
are described on Schedule 6.1(a).

 

36

 

(b)                                 Ownership.  Each Subsidiary of the Borrowers as of the
Closing Date is listed on Schedule 6.1(b).  As of the Closing Date, the capitalization
of the Borrowers and their Subsidiaries consists of the number of shares,
authorized, issued and outstanding, of such classes and series, with or without
par value, described on Schedule 6.1(b).  All outstanding shares have been duly authorized and validly
issued and are fully paid and nonassessable. 
The shareholders of the Subsidiaries of the Borrowers and the number of
shares owned by each as of the Closing Date are described on Schedule 6.1(b).  As of the Closing Date, there are no
outstanding stock purchase warrants, subscriptions, options, securities,
instruments or other rights of any type or nature whatsoever, which are
convertible into, exchangeable for or otherwise provide for or permit the
issuance of capital stock of the Borrowers or their Subsidiaries, except for
TESSCO Technologies Incorporated, which is publicly traded, and except as
described on Schedule 6.1(b). 
The only Subsidiaries of the Borrowers which are not Borrowers under
this Agreement are dormant, have no material assets and will not have any
material assets in the future.

 

(c)                                  Authorization
of Agreement, Loan Documents and Borrowing. Each of the Borrowers and their
Subsidiaries has the right, power and authority and has taken all necessary
corporate and other action to authorize the execution, delivery and performance
of this Agreement and each of the other Loan Documents to which it is a party
in accordance with their respective terms. 
This Agreement and each of the other Loan Documents have been duly
executed and delivered by the duly authorized officers of the Borrowers and
each of their Subsidiaries party thereto, and each such document constitutes
the legal, valid and binding obligation of the Borrowers or their Subsidiary
party thereto, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar state or federal debtor relief laws from time to time in
effect which affect the enforcement of creditors’ rights in general and the
availability of equitable remedies.

 

(d)                                 Compliance
of Agreement, Loan Documents and Borrowing with Laws, Etc.  The execution, delivery and performance by
the Borrowers and their Subsidiaries of the Loan Documents to which each such
Person is a party, in accordance with their respective terms, the borrowings
hereunder and the transactions contemplated hereby do not and will not, by the
passage of time, the giving of notice or otherwise, (i) require any
Governmental Approval which has not been obtained or violate any Applicable Law
relating to the Borrowers, (ii) conflict with, result in a breach of or
constitute a default under the articles of incorporation, bylaws or other
organizational documents of any of the Borrowers or a material default under
any indenture, agreement or other instrument to which such Person is a party or
by which any of its properties may be bound or any Governmental Approval relating
to such Person which would have a material adverse effect on any Borrower, or
(iii) result in or require the creation or imposition of any Lien upon or with
respect to any property now owned or hereafter acquired by such Person (other
than Liens, if any) arising under the Loan Documents.

 

(e)                                  Compliance
with Law; Governmental Approvals. 
Each of the Borrowers (i) has all Governmental Approvals required by any
Applicable Law for it to conduct its business, each of which is in full force
and effect, is final and not subject to review on appeal and is not the subject
of any pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding, and (ii) is in compliance with each Governmental
Approval applicable to it and in compliance with 

 

37

 

all other Applicable Laws
relating to it or any of its respective properties, the noncompliance with
which would have a material adverse effect on such Borrower.

 

(f)                                    Tax
Returns and Payments.  Each of the
Borrowers and its Subsidiaries has duly filed or caused to be filed all
federal, state, local and other tax returns required by Applicable Law to be
filed, and has paid, or made adequate provision for the payment of, all
federal, state, local and other taxes, assessments and governmental charges or
levies upon it and its property, income, profits and assets which are due and
payable pursuant to and as provided for under such returns (unless such taxes,
assessments, and governmental charges or levies are currently being contested
by the Borrowers in good faith and by appropriate proceedings, and adequate
reserves have been set aside therefor). 
No Governmental Authority has asserted any Lien (other than Permitted
Liens) or other claim against any of the Borrowers or any Subsidiary thereof
with respect to unpaid taxes which has not been discharged or resolved.  The charges, accruals and reserves on the
books of the Borrowers and any of their Subsidiaries in respect of federal,
state, local and other taxes for all Fiscal Years and portions thereof since
the organization of the Borrowers and any of their Subsidiaries are in the
judgment of the Borrowers adequate, and the Borrowers do not anticipate any
additional taxes or assessments for any of such years.

 

(g)                                 Intellectual
Property Matters.  Each of the
Borrowers and their Subsidiaries owns or possesses rights to use all
franchises, licenses, copyrights, copyright applications, patents, patent
rights or licenses, patent applications, trademarks, trademark rights, trade
names, trade name rights, copyrights and rights with respect to the foregoing,
in all cases in which the failure to own or possess such rights would have a
Material Adverse Effect.  No event has
occurred which permits, or after notice or lapse of time or both would permit,
the revocation or termination of any such rights, and neither the Borrowers nor
any Subsidiary thereof is liable to any Person for infringement under
Applicable Law with respect to any such rights as a result of its business
operations.

 

(h)                                 Environmental
Matters. To the best of the Borrowers’ knowledge and belief and except as
disclosed to the Lenders in writing:

 

(i)                                          The
properties owned, leased or operated by the Borrowers and their Subsidiaries
now or in the past do not contain, and to their knowledge have not previously
contained, any Hazardous Materials in amounts or concentrations which (A)
constitute or constituted a violation of applicable Environmental Laws or (B)
could give rise to liability under applicable Environmental Laws;

 

(ii)                                       The
Borrowers, each Subsidiary and such properties and all operations conducted in
connection therewith are in compliance, and have been in compliance, with all
applicable Environmental Laws the noncompliance with which would have a Material
Adverse Effect, and there is no contamination at, under or about such
properties or such operations which could interfere with the continued
operation of such properties or impair the fair saleable value thereof;

 

(iii)                                    Neither
any Borrower nor any Subsidiary thereof has received any notice of violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters, Hazardous Materials, or compliance with Environmental
Laws, nor does any 

 

38

 

Borrower or any Subsidiary
thereof have knowledge or reason to believe that any such notice will be
received or is being threatened;

 

(iv)                                   Hazardous
Materials have not been transported or disposed of to or from the properties owned,
leased or operated by the Borrowers and their Subsidiaries in violation of, or
in a manner or to a location which could give rise to liability under,
Environmental Laws, nor have any Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of such properties in violation of,
or in a manner that would give rise to a material liability under, any
applicable Environmental Laws;

 

(v)                                      No
judicial proceedings or governmental or administrative action is pending, or,
to the knowledge of any Borrower, threatened, under any Environmental Law to
which any Borrower or any Subsidiary thereof is or will be named as a party,
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to any
Borrower, any Subsidiary or such properties or operations; and

 

(vi)                                   There
has been no release, or to the best of any Borrower’s knowledge, threat of release,
of Hazardous Materials at or from properties owned, leased or operated by any
Borrower or any Subsidiary, now or in the past, in violation of or in amounts
or in a manner that could give rise to liability under Environmental Laws,
which would have a Material Adverse Effect.

 

(i)                                     ERISA.

 

(i)                                          As
of the Closing Date, neither any Borrower nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit Plans other
than those identified on Schedule 6.1(i);

 

(ii)                                       each
Borrower and each ERISA Affiliates is in material compliance with all
applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans except
for any required amendments for which the remedial amendment period as defined
in Section 401(b) of the Code has not yet expired.  Each Employee Benefit Plan that is intended
to be qualified under Section 401(a) of the Code has been determined by
the Internal Revenue Service to be so qualified as to form, and each trust
related to such plan has been determined to be exempt under Section 501(a)
of the Code.  No liability has been
incurred by any Borrower or any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;

 

(iii)                                    No
Pension Plan has been terminated, nor has any accumulated funding deficiency
(as defined in Section 412 of the Code) been incurred (without regard to
any waiver granted under Section 412 of the Code), nor has any funding
waiver from the Internal Revenue Service been received or requested with
respect to any Pension Plan, nor has any Borrower or any ERISA Affiliate failed
to make any contributions or to pay any amounts due and owing as required by
Section 412 of the Code, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has 

 

39

 

there been any event requiring
any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with
respect to any Pension Plan;

 

(iv)                                   Neither
any Borrower nor any ERISA Affiliate has: 
(A) engaged in a nonexempt prohibited transaction described in
Section 406 of the ERISA or Section 4975 of the Code, (B) incurred
any liability to the PBGC which remains outstanding other than the payment of
premiums and there are no premium payments which are due and unpaid, (C) failed
to make a required contribution or payment to a Multiemployer Plan, or (D)
failed to make a required installment or other required payment under
Section 412 of the Code, in each case, if such transaction, liability,
non-payment or failure would result in a material adverse effect upon any of
the Borrowers;

 

(v)                                      No
Termination Event has occurred or is reasonably expected to occur; and

 

(vi)                                   No
proceeding, claim, lawsuit and/or investigation is existing or, to the best
knowledge of the Borrowers after due inquiry, threatened concerning or
involving any (A) employee welfare benefit plan (as defined in
Section 3(1) of ERISA) currently maintained or contributed to by any
Borrower or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan.

 

(j)                                     Margin
Stock.  Neither any Borrower nor any
Subsidiary thereof is engaged principally or as one of its activities in the
business of extending credit for the purpose of “purchasing” or “carrying” any
“margin stock” (as each such term is defined or used in Regulation U of the
Board of Governors of the Federal Reserve System).  No part of the proceeds of any of the Loans or Letters of Credit
will be used for purchasing or carrying margin stock or for any purpose which
violates, or which would be inconsistent with, the provisions of Regulation T,
U or X of such Board of Governors.

 

(k)                                  Government
Regulation.  Neither any Borrower
nor any Subsidiary thereof is an “investment company” or a company “controlled”
by an “investment company” (as each such term is defined or used in the
Investment Company Act of 1940, as amended) and neither any Borrower nor any
Subsidiary thereof is, or after giving effect to any Loan or Letter of Credit
will be, subject to regulation under the Public Utility Holding Company Act of
1935 or the Interstate Commerce Act, each as amended, or any other Applicable
Law which limits its ability to incur or consummate the transactions
contemplated hereby.

 

(l)                                     Employee
Relations. Each of the Borrowers and its Subsidiaries has a stable work
force in place and is not, as of the Closing Date, party to any collective
bargaining agreement nor has any labor union been recognized as the
representative of its employees except as set forth on Schedule 6.1(m).  The Borrowers know of no pending, threatened
or contemplated strikes, work stoppage or other collective labor disputes
involving their employees or those of their Subsidiaries.

 

(m)                               Burdensome
Provisions.  Neither any Borrower
nor any Subsidiary thereof is a party to any indenture, agreement, lease or
other instrument, or subject to any corporate or partnership restriction,
Governmental Approval or Applicable Law which is so unusual or 

 

40

 

burdensome as in the
foreseeable future could be reasonably expected to have a Material Adverse
Effect.  The Borrowers and their Subsidiaries
do not presently anticipate that future expenditures needed to meet the
provisions of any statutes, orders, rules or regulations of a Governmental
Authority will be so burdensome as to have a Material Adverse Effect.

 

(n)                                 Financial
Statements.  The (i) Consolidated
and consolidating balance sheets of the Borrowers and their Subsidiaries as of
March 30, 2003 and the related statements of income and retained earnings
and cash flows for the Fiscal Years then ended and (ii) unaudited Consolidated
and consolidating balance sheet of the Borrowers and their Subsidiaries as of
June 29, 2003 and related unaudited interim statements of revenue and
retained earnings, copies of which have been furnished to the Lenders, are
complete and correct and fairly present the assets, liabilities and financial
position of the Borrowers and their Subsidiaries as at such dates, and the
results of the operations and changes of financial position for the periods
then ended.  All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP.  The
Borrowers and their Subsidiaries have no Debt, obligation or other unusual
forward or long-term commitment which is not fairly reflected in the foregoing
financial statements or in the notes thereto.

 

(o)                                 No
Material Adverse Change.  Since the
date of the most recent audited financial statements delivered to the Lenders,
there has been no material adverse change in the properties, business,
operations, prospects, or condition (financial or otherwise) of the Borrowers
and their Subsidiaries and no event has occurred or condition arisen that could
reasonably be expected to have a Material Adverse Effect.

 

(p)                                 Solvency.  As of the Closing Date and after giving
effect to each Loan and Letter of Credit made hereunder, the Borrowers, on a
consolidated basis, will be Solvent.

 

(q)                                 Titles
to Properties.  Each of the
Borrowers and their Subsidiaries has such title to the real property owned by
it as is necessary or desirable to the conduct of its business and valid and
legal title to all of its personal property and assets, including, but not
limited to, those reflected on the balance sheets of the Borrowers and their
Subsidiaries delivered pursuant to Section 6.1(o), except those which have
been disposed of by the Borrowers or their Subsidiaries subsequent to such
date, which dispositions have been in the ordinary course of business or as
otherwise expressly permitted hereunder, and except for minor imperfections in
title which do not significantly detract from the use thereof.

 

(r)                                    Liens.  None of the properties and assets of any
Borrower or any Subsidiary thereof is subject to any Lien, except Permitted
Liens.  No financing statement under the
Uniform Commercial Code of any state which names any Borrower or any Subsidiary
thereof or any of their respective trade names or divisions as debtor and which
has not been terminated, has been filed in any state or other jurisdiction upon
the authority of any Borrower or in respect of any security interest granted by
any Borrower, and neither any Borrower nor any Subsidiary thereof has signed
any such financing statement or any security agreement authorizing any secured
party thereunder to file any such financing statement, except to perfect Permitted
Liens.

 

41

 

(s)                                  Debt
and Guaranty Obligations.  Schedule 6.1(s)
is a complete and correct listing of all Debt and Guaranty Obligations of the
Borrowers and their Subsidiaries as of the Closing Date in excess of
$500,000.  The Borrowers and their
Subsidiaries have performed and are in compliance with all of the terms of such
Debt and Guaranty Obligations and all instruments and agreements relating
thereto, and no default or event of default, or event or condition which with
notice or lapse of time or both would constitute such a default or event of
default on the part of the Borrowers or their Subsidiaries exists with respect
to any such Debt or Guaranty Obligation.

 

(t)                                    Litigation.  Except for matters existing on the Closing
Date and set forth on Schedule 6.1(t), there are no actions, suits
or proceedings pending nor, to the knowledge of any Borrower, threatened
against or in any other way relating adversely to or affecting any Borrower or
any Subsidiary thereof or any of their respective properties in any court or
before any arbitrator of any kind or before or by any Governmental Authority
which would have a Material Adverse Effect.

 

(u)                                 Absence
of Defaults.  No event has occurred
or is continuing which constitutes a Default or an Event of Default, or which
constitutes, or which with the passage of time or giving of notice or both
would constitute, a default or event of default by any Borrower or any
Subsidiary thereof under any contract or judgment, decree or order to which any
Borrower or any Subsidiary is a party or by which any Borrower or any
Subsidiary or any of their respective properties may be bound or which would
require any Borrower or any Subsidiary to make any payment thereunder prior to
the scheduled maturity date therefor which would have a Material Adverse
Effect.

 

(v)                                 Accuracy
and Completeness of Information. 
All written information, reports and other papers and data produced by
or on behalf of any Borrower or any Subsidiary thereof and furnished to the
Lenders were, at the time the same were so furnished, complete and correct in
all material respects to the extent necessary to give the recipient a true and
accurate knowledge of the subject matter. 
To the knowledge of the Borrowers, no document furnished or written
statement made to the Agent or any Lender by any Borrower or any Subsidiary
thereof in connection with the negotiation, preparation or execution of this
Agreement or any of the Loan Documents contains or will contain any untrue statement
of a fact material to the creditworthiness of the Borrowers or their
Subsidiaries or omits or will omit to state a fact necessary in order to make
the statements contained therein not misleading.  No Borrower is aware of any facts which it has not disclosed in
writing to the Agent having a Material Adverse Effect, or insofar as any
Borrower can now foresee, could reasonably be expected to have a Material
Adverse Effect.

 

SECTION 6.2                                                  Survival
of Representations and Warranties, Etc.  All representations and warranties set forth
in this Article VI and all representations and warranties contained in any
certificate, or any of the Loan Documents (including but not limited to any
such representation or warranty made in or in connection with any amendment
thereto) shall constitute representations and warranties made under this
Agreement.  All representations and
warranties made under this Agreement shall be made or deemed to be made at and
as of the Closing Date, shall survive the Closing Date and shall not be waived
by the execution and delivery of this Agreement, any investigation made by or
on behalf of the Lenders or any borrowing hereunder.

 

42

 

ARTICLE VII

 

FINANCIAL INFORMATION AND NOTICES

 

Until all the Obligations have been paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.11 hereof, the Borrowers
will furnish or cause to be furnished to the Lenders at their respective addresses
as set forth on Schedule 1, or such other office as may be
designated by a Lender from time to time:

 

SECTION 7.1                                                  Financial
Statements.

 

(a)                                  Monthly
Financial Statements.  As soon as
practicable and in any event within forty-five (45) days after the end of each
month in each Fiscal Year, an unaudited Consolidated and consolidating balance
sheet of the Borrowers and their Subsidiaries as of the close of such month and
unaudited Consolidated and consolidating statements of income, retained
earnings and cash flows and statements of shareholder equity and changes in
financial position for the month then ended and that portion of the Fiscal Year
then ended, including the notes thereto, prepared by or under the direction of
the chief financial officer of the Borrowers, 
containing disclosure of the effect on the financial position or results
of operations of any change in the application of accounting principles and
practices during the period, subject to normal year end adjustments.

 

(b)                                 Quarterly
Financial Statements.  As soon as
practicable and in any event within forty-five (45) days after the end of each
quarter in each Fiscal Year, an unaudited Consolidated and consolidating
balance sheet of the Borrowers and their Subsidiaries as of the close of such
fiscal quarter and unaudited Consolidated and consolidating statements of
income, retained earnings and cash flows and statements of shareholder equity
and changes in financial position for the fiscal quarter then ended and that
portion of the Fiscal Year then ended, including the notes thereto, all in
reasonable detail setting forth in comparative form the corresponding figures
for the preceding Fiscal Year and prepared by the Borrowers in accordance with
GAAP and, if applicable, containing disclosure of the effect on the financial
position or results of operations of any change in the application of
accounting principles and practices during the period, and certified by the
chief financial officer of the Borrowers to present fairly in all material
respects the financial condition of the Borrowers and their Subsidiaries as of
their respective dates and the results of operations of the Borrowers and their
Subsidiaries for the respective periods then ended, subject to normal year end
adjustments.

 

(c)                                  Annual
Financial Statements.  As soon as
practicable and in any event within one hundred twenty (120) days after the end
of each Fiscal Year, an audited Consolidated and consolidating balance sheet of
the Borrowers and their Subsidiaries as of the close of such Fiscal Year and
audited Consolidated and consolidating balance sheets, statements of
shareholder equity, statements of income, retained earnings and cash flows, and
statements of changes in financial position for the Fiscal Year then ended,
including the notes thereto, all in reasonable detail setting forth in
comparative form the corresponding figures for the preceding Fiscal Year and
prepared by an independent certified public accounting firm acceptable to the
Lenders in accordance with GAAP

 

43

 

and, if applicable, containing
disclosure of the effect on the financial position or results of operation of
any change in the application of accounting principles and practices during the
year, and accompanied by a report thereon by such certified public accountants
that is not qualified with respect to scope limitations imposed by the
Borrowers or any of their Subsidiaries or with respect to accounting principles
followed by the Borrowers or any of their Subsidiaries not in accordance with
GAAP.

 

SECTION 7.2                                                  Officer’s
Compliance Certificate.  As soon as practicable, and in any event within
forty-five (45) days after the end of each fiscal quarter in each Fiscal Year,
and at such other times as the Lenders shall reasonably request, a certificate
of the chief financial officer or the treasurer of the Borrowers: (a) stating
that no Event of Default exists under the Loan Documents, or if an Event of
Default exists, specifying the Event of Default, (b) calculating the Borrowers’
ratio of Funded Debt to EBITDA for the previous Fiscal Quarter, and (c)
demonstrating the calculation of the Borrowers’ compliance with the other
financial covenants set forth herein, all of which shall be in form and
substance reasonably satisfactory to the Lenders in all respects.

 

SECTION 7.3                                                  [Intentionally
Omitted]

 

 

SECTION 7.4                                                  Borrowing
Base Certificates and Other Reports.

 

(a)                                  As
soon as available, but in no event more than fifteen (15) days after the end of
each month, and at such other times as the Lenders shall reasonably request in
order to verify eligibility for a proposed Loan, a Borrowing Base Certificate
in the form of Exhibit C hereto, accompanied by accounts receivable
aging reports, accounts payable aging reports, and inventory reports in form
and substance reasonably satisfactory to the Lenders in all respects, and

 

(b)                                 Such
other information regarding the operations, business affairs and financial
condition of the Borrowers or any of their Subsidiaries as any Lender may
reasonably request and which the Borrowers can legally provide.

 

SECTION 7.5                                                  Notice
of Litigation and Other Matters.  Prompt (but in no event later than ten (10) days
after an officer of the Borrowers obtains knowledge thereof) telephonic and
written notice of:

 

(a)                                  the
commencement of all proceedings and investigations by or before any
Governmental Authority and all actions and proceedings in any court or before
any arbitrator against or involving any Borrower or any Subsidiary thereof or
any of their respective properties, assets or businesses and involving claims
of $1,000,000 or more;

 

(b)                                 any
notice of any violation received by any Borrower or any Subsidiary thereof from
any Governmental Authority including, without limitation, any notice of
violation of Environmental Laws which in any such case would have a Material
Adverse Effect;

 

44

 

(c)                                  any
labor controversy that has resulted in, or threatens to result in, a strike or
other work action against any Borrower or any Subsidiary thereof which would
have a Material Adverse Effect;

 

(d)                                 any
attachment, judgment, lien, levy or order exceeding $1,000,000 that has been
assessed against any Borrower or any Subsidiary thereof;

 

(e)                                  any
Default or Event of Default; and

 

(f)                                    (i)
any unfavorable determination letter from the Internal Revenue Service
regarding the qualification of an Employee Benefit Plan under
Section 401(a) of the Code (along with a copy thereof), (ii) all notices
received by any Borrower or any ERISA Affiliate of the PBGC’s intent to
terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, (iii) all notices received by any Borrower or any ERISA Affiliate
from a Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA and (iv) any
Borrower obtaining knowledge or reason to know that any Borrower or any ERISA
Affiliate has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of
Section 4041(c) of ERISA which would have a Material Adverse Effect.

 

SECTION 7.6                                                  Accuracy
of Information.  All written information, reports, statements and
other papers and data furnished by or on behalf of any Borrower to the Agent or
any Lender (other than financial forecasts) whether pursuant to this
Article VII or any other provision of this Agreement, or any of the other
Loan Documents, shall be, at the time the same is so furnished, complete and
correct in all material respects to the extent necessary to give the Agent or
any Lender complete, true and accurate knowledge of the subject matter based on
the Borrowers’ knowledge thereof.

 

ARTICLE VIII

 

AFFIRMATIVE COVENANTS

 

Until all of the Obligations have been paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner provided for in Section 13.11, each of the
Borrowers will:

 

SECTION 8.1                                                  Preservation
of Corporate Existence and Related Matters.  Except as permitted by
Section 10.5, preserve and maintain its separate corporate existence and
all rights, franchises, licenses and privileges necessary to the conduct of its
business, and qualify and remain qualified as a foreign corporation or limited
liability company, as applicable, and authorized to do business in each
jurisdiction where the nature and scope of its activities require it to so
qualify under Applicable Law and where the failure to be so qualified would
have a material adverse effect on such Borrower.

 

45

 

SECTION 8.2                                                  Maintenance
of Property.  To the extent within the control of the Borrowers,
protect and preserve all properties useful in and material to its business,
including copyrights, patents, trade names and trademarks; maintain in good
working order and condition all buildings, equipment and other tangible real
and personal property useful and material to its business; and from time to
time make or cause to be made all renewals, replacements and additions to such
property necessary for the conduct of its business, so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times.

 

SECTION 8.3                                                  Insurance.  Maintain
insurance with financially sound and reputable insurance companies against such
risks and in such amounts as are customarily maintained by similar businesses
and as may be required by Applicable Law and as are required hereby, and on the
Closing Date and from time to time thereafter deliver to the Agent upon its
reasonable request a detailed list of the insurance then in effect, stating the
names of the insurance companies, the amounts and rates of the insurance, the
dates of the expiration thereof and the properties and risks covered thereby.

 

SECTION 8.4                                                  Accounting
Methods and Financial Records.  Maintain a system of accounting, and keep such
books, records and accounts (which shall be true and complete in all material
respects) as may be required or as may be necessary to permit the preparation
of financial statements in accordance with GAAP and in compliance with the
regulations of any Governmental Authority having jurisdiction over it or any of
its properties.

 

SECTION 8.5                                                  Payment
and Performance of Obligations.  Pay and perform all Obligations under this Agreement
and the other Loan Documents, and pay or perform (a) all taxes, assessments and
other governmental charges that may be levied or assessed upon it or any of its
property (unless such taxes, assessments and governmental charges or levies are
being contested by the Borrowers in good faith and by appropriate proceedings
and adequate reserves have been set aside therefor), and (b) all other
indebtedness, obligations and liabilities in accordance with customary trade
practices, except where failure to do so will not have a material adverse
effect on such Borrower.

 

SECTION 8.6                                                  Compliance
With Laws and Approvals.  Observe and remain in compliance with all Applicable
Laws and maintain in full force and effect all Governmental Approvals, in each
case applicable to the conduct of its business, except where the failure to so
comply or the failure to so maintain will not have a material adverse effect on
such Borrower.

 

SECTION 8.7                                                  Environmental
Laws.  In addition to and without limiting the generality of Section 8.6,
(a) comply with, and ensure such compliance by all tenants and subtenants
with, all applicable Environmental Laws and obtain and comply with and
maintain, and ensure that all tenants and subtenants obtain and comply with and
maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws, except where failure to
obtain, comply or maintain, or failure to cause such tenants to obtain, comply
or maintain, will not have a material adverse effect on such Borrower, (b)
conduct and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws, and
promptly comply with all lawful orders and directives of any Governmental
Authority regarding Environmental Laws, and (c) defend, 

 

46

 

indemnify and hold harmless the
Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates,
employees, agents, officers and directors, from and against any claims,
demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the presence of Hazardous Materials,
or the violation of, noncompliance with or liability under any Environmental
Laws applicable to the operations of the Borrowers or such Subsidiary, or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorney’s and consultant’s fees,
investigation and laboratory fees, response costs, court costs and litigation
expenses, except to the extent that any of the foregoing directly result from
the gross negligence or willful misconduct of the party seeking indemnification
therefor.

 

SECTION 8.8                                                  Compliance
with ERISA.  In addition to and without limiting the generality of Section 8.6,
(a) comply in all material respects with all applicable provisions of ERISA and
the regulations and published interpretations thereunder with respect to all
Employee Benefit Plans, (b) not take any action or fail to take action the
result of which could be a material liability to the PBGC or to a Multiemployer
Plan, (c) not participate in any prohibited transaction that could result in
any civil penalty under ERISA or tax under the Code, that in each case would
have a material adverse effect on any Borrower, (d) operate each Employee
Benefit Plan in such a manner that will not incur any tax liability under
Section 4980B of the Code or any liability to any qualified beneficiary as
defined in Section 4980B of the Code that in each case would have material
adverse effect on any Borrower, and (e) furnish to the Lenders upon any
Lender’s request such additional information about any Employee Benefit Plan as
may be reasonably requested by any Lender.

 

SECTION 8.9                                                  Compliance
With Agreements.  Comply in all material respects with each term,
condition and provision of all leases, agreements and other instruments entered
into in the conduct of its business the noncompliance with which would have a
Material Adverse Effect.

 

SECTION 8.10                                           Conduct
of Business.  Engage only in businesses in substantially the same
fields as the businesses conducted on the Closing Date and in lines of business
reasonably related thereto.

 

SECTION 8.11                                           Visits
and Inspections.  Permit representatives of the Agent or any Lender,
from time to time, to visit and inspect its properties; inspect, audit and make
extracts from its books, records and files, including, but not limited to,
management letters prepared by independent accountants; and discuss with its
principal officers, and its independent accountants, its business, assets,
liabilities, financial condition, results of operations and business prospects;
provided, however, that prior to an Event of Default, the Lenders shall conduct
an audit not more than once every Fiscal Year during normal business hours and
after giving reasonable prior notice. Borrowers will reimburse the Agent or the
Lenders for the cost of one audit per year, or, in the case of an Event of
Default, as many audits as the Agent or Lenders shall deem necessary or
appropriate.

 

47

 

SECTION 8.12                                           Additional
Subsidiaries.  Within ten (10) days after any new Subsidiary of any
Borrower, which is created or acquired after the Closing Date, engages in any
business operations, cause to be executed and delivered to the Agent (a) a duly
executed Assignment and Assumption Agreement, in form and substance satisfactory
to the Agent and the Lenders pursuant to which such new Subsidiary shall become
jointly and severally liable for the obligations of the Borrowers hereunder,
(b) favorable legal opinions addressed to the Lenders in form and substance
reasonably satisfactory thereto with respect to such Assignment and Assumption
Agreement and (c) such other searches, documents and closing certificates as
may be requested by the Agent.

 

SECTION 8.13                                           Further
Assurances.  Make, execute and deliver all such additional and further acts, things,
deeds and instruments as the Agent or any Lender may reasonably require to
document and consummate the transactions contemplated hereby and to vest
completely in and insure the Agent and the Lenders their respective rights under
this Agreement, the Note, the Letters of Credit and the other Loan Documents.

 

SECTION 8.14                                           Insurance.  Maintain
with financially sound, well rated and reputable insurance companies insurance
in such amounts and covering such risks as is consistent with sound business
practice, and in any event as is ordinarily and customarily carried by
companies similarly situated and in the same or similar businesses as such
Borrower.  Each Borrower will pay, when
due, all premiums on such insurance and will furnish to the Lenders, upon
request, evidence of payment of such premiums and other information as to the
insurance carried by such Borrower. 
Such insurance shall include, without limitation, (a) comprehensive fire
and extended coverage insurance (including vandalism and malicious mischief) on
the physical assets and properties of such Borrower against such risks, with
such loss deductible amounts and in such amounts not less than those which may
be reasonably satisfactory to the Lenders but in all events conforming to
prudent business practices and in such minimum amounts that such Borrower will
not be deemed a co-insurer under applicable insurance laws, regulations,
policies and practices, (b) public liability insurance against claims for
personal injury or death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by any
Borrower, and  (c) worker’s
compensation insurance.

 

SECTION 8.15                                           Bank
Accounts.  Maintain its primary deposit account at Wachovia and its primary
disbursement account at SunTrust.

 

ARTICLE IX

 

FINANCIAL COVENANTS

 

                                                Until
all of the Obligations have been paid and satisfied in full and the Commitments
terminated, unless consent has been obtained in the manner set forth in
Section 13.11 hereof, the Borrowers and their Subsidiaries on a
Consolidated basis will:

 

48

 

SECTION 9.1                                                  Minimum
Tangible Net Worth.  From the Closing Date through the Scheduled Maturity
Date, as measured at the end of each of the Borrowers’ fiscal quarters,
maintain a combined Tangible Net Worth of not less than $45,000,000; provided,
however, that the Minimum Tangible Net Worth requirement shall increase,
annually upon receipt of year-end financial statements, by fifty percent (50%)
of the Borrowers’ combined net income after applicable taxes; provided,
however, that for purposes of calculation of the Borrowers’ minimum Tangible
Net Worth requirement, the amount of any issued and outstanding stock purchases
up to $10,000,000 in the aggregate shall be subtracted from the calculation of
the Borrowers’ minimum Tangible Net Worth requirement.

 

SECTION 9.2                                                  Minimum
Cash Flow Coverage Ratio. From the Closing
Date through the Scheduled Maturity Date, maintain a ratio of EBITDA to the sum
of Debt Service plus taxes paid, as measured at the end of each of the
Borrowers’ fiscal quarters on a trailing four-quarter basis, of no less than
2.25:1.00.

 

SECTION 9.3                                                  Minimum
Liabilities to Tangible Net Worth.  From the Closing Date through the Scheduled Maturity
Date, maintain a ratio of total liabilities to Tangible Net Worth, as measured
at the end of each of the Borrowers’ fiscal quarters, of no more than
1.75:1.00.

 

SECTION 9.4                                                  Maximum
Funded Debt/EBITDA. From the Closing Date
through the Scheduled Maturity Date, maintain a ratio of  (a) Funded Debt, as measured at the end of
each of the Borrowers’ fiscal quarters, to (b) EBITDA, as measured at the end
of each of the Borrowers’ fiscal quarters on a trailing four-quarter basis, of
no more than 2.50:1:00.

 

ARTICLE X

 

NEGATIVE COVENANTS

 

Until all of
the Obligations have been paid and satisfied in full and the Commitments
terminated, each Borrower agrees that it shall not and shall not permit any of
its Subsidiaries to:

 

SECTION 10.1                                           Limitations
on Debt.  Without the Lenders’ prior written consent, which consent shall not be
unreasonably withheld, create, incur, assume or suffer to exist any Debt
except:

 

(a)                                  the
Obligations;

 

(b)                                 Debt
existing on the Closing Date and not otherwise permitted under this
Section 10.1, as set forth on Schedule 6.1(s), and the renewal
and refinancing (but not the increase in the aggregate principal amount
thereof) thereof;

 

(c)                                  current trade debt
incurred in the ordinary course of business;

 

49

 

(d)                                 payable purchase money
Debt of the Borrowers and their Subsidiaries (and renewals or replacement,
without increase, of such purchase money Debt) in an aggregate amount not to
exceed $5,000,000;

 

(e)           Without
duplication, Debt secured by Permitted Liens;

 

(f)            Subordinated
Debt;

 

(g)                                 Unsecured letters of
credit, bankers’ acceptances and/or (i) secured Hedging Agreements between any
Borrower and any Lender or any affiliate of any Lender and/or (ii) unsecured
Hedging Agreements between any Borrower and any other financial institution,
providing for the transfer or mitigation of foreign exchange risks or interest
rate risks either generally or under specific contingencies;

 

(h)                                 Capital Leases not to
exceed $5,000,000 in the aggregate;

 

(i)                                     Intercompany Debt
by and among any or all of the Borrowers; and

 

(l)                                     Debt permitted
under the provisions of Sections 10.2 and 10.4 of this Agreement.

 

provided, that no
agreement or instrument with respect to Debt permitted to be incurred by this
Section 10.1 shall restrict, limit or otherwise encumber (by covenant or
otherwise) the ability of any Subsidiary of any Borrower to make any payment to
any Borrower or any Subsidiary (in the form of dividends, intercompany advances
or otherwise) for the purpose of enabling the Borrowers to pay the Obligations.

 

SECTION 10.2                                           Limitations
on Guaranty Obligations.  Create, incur, assume or suffer to exist any
Guaranty Obligations except (a) Guaranty Obligations in favor of the Agent for
the benefit of the Agent and the Lenders, and (b) Debt consisting of Guaranty
Obligations guaranteeing Debt of another Borrower that is otherwise expressly
permitted by Section 10.1.

 

SECTION 10.3                                           Limitations
on Liens.  Without the Lenders’ prior written consent, which consent shall not be
unreasonably withheld, create, incur, assume or suffer to exist, any Lien on or
with respect to any of its assets or properties (including without limitation
shares of capital stock or other ownership interests), real or personal, whether
now owned or hereafter acquired, except any of the following liens (“Permitted
Liens”):

 

(a)                                  Liens
for taxes, assessments and other governmental charges or levies (excluding any
Lien imposed pursuant to any of the provisions of ERISA or Environmental Laws)
not yet due or as to which the period of grace (not to exceed thirty (30)
days), if any, related thereto has not expired or which are being contested in
good faith and by appropriate proceedings if adequate reserves are maintained
to the extent required by GAAP;

 

50

 

(b)                                 the
claims of materialmen, mechanics, carriers, warehousemen, or processors for
labor, materials, supplies or rentals incurred in the ordinary course of
business which are not overdue for a period of more than thirty (30) days or
which are bonded over or covered by insurance;

 

(c)                                  Liens
constituting encumbrances in the nature of zoning restrictions, easements and
rights or restrictions of record on the use of real property which in the
aggregate are not substantial in amount and which do not, in any case, detract
from the value of such property or impair the use thereof in the ordinary
conduct of business;

 

(d)                                 Liens
not otherwise permitted by this Section 10.3 and in existence on the
Closing Date and described on Schedule 10.3(d);

 

(e)                                  Liens
securing Debt permitted under Section 10.1(d); provided that (i)
such Liens shall be created substantially simultaneously with the acquisition
of the related asset, (ii) such Liens do not at any time encumber any property
other than the property financed by such Debt, (iii) the amount of Debt secured
thereby is not increased and (iv) the principal amount of Debt secured by any
such Lien shall at no time exceed one hundred percent (100%) of the original purchase
price of such property at the time it was acquired;

 

(f)                                    deposits or pledges
to secure obligations under workers’ compensation, social security or similar
laws, or under unemployment insurance in the ordinary course of business;

 

(g)                                 judgment Liens to the
extent the entry of such judgment does not constitute an Event of Default under
the terms of this Agreement;

 

(h)                                 deposits, liens or
pledges to secure payments of (i) unemployment and other insurance, old-age
pensions or other social security obligations, or (ii) the performance of bids,
tenders, leases, contracts, public or statutory obligations, surety, stay or
appeal bonds, or other similar obligations arising in the ordinary course of
business; provided that liens permitted under this Section 10.3(h)(ii)
shall not exceed $1,000,000 in the aggregate at any one time;

 

(i)                                     statutory
landlord’s Liens under leases to which any Borrower or any Subsidiary is a
party;

 

(j)                                     Liens securing
Debt permitted by the provisions of Section 10.1(d), or Liens securing
debt permitted by the provisions of Section 10.1(b), which liens are
described in Schedule 6.1(s);

 

(k)                                  Liens securing
obligations under Capital Leases to the extent such Capital Leases are
permitted by the provisions of this Agreement; and

 

(l)                                     any Lien arising
under any retention of title arrangements entered into in the ordinary course
of business and not entered into primarily for the purpose of securing
borrowings.

 

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SECTION 10.4                                           Limitations
on Loans, Investments and Acquisitions.  Purchase, own, invest in or otherwise
acquire, directly or indirectly, any capital stock, interests in any
partnership or joint venture (including without limitation the creation or
capitalization of any Subsidiary), evidence of Debt or other obligation or
security, substantially all or a portion of the business or assets of any other
Person or any other investment or interest whatsoever in any other Person, or
make or permit to exist, directly or indirectly, any loans, advances or
extensions of credit to, or any investment in cash or by delivery of property
in, any Person except:

 

(a)                                  Permitted
Acquisitions;

 

(b)                                 replacements of assets
that are the subject of Permitted Asset Dispositions;

 

(c)                                  investments not
otherwise permitted by this Section 10.4 in
Subsidiaries existing on the Closing Date (provided that the Borrowers’
aggregate investment in non-Borrower Subsidiaries shall in no event exceed the
aggregate investment in such Non-Borrower Subsidiaries on the date hereof), and
the other existing loans, advances and investments not otherwise permitted by
this Section 10.4 described on Schedule 10.4;

 

(d)                                 investments
in (i) marketable direct obligations issued or unconditionally guaranteed
by the United States or any agency thereof maturing within 120 days from the
date of acquisition thereof, (ii) commercial paper maturing no more than
120 days from the date of creation thereof and currently having the highest
rating obtainable from either Standard & Poor’s Ratings Services, a
division of The McGraw-Hill Companies, Inc., or Moody’s Investors Service,
Inc., (iii) certificates of deposit maturing no more than 120 days from
the date of creation thereof issued by commercial banks incorporated under the
laws of the United States, each having combined capital, surplus and undivided
profits of not less than $500,000,000 and having a rating of “A” or better by a
nationally recognized rating agency; provided, that the aggregate amount
invested in such certificates of deposit shall not at any time exceed
$5,000,000 for any one such certificate of deposit and $10,000,000 for any one
such bank, or (iv) time deposits maturing no more than 30 days from the
date of creation thereof with commercial banks or savings banks or savings and
loan associations each having membership either in the FDIC or the deposits of
which are insured by the FDIC and in amounts not exceeding the maximum amounts
of insurance thereunder;

 

(e)                                  investments
by any Borrower or any Subsidiary in the form of acquisitions of all or
substantially all of the business or a line of business (whether by the
acquisition of capital stock, assets or any combination thereof) of any other
Person if such acquisition has been previously approved in writing by the
Lenders (except to the extent consent is not required pursuant to the terms
hereof) and the Borrowers comply with the provisions of Section 8.12.

 

(f)                                    the receipt of Debt
by any Borrower or any Subsidiary which represents payment to such Borrower or
Subsidiary, as the case may be, of a portion of the purchase price payable in
connection with a Permitted Asset Disposition;

 

(g)                                 the receipt of
securities in connection with the settlement of claims against any customer,
supplier or vendor or as a result of the bankruptcy of any such customer,
supplier or vendor;

 

52

 

(h)                                 any advance to an
officer or employee of any Borrower or any Subsidiary for travel or other
business expenses in the ordinary course of business,
provided that the aggregate amount of all such advances by all of the Borrowers
and its Subsidiaries (taken as a whole) outstanding at any time shall not
exceed $100,000;

 

(i)                                     trade credit
extended to customers in the ordinary course of business; and

 

(j)                                     ordinary course
working capital advances and loans to and from any Borrower to any other
Borrower.

 

SECTION 10.5                                           Limitations
on Mergers and Liquidation.  Merge, consolidate or enter into any similar
combination with any other Person or liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution), except that (a) the Borrowers may
engage in Permitted Acquisitions and Permitted Asset Dispositions, and (b) any Borrower may merge into or consolidate with any other Borrower,
and (c) any Subsidiary may merge into or consolidate with any Borrower, so long
as (i) the Borrower is the surviving entity and (ii) such merger or
consolidation does not render the surviving entity insolvent.

 

SECTION 10.6                                           Limitations
on Sale of Assets.  Convey, sell, lease, assign, transfer or otherwise
dispose of any of its property, business or assets (including, without
limitation, the sale of any receivables and leasehold interests and any
sale-leaseback or similar transaction), whether now owned or hereafter acquired
except Permitted Asset Dispositions.

 

SECTION 10.7                                           Limitations
on Dividends and Distributions.  Declare or pay any dividends upon any of its capital
stock; purchase, redeem, retire or otherwise acquire, directly or indirectly,
any shares of its capital stock, or make any distribution of cash, property or
assets among the holders of shares of its capital stock, or make any change in
its capital structure; provided that (a) any Subsidiary (including any
Subsidiary that is also a Borrower) may pay cash dividends to any of the Borrowers,
and (b) the Borrowers may purchase up to $10,000,000 of their issued and
outstanding stock in the aggregate during the term of the Credit Facility.

 

SECTION 10.8                                           Limitations
on Exchange and Issuance of Capital Stock. 
Except in connection with any Permitted
Acquisition, issue, sell or otherwise dispose of any class or series of capital
stock that, by its terms or by the terms of any security into which it is
convertible or exchangeable, is, or upon the happening of an event or passage
of time would be, (a) convertible or exchangeable into Debt or (b) required to
be redeemed or repurchased, including at the option of the holder, in whole or
in part, or has, or upon the happening of an event or passage of time would
have, a redemption or similar payment due.

 

SECTION 10.9                                           Transactions
with Affiliates.  Except as expressly permitted pursuant to
Section 10.4, directly or indirectly 
(a) make any loan or advance to, or purchase or assume the Note or other
obligation to or from, any of its officers, directors, shareholders or other
Affiliates, or to or from any member of the immediate family of any of its
officers, directors, shareholders or other Affiliates, or, other than on an
arm’s length basis, subcontract any operations to any of its Affiliates or (b) enter
into, or be a party to, any other transaction with any of its Affiliates,
except pursuant to the reasonable requirements of its business and upon fair
and reasonable terms that are fully disclosed to and approved in writing by the
Required Lenders prior 

 

53

 

to the consummation thereof and
are no less favorable to it than it would obtain in a comparable arm’s length
transaction with a Person not its Affiliate. The foregoing provisions shall not
restrict (a) any employment agreement or related compensation arrangement
entered into by any Borrower or Subsidiary, or any reasonable travel or
business expense reimbursement or advance made by any Borrower or subsidiary,
in each case, on an arm’s length basis in the ordinary course of business
consistent with past or reasonable business practices, (b) the payment of
dividends and distributions to the extent otherwise permitted by this
Agreement, and (c) intercompany investments and loans between and among Borrowers
as and to the extent permitted by this Agreement.

 

SECTION 10.10                                    Certain
Accounting Changes.  Change its Fiscal Year end, or make any
change in its accounting treatment and reporting practices except as required
by GAAP.

 

SECTION 10.11                                    Amendments;
Payments and Prepayments of Subordinated Debt.  Amend or modify (or permit the
modification or amendment of) any of the terms or provisions of any
Subordinated Debt, or cancel or forgive, make any voluntary or optional payment
or prepayment on, or redeem or acquire for value (including without limitation
by way of depositing with any trustee with respect thereto money or securities
before due for the purpose of paying when due) any Subordinated Debt.

 

SECTION 10.12                                    Restrictive
Agreements.  Enter into any Debt which contains any negative pledge on assets
or any covenants more restrictive than the provisions of Articles VIII, IX and
X hereof, or which restricts, limits or otherwise encumbers its ability to
incur Liens on or with respect to any of its assets or properties other than
the assets or properties securing such Debt.

 

SECTION 10.13                                    Capital
Expenditures.  Spend, in the aggregate, more than
$6,000,000 in Capital Expenditures in any fiscal year. The Agent and the
Lenders agree that the foregoing limitation shall not include or in any way
restrict Capital Expenditures made or to be made by the Borrower relating to
the use of insurance proceeds to repair, replace or rebuild any assets or
facilities damaged or destroyed as a result of any prior or future casualty.

 

ARTICLE XI

 

DEFAULT AND REMEDIES

 

SECTION 11.1                                           Events
of Default.  Each of the following shall constitute an Event of Default, whatever
the reason for such event and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment or order of any
court or any order, rule or regulation of any Governmental Authority or
otherwise:

 

(a)                                  Default
in Payment of Principal and Interest on Loans and Reimbursement Obligations.  The Borrowers shall default in any payment
of principal of or interest on, any Loan, Note or Reimbursement Obligation when
and as due (whether at maturity, by reason of acceleration 

 

54

 

or otherwise); provided,
however, that the Borrowers shall not be deemed to be in default hereunder if a
failure to make an interest payment results from the failure of the Lenders to
make a Loan when the Borrowers are otherwise entitled to a Loan hereunder, or
from the failure of any Lender to make automatic payments of interest pursuant
to the procedures described or contemplated by Section 2.2(b)(ii) hereof.

 

(b)                                 Other
Payment Default.  The Borrowers
shall default in the payment when and as due (whether at maturity, by reason of
acceleration or otherwise) of (a) any fee payable hereunder or under any
Hedging Agreement, as and when the same becomes due and payable, or (b) the
payment of any other Obligation within ten (10) days after demand therefor.

 

(c)                                  Misrepresentation.  Any representation or warranty made or
deemed to be made by any of the Borrowers or any of their Subsidiaries under
this Agreement, any Loan Document or any amendment hereto or thereto, shall at
any time prove to have been incorrect or misleading in any material respect
when made or deemed made; provided, however, that in the event the Agent or the
Lenders determine that a Borrower has made a misrepresentation constituting an
Event of Default, the Agent shall notify the Borrowers, and the Borrowers shall
be permitted two (2) Business Days after the receipt of such notice to
demonstrate to the Agent and the Lenders in writing that the representation was
not a misrepresentation. Thereafter, if the Agent and the Lenders are satisfied
that such representation was not a misrepresentation, then such representation
shall no longer be the basis for an Event of Default hereunder.

 

(d)                                 Default
in Performance of Certain Covenants. 
The Borrowers shall default in the performance or observance of any
covenant or agreement contained in Sections 7.1, 7.2 or 7.4(a) or Articles IX
or X of this Agreement, and, in the case of any covenant contained in Sections
7.1, 7.2, or 7.4(a), such default shall remain uncured for a period of five (5)
Business Days after written notice thereof to the Borrower.

 

(e)                                  Default
in Performance of Other Covenants and Conditions.  The Borrowers or any Subsidiary thereof shall default in the
performance or observance of any term, covenant, condition or agreement
contained in this Agreement (other than as specifically provided for otherwise in
this Section 11.1) or any other Loan Document and such default shall
continue for a period of thirty (30) days after written notice thereof has been
given to the Borrowers by the Agent.

 

(f)                                    Debt
Cross-Default.  Any Borrower or any
of its Subsidiaries shall (i) default in the payment of any Debt (other than
the Note or any Reimbursement Obligation) the aggregate outstanding amount of
which Debt is in excess of $2,000,000, beyond the period of grace, if any,
provided in the instrument or agreement under which such Debt was created, or
(ii) default in the observance or performance of any other agreement or
condition relating to any Debt (other than the Note or any Reimbursement
Obligation) the aggregate outstanding amount of which Debt is in excess of
$2,000,000 or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Debt (or a trustee or agent on behalf of such holder
or holders) to cause, with the giving of notice if required, any such Debt to
become due prior to its stated maturity (any applicable grace period having
expired).

 

55

 

(g)                                 Other Cross
Defaults.  Any Borrower shall
default in the payment when due, or in the performance or observance of any
obligation or condition of any contract or judgment, decree or order to which
any Borrower or any Subsidiary is a party or by which any Borrower or any
Subsidiary or any of their respective properties may be bound or which would
require any Borrower or any Subsidiary to make any payment thereunder prior to
the scheduled maturity date therefor, which would have a Material Adverse
Effect.

 

(h)                                 Change
in Control.  (i) Any person or group
of persons (within the meaning of Section 13(d) of the Securities Exchange
Act of 1934, as amended) other than TESSCO shall obtain ownership or control in
one or more series of transactions of more than forty-nine percent (49%) of the
common stock of any of the other Borrowers or more than forty-nine percent
(49%) of the voting power entitled to vote in the election of members of the
board of directors of any other Borrower, or (ii) any person or group of
persons (within the meaning of Section 13(d) of the Securities Exchange
Act of 1934, as amended), not including Robert B. Barnhill, Jr., or interests
controlled by him, shall obtain ownership or control in one or more series of
transactions of more than forty-nine percent (49%) of the voting power entitled
to vote in the election of members of the board of directors of TESSCO (any
such event described in subparts (i) and (ii) of this Section 9.1(h) being
hereinafter called a “Change in Control”).

 

(i)                                     Voluntary
Bankruptcy Proceeding.  Any Borrower
or any Subsidiary thereof shall (i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking
to take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or composition for
adjustment of debts, (iii) consent to or fail to contest in a timely and
appropriate manner any petition filed against it in an involuntary case under
such bankruptcy laws or other laws, (iv) apply for or consent to, or fail to
contest in a timely and appropriate manner, the appointment of, or the taking
of possession by, a receiver, custodian, trustee, or liquidator of itself or of
a substantial part of its property, domestic or foreign, (v) admit in writing
its inability to pay its debts as they become due, (vi) make a general
assignment for the benefit of creditors, or (vii) take any corporate action for
the purpose of authorizing any of the foregoing.

 

(j)                                     Involuntary
Bankruptcy Proceeding.  A case or
other proceeding shall be commenced against any Borrower or any Subsidiary
thereof in any court of competent jurisdiction seeking (i) relief under the
federal bankruptcy laws (as now or hereafter in effect) or under any other
laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding up or adjustment of debts, or (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like for any Borrower or any Subsidiary
thereof or for all or any substantial part of their respective assets, domestic
or foreign, and such case or proceeding shall continue without dismissal or
stay for a period of sixty (60) consecutive days, or an order granting the
relief requested in such case or proceeding (including, but not limited to, an
order for relief under such federal bankruptcy laws) shall be entered.

 

(k)                                  Failure
of Agreements.  Any material
provision of this Agreement or of any other Loan Document shall for any reason
cease to be valid and binding on any Borrower or other party thereto or any
such Person shall so state in writing.

 

56

 

(l)                                     Termination
Event.  Any of the following events
occurs, and a Material Adverse Effect results therefrom:  (i) any Borrower or any ERISA Affiliate
fails to make full payment when due of all amounts which, under the provisions
of any Pension Plan or Section 412 of the Code, any Borrower or any ERISA
Affiliate is required to pay as contributions thereto, (ii) an accumulated
funding deficiency occurs or exists, whether or not waived, with respect to any
Pension Plan, (iii) a Termination Event or (iv) any Borrower or any ERISA
Affiliate as employers under one or more Multiemployer Plans makes a complete
or partial withdrawal from any such Multiemployer Plan and the plan sponsor of
such Multiemployer Plans notifies such withdrawing employer that such employer
has incurred a withdrawal liability requiring payments.

 

(m)                               Judgment.  A judgment or order for the payment of money
which causes the aggregate amount of all such judgments to exceed $1,000,000 in
any Fiscal Year shall be entered against any Borrower or any of its
Subsidiaries by any court and such judgment or order shall continue without
discharge or stay for a period of thirty (30) days.

 

SECTION 11.2                                     Remedies.  Upon the occurrence of an Event of Default,
with the consent of the Required Lenders, the Agent may, or upon the request of
the Required Lenders, the Agent shall, by written notice to the Borrowers:

 

(a)                                  Acceleration;
Termination of Facilities.  Declare
the principal of and interest on the Loans, the Note and the Reimbursement
Obligations at the time outstanding, and all other amounts owed to the Lenders
and to the Agent under this Agreement or any of the other Loan Documents (other
than any Hedging Agreement) (including, without limitation, all L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters
of Credit shall have presented the documents required thereunder) and all other
Obligations (other than obligations owing under any Hedging Agreement), to be
forthwith due and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any kind, all
of which are expressly waived, anything in this Agreement or the other Loan
Documents to the contrary notwithstanding, and terminate the Credit Facility
and any right of the Borrowers to request borrowings or Letters of Credit
thereunder; provided, that upon the occurrence of an Event of Default
specified in Section 11.1(i) or (j), the Credit Facility shall be
automatically terminated and all Obligations (other than obligations owing
under any Hedging Agreement) shall automatically become due and payable.

 

(b)                                 Letters
of Credit.  With respect to all
Letters of Credit with respect to which presentment for honor shall not have
occurred at the time of an acceleration pursuant to the preceding paragraph,
require the Borrowers at such time to deposit in a cash collateral account
opened by the Agent an amount equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit. 
Amounts held in such cash collateral account shall be applied by the
Agent to the payment of drafts drawn under such Letters of Credit, and the unused
portion thereof after all such Letters of Credit shall have expired or been
fully drawn upon, if any, shall be applied to repay the other Obligations.  After all such Letters of Credit shall have
expired or been fully drawn upon, the Reimbursement Obligation shall have been
satisfied and all other Obligations shall have been paid in full, the balance,
if any, in such cash collateral account shall be returned to the Borrowers.

 

57

 

(c)                                  Rights
of Collection.  Exercise on behalf
of the Lenders all of the Lenders’ or the Agent’s other rights and remedies
under this Agreement, the other Loan Documents and Applicable Law, in order to
satisfy all of the Borrowers’ Obligations.

 

SECTION 11.3                                     Rights
and Remedies Cumulative; Non-Waiver; etc. The enumeration of the rights
and remedies of the Agent and the Lenders set forth in this Agreement is not
intended to be exhaustive and the exercise by the Agent and the Lenders of any
right or remedy shall not preclude the exercise of any other rights or
remedies, all of which shall be cumulative, and shall be in addition to any
other right or remedy given hereunder or under the Loan Documents or that may
now or hereafter exist in law or in equity or by suit or otherwise.  No delay or failure to take action on the
part of the Agent or any Lender in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege or shall be
construed to be a waiver of any Event of Default.  No course of dealing between the Borrowers, the Agent and the
Lenders or their respective agents or employees shall be effective to change,
modify or discharge any provision of this Agreement or any of the other Loan
Documents or to constitute a waiver of any Event of Default.

 

ARTICLE XII

 

THE AGENT

 

SECTION 12.1                                     Appointment.  Each of the Lenders hereby irrevocably
designates and appoints Wachovia as Administrative Agent of such Lender under
this Agreement and the other Loan Documents for the term hereof and each such
Lender irrevocably authorizes Wachovia as Agent for such Lender to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and such other Loan
Documents, together with such other powers as are reasonably incidental
thereto.  Notwithstanding any provision
to the contrary elsewhere in this Agreement or such other Loan Documents, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against the Agent.  Any
reference to the Agent in this Article XII shall be deemed to refer to the
Agent solely in its capacity as Agent and not in its capacity as a Lender.

 

SECTION 12.2                                     Delegation
of Duties.  The Agent may
execute any of its respective duties under this Agreement and the other Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.  The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by the
Agent with reasonable care.

 

SECTION 12.3                                     Exculpatory
Provisions.  Neither the Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates shall be (a) liable for any

 

58

 

action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or the other Loan Documents (except for actions occasioned solely by
its or such Person’s own gross negligence or willful misconduct), or (b)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrowers or any of their
Subsidiaries or any officer thereof contained in this Agreement or the other
Loan Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Loan Documents or for any failure of the Borrowers or any of their
Subsidiaries to perform their obligations hereunder or thereunder.  The Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement, or to
inspect the properties, books or records of the Borrowers or any of their
Subsidiaries.

 

SECTION 12.4                                     Reliance
by the Agent.  The Agent shall
be entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrowers), independent accountants and other experts selected by the
Agent.  The Agent may deem and treat the
payee of the Note as the owner thereof for all purposes unless such Note shall
have been transferred in accordance with Section 13.10 hereof.  The Agent shall be fully justified in
failing or refusing to take any action under this Agreement and the other Loan
Documents unless it shall first receive such advice or concurrence of the
Required Lenders (or, when expressly required hereby or by any other Loan
Document, all the Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action except for its own gross negligence or willful misconduct.  The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
Note in accordance with a request of the Required Lenders (or, when expressly
required hereby, all the Lenders), and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Note.

 

SECTION 12.5                                     Notice
of Default.  The Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless it has received notice from a Lender or the
Borrowers referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default”.  In the event that the Agent receives such a
notice, it shall promptly give notice thereof to the Lenders.  The Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided that unless and until the Agent shall
have received such direction, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders, except to the extent that other provisions of this
Agreement expressly require that any such action be taken or not be taken only
with the consent and authorization or the request of the Lenders or Required
Lenders, as applicable.

 

59

 

SECTION 12.6                                     Non-Reliance
on the Agent and Other Lenders. 
Each Lender expressly acknowledges that neither the Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties to it and
that no act by the Agent hereinafter taken, including any review of the affairs
of the Borrowers or any of their Subsidiaries, shall be deemed to constitute
any representation or warranty by the Agent to any Lender.  Each Lender represents to the Agent that it
has, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrowers and their
Subsidiaries and made its own decision to make its Loans and issue or
participate in Letters of Credit hereunder and enter into this Agreement.  Each Lender also represents that it will,
independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrowers and their Subsidiaries.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder or by the other Loan Documents, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrowers or any of their Subsidiaries which may come
into the possession of the Agent or any of its respective officers, directors,
employees, agents, attorneys-in-fact, Subsidiaries or Affiliates.

 

SECTION 12.7                                     Indemnification.  The Lenders agree to indemnify the Agent in
its capacity as such and (to the extent not reimbursed by the Borrowers and
without limiting the obligation of the Borrowers to do so) ratably according to
the respective amounts of their Commitment Percentages, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including, without limitation, at any time following the
payment of the Note or any Reimbursement Obligation) be imposed on, incurred by
or asserted against the Agent in any way relating to or arising out of this
Agreement or the other Loan Documents, or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent’s bad faith, gross negligence or willful
misconduct.  The agreements in this
Section 12.7 shall survive the payment of the Note, any Reimbursement
Obligation and all other amounts payable hereunder and the termination of this
Agreement.

 

SECTION 12.8                                     The
Agent in Its Individual Capacity. 
The Agent and its respective Subsidiaries and Affiliates may make loans
to, accept deposits from and generally engage in any kind of business with the
Borrowers as though the Agent were not an Agent hereunder.  With respect to any Loans made by it and
with respect to any Letter of Credit issued by it or participated in by it, the
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise the same as

 

60

 

though it were not an Agent,
and the terms “Lender” and “Lenders” shall include the Agent in its individual
capacity.

 

SECTION 12.9                                     Resignation
of the Agent; Successor Agent. 
Subject to the appointment and acceptance of a successor as provided
below, the Agent may resign at any time by giving notice thereof to the Lenders
and the Borrowers.  Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent, reasonably acceptable to the Borrowers, which successor shall have
minimum capital and surplus of $500,000,000. 
If no successor Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty (30) days after
the Agent’s giving of notice of resignation, then the Agent may, on behalf of
the Lenders, appoint a successor Agent, reasonably acceptable to the Borrowers,
which successor shall have minimum capital and surplus of $500,000,000.  Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder.  After any retiring
Agent’s resignation hereunder as Agent, the provisions of this
Section 12.9 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.

 

ARTICLE XIII

 

MISCELLANEOUS

 

SECTION 13.1                                     Notices.

 

(a)                                  Method
of Communication.  Except as
otherwise provided in this Agreement, all notices and communications hereunder
shall be in writing, or by telephone subsequently confirmed in writing.  Any notice shall be effective if delivered
by hand delivery or sent via telecopy, recognized overnight courier service or
certified mail, return receipt requested, and shall be presumed to be received
by a party hereto (i) on the date of delivery if delivered by hand or sent by
telecopy, (ii) on the next Business Day if sent by recognized overnight courier
service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested. 
A telephonic notice to the Agent as understood by the Agent will be
deemed to be the controlling and proper notice in the event of a discrepancy
with or failure to receive a confirming written notice.

 

(b)                                 Addresses
for Notices.  Notices to any party
shall be sent to it at the following addresses, or any other address as to
which all the other parties are notified in writing.

 

61

 

	
  If to the Borrowers:

  	
   

  	
  c/o TESSCO Technologies Incorporated

  
	
   

  	
   

  	
  11126 McCormick Road

  
	
   

  	
   

  	
  Hunt Valley, Maryland  21031-4302

  
	
   

  	
   

  	
  Attention:

  	
  Robert C. Singer, Senior Vice President and

  
	
   

  	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
  Telephone
  No.: 410-229-1000

  
	
   

  	
   

  	
  Telecopy
  No.: 410-229-1656

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  Ballard Spahr Andrews & Ingersoll, LLP

  
	
   

  	
   

  	
  300 East Lombard Street

  
	
   

  	
   

  	
  Baltimore, Maryland 21202

  
	
   

  	
   

  	
  Attention: Douglas M. Fox, Esquire

  
	
   

  	
   

  	
  Telephone No.: 410-528-5600

  
	
   

  	
   

  	
  Telecopy No.: 410-528-5650

  
	
   

  	
   

  	
   

  
	
  If to Wachovia as Agent:

  	
   

  	
  Wachovia Bank, National Association

  
	
   

  	
   

  	
  7 St. Paul Street, 2nd Floor

  
	
   

  	
   

  	
  Baltimore, MD 21202

  
	
   

  	
   

  	
  Attention: Lucy C. Campbell, Vice President

  
	
   

  	
   

  	
  Telephone
  No.:  410-332-5242

  
	
   

  	
   

  	
  Telecopy No.:  410-539-0136

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  Ober, Kaler Grimes & Shriver,

  
	
   

  	
   

  	
  A Professional Corporation

  
	
   

  	
   

  	
  120 East Baltimore Street

  
	
   

  	
   

  	
  Baltimore, Maryland  21202

  
	
   

  	
   

  	
  Attention: David S. Musgrave, Esquire

  
	
   

  	
   

  	
  Telephone No.: 410-347-1391

  
	
   

  	
   

  	
  Telecopy No.: 410-547-0699

  
	
   

  	
   

  	
   

  
	
  If to SunTrust as

  	
   

  	
   

  
	
  Arrangement Agent:

  	
   

  	
  SunTrust Bank

  
	
   

  	
   

  	
  120 East Baltimore Street

  
	
   

  	
   

  	
  Baltimore, MD 21202

  
	
   

  	
   

  	
  Attention: Gregory Farno, Senior Vice President

  
	
   

  	
   

  	
  Telephone No.:  410-986-1673

  
	
   

  	
   

  	
  Telecopy No.: 410-986-1927

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  Ober, Kaler Grimes & Shriver,

  
	
   

  	
   

  	
  A Professional Corporation

  
	
   

  	
   

  	
  120 East Baltimore Street

  
	
   

  	
   

  	
  Baltimore, Maryland  21202

  
	
   

  	
   

  	
  Attention: David S. Musgrave, Esquire

  
	
   

  	
   

  	
  Telephone No.: 410-347-1391

  
	
   

  	
   

  	
  Telecopy No.: 410-547-0699

  
	
   

  	
   

  	
   

  
	
  If to any Lender:

  	
   

  	
  To the Address set forth on Schedule 1
  hereto

  

 

62

 

(c)                                  Agent’s
Office.  The Agent hereby designates
its office located at the address set forth above, or any subsequent office
which shall have been specified for such purpose by written notice to the
Borrowers and Lenders, as the Agent’s Office referred to herein, to which
payments due are to be made and at which Loans will be disbursed and Letters of
Credit issued.

 

SECTION 13.2                                     Expenses;
Indemnity.  The Borrowers will
(a) pay reasonably incurred all out-of-pocket expenses of the Agent and the
Lenders in connection with (i) the preparation, execution and delivery of this
Agreement and each other Loan Document, whenever the same shall be executed and
delivered, including without limitation all out-of-pocket syndication and due
diligence expenses and reasonable fees and disbursements of counsel for the
Agent and (ii) the preparation, execution and delivery of any waiver, amendment
or consent by the Agent or the Lenders relating to this Agreement or any other
Loan Document, including without limitation reasonable fees and disbursements
of counsel for the Agent, (b) pay all reasonable out-of-pocket expenses of the
Agent and each Lender actually incurred in connection with the administration
and enforcement of any rights and remedies of the Agent and the Lenders under
the Credit Facility, including consulting with appraisers, accountants,
engineers, attorneys and other Persons concerning the nature, scope or value of
any right or remedy of the Agent or any Lender hereunder or under any other
Loan Document or any factual matters in connection therewith, which expenses
shall include without limitation the reasonable fees and disbursements of such
Persons, and (c) defend, indemnify and hold harmless the Agent and the Lenders,
and their respective parents, Subsidiaries, Affiliates, employees, agents,
officers and directors, from and against any losses, penalties, fines,
liabilities, settlements, damages, costs and expenses, suffered by any such
Person in connection with any claim, investigation, litigation or other
proceeding (whether or not the Agent or any Lender is a party thereto) and the
prosecution and defense thereof, arising out of or in any way connected with
this Agreement, any other Loan Document or the Loans, including without
limitation reasonable attorney’s and consultant’s fees, except to the extent
that any of the foregoing directly result from the gross negligence or willful
misconduct of the party seeking indemnification therefor.

 

SECTION 13.3                                     Set-off.  In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the
continuance thereof, the Lenders and any assignee or participant of a Lender in
accordance with Section 13.10 are hereby authorized by the Borrowers at
any time or from time to time, without notice to the Borrowers or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured) and any other indebtedness at any
time held or owing by the Lenders, or any such assignee or participant to or
for the credit or the account of the Borrowers against and on account of the
Obligations irrespective of whether (a) the Lenders shall have made any demand
under this Agreement or any of the other Loan Documents or (b) the Agent shall
have declared any or all of the Obligations to be due and payable as permitted
by Section 11.2 and although such Obligations shall be contingent or
unmatured.

 

SECTION 13.4                                     Governing
Law.  This Agreement, the Note
and the other Loan Documents, unless otherwise expressly set forth therein,
shall be governed by, construed and

 

63

 

enforced in accordance with the
laws of the State of Maryland, without reference to the conflicts or choice of
law principles thereof.

 

SECTION 13.5                                     Consent
to Jurisdiction.  The Borrowers
hereby irrevocably consent to the personal jurisdiction of the state and
federal courts located in the State of Maryland, in any action, claim or other
proceeding arising out of any dispute in connection with this Agreement, the
Note and the other Loan Documents, any rights or obligations hereunder or
thereunder, or the performance of such rights and obligations.  Each Borrower hereby irrevocably consents to
the service of a summons and complaint and other process in any action, claim
or proceeding brought by the Agent or any Lender in connection with this
Agreement, the Note or the other Loan Documents, any rights or obligations
hereunder or thereunder, or the performance of such rights and obligations, on
behalf of itself or its property, in the manner specified in
Section 13.1.  Nothing in this
Section 13.5 shall affect the right of the Agent or any Lender to serve
legal process in any other manner permitted by Applicable Law or affect the
right of the Agent or any Lender to bring any action or proceeding against any
Borrower or its properties in the courts of any other jurisdictions.

 

SECTION 13.6                                     Binding
Arbitration; Waiver of Jury Trial.

 

 

(a)                                  Binding Arbitration.  Upon
demand of any party, whether made before or after institution of any judicial
proceeding, any dispute, claim or controversy arising out of, connected with or
relating to the Note or any other Loan Document (“Disputes”), between or among
parties to the Note or any other Loan Document shall be resolved by binding
arbitration as provided herein. 
Institution of a judicial proceeding by a party does not waive the right
of that party to demand arbitration hereunder. 
Disputes may include, without limitation, tort claims, counterclaims,
claims brought as class actions, claims arising from Loan Documents executed in
the future, disputes as to whether a matter is subject to arbitration, or
claims concerning any aspect of the past, present or future relationships
arising out of or connected with the Loan Documents.  Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the “Arbitration Rules”) of
the American Arbitration Association and Title 9 of the U.S. Code.  All arbitration hearings shall be conducted
in Baltimore, Maryland.  The expedited
procedures set forth in Rule 51, et  seq. of the Arbitration Rules
shall be applicable to claims of less than $1,000,000.  All applicable statutes of limitation shall
apply to any Dispute.  A judgment upon
the award may be entered in any court having jurisdiction.  Notwithstanding anything foregoing to the
contrary, any arbitration proceeding demanded hereunder shall begin within
ninety (90) days after such demand thereof and shall be concluded within
one-hundred and twenty (120) days after such demand.  These time limitations may not be extended unless a party hereto
shows cause for extension and then such extension shall not exceed a total of
sixty (60) days.  The panel from which
all arbitrators are selected shall be comprised of licensed attorneys.  The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted.  The parties hereto do not
waive any applicable Federal or state substantive law except as provided
herein.  Notwithstanding the foregoing,
this paragraph shall not apply to any Hedging Agreement that is a Loan
Document.

 

(b)                                 Jury Trial.
 THE AGENT, EACH LENDER AND THE BORROWERS HEREBY ACKNOWLEDGE THAT BY
AGREEING TO BINDING ARBITRATION THEY

 

64

 

HAVE IRREVOCABLY WAIVED THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR THE
OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

 

(c)                                  Preservation of Certain Remedies. 
Notwithstanding the preceding binding arbitration provisions, the
parties hereto and the other Loan Documents preserve, without diminution,
certain remedies that such Persons may employ or exercise freely, either alone,
in conjunction with or during a Dispute. 
Each such Person shall have and hereby reserves the right to proceed in
any court of proper jurisdiction or by self help to exercise or prosecute the
following remedies:  (i) all rights to
foreclose against any real or personal property or other security by exercising
a power of sale granted in the Loan Documents or under applicable law or by
judicial foreclosure and sale, (ii) all rights of self help including peaceful
occupation of property and collection of rents, set off, and peaceful
possession of property, (iii) obtaining provisional or ancillary remedies
including injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and filing an involuntary bankruptcy proceeding, and
(iv) when applicable, a judgment by confession of judgment.  Preservation of these remedies does not
limit the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.

 

SECTION 13.7                                     Reversal
of Payments.  To the extent that
any Borrower makes a payment or payments to the Agent for the ratable benefit
of the Lenders which payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of
such payment repaid, the Obligations or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been received by the Agent.

 

SECTION 13.8                                     Injunctive
Relief; Punitive Damages.

 

(a)                                  Each
Borrower recognizes that, if any Borrower fails to perform, observe or
discharge any of its obligations or liabilities under this Agreement, any
remedy of law may prove to be inadequate relief to the Lenders. Therefore, each
Borrower agrees that the Lenders, at the Lenders’ option, shall be entitled to
temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.

 

(b)                                 The
Agent, each Lender and each Borrower (on behalf of itself and its Subsidiaries)
hereby agree that no such Person shall have a remedy of punitive or exemplary
damages against any other party to a Loan Document and each such Person hereby
waives any right or claim to punitive or exemplary damages that they may now
have or may arise in the future in connection with any Dispute, whether such
Dispute is resolved through arbitration or judicially.

 

(c)                                  The
parties agree that they shall not have a remedy of punitive or exemplary
damages against any other party in any Dispute and hereby waive any right or
claim to punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.

 

65

 

SECTION 13.9                                     Accounting
Matters.  All financial and
accounting calculations, measurements and computations made for any purpose
relating to this Agreement, including, without limitation, all computations
utilized by the Borrowers or any Subsidiary thereof to determine compliance
with any covenant contained herein, shall, except as otherwise expressly
contemplated hereby or unless there is an express written direction by the
Agent to the contrary agreed to by the Borrowers, be performed in accordance
with GAAP as in effect on the Closing Date. 
In the event that changes in GAAP shall be mandated by the Financial
Accounting Standards Board, or any similar accounting body of comparable
standing, or shall be recommended by the Borrowers’ certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Borrowers and
the Lenders shall have amended this Agreement to the extent necessary to
reflect any such changes in the financial covenants and other terms and
conditions of this Agreement.

 

SECTION 13.10                              Successors
and Assigns; Participations.

 

(a)                                  Benefit
of Agreement.  This Agreement shall
be binding upon and inure to the benefit of the Borrowers, the Agent and the
Lenders, all future holders of the Note, and their respective successors and
assigns, except that the Borrowers shall not assign or transfer any of their
rights or obligations under this Agreement without the prior written consent of
each Lender.

 

(b)                                 Assignment
by Lenders.  Each Lender may, with
the consent of the Borrowers (so long as no Default or Event of Default has
occurred and is continuing), which consent shall not be unreasonably withheld,
and with the consent of the Agent and each of the other Lenders, assign to one
or more Eligible Assignees all or a portion of its interests, rights and
obligations under this Agreement; provided that:

 

(i)                                     each
such assignment shall be of a constant, and not a varying, percentage of all of
the assigning Lender’s rights and obligations under this Agreement;

 

(ii)                                  if
less than all of the assigning Lender’s Commitment is to be assigned, the
Commitment so assigned shall not be less than $5,000,000;

 

(iii)                               the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance in the
form of Exhibit D attached hereto (an “Assignment and Acceptance”);

 

(iv)                              such
assignment shall not, without the consent of the Borrowers, require the
Borrowers to file a registration statement with the Securities and Exchange
Commission or apply to or qualify the Loans under the blue sky laws of any
state; and

 

(v)                                 the
assigning Lender shall pay to the Agent an assignment fee of $3,000 upon the
execution by such Lender of the Assignment and Acceptance; provided that
no such fee shall be payable upon any assignment by a Lender to an Affiliate
thereof.

 

66

 

Upon such
execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective date shall be
at least five (5) Business Days after the execution thereof, (A) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.

 

(c)                                  Rights
and Duties Upon Assignment.  By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the assignee thereunder confirm to and agree with each other and
the other parties hereto as set forth in such Assignment and Acceptance.

 

(d)                                 Register.  The Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the amount of the Extensions of
Credit with respect to each Lender from time to time (the “Register”).  The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrowers, the Agent and the Lenders
may treat each person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. 
The Register shall be available for inspection by any Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

 

(e)                                  Procedure.  Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee together
with the written consent to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is substantially in the form
of Exhibit D:

 

(i)                                     accept
such Assignment and Acceptance;

 

(ii)                                  record
the information contained therein in the Register;

 

(iii)                               give
prompt written notice thereof to the Lenders and the Borrowers; and

 

(iv)                              promptly
deliver a copy of such Assignment and Acceptance to the Borrowers.

 

(f)                                    Participations.  Each Lender may sell participations to one
or more banks or other entities in all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Extensions of Credit); provided that:

 

(i)                                     each
such participation shall be in an amount not less than $5,000,000;

 

(ii)                                  such
Lender’s obligations under this Agreement (including, without limitation, its
Commitment) shall remain unchanged;

 

67

 

(iii)                               such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations;

 

(iv)                              such
Lender shall remain the “Lender” for all purposes of this Agreement;

 

(v)                                 the
Borrowers, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement;

 

(vi)                              such
Lender shall not give such participant the right to approve any waivers,
amendments or other modifications to this Agreement or any other Loan Document
other than waivers, amendments or modifications which would reduce the
principal of or the interest rate on any Loan or Reimbursement Obligation,
extend the term or increase the amount of the Commitment, reduce the amount of
any fees to which such participant is entitled, or extend any scheduled payment
date for principal of any Loan; and

 

(vii)                           any such
disposition shall not, without the consent of the Borrowers, require the
Borrowers to file a registration statement with the Securities and Exchange
Commission or apply to or qualify the Loans under the blue sky laws of any
state.

 

(g)                                 Disclosure
of Information; Confidentiality. 
The Agent and the Lenders shall hold all non-public information with
respect to the Borrowers obtained pursuant to the Loan Documents in accordance
with their customary procedures for handling confidential information; provided,
that the Agent may disclose information relating to this Agreement (and not the
Borrowers’ business generally) to Gold Sheets and other similar bank
trade publications, such information to consist of deal terms and other
information customarily found in such publications and provided  further,
that the Agent and the Lenders may disclose any such information to the extent
such disclosure is required by law or requested by any regulatory
authority.  Any Lender may, in
connection with any assignment, proposed assignment, participation or proposed
participation pursuant to this Section 13.10, disclose to the assignee,
participant, proposed assignee or proposed participant, any information
relating to the Borrowers furnished to such Lender by or on behalf of the
Borrowers; provided, that prior to any such disclosure, each such
assignee, proposed assignee, participant or proposed participant shall agree
with the Borrowers or such Lender for the express benefit of the Borrowers to
preserve the confidentiality of any confidential information relating to the
Borrowers received from such Lender.

 

(h)                                 Certain
Pledges or Assignments.  Nothing
herein shall prohibit any Lender from pledging or assigning the Note to any
Federal Reserve Bank in accordance with Applicable Law.

 

SECTION 13.11                              Amendments,
Waivers and Consents.  Except as
set forth below, any term, covenant, agreement or condition of this Agreement
or any of the other Loan Documents may be amended or waived by the Lenders, and
any consent given by the Lenders, if, but only if, such amendment, waiver or
consent is in writing signed by the Required Lenders (or by the Agent with the
consent of the Required Lenders) and delivered to the Agent and, in the

 

68

 

case of an
amendment, signed by the Borrowers; provided, that no amendment, waiver
or consent shall (a) increase the amount or extend the time of the obligation
of the Lenders to make Loans or issue or participate in Letters of Credit
(including without limitation pursuant to Section 2.7), (b) extend the
originally scheduled time or times of payment of the principal of any Loan or
Reimbursement Obligation or the time or times of payment of interest on any
Loan or Reimbursement Obligation, (c) reduce the rate of interest or fees
payable on any Loan or Reimbursement Obligation, (d) reduce the principal
amount of any Loan or Reimbursement Obligation, (e) permit any subordination of
the principal or interest on any Loan or Reimbursement Obligation, (f) permit
any assignment (other than as specifically permitted or contemplated in this
Agreement) of any of the Borrowers’ rights and obligations hereunder, or (g)
amend the provisions of this Section 13.11 or the definition of Required
Lenders, without the prior written consent of each Lender.  In addition, no amendment, waiver or consent
of or to the provisions of (a) Article XII shall be made without the
written consent of the Agent and (b) Article III shall be made without the
written consent of the Issuing Lender.

 

SECTION 13.12                              Performance
of Duties.  The Borrowers’
obligations under this Agreement and each of the Loan Documents shall be
performed by the Borrowers at their sole cost and expense.

 

SECTION 13.13                              All
Powers Coupled with Interest. 
All powers of attorney and other authorizations granted to the Lenders,
the Agent and any Persons designated by the Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or the Credit Facility has not been
terminated.

 

SECTION 13.14                              Survival
of Indemnities.  Notwithstanding
any termination of this Agreement, the indemnities to which the Agent and the
Lenders are entitled under the provisions of this Article XIII and any
other provision of this Agreement and the Loan Documents shall continue in full
force and effect and shall protect the Agent and the Lenders against events
arising after such termination as well as before.

 

SECTION 13.15                              Titles
and Captions.  Titles and
captions of Articles, Sections and subsections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement.

 

SECTION 13.16                              Severability
of Provisions.  Any provision of
this Agreement or any other Loan Document which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the remainder
of such provision or the remaining provisions hereof or thereof or affecting
the validity or enforceability of such provision in any other jurisdiction.

 

SECTION 13.17                              Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which when
taken together shall constitute one and the same agreement.

 

69

 

SECTION 13.18                              Term
of Agreement.  This Agreement
shall remain in effect from the Closing Date through and including the date
upon which all Obligations shall have been indefeasibly and irrevocably paid
and satisfied in full.  No termination
of this Agreement shall affect the rights and obligations of the parties hereto
arising prior to such termination.

 

SECTION 13.19                              Inconsistencies
with Other Documents; Independent Effect of Covenants.

 

(a)                                  In the event there is
a conflict or inconsistency between this Agreement and any other Loan Document,
the terms of this Agreement shall control.

 

(b)                                 Each Borrower
expressly acknowledges and agrees that each covenant contained in Articles
VIII, IX, or X hereof shall be given independent effect.  Accordingly, the Borrowers shall not engage
in any transaction or other act otherwise permitted under any covenant
contained in Articles VIII, IX, or X if, before or after giving effect to such
transaction or act, the Borrowers shall or would be in breach of any other
covenant contained in Articles VIII, IX, or X.

 

SECTION 13.20                              Joint
and Several Liability, Etc.  The
Borrowers shall be jointly and severally liable for the payment and performance
of the Obligations.  The Agent and the
Lenders may, without notice to or consent of any of the Borrowers and with or
without consideration, release, discharge, compromise or settle with, waive,
grant indulgences to, proceed against or otherwise deal with, any of the
Borrowers without in any way affecting, limiting, modifying, discharging or
releasing any of the obligations and liabilities under this Agreement or any
other Loan Documents of the other Borrowers. 
Each of the Borrowers consents and agrees that (a) the Agent shall be under
no obligation to marshall any assets in favor of such Borrower or against or in
payment of any or all of the obligations and liabilities of such Borrower under
this Agreement or any of the other Loan Documents, (b) any rights such Borrower
may have against the other Borrowers for contribution, exoneration from payment
or otherwise, in respect of any amounts paid by such Borrower pursuant to any
of the Loan Documents or which continue to be owing pursuant to any of the Loan
Documents, shall be postponed until the Obligations have been indefeasibly paid
in full and no commitments therefor are outstanding and (c) the Agent or the
Lenders, as applicable, may enforce and collect the obligations and liabilities
of such Borrower hereunder or under the other Loan Documents irrespective of
any attempt, pursuit, enforcement or exhaustion of any rights and remedies the
Agent or the Lenders may at any time have to collect the obligations and
liabilities hereunder or under the other Loan Documents of the other Borrowers.

 

ARTICLE XIV

 

GUARANTY

 

70

 

SECTION 14.1                                     Borrowers’
Guaranty of the Obligations.    Each Borrower acknowledges that it is
jointly and severally liable for all of the Obligations and, as a result
hereby, unconditionally guarantees the full and prompt payment when due,
whether at maturity or earlier, by reason of acceleration or otherwise, and at
all times thereafter, of all Obligations of every kind and nature of the other
Borrowers to the Lenders or the Agent under the Loan Documents, howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, joint or several, now or hereafter existing, or due or to become
due, and howsoever owned, held or acquired. 
Each Borrower agrees that if this guaranty, or any liens securing this
guaranty, would, but for the application of this sentence, be unenforceable
under applicable law, this guaranty and each such lien shall be valid and
enforceable to the maximum extent that would not cause this guaranty or such
lien to be unenforceable under applicable law, and this guaranty and such lien
shall automatically be deemed to have been amended accordingly at all relevant
times.

 

Each Borrower hereby agrees that its obligations under this guaranty shall
be unconditional, irrespective of (a) the validity or enforceability of
the Obligations or any part thereof, or of any promissory note or other
document evidencing all or any part of the Obligations, (b) the absence of
any attempt to collect the Obligations from any Borrower or other action to
enforce the same, (c) the waiver or consent by the Agent or any Lender
with respect to any provision of any agreement, instrument or document
evidencing or securing all or any part of the Obligations, or any other
agreement, instrument or document now or hereafter executed by any Borrower and
delivered to the Agent or the Lenders, (d) the failure by the Agent or the
Lenders to take any steps to perfect and maintain a security interest in, or to
preserve its rights to, any collateral now or hereafter given for the
Obligations, (e) the Lenders’ election, in any proceeding instituted under
the Bankruptcy Code, of the application of Section 1111(b)(2) of the
Bankruptcy Code, (f) any borrowing or grant of a security interest by any
Borrower as debtor-in-possession under Section 364 of the Bankruptcy Code,
(g) the disallowance, under Section 502 of the Bankruptcy Code, of
all or any portion of the Agent’s or the Lenders’ claim(s) for repayment of the
Obligations, or (h) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of any Borrower.

 

Each Borrower hereby waives, to the fullest extent permitted by
applicable law, diligence, presentment, demand of payment, filing of claims with
a court in the event of receivership or bankruptcy of any Borrower, protest or
notice with respect to the Obligations (other than notices required to be given
pursuant to the terms of this Agreement or any of the other Loan Documents),
and all demands whatsoever, and covenants that this guaranty will not be
discharged, except by complete and irrevocable payment and performance of the
Obligations (other than contingent and unasserted indemnification
obligations).  No notice to any Borrower
or any other party (other than notices required to be given pursuant to the
terms of this Agreement or any of the other Loan Documents) shall be required
for the Agent or the Lenders to make demand hereunder.  Such demand shall constitute a mature and
liquidated claim against any Borrower. 
Upon the occurrence and continuance of any Event of Default, the Agent
and the Lenders may, in their sole discretion, proceed directly and at once,
without notice, against any one or more of the Borrowers to collect and recover
the full amount of any portion of the Obligations, without first proceeding
against the other Borrowers, any other person, firm, corporation, or any
security or collateral for the Obligations. 
To the extent not expressly provided for herein, the Agent and the

 

71

 

Lenders shall have the
exclusive right to determine the application of all payments made and credits,
if any, given by or from any Borrower, any other person, firm or corporation,
or any security or collateral for the Obligations, on account of the
Obligations.

 

At any time after and during the continuance of an Event of Default,
the Agent and the Lenders may, in their sole discretion, without notice to any
Borrower and regardless of the acceptance of any collateral for the payment
hereof, appropriate and apply toward payment of the Obligations (i) any
indebtedness due or to become due from such Borrower and (ii) any moneys,
credits or other property belonging to such Borrower at any time held by or
coming into the possession of the Agent, any Lender or any of their Affiliates,
whether for deposit or otherwise.  The
Agent and the Lenders agree promptly to notify the Borrowers in writing after
any such set-off and application made by such Person.

 

[SIGNATURES ON NEXT PAGE]

 

72

 

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

 

	
  WITNESS:

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  TESSCO TECHNOLOGIES INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
  /s/ Robert B. Barnhill, Jr.

  	
   

  
	
   

  	
   

  	
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
					

 

 

	
   

  	
  CARTWRIGHT COMMUNICATIONS COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
  /s/ Robert B. Barnhill, Jr.

  	
   

  
	
   

  	
   

  	
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
					

 

 

	
   

  	
  TESSCO SERVICE SOLUTIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
  /s/ Robert B. Barnhill, Jr.

  	
   

  
	
   

  	
   

  	
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
					

 

 

	
   

  	
  TESSCO INCORPORATED.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
  /s/ Robert B. Barnhill, Jr.

  	
   

  
	
   

  	
   

  	
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
					

 

 

	
   

  	
  TESSCO COMMUNICATIONS INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
  /s/ Robert B. Barnhill, Jr.

  	
   

  
	
   

  	
   

  	
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
					

 

73

 

	
   

  	
  WIRELESS SOLUTIONS INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
  /s/ Robert B. Barnhill, Jr.

  	
   

  
	
   

  	
   

  	
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
					

 

	
   

  	
  TESSCO BUSINESS SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
  /s/ Robert B. Barnhill, Jr.

  	
   

  
	
   

  	
   

  	
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
					

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
  /s/ Sean Sands

  	
   

  
	
   

  	
   

  	
  Sean Sands

  
	
   

  	
   

  	
  Senior Vice President

  
					

 

	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
  /s/ Gregory Farno

  	
   

  
	
   

  	
   

  	
  Gregory Farno

  
	
   

  	
   

  	
  Senior Vice President

  
					

 

	
   

  	
  ADMINISTRATIVE AGENT:

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
  /s/ Sean Sands

  	
   

  
	
   

  	
   

  	
  Sean Sands

  
	
   

  	
   

  	
  Senior Vice President

  
					

 

74

 

	
   

  	
  ARRANGEMENT AGENT:

  
	
   

  	
   

  
	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By:

  	
  /s/ Gregory Farno

  	
   

  
	
   

  	
   

  	
  Gregory Farno

  
	
   

  	
   

  	
  Senior Vice President

  
					

 

75

 

Schedule 1

 

(Lenders and Commitments)

 

 

	
  LENDER

  	
   

  	
  COMMITMENT
  PERCENTAGE

  	
   

  	
  COMMITMENT

  	
   

  
	
  Wachovia
  Bank, National Association

  	
   

  	
  50

  	
  %

  	
  $

  	
  15,000,000

  	
   

  
	
  SunTrust
  Bank

  	
   

  	
  50

  	
  %

  	
  $

  	
  15,000,000

  	
   

  

 

76EXHIBIT
10.1

 

NOTE PURCHASE AGREEMENT

 

 

Note Purchase Agreement
(this “Agreement”), dated as of September       ,
2003, by and between EQUIFIN, INC., a Delaware corporation (the “Company”)
located at 1011 Highway 71, Spring Lake, New Jersey 07762, and                               ,
an individual with an address at
                                             
(the “Purchaser”).

 

RECITALS

 

Subject to the terms and
conditions set forth in this Agreement, the Company desires to issue and sell
to the Purchaser and Purchaser desires to purchase from the Company that amount
of Notes and Warrants (as defined herein) a set forth on the signature page of
this Agreement.  The Company proposes to
issue: (i) $1,250,000 aggregate principal amount of 11% convertible subordinated
notes due August 31, 2008 (the “Notes”); and (ii) such number of common stock
purchase warrants (the “Warrants”) as equals the quotient of (x) $1,250,000,
divided by (y) the “Closing Price” (as such term is defined in Section 1
below), each such warrant to have an initial exercise price of $.50 per share
of the Company’s common stock, $.01 par value per share (“Common Stock”), and
to expire on August 31, 2008 as part of a private placement in which the
Purchaser will participate (the “Placement”).

 

In consideration of the
mutual covenants contained herein, the parties agree as follows:

 

1.             Sales and Purchase
of Notes.  Subject to the terms and
conditions set forth herein, the Company shall issue and sell to Purchaser, and
the Purchaser shall purchase from the Company that amount of $1,250,000
aggregate principal amount of Notes and such number of Warrants as equals the
quotient of $1,250,000 divided by the Closing Price as set forth on the
signature page hereto which are part of the Placement.  The Notes and the Warrants, shall be
substantially in the forms annexed hereto as Exhibits A and B, respectively,
and the original price that the Notes may be converted into shares of Common
Stock shall be equal to the average closing sales price, regular way, of the
Common Stock, as reported by the American Stock Exchange (“AMEX”), over the
five (5) trading days immediately preceding the “Closing Date” (as hereinafter
defined) (such average referred to as the “Closing Price”).

 

2.             The
Closing.

 

(a)           The closing of the
purchase and sale of the Notes and Warrants (the “Closing”) shall be September
12, 2003.  The date of the Closing is
hereinafter referred to as the “Closing Date.”

 

(b)           At the Closing, the
parties shall deliver, or shall cause to be delivered, the following: (i) the
Company shall deliver to the Purchaser a Note or Notes in the aggregate
principal amount subscribed for and a warrant certificate representing the
number of Warrants being purchased in accordance with the terms of this
Agreement, all registered in the name of Purchaser or in such names as
Purchaser may specify by written notice to the Company at least two full
business days prior to the Closing Date and (ii) Purchaser shall deliver to the
Company at Closing payment in United States dollars in immediately available
funds by wire transfer to an account designated in writing by the Company for
an amount equal to the amount of Notes to be issued to the Purchaser.

 

3.             Representations
and Warranties of the Company.  The
Company represents, warrants and agrees as follows:

 

 

(a)           Organization and
Qualification.  The Company is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted.  Each of the
Company and its subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate, (i) adversely
affect the legality, validity or enforceability of this Agreement, the Notes,
the Warrants or the shares (the “Underlying Shares”) of Common Stock issuable
upon conversion or exercise thereof (the Notes, the Warrants and the Underlying
Shares are referred to collectively as the “Securities”), or (y) have or result
in a material adverse effect on the results of operations or assets of the
Company and its subsidiaries, taken as a whole.

 

(b)           Corporate Action.  The Company has the requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereunder. 
The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company.  This Agreement has been duly executed by the
Company and constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, moratorium and other laws of
general application, affecting enforcement or creditors’ rights generally, or
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.

 

(c)           Issuance of Securities.  The Notes, Warrants and the Underlying
Shares are duly authorized, and, when issued and paid for in accordance with
the terms of this Agreement and the Securities, as applicable, shall have been
validly issued, fully paid and nonassessable, free and clear of all liens,
encumbrances, and rights of first refusal of any kind (collectively,
“Liens”).  The Company has on the date
hereof and will, at the Closing Date and at all time while the Notes and
Warrants are outstanding, maintain an adequate reserve of duly reserved shares
of Common Stock, reserved for issuance to holders of Notes and Warrants, to
enable it to perform its obligations under such Securities.

 

(d)           Consents and
Approvals. The Company is not required to obtain the consent, waiver,
approval, authorization or order of, give any notice to, or make any filing or
registration with, any court or other Federal, state, local or other
governmental authority or other person or entity in connection with the
execution, delivery and performance by the Company of this Agreement, or the
offer, issue, sale or delivery of the Securities pursuant to this Agreement, or
the performance of any of the terms or conditions of the Securities, other than
(i) as have been made (in the case of filings and registrations) or obtained
(in the case of consents, waivers, orders, approvals or authorizations), (ii)
the filing of a registration statement with the Securities and Exchange
Commission (the “Commission”) as contemplated in Section 9, (iii) the
application(s) to the American Stock Exchange (“AMEX”) for the listing of the
Underlying Shares with the AMEX (and with any other national securities
exchange or market on which the Common Stock is then listed), (iv) the filing
of a Form D with the Commission, and (v) in all other cases where the failure
to obtain such consent, waiver, authorization or order, or to give such notice
or make such filing or registration could not have or result in, individually
or in the aggregate, a material adverse effect to the Company.

 

2

 

(e)           No Conflicts.  The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and the performance of the Company’s obligations
under the Notes and Warrants do not and will not (i) conflict with or violate
any provision of its certificate of incorporation, bylaws or other charter
documents (each as amended through the date hereof), (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, credit facility,
indenture or instrument (evidencing a Company debt or otherwise)  to
which the Company or any of its subsidiaries is a party or by which any
property or asset of the Company or any of its subsidiaries is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including Federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected, except in the case of each of clauses (i) and
(iii), as could not, individually or in the aggregate, have or result in a
material adverse effect on the Company. 
The business of the Company is not being conducted in violation of any
law, ordinance or regulation of any governmental authority, except for
violations which, individually or in the aggregate, could not have or result in
a material adverse effect on the Company.

 

(f)            No Default or
Violation.  Neither the Company nor
any of its subsidiaries received notice of a claim that it is in default under
or that it (i) is in violation of, any indenture, loan or credit agreement or
any other agreement or instrument to which it is a party or by which it or any
of its properties is bound which default has not subsequently been waived, (ii)
is in violation of any order of any court, arbitrator or governmental body, or
(iii) is in violation of any statute, rule or regulation of any governmental
authority, except as could not individually or in the aggregate, have or result
in a material adverse effect.

 

(g)           Disclosure Documents.  In connection with the offering and sale of
the Securities, the Company has previously delivered to Purchaser those
documents listed in Schedule A (“Disclosure Documents”).  The Disclosure Documents taken as a whole do
not include any untrue statement of material fact or omit to state any material
fact necessary to make the statements therein not misleading.

 

4.             Representations
and Warranties of Purchaser.  The
Purchaser hereby represents and warrants to the Company as follows:

 

(a)           Organization;
Authority.  This Agreement has been
duly executed and delivered by the Purchaser and constitutes the valid and
legally binding obligation of the Purchaser, enforceable against him in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, moratorium and other laws of general application, affecting
enforcement or creditors’ rights generally, or (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.

 

(b)           Accredited Investor.  As of the date hereof, Purchaser is an
“accredited investor,” as that term is defined in Rule 501(a) under the
Securities Act of 1933, as amended (the “1933 Act”) by virtue of (i) having
individual income (exclusive of any income attributable to the Purchaser’s
spouse) of more than $200,000 in each of the most recent two years or joint
income with the Purchaser’s spouse in excess of $300,000 and reasonably expects
to have income of at least the same

 

3

 

level for the current
year and/or (ii) an individual net worth, or a combined net worth, with the
Purchaser’s spouse, in excess of $1,000,000 (for purposes hereof, “individual
net worth” means the excess of total assets at fair market value, including
home and personal property, over total liabilities).

 

(c)            Non-Registration of
Securities and Restrictions on Transferability.  Purchaser is aware that (i) the Securities have not been
registered under the 1933 Act or the securities laws of any state, and this
Agreement has not been qualified under the Trust Indenture Act of 1939, as
amended (the “1939 Act”), in reliance upon exceptions contained in the 1933 Act
and the 1939 Act, nor will the Notes otherwise be issued pursuant to an
indenture; (ii) the Securities are subject to significant restrictions on
transfer, as set forth in this Agreement, the Notes and the Warrants, (iii)
there is no public trading market for the Notes or the Warrants and there is no
reason to expect that any such market will exist at any time in the future;
(iv) Purchaser will only have those rights to register the Securities as are
set forth in Section 9; (v) the Company has no obligation to qualify this
Agreement under the 1939 Act and has no present intention of doing so; and (vi)
Purchaser may therefore be precluded from selling or otherwise transferring or
disposing of the Securities for an indefinite period of time.

 

(d)           Reliance Upon
Representation and Warranties. 
Purchaser is aware that the Securities are being offered and sold in
reliance upon specific exemptions from the registration and qualification
requirements of Federal and state laws and that the Company is relying upon the
truth and accuracy of the representations and warranties of the Purchaser set
forth herein in determining the availability of such exemptions.

 

(e)           Investment Intent.  Purchaser is acquiring the Securities for
investment only, for his own account, and not with view or for sale in
connection with, any distribution of securities.  Purchaser has no present intention of making a sale or
distribution of any Securities.

 

(f)            Ability to Evaluate
Risks and Merits of Investment. 
Purchaser acknowledges receipt of the Disclosure Documents and further
acknowledges that he and his investment advisor(s), if any, have reviewed the
Disclosure Documents and have been afforded the opportunity to obtain any
information necessary to verify the accuracy of any representations or
information contained in this Agreement or in the Disclosure Documents and have
had all of its inquiries to the Company answered in full, and have been
furnished all requested material relating to the Company and the offering and
sale of the Securities.  Neither the
Purchaser nor his investment adviser(s), if any, has been furnished any
offering literature by the Company or any of its affiliates, associates, or
agents, other than this Agreement (including its Exhibits and Schedules) and
the Disclosure Documents.  The Purchaser
has evaluated the risks of investing in the Company and has substantial
experience in making investment decisions of this type or is relying upon his
professional advisers (who have such experience) in making this investment
decision.

 

(g)           Residency and
Taxpayer Identification Number.  The
address set forth on the Signature Page immediately beneath Purchaser’s
signature is Purchaser’s true and correct address.  Purchaser has no present intention of becoming a resident of any
other state or jurisdiction.  The social
security number set forth on the Signature Page beneath Purchaser’s signature,
is Purchaser’s true and correct social security number.

 

4

 

(h)           Ability of the
Purchaser to Bear Risk of Investment. 
Purchaser understands that the purchase of the Securities to be sold to
Purchaser as contemplated hereby is highly speculative and that an investment
in the Company involves substantial risks. 
Purchaser’s personal financial situation is such that (i) he can afford
to hold the Securities for an indefinite period of time and sustain a complete
loss of the investment, and (ii) he has adequate means to provide for his
current needs and contingencies and has no need for liquidity of this
investment.

 

(i)            Original Issue
Discount.  Purchaser is aware he
will be required to recognize original issue discount on the Notes for tax
purposes.  Purchaser understands that a
portion of the purchase price for the Securities acquired by him will be attributable
to the Warrants and the remainder will be attributable to the Notes, and that
the Company will deliver its valuation for original issue discount purposes
after the closing of the Purchaser’s acquisition of securities.  Purchaser is aware that there is no
assurance that upon audit, the Internal Revenue Service will not seek to adjust
such valuation and recompute income and deductions accordingly.

 

(j)            Accuracy of
Representations.  The foregoing
representations of such Purchaser are true and accurate as of the date hereof
and shall be true and accurate as of the Closing.  If, in any respect, such representations shall not be true and
accurate prior to or upon the Closing Date, Purchaser shall give written notice
of such fact to the Company, specifying which representations are not true and
accurate and the reasons therefor.

 

5.             Conditions of
Purchaser’s Obligations at Closing Date. 
Purchaser’s obligation to purchase the Securities subscribed for by such
Purchaser is subject to the fulfillment, prior to or on the Closing Date, of
the following conditions:

 

(a)           Accuracy of
Representations and Warranties.  The
representations and warranties made by the Company herein shall be true and
correct when made, and there shall have been no changes with respect to the
Company since such representations and warranties were made that in the
aggregate materially adversely effect the business, prospects, condition,
affairs or operations of the Company.

 

(b)           Performance; No
Event of Default.  The Company shall
have performed and complied with all agreement and conditions herein required
to be performed or complied with by it prior to or at the Closing, and there
shall not exist any condition or event which would constitute an Event of
Default, or which, after notice or lapse of time or both, would constitute an Event
of Default under the Notes.

 

6.             Conditions of
Company’s Obligations at Closing Date. 
The Company’s obligations to sell the Securities subscribed for by
Purchaser is subject to the fulfillment, prior to or on the Closing Date, of
the following conditions:

 

(a)           Accuracy of
Representations and Warranties.  The
representations and warranties herein made by Purchaser shall be true and
correct when made and shall be true and correct as of the Closing Date.

 

5

 

(b)           Performance of All
Covenants and Conditions.  Purchaser
shall have performed or complied with all agreements and conditions herein
required to be performed or complied with by it prior to or at Closing.

 

7.             Legends on
Securities.

 

(a)           Legend Required on
Notes.  The Company shall be
entitled to cause a legend in the following form to be endorsed on the face of
each Note, whether held by Purchaser or any subsequent holder:

 

“This Note and the Common
Stock issuable upon conversion hereof have not been registered under the
Securities Act of 1933, as amended (the “Act”), nor under any state securities
law and may not be pledged, sold, assigned, hypothecated or otherwise
transferred until (1) a registration statement with respect thereto is
effective under the Act and any applicable state securities law or (2) the
company receives an opinion of counsel to the Company or other counsel to the
holder of such Note, which other counsel is reasonably satisfactory to the
Company, that such note and/or Common Stock may be pledged, sold, assigned,
hypothecated or transferred without an effective registration statement under
the Act or applicable state securities laws.”

 

(b)           Legend Required on
Warrants.  The Company shall be
entitled to cause a legend in the following form to be endorsed on the face of
each Warrant, whether held by Purchaser or any subsequent holder:

 

“Neither this Warrant nor
the shares or Common Stock issuable upon exercise of this Warrant have been
registered under the Securities Act of 1933, as amended (the “Act”) and neither
this Warrant nor the shares of Common Stock issuable upon exercise of this
Warrant may be sold, transferred, pledged, hypothecated or otherwise disposed
of in whole or in part in the absence of an effective registration statement
under such Act or an opinion of counsel reasonably satisfactory to the Company,
in form and substance reasonably satisfactory to the Company, that an exemption
from registration under such Act exists with respect to the proposed sale,
transfer, pledge, hypothecation or other disposition.”

 

(c)           Legend Required on
Common Stock.  The Company shall be
entitled to cause a legend in the following form to be endorsed on the face of
any stock certificate representing any shares of Common Stock issuable upon
conversion of Notes or exercise of the Warrants, whether held by Purchaser or
any subsequent holder:

 

“The shares of stock
represented by this certificate have not been registered under the Securities
Act of 1933 (the “Act”), as amended, or state securities laws and may not be
sold, transferred, pledged, hypothecated or otherwise disposed of in whole or
in part in the absence of an effective registration statement under such Act or
an opinion of counsel reasonably satisfactory to the Company, in form and substance
reasonably satisfactory to the Company, that an exemption from registration
under such Act exists with respect to the proposed sale, transfer, pledge,
hypothecation or other disposition.”

 

6

 

8.             Registration
Rights.  Effective as of the
Closing, Purchaser shall have the registration rights as set forth on
Exhibit C.

 

9.             Notices, etc.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and delivered via facsimile at the facsimile
telephone number specified in this Section 10 prior to 5:00 p.m. (of the time
zone of the recipient) on a business day, (ii) the business day after the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified in this Section 10 later than 5:00
p.m. (of the time zone of the recipient) on such date, (iii) the business day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice
is required to be given.  The address
for such notices and communications shall be as follows:

 

	
  If to the Company:

  	
   

  	
  EquiFin, Inc.

  
	
   

  	
   

  	
  1011 Highway 71

  
	
   

  	
   

  	
  Spring Lake, New Jersey
  07762

  
	
   

  	
   

  	
  Facsimile No.:  (732)282-1411

  
	
   

  	
   

  	
  Attn:  Walter M. Craig, Jr.

  
	
   

  	
   

  	
   

  
	
  If to the Purchaser:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to a “Holder” (as
  defined in Exhibit C):

  	
   

  	
  at the address of such
  Holder maintained on the books of the Company,

  

 

or such other address as
may be designated in writing hereafter, in the same manner, by such person.

 

10.           Amendments and
Waivers. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally or in writing, except with the written consent
of the Company and the Purchaser.

 

11.           Fees and Expenses.  Each party shall pay the fees and expenses
of its own advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.  The Company shall pay all stamp and other
taxes and duties levied in connection with the issuance of the Securities
pursuant hereto.

 

12.           Publicity.  The Company contemplates the issuance of a
press release announcing the completion of this transaction and will advise the
Purchaser of the proposed language of the release for Purchaser’s review and
comment 24 hours before such release.

 

13.           Miscellaneous.  This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of New
Jersey, without giving effect to conflict of laws principles.  All the terms of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, whether so expressed or not, and
in particular shall inure to the benefit of and be enforceable by any holder or
holders at any time of the Securities to whom said

 

7

 

Securities are
transferred or sold in accordance with the terms and provision of this
Agreement and said Securities.  This
Agreement, together with the Exhibits and Schedules hereto, contains the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into thereto.  The headings in
this Agreement are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof. 
When the context in which words are used in this Agreement indicates
that such is the intent, singular words shall include the plural and vice versa
and masculine words shall include the feminine and the neuter genders and vice
versa.  This Agreement may be executed
in two or more counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party,
it being understood that both parties need not sign the same counterpart.  All representations, warranties, covenants
and agreements contained herein shall survive the Closing and the delivery of
the Securities.  This Agreement is
intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person or entity.  In case any one or more of the provisions of this Agreement shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision which shall be a reasonable substitute therefor, and
upon so agreeing, shall incorporate such substitute provision in this
Agreement.  Any reference to “this
Agreement” shall include all Exhibits hereto.

 

IN WITNESS WHEREOF, the
parties hereto have caused this Note Purchase Agreement to be duly executed by
their respective authorized signatories as of the date first indicated above.

 

	
   

  	
  EQUIFIN, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Proposed Principal Amount
of Notes to be Purchased by Purchaser, together with Warrants as provided
herein.

$                  .

 

 

	
   

  	
   

  	
   

  
	
   

  	
                          ,
  Purchaser

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Social Security Number

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  

 

8

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