Document:

Exhibit
10.1

 

FIRST
AMENDMENT TO CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO
CREDIT AGREEMENT (this “Amendment”)
is entered into as of November 9, 2009, among UNIVERSAL AMERICAN CORP., a New York corporation (the “Borrower”), the Lenders party to the
Credit Agreement (hereinafter defined) and BANK OF AMERICA, N.A.,
as the Administrative Agent for the Lenders.

 

The Borrower, the Lenders
and the Administrative Agent are party to the Credit Agreement dated as of September 18,
2007 (as heretofore amended, waived or otherwise modified, the “Credit Agreement”), and have agreed, upon the following
terms and conditions, to amend the Credit Agreement in certain respects.  Accordingly, for valuable and acknowledged
consideration, the Borrower, the Lenders and the Administrative Agent agree as
follows:

 

1.                                       Terms and References. 
Unless otherwise stated in this Amendment, (a) terms defined in the
Credit Agreement have the same meanings when used in this Amendment and (b) references
to “Sections” are to the Credit
Agreement’s sections.

 

2.                                       Amendments.

 

(a)                                  The grid appearing in the definition of “Applicable
Rate” set forth in Section 1.01 is amended to read in its
entirety as follows:

 

	
  Level

  	
   

  	
  Consolidated

  Leverage Ratio

  	
   

  	
  Eurodollar Rate

  +

  Letters of Credit

  	
   

  	
  Base Rate

  +

  	
   

  	
  Commitment

  Fee Rate

  	
   

  
	
  1

  	
   

  	
  > 2.00:1.00

  	
   

  	
  1.250

  	
  %

  	
  .250

  	
  %

  	
  .300

  	
  %

  
	
  2

  	
   

  	
  < 2.00:1.00 and > 1.25:1.00

  	
   

  	
  1.125

  	
  %

  	
  .125

  	
  %

  	
  .275

  	
  %

  
	
  3

  	
   

  	
  < 1.25:1.00

  	
   

  	
  1.000

  	
  %

  	
  .0

  	
  %

  	
  .250

  	
  %

  

 

(b)                                 Section 7.06(d) is amended to read in its entirety
as follows:

 

(d)                                 if a Rating Condition exists at the time
such Restricted Payment is declared, the Borrower may declare or make, directly
or indirectly, a Restricted Payment if such Restricted Payment is payable in
cash and the amount of such Restricted Payment, when aggregated with the amount
of all other Restricted Payments committed to be made in cash pursuant to this Section 7.06(d) at
a time that a Rating Condition exists, does not exceed $200,000,000; provided
that with respect to any Restricted Payment declared and/or made pursuant to
this Section 7.06(d) in excess of $125,000,000 in the
aggregate, the Borrower will make a prepayment of the Term Loans pursuant to Section 2.05(a) in
an amount equal to fifty percent (50%) of the amount of such Restricted Payment
(but solely with respect to any Restricted Payment (or portion thereof) that is
in excess of $125,000,000 in the aggregate) not less than five (5) Business
Days after such Restricted Payment is made.

 

First Amendment to 

Credit Agreement

 

 

3.                                       Conditions Precedent to
Effectiveness of Amendment.  This
Amendment shall not be effective unless and until the Administrative Agent
receives: (a) counterparts of this Amendment executed by the Borrower, the
Required Lenders and the Administrative Agent and consented to in writing by
the Guarantors; (b) payment of an amendment fee to each Lender that
executes and delivers this Amendment at or before noon, New York time on November 9,
2009, in an amount equal to .20% of the sum of (i) the outstanding
principal balance of the Term Loan owing to such Lender and (ii) the
Revolving Credit Commitment of such Lender, in each case immediately before
giving effect to this Amendment; (c) payment of all reasonable
expenses, including reasonable legal fees and expenses of counsel to the
Administrative Agent, incurred by the Administrative Agent in connection with
this Amendment, to the extent invoiced to the Borrower on or prior to the date
hereof; and (d) such documents as the Administrative Agent may reasonably
request to evidence the due authorization of the execution, delivery and
performance by the Borrower and each of the Guarantors of this Amendment, the
incumbency of the officer of the Borrower and each of the Guarantors executing
this Amendment, and any other matters relevant thereto.

 

4.                                       Representations.  The Borrower represents and warrants to the
Administrative Agent and the Lenders as follows:  (a) the execution, delivery and
performance by the Borrower of this Amendment and the Credit Agreement, as
amended hereby, have been duly authorized by all necessary corporate action; (b) after
giving effect to this Amendment, all representations and warranties made or
deemed made by the Borrower in the Loan Documents are true and correct in all
material respects as of the date hereof (provided that
any such representation and warranty that is qualified as to “materiality,” “Material
Adverse Effect” or similar language is true and correct in all respects),
except to the extent that such representations and warranties expressly relate
solely to an earlier date, in which case such representations and warranties
were true and accurate in all material respects on and as of such earlier date
(provided that any such representation
and warranty that was qualified as to “materiality,” “Material Adverse Effect”
or similar language was true and correct in all respects), and except for
changes in factual circumstances not prohibited by the Credit Agreement; and (c) no
Default or Event of Default has occurred and is continuing as of the date
hereof.

 

5.                                       Effect of Amendment. 
This Amendment is a Loan Document. 
Except as expressly modified and amended by this Amendment, all of the
terms, provisions and conditions of the Loan Documents shall remain unchanged
and in full force and effect.  If any
part of this Amendment is for any reason found to be unenforceable, all other
portions of it shall nevertheless remain enforceable.  The Loan Documents and any and all other
documents heretofore, now or hereafter executed and delivered pursuant to the
terms of the Credit Agreement are hereby amended so that any reference to the
Credit Agreement shall mean a reference to the Credit Agreement as amended
hereby.

 

6.                                       Expenses.  The Borrower shall pay all reasonable fees
and expenses paid or incurred by the Administrative Agent incident to this
Amendment, including, without limitation, the reasonable fees and expenses of
the Administrative Agent’s counsel in connection with the negotiation,
preparation, delivery and execution of this Amendment and any related
documents.

 

7.                                       Governing Law.  This Amendment shall be governed by and
construed in accordance with and be governed by the laws of the State of New
York, without regard to conflict of laws principles.

 

8.                                       Counterparts.  This Amendment may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same instrument.  Delivery of an executed signature page to
this Amendment by telecopy or other electronic imaging means shall be effective
as delivery of a manually executed counterpart of this Amendment.

 

First Amendment to 

Credit Agreement

 

2

 

9.                                       ENTIRETY.  THIS AMENDMENT, THE CREDIT AGREEMENT, AND THE
OTHER LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND
SUPERCEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THE
SUBJECT MATTER HEREOF.  THESE LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

 

10.                                 Parties.  This Amendment binds and inures to the
benefit of the Borrower, the Guarantors, the Administrative Agent, the Lenders
and their respective permitted successors and assigns.

 

[REMAINDER OF PAGE INTENTIONALLY
BLANK.

SIGNATURE PAGES FOLLOW.]

 

First Amendment to 

Credit Agreement

 

3

 

Signature Page to
that certain First Amendment to Credit Agreement dated as of the date first set
forth above, among Universal American Corp., as the Borrower, Bank of America,
N.A., as the Administrative Agent, and certain Lenders party thereto.

 

	
   

  	
  UNIVERSAL AMERICAN CORP., as the Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Robert
  A. Waegelein, Executive Vice President 

  and Chief Financial Officer

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to
that certain First Amendment to Credit Agreement dated as of the date first set
forth above, among Universal American Corp., as the Borrower, Bank of America,
N.A., as the Administrative Agent, and certain Lenders party thereto.

 

	
   

  	
  BANK OF AMERICA, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as the

  
	
   

  	
  Administrative
  Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to
that certain First Amendment to Credit Agreement dated as of the date first set
forth above, among Universal American Corp., as the Borrower, Bank of America,
N.A., as the Administrative Agent, and certain Lenders party thereto.

 

	
   

  	
  BANK OF COMMUNICATIONS CO.,
  LTD., NEW 

  YORK BRANCH, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to
that certain First Amendment to Credit Agreement dated as of the date first set
forth above, among Universal American Corp., as the Borrower, Bank of America,
N.A., as the Administrative Agent, and certain Lenders party thereto.

 

	
   

  	
  RAYMOND JAMES BANK FSB, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to
that certain First Amendment to Credit Agreement dated as of the date first set
forth above, among Universal American Corp., as the Borrower, Bank of America,
N.A., as the Administrative Agent, and certain Lenders party thereto.

 

	
   

  	
  CALYON NEW YORK BRANCH, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to
that certain First Amendment to Credit Agreement dated as of the date first set
forth above, among Universal American Corp., as the Borrower, Bank of America,
N.A., as the Administrative Agent, and certain Lenders party thereto.

 

	
   

  	
  CHANG HWA COMMERCIAL BANK,
  LTD., LOS 

  ANGELES BRANCH,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to
that certain First Amendment to Credit Agreement dated as of the date first set
forth above, among Universal American Corp., as the Borrower, Bank of America,
N.A., as the Administrative Agent, and certain Lenders party thereto.

 

	
   

  	
  CITIBANK,
  N.A., as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to that
certain First Amendment to Credit Agreement dated as of the date first set
forth above, among Universal American Corp., as the Borrower, Bank of America,
N.A., as the Administrative Agent, and certain Lenders party thereto.

 

	
   

  	
  SUNTRUST
  BANK, as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to that certain First Amendment to Credit Agreement
dated as of the date first set forth above, among Universal American Corp., as
the Borrower, Bank of America, N.A., as the Administrative Agent, and certain
Lenders party thereto.

 

	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to that certain First Amendment to Credit Agreement
dated as of the date first set forth above, among Universal American Corp., as
the Borrower, Bank of America, N.A., as the Administrative Agent, and certain
Lenders party thereto.

 

	
   

  	
  FIFTH
  THIRD BANK, as
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to that certain First Amendment to Credit Agreement
dated as of the date first set forth above, among Universal American Corp., as
the Borrower, Bank of America, N.A., as the Administrative Agent, and certain
Lenders party thereto.

 

	
   

  	
  NATIONAL BANK OF EGYPT, NEW
  YORK BRANCH, as
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to that certain First Amendment to Credit Agreement
dated as of the date first set forth above, among Universal American Corp., as
the Borrower, Bank of America, N.A., as the Administrative Agent, and certain
Lenders party thereto.

 

	
   

  	
  NATIONAL CITY BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to that certain First Amendment to Credit Agreement
dated as of the date first set forth above, among Universal American Corp., as the
Borrower, Bank of America, N.A., as the Administrative Agent, and certain
Lenders party thereto.

 

	
   

  	
  TAIPEI FUBON COMMERCIAL BANK,
  LOS ANGELES BRANCH,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to that certain First Amendment to Credit Agreement
dated as of the date first set forth above, among Universal American Corp., as
the Borrower, Bank of America, N.A., as the Administrative Agent, and certain
Lenders party thereto.

 

	
   

  	
  UNION BANK OF CALIFORNIA, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature
Page to First Amendment to Credit Agreement

 

 

Signature Page to that certain First Amendment to Credit Agreement
dated as of the date first set forth above, among Universal American Corp., as
the Borrower, Bank of America, N.A., as the Administrative Agent, and certain
Lenders party thereto.

 

	
   

  	
                                                                      ,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature Page to First Amendment
to Credit Agreement

 

 

Signature Page to that certain First Amendment to Credit Agreement
dated as of the date first set forth above, among Universal American Corp., as
the Borrower, Bank of America, N.A., as the Administrative Agent, and certain
Lenders party thereto.

 

	
   

  	
                                                                      ,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature Page to First Amendment
to Credit Agreement

 

 

To induce the
Administrative Agent and the Lenders to enter into this Amendment, the
undersigned consent and agree (a) to its execution and delivery and terms
and conditions thereof, (b) that this document in no way releases,
diminishes, impairs, reduces, or otherwise adversely affects any Liens,
Guaranties, assurances, or other obligations or undertakings of any of the
undersigned under any Loan Documents, and (c) that this Amendment binds
each of the undersigned and its successors and permitted assigns and inures to
the benefit of the Administrative Agent, the Lenders, and their respective
successors and permitted assigns.

 

 

	
  HERITAGE
  HEALTH SYSTEMS, INC., as a Guarantor

  	
   

  	
  MEMBERHEALTH LLC, as a Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

Signature Page to First Amendment
to Credit AgreementExhibit 10.1

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT (the “Agreement”) is made as of
the 6th day of November, 2009, by and between XETA TECHNOLOGIES, INC., an Oklahoma corporation (the “Borrower”)
and COMMERCE BANK, N.A., a national banking
association (the “Lender”).

 

R E C I T A L S

 

A.                                   Borrower has
requested that Lender enter into a financing arrangement whereby Lender shall
extend credit to Borrower in the form of a revolving loan allowing advances up
to the aggregate principal amount of $8,500,000.00.

 

B.                                     Lender is
willing to extend such credit on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, and other good and valuable
consideration, receipt of which is acknowledged, the parties agree as follows:

 

ARTICLE I

 

CERTAIN DEFINITIONS

 

When used herein, the following terms shall have the
following meanings:

 

“Account Debtor” means a Person liable under
or in regard to an Account.

 

“Accounts” or “Account” shall have the
meaning assigned to such term in the UCC.

 

“Advance” shall mean each separate advance of
funds pursuant to the Loan by Lender to Borrower.

 

“Affiliate” of any
Person shall mean (i) any Person directly or indirectly controlled by,
controlling or under common control with such first Person, (ii) any
manager, director or officer of such first Person or of any Person referred to
in clause (i) above and (iii) if any Person in clause (i) or (ii) above
is an individual, any member of the immediate family (including parents, spouse
and children) of such individual and any trust whose principal beneficiary is
such individual or one or more members of such immediate family and any Person
who is controlled by any such member or trust. 
For purposes of this definition, any Person who owns directly or
indirectly 10% or more of the equity interests having ordinary voting power for
the election of directors or other governing body of any other Person (other
than as a limited partner of such other Person) will be deemed to “control”
(including, with its correlative meanings, “controlled by” and “under common
control with”) such other Person.

 

“Authorized Individual” shall mean any
Responsible Officers and any other individuals designated by any one of the
Responsible Officers.

 

“Borrowing Base”
shall mean an amount equal to the lesser of:

 

(a)          the sum of:

 

 

(i)                                     seventy-five
percent (75%) of the uncollected amount of the aggregate Eligible Accounts of
Borrower at book value, held by and due and owing to Borrower as shown by the
books and records of Borrower as of the Determination Date; plus

 

(ii)                                  the lesser of (1) fifty
percent (50%) of the aggregate value of the Eligible Inventory of Borrower as
of the Determination Date or (2) $2,000,000.00; plus

 

(iii)                               $2,000,000.00

 

or

 

(b)         $8,500,000.00.

 

In
determining the value of Eligible Inventory to be included in the Borrowing
Base, Lender will use the lowest of (i) Borrower’s cost, (ii) Borrower’s
estimated market value, or (iii) Lender’s reasonable determination of the
resale value of such Inventory in such quantities and on such terms as Lender
reasonably deems appropriate.

 

“Borrowing Base Certificate” shall mean a
Certificate of Borrower in the form of Exhibit “A” annexed hereto
and made a part hereof.

 

“Business Day” shall mean a day other than a
Saturday, Sunday or a day upon which banks in the State of Oklahoma are closed
to business generally.

 

“Cash
Management Services” means any one or more of the following types or
services or facilities provided to any Loan Party by Lender or any of its
Affiliates: (a) ACH transactions, (b) cash management, including,
without limitation, controlled disbursement services and daylight overdrafts, (c) foreign
exchange facilities, and (d) credit cards.

 

“Chattel
Paper” shall have the meaning assigned to such term in the UCC.

 

“Closing Date”
shall mean the date of this Agreement.

 

“Code” means the
Internal Revenue Code of 1986, as amended from time to time, and the
regulations and published interpretations thereof.

 

“Collateral”
shall mean any and all assets and rights and interests in or to property of
Borrower and each of the other Loan Parties, whether real or personal, tangible
or intangible, in which a Lien is granted or purported to be granted pursuant
to the Security Instruments.

 

“Commercial Receivables” means Eligible
Accounts other than Prime Government Receivables or Sub Contractor or Other
Government Receivables.

 

2

 

“Commitment”
shall mean the agreement of Lender to make Advances under the Loan pursuant to
this Agreement.

 

“Commonly Controlled Entity”
means an entity, whether or not incorporated, which is under common control
with Borrower within the meaning of Section 414(b) or 414(c) of
the Code.

 

“Compliance Certificate”
shall mean a Certificate of Borrower substantially in the form of Exhibit “B”
annexed hereto and made a part hereof.

 

“Debt” means for any Person the sum of the
following (without duplication): (i) all obligations of such Person for
borrowed money or evidenced by bonds, debentures, notes or other similar
instruments (including principal, interest, fees and charges); (ii) all
obligations of such Person (whether contingent or otherwise) in respect of
bankers’ acceptances, letters of credit, surety or other bonds and similar instruments;
(iii) all obligations of such Person to pay the deferred purchase price of
Property or services (other than for borrowed money); (iv) all obligations
under leases which shall have been, or should have been, in accordance with
GAAP, recorded as capital leases in respect of which such Person is liable
(whether contingent or otherwise); (v) all obligations under operating
leases which require such Person or its Affiliate to make payments over the
term of such lease based on the purchase price or appraisal value of the
Property subject to such lease plus a marginal interest rate, and used
primarily as a financing vehicle for, or to monetize, such Property; (vi) all
Debt (as described in the other clauses of this definition) and other
obligations of others secured by a Lien on any asset of such Person, whether or
not such Debt is assumed by such Person; (vii) all Debt (as described in
the other clauses of this definition) and other obligations of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the debtor or obligations of others; (viii) all
obligations or undertakings of such Person to maintain or cause to be
maintained the financial position or covenants of others or to purchase the
Debt or Property of others; (ix) obligations to deliver goods or services
in consideration of advance payments; (x) obligations to pay for goods or
services whether or not such goods or services are actually received or
utilized by such Person; and (xi) any capital stock of such Person in which
such Person has a mandatory obligation to redeem such stock.

 

“Default” shall
mean any event, which together with any lapse of time or giving of any Notice,
or both, would constitute an Event of Default.

 

“Default Rate”
shall mean, in respect of any principal of any Loan or any other amount payable
by Borrower under this Agreement or any other Loan Document, a rate of interest
per annum during the period commencing on the date of occurrence of an Event of
Default until such amount is paid in full or all Events of Default are cured or
waived equal to 5.0 percentage points (5%) higher than the rate of interest
otherwise provided under this Agreement, but in no event to exceed the Highest
Lawful Rate.

 

“Determination Date”
shall mean the date on which Eligible Accounts and Eligible Inventory are
determined for purposes of calculating the Borrowing Base.

 

“EBITDA” means net income, less income
or plus loss from discontinued operations and extraordinary items, plus
non-cash FAS 123R expense, plus income taxes, plus interest expense, plus
depreciation, depletion, and amortization. 
By way of clarification, the following item shall be considered losses
from extraordinary items for the applicable periods:  the $14 million impairment charge on goodwill
and other assets that occurred in the third quarter of the fiscal year 2009

 

3

 

(provided that if such impairment charge is adjusted
downward the adjusted number shall be considered the loss from extraordinary
items for purposes of this definition for the applicable period, and if such
impairment charge is adjusted upward the maximum amount of contribution to
EBITDA therefrom shall be $18 million unless otherwise agreed by Lender).

 

“Eligible Account”
shall mean an Account which meets the following standards until the same is
collected in full:

 

(c)          The Account is based upon an
enforceable order or contract, written or oral, for Inventory shipped or for
services performed and the same were shipped or performed by Borrower in
accordance with such order or contract and in the ordinary course of Borrower’s
business and without any further obligation on the part of Borrower to service,
repair, or maintain any such goods sold other than pursuant to any applicable
warranty.

 

(d)         There are no conditions
which must be satisfied before Borrower is entitled to receive payment of the
Account (Accounts arising from COD sales, consignments, bill and hold sales,
sale or return, guaranteed sales or on the basis of any other understanding are
not Eligible Accounts).

 

(e)          The Account Debtor does not
claim any present or contingent (and no fact exists which is the basis for any
future) claim, deduction or dispute or defense in law or equity to payment of
the Account.  The Account balance does
not include the amount of any counterclaims, offsets, claims for credits,
allowances, or adjustments because of returned, inferior, or damaged Inventory
or unsatisfactory services, or for any other reason including, without
limitation, those arising on account of a breach of any express or implied
representation or warranty which have been or may be asserted against Borrower
by the Account Debtor (including offsets for any “contra accounts” owed by
Borrower to the Account Debtor for goods purchased by Borrower or for services
performed for Borrower).  To the extent
any counterclaims, offsets, or contra accounts exist in favor of the Account
Debtor, such amounts shall be deducted from the Account balance.

 

(f)            The Account is either (1) evidenced
by an invoice or other documentation in form acceptable to Lender, dated no
later than the date of shipment or performance and containing only terms
normally offered by Borrower or (2) is for legally billable, but not yet
billed, materials which have been shipped to Account Debtors.

 

(g)         The amount shown on the
books of Borrower and on any invoice, certificate, schedule or statement
delivered to Lender is owing to Borrower and no partial payment has been
received unless reflected with that delivery.

 

(h)         The Account represents a
genuine obligation of the Account Debtor for goods sold to and accepted by the
Account Debtor, or for services performed for and accepted by the Account
Debtor, or a combination thereof.  To the
extent any credit balances exist in favor of the Account Debtor, such credit
balances represent customary credits, adjustments and/or discounts given to an
Account Debtor by Borrower in the ordinary course of its business and shall be
deducted from the Account balance.

 

4

 

(i)             The Account balance does not
arise from services under or related to any warranty obligation of Borrower or
out of any finance charges, services charges or other fees for the time value
of money, payable by the Account Debtor. 
To the extent any such charges are included, such amounts shall be
deducted from the Account balance.

 

(j)             As to any Commercial
Receivables, the Account Debtor has either submitted to jurisdiction and venue
in courts sitting in Tulsa, Oklahoma, or Borrower is not prohibited by the laws
of the state where the Account Debtor is located from bringing an action in the
courts of that state to enforce the Account Debtor’s obligation to pay the
Account.  Borrower has taken all
appropriate actions to ensure access to the courts of the state where the
Account Debtor is located, including, where necessary, the filing of a Notice
of Business Activities Report or other similar filing with the applicable state
agency or the qualification by Borrower as a foreign corporation authorized to
transact business in such state.

 

(k)          The Account is owned by
Borrower free of any title defects or any Liens or interests of others except
the security interest in favor of Lender. 
Borrower has the full and unqualified right and power to assign and
grant a security interest in, and Lien on, the Account to Lender as security
and collateral for the payment of the Indebtedness, which Lien is perfected as
to the Account by the filing of financing statements and which Lien upon such
filing constitutes a first priority security interest and Lien.

 

(l)             The Account Debtor upon the
Account is not any of the following:

 

(i)                                     An employee,
affiliate, parent or Subsidiary of Borrower, or an entity which has common
officers or directors with Borrower.

 

(ii)                                  Any Person
located, incorporated or primarily conducting business in a foreign country
unless (A) the Account is supported by an irrevocable letter of credit
issued by a bank acceptable to Lender, and, if requested by Lender, the
original of such letter of credit and/or any usance drafts drawn under such
letter of credit and accepted by the issuing or confirming bank have been
delivered to Lender, or (B) the Account is covered by foreign credit
insurance acceptable to Lender and the Account is otherwise an Eligible
Receivable.

 

(iii)                               Any federal,
state or local government agency or instrumentality, unless the applicable
Account is a Prime Government Receivable or a Sub Contractor or Other
Government Receivable.

 

(m)       The Account is not in default.  An Account will be considered in default if
any of the following occur:  (A) the
Account is not paid within ninety (90) days from the due date, not to exceed
one hundred twenty (120) days from the Invoice Date; (B) the Account
Debtor obligated upon the Account suspends business, makes a general assignment
for the benefit of creditors, fails to pay its debts generally as they come
due, or any petition is filed by or against the Account Debtor obligated upon
the Account under any bankruptcy law or any other law or laws for the relief of
debtors in the United States, any state or territory thereof, or any foreign
jurisdiction; (C) there is an appointment of a receiver or trustee for the
Account Debtor or for any of the assets of the Account Debtor, including,
without limitation, the appointment of or 

 

5

 

taking possession by a “custodian,”
as defined in the Federal Bankruptcy Code; (D) the initiation by or
against the Account Debtor of any other type of any formal or informal
proceeding for the insolvency, dissolution or liquidation of, settlement of
claims against, or winding up of affairs of, the Account Debtor; (E) the
death or judicial declaration of incompetency of an Account Debtor who is an
individual; (F) the sale, assignment, or transfer of all or any material
part of the assets of the Account Debtor.

 

(n)         The Account is not the
obligation of an Account Debtor who is in default (as defined above) on ten
percent (10%) or more of the Accounts upon which such Account Debtor is
obligated.

 

(o)         The Account is not owing by
any Account Debtor for which Lender has deemed fifty percent (50%) or more of
such Account Debtor’s other Accounts (or any portion thereof) due to Borrower,
to be non-Eligible Accounts.

 

(p)         The Account does not arise
from the sale of goods which remain in Borrower’s possession or under Borrower’s
control.

 

(q)         The Account is not evidenced
by a promissory note or Chattel Paper, is not secured by any letter of credit
nor is the Account Debtor obligated to Borrower under any other obligation
which is evidenced by a promissory note.

 

(r)            No bond or other undertaking
by a guarantor or surety has been or is required to be obtained, supporting the
performance of Borrower in respect of Borrower’s agreements with the Account
Debtor.

 

(s)          The Account is not subject
to a restriction that forbids or makes void or unenforceable the assignment or
grant of a security interest by Borrower to Lender, unless Borrower has
obtained any necessary consents.

 

(t)            The Account is not a Prime
Government Receivable or Sub Contractor or Other Government Receivable as to
which Borrower has failed to comply with Section 5.30 within thirty
(30) days of a request therefor by Lender.

 

(u)         The Account is not an
Unbilled Receivable and does not represent deferred revenue or a pre-bill.

 

(v)         No part of the Account
represents a final billing or a retainage.

 

(w)       Lender in the good faith
exercise of its reasonable discretion has not deemed the Account ineligible
because of uncertainty as to the creditworthiness of the Account Debtor or
because Lender otherwise considers the collateral value of such Account to
Lender to be impaired or its ability to realize such value to be insecure.

 

(x)           The Account is otherwise
acceptable to Lender.

 

In addition to the foregoing limitations, the following limitations
shall apply:

 

6

 

(A)                              the dollar
amount of Accounts included as Eligible Accounts which are the obligations of a
single Account Debtor (excluding Prime Government Receivables and Sub
Contractor or Other Government Receivables) shall not exceed the concentration
limit established for that Account Debtor. 
To the extent the total of such Accounts exceeds an Account Debtor’s
concentration limit, the amount of any such excess shall be excluded.  The concentration limit for each Account
Debtor shall be equal to twenty percent (20%) of the total amount of Borrower’s
Eligible Accounts at that time. It is provided, however, that if the Account
Debtor obligated upon an Account is one of the Account Debtors listed below,
the concentration limit applicable to each such Account Debtor will be
increased to the percentage set forth below:

 

	
  Account Debtor

  	
   

  	
  Concentration Limit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Marriott
  Corporate-owned Properties

  	
   

  	
  30

  	
  %

  

 

(B)                                The dollar
amount of Accounts included as Eligible Accounts which are owing in connection
with either (i) a single Prime Government Receivable, or (ii) Sub
Contractor or Other Government Receivables with the same governmental authority,
shall not exceed ten percent (10%) of the total amount of Borrower’s Eligible
Accounts at that time.  It is provided,
however, that if the Account Debtor obligated upon an Account is one of the
Account Debtors listed below, the concentration limit applicable to each such
Account Debtor will be increased to the percentage set forth below:

 

	
  Account Debtor

  	
   

  	
  Concentration Limit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Miami
  Dade County Public School System

  	
   

  	
  15

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Universal
  Service Administrative Company

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Lockheed-ACEIT (joint
  venture between Lockheed Martin and the Army Corps of Engineers)

  	
   

  	
  15

  	
  %

  

 

(C)                                If the
aggregate of all Accounts that are Prime Government Receivables or Sub
Contractor or Other Government Receivables and that give rise to Eligible
Accounts due Borrower exceed in aggregate face amount twenty percent (20%) of
the total Eligible Accounts of Borrower, the portion of such Eligible Accounts
that exceeds in aggregate face amount twenty percent (20%) of the total
Eligible Accounts of Borrower shall be ineligible unless otherwise agreed by
Lender in writing.

 

The
above specifications with respect to the term “Eligible Accounts” are special
specifications adopted for the purpose of determining the Borrowing Base and
the designation of such specifications shall not be interpreted to limit in any
respect the security interest granted to Lender in and to any Accounts or any
other Collateral.

 

“Eligible Inventory”
shall mean Inventory which satisfies the following requirements:

 

(a)   The Inventory
is owned by Borrower free of any title defects or any Liens or interests of
others except the security interest in favor of Lender.

 

7

 

(b)   The Inventory
is located at locations which Borrower has disclosed to Lender and which are
acceptable to Lender.  If the Inventory
is covered by a negotiable document of title (such as a warehouse receipt or
bill of lading) that document must be delivered to Lender.

 

(c)   The Inventory
is held for sale or use in the ordinary course of Borrower’s business and is of
good and merchantable quality.  Display
items, work-in-process, samples, and packing and shipping materials are not
acceptable.  Inventory which is obsolete,
unsalable, damaged, defective, used, discontinued or slow moving, or which has
been returned by the buyer, is not acceptable.

 

(d)   The Inventory
is covered by insurance as required by this Agreement.

 

(e)   The Inventory
has not been manufactured to the specifications of a particular Account Debtor.

 

(f)    The Inventory
is not subject to any licensing agreements which would prohibit or restrict in
any way the ability of Lender to sell the Inventory to third parties.

 

(g)   The Inventory
has been produced in compliance with the requirements of the U.S. Fair Labor
Standards Act (29 U.S.C. §§201 et seq.).

 

(h)   The Inventory
is not placed on consignment.

 

(i)    The Inventory
is otherwise acceptable to Lender in its reasonable discretion.

 

The
above specifications with respect to the term “Eligible Inventory” are
specifications adopted for the purpose of determining the Borrowing Base and
the designation of such specifications shall not be interpreted to limit in any
respect the security interest granted to Lender in and to Inventory or any
other Collateral.

 

“Equity Interest” means shares of capital stock,
partnership interests, membership interests in a limited liability company,
beneficial interests in a trust or other equity ownership interests in a
Person, and any warrants, options or other rights entitling the holder thereof
to purchase or acquire any such equity interest.

 

“Entity Loan Parties” shall mean Loan Parties
that are not natural persons.

 

“ERISA” shall
mean the Federal Employee Retirement Income Security Act of 1974, as amended together
with all regulations and rulings promulgated with respect thereto.

 

“Equipment”
shall have the meaning assigned to such term in the UCC.

 

“Event of Default”
shall mean any of the events specified in Section 7.01 of this
Agreement.

 

“GAAP” shall
mean generally accepted accounting principles applied on a consistent basis in
all material respects to those applied in the preceding period.  Unless otherwise indicated herein, all
accounting terms will be defined according to GAAP.

 

8

 

“Governmental
Authority” shall include the country, the state, county, city and political
subdivisions in which any Person or such Person’s Property is located or which
exercises valid jurisdiction over any such Person or such Person’s Property,
and any court, agency, department, commission, board, bureau or instrumentality
of any of them including monetary authorities which exercises valid
jurisdiction over any such Person or such Person’s Property.  Unless otherwise specified, all references to
Governmental Authority herein shall mean a Governmental Authority having
jurisdiction over, where applicable, Borrower, any of its Property or Lender.

 

“hereby”, “herein”,
“hereof”, “hereunder”
and similar such terms shall mean and refer to this Agreement as a whole and
not merely to the specific section, paragraph or clause in which the respective
word appears.

 

“Highest
Lawful Rate” shall mean the maximum nonusurious interest rate, if any, that
at any time or from time to time may be contracted for, taken, reserved,
charged or received on the Note or on other Indebtedness under Laws applicable
to Lender which are presently in effect or, to the extent allowed by Law, under
such applicable Laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable Laws now allow.

 

“Indebtedness” shall mean and include any and all:
(i) indebtedness, obligations and liabilities of Borrower to Lender or any
Affiliates of Lender incurred or which may be incurred or purportedly incurred
hereafter pursuant to the terms of this Agreement or any of the other Loan
Documents, and any extensions, renewals, substitutions, amendments and
increases in amount thereof, including such amounts as may be evidenced by the
Note and all lawful interest, loan closing fees, service fees, facility fees,
commitment fees, fees in lieu of balances and other charges, and all costs and
expenses incurred in connection with the preparation, filing and recording of
the Loan Documents, including attorneys’ fees and legal expenses; (ii) all
other indebtedness, obligations (whether direct or indirect, primary or
secondary, fixed or contingent) and liabilities of Borrower to Lender,
including future advances and loans made by Lender to Borrower and any
extensions, renewals, substitutions, amendments and increases in amount thereof
and including but not limited to any loan or credit agreement, any tri-party
financing agreement, any derivative contracts, any Swap Contract or other “swap
agreement” with Lender of any of its Affiliates or any liabilities under or
relating to any Cash Management Services; (iii) all reasonable costs and
expenses paid or incurred by Lender, including attorneys’ fees, in enforcing or
attempting to enforce collection of any Indebtedness and in enforcing or
realizing upon or attempting to enforce or realize upon any Collateral or
security for any Indebtedness, including interest on all sums so expended by
Lender accruing from the date upon which such expenditures are made until paid,
at an annual rate equal to the Default Rate; (iv) all sums reasonably
expended by Lender in curing any Default or Event of Default, together with
interest on all sums so expended by Lender accruing from the date upon which
such expenditures are made until paid, at an annual rate equal to the Default
Rate; (v) all reasonable costs and expenses paid or incurred by Lender,
including attorneys’ fees and legal expenses, in enforcing or attempting to
enforce any right, remedy or cause of action of Lender against any Loan Party, including
interest on all sums so expended by Lender accruing from the date upon which
such expenditures are made until paid, at an annual rate equal to the Default
Rate; and (vi) all “Indebtedness” or “Secured Indebtedness” or “Secured
Obligations” as said terms are defined in any of the Loan Documents.

 

“Inventory” shall have the meaning assigned to
such term in the UCC.

 

9

 

“Invoice Date” shall mean the date of the first
invoice (but not the due date set forth in such invoice) for the services
rendered or the goods sold by Borrower to an Account Debtor, which date shall
be no later than thirty (30) days after shipment or delivery of goods or the
provision of the applicable services.

 

“Laws” shall mean all statutes, Laws, ordinances,
rules, regulations, orders, writs, injunctions, or decrees of the United
States, any state or commonwealth, any municipality, any foreign country, any
territory or possession, or any Tribunal.

 

“Letters
of Credit” shall mean any letters of credit issued by Lender on behalf of
Borrower and all reimbursement obligations pertaining to any such letters of
credit.

 

“LIBOR
Rate” shall mean, for any day, the rate per annum equal to the British
Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other
commercially available source providing quotations of BBA LIBOR as selected by
Lender from time to time) at approximately 11:00 a.m. London time, on such
date, or if such date is not a Business Day, on the immediately preceding
Business Day, for U.S. Dollar deposits (for delivery on such day) with a
maturity equal to one (1) month.  If
such rate is not available at such time for any reason, then the rate will be
determined by such alternate method as reasonably selected by Lender.

 

“Lien” shall mean any mortgage, pledge, security
interest, tax lien, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the UCC or comparable Law of any jurisdiction to evidence any of the
foregoing), whether arising by agreement or under any statute or Law, or
otherwise.

 

“Loan” shall mean the revolving line of credit
made available to Borrower pursuant to the terms of this Agreement.

 

“Loan Documents” shall mean this Agreement, the
Note (including any renewals or extensions thereof), the Security Instruments
and all other documents, instruments and certificates executed and delivered to
Lender by Borrower or any other Loan Party pursuant to the terms of this
Agreement, and any supplements thereto or modifications thereof.  “Loan Documents” also includes any agreement
between any Loan Party and Lender or any of its Affiliates with respect to Cash
Management Services and any Swap Contracts.

 

“Loan Parties” shall mean, collectively, Borrower and each
Person (other than Lender) executing a Loan Document including, without
limitation, each Person executing a Security Instrument and each Person who
becomes a guarantor of any or all of the Indebtedness.

 

“Loan
Sweep” means the loan advance facility that Lender has agreed or may agree
to extend as part of an account sweep or similar service, as it may be amended
from time to time.

 

“Material Adverse Effect” shall mean (i) any
effect whatsoever upon the validity, performance or enforceability of any of
the terms of the Loan Documents, or (ii) any effect which reasonably could
be material and adverse to the financial condition, property, or business
operations of Borrower, or (iii) any effect which reasonably could impair
the ability of Borrower to fulfill its obligations under the terms and
conditions of this Agreement and the other Loan Documents, or (iv) 

 

10

 

any effect which reasonably could impair the ability
of Borrower to conduct its business as at the Closing Date, or (v) any
effect which reasonably could be material and adverse to the Collateral or
Lender’s interest in any of the Collateral, or (vi) any effect which
constitutes an Event of Default.

 

“Mortgage” shall mean that certain Mortgage,
Assignment of Rents, Security Agreement and Fixture Filing in the form of Exhibit “C”
annexed to this Agreement, to be made, executed and delivered by Borrower to
Lender under the terms of this Agreement.

 

“Multiemployer Plan” means a Plan described in Section 4001(a)(3) of
ERISA.

 

“Note” shall mean the promissory note described in
Section 2.05 together with any and all extensions, renewals,
modifications, substitutions and changes in form thereof.

 

“Notice” shall
mean any notice, demand, request, or other communication or document to be
provided under this Agreement to a party to this Agreement (without implying
any requirement that Lender give any notice of default or of exercise of any of
its rights or remedies except as may be specifically provided by this
Agreement).

 

“PBGC” means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its functions under
ERISA.

 

“Person” shall mean and include an individual, a
partnership, a joint venture, a corporation, a limited liability company, a
trust, a business trust, an unincorporated organization, and a government or
any department, agency or political subdivision thereof.

 

“Plan” means any pension plan which is covered by
Title IV of ERISA and in respect of which Borrower or a Commonly Controlled
Entity is an “employer” as defined in Section 3(5) of ERISA.

 

“Prime
Government Receivables” means Accounts which have resulted from an amount
due and owing directly from the U.S. Government or any department or agency
thereof.

 

“Prohibited Transaction” means any transaction set
forth in Section 406 of ERISA or Section 4975 of the Code.

 

“Reportable Event” means any of the events set
forth in Section 4043 of ERISA.

 

“Responsible
Officer” shall mean the Chief Executive Officer, President or Chief
Financial Officer of Borrower.

 

“Revolving
Loan Advance Request” shall mean a written request for an Advance of the
Loan made pursuant to Article II hereof, which Revolving Loan Advance
Request shall be in the form attached hereto as Exhibit “D”.

 

“Security
Agreement” shall mean that certain Security Agreement and Assignment in the
form of Exhibit “E” annexed to this Agreement, to be made, executed
and delivered by Borrower to Lender under the terms of this Agreement.

 

“Security Instruments” shall mean the Mortgage,
the Security Agreement, the Trademark Assignment and all other  agreements,
instruments and documents now or hereafter executed and 

 

11

 

delivered in connection with this Agreement pursuant
to which Liens are granted or purported to be granted to Lender in Collateral
securing all or part of the Indebtedness, each in form and substance
satisfactory to Lender.

 

“Sub
Contractor or Other Government Receivables” means Accounts which have
resulted from (a) an amount due and owing from Account Debtors who are
prime U.S. Government contractors with confirmed contracts with the U.S.
Government or any department or agency thereof; or (b) an amount due and
owing directly from any state or local government or any department or agency
thereof.

 

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

 

“Swap Contract” means any document, instrument or
agreement between Borrower and Lender or any affiliate of Lender, now existing
or entered into in the future, relating to an interest rate swap transaction,
forward rate transaction, interest rate cap, floor or collar transaction, any
similar transaction, any option to enter into any of the foregoing, and any
combination of the foregoing, which agreement may be oral or in writing,
including, without limitation, any master agreement relating to or governing
any or all of the foregoing and any related schedule or confirmation, each as
amended from time to time.

 

“Tangible Net Worth” shall mean, on any date as
of which the amount thereof is to be determined, the value of Borrower’s total
assets (including leaseholds and leasehold improvements and reserves against
assets) less goodwill, patents, trademarks, trade
names, organization expense, unamortized debt discount and expense, capitalized
or deferred research and development costs, deferred marketing expenses, and
other like intangibles, and monies due from Affiliates, officers, directors,
employees, or shareholders of Borrower) less total
liabilities, including but not limited to accrued and deferred income taxes.

 

“Taxes” shall mean all taxes, assessments, fees, or other
charges or levies from time to time or at any time imposed by any Laws or by
any Tribunal.

 

“Termination Date” shall mean November 5,
2010.

 

“Trademark
Assignment” shall mean that certain Trademark Security Agreement in the
form of Exhibit “F” annexed to this Agreement, to be made, executed
and delivered by Borrower to Lender under the terms of this Agreement.

 

“Tribunal” shall mean any municipal, state,
commonwealth, federal, foreign, territorial or other sovereign, governmental
entity, governmental department, court, commission, board, bureau, agency or
instrumentality.

 

12

 

“UCC” shall mean the Uniform Commercial Code, 12A Okla.
Stat. § 1-101 et seq., as it may be amended from time to time.

 

“Unbilled
Receivables” means Accounts, notwithstanding their unbilled status which
have resulted from unbilled costs actually incurred and arising out of work
actually performed by Borrower underwritten contracts with the U.S. Government
which (i) have been accepted by the U.S. Government and (ii) are properly
billable to the U.S. Government in accordance with the applicable contract.

 

“Unused Portion”
shall mean, at any date of the determination thereof, an amount equal to
$8,500,000.00 minus the outstanding amount of Advances under the Loan minus
the amount of all issued and outstanding Letters of Credit.

 

ARTICLE II

AMOUNT AND TERMS OF THE LOAN

 

SECTION 2.01             Revolving Loan.

 

(a)                                  Subject to the
terms of this Agreement, Lender agrees to lend to Borrower and Borrower agrees
to borrow from Lender an aggregate principal amount not to exceed at any one
time the Borrowing Base, for the purpose of providing working capital for
Borrower for Borrower’s business purposes. Borrower shall issue and deliver to
Lender the Note, which shall evidence Borrower’s obligations to repay all sums
advanced pursuant to the Loan.  Subject
to the terms and conditions of this Agreement, Lender agrees to make Advances
available to Borrower under the Loan from the Closing Date to and up to, but
excluding, the Termination Date.

 

(b)                                 This is a
revolving line of credit.  Prior to the
Termination Date, and within the limits of the Borrowing Base and the other
provisions of this Agreement, Borrower may repay principal amounts of the Loan
and reborrow them.

 

(c)                                  In addition to
all other conditions precedent to Lender’s obligations herein contained, as a
condition precedent to Lender’s obligation to make any Advance under the Loan
(except pursuant to the Loan Sweep), Borrower shall have delivered to Lender a
Revolving Loan Advance Request.  All
Revolving Loan Advance Requests must be received by Lender not later than 1:00 P.M.,
Tulsa, Oklahoma time at least one (1) Business Day prior to the date of
such requested Advance.  Without in any
manner limiting Borrower’s obligation to provide a Revolving Loan Advance
Request, Lender may act without liability upon the basis of (i) a
telephonic Notice believed by Lender in good faith to be from an Authorized
Individual prior to the receipt of a Revolving Loan Advance Request; or (ii) such
other method as Borrower may request and Lender may permit in Lender’s
discretion.  In each such case, Borrower
hereby waives the right to dispute Lender’s record of the terms of such
telephonic Notice except in the case of gross negligence or willful misconduct
by Lender.

 

(d)                                 Borrower shall
not submit a Revolving Loan Advance Request for an amount less than Fifty
Thousand and no/100 Dollars ($50,000.00) (except for Advances that occur
pursuant to the Loan Sweep).  Further, no
Revolving Loan Advance Request shall be greater 

 

13

 

than the Borrowing Base less the then
outstanding principal balance of the Loan, it being understood and agreed that
in no event shall the aggregate unpaid principal amount at any one time
outstanding under the Loan exceed the Borrowing Base.  Borrower will not request, nor will it
accept, any Advance under the Loan, nor shall Lender be obligated to make such
an Advance, at any time when the amount thereof, together with the outstanding
unpaid principal amount of the Loan, exceeds the Borrowing Base.

 

(e)                                  Borrower will
promptly deliver the following to Lender at such times as may be requested by
Lender:

 

(i)                                     Copies of the
invoices or the record of invoices from Borrower’s sales journal for Borrower’s
Accounts and a listing of the names and addresses of the Account Debtors
obligated thereunder.

 

(ii)                                  Copies of the
delivery receipts, purchase orders, shipping instructions, bills of lading and
other documentation pertaining to such Accounts.

 

(iii)                               Copies of
Borrower’s cash receipts journal pertaining to its Accounts.

 

(f)                                    The proceeds of
all Advances under the Loan shall be deposited to the general deposit account
of Borrower with Lender, for the benefit of Borrower, and Lender shall have no
responsibility to monitor the distribution of such Advances in any other
respect.  Each request by Borrower for an
additional Advance shall constitute a representation by Borrower that there is
not at the time of such request an Event of Default or a Default, and that all
representations and warranties in Article VI of this Agreement are
true and correct on and as of the date of each such request.

 

(g)                                 Lender may at
any time, either orally or in writing, request confirmation from any Account
Debtor of the current amount and status of the Eligible Accounts upon which
such Account Debtor is obligated. 
Borrower authorizes Lender to discuss Borrower’s financial affairs and
business operations with any accountants, auditors, business consultants, or
other professional advisors employed by Borrower and authorizes such parties to
disclose to Lender Bank such financial and business information or reports
(including management letters) concerning Borrower as Lender may request.

 

(h)                                 Borrower agrees
not to permit the principal balance outstanding of the Loan at any one time to
exceed the Borrowing Base.

 

(i)                                     Any Advance
under the Loan shall be conclusively presumed to have been made to Borrower by
Lender under the terms and provisions hereof and shall be secured by all of the
Collateral, whether or not such Advance conforms in all respects to the terms
and provisions hereof. If Lender should (for the convenience of Borrower or for
any other reason) make Advances which would cause the unpaid principal amount
of the Loan to exceed the Borrowing Base, no such variance, change or departure
shall prevent any such Advance from being secured by the Collateral and
security created or intended to be created herein or in the Security
Instruments.  The Borrowing Base shall
not in any manner limit the extent or scope of the Collateral to the proceeds
of the Eligible Accounts and Eligible Inventory or limit the amount of the
Indebtedness to be secured.

 

14

 

(j)                                     The Borrowing
Base shall be calculated based upon the Revolving Loan Advance Request to be
provided by Borrower pursuant hereto and the Determination Date shall be the
date set forth in such Revolving Loan Advance Request, which date must be no
more than thirty (30) days prior to the date of the requested Advance.

 

(k)                                  On the Termination
Date Lender’s obligations to make any further Advances shall immediately
terminate.  Additionally, Lender’s
obligation to make any further Advances shall immediately terminate upon the
occurrence of an Event of Default.

 

SECTION 2.02             Letters of
Credit.

 

(a)                                  Prior to the
Termination Date, at the request of Borrower, Lender will issue commercial
Letters of Credit with a maximum maturity not to extend more than 12 months
beyond the Termination Date.  Each such
Letter of Credit will require drafts payable at sight or up to thirty (30) days
after sight.

 

(b)                                 The amount of
the Letters of Credit outstanding at any one time (including the drawn and
unreimbursed amounts of the Letters of Credit may not exceed Three Million
Dollars ($3,000,000.00).

 

(c)                                  In calculating
the principal amount outstanding under the Loan, the calculation shall include
the amount of any Letters of Credit outstanding, including amounts drawn on any
Letters of Credit and not yet reimbursed.

 

(d)                                 Borrower
agrees:

 

(i)                                     Any sum drawn
under a Letter of Credit may, at the option of Lender, be added to the
principal amount outstanding under the Loan.

 

(ii)                                  If there is an
Event of Default, Borrower shall immediately prepay or provide Lender with
sufficient liquid collateral acceptable to Lender in its reasonable discretion
so as to make Lender whole for any outstanding Letters of Credit.

 

(iii)                               The issuance of
any Letter of Credit and any amendment to a Letter of Credit is subject to
Lender’s written approval and must be in form and content satisfactory to
Lender and in favor of a beneficiary acceptable to Lender.

 

(iv)                              To sign Lender’s
form applications and agreements for Letters of Credit as required by Lender.

 

(v)                                 To pay any
issuance fees that Lender notifies Borrower will be charged for issuing and
processing Letters of Credit for Borrower.

 

(vi)                              To pay a Letter
of Credit fee at the rate of one and three fourths percent (1.75%) per annum on
the average daily amount of the sum of (A) all undrawn amounts of
outstanding Letters of Credit and (B) all amounts drawn under Letters of
Credit and not added to the balance of the Loan pursuant to subparagraph (i) above,
during the period from and including the Closing Date to but excluding the
later of the date on which the Commitment terminates and the date on which
Lender has no further exposure under any Letters of Credit.  Such fees accrued through and 

 

15

 

including the last day of March, June, September and
December of each year shall be payable on the third Business Day following
such last day, commencing on the first such date to occur after the Closing
Date; provided that all such fees shall be payable on the date on which the
Commitment terminates and any such fees accruing after the date on which the
Commitment terminates shall be payable on demand

 

(vii)                           To allow Lender
to automatically charge Borrower’s checking account for applicable fees,
discounts, and other charges.

 

SECTION 2.03             Interest.

 

(a)                                  The interest
rate applicable to the Loan shall be a rate per year equal to the greater of (i) the
LIBOR Rate plus three (3) percentage points and (ii) four and
one-half percent (4.5%) per annum.

 

(b)                                 Interest shall
be calculated on the basis of a year of 360 days for the actual number of days
elapsed.

 

(c)                                  Upon the
occurrence of any Event of Default, all Indebtedness, including any interest,
fees, or costs which are not paid when due, will at the option of Lender bear
interest at the Default Rate.  This may
result in compounding of interest.  This
will not constitute a waiver of any Default or Event of Default.

 

SECTION 2.04             Repayment Terms.

 

(a)                                  Borrower will
pay all unpaid accrued interest on the Loan on November 30, 2009 and then
on the same day of each month thereafter until payment in full of any principal
outstanding under the Loan.

 

(b)                                 Borrower will
repay in full any principal, interest or other charges outstanding under the
Loan no later than the Termination Date.

 

SECTION 2.05             Note.  The Loan
shall be evidenced by the Note, which shall be in substantially the form of Exhibit “G”
annexed hereto and made a part hereof. 
Lender is hereby authorized by Borrower to endorse on the schedule
attached to the Note the amount of each Advance under the Loan and of each
payment of principal received by Lender on account of the Loan, which
endorsement shall, in the absence of manifest error, be conclusive as to the
outstanding balance of the Loan; provided, however, that the failure to make
such notation with respect to any Advance or payment shall not limit or
otherwise affect the obligations of Borrower under this Agreement or the Note.

 

SECTION 2.06             Prepayments.

 

(a)                                  Borrower may
voluntarily prepay the outstanding principal amount of the Loan, in whole at
any time or in part from time to time, without premium or penalty.

 

(b)                                 In the event
the outstanding aggregate principal balance of the Loan at any time exceeds the
Borrowing Base, Borrower shall make a mandatory prepayment in an amount equal
to such excess.  Each such mandatory
prepayment shall be paid prior to the earlier of (i) two (2) Business
Days after Borrower shall have knowledge of such excess, or 

 

16

 

(ii) two (2) Business Days after
Lender shall have made demand that Borrower make such a mandatory
prepayment.  Notwithstanding the above,
Borrower hereby authorizes and directs Lender to withdraw the amount of such
excess from any account or accounts of Borrower maintained at Lender, in any
order and manner as Lender may determine in its sole discretion, without prior
Notice or demand to Borrower, upon and at any time after receipt by Lender of a
Borrowing Base Certificate reflecting such excess, and apply said sums to the
payment of such mandatory prepayment. 
All prepayments under this Section 2.06(b) shall be
made together with interest
accrued and unpaid to the date of such prepayment on the principal amount
prepaid.

 

SECTION 2.07             Proceeds. 
Borrower will not, directly or indirectly, use any part of the proceeds
of the Loan for the purpose of purchasing or carrying any margin stock within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System or to extend credit to any Person for the purpose of purchasing or
carrying any such margin stock, or for any purpose which violates, or is
inconsistent with, Regulation X of such Board of Governors.

 

SECTION 2.08             Fees.

 

(a)                                  Unused Portion
Fee.  Borrower agrees to pay a fee
on the Unused Portion, based on the average of the daily amount of the Unused
Portion.  The fee will be calculated at
1/4% per year.  Such fees accrued through
and including the last day of March, June, September and December of
each year shall be payable on the third Business Day following such last day,
commencing on the first such date to occur after the Closing Date; provided
that all such fees shall be payable on the Termination Date.

 

(b)                                 Waiver Fee.  If Lender, at its discretion, agrees to waive
or amend any terms of this Agreement, Borrower will, at Lender’s option, pay
Lender a fee for each waiver or amendment in an amount advised by Lender at the
time Borrower requests the waiver or amendment. 
Nothing in this paragraph shall imply that Lender is obligated to agree
to any waiver or amendment requested by Borrower.  Lender may impose additional requirements as
a condition to any waiver or amendment. 
Nothing in this paragraph shall imply that Lender is obligated to agree
to any waiver or amendment requested by Borrower.  Lender may impose additional requirements as
a condition to any waiver or amendment.

 

(c)                                  Late Fee.  To the extent permitted by Law, Borrower
agrees to pay a late fee in an amount not to exceed four percent (4%) of any
payment that is more than fifteen (15) days late.  The imposition and payment of a late fee shall
not constitute a waiver of Lender’s rights with respect to any Default.

 

SECTION 2.09             Expenses.

 

(a)                                  Borrower agrees
to immediately repay Lender for expenses that include, but are not limited to, filing,
recording and search fees, title insurance premiums and fees, appraisal fees,
title report fees, and documentation fees.

 

(b)                                 Borrower also
agrees to reimburse Lender for any expenses it incurs in the preparation,
negotiation and closing of this Agreement and any agreement or instrument
required by this Agreement.  Expenses
include, but are not limited to, reasonable attorneys’ fees.

 

17

 

(c)                                  Borrower agrees
to reimburse Lender for the cost of periodic field examinations of Borrower’s
books, records and Collateral, and appraisals of the Collateral, at such
intervals as Lender may reasonably require. 
The actions described in this paragraph may be performed by employees of
Lender or by independent appraisers.

 

SECTION 2.10             Disbursements,
Payments and Costs.

 

(a)                                  Disbursements
and Payments.

 

(i)                                     Each payment by
Borrower will be made in U.S. Dollars and immediately available funds by debit
to a deposit account, as described in this Agreement or otherwise authorized by
Borrower.  For payments not made by
direct debit, payments will be made by mail to the address shown on Borrower’s
statement or at one of Lender’s banking centers, or by such other method as may
be permitted by Lender.

 

(ii)                                  Lender may
honor instructions for Advances or repayments given by any one of the
Authorized Individuals.

 

(iii)                               For any payment
under this Agreement made by debit to a deposit account, Borrower will maintain
sufficient immediately available funds in the deposit account to cover each
debit.  If there are insufficient
immediately available funds in the deposit account on the date Lender enters
any such debit authorized by this Agreement, Lender may reverse the debit.

 

(b)                                 Telephone and
Telefax Authorization. 
Lender may honor telephone or telefax instructions for Advances or
repayments (and for Letters of Credit) given, or purported to be given, by any
one of the Authorized Individuals. 
Borrower will indemnify and hold Lender harmless from all liability,
loss, and costs in connection with any act resulting from telephone or telefax
instructions Lender reasonably believes are made by any Authorized
Individual.  This paragraph will survive
this Agreement’s termination, and will benefit Lender and its officers,
employees, and agents.

 

(c)                                  Borrower’s
Account.  Advances will be deposited in
account number 814006094 owned by Borrower, or such other of Borrower’s
accounts with Lender as designated in writing by Borrower.

 

(d)                                 Direct Debit.  Borrower agrees that Lender will debit
deposit account number 814006094 owned by Borrower, or such other of Borrower’s
accounts with Lender as designated in writing by Borrower, for all payments due
hereunder, under the Note, or under any of the other Loan Documents.

 

(e)                                  Business Days.  Unless otherwise provided in this Agreement,
all payments which would be due on a day which is not a Business Day will be
due on the next Business Day.  All
payments received on a day which is not a Business Day will be applied to the
Loan on the next Business Day.

 

(f)                                    Interest
Calculation.  Except as
otherwise stated in this Agreement, all interest and fees, if any, will be
computed on the basis of a 360-day year and the actual number of 

 

18

 

days elapsed. 
Installments of principal which are not paid when due under this
Agreement shall continue to bear interest until paid.

 

(g)                                 Default Rate.  Upon the occurrence of any Event of Default
or after maturity or after judgment has been rendered on any obligation under
this Agreement, all Indebtedness will at the option of Lender bear interest at
the Default Rate.  This may result in
compounding of interest.  This will not
constitute a waiver of any Default or Event of Default.

 

ARTICLE III

SECURITY

 

SECTION 3.01             Collateral.

 

(a)                                  Personal Property.  Pursuant to
the Security Agreement, all personal property of Borrower will secure the
Indebtedness and all other present and future obligations of Borrower to
Lender.  All personal property Collateral
securing any other present or future obligations of Borrower to Lender shall
also secure the Indebtedness.

 

(b)                                 Real Property.  Pursuant to the Mortgage, the Indebtedness
will also be secured by a first priority mortgage in favor of Lender covering
the property described in the Mortgage.

 

SECTION 3.02             Continuation; Perfection.  Borrower, at its expense, shall promptly and
diligently take all action necessary to maintain and preserve the Liens and
security interests granted in the Collateral pursuant to the Security
Instruments and shall either cause to be filed in appropriate offices of public
record, or shall cause to be promptly delivered to Lender, such statements,
instruments, assignments, documents or papers, as may be necessary to keep such
security interest continuously perfected in the Collateral, and shall execute
and acknowledge and deliver or cause to be done, executed, acknowledged and
delivered, all and every such further act, deed, conveyance, financing
statement, continuation statement, transfer and assurances Lender may from time
to time request for the better assuring, conveying, transferring and confirming
unto Lender the Collateral that is now and thereafter constituted, including
but not limited to appropriate landlord lien waivers in form and content
acceptable to Lender.  Notwithstanding
the above, Lender is hereby appointed Borrower’s attorney-in-fact, coupled with
an interest, to do, at Lender’s option and at Borrower’s expense, all acts and
things which Lender may deem necessary to perfect and continue perfecting the
security interest referred to by this Agreement and the Security Instruments
and to protect the Collateral.

 

SECTION 3.03             Lien Survives Until Full Repayment.  Borrower hereby acknowledges that the Liens
and security interests in all of the Collateral are granted to Lender as
security for the repayment of all of the Indebtedness.

 

19

 

ARTICLE IV

CONDITIONS PRECEDENT

 

SECTION 4.01             Conditions Precedent to Initial Advance.  The obligations of Lender to make the initial
Advance to Borrower are subject to the conditions precedent that Lender shall
have received on or before such Advance each of the following, in form and
substance satisfactory to Lender and its counsel:

 

(a)                                  Authorizations.  If Borrower or any other Loan Party is
anything other than a natural person, evidence that the execution, delivery and
performance by Borrower and/or such Loan Party of this Agreement and any
instrument or agreement required under this Agreement have been duly
authorized.

 

(b)                                 Good Standing.  Certificates of good standing for Borrower
and all Entity Loan Parties from their respective states of formation and from
any other state(s) in which any of them is required to qualify to conduct
its business.

 

(c)                                  Governing Documents.  If required by Lender, a copy of the
organizational and governing documents of Borrower and all Entity Loan Parties.

 

(d)                                 Incumbency and Signature Certificate of
Borrower and Each Loan Party.  A certificate (dated as of the date of this
Agreement) of the Secretary of Borrower and each Entity Loan Party certifying
the names and true signatures of the officers or managers of Borrower and such
Entity Loan Parties authorized to sign the Loan Documents to which it is a
party and the other documents to be delivered under this Agreement.

 

(e)                                  Note.  The Note
duly executed by Borrower.

 

(f)                                    Security Agreement; UCC Search.

 

(i)                                     The Security
Agreement.

 

(ii)                                  The Trademark
Assignment.

 

(iii)                               Evidence that
the security interests and Liens in favor of Lender are valid, enforceable,
properly perfected in a manner acceptable to Lender and prior to all others’
rights and interests, except those Lender consents to in writing.  The foregoing shall include, if required by
Lender, copies of Requests for Copies or Information (Form UCC-11)
identifying all of the financing statements on file with respect to Borrower
and any other Persons who own any of the Collateral in all jurisdictions
require by Lender, indicating that no party claims an interest in any of the
Collateral.

 

(g)                                 Other Loan Documents.  The Mortgage and all other Security
Instruments and other Loan Documents, duly executed and delivered.

 

(h)                                 Opinion of Counsel for Borrower.  A favorable opinion of Barber &
Bartz,  counsel for Borrower and the
other Loan Parties, in the form of Exhibit 4.01(h) hereto
attached.

 

20

 

(i)                                     Payment of Fees.  Payment of all fees and other amounts due and
owing to Lender, including without limitation payment of all accrued and unpaid
expenses incurred by Lender as required by Section 2.09.

 

(j)                                     Repayment of
Other Credit Agreement. 
Evidence that the existing credit facility with Bank of Oklahoma, N.A.
has been or will be repaid and cancelled on or before the first Advance.

 

(k)                                  Landlord
Agreement.  For any
personal property Collateral located on real property which is subject to a
mortgage or deed of trust or which is not owned by Borrower, an agreement from
the owner of the real property and the holder of any such mortgage or deed of
trust in form acceptable to Lender.

 

(l)                                     Insurance.  Evidence of insurance coverage as required by
this Agreement.

 

(m)                               Environmental
Information.  An
environmental site assessment prepared by a qualified third party consultant
approved by Lender concerning any potential toxic or hazardous condition with
respect to the real property Collateral, together with a certification signed
by Borrower regarding the environmental information provided to Lender.

 

(n)                                 Title Insurance.  An ALTA lender’s title insurance policy (on a
form acceptable to Lender and from a title company acceptable to Lender), for
at least $4,000,000.00, insuring Lender’s interest in the real property
Collateral, with only such exceptions as may be approved by Lender and together
with such endorsements as Lender may require.

 

(o)                                 Other Required
Documentation. Such other information, documents and assurances
as shall be reasonably requested by Lender.

 

ARTICLE V

COVENANTS

 

Borrower covenants and
agrees with Lender that from the date hereof and so long as this Agreement is
in effect (by extension, amendment or otherwise) and until payment in full of
all Indebtedness, termination of the Commitment and the performance of all
other obligations of Borrower under this Agreement, unless Lender shall
otherwise consent in writing:

 

SECTION 5.01             Maintenance of Existence.  Borrower shall preserve and maintain, and
cause each Entity Loan Party to preserve and maintain, its existence and good
standing in the jurisdiction of its organization, and Borrower shall qualify
and remain qualified, and cause each Entity Loan Party to qualify and remain
qualified, as a foreign entity in each jurisdiction in which such qualification
is required.

 

SECTION 5.02             Maintenance of Records.  Borrower shall keep, and cause each Loan
Party to keep, adequate records and books of account, in which complete entries
will be made in accordance with GAAP consistently applied, reflecting all
financial transactions of the applicable Person.

 

21

 

SECTION 5.03             Compliance with Applicable Laws.  Borrower will comply and cause all Loan Parties
to comply with the requirements of all applicable Laws and orders of any
Tribunal and obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its properties or to the conduct
of its business.

 

SECTION 5.04             Financial Statements and Reports.  Borrower will provide the following financial
information and statements in form and content acceptable to Lender, and such
additional information as requested by Lender from time to time.  Lender reserves the right, upon written
Notice to Borrower, to require Borrower to deliver financial information and
statements to Lender more frequently than otherwise provided below, and to use
such additional information and statements to measure any applicable financial
covenants in this Agreement.

 

(a)                                  Within 90 days
of the fiscal year end, the annual financial statements of Borrower, certified
and dated by an authorized financial officer. 
These financial statements must be audited (with an opinion satisfactory
to Lender) by a Certified Public Accountant acceptable to Lender.  Lender agrees that Borrower’s current
Certified Public Accountant is acceptable as of the date of this Agreement.

 

(b)                                 Within 45 days
of the period’s end (excluding the last period in each fiscal year), quarterly
financial statements of Borrower, certified and dated by an authorized
financial officer.  These financial
statements may be company-prepared.

 

(c)                                  Promptly, upon
sending or receipt, copies of any management letters and correspondence
relating to management letters, sent or received by Borrower to or from
Borrower’s auditor.  If no management
letter is prepared, Lender may, in its discretion, request a letter from such
auditor stating that no deficiencies were noted that would otherwise be
addressed in a management letter.

 

(d)                                 Copies of the
federal income tax return of each Loan Party, within 15 days of filing, and, if
requested by Lender, copies of any extensions of the filing date.

 

(e)                                  Copies of the Form 10-K
Annual Report and Form 10-Q Quarterly Report for Borrower, within ten (10)
days after the date of filing with the Securities and Exchange Commission.

 

(f)                                    With each
financial statement provided to Lender pursuant to subparagraphs (a) and (b) above
and within forty-five (45) days after the end of the fiscal year, a Compliance
Certificate signed by an authorized financial officer and setting forth (i) the
information and computations (in sufficient detail) to establish compliance
with all financial covenants at the end of the applicable period and (ii) whether
there existed as of such date and whether there exists as of the date of the
certificate, any Default or Event of Default and, if any such Default or Event
of Default, specifying the nature thereof and the action the party is taking
and proposes to take with respect thereto.

 

(g)                                 A Borrowing
Base Certificate as of the last day of each month and delivered to Lender
within twenty (20) days after month end.

 

(h)                                 A detailed
aging of Borrower’s Accounts by invoice or a summary aging by Account Debtor,
as specified by Lender, within twenty (20) days after the end of each month.

 

22

 

(i)                                     A listing of
the names and addresses of all Account Debtors obligated upon Borrower’s
Eligible Accounts within fifteen (15) days after demand therefore by Lender.

 

(j)                                     Promptly upon
Lender’s request, such other books, records, statements, lists of property and
accounts, budgets, forecasts or reports as to Borrower and as to each guarantor
of Borrower’s obligations to Lender as Lender may request.

 

SECTION 5.05             Dividends and Distributions.  Not to declare or pay any dividends,
redemptions or repurchases of stock, distributions and withdrawals (as
applicable) to its owners, except:

 

(a)                                  dividends payable in capital
stock; and

 

(b)                                 stock repurchases up to an
aggregate of $1,000,000.00 (which amount shall include any repurchases that may
have occurred prior to the Closing Date) under Borrower’s stock repurchase
program announced in its October 29, 2008 press release and its Form 8-K
filed October 31, 2008.

 

SECTION 5.06             Bank as Principal Depository.  To maintain Lender as its principal
depository bank, including for the maintenance of business, cash management,
operating and administrative deposit accounts.

 

SECTION 5.07             Other Debts.  Not to have
outstanding or incur (or allow any other Loan Party to have outstanding or
incur) any direct or contingent liabilities or lease obligations (other than
those to Lender), or become liable for the liabilities of others, without
Lender’s written consent.  This does not
prohibit:

 

(a)                                  Acquiring goods, supplies, or
merchandise on normal trade credit.

 

(b)                                 Endorsing negotiable
instruments received in the usual course of business.

 

(c)                                  Obtaining surety bonds in the
usual course of business.

 

(d)                                 Liabilities, lines of credit
and leases in existence on the date of this Agreement disclosed on the attached
Schedule 5.07.

 

(e)                                  Additional debts and lease
obligations for capital acquisitions permitted to be secured by purchase money
security interests pursuant to the terms of this Agreement.

 

SECTION 5.08             Other Liens.  Not to create,
assume, or allow any security interest or Lien (including judicial liens) on
property Borrower or any Loan Party now or later owns, except:

 

(a)                                  Liens and security interests
in favor of Lender.

 

(b)                                 Liens for taxes not yet due or
being contested in good faith.

 

(c)                                  Liens outstanding on the date
of this Agreement disclosed on Schedule
5.08/6.07.

 

23

 

(d)                                 Additional purchase money
security interests in assets acquired after the date of this Agreement, if the
total principal amount of debts secured by such Liens does not exceed
$250,000.00 at any one time.

 

SECTION 5.09             Maintenance of Assets.

 

(a)                                  Not to sell, assign, lease,
transfer or otherwise dispose of any part of Borrower’s business or Borrower’s
assets except in the ordinary course of Borrower’s business.

 

(b)                                 Not to sell, assign, lease,
transfer or otherwise dispose of any assets for less than fair market value, or
enter into any agreement to do so.

 

(c)                                  Not to enter into any sale and
leaseback agreement covering any of its fixed assets.

 

(d)                                 To maintain and preserve all
rights, privileges, and franchises Borrower now has.

 

(e)                                  To make any repairs, renewals,
or replacements to keep Borrower’s properties in good working condition.

 

SECTION 5.10             Investments.  Not to have any
existing, or make any new, investments in any individual or entity, or make any
capital contributions or other transfers of assets to any individual or entity,
except for:

 

(a)                                  Existing investments disclosed
to Lender in writing.

 

(b)                                 Investments in Borrower’s
current Subsidiaries.

 

(c)                                  Investments in any of the
following:

 

(i)                                     certificates of deposit;

 

(ii)                                  U.S. treasury bills and other
obligations of the federal government;

 

(iii)                               marketable securities
(including commercial paper, but excluding restricted stock and stock subject
to the provisions of Rule 144 of the Securities and Exchange Commission).

 

(d)                                 Investments in businesses or
assets not prohibited by Section 5.14(b).

 

(e)                                  Investments that do not exceed
an aggregate amount of $100,000.00 outstanding at any one time.

 

SECTION 5.11             Loans. Not to make any loans, advances or other extensions of
credit to any individual or entity, except for:

 

(a)                                  Existing extensions of credit
disclosed to Lender in writing.

 

24

 

(b)                                 Extensions of credit to
Borrower’s current subsidiaries.

 

(c)                                  Extensions of credit in the
nature of accounts receivable or notes receivable arising from the sale or
lease of goods or services in the ordinary course of business to non-affiliated
entities.

 

SECTION 5.12             Change of Management.   Not to make
any substantial change in the present executive or management personnel of
Borrower.

 

SECTION 5.13             Change in Control.  Not to
cause, permit, or suffer to occur either of the following:

 

(a)                                  the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of
the Securities and Exchange Commission thereunder as in effect on the date
hereof), of stock representing more than twenty-five percent
(25%) of the aggregate ordinary voting power represented by the issued and
outstanding stock of Borrower; or

 

(b)                                 occupation of a majority of
the seats (other than vacant seats) on the board of directors of Borrower by
Persons who were neither (i) nominated by the board of directors of
Borrower nor (ii) appointed by directors so nominated.

 

SECTION 5.14             Additional Negative Covenants.  Not to, without Lender’s written consent:

 

(a)                                  Enter into any consolidation,
merger, or other combination, or become a partner in a partnership, a member of
a joint venture, or a member of a limited liability company.

 

(b)                                 Acquire or purchase a business
or its assets for a consideration, including assumption of direct or contingent
debt, in excess of Two Million Dollars ($2,000,000.00) in the aggregate after
the Closing Date.  Before making any such
acquisition, Borrower must obtain the prior, effective written consent or
approval of the board of directors or equivalent governing body of the business
being acquired.

 

(c)                                  Engage in any business
activities substantially different from Borrower’s present business.

 

(d)                                 Liquidate or dissolve Borrower’s
business.

 

(e)                                  Voluntarily suspend its
business for more than five (5) days in any thirty (30) day period.

 

SECTION 5.15             Notices to Lender.  To promptly
notify Lender in writing of:

 

(a)                                  Any lawsuit over Fifty
Thousand Dollars ($50,000.00) against Borrower or any Loan Party.

 

(b)                                 Any substantial dispute
between any Governmental Authority and Borrower or any Loan Party.

 

25

 

(c)                                  Any Default or Event of
Default.

 

(d)                                 Any material adverse change in
Borrower’s or any Loan Party’s business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the Loan.

 

(e)                                  Any change in Borrower’s or
any Loan Party’s name, legal structure, principal residence (for an
individual), state of registration (for a registered entity), place of
business, or chief executive office if Borrower or any Loan Party has more than
one place of business.

 

SECTION 5.16             Insurance.

 

(a)                                  General Business Insurance.  To maintain insurance satisfactory to Lender
as to amount, nature and carrier covering property damage (including loss of
use and occupancy) to any of Borrower’s and all other Loan Parties’ properties,
business interruption insurance, public liability insurance including coverage
for contractual liability, product liability and workers’ compensation, and any
other insurance which is usual for Borrower’s business.  Each policy shall provide for at least thirty
(30) days prior notice to Lender of any cancellation thereof.

 

(b)                                 Insurance Covering Collateral.  To maintain all risk property damage
insurance policies (including without limitation windstorm coverage, and
hurricane coverage as applicable) covering the tangible property comprising the
Collateral.  Each insurance policy must
be for the full replacement cost of the Collateral and include a replacement
cost endorsement.  The insurance must be
issued by an insurance company acceptable to Lender and must include a lender’s
loss payable endorsement in favor of Lender in a form acceptable to Lender.

 

(c)                                  Evidence of Insurance.  Upon the
request of Lender, to deliver to Lender a copy of each insurance policy, or, if
permitted by Lender, a certificate of insurance listing all insurance in force.

 

SECTION 5.17             Compliance with Laws.  To comply
with the Laws (including any fictitious or trade name statute), regulations, and
orders of any Governmental Authority with authority over Borrower’s
business.  Lender shall have no
obligation to make any advance to Borrower except in compliance with all
applicable Laws and regulations and Borrower shall fully cooperate with Lender in
complying with all such applicable Laws and regulations.

 

SECTION 5.18             ERISA Plans.  Promptly during
each year, to pay and cause any Subsidiaries to pay contributions adequate to
meet at least the minimum funding standards under ERISA with respect to each
and every Plan; file each annual report required to be filed pursuant to ERISA
in connection with each Plan for each year; and notify Lender within ten (10) days
of the occurrence of any Reportable Event that might constitute grounds for termination
of any capital Plan by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States District Court of a trustee to
administer any Plan.  “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to
time.  Capitalized terms in this
paragraph shall have the meanings defined within ERISA.

 

26

 

SECTION 5.19             Books and Records.  To maintain
adequate books and records.

 

SECTION 5.20             Audits.  To allow Lender
and its agents to inspect Borrower’s properties and examine, audit, and make
copies of books and records at any reasonable time.  If any of Borrower’s properties, books or
records are in the possession of a third party, Borrower authorizes that third
party to permit Lender or its agents to have access to perform inspections or
audits and to respond to Lender’s requests for information concerning such
properties, books and records.

 

SECTION 5.21             Perfection of Liens.  To help
Lender perfect and protect its security interests and Liens, and reimburse it
for related costs it incurs to protect its security interests and Liens.

 

SECTION 5.22             Cooperation.  To take any
action reasonably requested by Lender to carry out the intent of this
Agreement.

 

SECTION 5.23             Flood and Other Insurance.  If any improved real property Collateral is
located in a designated flood hazard area, or becomes located in a designated
flood hazard area after the date of this Agreement as a result of any
re-mapping of flood insurance maps by the Federal Emergency Management Agency,
Borrower will be required to maintain flood insurance on the real property and
on any tangible personal property Collateral located on the real property.  In addition, Borrower shall maintain such
other insurance as Lender may require to comply with Lender’s regular
requirements and practices in similar transactions, which may include
earthquake insurance and insurance covering acts of terrorism.

 

SECTION 5.24             Inspections and Appraisals of Real Property.  To allow Lender and its agents to visit the
real property Collateral at any reasonable time for the purpose of inspecting
the real property and conducting appraisals, and deliver to Lender any
financial or other information concerning the real property as Lender may
request.

 

SECTION 5.25             Use or Leasing of the Real Property Collateral.  To occupy the real property Collateral for
the conduct of its regular business. 
Borrower will not change its intended use of such real property without
Lender’s prior written approval.

 

SECTION 5.26             Indemnity Regarding Use of Real Property.  To indemnify, defend with counsel acceptable
to Lender, and hold Lender harmless from and against all liabilities, claims,
actions, damages, costs and expenses (including all legal fees and expenses of
Bank’s counsel) arising out of or resulting from the construction of any
improvements on the real property Collateral, or the ownership, operation, or
use of the real property Collateral, whether such claims are based on theories
of derivative liability, comparative negligence or otherwise.  Borrower’s obligations to Lender under this
Paragraph shall survive termination of this Agreement and repayment of Borrower’s
obligations to Lender under this Agreement, and shall also survive as unsecured
obligations after any acquisition by Lender of the real property Collateral or
any part of it by foreclosure or any other means.

 

SECTION 5.27             Hazardous Substances; Real Property Collateral.

 

(a)                                  Indemnity Regarding Hazardous Substances.  Borrower agrees to indemnify and hold Lender
harmless from and against all liabilities, claims, actions, foreseeable and 

 

27

 

unforeseeable consequential damages, costs and expenses
(including sums paid in settlement of claims and all consultant, expert and
legal fees and expenses of Lender’s counsel) or loss directly or indirectly
arising out of or resulting from any of the following:

 

(i)                                     Any hazardous substance being
present at any time, whether before, during or after any construction, in or
around any part of the real property Collateral (the “Real Property”), or in
the soil, groundwater or soil vapor on or under the Real Property, including
those incurred in connection with any investigation of site conditions or any
clean-up, remedial, removal or restoration work, or any resulting damages or
injuries to the person or property of any third parties or to any natural
resources.

 

(ii)                                  Any use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. 
This indemnity will apply whether the hazardous substance is on, under
or about any of Borrower’s property or operations or property leased to
Borrower, whether or not the property has been taken by Lender as collateral.

 

Upon
demand by Lender, Borrower will defend any investigation, action or proceeding
alleging the presence of any hazardous substance in any such location, which
affects the Real Property or which is brought or commenced against Lender,
whether alone or together with Borrower or any other person, all at Borrower’s
own cost and by counsel to be approved by Lender in the exercise of its
reasonable judgment.  In the alternative,
Lender may elect to conduct its own defense at the expense of Borrower.  Borrower’s obligations to Lender under this
Article, except the obligation to give Notices to Lender, shall survive
termination of this Agreement, repayment of Borrower’s obligations to Lender
under this Agreement, and foreclosure of the deed of trust or mortgage
encumbering the Real Property or similar proceedings.

 

(b)                                 Representation and Warranty Regarding Hazardous Substances.  Before signing this Agreement, Borrower
researched and inquired into the previous uses and ownership of the Real
Property.  Based on that due diligence,
Borrower represents and warrants that to the best of its knowledge, no
hazardous substance has been disposed of or released or otherwise exists in,
on, under or onto the Real Property, except as Borrower has disclosed to Lender
in writing.

 

(c)                                  Compliance Regarding Hazardous Substances.  Borrower has complied, and will comply and
cause all occupants of the Real Property to comply, with all current and future
Laws, regulations and ordinances or other requirements of any Governmental
Authority relating to or imposing liability or standards of conduct concerning
protection of health or the environment or hazardous substances (“Environmental
Laws”).  Borrower shall promptly, at
Borrower’s sole cost and expense, take all reasonable actions with respect to
any hazardous substances or other environmental condition at, on, or under the
Real Property necessary to (i) comply with all applicable Environmental
Laws; (ii) allow continued use, occupation or operation of the Real
Property; or (iii) maintain the fair market value of the Real
Property.  Borrower acknowledges that
hazardous substances may permanently and materially impair the value and use of
the Real Property.

 

28

 

(d)                                 Notices Regarding Hazardous Substances.  Until full repayment of the Indebtedness in
full and termination of the Commitment, Borrower will promptly notify Lender in
writing if it knows, suspects or believes there may be any hazardous substance
in or around the Real Property, or in the soil, groundwater or soil vapor on or
under the Real Property, or that Borrower or the Real Property may be subject
to any threatened or pending investigation by any governmental agency under any
current or future Law, regulation or ordinance pertaining to any hazardous
substance.

 

(e)                                  Site Visits, Observations and Testing.  Lender and its agents and representatives
will have the right at any reasonable time, after giving reasonable Notice to
Borrower, to enter and visit the Real Property and any other locations where
any personal property collateral securing this Agreement is located, for the
purposes of observing the Real Property and the personal property collateral,
taking and removing environmental samples, and conducting tests on any part of
the Real Property.  Borrower shall
reimburse Lender on demand for the costs of any such environmental
investigation and testing.  Lender will
make reasonable efforts during any site visit, observation or testing conducted
pursuant this paragraph to avoid interfering with Borrower’s use of the Real
Property and the personal property collateral. 
Lender is under no duty, however, to visit or observe the Real Property
or the personal property collateral or to conduct tests, and any such acts by
Lender will be solely for the purposes of protecting Lender’s security and
preserving Lender’s rights under this Agreement.  No site visit, observation or testing or any
report or findings made as a result thereof (“Environmental Report”) (i) will
result in a waiver of any default of Borrower; (ii) impose any liability
on Lender; or (iii) be a representation or warranty of any kind regarding
the Real Property or the personal property collateral (including its condition
or value or compliance with any Laws) or the Environmental Report (including
its accuracy or completeness).  In the
event Lender has a duty or obligation under applicable Laws, regulations or
other requirements to disclose an Environmental Report to Borrower or any other
party, Borrower authorizes Lender to make such a disclosure.  Lender may also disclose an Environmental
Report to any regulatory authority, and to any other parties as necessary or
appropriate in Lender’s judgment. 
Borrower further understands and agrees that any Environmental Report or
other information regarding a site visit, observation or testing that is
disclosed to Borrower by Lender or its agents and representatives is to be
evaluated (including any reporting or other disclosure obligations of Borrower)
by Borrower without advice or assistance from Lender.

 

(f)                                    Definition of Hazardous Substance.  “Hazardous substance” means any substance,
material or waste that is or becomes designated or regulated as “toxic,” “hazardous,”
“pollutant,” or “contaminant” or a similar designation or regulation under any
current or future federal, state or local Law (whether under common Law,
statute, regulation or otherwise) or judicial or administrative interpretation
of such, including without limitation petroleum or natural gas.

 

SECTION 5.28             Financial Covenants.

 

(a)                                  Tangible Net
Worth.  Borrower’s Tangible Net Worth
shall at all times be no less than $10,000,000.00.

 

(b)                                 Funded Debt to EBITDA.  Borrower shall maintain a ratio of Funded
Debt to EBITDA not exceeding 2.50:1.0.  “Funded
Debt” means all outstanding Debt for borrowed 

 

29

 

money, all Debt
comprised of guaranties of money borrowed by any Persons other than Borrower
and other interest-bearing liabilities, including current and long term Debt.
This ratio will be calculated on a rolling four quarters basis at the end of
each fiscal quarter, using the results of the twelve-month period ending at the
end of such fiscal quarter.

 

(c)                                  Fixed Charge Coverage Ratio.  Borrower shall maintain a Fixed Charge
Coverage Ratio of no less than 1.25:1.0. 
“ Fixed Charge Coverage Ratio” means the ratio of (a) EBITDA,
to (b) the sum of interest expense, lease expense, the current portion of
long-term liabilities, the current portion of capitalized lease obligations and
all expenditures for stock repurchases allowed pursuant to Section 5.05(b).  This ratio will be calculated on a rolling
four quarters basis at the end of each fiscal quarter, using the results of the
twelve-month period ending at the end of such fiscal quarter.  The current portion of long-term liabilities
will be measured as of the last day of the calculation period.

 

SECTION 5.29             Change of Fiscal Year.  Borrower will not change its fiscal year from
its present fiscal year.

 

SECTION 5.30             Assignment of
Claims Act.  Borrower
will promptly, upon request by Lender, comply with any and all of the
requirements of the Assignment of Claims Act (Title 31 Section 3727 and
Title 41 Section 15 of the United States Code), where such statutes are
applicable to any Eligible Accounts, and shall take all such other action as
may be necessary to facilitate the direct assignment to Lender of the payments
due or to become due under any Eligible Accounts which has at least Twenty-Five
Thousand Dollars ($25,000.00) in payment obligations to Borrower and which has
a duration of at least three (3) months, and such further action as may be
necessary to facilitate the creation and perfection of Lender’s security
interest in such payments.

 

SECTION 5.31             Merchantable
Inventory; Compliance with FLSA.  All Inventory which is included in the
Borrowing Base shall be of good and merchantable quality and free from defects,
and shall be produced in compliance with the requirements of the U.S. Fair
Labor Standards Act (29 U.S.C. §§201 et seq.).

 

SECTION 5.32             Additional
Collateral; Further Assurances.

 

(a)                                  Subject to
applicable law, Borrower shall cause each of its Subsidiaries formed or
acquired after the date of this Agreement in accordance with the terms of this
Agreement (and XETAPLAN, Inc., if it acquires any material assets or
begins any materials operations, in which case it shall be considered a
Subsidiary formed or acquired after the date of this Agreement for purposes of
this Section 5.32) to become a Loan Party by executing a Joinder
Agreement in form acceptable to Lender and a form of Guaranty Agreement
acceptable to Lender.  Upon execution and
delivery thereof, each such Person (i) shall automatically have all of the
rights, benefits, duties, and obligations in such capacity under the Loan
Documents and (ii) will grant Liens to Lender in any property of such
Subsidiary, including any parcel of real property owned by such Subsidiary.

 

(b)                                 Borrower and
each Subsidiary that is a Loan Party will cause (i) 100% of the issued and
outstanding Equity Interests of each of its domestic Subsidiaries and (ii) 65%  of the issued and outstanding Equity
Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2))
and 100% of the issued and outstanding Equity Interests not 

 

30

 

entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2)) in each foreign Subsidiary directly
owned by the Borrower or any domestic Subsidiary to be subject at all times to
a first priority, perfected Lien in favor of Lender pursuant to the terms and
conditions of the Loan Documents or other security documents as Lender shall
reasonably request.

 

(c)                                  If any material
assets (including any real property or improvements thereto or any interest
therein) are acquired by Borrower or any Subsidiary that is a Loan Party after
the date of this Agreement (other than assets constituting Collateral under the
Security Instruments that become subject to the Lien in favor of Lender upon
acquisition thereof), Borrower will notify Lender thereof, and, if requested by
Lender, Borrower will cause such assets to be subjected to a Lien securing the
Indebtedness and will take, and cause the applicable Subsidiary(s) to
take, such actions as shall be necessary or reasonably requested by Lender to
grant and perfect such Liens, including actions described in paragraph (a) and
(b) of this Section, all at the expense of the Loan Parties.

 

ARTICLE VI

REPRESENTATIONS AND
WARRANTIES

 

To induce Lender to enter
into this Agreement and to make the Loan under the provisions hereof, and in
consideration thereof, Borrower represents, warrants and covenants as follows:

 

SECTION 6.01             Organization, Good Standing, and Due Qualification.  Borrower and each Entity Loan Party (i) is
duly organized, validly existing, and in good standing under the Laws of the
jurisdiction of its formation, (ii) has the power and authority to own its
assets and to transact the business in which it is now engaged or proposed to
be engaged, and (iii) is duly qualified as a foreign entity and in good
standing under the Laws of each other jurisdiction in which such qualification
is required.

 

SECTION 6.02             Authorization.  This Agreement, and any instrument or
agreement required hereunder (including without limitation all Loan Documents),
are within each Loan Party’s powers, have been duly authorized, and do not
conflict with any Entity Loan Party’s organizational papers.

 

SECTION 6.03             Enforceable
Agreement.  This
Agreement is a legal, valid and binding agreement of Borrower, enforceable
against Borrower in accordance with its terms, and any instrument or agreement
required hereunder, when executed and delivered, will be similarly legal,
valid, binding and enforceable.

 

SECTION 6.04             No Conflicts.  The execution, delivery, and performance by
the Loan Parties of the Loan Documents do not and will not (1) require any
consent or approval not already obtained, (2) violate any provision of any
Law, rule, regulation (including, without limitation, Regulations U and X of
the Board of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination, or award presently in effect having
applicability to any Loan Party, (3) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease, or instrument to which any Loan Party is a party or by which it or its
properties may be bound or affected, (4) result in, or require, the
creation or imposition of any Lien, upon or with respect to any of the
properties now owned or hereafter 

 

31

 

acquired by such Loan Party, (5) cause such
Loan Party to be in default under any such Law, rule, regulation, order, writ,
judgment, injunction, decree, determination, or award or any such indenture,
agreement, lease, or instrument.

 

SECTION 6.05             Financial
Information.  All
financial and other information that has been or will be supplied to Lender is
sufficiently complete to give Lender accurate knowledge of Borrower’s (and any
other Loan Party’s) financial condition, including all material contingent
liabilities.  Since the date of the most
recent financial statement provided to Lender, there has been no material
adverse change in the business condition (financial or otherwise), operations,
properties or prospects of any Loan Party.

 

SECTION 6.06             Lawsuits.  There is no lawsuit, tax claim or other
dispute pending or threatened against Borrower which, if lost, would impair
Borrower’s financial condition or ability to repay the Loan, except as have
been disclosed in writing to Lender.

 

SECTION 6.07             Collateral.  All Collateral is owned by the grantor of the
applicable Lien or security interest free of any title defects or any Liens or
interests of others, except those Liens and interests set forth on the attached
Schedule 5.08/6.07.

 

SECTION 6.08             Permits,
Franchises.  Borrower
possesses all permits, memberships, franchises, contracts and licenses required
and all trademark rights, trade name rights, patent rights, copyrights, and
fictitious name rights necessary to enable it to conduct the business in which
it is now engaged.

 

SECTION 6.09             Other
Obligations.  Borrower is
not in default on any obligation for borrowed money, any purchase money
obligation or any other material lease, commitment, contract, instrument or
obligation, except as have been disclosed in writing to Lender.

 

SECTION 6.10             Tax Matters.  Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year and all taxes due
have been paid, except as have been disclosed in writing to Lender.

 

SECTION 6.11             No Event of
Default.  There is no event which is, or
with notice or lapse of time or both would be, an Event of Default.

 

SECTION 6.12             Insurance.  Borrower has obtained, and maintained in
effect, the insurance coverage required by this Agreement.

 

SECTION 6.13             ERISA Plans.

 

(a)                                  Each Plan
(other than a multiemployer plan) is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other federal or state
Law.  Each Plan has received a favorable
determination letter from the IRS and to the best knowledge of Borrower,
nothing has occurred which would cause the loss of such qualification.  Borrower has fulfilled its obligations, if
any, under the minimum funding standards of ERISA and the Code with respect to
each Plan, and has not incurred any liability with respect to any Plan under
Title IV of ERISA.

 

(b)                                 There are no
claims, lawsuits or actions (including by any Governmental Authority), and
there has been no prohibited transaction or violation of the fiduciary 

 

32

 

responsibility rules, with respect to any
Plan which has resulted or could reasonably be expected to result in a material
adverse effect.

 

(c)                                  With respect to
any Plan subject to Title IV of ERISA:

 

(i)                                     No reportable
event has occurred under Section 4043(c) of ERISA for which the PBGC
requires 30-day notice.

 

(ii)                                  No action by
Borrower or any ERISA Affiliate to terminate or withdraw from any Plan has been
taken and no notice of intent to terminate a Plan has been filed under Section 4041
of ERISA.

 

(iii)                               No termination
proceeding has been commenced with respect to a Plan under Section 4042 of
ERISA, and no event has occurred or condition exists which might constitute
grounds for the commencement of such a proceeding.

 

(d)                                 The following
terms have the meanings indicated for purposes of this Agreement:

 

(i)                                     “Code” means
the Internal Revenue Code of 1986, as amended from time to time.

 

(ii)                                  “ERISA” means
the Employee Retirement Income Security Act of 1974, as amended from time to
time.

 

(iii)                               “ERISA
Affiliate” means any trade or business (whether or not incorporated) under
common control with Borrower within the meaning of Section 414(b) or (c) of
the Code.

 

(iv)                              “PBGC” means
the Pension Benefit Guaranty Corporation.

 

(v)                                 “Plan” means a
pension, profit-sharing, or stock bonus plan intended to qualify under Section 401(a) of
the Code, maintained or contributed to by Borrower or any ERISA Affiliate,
including any multiemployer plan within the meaning of Section 4001(a)(3) of
ERISA.

 

SECTION 6.14             Location of
Borrower.  The place
of business of Borrower (or, if Borrower has more than one place of business,
its chief executive office) is located at 1814 W. Tacoma Street, Broken Arrow,
Oklahoma 74012-1406.

 

SECTION 6.15             Investment Company Act Representation.  Borrower is not an “investment company” or a
company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended.

 

SECTION 6.16             Fiscal Year.  The fiscal year of Borrower ends October 31.

 

SECTION 6.17             Subsidiaries.  Borrower has no Subsidiaries except XETAPLAN, Inc.,
an Oklahoma corporation, which has no material assets and no ongoing
operations.

 

33

 

SECTION 6.18             Other
Names, Etc.  The following is a list
of all other names (including trade names or similar appellations) used by
Borrower, or any other business or organization to which Borrower became the
successor by merger, consolidation, acquisition, change in form, nature or
jurisdiction of organization or otherwise, now or at any time during the past
five years:  Summatis.

 

SECTION 6.19             Other
Locations.

 

The
following are all other places of business and other locations of each Loan
Party in the United States of America not listed in Section 6.14
above where any of the Collateral consisting of inventory or equipment is
located:

 

	
  Loan
  Party

  	
   

  	
  Name/Address

  	
   

  	
  City
  and/or County

  	
   

  	
  State

  
	
  Borrower

  	
   

  	
  NEW JERSEY, Marlton  

  4003 H Lincoln Drive West  

  4003 Suite H

  	
   

  	
  Marlton

  	
   

  	
  NJ

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  OREGON, Gresham  

  Gentry Building  

  Suite 210-4  

  200 NE 2nd

  	
   

  	
  Gresham

  	
   

  	
  OR

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  TEXAS, Dallas  

  2730 N. Stemmons Freeway  

  Suite 511, West Tower

  	
   

  	
  Dallas

  	
   

  	
  TX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  TEXAS, Richardson (Samsung)  

  1601 Glenville Drive  

  Suite 103

  	
   

  	
  Richardson

  	
   

  	
  TX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  TEXAS, Houston  

  One Cornerstone Plaza  

  3845 FM 1960 West  

  Suite 277

  	
   

  	
  Houston

  	
   

  	
  TX

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  VIRGINIA, Reston  

  1800 Alexander Bell Drive

  	
   

  	
  Reston

  	
   

  	
  VA

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  WASHINGTON, Seattle  

  13228 NE 20th Street  

  Suite 500

  	
   

  	
  Bellevue

  	
   

  	
  WA

  

 

SECTION 6.20             Lessees,
Consignees, Bailees, Etc.  The
following are the names and addresses (and other information in regard to) of
all Persons other than each Loan Party, such as lessees, consignees,
warehousemen, bailees or purchasers of chattel paper, which have possession or
are intended to have possession of any of the Collateral consisting of
instruments, chattel paper, inventory or equipment:

 

34

 

	
  Affected

  Loan 

  Party

  	
   

  	
  Name
  and Address

  	
   

  	
  City
  and/or 

  County

  	
   

  	
  State

  	
   

  	
  Description
  of Collateral

  
	
  Borrower

  	
   

  	
  CK-Miami Dade Public 

  Schools-Miami  

  10451 N.W. 28th St.  

  Ste. F101

  	
   

  	
  Doral

  	
   

  	
  FL

  	
   

  	
  New systems being staged (prepped) for local installation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  CK-Tulsa Public Schools-

  Tulsa  

  3027 S. New Haven

  	
   

  	
  Tulsa

  	
   

  	
  OK

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  CK-St. John Tulsa  

  1923 S. Utica Ave.

  	
   

  	
  Tulsa

  	
   

  	
  OK

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  CK-City of Joplin-Joplin  

  303 East Third Street

  	
   

  	
  Joplin

  	
   

  	
  MO

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  CK-Bellevue  

  13228 NE 20th St.  

  Suite 500

  	
   

  	
  Bellevue

  	
   

  	
  WA

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Atlanta Remote Warehouse  

  15 Royal Drive

  	
   

  	
  Forrest Park

  	
   

  	
  GA

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Boston Remote Warehouse  

  577 Main St.

  	
   

  	
  Hudson

  	
   

  	
  MA

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Charlotte Remote Warehouse  

  552 Griffith Road

  	
   

  	
  Charlotte

  	
   

  	
  NC

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Chicago Remote Warehouse  

  1270 Kirk St.

  	
   

  	
  Elk Grove Village

  	
   

  	
  IL

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Cleveland Remote Warehouse  

  16172 Imperial Pkwy

  	
   

  	
  Strongsville

  	
   

  	
  OH

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Dallas Remote Warehouse  

  1705 Wallace Drive

  	
   

  	
  Carollton

  	
   

  	
  TX

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Denver Remote Warehouse  

  2355 Delgany St.

  	
   

  	
  Denver

  	
   

  	
  CO

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Detroit Remote Warehouse  

  1895 Stephenson Hwy.

  	
   

  	
  Troy

  	
   

  	
  MI

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Louisville Remote Warehouse  

  1017 Industrial Blvd.

  	
   

  	
  Louisville

  	
   

  	
  KY

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Miami Remote Warehouse  

  386 NE 191st St.

  	
   

  	
  Miami

  	
   

  	
  FL

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Minneapolis Remote Warehouse  

  2280 Terminal Road

  	
   

  	
  Roseville

  	
   

  	
  MN

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  New Jersey Remote Warehouse  

  10 Old Bloomfield Avenue

  	
   

  	
  Pine Brook

  	
   

  	
  NJ

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  OK City Remote Warehouse  

  1001 Enterprise Ave. Bay 22

  	
   

  	
  OK City

  	
   

  	
  OK

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Orlando Remote Warehouse  

  9600 Satellite Blvd.  

  Ste. 100

  	
   

  	
  Orlando

  	
   

  	
  FL

  	
   

  	
  Spare parts

  

 

35

 

	
  Affected

  Loan 

  Party

  	
   

  	
  Name
  and Address

  	
   

  	
  City
  and/or 

  County

  	
   

  	
  State

  	
   

  	
  Description
  of Collateral

  
	
  Borrower

  	
   

  	
  Southern CA Remote 

  Warehouse  

  3731 W. Warner Avenue

  	
   

  	
  Santa Ana

  	
   

  	
  CA

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Syracuse Remote Warehouse  

  6816 Ellicott Drive

  	
   

  	
  East Syracuse

  	
   

  	
  NY

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  D.C. Remote Warehouse  

  10233 Southard Drive

  	
   

  	
  Beltsville

  	
   

  	
  MD

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  St. Louis Warehouse  

  1111 Horan Drive, Suite I-J

  	
   

  	
  Fenton

  	
   

  	
  MO

  	
   

  	
  Primary warehouse — new systems being staged for installation; new
  components held for resale; refurbished parts held for resale and to support
  field services

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Tulsa Warehouse  

  1814 W. Tacoma

  	
   

  	
  Broken Arrow

  	
   

  	
  OK

  	
   

  	
  Spare parts, new and refurbished, call accounting systems,
  installation materials / supplies, new systems being staged for local
  installations

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  c/o Atlanta Logistics & 

  Recovery  

  Att: James Call  

  15 Royal Drive

  	
   

  	
  Forrest Park

  	
   

  	
  GA

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  Attn: Kirk Neison  

  577 Main St.

  	
   

  	
  Hudson

  	
   

  	
  MA

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  c/o Dial 4 Delivery  

  Attn: Julie Sayavong  

  552 Griffith Road

  	
   

  	
  Charlotte

  	
   

  	
  NC

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  c/o Speedy Messenger & Delivery  

  Attn: Greg Hubbard  

  2355 Delgany St.

  	
   

  	
  Denver

  	
   

  	
  CO

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  c/o A-1 International Courier 

  Service, Inc.  

  Attn: Karen Dodd  

  1895 Stephenson Hwy.

  	
   

  	
  Troy

  	
   

  	
  MI

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  Attn: Matt Sanders  

  1017 Industrial Blvd.

  	
   

  	
  Louisville

  	
   

  	
  KY

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  c/o Baron Messenger  

  Attn: Ricky De Armas  

  386 NE 191st St.

  	
   

  	
  Miami

  	
   

  	
  FL

  	
   

  	
  Spare parts

  

 

36

 

	
  Affected

  Loan 

  Party

  	
   

  	
  Name
  and Address

  	
   

  	
  City
  and/or 

  County

  	
   

  	
  State

  	
   

  	
  Description
  of Collateral

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  c/o Express Messenger System  

  Attn: Dan Comstock  

  2280 Terminal Road

  	
   

  	
  Roseville

  	
   

  	
  MN

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  Att: Javier Perez  

  10 Old Bloomfield Avenue

  	
   

  	
  Pine Brook

  	
   

  	
  NJ

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  c/o Freedom Express  

  Attn: Shane Cooke  

  1001 Enterprise Ave., Bay 22

  	
   

  	
  Oklahoma City

  	
   

  	
  OK

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  c/o Courier Express  

  Attn: Orlando Linanes  

  9600 Satellite Blvd., Ste. 100

  	
   

  	
  Orlando

  	
   

  	
  FL

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  c/o Orange Courier  

  Attn: Radu Mihalescu  

  3731 W. Warner Avenue

  	
   

  	
  Santa Ana

  	
   

  	
  CA

  	
   

  	
  Spare parts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower

  	
   

  	
  Flash Global Logistics  

  c/o Trans Logistix  

  Attn: Seth Gibson  

  10233 Southard Drive

  	
   

  	
  Beltsville

  	
   

  	
  MD

  	
   

  	
  Spare parts

  

 

SECTION 6.21             Prime
Government Receivables and Sub Contractor or Other Government Receivables.  With respect to all Prime Government
Receivables and Sub Contractor or Other Government Receivables, to the best of
Borrower’s knowledge (a) there has been no default or cancellation with
respect thereto, (b) the Prime Government Receivables and Sub Contractor
or Other Government Receivables are not dependent on any future appropriations,
(c) the assignment of all sums due thereunder does not violate any Law,
statute, or regulation and is permissible, (d) Borrower has the right to
assign all monies due thereunder, (e) any prior assignment with respect
thereto has been terminated; and (f) Borrower is not subject to any
pending or threatened debarment proceedings.

 

ARTICLE VII

EVENTS OF DEFAULT

 

SECTION 7.01             Events of Default.  One or more of the following events shall
constitute an “Event of Default”:

 

(a)           Borrower shall default in
the payment when due of any principal of or interest on the Loan, as herein
provided, or any fees or other amount payable by it hereunder or under any
Security Instrument; or

 

37

 

(b)           Borrower shall default in
the payment when due of any principal of or interest on any of its other Debt
aggregating $50,000.00 or more, or any event specified in any note, agreement,
indenture or other document evidencing or relating to any such Debt shall
occur, if the effect of such event is to cause, or (with the giving of any
notice or the lapse of time or both) to permit the holder or holders of such
Debt (or a trustee or agent on behalf of such holder or holders) to cause, such
Debt to become due prior to its stated maturity; or

 

(c)           Any representation, warranty
or certification made or deemed made herein or in any Security Instrument by
any Loan Party, or any certificate furnished to Lender pursuant to the
provisions hereof or any Security Instrument, shall prove to have been false or
misleading as of the time made or furnished in any material respect; or

 

(d)           Borrower shall default in
the performance of any of its other obligations under any Article of this
Agreement or under any of the Loan Documents; or

 

(e)           Borrower or any Loan Party
has given Lender false or misleading information or representations; or

 

(f)            Borrower, any Loan Party, or
any general partner of any Loan Party files a bankruptcy petition, a bankruptcy
petition is filed against any of the foregoing parties, or Borrower, any Loan
Party, or any general partner of any Loan Party makes a general assignment for
the benefit of creditors.  The default
will be deemed cured if any bankruptcy petition filed against Borrower, any
Loan Party, or any general partner of any Loan Party is dismissed within a
period of forty-five (45) days after the filing; provided, however, that such
cure opportunity will be terminated upon the entry of an order for relief in
any bankruptcy case arising from such a petition; or

 

(g)           A receiver or similar
official is appointed for a substantial portion of Borrower’s or any Loan Party’s
business, or the business is terminated, or, if any Loan Party is anything
other than a natural person, such Loan Party is liquidated or dissolved; or

 

(h)           Lender fails to have an
enforceable first Lien (except for any prior Liens to which Lender has
consented in writing) on or security interest in any Collateral unless such
deficiency is cured within thirty (30) days after the earlier of discovery by
Borrower or any Responsible Officer or the date on which Lender gives written
notice thereof to Borrower; or

 

(i)            Any lawsuit or lawsuits are
filed on behalf of one or more trade creditors against Borrower or any Loan
Party in an aggregate amount of Fifty Thousand Dollars ($50,000.00) or more in
excess of any insurance coverage unless such lawsuit or lawsuits are bonded
around, settled or dismissed within sixty (60) days after receipt of summons; or

 

(j)            Any judgments or arbitration
awards are entered against Borrower or any Loan Party, or Borrower or any Loan
Party enters into any settlement agreements with respect to any litigation or
arbitration, in an aggregate amount of Fifty Thousand Dollars ($50,000.00) or
more in excess of any insurance coverage; or

 

(k)           A material adverse change
occurs, or is reasonably likely to occur, in Borrower’s (or any Loan Party’s)
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the Loan; or

 

38

 

(l)            Any Governmental Authority
takes action that Lender reasonably believes materially adversely affects
Borrower’s or any Loan Party’s financial condition or ability to repay; or

 

(m)          A default occurs under any
other term or condition of this Agreement not specifically referred to in this
Article.  This includes any failure or
anticipated failure by Borrower (or any other party named in the Covenants
section) to comply with any financial covenants set forth in this Agreement,
whether such failure is evidenced by financial statements delivered to Lender
or is otherwise known to Borrower or Lender. 
If, in Lender’s opinion, the breach is capable of being remedied, the
breach will not be considered an Event of Default for a period of thirty (30)
days after the date on which Lender gives written Notice of the breach to
Borrower.

 

SECTION 7.02             Remedies.

 

(a)           If any Event of Default
occurs, Lender may do one or more of the following: declare Borrower in
default, stop making any Advances, and require Borrower to repay all
Indebtedness immediately and without prior notice.  If a Default occurs and is continuing, Lender
has no obligation to make Advances or extend additional credit under this
Agreement.  In addition, if any Event of
Default occurs, Lender shall have all rights, powers and remedies available
under any instruments and agreements required by or executed in connection with
this Agreement, as well as all rights and remedies available at Law or in
equity.  If an Event of Default described
in Section 7.01(f) occurs, then the entire Indebtedness will
automatically be due immediately.

 

(b)           No delay or omission on the
part of Lender in exercising any power or right hereunder or under any of the
Loan Documents or under applicable Law shall impair such right or power or be
construed to be a waiver of any default or any acquiescence therein, nor shall
any single or partial exercise by Lender of any such power or right preclude
other or further exercise thereof or the exercise of any other such power or
right by Lender.

 

(c)           In the event that all or
part of the Indebtedness becomes or is declared to be forthwith due and payable
as herein provided, Lender shall have the right to set off the amount of all
the Indebtedness of Borrower owing to Lender against, and shall have, and is
hereby granted by Borrower, a Lien upon and security interest in, all property
of Borrower in Lender’s possession at or subsequent thereto, regardless of the
capacity in which Lender possesses such property, including but not limited to
any balance or share of any deposit, collection or agency account.

 

(d)           After Default all proceeds
received by Lender may be applied to the Indebtedness in such order of application
and such proportions as Lender, in its discretion, shall choose.

 

39

 

ARTICLE VIII

MISCELLANEOUS

 

SECTION 8.01             GAAP.  Except as otherwise stated in this Agreement,
all financial information provided to Lender and all financial covenants will
be made under generally accepted accounting principles, consistently applied.

 

SECTION 8.02             Governing Law. This
Agreement shall be governed by and construed in accordance with the Laws of the
State of Oklahoma.  To the extent that
Lender has greater rights or remedies under federal Law, whether as a national
bank or otherwise, this paragraph shall not be deemed to deprive Lender of such
rights and remedies as may be available under federal Law.

 

SECTION 8.03             Successors and
Assigns.  This Agreement is binding on
Borrower’s and Lender’s successors and assignees.  Borrower agrees that it may not assign this
Agreement without Lender’s prior consent. 
Lender may sell participations in or assign the Loan, and may exchange
information about Borrower (including, without limitation, any information
regarding any hazardous substances) with actual or potential participants or
assignees.  If a participation is sold or
the Loan is assigned, the purchaser will have the right of set-off against
Borrower.

 

SECTION 8.04             Severability;
Waivers.  If any part of this Agreement
is not enforceable, the rest of the Agreement may be enforced.  Lender retains all rights, even if it makes a
loan after a Default.  If Lender waives a
Default or Event of Default, it may enforce a later one.  Any consent or waiver under this Agreement
must be in writing.

 

SECTION 8.05             Attorneys’ Fees.  Borrower shall reimburse Lender for any
reasonable costs and attorneys’ fees incurred by Lender in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, “workout” or restructuring under this
Agreement.  In the event of a lawsuit or
arbitration proceeding, the prevailing party is entitled to recover costs and
reasonable attorneys’ fees incurred in connection with the lawsuit or
arbitration proceeding, as determined by the court or arbitrator.  In the event that any case is commenced by or
against Borrower under the Bankruptcy Code (Title 11, United States Code) or
any similar or successor statute, Lender is entitled to recover costs and
reasonable attorneys’ fees incurred by Lender related to the preservation,
protection, or enforcement of any rights of Lender in such a case.  As used in this paragraph, “attorneys’ fees”
includes the allocated costs of Lender’s in-house counsel.

 

SECTION 8.06             Indemnification.  Borrower will indemnify and hold Lender
harmless from any loss, liability, damages, judgments, and costs of any kind
relating to or arising directly or indirectly out of (a) this Agreement or
any document required hereunder, (b) any credit extended or committed by
Lender to Borrower hereunder, and (c) any litigation or proceeding related
to or arising out of this Agreement, any such document, or any such
credit.  This indemnity includes but is
not limited to reasonable attorneys’ fees (including the allocated reasonable
cost of in-house counsel).  This
indemnity extends to Lender, its parent, subsidiaries and all of their
directors, officers, employees, agents, successors, attorneys, and
assigns.  This indemnity will survive
repayment of Borrower’s obligations to Lender. 
All sums due to Lender hereunder shall be obligations of Borrower, due
and payable immediately without demand.

 

40

 

SECTION 8.07             Notices.  Unless otherwise provided in this Agreement
or in another agreement between Lender and Borrower, all Notices required under
this Agreement shall be personally delivered or sent by first class mail,
postage prepaid, or by overnight courier, to the addresses on the signature page of
this Agreement, or sent by facsimile to the fax numbers listed on the signature
page, or to such other addresses as Lender and Borrower may specify from time
to time in writing.  Notices and other
communications shall be effective (i) if mailed, upon the earlier of
receipt or five (5) days after deposit in the U.S. mail, first class,
postage prepaid, (ii) if telecopied, when transmitted, or (iii) if
hand-delivered, by courier or otherwise (including telegram, lettergram or
mailgram), when delivered.

 

SECTION 8.08             Headings.  Article and paragraph headings are for
reference only and shall not affect the interpretation or meaning of any
provisions of this Agreement.

 

SECTION 8.09             Counterparts.  This Agreement may be executed in as many
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement.

 

SECTION 8.10             Borrower
Information; Reporting to Credit Bureaus.  Borrower authorizes Lender at any time to
verify or check any information given by Borrower to Lender, check Borrower’s
credit references, verify employment, and obtain credit reports.  Borrower agrees that Lender shall have the
right at all times to disclose and report to credit reporting agencies and
credit rating agencies such information pertaining to Borrower and/or all
guarantors as is consistent with Lender’s policies and practices from time to
time in effect.

 

SECTION 8.11             Marshaling; Waiver of 12 OKLA. STAT. § 686.  Borrower waives any right it may have to require
marshaling of assets or Collateral for repayment of the Indebtedness in the
event of the occurrence of any Default or Event of Default.  Upon any Default or Event of Default, Lender
may, at its option, realize or foreclose upon any of the Collateral or any
portion or part of the Collateral in any order. 
Borrower waives any and all rights it may have under 12 OKLA. STAT.
§ 686 or any other applicable Law that may require or arguably require
Lender to proceed first against any Collateral or portion of the Collateral in
lieu of or prior to proceeding upon any Collateral or portion of the Collateral
Lender may choose upon which to proceed first for satisfaction or partial
satisfaction of the Indebtedness. 
Borrower also waives any right under 12 OKLA. STAT. § 686 or under
any other applicable Law to obtain credit for the fair market value of any
Collateral encumbered by any mortgage, even if such mortgage is released by
Lender, unless Lender forecloses such mortgage and the property encumbered
thereby is sold at sheriff’s sale or by power of sale pursuant to such
mortgage.  The terms of this paragraph
shall survive any release of any mortgage and shall remain in effect between
Lender and Borrower as long as any Indebtedness exists in any form.

 

SECTION 8.12             Survival of Agreements.  All covenants, agreements, representations
and warranties made herein shall survive the execution and the delivery of the
Loan Documents.  All statements contained
in any certificate or other instrument delivered by Borrower hereunder shall be
deemed to constitute representations and warranties by Borrower.

 

SECTION 8.13             Parties in Interest.  All covenants, agreements and obligations
contained in this Agreement shall bind and inure to the benefit of the respective
successors and 

 

41

 

assigns of the parties hereto, except that Borrower
may not assign its rights or obligations hereunder without the prior written
consent of Lender.

 

SECTION 8.14             Jurisdiction; Venue.  For purposes of enforcing and/or interpreting
the provisions of this Agreement and all other Loan Documents, or resolving any
dispute arising out of the execution, delivery or performance of this Agreement
or any of the Loan Documents, Borrower hereby submits itself to the
jurisdiction of the courts of the State of Oklahoma, Borrower waives all
objections to service of process therefrom and Borrower waives all objections
to venue of any state or federal court sitting in Tulsa County, Oklahoma.

 

SECTION 8.15             Maximum Interest Rate.  In  no
event shall the amount or rate of interest due and payable under this Agreement
exceed the Highest Lawful Rate and, in the event any such excess payment is
made by Borrower or received by Lender, such excess sum shall be credited as a
payment of principal or be refunded to Borrower, at the option of Lender.  It is the express intent hereof that Borrower
not pay and Lender not receive, directly or indirectly, interest in excess of
that which may be paid under applicable Law.

 

SECTION 8.16             No Waiver; Cumulative Remedies.  No failure to exercise, and no delay in
exercising on the part of Lender, any right, power or privilege hereunder or
under any other Loan Document or applicable Law shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
of Lender.  The rights and remedies
herein provided are cumulative and not exclusive of any other rights or remedies
provided by any other instrument or by Law. 
No amendment, modification or waiver of any provision of this Agreement
or any other Loan Document shall be effective unless the same shall be in
writing and signed by Lender.  No Notice
to or demand on Borrower in any case shall entitle Borrower to any other or
further Notice or demand in similar or other circumstances.

 

SECTION 8.17             USA PATRIOT ACT
NOTICE.  Federal Law requires all
financial institutions to obtain, verify and record information that identifies
each person who opens an account or obtains a loan.  Lender will ask for Borrower’s legal name,
address, tax ID number or social security number and other identifying
information.  Lender may also ask for
additional information or documentation or take other actions reasonably necessary
to verify the identity of Borrower, Loan Parties, or other related Persons.

 

[SIGNATURES BEGIN ON NEXT
PAGE]

 

42

 

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

 

	
  XETA TECHNOLOGIES, INC.,

  
	
  an Oklahoma corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Robert B. Wagner

  	
   

  
	
   

  	
   

  	
  Robert B. Wagner, Chief Financial Officer

  	
   

  
	
   

  	
   

  	
              “Borrower”

  	
   

  

 

Address where Notices to Borrower are to be sent:

XETA Technologies, Inc.

Attn: Chief Financial Officer

1814 W. Tacoma

Broken Arrow, Oklahoma 74012

Facsimile: 918-664-6876

 

with a copy to:

 

Barber and Bartz

Attn: General Counsel - XETA Technologies, Inc.

525 S. Main

Suite 800

Tulsa, Oklahoma 74103

 

43

 

	
  COMMERCE BANK, N.A.,
  a national banking association

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Chris Amburgy

  	
   

  
	
   

  	
   

  	
  Chris Amburgy, Executive Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
        “Lender”

  	
   

  

 

Address where Notices to Lender are to be sent:

 

c/o Chris Amburgy

6130 East 81st Street

Tulsa, OK 74137

Facsimile: (918) 879-2227

 

44

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