Document:

EX-10.2

 

Execution Copy

Exhibit 10.2

Schedule 1.1

As used in the Agreement, the following terms shall have the following
definitions:

     “Ableco” means Ableco Finance LLC, a Delaware limited liability company.

     “Account” means an “account” (as such term is defined in Article 9 of the
Code).

     “Account Debtor” means any Person who is obligated on an Account, chattel
paper, or a general intangible.

     “ACH Transactions” means any cash management or related services
(including the Automated Clearing House processing of electronic fund transfers
through the direct Federal Reserve Fedline system) provided by a Bank Product
Provider for the account of Borrower or its Subsidiaries.

     “Administrative Agent” has the meaning specified therefor in the preamble
to this Agreement.

     “Advances” has the meaning specified therefor in Section 2.1(a).

     “Affiliate” means, as applied to any Person, any other Person who
controls, is controlled by, or is under common control with, such Person. For
purposes of this definition, “control” means the possession, directly or
indirectly through one or more intermediaries, of the power to direct the
management and policies of a Person, whether through the ownership of Stock, by
contract, or otherwise; provided, however, that, for purposes of the definition
of Eligible Accounts and Section 6.13 of the Agreement: (a) any Person which
owns directly or indirectly 10% or more of the Stock having ordinary voting
power for the election of directors or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed an
Affiliate of such Person, (b) each director (or comparable manager) of a Person
shall be deemed to be an Affiliate of such Person, and (c) each partnership or
joint venture in which a Person is a partner or joint venturer shall be deemed
an Affiliate of such Person.

     “Agent” and “Agents” have the meaning specified therefor in the preamble
to the Agreement.

     “Agent-Related Persons” means the Agents, together with their Affiliates,
officers, directors, employees, attorneys, and agents.

     “Agent’s Account” means the Deposit Account of Administrative Agent
identified on Schedule A-1.

     “Agent’s Liens” means the Liens granted by Borrower or its Subsidiaries to
Administrative Agent under the Loan Documents.

     “Agreement” means the Credit Agreement to which this Schedule 1.1 is
attached.

     “Applicable Prepayment Premium” has the meaning specified in the Fee
Letter.

     “Assignee” has the meaning specified therefor in Section 13.1(a).

 

 

     “Assigning Lender” has the meaning specified therefore in Section 13.1(a).

     “Assignment and Acceptance” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1.

     “Authorized Person” means any officer or employee of Borrower.

     “Availability” means, as of any date of determination, the amount that
Borrower is entitled to borrow as Advances hereunder (after giving effect to
all then outstanding Obligations (other than Bank Product Obligations) and all
sublimits and reserves then applicable hereunder).

     “Bank Product” means any financial accommodation extended to Borrower or
its Subsidiaries by a Bank Product Provider (other than pursuant to the
Agreement) including: (a) credit cards, (b) credit card processing services,
(c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management,
including controlled disbursement, accounts or services, or (g) transactions
under Hedge Agreements.

     “Bank Product Agreements” means those agreements entered into from time to
time by Borrower or its Subsidiaries with a Bank Product Provider in connection
with the obtaining of any of the Bank Products.

     “Bank Product Obligations” means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by Borrower or its
Subsidiaries to any Bank Product Provider pursuant to or evidenced by the Bank
Product Agreements and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that Borrower or
its Subsidiaries are obligated to reimburse to Administrative Agent or any
member of the Lender Group as a result of Administrative Agent or such member
of the Lender Group purchasing participations from, or executing indemnities or
reimbursement obligations to, a Bank Product Provider with respect to the Bank
Products provided by such Bank Product Provider to Borrower or its
Subsidiaries.

     “Bank Product Provider” means Wells Fargo or any of its Affiliates.

     “Bank Product Reserve” means, as of any date of determination, the lesser
of (a) $1,000,000, and (b) the amount of reserves that Administrative Agent has
established (based upon the Bank Product Providers’ reasonable determination of
the credit exposure of Borrower and its Subsidiaries in respect of Bank
Products) in respect of Bank Products then provided or outstanding; provided,
that in order to qualify as Bank Product Reserves, such reserves must be
established on or prior to the date that the Bank Product Provider provides the
applicable Bank Products.

     “Bankruptcy Code” means title 11 of the United States Code, as in effect
from time to time.

     “Base Rate” means, the rate of interest announced, from time to time,
within Wells Fargo at its principal office in San Francisco as its “prime
rate”, with the understanding that the “prime rate” is one of Wells Fargo’s
base rates (not necessarily the lowest of such rates) and serves as the basis
upon which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Wells Fargo may designate.

     “Base Rate Loan” means the portion of the Advances or the Term Loans that
bears interest at a rate determined by reference to the Base Rate.

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     “Base Rate Margin” means 1.50 percentage points.

     “Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35)
of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of Borrower
has been an “employer” (as defined in Section 3(5) of ERISA) within the past
six (6) years.

     “Board of Directors” means the board of directors (or comparable managers)
of Borrower or any committee thereof duly authorized to act on behalf of the
board of directors (or comparable managers).

     “Borrower” has the meaning specified therefor in the preamble to the
Agreement.

     “Borrowing” means a borrowing hereunder consisting of Advances (or term
loans in the case of Term Loans) made on the same day by the Lenders (or
Administrative Agent on behalf thereof), or by Swing Lender in the case of a
Swing Loan, or by Administrative Agent in the case of a Protective Advance.

     “Borrowing Base” means, as of any date of determination, the result of:

     (a) 85% of the amount of Eligible Accounts, less the amount,
if any, of the Dilution Reserve, plus

     (b) the lesser of

     (i) $2,500,000, and

     (ii) 25% of the book value of Eligible Inventory, minus

     (c) the sum of (i) the Bank Product Reserve, and (ii) the
aggregate amount of reserves, if any, established by
Administrative Agent under Section 2.1(b).

     “Borrowing Base Certificate” means a certificate in the form of Exhibit
B-1.

     “Breeze EBITDA” means, with respect to any fiscal period, the portion of
EBITDA that is attributable to the Breeze Eastern Division of Borrower.

     “Breeze TTM EBITDA” means as of any date of determination, Breeze EBITDA
for the 12-month period most recently ended.

     “Business Day” means any day that is not a Saturday, Sunday, or other day
on which banks are authorized or required to close in the state of New York,
except that, if a determination of a Business Day shall relate to a LIBOR Rate
Loan, the term “Business Day” also shall exclude any day on which banks are
closed for dealings in Dollar deposits in the London interbank market.

     “Capital Expenditures” means, with respect to any Person for any period,
the aggregate of all expenditures by such Person and its Subsidiaries during
such period that are capital expenditures as determined in accordance with
GAAP, whether such expenditures are paid in cash or financed.

     “Capitalized Lease Obligation” means that portion of the obligations under
a Capital Lease that is required to be capitalized in accordance with GAAP.

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     “Capital Lease” means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

     “Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within one (1) year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit or
bankers’ acceptances maturing within one (1) year from the date of acquisition
thereof issued by any bank organized under the laws of the United States or any
state thereof having at the date of acquisition thereof combined capital and
surplus of not less than $250,000,000, (e) Deposit Accounts maintained with (i)
any bank that satisfies the criteria described in clause (d) above, or (ii) any
other bank organized under the laws of the United States or any state thereof
so long as the amount maintained with any such other bank is less than or equal
to $100,000 and is insured by the Federal Deposit Insurance Corporation, and
(f) Investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (e) above.

     “Cash Management Account” has the meaning specified therefor in Section
2.7(a).

     “Cash Management Agreements” means those certain cash management
agreements, in form and substance satisfactory to Administrative Agent, each of
which is among Borrower or one of its Subsidiaries, Administrative Agent, and
one of the Cash Management Banks.

     “Cash Management Bank” has the meaning specified therefor in Section
2.7(a).

     “Change of Control” means that (a) any “person” or “group” (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 36% or more of the Stock of Borrower having the right to vote
for the election of members of the Board of Directors, or (b) a majority of the
members of the Board of Directors do not constitute Continuing Directors.

     “Closing Date” means the date of the making of the initial Advance (or
other extension of credit) hereunder or the date on which Administrative Agent
sends Borrower a written notice that each of the conditions precedent set forth
in Section 3.1 either have been satisfied or have been waived.

     “Code” means the New York Uniform Commercial Code, as in effect from time
to time.

     “Collateral” means all assets and interests in assets and proceeds thereof
now owned or hereafter acquired by Borrower or its Subsidiaries in or upon
which a Lien is granted under any of the Loan Documents.

     “Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests in
Borrower’s or its Subsidiaries’ books and records, Equipment, or Inventory, in
each case, in form and substance satisfactory to Agents.

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     “Collections” means all cash, checks, notes, instruments, and other items
of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).

     “Commitment” means, with respect to each Lender, its Revolver Commitment,
its Term Loan A Commitment, its Term Loan B Commitment, its Term Loan C
Commitment, or its Total Commitment, as the context requires, and, with respect
to all Lenders, their Revolver Commitments, their Term Loan A Commitments,
their Term Loan B Commitments, their Term Loan C Commitments, or their Total
Commitments, as the context requires, in each case as such Dollar amounts are
set forth beside such Lender’s name under the applicable heading on Schedule
C-1 or in the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 13.1.

     “Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 delivered by the chief financial officer of Borrower to
Administrative Agent.

     “Consolidated TTM EBITDA” means as of any date of determination, EBITDA
for the 12-month period most recently ended.

     “Continuing Director” means (a) any member of the Board of Directors who
was a director (or comparable manager) of Borrower on the Closing Date, and (b)
any individual who becomes a member of the Board of Directors after the Closing
Date if such individual was appointed or nominated for election to the Board of
Directors by a majority of the Continuing Directors, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Borrower and whose initial assumption of office resulted from such contest or
the settlement thereof.

     “Control Agreement” means a control agreement, in form and substance
satisfactory to Administrative Agent, executed and delivered by Borrower or one
of its Subsidiaries, Administrative Agent, and the applicable securities
intermediary (with respect to a Securities Account) or bank (with respect to a
Deposit Account).

     “Copyright Security Agreement” has the meaning specified therefor in the
Security Agreement.

     “Daily Balance” means, as of any date of determination and with respect to
any Obligation, the amount of such Obligation owed at the end of such day.

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

     “Defaulting Lender” means any Lender that fails to make any Advance (or
other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.

     “Defaulting Lender Rate” means (a) for the first 3 days from and after the
date the relevant payment is due, the Base Rate, and (b) thereafter, the
interest rate then applicable to Advances that are Base Rate Loans (inclusive
of the Base Rate Margin applicable thereto).

     “Deposit Account” means any “deposit account” (as such term is defined in
the Code).

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     “Designated Account” means the Deposit Account of Borrower identified on
Schedule D-1.

     “Designated Account Bank” has the meaning specified therefor in Schedule
D-1.

     “Dilution” means, as of any date of determination, a percentage, based
upon the experience of the immediately prior 365 consecutive days, that is the
result of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to
Borrower’s Accounts during such period, by (b) Borrower’s billings with respect
to Accounts during such period.

     “Dilution Reserve” means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by 1 percentage
point for each percentage point by which Dilution is in excess of 5.0%.

     “Dollars” or “$” means United States dollars.

     “EBITDA” means, with respect to any fiscal period, Borrower’s and its
Subsidiaries’ consolidated net earnings (or loss), minus extraordinary gains
and interest income, plus interest expense, income taxes, depreciation and
amortization, non-cash extraordinary losses, and any amounts payable in
connection with the settlement or other resolution of the Investigation and the
amount of actual expenses incurred by Borrower in connection with the
Investigation, such expenses not to exceed (x) through March 31, 2005,
$1,615,000, (y) from April 1, 2005 through and including March 31, 2006,
$1,000,000, and (z) at all times thereafter, zero (0), (such settlement costs
and expenses collectively referred to as the “Investigation Amounts”) for such
period, in each case, as determined in accordance with GAAP.

     “Eligible Accounts” means those Accounts created by Borrower in the
ordinary course of its business, that arise out of Borrower’s sale of goods or
rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made in the Loan Documents, and that
are not excluded as ineligible by virtue of one or more of the excluding
criteria set forth below; provided, however, that such criteria may be revised
from time to time by Administrative Agent in Administrative Agent’s Permitted
Discretion to address the results of any audit performed by Administrative
Agent from time to time after the Closing Date. In determining the amount to
be included, Eligible Accounts shall be calculated net of customer deposits and
unapplied cash. Eligible Accounts shall not include the following:

     (a) Accounts that the Account Debtor has failed to pay within 90 days of
original invoice date or Accounts with selling terms of more than 60 days,

     (b) Accounts owed by an Account Debtor (or its Affiliates) where 50% or
more of all Accounts owed by that Account Debtor (or its Affiliates) are deemed
ineligible under clause (a) above,

     (c) Accounts with respect to which the Account Debtor is an Affiliate of
Borrower or an employee or agent of Borrower or any Affiliate of Borrower,

     (d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,

     (e) Accounts that are not payable in Dollars or Canadian Dollars or, with
respect to Eligible Foreign Accounts, Canadian Dollars or Euros,

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     (f) Accounts with respect to which the Account Debtor either (i) does not
maintain its chief executive office in Canada or the United States, or (ii) is
not organized under the laws of Canada or the United States or any state
thereof, or (iii) is the government of any foreign country or sovereign state,
or of any state, province, municipality, or other political subdivision
thereof, or of any department, agency, public corporation, or other
instrumentality thereof, unless (x) the Account is supported by an irrevocable
letter of credit satisfactory to Administrative Agent (as to form, substance,
and issuer or domestic confirming bank) that has been delivered to
Administrative Agent and is directly drawable by Administrative Agent, (y) the
Account is covered by credit insurance in form, substance, and amount, and by
an insurer, satisfactory to Administrative Agent, or (z) the Account is an
Eligible Foreign Account,

     (g) Accounts with respect to which the Account Debtor is either (i) the
United States or any department, agency, or instrumentality of the United
States (exclusive, however, of Accounts with respect to which Borrower has
complied, to the reasonable satisfaction of Administrative Agent, with the
Assignment of Claims Act, 31 USC §3727), or (ii) any state of the United
States,

     (h) Accounts with respect to which the Account Debtor is a creditor of
Borrower, has or has asserted a right of setoff, or has disputed its obligation
to pay all or any portion of the Account, to the extent of such claim, right of
setoff, or dispute,

     (i) Accounts with respect to an Account Debtor whose total obligations
owing to Borrower exceed 10% of all Eligible Accounts; provided, however, that
as to Lockheed Martin Corporation, Finmeccanica Spa., Boeing Corporation and
any individual unit of the government of the United States, a percentage
limitation of 20% (in lieu of 10%) shall apply (such percentages, as applied to
a particular Account Debtor, being subject to reduction by Administrative Agent
in its Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates), to the extent of the obligations owing by such Account Debtor in
excess of such percentage; provided, however, that, in each case, the amount of
Eligible Accounts that are excluded because they exceed the foregoing
percentage shall be determined by Administrative Agent based on all of the
otherwise Eligible Accounts prior to giving effect to any eliminations based
upon the foregoing concentration limit,

     (j) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
Borrower has received notice of an imminent Insolvency Proceeding or a material
impairment of the financial condition of such Account Debtor,

     (k) Accounts with respect to which the Account Debtor is located in a
state or jurisdiction (e.g., New Jersey, Minnesota, and West Virginia) that
requires, as a condition to access to the courts of such jurisdiction, that a
creditor qualify to transact business, file a business activities report or
other report or form, or take one or more other actions, unless Borrower has so
qualified, filed such reports or forms, or taken such actions (and, in each
case, paid any required fees or other charges), except to the extent that
Borrower may qualify subsequently as a foreign entity authorized to transact
business in such state or jurisdiction and gain access to such courts, without
incurring any cost or penalty viewed by Administrative Agent to be significant
in amount, and such later qualification cures any access to such courts to
enforce payment of such Account,

     (l) Accounts, the collection of which, Administrative Agent, in its
Permitted Discretion, believes to be doubtful by reason of the Account Debtor’s
financial condition,

     (m) Accounts that are not subject to a valid and perfected first priority
Agent’s Lien,

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     (n) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or

     (o) Accounts that represent the right to receive progress payments or
other advance billings that are due prior to the completion of performance by
Borrower of the subject contract for goods or services.

     “Eligible Foreign Account” means (a) an Account created by Borrower with
respect to which the Account Debtor does not maintain its chief executive
office in Canada or the United States or is not organized under the laws of
Canada or the United States; provided, that either (i) such Account is
supported by an irrevocable letter of credit (in form and substance reasonably
satisfactory to Administrative Agent) issued or confirmed by, and payable at, a
bank having a place of business in the United States of America, that has been
delivered to Administrative Agent and is directly drawable by Administrative
Agent or (ii) the applicable Account Debtor has unsecured debt rated
“investment grade” by either Moody’s or S&P and (b) an Account with respect to
which the Account Debtor is either Finmeccanica, Spa. or European Aeronautic
Defence and Space Company, so long as, with respect to (a) and (b) above, (x)
such Account is not otherwise ineligible in accordance with the definition of
“Eligible Accounts” and (y) the aggregate amount of such Accounts (other than
Accounts supported by irrevocable letters of credit as described in clause
(a)(i) above) does not exceed $4,000,000.

     “Eligible Inventory” means Inventory consisting of finished goods held for
sale, work-in-process, raw materials, or goods that constitute spare parts, in
the ordinary course of Borrower’s business, that complies with each of the
representations and warranties respecting Eligible Inventory made in the Loan
Documents, and that is not excluded as ineligible by virtue of one or more of
the excluding criteria set forth below; provided, however, that such criteria
may be revised from time to time by Administrative Agent in Administrative
Agent’s Permitted Discretion to address the results of any audit or appraisal
performed by Administrative Agent from time to time after the Closing Date. In
determining the amount to be so included, Inventory shall be valued at the
lower of cost or market on a basis consistent with Borrower’s historical
accounting practices. An item of Inventory shall not be included in Eligible
Inventory if:

     (a) Borrower does not have good, valid, and marketable title thereto,

     (b) it is not located at one of the locations in the continental United
States set forth on Schedule E-1 (or in-transit from one such location to
another such location),

     (c) it is located on real property leased by Borrower or in a contract
warehouse, in each case, unless it is subject to a Collateral Access Agreement
executed by the lessor or warehouseman, as the case may be, and unless it is
segregated or otherwise separately identifiable from goods of others, if any,
stored on the premises,

     (d) it is not subject to a valid and perfected first priority Agent’s
Lien,

     (e) it consists of goods returned or rejected by Borrower’s customers, or

     (f) it consists of goods that are obsolete or slow moving, restrictive or
custom items, packaging and shipping materials, supplies used or consumed in
Borrower’s business, bill and hold goods, defective goods, “seconds,” or
Inventory acquired on consignment.

     “Eligible Transferee” means (a) a commercial bank organized under the laws
of the United States, or any state thereof, and having total assets in excess
of $250,000,000, (b) a commercial

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bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans having (together with
its Affiliates) total assets (including assets under management) in excess of
$250,000,000, (d) any Lender or Affiliate (other than individuals) of any
Lender, including a fund or account managed by any Lender or an Affiliate of
any Lender or its investment manager (a “Related Fund”), (e) so long as no
Event of Default has occurred and is continuing, any other Person approved by
Administrative Agent and Borrower (which approval of Borrower shall not be
unreasonably withheld, delayed, or conditioned), and (f) during the
continuation of an Event of Default, any other Person approved by
Administrative Agent.

     “Environmental Actions” means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of Borrower, its Subsidiaries, or any of their predecessors in interest, (b)
from adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by Borrower, its Subsidiaries, or
any of their predecessors in interest.

     “Environmental Law” means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of
common law now or hereafter in effect and in each case as amended, or any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, in each case, to the extent
binding on Borrower or its Subsidiaries, relating to the environment, the
effect of the environment on employee health, or Hazardous Materials, in each
case as amended from time to time.

     “Environmental Liabilities” means all liabilities, monetary obligations,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all reasonable fees, disbursements and expenses of
counsel, experts, or consultants, and costs of investigation and feasibility
studies), fines, penalties, sanctions, and interest incurred as a result of any
claim or demand, or Remedial Action required, by any Governmental Authority or
any third party, and which relate to any Environmental Action.

     “Environmental Lien” means any Lien in favor of any Governmental Authority
for Environmental Liabilities.

     “Equipment” means “equipment” (as that term is defined in the Code).

     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.

     “ERISA Affiliate” means (a) any Person subject to ERISA whose employees
are treated as employed by the same employer as the employees of Borrower or
its Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower or its Subsidiaries under IRC Section 414(c), (c) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group
of which Borrower or any of its Subsidiaries is a member under IRC Section
414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a
party to an arrangement

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with Borrower or any of its Subsidiaries and whose
employees are aggregated with the employees of Borrower or its Subsidiaries
under IRC Section 414(o).

     “Event of Default” has the meaning specified therefor in Section 7.

     “Excess Availability” means, as of any date of determination, the amount
equal to Availability minus the aggregate amount, if any, of all trade payables
of Borrower and its Subsidiaries aged in excess of historical levels with
respect thereto and all book overdrafts of Borrower and its Subsidiaries in
excess of historical practices with respect thereto, in each case as determined
by Administrative Agent in its Permitted Discretion.

     “Excess Cash Flow” means, as of any date of determination, the result of
(a) EBITDA for the immediately preceding fiscal year, minus (b) the sum of (i)
interest payments made in cash during such period on any Indebtedness of
Borrower permitted hereunder, (ii) principal payments made in cash during such
period on any Indebtedness of Borrower permitted hereunder (but, in the case of
revolving loans, only to the extent that the revolving credit commitment with
respect thereto is permanently reduced by the amount of such payments), (iii)
Capital Expenditures made in cash during such period, and (iv) payments of
Taxes made in cash during such period.

     “Exchange Act” means the Securities Exchange Act of 1934, as in effect
from time to time.

     “Existing Lenders” means collectively (i) The CIT Group/Business Credit,
Inc. and (ii) the Holders of the Borrower’s 16% Amended and Restated Senior
Subordinated Promissory Notes due August 29, 2005.

     “Extraordinary Receipts” means any cash received by Borrower or any of its
Subsidiaries not in the ordinary course of business, including (i) foreign,
United States, state or local tax refunds, (ii) pension plan reversions, (iii)
proceeds of insurance, (iv) judgments, proceeds of settlements or other
consideration of any kind in connection with any cause of action, (v)
condemnation awards (and payments in lieu thereof), (vi) indemnity payments,
(vii) 100% of the cash proceeds received from the sale of Borrower’s real
property and improvements located in Glen Head, New York, net of any reasonable
costs incurred in connection with the sale and all payments required to be made
by Borrower in connection with the remediation of the property in an amount not
to exceed $2,400,000, as more fully described on Schedule R-2, (viii) 100% of
the cash proceeds received from the sale of the real property and improvements
owned by Retainers, Inc. located at 57 Cordier Street, Irvington, New Jersey,
net of any reasonable costs incurred in connection with the sale, and (ix) any
purchase price adjustment received in connection with any purchase agreement.

     “Facility Limiter Amount” means (a) at any time prior to and including
December 31, 2004, the lesser of (i) 4.70 times Breeze TTM EBITDA and (ii) 5.6
times Consolidated TTM EBITDA; (b) for the period commencing January 1, 2005
through and including March 31, 2005, the lesser of (i) 4.70 times Breeze TTM
EBITDA and (ii) 5.5 times Consolidated TTM EBITDA; and (c) at all times after
March 31, 2005, the lesser of (i) 4.00 times Breeze TTM EBITDA and (ii) 5.00
times Consolidated TTM EBITDA.

     “Fee Letter” means that certain fee letter between Borrower and Agents, in
form and substance satisfactory to Agents.

     “Funding Date” means the date on which a Borrowing occurs.

     “Funding Losses” has the meaning specified therefor in Section
2.13(b)(ii).

10

 

     “GAAP” means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.

     “Governing Documents” means, with respect to any Person, the certificate
or articles of incorporation, by-laws, or other organizational documents of
such Person.

     “Governmental Authority” means any federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.

     “Government Contract” means a contract for the sale of goods by Borrower
to the United States of America or any agency, department or division thereof.

     “Hazardous Materials” means (a) substances that are defined or listed in,
or otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude
oil, natural gas, or geothermal resources, (c) any flammable substances or
explosives or any radioactive materials, and (d) asbestos in any form or
electrical equipment that contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of 50 parts per million.

     “Hedge Agreement” means any and all agreements or documents now existing
or hereafter entered into by Borrower or any of its Subsidiaries that provide
for an interest rate, credit, commodity or equity swap, cap, floor, collar,
forward foreign exchange transaction, currency swap, cross currency rate swap,
currency option, or any combination of, or option with respect to, these or
similar transactions, for the purpose of hedging Borrower’s or any of its
Subsidiaries’ exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security, or currency valuations or commodity prices.

     “Holdout Lender” has the meaning specified therefor in Section 14.2(a).

     “Inactive Subsidiaries” means, collectively, (a) TT Connecticut
Corporation, (b) TT Minnesota Corporation, (c) Retainers, Inc., (d) SSP
Industries, (e) TTERUSA, Inc., (f) Rancho TransTechnology Corporation, (g) SSP
International Sales, Inc., (h) TransTechnology (Australiasia) Pty. Ltd., (i)
TransTechnology International Corp., a United States Virgin Islands
corporation, (j) TransTechnology International Corp., a Delaware corporation,
(k) TransTechnology Germany GmbH, (l) TransTechnology Germany
Beteiligungsgesellschaft GmbH, and (m) TransTechnology Germany GmbH & Co. OHG.

     “Indebtedness” means, as applied to any Person, contingent or otherwise,
(a) all obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, interest rate
swaps, hedges, derivatives or other similar products, (c) all obligations as a
lessee under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of such Person or its Subsidiaries, irrespective
of whether such obligation or liability is assumed, (e) all obligations of such
Person to pay the deferred purchase price of assets (other than trade payables
incurred in the ordinary course of business and repayable in accordance with
customary trade practices), (f) all obligations of such Person owing under
Hedge Agreements, and (g) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made,

11

 

discounted, or sold with recourse) any obligation of any other Person that
constitutes Indebtedness under any of clauses (a) through (f) above.

     “Indemnified Liabilities” has the meaning specified therefor in Section
10.3.

     “Indemnified Person” has the meaning specified therefor in Section 10.3.

     “Insolvency Proceeding” means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other state or
federal bankruptcy or insolvency law, assignments for the benefit of creditors,
formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief, and including the appointment of a trustee, receiver, administrative
receiver, administrator or similar officer.

     “Interest Expense” means, for any period, the aggregate of the interest
expense of Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

     “Inventory” means “inventory” (as such term is defined in Article 9 of the
Code).

     “Investigation” means the investigation being conducted by the United
States Attorney with respect to the overhaul and repair operations of
Borrower’s Breeze Eastern division.

     “Investigation Amounts” has the meaning set forth in the definition of
EBITDA.

     “Investment” means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such other Person (or of any division or business line of such other
Person), and any other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP.

     “IRC” means the Internal Revenue Code of 1986, as in effect from time to
time.

     “Issuing Lender” means WFF or any other Lender that, at the request of
Borrower and with the consent of Administrative Agent, agrees, in such Lender’s
sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or
L/C Undertakings pursuant to Section 2.12.

     “L/C” has the meaning specified therefor in Section 2.12(a).

     “L/C Disbursement” means a payment made by the Issuing Lender pursuant to
a Letter of Credit.

     “L/C Undertaking” has the meaning specified therefor in Section 2.12(a).

     “Lender” and “Lenders” have the respective meanings set forth in the
preamble to the Agreement, and shall include any other Person made a party to
the Agreement in accordance with the provisions of Section 13.1.

     “Lender Group” means, individually and collectively, each of the Lenders
(including the Issuing Lender) and each of the Agents.

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     “Lender Group Expenses” means all (a) costs or expenses (including taxes,
and insurance premiums) required to be paid by Borrower or its Subsidiaries
under any of the Loan Documents that are paid, advanced, or incurred by the
Lender Group, (b) fees or charges paid or incurred by Agents in connection with
the Lender Group’s transactions with Borrower or its Subsidiaries, including,
fees or charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation, and
Uniform Commercial Code searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisals (including periodic collateral
appraisals or business valuations to the extent of the fees and charges (and up
to the amount of any limitation) contained in the Agreement or in the Fee
Letter), real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by Administrative Agent
in the disbursement of funds to Borrower or other members of the Lender Group
(by wire transfer or otherwise), (d) charges paid or incurred by Administrative
Agent resulting from the dishonor of checks, (e) reasonable costs and expenses
paid or incurred by the Lender Group to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) audit fees and expenses of Agents related to
any inspections or audits to the extent of the fees and charges (and up to the
amount of any limitation) contained in the Agreement or in the Fee Letter, (g)
reasonable costs and expenses of third party claims or any other suit paid or
incurred by the Lender Group in enforcing or defending the Loan Documents or in
connection with the transactions contemplated by the Loan Documents, (h) each
Agent’s and each Lender’s reasonable costs and expenses (including attorneys
fees) incurred in advising, structuring, drafting, reviewing, administering,
syndicating, or amending the Loan Documents, and (i) each Agent’s and each
Lender’s reasonable costs and expenses (including attorneys, accountants,
consultants, and other advisors fees and expenses) incurred in terminating,
enforcing (including attorneys, accountants, consultants, and other advisors
fees and expenses incurred in connection with a “workout,” a “restructuring,”
or an Insolvency Proceeding concerning Borrower or its Subsidiaries or in
exercising rights or remedies under the Loan Documents), or defending the Loan
Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral.

     “Lender-Related Person” means, with respect to any Lender, such Lender,
together with such Lender’s Affiliates, officers, directors, employees,
attorneys, and agents.

     “Lender Side Letter Agreement” means an agreement among two (2) or more of
the Lenders, as amended, modified, supplemented or restated from time to time
in accordance with the terms thereof.

     “Letter of Credit” means an L/C or an L/C Undertaking, as the context
requires.

     “Letter of Credit Usage” means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.

     “Leverage Ratio” means a ratio determined as of the relevant calculation
date by dividing (x) the aggregate principal amount of outstanding Obligations
(including letters of credit) of Borrower as of the last day of the applicable
period by (y) EBITDA for the immediately preceding 12-month period.

     “Lien” means any interest in an asset securing an obligation owed to, or a
claim by, any Person other than the owner of the asset, irrespective of whether
(a) such interest is based on the common law, statute, or contract, (b) such
interest is recorded or perfected, and (c) such interest is contingent upon the
occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the
foregoing, the term “Lien”

13

 

includes the lien or security interest arising from a mortgage, deed of
trust, encumbrance, notice of Lien, levy or assessment, pledge, hypothecation,
assignment, deposit arrangement, security agreement, conditional sale or trust
receipt, or from a lease, consignment, or bailment for security purposes and
also includes reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.

     “Loan Account” has the meaning specified therefor in Section 2.10.

     “Loan Documents” means the Agreement, the Bank Product Agreements, the
Cash Management Agreements, the Control Agreements, the Fee Letter, the Letters
of Credit, the Mortgages, the Security Agreement, the Perfection Certificate,
the Patent Security Agreement, the Trademark Security Agreement, the Copyright
Security Agreement, any note or notes executed by Borrower in connection with
the Agreement and payable to a member of the Lender Group, and any other
agreement entered into, now or in the future, by Borrower and the Lender Group
in connection with the Agreement (including any agreements entered into
pursuant to Section 5.16).

     “Material Adverse Change” means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a
whole, (b) a material impairment of Borrower’s and its Subsidiaries ability to
perform their obligations under the Loan Documents to which they are parties or
of the Lender Group’s ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
the Agent’s Liens with respect to the Collateral as a result of an action or
failure to act on the part of Borrower or its Subsidiaries.

     “Material Contract” means, with respect to any Person, (i) each contract
or agreement listed on Schedule M-1, (ii) each contract or agreement entered
into after the Closing Date to which such Person or any of its Subsidiaries is
a party involving aggregate consideration payable to or by such Person or such
Subsidiary of $250,000 or more in any fiscal year of Borrower (other than
purchase orders in the ordinary course of the business of such Person or such
Subsidiary and other than contracts that by their terms may be terminated by
such Person or Subsidiary in the ordinary course of its business upon less than
60 days notice without penalty or premium), and (iii) any other contract or
agreement, whether entered into as of the Closing Date or after the Closing
Date, if the breach of any such contract or agreement or the failure of any
such contract or agreement to be in full force and effect could be reasonably
expected to result in a Material Adverse Change.

     “Maturity Date” has the meaning specified therefor in Section 3.4.

     “Maximum Revolver Amount” means $10,000,000.

     “Moody’s” has the meaning set forth in the definition of Cash Equivalents.

     “Monthly Period” means a four (4) or five (5) week period of which there
are twelve (12) such periods during the fiscal year of Borrower, determined
based upon a 52-week accounting period.

     “Mortgage Policy” has the meaning specified therefor in Schedule 3.1(v).

     “Mortgages” means, individually and collectively, one or more mortgages,
deeds of trust, or deeds to secure debt, executed and delivered by Borrower or
its Subsidiaries in favor of Administrative Agent, in form and substance
satisfactory to Agents, that encumber the Real Property Collateral.

14

 

     “Net Cash Proceeds” means, with respect to the sale or issuance by any
Person or any of its Subsidiaries of any shares of its Stock, the aggregate
amount of cash received (directly or indirectly) from time to time (whether as
initial consideration or through the payment or disposition of deferred
consideration) by or on behalf of such Person or such Subsidiary in connection
therewith, after deducting therefrom only (i) costs and expenses related
thereto incurred by such Person or such Subsidiary in connection therewith
(including, without limitation, legal, accounting and investment banking fees,
and underwriting discounts and commissions), (ii) transfer taxes paid by such
Person or such Subsidiary in connection therewith and (iii) net income taxes to
be paid in connection therewith (after taking into account any tax credits or
deductions and any tax sharing arrangements).

     “Obligations” means (a) all loans (including the Term Loans), Advances,
debts, principal, interest (including any interest that accrues after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
contingent reimbursement obligations with respect to outstanding Letters of
Credit, premiums, liabilities (including all amounts charged to Borrower’s Loan
Account pursuant hereto), obligations (including indemnification obligations),
fees (including the fees provided for in the Fee Letter), charges, costs,
Lender Group Expenses (including any fees or expenses that accrue after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
lease payments, guaranties, covenants, and duties of any kind and description
owing by Borrower to the Lender Group pursuant to or evidenced by the Loan
Documents and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all other
expenses or other amounts that Borrower is required to pay or reimburse by the
Loan Documents, by law, or otherwise, and (b) all Bank Product Obligations.
Any reference in the Agreement or in the Loan Documents to the Obligations
shall include all or any portion thereof and any extensions, modifications,
renewals, or alterations thereof, both prior and subsequent to any Insolvency
Proceeding.

     “Originating Lender” has the meaning specified therefor in Section
13.1(e).

     “Overadvance” has the meaning specified therefor in Section 2.5.

     “Participant” has the meaning specified therefor in Section 13.1(e).

     “Participant Register” has the meaning specified therefor in Section
13.1(i).

     “Patent Security Agreement” has the meaning specified therefor in the
Security Agreement.

     “Perfection Certificate” means the representations and warranties form
submitted by Administrative Agent to Borrower, together with Borrower’s
completed responses to the inquiries set forth therein, the form and substance
of such responses to be satisfactory to Administrative Agent.

     “Permitted Discretion” means a determination made in the exercise of
reasonable (from the perspective of a secured asset-based lender) business
judgment.

     “Permitted Dispositions” means (a) sales or other dispositions of
Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of business, (b) sales of Inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents in a manner that
is not prohibited by the terms of the Agreement or the other Loan Documents,
(d) the licensing, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
business and (e) those items listed on Schedule 6.4.

15

 

     “Permitted Investments” means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments received in settlement of amounts due to
Borrower or any of its Subsidiaries effected in the ordinary course of business
or owing to Borrower or any of its Subsidiaries as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement
of any Lien in favor of Borrower or its Subsidiaries, and (e) those items
listed on Schedule 6.12.

     “Permitted Liens” means (a) Liens held by Administrative Agent to secure
the Obligations, (b) Liens for unpaid taxes, assessments, or other governmental
charges or levies that either (i) are not yet delinquent, or (ii) do not have
priority over the Agent’s Liens and the underlying taxes, assessments, or
charges or levies are the subject of Permitted Protests, (c) judgment Liens
that do not constitute an Event of Default under Section 7.7 of the Agreement,
(d) Liens set forth on Schedule P-1, (e) the interests of lessors under
operating leases, (f) purchase money Liens or the interests of lessors under
Capital Leases to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, (g) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (h) Liens on
amounts deposited in connection with obtaining worker’s compensation or other
unemployment insurance, (i) Liens on amounts deposited in connection with the
making or entering into of bids, tenders, or leases in the ordinary course of
business and not in connection with the borrowing of money, (j) Liens on
amounts deposited as security for surety or appeal bonds in connection with
obtaining such bonds in the ordinary course of business, and (k) with respect
to any Real Property, easements, rights of way, and zoning restrictions that do
not (i) materially interfere with or impair the use or operation thereof and
(ii) are not Environmental Liens.

     “Permitted Protest” means the right of Borrower or any of its Subsidiaries
to protest any Lien (other than any Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on Borrower’s or its Subsidiaries’ books and
records in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Borrower or its Subsidiary, as
applicable, in good faith, and (c) each Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of the Agent’s Liens.

     “Permitted Purchase Money Indebtedness” means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate principal amount outstanding at any one time not in excess of
$250,000.

     “Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

     “PIK Interest” means, as of the date of determination, the amount of all
interest accrued with respect to Term Loan B and Term Loan C that has been
paid-in-kind by being accrued as deferred interest.

     “PIK Margin” means 2.00 percentage points; provided, however, that if, as
of Borrower’s fiscal year ended March 31, 2006, EBITDA for the immediately
preceding 12-month period equals or exceeds $14,700,000, then commencing on the
first day of the fiscal month of

16

 

Borrower next following the receipt of Borrower’s audited financial
statements for its fiscal year ended March 31, 2006, “PIK Margin” shall mean
1.00 percentage point, any such reduction in the PIK Margin to be effective as
of April 1, 2006.

     “Projections” means Borrower’s forecasted (a) balance sheets, (b) profit
and loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Borrower’s historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.

     “Pro Rata Share” means, as of any date of determination:

     (a) with respect to a Lender’s obligation to make Advances and right to
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (i) prior to the Revolver Commitments being terminated or reduced to
zero, the percentage obtained by dividing (y) such Lender’s Revolver
Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii)
from and after the time that the Revolver Commitments have been terminated or
reduced to zero, the percentage obtained by dividing (y) the aggregate
outstanding principal amount of such Lender’s Advances by (z) the aggregate
outstanding principal amount of all Advances,

     (b) with respect to a Lender’s obligation to participate in Letters of
Credit, to reimburse the Issuing Lender, and right to receive payments of fees
with respect thereto, (i) prior to the Revolver Commitments being terminated or
reduced to zero, the percentage obtained by dividing (y) such Lender’s Revolver
Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii)
from and after the time that the Revolver Commitments have been terminated or
reduced to zero, the percentage obtained by dividing (y) the aggregate
outstanding principal amount of such Lender’s Advances by (z) the aggregate
outstanding principal amount of all Advances,

     (c) with respect to a Lender’s obligation to make the Term Loan A and
right to receive payments of interest, fees, and principal with respect
thereto, (i) prior to the making of the Term Loan A, the percentage obtained by
dividing (y) such Lender’s Term Loan A Commitment, by (z) the aggregate amount
of all Lenders’ Term Loan A Commitments, and (ii) from and after the making of
the Term Loan, the percentage obtained by dividing (y) the principal amount of
such Lender’s portion of the Term A Loan by (z) the principal amount of the
Term Loan A,

     (d) with respect to a Lender’s obligation to make the Term Loan B and
right to receive payments of interest, fees, and principal with respect
thereto, (i) prior to the making of the Term Loan B, the percentage obtained by
dividing (y) such Lender’s Term Loan B Commitment, by (z) the aggregate amount
of all Lenders’ Term Loan B Commitments, and (ii) from and after the making of
the Term Loan B, the percentage obtained by dividing (y) the principal amount
of such Lender’s portion of the Term Loan B by (z) the principal amount of the
Term Loan B,

     (e) with respect to a Lender’s obligation to make the Term Loan C and
right to receive payments of interest, fees, and principal with respect
thereto, (i) prior to the making of the Term Loan C, the percentage obtained by
dividing (y) such Lender’s Term Loan C Commitment, by (z) the aggregate amount
of all Lenders’ Term Loan C Commitments, and (ii) from and after the making of
the Term Loan C, the percentage obtained by dividing (y) the principal amount
of such Lender’s portion of the Term Loan C by (z) the principal amount of the
Term Loan C, and

     (f) with respect to all other matters as to a particular Lender (including
the indemnification obligations arising under Section 15.7), the percentage
obtained by dividing (i) such Lender’s Revolver Commitment plus the outstanding
principal amount of such Lender’s portion of the Term Loans, by (ii) the
aggregate amount of Revolver Commitments of all Lenders plus the outstanding
principal amount of the Term Loans; provided, however, that in the event the
Revolver

17

 

Commitments have been terminated or reduced to zero, Pro Rata Share under
this clause shall be the percentage obtained by dividing (A) the outstanding
principal amount of such Lender’s Advances plus such Lender’s ratable portion
of the Risk Participation Liability with respect to outstanding Letters of
Credit plus the outstanding principal amount of such Lender’s portion of the
Term Loans, by (B) the outstanding principal amount of all Advances plus the
aggregate amount of the Risk Participation Liability with respect to
outstanding Letters of Credit plus the outstanding principal amount of the Term
Loans.

     “Protective Advances” has the meaning specified therefor in Section
2.3(d)(i).

     “Purchase Money Indebtedness” means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.

     “Qualified Cash” means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of Borrower and its Subsidiaries that is
in Deposit Accounts or in Securities Accounts, or any combination thereof, and
which such Deposit Account or Securities Account is the subject of a Control
Agreement and is maintained by a branch office of the bank or securities
intermediary located within the United States.

     “Rating Agencies” has the meaning specified therefor in Section 2.16.

     “Real Property” means any estates or interests in real property now owned
or hereafter acquired by Borrower or its Subsidiaries and the improvements
thereto.

     “Real Property Collateral” means the Real Property identified on Schedule
R-1 and any Real Property hereafter acquired by Borrower or its Subsidiaries.

     “Record” means information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable
form.

     “Register” has the meaning set forth in Section 13.1(h).

     “Registered Loan” means any loan recorded on the Register pursuant to
Section 13.1(h).

     “Registered Note” has the meaning set forth in Section 2.16.

     “Related Fund” has the meaning set forth in the definition of Eligible
Transferee.

     “Remedial Action” means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.

     “Replacement Lender” has the meaning specified therefor in Section
14.2(a).

     “Report” has the meaning specified therefor in Section 15.17.

18

 

     “Required Availability” means that the sum of (a) Excess Availability,
plus (b) Qualified Cash exceeds $3,000,000.

     “Required Lenders” means, at any time, Lenders whose aggregate Pro Rata
Shares (calculated under clause (f) of the definition of Pro Rata Shares)
exceed 66.67%; provided that (a) so long as WFF and its Affiliates hold not
less than 30% of the sum of (i) the Revolver Commitment (or if the Revolver
Commitment has been terminated or reduced to zero, the then extant Revolver
Usage), and (ii) the Term Loan A Commitment (or, from and after the making of
Term Loan A, the aggregate unpaid principal amount of Term Loan A), “Required
Lenders” shall include WFF, and (b) so long as Ableco and its Affiliates and
Related Funds hold not less than 30% of the sum of (i) the Term Loan B
Commitment (or, from and after the making of the Term Loan B, the aggregate
unpaid principal amount of the Term Loan B), and (ii) the Term Loan C
Commitment (or, from and after making the Term Loan C, the aggregate unpaid
principal amount of Term Loan C), “Required Lenders” shall include Ableco.

     “Required Revolver/Term Loan A Lenders” means, at any time, (a)
Administrative Agent and (b) Lenders whose Pro Rata Shares exceed 50% of the
aggregate of the Revolver Commitment and the Term Loan A Commitment.

     “Revolver Commitment” means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.1.

     “Revolver Usage” means, as of any date of determination, the sum of (a)
the amount of outstanding Advances, plus (b) the amount of the Letter of Credit
Usage.

     “Risk Participation Liability” means, as to each Letter of Credit, all
reimbursement obligations of Borrower to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrower, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.

     “S&P” has the meaning set forth in the definition of Cash Equivalents.

     “SEC” means the United States Securities and Exchange Commission and any
successor thereto.

     “Securities Account” means a “securities” account (as such term is defined
in Article 8 of the Code).

     “Securitization” has the meaning specified therefor in Section 2.17.

     “Securitization Liabilities” has the meaning specified therefor in Section
2.17.

     “Securitization Parties” has the meaning specified therefor in Section
2.17.

     “Security Agreement” means a security agreement, in form and substance
satisfactory to Administrative Agent, executed and delivered by Borrower to
Administrative Agent.

19

 

     “Senior Facility Limiter Amount” means (a) at any time prior to and
including December 31, 2004, the lesser of (i) 1.5 times Breeze TTM EBITDA, and
(ii) 1.85 times Consolidated TTM EBITDA; and (b) at all times after December
31, 2004, the lesser of (i) 1.5 times Breeze TTM EBITDA and (ii) 1.75 times
Consolidated TTM EBITDA.

     “Settlement” has the meaning specified therefor in Section 2.3(e)(i).

     “Settlement Date” has the meaning specified therefor in Section 2.3(e)(i).

     “Solvent” means, with respect to any Person on a particular date, that
such Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).

     “Spanier Note” means that certain promissory note, dated as of March 31,
2003, by Borrower in favor of Joseph F. Spanier, in the original principal
amount of $237,000.

     “Stock” means all shares, options, warrants, interests, participations, or
other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including common stock, preferred stock, or any other
“equity security” (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).

     “Subsidiary” of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.

     “Swing Lender” means WFF or any other Lender that, at the request of
Borrower and with the consent of Administrative Agent agrees, in such Lender’s
sole discretion, to become the Swing Lender under Section 2.3(b).

     “Swing Loan” has the meaning specified therefor in Section 2.3(b)(i).

     “Taxes” has the meaning specified therefor in Section 15.11.

     “Term Loan A” has the meaning specified therefor in Section 2.2(a).

     “Term Loan A Amount” means $15,000,000.

     “Term Loan A Commitment” means, with respect to each Lender, its Term Loan
A Commitment, and, with respect to all Lenders, their Term Loan A Commitments,
in each case as such Dollar amounts are set forth beside such Lender’s name
under the applicable heading on Schedule C-1 or in the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1.

     “Term Loan A Margin” means 3.00 percentage points.

     “Term Loan B” has the meaning specified therefor in Section 2.2(b).

     “Term Loan B and Term Loan C Agent” has the meaning specified therefor in
the preamble to this Agreement.

     “Term Loan B Amount” means $37,500,000.

20

 

     “Term Loan B Commitment” means, with respect to each Lender, its Term Loan
B Commitment, and, with respect to all Lenders, their Term Loan B Commitments,
in each case as such Dollar amounts are set forth beside such Lender’s name
under the applicable heading on Schedule C-1 or in the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1.

     “Term Loan B Margin” means 7.00 percentage points plus the PIK Margin.

     “Term Loan C” has the meaning specified therefor in Section 2.2(c).

     “Term Loan C Amount” means $9,000,000.

     “Term Loan C Commitment” means, with respect to each Lender, its Term Loan
C Commitment, and, with respect to all Lenders, their Term Loan C Commitments,
in each case as such Dollar amounts are set forth beside such Lender’s name
under the applicable heading on Schedule C-1 or in the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1.

     “Term Loan C Margin” means 14.00 percentage points plus the PIK Margin;
provided, however, that if, as of Borrower’s fiscal year ended March 31, 2006,
EBITDA for the immediately preceding 12-month period equals or exceeds
$14,700,000, then commencing on the first day of the fiscal month of Borrower
next following the receipt of Borrower’s audited financial statements for its
fiscal year ended March 31, 2006, “Term Loan C Margin” means 11.00 percentage
points plus the PIK Margin, any such reduction in the Term Loan C Margin to be
effective as of April 1, 2006.

     “Term Loans” has the meaning set forth in Section 2.2(c).

     “Total Commitment” means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender’s name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 13.1.

     “Trademark Security Agreement” has the meaning specified therefor in the
Security Agreement.

     “Underlying Issuer” means a third Person which is the beneficiary of an
L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrower.

     “Underlying Letter of Credit” means a letter of credit that has been
issued by an Underlying Issuer.

     “United States” means the United States of America.

     “Voidable Transfer” has the meaning specified therefor in Section 16.6.

     “Wells Fargo” means Wells Fargo Bank, National Association, a national
banking association.

21

 

     “WFF” means Wells Fargo Foothill, Inc., a California corporation.

22EX-10.3

 

Exhibit 10.3

Execution Copy

Schedule 3.1

     The obligation of each Lender to make its initial extension of credit
provided for in the Agreement is subject to the fulfillment, to the
satisfaction of each Lender (the making of such initial extension of credit by
any Lender being conclusively deemed to be its satisfaction or waiver of the
following), of each of the following conditions precedent:

          (a) Administrative Agent shall have received a letter duly executed by
Borrower authorizing Administrative Agent to file appropriate financing
statements in such office or offices as may be necessary or, in the opinion of
Agents, desirable to perfect the security interests to be created by the Loan
Documents;

          (b) Administrative Agent shall have received evidence that appropriate
financing statements have been duly filed in such office or offices as may be
necessary or, in the opinion of Administrative Agent, desirable to perfect the
Agent’s Liens in and to the Collateral, and Administrative Agent shall have
received evidence satisfactory to Agents reflecting the filing of all such
financing statements;

          (c) Administrative Agent shall have received each of the following
documents, in form and substance satisfactory to Agents, duly executed, and
each such document shall be in full force and effect:

               (i) the Cash Management Agreements,

               (ii) the Control Agreements,

               (iii) the Security Agreement,

               (iv) a disbursement letter executed and delivered by Borrower to
Administrative Agent regarding the extensions of credit to be made on the
Closing Date, the form and substance of which is satisfactory to Agents,

               (v) the Fee Letter,

               (vi) the Lender Side Letter Agreement,

               (vii) the Mortgage on the Real Property located in Union, New Jersey,

               (viii) the Perfection Certificate, and

               (ix) letters, each in form and substance satisfactory to Agents, from
Existing Lenders to Administrative Agent respecting the amount necessary to
repay in full all of the obligations of Borrower and its Subsidiaries owing to
Existing Lenders and obtain releases of all of the Liens existing in favor of
Existing Lenders in and to the assets of Borrower and its Subsidiaries,
together with termination statements and other documentation evidencing the
termination by Existing Lenders of their Liens in and to the properties and
assets of Borrower and its Subsidiaries.

          (d) Administrative Agent shall have received a certificate from the
Secretary of Borrower (i) attesting to the resolutions of Borrower’s Board of
Directors authorizing its execution, delivery,

 

 

and performance of this Agreement and the other Loan Documents to which Borrower is a party, (ii) authorizing specific officers of Borrower to execute the same, and (iii)
attesting to the incumbency and signatures of such specific officers of
Borrower;

          (e) Administrative Agent shall have received copies of Borrower’s
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of Borrower and by the appropriate officer of
Borrower’s jurisdiction of organization;

          (f) Administrative Agent shall have received a certificate of status with
respect to Borrower, dated within 10 days of the Closing Date, such certificate
to be issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;

          (g) Administrative Agent shall have received certificates of status with
respect to Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of Borrower) in which its failure
to be duly qualified or licensed would constitute a Material Adverse Change,
which certificates shall indicate that Borrower is in good standing in such
jurisdictions;

          (h) Administrative Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 5.8, the
form and substance of which shall be satisfactory to Administrative Agent;

          (i) Administrative Agent shall have received Collateral Access Agreements
with respect to the following locations: (i) International Creative Data
Industries, Inc., 8 Trowbridge Drive, Bethel, Connecticut and (ii) Triad Tool
and Die Company, 27-29 Montgomery Street, Hillside, New Jersey;

          (j) Administrative Agent shall have received opinions of Borrower’s
counsel in form and substance satisfactory to Agents;

          (k) Borrower shall have the Required Availability after giving effect to
the initial extensions of credit hereunder and the payment of all fees and
expenses required to be paid by Borrower on the Closing Date under this
Agreement or the other Loan Documents;

          (l) If necessary for the calculation of Required Availability, Borrower
shall have remitted by wire transfer to Administrative Agent all cash (and
delivered all cash equivalents in such manner as directed by Administrative
Agent) of Borrower utilized to calculate the Required Availability;

          (m) Agents shall have completed their business, legal, and collateral due
diligence, including (i) a collateral audit and review of Borrower’s and its
Subsidiaries books and records and verification of Borrower’s representations
and warranties to Lender Group, the results of which shall be satisfactory to
Agents, (ii) an inspection of each of the locations where Borrower’s and its
Subsidiaries’ Inventory is located, and (iii) completion of a pre-funding
audit, the results of which shall be satisfactory to Agents;

          (n) Administrative Agent shall have received completed reference checks
with respect to Borrower’s senior management, the results of which are
satisfactory to Agents in their sole discretion;

          (o) Administrative Agent shall have received a set of Projections for the
three (3) year period following the Closing Date (on a year by year basis, and
for the one (1) year period following the Closing Date, on a month by month
basis), in form and substance (including as to scope and underlying
assumptions) satisfactory to Agents;

-2-

 

          (p) Borrower shall have paid all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;

          (q) Administrative Agent shall have received mortgagee title insurance
policies (or marked commitments to issue the same) for the Real Property
Collateral issued by a title insurance company satisfactory to Agents (each a
“Mortgage Policy” and, collectively, the “Mortgage Policies”) in amounts
satisfactory to Agents assuring Administrative Agent that the Mortgages on such
Real Property Collateral are valid and enforceable first priority mortgage
Liens on such Real Property Collateral free and clear of all defects and
encumbrances except Permitted Liens, and the Mortgage Policies otherwise shall
be in form and substance satisfactory to Agents;

          (r) Administrative Agent shall have received a phase-I environmental
report for the Real Property Collateral located in Union, New Jersey and a real
estate survey with respect to each parcel composing the Real Property
Collateral; the environmental consultants and surveyors retained for such
reports or surveys, the scope of the reports or surveys, and the results
thereof shall be acceptable to Agents;

          (s) Administrative Agent shall have received Uniform Commercial Code, tax
lien and litigation searches, the results of which shall be satisfactory to
Agents;

          (t) No material adverse change shall have occurred in Borrower’s financial
condition or prospects or in the value of the Collateral;

          (u) No material adverse conditions in loan syndication or financial or
capital market conditions generally that would make the proposed syndication
impracticable or materially more burdensome shall have occurred;

          (v) Borrower shall have complied with the Federal Assignment of Claims Act
in a manner acceptable to Agents, including the following (i) all necessary
notices and assignments under the Federal Assignment of Claims Act shall have
been executed by Borrower and, if necessary, The CIT Group/Business Credit,
Inc., for delivery, on the day immediately following the Closing Date to
Borrower’s Administrative Contracting Officer with respect to all Government
Contracts that are in effect as of the Closing Date and (ii) Borrower shall
have amended its registration with the Central Contractor Registration database
maintained by the Department of Defense and other agencies of the United States
of America, so that all electronic payments made by the United States of
America or any agency or department thereof to Borrower shall be made to an
account designated by Administrative Agent;

          (w) Borrower and each of its Subsidiaries shall have received all
licenses, approvals or evidence of other actions required by any Governmental
Authority, stockholder, director or any third party in connection with the
execution and delivery by Borrower or its Subsidiaries of the Loan Documents or
with the consummation of the transactions contemplated thereby;

          (x) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to
Agents; and

          (y) Agents shall have received a certificate from the Chief Financial
Officer of the Borrower dated as of the Closing Date certifying (i) as to the
truth and accuracy of the representations and warranties made by Borrower in
the Credit Agreement and the other Loan Documents, and (ii) that before and
after giving effect to the extensions of credit to be made on the Closing Date,
(x) no Default or Event of Default shall have occurred and be continuing, and
(y) Borrower and each of its Subsidiaries is Solvent.

-3-

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