Document:

EXHIBIT 10.26

 

AMENDED AND RESTATED REVOLVING CREDIT NOTE

 

	
  $10,000,000

  	
   

  	
  Rockville, Maryland

  
	
   

  	
   

  	
  June 27, 2003

  

 

FOR VALUE
RECEIVED, PEC SOLUTIONS, INC., a corporation organized under the laws of the
State of Delaware (the “Borrower”), promises to pay to the order of BANK OF
AMERICA, N. A., a national banking association (the “Lender”), the principal
sum of TEN MILLION DOLLARS ($10,000,000) (the “Principal Sum”), or so much
thereof as has been or may be advanced/readvanced to or for the account of the
Borrower pursuant to the terms and conditions of the Financing Agreement (as
hereinafter defined), together with interest thereon at the rate hereinafter
provided, in accordance with the following:

 

1.                                       Interest.

 

Commencing as
of the date hereof and continuing until repayment in full of all sums due
hereunder, the unpaid Principal Sum shall bear interest the LIBOR Rate plus two
hundred and fifty (250) basis points per annum.  For purposes hereof, the “LIBOR Rate” shall mean the fluctuating
rate of interest (rounded upwards, if necessary to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the one (1) month
London interbank offered rate for deposits in United States Dollars at
approximately 11:00 a.m. (London time) on the second preceding business day, as
adjusted from time to time in Lender’s sole discretion for then-applicable
reserve requirements, deposit insurance assessment rates and other regulatory
costs.  If for any reason such rate is
not available, the term “LIBOR Daily Floating Rate” shall mean the fluctuating
rate of interest equal to the rate of interest (rounded upwards, if necessary
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the one
(1) month London interbank offered rate for deposits in United States Dollars
at approximately 11:00 a.m. (London time) on the second preceding day, as
adjusted from time to time in Lender’s sole discretion for then-applicable
reserve requirements, deposit insurance assessment rates and other regulatory
costs; provided, however, if more than one rate is specified on Reuters Screen
LIBO page, the applicable rate shall be the arithmetic mean of all such
rates.  Any change in the rate will take
effect on the date of such change in the LIBOR Daily Floating Rate as indicated
on Telerate Page 3750.  Interest will
accrue on any non-banking day at the rate in effect on the immediately
preceding banking day.

 

The rate of
interest charged under this Note shall change immediately and contemporaneously
with any change in the LIBOR Rate.  All
interest payable under the terms of this Note shall be calculated on the basis
of a 360-day year and the actual number of days elapsed.

 

2.                                       Payments and
Maturity.

 

The unpaid
Principal Sum, together with interest thereon at the rate provided above, shall
be payable as follows:

 

(a)           Interest only on the unpaid
Principal Sum shall be due and payable monthly, commencing July 1, 2003,
and on the first day of each month thereafter to maturity; and

 

 

(b)           Unless sooner paid, the unpaid
Principal Sum, together with interest accrued and unpaid thereon, shall be due
and payable in full on the Revolving Credit Expiration Date (as defined in the
Financing Agreement).

 

The fact that
the balance hereunder may be reduced to zero from time to time pursuant to the
Financing Agreement will not affect the continuing validity of this Note or the
Financing Agreement, and the balance may be increased to the Principal Sum
after any such reduction to zero.

 

The Lender is
authorized to deduct any payment due hereunder from the Borrower’s account
#00000000079225641 issued by the Lender, on or after the date the payment is
due.

 

3.                                       Default
Interest.

 

Upon the
occurrence of an Event of Default (as hereinafter defined), the unpaid
Principal Sum shall bear interest thereafter at a rate three percent (3%) per
annum in excess of the fluctuating prime rate of interest established and
declared by the Lender from time to time until such Event of Default is cured.

 

4.                                       Late Charges.

 

If the
Borrower shall fail to make any payment under the terms of this Note within
fifteen (15) days after the date such payment is due, the Borrower shall pay to
the Lender on demand a late charge equal to five percent (5%) of such payment.

 

5.                                       Application
and Place of Payments.

 

All payments,
made on account of this Note shall be applied first to the payment of any late
charge then due hereunder, second to the payment of any prepayment fee then due
hereunder, third to the payment of accrued and unpaid interest then due
hereunder, and the remainder, if any, shall be applied to the unpaid Principal
Sum.  All payments on account of this
Note shall be paid in lawful money of the United States of America in
immediately available funds during regular business hours of the Lender at its
principal office in Rockville, Maryland or at such other times and places as
the Lender may at any time and from time to time designate in writing to the
Borrower.

 

6.                                       Prepayment.

 

The Borrower
may prepay the Principal Sum in whole or in part upon ten (10) days prior
written notice to the Lender without premium or penalty.

 

7.                                       Financing
Agreement and Other Financing Documents.

 

This Note is
the “Revolving Credit Note” described in an Amended and Restated Financing and
Security Agreement of even date herewith by and between the Borrower and the
Lender (as amended, modified, restated, substituted, extended and renewed at
any time and from time to time, the “Financing Agreement”).  The indebtedness evidenced by this Note is
included within the meaning of the term “Obligations” as defined in the
Financing Agreement.  The term
“Financing Documents” as used in this Note shall mean collectively this Note,
the Financing Agreement and any other instrument, agreement, or document
previously, simultaneously, or

 

2

 

hereafter
executed and delivered by the Borrower and/or any other person, singularly or
jointly with any other person, evidencing, securing, guaranteeing, or in
connection with the Principal Sum, this Note and/or the Financing Agreement.

 

8.                                       Security.

 

This Note is
secured as provided in the Financing Agreement.

 

9.                                       Events of
Default.

 

The occurrence
of any one or more of the following events shall constitute an event of default
(individually, an “Event of Default” and collectively, the “Events of Default”)
under the terms of this Note:

 

(a)           The failure of the Borrower to
pay to the Lender when due any and all amounts payable by the Borrower to the
Lender under the terms of this Note; or

 

(b)           The occurrence of an event of
default (as defined therein) under the terms and conditions of any of the other
Financing Documents.

 

10.                                 Remedies.

 

Upon the
occurrence of an Event of Default, at the option of the Lender, all amounts
payable by the Borrower to the Lender under the terms of this Note shall
immediately become due and payable by the Borrower to the Lender without notice
to the Borrower or any other person, and the Lender shall have all of the
rights, powers, and remedies available under the terms of this Note, any of the
other Financing Documents and all applicable laws.  The Borrower and all endorsers, guarantors, and other parties who
may now or in the future be primarily or secondarily liable for the payment of
the indebtedness evidenced by this Note hereby severally waive presentment,
protest and demand, notice of protest, notice of demand and of dishonor and
non-payment of this Note and expressly agree that this Note or any payment
hereunder may be extended from time to time without in any way affecting the
liability of the Borrower, guarantors and endorsers.

 

11.                                 Arbitration and
Waiver of Jury Trial.

 

(a)           This paragraph concerns the
resolution of any controversies or claims between the Borrower and the Lender,
whether arising in contract, tort or by statute, including but not limited to
controversies or claims that arise out of or relate to: (i) this Note
(including any renewals, extensions or modifications); or (ii) any document
related to this Note; (collectively a “Claim”).

 

(b)           At the request of the Borrower
or the Lender, any Claim shall be resolved by binding arbitration in accordance
with the Federal Arbitration Act (Title 9, U. S. Code) (the “Act”).  The Act will apply even though this Note
provides that it is governed by the law of a specified state.

 

(c)           Arbitration proceedings will
be determined in accordance with the Act, the rules and procedures for the
arbitration of financial services disputes of JAMS/Endispute or any

 

3

 

successor
thereof (“JAMS”), and the terms of this paragraph.  In the event of any inconsistency, the terms of this paragraph
shall control.

 

(d)           The arbitration shall be
administered by JAMS and conducted in any U. S. state where real or tangible
personal property collateral for this credit is located or if there is no such
collateral, in the Commonwealth of Virginia. 
All Claims shall be determined by one arbitrator; however, if Claims
exceed $5,000,000, upon the request of any party, the Claims shall be decided
by three arbitrators.  All arbitration
hearings shall commence within ninety (90) days of the demand for arbitration
and close within ninety (90) days of commencement and the award of the
arbitrator(s) shall be issued within thirty (30) days of the close of the
hearing.  However, the arbitrator(s), upon
a showing of good cause, may extend the commencement of the hearing for up to
an additional sixty (60) days.  The
arbitrator(s) shall provide a concise written statement of reasons for the
award.  The arbitration award may be
submitted to any court having jurisdiction to be confirmed and enforced.

 

(e)           The arbitrator(s) will have
the authority to decide whether any Claim is barred by the statute of
limitations and, if so, to dismiss the arbitration on that basis.  For purposes of the application of the
statute of limitations, the service on JAMS under applicable JAMS rules of a
notice of Claim is the equivalent of the filing of a lawsuit.  Any dispute concerning this arbitration
provision or whether a Claim is arbitrable shall be determined by the arbitrator(s).  The arbitrator(s) shall have the power to
award legal fees pursuant to the terms of this Note.

 

(f)            This paragraph does not limit
the right of the Borrower or the Lender to: (i) exercise self-help remedies,
such as but not limited to, setoff; (ii) initiate judicial or non-judicial
foreclosure against any real or personal property collateral; (iii) exercise
any judicial or power of sale rights, or (iv) act in a court of law to obtain
an interim remedy, such as but not limited to, injunctive relief, writ of
possession or appointment of a receiver, or additional or supplementary
remedies.

 

(g)           The filing of a court action
is not intended to constitute a waiver of the right of the Borrower or the
Lender, including the suing party, thereafter to require submittal of the Claim
to arbitration.

 

12.                                 Expenses.

 

The Borrower
promises to pay to the Lender on demand by the Lender all costs and expenses
incurred by the Lender in connection with the collection and enforcement of
this Note, including, without limitation, reasonable attorneys’ fees and
expenses and all court costs.

 

13.           Notices.

 

Any notice,
request, or demand to or upon the Borrower or the Lender shall be deemed to
have been properly given or made when delivered in accordance with Section 8.1
of the Financing Agreement.

 

4

 

14.           Miscellaneous.

 

Each right,
power, and remedy of the Lender as provided for in this Note or any of the
other Financing Documents, or now or hereafter existing under any applicable
law or otherwise shall be cumulative and concurrent and shall be in addition to
every other right, power, or remedy provided for in this Note or any of the
other Financing Documents or now or hereafter existing under any applicable
law, and the exercise or beginning of the exercise by the Lender of any one or
more of such rights, powers, or remedies shall not preclude the simultaneous or
later exercise by the Lender of any or all such other rights, powers, or
remedies.  No failure or delay by the
Lender to insist upon the strict performance of any term, condition, covenant,
or agreement of this Note or any of the other Financing Documents, or to
exercise any right, power, or remedy consequent upon a breach thereof, shall
constitute a waiver of any such term, condition, covenant, or agreement or of
any such breach, or preclude the Lender from exercising any such right, power,
or remedy at a later time or times.  By
accepting payment after the due date of any amount payable under the terms of
this Note, the Lender shall not be deemed to waive the right either to require
prompt payment when due of all other amounts payable under the terms of this
Note or to declare an Event of Default for the failure to effect such prompt
payment of any such other amount.  No
course of dealing or conduct shall be effective to amend, modify, waive,
release, or change any provisions of this Note.

 

15.           Partial  Invalidity.

 

In the event
any provision of this Note (or any part of any provision) is held by a court of
competent jurisdiction to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other
provision (or remaining part of the affected provision) of this Note; but this
Note shall be construed as if such invalid, illegal, or unenforceable provision
(or part thereof) had not been contained in this Note, but only to the extent
it is invalid, illegal, or unenforceable.

 

16.           Captions.

 

The captions
herein set forth are for convenience only and shall not be deemed to define,
limit, or describe the scope or intent of this Note.

 

17.           Applicable  Law.

 

The Borrower
acknowledges and agrees that this Note shall be governed by the laws of the
Commonwealth of Virginia, even though for the convenience and at the request of
the Borrower, this Note may be executed elsewhere.

 

18.           Consent to Jurisdiction.

 

The Borrower
irrevocably submits to the jurisdiction of any state or federal court sitting
in the Commonwealth of Virginia over any suit, action, or proceeding arising
out of or relating to this Note or any of the other Financing Documents.  The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection that the Borrower may now or
hereafter have to the laying of venue of any such suit, action, or proceeding
brought in any such court and any claim that any such suit, action, or
proceeding brought in any such court has been brought in an inconvenient
forum.  Final judgment in any such suit,
action, or proceeding brought in any such court shall be conclusive and binding
upon the Borrower and may be enforced in any court in

 

5

 

which the
Borrower is subject to jurisdiction by a suit upon such judgment, provided that
service of process is effected upon the Borrower as provided in this Note or as
otherwise permitted by applicable law.

 

19.           Service of Process.

 

The Borrower
hereby consents to process being served in any suit, action, or proceeding
instituted in connection with this Note by (a) the mailing of a copy thereof by
certified mail, postage prepaid, return receipt requested, to the Borrower and
(b) serving a copy thereof upon Commonwealth Legal Services Corporation, 4701
Cox Road, Suite 301, Glen Allen, VA 23060-6802, the agent hereby designated and
appointed by the Borrower as the Borrower’s agent for service of process.  The Borrower irrevocably agrees that such
service shall be deemed in every respect effective service of process upon the
Borrower in any such suit, action or proceeding, and shall, to the fullest
extent permitted by law, be taken and held to be valid personal service upon
the Borrower.  Nothing in this Section
shall affect the right of the Lender to serve process in any manner otherwise
permitted by law or limit the right of the Lender otherwise to bring
proceedings against the Borrower in the courts of any jurisdiction or
jurisdictions.

 

20.          WAIVER OF TRIAL BY JURY.

 

THE
BORROWER AND THE LENDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO WHICH THE BORROWER AND THE LENDER MAY BE PARTIES, ARISING OUT OF OR IN
ANY WAY PERTAINING TO (A) THIS NOTE OR (B) THE FINANCING DOCUMENTS.  IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER
CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH
ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO
THIS NOTE.

 

THIS
WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE BORROWER, AND THE
BORROWER HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN
MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY
MODIFY OR NULLIFY ITS EFFECT.  THE
BORROWER FURTHER REPRESENTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS
NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF
ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH COUNSEL.

 

21.           No Novation.

 

This Note, is
intended as a replacement of, and is in substitution for, that certain  Revolving Credit Note dated April 30,
2001 and that certain Promissory Note dated April 30, 2001, each as
amended, modified, substituted, extended, and renewed from time to time, from
the Borrower, as maker, payable to the order of Lender (collectively, the
“Original Note”), but is not intended as a novation of the Original Note or any
of the Obligations evidenced by the Original Note.  All references in the Financing Agreement or any of the other
Financing Documents to the Note shall mean the Original Note, as amended and
restated in accordance with the provisions of this Note.

 

6

 

IN WITNESS
WHEREOF, the Borrower has caused this Note to be executed under seal by its
duly authorized officers as of the date first written above.

 

	
  WITNESS OR
  ATTEST:

  	
  PEC
  SOLUTIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ SHARON
  L. CLARKE

  	
   

  	
  By:

  	
  /s/ STUART
  A. LLOYD

  	
  (SEAL)

  
	
   

  	
   

  	
   

  	
  Name: STUART
  A. LLOYD

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  SENIOR VICE
  PRESIDENT,

  CHIEF FINANCIAL OFFICER

  
						

 

7EXHIBIT 10.27

 

AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT

 

THIS AMENDED
AND RESTATED FINANCING AND SECURITY AGREEMENT (this “Agreement”) is made this
27 day of June, 2003, by and between PEC SOLUTIONS, INC., a corporation
organized under the laws of the State of Delaware (the “Borrower”) and BANK OF
AMERICA, N. A., a national banking association (the “Lender”).

 

RECITALS

 

A.            The
Borrower and the Lender entered into a Financing and Security Agreement dated
as of April 30, 2001, as modified by a First Amendment to Financing and
Security Agreement dated November 21, 2001 and a Second Amendment to
Financing and Security Agreement dated as of April 30, 2003 (the same, as
amended, modified, restated, substituted, extended, and renewed from time to
time, collectively, the “Original Financing Agreement”).  Under the terms of the Original Financing
Agreement, the Lender extended to the Borrower a revolving credit facility and
a letter of credit facility in the aggregate maximum principal amount of Six
Million Dollars ($6,000,000).

 

B.            The
Borrower has applied to the Lender for an increase in the existing credit
facilities consisting of a revolving credit facility in the maximum principal
amount of $10,000,000 and a letter of credit facility, as part of that revolving
credit facility, to be used by the Borrower for the Permitted Uses described in
this Agreement.

 

C.            The
Lender is willing to make the credit facilities available to the Borrower upon
the terms and subject to the conditions set forth in this Agreement.

 

AGREEMENTS

 

NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereby
agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1             Certain
Defined Terms.

 

As used in
this Agreement, the terms defined in the Preamble and Recitals hereto shall
have the respective meanings specified therein, and the following terms shall
have the following meanings:

 

“Account”
individually and “Accounts” collectively mean all presently existing or
hereafter acquired or created accounts, accounts receivable, health-care
insurance receivables, contract rights, notes, drafts, instruments,
acceptances, chattel paper, leases and writings evidencing a monetary
obligation or a security interest in, or a lease of, goods, all rights to
payment of a monetary obligation or other consideration under present or future
contracts

 

 

(including,
without limitation, all rights (whether or not earned by performance) to
receive payments under presently existing or hereafter acquired or created
letters of credit), or by virtue of property that has been sold, leased,
licensed, assigned or otherwise disposed of, services rendered or to be
rendered, loans and advances made or other considerations given, by or set
forth in or arising out of any present or future chattel paper, note, draft,
lease, acceptance, writing, bond, insurance policy, instrument, document or
general intangible, and all extensions and renewals of any thereof, all rights
under or arising out of present or future contracts, agreements or general
interest in goods which gave rise to any or all of the foregoing, including all
commercial tort claims, other claims or causes of action now existing or
hereafter arising in connection with or under any agreement or document or by
operation of law or otherwise, all collateral security of any kind (including,
without limitation, real property mortgages and deeds of trust) Supporting
Obligations, letter-of-credit rights and letters of credit given by any Person
with respect to any of the foregoing, all books and records in whatever media
(paper, electronic or otherwise) recorded or stored, with respect to any or all
of the foregoing and all equipment and general intangibles necessary or beneficial
to retain, access and/or process the information contained in those books and
records, and all Proceeds of the foregoing.

 

“Account
Debtor” means any Person who is obligated on a Receivable and “Account Debtors”
mean all Persons who are obligated on the Receivables.

 

“Additional
Borrower” means each Person that has executed and delivered an Additional
Borrower Joinder Supplement that has been accepted and approved by the Lender.

 

“Additional
Borrower Joinder Supplement” means an Additional Borrower Joinder Supplement in
substantially the form attached hereto as EXHIBIT A, with the blanks
appropriately completed and executed and delivered by the Additional Borrower
and the Borrower.

 

“Affiliate”
means, with respect to any designated Person, any other Person, (a) directly or
indirectly controlling, directly or indirectly controlled by, or under direct
or indirect common control with the Person designated, (b) directly or
indirectly owning or holding five percent (5%) or more of any equity interest
in such designated Person, or (c) five percent (5%) or more of whose stock or
other equity interest is directly or indirectly owned or held by such
designated Person.  For purposes of this
definition, the term “control” (including with correlative meanings, the terms
“controlling”, “controlled by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or other equity interests or by contract or otherwise.

 

“Agreement”
means this Amended and Restated Financing and Security Agreement, as amended,
restated, supplemented or otherwise modified in writing in accordance with the
provisions of Section 8.2 (Amendments; Waivers).

 

“Asset
Disposition” means the disposition of any or all of the Assets of the Borrower
or any of its Subsidiaries, whether by sale, lease, transfer or other
disposition (including any such

 

2

 

disposition effected by way of
merger or consolidation) other than (a) sales of Inventory, (b) licensing of
Patents, Trademarks and/or Copyrights, and (c) dispositions of worn, surplus or
obsolete Equipment, all only to the extent made in the ordinary course of
business.

 

“Assets” means
at any date all assets that, in accordance with GAAP consistently applied,
should be classified as assets on a consolidated balance sheet of the Borrower
and its Subsidiaries.

 

“Bankruptcy
Code” means Title 11 of the United States Code, as amended from time to time,
and any successor Laws.

 

“Borrower”
means each Person defined as a “Borrower” in the preamble of this Agreement and
each Additional Borrower; “Borrowers” means the collective reference to all
Persons defined as “Borrowers” in the preamble to this Agreement and all
Additional Borrowers.

 

“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks in the State are authorized or required to close.

 

“Capital
Adequacy Regulation” means any guideline, request or directive of any central
bank or other Governmental Authority, or any other law, rule or regulation,
whether or not having the force of law, in each case, regarding capital
adequacy of any bank or of any corporation controlling a bank.

 

“Capital
Expenditure” means an expenditure for Fixed or Capital Assets including,
without limitation, the entering into of a Capital Lease.

 

“Capital
Lease” means any lease of real or personal property, for which the related
Lease Obligations have been or should be, in accordance with GAAP consistently
applied, capitalized on the balance sheet.

 

“Cash
Equivalents” means (a) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed or insured by the United States
Government or any agency thereof, (b) certificates of deposit with maturities
of one (1) year or less from the date of acquisition of, or money market
accounts maintained with, the Lender, any Affiliate of the Lender, or any other
domestic commercial bank having capital and surplus in excess of One Hundred
Million Dollars ($100,000,000.00) or such other domestic financial institutions
or domestic brokerage houses to the extent disclosed to, and approved by, the
Lender and (c) commercial paper of a domestic issuer rated at least either A-1
by Standard & Poor’s Corporation or P-1 by Moody’s Investors Service, Inc.
with maturities of six (6) months or less from the date of acquisition.

 

“Closing Date”
means the Business Day, in any event not later than June 27, 2003, on
which the Lender shall be satisfied that the conditions precedent set forth in
Section 5.1 (Conditions to Initial Advance) have been fulfilled.

 

3

 

“Collateral”
means all property of the Borrower subject from time to time to the Liens of
this Agreement, any of the Security Documents and/or any of the other Financing
Documents, together with any and all cash and non-cash proceeds and products
thereof.

 

“Commitment”
means the collective reference to the Revolving Credit Commitment and the
Letter of Credit Commitment.

 

“Committed
Amount” means the Revolving Credit Committed Amount or the Letter of Credit
Committed Amount, as the case may be, and “Committed Amounts” means
collectively the Revolving Credit Committed Amount and the Letter of Credit
Committed Amount.

 

“Compliance
Certificate” means a periodic Compliance Certificate described in Section 6.1.1
(Financial Statements).

 

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

 

“Credit
Facility” means the Revolving Credit Facility or the Letter of Credit Facility,
as the case may be, and “Credit Facilities” means collectively the Revolving
Credit Facility, the Letter of Credit Facility and any and all other credit
facilities now or hereafter extended under or secured by this Agreement.

 

“Default”
means an event which, with the giving of notice or lapse of time, or both,
could or would constitute an Event of Default under the provisions of this
Agreement.

 

“Documents”
means all documents of title or receipts, whether now existing or hereafter
acquired or created, and all Proceeds of the foregoing.

 

“Earnings”
means net income, less income or loss from discontinued operations and
extraordinary items, plus income taxes, plus interest expense.

 

“EBITDA” means
net income, less income or plus loss from discontinued operations and
extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, amortization and other non-cash charges.

 

“Enforcement
Costs” means all expenses, charges, costs and fees whatsoever (including,
without limitation, reasonable outside and allocated in-house counsel
attorney’s fees and expenses) of any nature whatsoever paid or incurred by or
on behalf of the Lender in connection with (a) any or all of the Obligations,
this Agreement and/or any of the other Financing Documents, (b) the creation,
perfection, collection, maintenance, preservation, defense, protection,
realization upon, disposition, sale or enforcement of all or any part of the
Collateral, this Agreement or any of the other Financing Documents, including,
without limitation, those costs and expenses more specifically enumerated
Section 3.4 (Costs) and/or Section 8.8 (Enforcement Costs), and further
including, without limitation, amounts paid to lessors, processors, bailees,
warehousemen, sureties, judgment creditors and others in possession of or

 

4

 

with a Lien against or claimed
against the Collateral, and (c) the monitoring, administration, processing
and/or servicing of any or all of the Obligations, the Financing Documents,
and/or the Collateral.

 

“Equipment”
means all equipment, machinery, computers, chattels, tools, parts, machine
tools, furniture, furnishings, fixtures and supplies of every nature, presently
existing or hereafter acquired or created and wherever located, whether or not
the same shall be deemed to be affixed to real property, and all of such types
of property leased by the Borrower and all of the Borrower’s rights and
interests with respect thereto under such leases (including, without
limitation, options to purchase), together with all accessions, additions,
fittings, accessories, special tools, and improvements thereto and
substitutions therefor and all parts and equipment which may be attached to or
which are necessary or beneficial for the operation, use and/or disposition of
such personal property, all licenses, warranties, franchises and General
Intangibles related thereto or necessary or beneficial for the operation, use
and/or disposition of the same, together with all Accounts, Chattel Paper,
Instruments and other consideration received by the Borrower on account of the
sale, lease or other disposition of all or any part of the foregoing, and
together with all rights under or arising out of present or future Documents
and contracts relating to the foregoing and all Proceeds of the foregoing.

 

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

 

“Event of
Default” has the meaning described in ARTICLE VII (Default and Rights and
Remedies).

 

“Facilities”
means the collective reference to the loan, letter of credit, interest rate
protection, foreign exchange risk, cash management, and other credit facilities
now or hereafter provided to the Borrower by the Lender whether under this
Agreement or otherwise.

 

“Fees” means
the collective reference to each fee payable to the Lender under the terms of
this Agreement or under the terms of any of the other Financing Documents.

 

“Financing
Documents” means at any time collectively this Agreement, the Note, the
Security Documents, the Letter of Credit Documents, and any other instrument,
agreement or document previously, simultaneously or hereafter executed and
delivered by the Borrower, any Guarantor and/or any other Person, singly or
jointly with another Person or Persons, evidencing, securing, guarantying or in
connection with this Agreement, any Note, any of the Security Documents, any of
the Facilities, and/or any of the Obligations.

 

“Fixed or
Capital Assets” of a Person at any date means all assets which would, in
accordance with GAAP consistently applied, be classified on the balance sheet
of such Person as property, plant or equipment at such date.

 

5

 

“Funded Debt”
means all outstanding liabilities for borrowed money, letters of credit, synthetic
leases and other interest-bearing liabilities, including current and long-term
debt, and guarantees of the foregoing, less the non-current portion of
Subordinated Liabilities.

 

“GAAP” means
generally accepted accounting principles in the United States of America in
effect from time to time.

 

“General
Intangibles” means all general intangibles of every nature, whether presently
existing or hereafter acquired or created, and without implying any limitation
of the foregoing, further means all books and records, commercial tort claims,
other claims (including without limitation all claims for income tax and other
refunds), payment intangibles, Supporting Obligations, choses in action,
claims, causes of action in tort or equity, contract rights, judgments, customer
lists, software, Patents, Trademarks, licensing agreements, rights in
intellectual property, goodwill (including goodwill of the Borrower’s business
symbolized by and associated with any and all Trademarks, trademark licenses,
Copyrights and/or service marks), royalty payments, licenses, letter-of-credit
rights, letters of credit, contractual rights, the right to receive refunds of
unearned insurance premiums, rights as lessee under any lease of real or
personal property, literary rights, Copyrights, service names, service marks,
logos, trade secrets, amounts received as an award in or settlement of a suit
in damages, deposit accounts, interests in joint ventures, general or limited
partnerships, or limited liability companies or partnerships, rights in
applications for any of the foregoing, books and records in whatever media
(paper, electronic or otherwise) recorded or stored, with respect to any or all
of the foregoing, all Supporting Obligations with respect to any of the
foregoing, and all Equipment and General Intangibles necessary or beneficial to
retain, access and/or process the information contained in those books and
records, and all Proceeds of the foregoing.

 

“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any
department, agency or instrumentality thereof.

 

“Hazardous
Materials” means (a) any “hazardous waste” as defined by the Resource
Conservation and Recovery Act of 1976, as amended from time to time, and
regulations promulgated thereunder; (b) any “hazardous substance” as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, and regulations promulgated thereunder; (c)
any substance the presence of which on any property now or hereafter owned,
acquired or operated by the Borrower is prohibited by any Law similar to those
set forth in this definition; and (d) any other substance which by Law requires
special handling in its collection, storage, treatment or disposal.

 

“Hazardous
Materials Contamination” means the contamination (whether presently existing or
occurring after the date of this Agreement) by Hazardous Materials of any
property owned, operated or controlled by the Borrower or for which the
Borrower has responsibility, including, without limitation, improvements,
facilities, soil, ground water, air or other elements on, or of, any property
now or hereafter owned, acquired or operated by the Borrower, and any

 

6

 

other contamination by
Hazardous Materials for which the Borrower is, or is claimed to be,
responsible.

 

“Indebtedness”
of a Person means at any date the total liabilities of such Person at such time
determined in accordance with GAAP consistently applied.

 

“Indebtedness
for Borrowed Money” of a Person means at any time the sum at such time of (a)
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (b) any obligations of such Person in respect of
letters of credit, banker’s or other acceptances or similar obligations issued
or created for the account of such Person, (c) Lease Obligations of such Person
with respect to Capital Leases, (d) all liabilities secured by any Lien on any
property owned by such Person, to the extent attached to such Person’s interest
in such property, even though such Person has not assumed or become personally
liable for the payment thereof, (e) obligations of third parties which are
being guarantied or indemnified against by such Person or which are secured by
the property of such Person; (f) any obligation of such Person under an
employee stock ownership plan or other similar employee benefit plan; (g) any
obligation of such Person or a Commonly Controlled Entity to a Multi-employer
Plan; and (h) any obligations, liabilities or indebtedness, contingent or
otherwise, under or in connection with, any Swap Contract; but excluding trade
and other accounts payable in the ordinary course of business in accordance
with customary trade terms and which are not overdue (as determined in
accordance with customary trade practices) or which are being disputed in good
faith by such Person and for which adequate reserves are being provided on the
books of such Person in accordance with GAAP.

 

“Indemnified
Parties” has the meaning set forth in Section 8.17 (Indemnification).

 

“Instrument”
means a negotiable instrument or any other writing which evidences a right to
payment of a monetary obligation and is not itself a security agreement or
lease and is of a type that in the ordinary course of business is transferred
by delivery with any necessary endorsement or assignment, and all Supporting
Obligations with respect to any of the foregoing and all Proceeds with respect
to any of the foregoing.

 

“Interest
Coverage Ratio” means the ratio of Earnings to interest expense on all
Indebtedness for Borrowed Money.

 

“Internal
Revenue Code” means the Internal Revenue Code of 1986, as amended from time to
time, and the Income Tax Regulations issued and proposed to be issued
thereunder.

 

“Investment
Property” means a security, whether certificated or uncertificated, security
entitlement, securities account, commodity contract or commodity account and
all Proceeds of, and Supporting Obligations with respect to, the foregoing.

 

“Laws” means
all ordinances, statutes, rules, regulations, orders, injunctions, writs, or
decrees of any Governmental Authority.

 

7

 

“Lease
Obligations” of a Person means for any period the rental commitments of such
Person for such period under leases for real and/or personal property (net of
rent from subleases thereof, but including taxes, insurance, maintenance and
similar expenses which such Person, as the lessee, is obligated to pay under
the terms of said leases, except to the extent that such taxes, insurance,
maintenance and similar expenses are payable by sublessees), including rental
commitments under Capital Leases.

 

“Letter of
Credit” and “Letters of Credit” shall have the meanings described in Section
2.2.1 (Letters of Credit).

 

“Letter of
Credit Agreement” means the collective reference to each letter of credit
application and agreement substantially in the form of the Lender’s then
standard form of application for letter of credit or such other form as may be
approved by the Lender, executed and delivered by the Borrower in connection
with the issuance of a Letter of Credit, as the same may from time to time be
amended, restated, supplemented or modified and “Letter of Credit Agreements”
means all of the foregoing in effect at any time and from time to time.

 

“Letter of
Credit Commitment” means the agreement of the Lender relating to the issuance
of Letters of Credit subject to and in accordance with the provisions of this
Agreement.

 

“Letter of
Credit Documents” means any and all drafts under or purporting to be under a
Letter of Credit, any Letter of Credit Agreement, and any other instrument,
document or agreement executed and/or delivered by the Borrower or any other
Person under, pursuant to or in connection with a Letter of Credit or any
Letter of Credit Agreement.

 

“Letter of
Credit Facility” means the facility established by the Lender pursuant to
Section 2.2 (Letter of Credit Facility).

 

“Letter of
Credit Fee” and “Letter of Credit Fees” have the meanings described in Section
2.2.2 (Letter of Credit Fees).

 

“Letter of
Credit Obligations” means the collective reference to all Obligations of the
Borrower with respect to the Letters of Credit and the Letter of Credit
Agreements.

 

“Letter-of-credit
right” means a right to payment or performance under a letter of credit,
whether or not the beneficiary has demanded or is at the time entitled to
demand payment or performance.

 

“Liabilities”
means at any date all liabilities that in accordance with GAAP consistently
applied should be classified as liabilities on a consolidated balance sheet of
the Borrower and its Subsidiaries.

 

“Lien” means
any mortgage, deed of trust, deed to secure debt, grant, pledge, security
interest, assignment, encumbrance, judgment, lien, financing statement,
hypothecation, provision in any instrument or other document for confession of
judgment, cognovit or other similar right or other remedy, claim, charge,
control over or interest of any kind in real or personal property

 

8

 

securing any indebtedness,
duties, obligations, and liabilities owed to, or a claimed to be owed to, a
Person, all whether perfected or unperfected, avoidable or unavoidable, based
on the common law, statute or contract or otherwise, including, without
limitation, any conditional sale or other title retention agreement, any lease
in the nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction, excluding the
precautionary filing of any financing statement by any lessor in a true lease transaction,
by any bailor in a true bailment transaction or by any consignor in a true
consignment transaction under the Uniform Commercial Code of any jurisdiction
or the agreement to give any financing statement by any lessee in a true lease
transaction, by any bailee in a true bailment transaction or by any consignee
in a true consignment transaction.

 

“Loan” means
each of the Revolving Loan.

 

“Loan Notice”
has the meaning described in Section 2.1.2 (Procedure for Making Advances).

 

“Maximum Rate”
has the meaning described in Section 2.3.4 (Maximum Interest Rate).

 

“Multi-employer
Plan” means a Plan that is a Multi-employer plan as defined in Section
4001(a)(3) of ERISA.

 

“Note” means
the Revolving Credit and “Notes” means collectively the Revolving Credit Note,
and any other promissory note which may from time to time evidence all or any
portion of the Obligations.

 

“Obligations”
means all present and future indebtedness, duties, obligations, and
liabilities, whether now existing or contemplated or hereafter arising, of the
Borrower to the Lender under, arising pursuant to, in connection with and/or on
account of the provisions of this Agreement, each Note, each Security Document,
and/or any of the other Financing Documents, the Loan, any Swap Contract and/or
any of the Facilities including, without limitation, the principal of, and
interest on, each Note, late charges, the Fees, Enforcement Costs, and
prepayment fees (if any), letter of credit reimbursement obligations, letter of
credit fees or fees charged with respect to any guaranty of any letter of
credit; also means all other present and future indebtedness, duties,
obligations, and liabilities, whether now existing or contemplated or hereafter
arising, of the Borrower to the Lender of any nature whatsoever, regardless of
whether such indebtedness, duties, obligations, and liabilities be direct,
indirect, primary, secondary, joint, several, joint and several, fixed or
contingent; and also means any and all renewals, extensions, substitutions,
amendments, restatements and rearrangements of any such indebtedness, duties,
obligations, and liabilities.

 

“Outstanding
Letter of Credit Obligations” has the meaning described in Section 2.2.3 (Terms
of Letters of Credit).

 

“PBGC” means
the Pension Benefit Guaranty Corporation.

 

9

 

“Permitted
Liens” means:  (a) Liens for Taxes which
are not delinquent or which the Lender has determined in the exercise of its
sole and absolute discretion (i) are being diligently contested in good faith
and by appropriate proceedings, and such contest operates to suspend collection
of the contested Taxes and enforcement of a Lien, (ii) the Borrower has the
financial ability to pay, with all penalties and interest, at all times without
materially and adversely affecting the Borrower, and (iii) are not, and will
not be with appropriate filing, the giving of notice and/or the passage of
time, entitled to priority over any Lien of the Lender; (b) deposits or pledges
to secure obligations under workers’ compensation, social security or similar
laws, or under unemployment insurance in the ordinary course of business; (c)
Liens securing the Obligations; (d) judgment Liens to the extent the entry of
such judgment does not constitute a Default or an Event of Default under the
terms of this Agreement or result in the sale or levy of, or execution on, any
of the Collateral; and (e) such other Liens, if any, as are set forth on Schedule
4.1.16 attached hereto and made a part hereof.

 

“Permitted
Uses” means the payment of expenses incurred in the ordinary course of the
Borrower’s business.

 

“Person” means
and includes an individual, a corporation, a partnership, a joint venture, a
limited liability company or partnership, a trust, an unincorporated association,
a Governmental Authority, or any other organization or entity.

 

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

 

“Prime Rate”
means the rate of interest publicly announced from time to time by the Lender
as its prime rate.  It is a rate set by
the Lender based upon various factors including the Lender’s costs and desired
return, general economic conditions, and other factors, and is used as a
reference point for pricing some loans. 
However, the Lender may price loans at, above, or below such announced
rate.  Any changes in the Prime Rate
shall take effect on the day specified in the public announcement of such change.

 

“Post-Default
Rate” means the Prime Rate in effect from time to time, plus three percent (3%)
per annum.

 

“Prepayment”
means a Revolving Loan Optional Prepayment as the case may be, and
“Prepayments” mean collectively all Revolving Loan Optional Prepayments.

 

“Proceeds” has
the meaning described in the Uniform Commercial Code as in effect from time to
time.

 

“Receivable”
means one of the Borrower’s now owned and hereafter owned, acquired or created
Accounts, Chattel Paper, General Intangibles and Instruments; and “Receivables”
means all of the Borrower’s now or hereafter owned, acquired or created
Accounts, Chattel Paper, General Intangibles and Instruments, and all cash and
non-cash proceeds and products thereof.

 

10

 

“Registered
Organization” means an organization organized solely under the law of a single
state or the United States and as to which the state or the United States must
maintain a public record showing the organization to have been organized.

 

“Reportable
Event” means any of the events set forth in Section 4043(c) of ERISA or the
regulations thereunder.

 

“Responsible
Officer” means the chief executive officer of the Borrower or the president of
the Borrower or, with respect to financial matters, the chief financial officer
of the Borrower.

 

“Revolving
Credit Commitment” means the agreement of the Lender relating to the making of
the Revolving Loan and advances thereunder subject to and in accordance with
the provisions of this Agreement.

 

“Revolving
Credit Commitment Period” means the period of time from the Closing Date to the
Business Day preceding the Revolving Credit Termination Date.

 

“Revolving
Credit Committed Amount” has the meaning described in Section 2.1.1 (Revolving
Credit Facility).

 

“Revolving
Credit Expiration Date” means June 30, 2005.

 

“Revolving
Credit Facility” means the facility established by the Lender pursuant to
Section 2.1 (Revolving Credit Facility).

 

“Revolving
Credit Note” has the meaning described in Section 2.1.3 (Revolving Credit
Note).

 

“Revolving
Credit Termination Date” means the earlier of (a) the Revolving Credit
Expiration Date, or (b) the date on which the Revolving Credit Commitment is
terminated pursuant to Section 7.2 (Remedies) or otherwise.

 

“Revolving
Credit Fee” and “Revolving Credit Fees” have the meanings described in Section
2.1.6 (Revolving Credit Fee).

 

“Revolving
Loan” has the meaning described in Section 2.1.1 (Revolving Credit Facility).

 

“Revolving
Loan Account” has the meaning described in Section 2.1.5 (Revolving Loan
Account).

 

“Revolving
Loan Optional Prepayment” and “Revolving Loan Optional Prepayments” have the
meanings described in Section 2.1.4 (Optional Prepayment of Revolving Loan).

 

“Security
Documents” means collectively any assignment, pledge agreement, security
agreement, mortgage, deed of trust, deed to secure debt, financing statement
and any similar

 

11

 

instrument, document or
agreement under or pursuant to which a Lien is now or hereafter granted to, or
for the benefit of, the Lender on any real or personal property of any Person
to secure all or any portion of the Obligations, all as the same may from time
to time be amended, restated, supplemented or otherwise modified.

 

“State” means
the Commonwealth of Virginia.

 

“Subordinated
Liabilities” means liabilities subordinated to Borrower’s obligations to Lender
in a manner acceptable to Lender in its sole discretion.

 

“Subsidiary”
means any corporation the majority of the voting shares of which at the time
are owned directly by the Borrower and/or by one or more Subsidiaries of the
Borrower.

 

“Supporting
Obligation” means a Letter-of-credit right, secondary obligation or obligation
of a secondary obligor or that supports the payment or performance of an
account, chattel paper, a document, a general intangible, an instrument or
investment property.

 

“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.

 

“Taxes” means
all taxes and assessments whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character (including all
penalties or interest thereon), which at any time may be assessed, levied,
confirmed or imposed by any Governmental Authority on the Borrower or any of
its properties or assets or any part thereof or in respect of any of its
franchises, businesses, income or profits.

 

“Uniform
Commercial Code” means, unless otherwise provided in this Agreement, the
Uniform Commercial Code as adopted by and in effect from time to time in the
State or in any other jurisdiction, as applicable.

 

“Wholly Owned
Subsidiary” means any domestic United States corporation all the shares of
stock of all classes of which (other than directors’ qualifying shares) at the
time are owned directly or indirectly by the Borrower and/or by one or more
Wholly Owned Subsidiaries of the Borrower.

 

Section 1.2             Accounting
Terms and Other Definitional Provisions.

 

Unless
otherwise defined herein, as used in this Agreement and in any certificate,
report or other document made or delivered pursuant hereto, accounting terms
not otherwise defined herein, and accounting terms only partly defined herein,
to the extent not defined, shall have the respective meanings given to them
under GAAP, as consistently applied to the applicable

 

12

 

Person.  All terms used herein which are defined by
the Uniform Commercial Code shall have the same meanings as assigned to them by
the Uniform Commercial Code unless and to the extent varied by this
Agreement.  The words “hereof”, “herein”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, subsection, schedule and exhibit references
are references to articles, sections or subsections of, or schedules or
exhibits to, as the case may be, this Agreement unless otherwise
specified.  As used herein, the singular
number shall include the plural, the plural the singular and the use of the
masculine, feminine or neuter gender shall include all genders, as the context
may require.  Reference to any one or
more of the Financing Documents shall mean the same as the foregoing may from
time to time be amended, restated, substituted, extended, renewed, supplemented
or otherwise modified.

 

ARTICLE II

THE CREDIT FACILITIES

 

Section 2.1             The
Revolving Credit Facility.

 

2.1.1        Revolving Credit
Facility.

 

Subject to and
upon the provisions of this Agreement, the Lender establishes a revolving
credit facility in favor of the Borrower. 
The aggregate of all advances under the Revolving Credit Facility is
sometimes referred to in this Agreement collectively as the “Revolving Loan”.

 

The principal amount
of Ten Million Dollars ($10,000,000) is the “Revolving Credit Committed
Amount”.  If at any time the unpaid
principal balance of the Revolving Loan exceeds the Revolving Credit Committed
Amount in effect from time to time, the Borrower shall pay such excess to the
Lender ON DEMAND.

 

Unless sooner
paid, the unpaid Revolving Loan, together with interest accrued and unpaid
thereon, and all other Obligations shall be due and payable in full on the
Revolving Credit Expiration Date.

 

2.1.2        Procedure
for Making Advances Under the Revolving Loan; Lender Protection Loans.

 

The Borrower
may borrow under the Revolving Credit Facility on any Business Day.  Advances under the Revolving Loan shall be
deposited to a demand deposit account of the Borrower with the Lender (or an
Affiliate of the Lender) or shall be otherwise applied as directed by the
Borrower, which direction the Lender may require to be in writing.  No later than 10:00 a.m. (Eastern Time) on
the date of the requested borrowing, the Borrower shall give the Lender oral or
written notice (a “Loan Notice”) of the amount and (if requested by the Lender)
the purpose of the requested borrowing. 
Any oral Loan Notice shall be confirmed in writing by the Borrower
within three (3) Business Days after the making of the requested advance under
the Revolving Loan.  Each Loan Notice
shall be irrevocable.

 

13

 

In addition,
the Borrower hereby irrevocably authorizes the Lender at any time and from time
to time, without further request from or notice to the Borrower, to make
advances under the Revolving Loan, which the Lender, in its sole and absolute
discretion, deems necessary or appropriate to protect the interests of the
Lender under this Agreement, including, without limitation, advances and
reserves under the Revolving Loan made to cover debit balances in the Revolving
Loan Account, principal of, and/or interest on, any Loan, the Obligations
(including, without limitation, any Letter of Credit Obligations), and/or Enforcement
Costs, prior to, on, or after the termination of other advances under this
Agreement, regardless of whether the outstanding principal amount of the
Revolving Loan that the Lender may advance or reserve hereunder exceeds the
Revolving Credit Committed Amount.  The
Lender shall provide the Borrower written notice of any advances made under
this paragraph as soon as reasonably practicable after the making of the
advance.

 

2.1.3        Revolving Credit Note.

 

The obligation
of the Borrower to pay the Revolving Loan, with interest, shall be evidenced by
a promissory note (as from time to time extended, amended, restated,
supplemented or otherwise modified, the “Revolving Credit Note”) substantially
in the form of EXHIBIT B attached hereto and made a part hereof, with
appropriate insertions.  The Revolving
Credit Note shall be dated as of the Closing Date, shall be payable to the
order of the Lender at the times provided in the Revolving Credit Note, and
shall be in the principal amount of the Revolving Credit Committed Amount.  The Borrower acknowledges and agrees that,
if the outstanding principal balance of the Revolving Loan outstanding from
time to time exceeds the face amount of the Revolving Credit Note, the excess shall
bear interest rates provided from time to time for advances under the Revolving
Loan evidenced by the Revolving Credit Note and shall be payable, with accrued
interest, ON DEMAND.  The Revolving
Credit Note shall not operate as a novation of any of the Obligations or
nullify, discharge, or release any such Obligations or the continuing
contractual relationship of the parties hereto in accordance with the
provisions of this Agreement.

 

2.1.4        Optional Prepayments of
Revolving Loan.

 

The Borrower
shall have the option, at any time and from time to time, to prepay (each a
“Revolving Loan Optional Prepayment” and collectively the “Revolving Loan
Optional Prepayments”) the Revolving Loan, in whole or in part without premium
or penalty.

 

2.1.5        Revolving Loan Account.

 

The Lender
will establish and maintain a loan account on its books (the “Revolving Loan
Account”) to which the Lender will (a) debit (i) the principal amount of
each advance of the Revolving Loan made by the Lender hereunder as of the date
made, (ii) the amount of any interest accrued on the Revolving Loan as and when
due, and (iii) any other amounts due and payable by the Borrower to the Lender
from time to time under the provisions of this Agreement in connection with the
Revolving Loan, including, without limitation, Enforcement Costs, Fees, late
charges, and service, collection and audit fees, as and when due and payable,
and (b) credit all payments made by the Borrower to the Lender on
account of the

 

14

 

Revolving Loan as of the date made.  The Lender may debit the Revolving Loan
Account for the amount of any Item of Payment that is returned to the Lender
unpaid.  All credit entries to the
Revolving Loan Account are conditional and shall be readjusted as of the date
made if final and indefeasible payment is not received by the Lender in cash or
solvent credits.  Any and all periodic
or other statements or reconciliations, and the information contained in those
statements or reconciliations, of the Revolving Loan Account shall be final, binding
and conclusive upon the Borrower in all respects, absent manifest error, unless
the Lender receives specific written objection thereto from the Borrower within
thirty (30) Business Days after such statement or reconciliation shall have
been sent by the Lender.

 

2.1.6        Revolving Credit Fee.

 

The Borrower
shall pay to the Lender an annual revolving credit facility fee (collectively,
the “Revolving Credit Fees” and individually, a “Revolving Credit Fee”) in an
amount equal to Five Thousand Dollars ($5,000).  The Revolving Credit Fee shall be paid by the Borrower to the
Lender in full and in advance on the Closing Date and annually thereafter on
the anniversary of the Closing Date. 
The Lender is authorized to deduct any payment due hereunder from the
Borrower’s account #00000000079225641 issued by the Lender, on or after the
date the payment is due.

 

Section 2.2             The
Letter of Credit Facility.

 

2.2.1        Letters of Credit.

 

Subject to and
upon the provisions of this Agreement, and as a part of the Revolving Credit
Commitment, the Borrower, upon the prior approval of the Lender, may obtain
standby letters of credit (as the same may from time to time be amended,
supplemented or otherwise modified, each a “Letter of Credit” and collectively
the “Letters of Credit”) from the Lender from time to time from the Closing
Date until the Business Day preceding the Revolving Credit Termination
Date.  The Borrower will not be entitled
to obtain a Letter of Credit hereunder unless after giving effect to the
request, the outstanding principal balance of the Revolving Loan and of the
Letter of Credit Obligations would not exceed the Revolving Credit Committed
Amount.

 

2.2.2        Letter of Credit Fees.

 

Prior to or
simultaneously with the opening of each Letter of Credit, the Borrower shall
pay to the Lender, a letter of credit fee (each a “Letter of Credit Fee” and
collectively the “Letter of Credit Fees”) in an amount equal to the greater of
(a) one and one half of one percent (1-1/2%) per annum of the amount of the
Letter of Credit or (b) $300.  Prior to
or simultaneously with the renewal of a Letter of Credit, the Borrower shall
pay to the Lender, a fee equal to the greater of (a) one percent (1%) per annum
of the amount of the Letter of Credit or (b) $300.  In addition, the Borrower shall pay to the Lender any and all
additional issuance, negotiation, processing, transfer or other fees to the
extent and as and when required by the provisions of any Letter of Credit
Agreement; such additional fees are included in and a part of the “Fees”
payable by the Borrower under the provisions of this Agreement.  The Lender is

 

15

 

authorized to deduct any
payment due hereunder from the Borrower’s account #00000000079225641 issued by
the Lender, on or after the date the payment is due.

 

2.2.3        Terms of Letters of
Credit.

 

Each Letter of
Credit shall be opened pursuant to a Letter of Credit Agreement.  If any Letter of Credit has an expiration
date later than the Business Day preceding the Revolving Credit Termination
Date, as of the Business Day preceding the Revolving Credit Termination Date an
advance of the Letter of Credit Facility shall be made by the Lender in the
face amount of such Letter of Credit (or Letters of Credit) and the Proceeds
thereof shall be deposited in an account titled in the name of the Lender as
trustee for the Borrower.  The proceeds
of the trustee account referred to in the immediately preceding sentence shall
be held as collateral for the Letter of Credit (or Letters of Credit) and in
the event of a draw under the Letter of Credit (or Letters of Credit), used to
pay any such draw.  The aggregate face
amount of all Letters of Credit at any one time outstanding and issued by the
Lender pursuant to the provisions of this Agreement, plus the amount of any
unpaid Letter of Credit Fees accrued or scheduled to accrue thereon, and less
the aggregate amount of all drafts issued under or purporting to have been
issued under such Letters of Credit that have been paid by the Lender, is herein
called the “Outstanding Letter of Credit Obligations”.

 

2.2.4        Procedure for Letters
of Credit.

 

The Borrower
shall give the Lender written notice at least three (3) Business Days prior to
the date on which a Letter of Credit is requested to be opened of their request
for a Letter of Credit.  Such notice
shall be accompanied by a duly executed and delivered Letter of Credit
Agreement.  Upon receipt of the Letter
of Credit Agreement and the Letter of Credit Fee, the Lender shall process such
Letter of Credit Agreement in accordance with its customary procedures and open
such Letter of Credit on the Business Day specified in such notice.

 

2.2.5        Payments of Letters of
Credit.

 

The Borrower
hereby promises to pay to the Lender, ON DEMAND and in United States Dollars,
the following which are herein collectively referred to as the “Current Letter
of Credit Obligations”:

 

(a)           the amount which the
Lender has paid or will be required to pay under each draft or draw on a Letter
of Credit, whether such demand be in advance of the Lender’s payment or for
reimbursement for such payment;

 

(b)           any and all reasonable
charges and expenses which the Lender may pay or incur relative to the Letter
of Credit and/or such draws or drafts; and

 

(c)           interest on the amounts
described in (a) and (b) not paid by the Borrower as and when due and payable
under the provisions of (a)

 

16

 

and (b) above
from the day the same are due and payable until paid in full at the
Post-Default Rate.

 

In addition,
the Borrower hereby promises to pay any and all other Letter of Credit
Obligations as and when due and payable in accordance with the provisions of
this Agreement and the Letter of Credit Agreements.  The obligation of the Borrower to pay Current Letter of Credit
Obligations and all other Letter of Credit Obligations shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrower or any other account party
may have or have had against the beneficiary of such Letter of Credit, the
Lender, or any other Person, including, without limitation, any defense based
on the failure of any draft or draw to conform to the terms of such Letter of
Credit, or the legality, validity, regularity or enforceability of such Letter
of Credit, any draft or other documents presented with any draft, any Letter of
Credit Agreement, this Agreement, or any of the other Financing Documents, all
whether or not the Lender had actual or constructive knowledge of the same, and
irrespective of any Collateral, security or guarantee therefore or right of
offset with respect thereto and irrespective of any other circumstances
whatsoever which constitutes, or might be construed to constitute, an equitable
or legal discharge of the Borrower for any Letter of Credit Obligations, in
bankruptcy or otherwise; provided, however, that the Borrower
shall not be obligated to reimburse the Lender for any wrongful payment under
such Letter of Credit made as a result of the Lender ‘s willful
misconduct.  The obligation of the
Borrower to pay the Letter of Credit Obligations shall not be conditioned or
contingent upon the pursuit by the Lender or any other Person at any time of
any right or remedy against any Person which may be or become liable in respect
of all or any part of such obligation or against any Collateral, security or
guarantee therefore or right of offset with respect thereto.

 

The obligation
of the Borrower to pay Current Letter of Credit Obligations and all other
Letter of Credit Obligations shall be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower or any other account party may have or have had against
the beneficiary of such Letter of Credit, the Lender, or any other Person,
including, without limitation, any defense based on the failure of any draft or
draw to conform to the terms of such Letter of Credit, any draft or other
document proving to be forged, fraudulent or invalid, or the legality,
validity, regularity or enforceability of such Letter of Credit, any draft or
other documents presented with any draft, any Letter of Credit Agreement, this
Agreement, or any of the other Financing Documents, all whether or not the
Lender had actual or constructive knowledge of the same, and irrespective of
any Collateral, security or guarantee therefor or right of offset with respect
thereto and irrespective of any other circumstances whatsoever which constitutes,
or might be construed to constitute, an equitable or legal discharge of the
Borrower for any Letter of Credit Obligations, in bankruptcy or otherwise; provided,
however, that the Borrower shall not be obligated to reimburse the
Lender for any wrongful payment under such Letter of Credit made as a result of
the Lender’s willful misconduct or gross negligence.  The obligation of the Borrower to pay the Letter of Credit
Obligations shall not be conditioned or contingent upon the pursuit by the
Lender or any other Person at any time of any right or remedy against any
Person which may be or become liable in respect of all or any part of such
obligation or against any Collateral, security or guarantee therefor or right
of offset with respect thereto.

 

17

 

The Letter of
Credit Obligations shall continue to be effective, or be reinstated, as the
case may be, if at any time payment of all or any portion of the Letter of
Credit Obligations is rescinded or must otherwise be restored or returned by
the Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Person, or upon or as a result of the appointment of a
receiver, intervenor, or conservator of, or trustee or similar officer for, any
Person, or any substantial part of such Person’s property, all as though such
payments had not been made.

 

2.2.6        Change in Law;
Increased Cost.

 

If any change
in any law or regulation or in the interpretation thereof by any court or other
Governmental Authority charged with the administration thereof shall either (a)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against Letters of Credit issued by the Lender, or (b) impose on
the Lender any other condition regarding this Agreement or any Letter of
Credit, and the result of any event referred to in clauses (a) or (b) above
shall be to increase the cost to the Lender of issuing, maintaining or
extending the Letter of Credit or the cost to the Lender of funding any obligation
under or in connection with the Letter of Credit, then, upon demand by the
Lender, the Borrower shall immediately pay to the Lender from time to time as
specified by the Lender, additional amounts which shall be sufficient to
compensate the Lender for such increased cost, together with interest on each
such amount from the date demanded until payment in full thereof at a rate per
annum equal to the rate of interest stated in the Note.  A certificate as to such increased cost
incurred by the Lender, submitted by the Lender to the Borrower, shall be
conclusive, absent manifest error.

 

2.2.7        General Letter of
Credit Provisions.

 

The Borrower
hereby instructs the Lender to pay any draft complying with the terms of any
Letter of Credit irrespective of any instructions of the Borrower to the
contrary.  The Borrower assumes all
risks of the acts and omissions of the beneficiary and other users of any
Letter of Credit.  The Lender and its
respective branches, Affiliates and/or correspondents shall not be responsible
for and the Borrower hereby indemnifies and holds the Lender and its respective
branches, Affiliates and/or correspondents harmless from and against all
liability, loss and expense (including reasonable attorney’s fees and costs)
incurred by the Lender and/or their respective branches, Affiliates and/or
correspondents relative to and/or as a consequence of (a) any failure by the
Borrower to perform the agreements hereunder and under any Letter of Credit
Agreement, (b) any Letter of Credit Agreement, this Agreement, any Letter of
Credit and any draft, draw and/or acceptance under or purported to be under any
Letter of Credit, (c) any action taken or omitted by the Lender and/or any of
its respective branches, Affiliates and/or correspondents at the request of the
Borrower, (d) any failure or inability to perform in accordance with the terms
of any Letter of Credit by reason of any control or restriction rightfully or
wrongfully exercised by any de facto or de jure Governmental
Authority, group or individual asserting or exercising governmental or
paramount powers, and/or (e) any consequences arising from causes beyond the
control of the Lender and/or any of its respective branches, Affiliates and/or
correspondents.

 

18

 

Except for
willful misconduct or gross negligence, the Lender and its respective branches,
Affiliates and/or correspondents, shall not be liable or responsible in any
respect for any (a) error, omission, interruption or delay in transmission,
dispatch or delivery of any one or more messages or advices in connection with
any Letter of Credit, whether transmitted by cable, telegraph, mail or
otherwise and despite any cipher or code which may be employed, and/or (b)
action, inaction or omission which may be taken or suffered by it or them in
good faith or through inadvertence in identifying or failing to identify any
beneficiary or otherwise in connection with any Letter of Credit.

 

Any Letter of
Credit may be amended, modified or revoked only upon the receipt by the Lender
from the Borrower and the beneficiary (including any transferee and/or assignee
of the original beneficiary), of a written consent and request therefor.

 

If any Laws,
order of court and/or ruling or regulation of any Governmental Authority of the
United States (or any state thereof) and/or any country other than the United
States permits a beneficiary under a Letter of Credit to require the Lender
and/or any of its respective branches, Affiliates and/or correspondents to pay
drafts under or purporting to be under a Letter of Credit after the expiration
date of the Letter of Credit, the Borrower shall reimburse the Lender, as
appropriate, for any such payment pursuant to provisions of Section 2.2.5
(Change in Law; Increased Cost).

 

Except as may
otherwise be specifically provided in a Letter of Credit or Letter of Credit
Agreement, the laws of the State and the Uniform Customs and Practice for
Documentary Credits, 1993 Revision, International Chamber of Commerce
Publication No. 500 shall govern the Letters of Credit.  The Laws, rules, provisions and regulations
of the Uniform Customs and Practice for Documentary Credits are hereby
incorporated by reference.  In the event
of a conflict between the Uniform Customs and Practice for Documentary Credits
and the laws of the State, the Uniform Customs and Practice for Documentary
Credits shall prevail.

 

Section 2.3             General
Financing Provisions.

 

2.3.1        Borrower’s
Representatives.

 

The Lender is
hereby irrevocably authorized by the Borrower to make advances under the Loan
to the Borrower pursuant to the provisions of this Agreement upon the written,
oral or telephone request of any one of the Persons who is from time to time a
Responsible Officer of the Borrower under the provisions of the most recent
“Certificate” of corporate resolutions of the Borrower on file with the Lender
or who is an officer or employee of the Borrower whom a Responsible Officer
from time to time authorizes in writing to do so.  The Lender does not and shall not assume any responsibility or
liability for any errors, mistakes, and/or discrepancies in the oral,
telephonic, written or other transmissions of any instructions, orders,
requests and confirmations between the Lender and the Borrower in connection
with the Credit Facilities, any Loan or any other transaction in connection
with the provisions of this Agreement.

 

19

 

2.3.2        Use of Proceeds of the
Loan.

 

The proceeds
of each advance under the Loan shall be used by the Borrower for Permitted
Uses, and for no other purposes except as may otherwise be agreed by the Lender
in writing.  The Borrower shall use the
proceeds of the Loan promptly.

 

2.3.3        Computation of Interest
and Fees.

 

All applicable
Fees and interest shall be calculated on the basis of a year of 360 days for
the actual number of days elapsed.  Any
change in the interest rate on any of the Obligations resulting from a change
in the Prime Rate shall become effective as of the opening of business on the
day on which such change in the Prime Rate is announced.

 

2.3.4        Maximum Interest Rate.

 

In no event
shall any interest rate provided for hereunder exceed the maximum rate
permissible for corporate borrowers under applicable law for loans of the type
provided for hereunder (the “Maximum Rate”). 
If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that interest rate would otherwise be
less than the Maximum Rate, then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals the amount
of interest which would have been paid if the same had not been limited by the
Maximum Rate.  In the event that, upon
payment in full of the Obligations, the total amount of interest paid or
accrued under the terms of this Agreement is less than the total amount of
interest which would, but for this Section, have been paid or accrued if the
interest rates otherwise set forth in this Agreement had at all times been in
effect, then the Borrower shall, to the extent permitted by applicable law, pay
the Lender, an amount equal to the excess of (a) the lesser of (i) the amount
of interest which would have been charged if the Maximum Rate had, at all
times, been in effect or (ii) the amount of interest which would have accrued
had the interest rates otherwise set forth in this Agreement, at all times,
been in effect over (b) the amount of interest actually paid or accrued under
this Agreement.  In the event that a
court determines that the Lender has received interest and other charges
hereunder in excess of the Maximum Rate, such excess shall be deemed received on
account of, and shall automatically be applied to reduce, the Obligations other
than interest, in the inverse order of maturity, and if there are no
Obligations outstanding, the Lender shall refund to the Borrower such excess.

 

2.3.5        Payments.

 

All payments
of the Obligations, including, without limitation, principal, interest,
Prepayments, and Fees, shall be paid by the Borrower without setoff, recoupment
or counterclaim to the Lender in immediately available funds not later than
12:00 noon (Eastern Time) on the due date of such payment.  All such payments shall be made to the
Lender’s principal office in McLean, Virginia or at such other location as the
Lender may at any time and from time to time notify the Borrower.  Alternatively, at its sole discretion, the
Lender may charge any deposit account of the Borrower at the Lender or any
Affiliate of the Lender with all or any part of any amount due to the Lender
under this Agreement or any of the other Financing

 

20

 

Documents to the extent that
the Borrower shall have not otherwise tendered payment to the Lender.  All payments shall be applied first to any
unpaid Fees, second to any and all accrued and unpaid late charges and
Enforcement Costs, third to any and all accrued and unpaid interest on the
Obligations, and then to the then unpaid principal balance of the Obligations,
all in such order and manner as shall be determined by the Lender in its sole
and absolute discretion.  The Lender is
authorized to deduct any payment due hereunder from the Borrower’s account
#00000000079225641 issued by the Lender, on or after the date the payment is
due.

 

2.3.6        Liens; Setoff.

 

The Borrower
hereby grants to the Lender as additional collateral and security for all of
the Obligations, a continuing Lien on any and all monies, Securities, and other
personal property of the Borrower and any and all proceeds thereof, now or
hereafter held or received by, or in transit to, the Lender or any Affiliate of
the Lender from, or for the account of, the Borrower, and also upon any and all
depository accounts (whether general or special) and credits of the Borrower,
if any, with the Lender or any Affiliate of the Lender, at any time existing,
excluding any depository accounts held by the Borrower in its capacity as
trustee for Persons who are not Affiliates of the Borrower.  Without implying any limitation on any other
rights the Lender may have under the Financing Documents or applicable Laws,
during the continuance of an Event of Default, the Lender is hereby authorized
by the Borrower at any time and from time to time at the Lender’s option,
without notice to, or consent of, the Borrower, to set off, appropriate, seize,
freeze and apply any or all items hereinabove referred to against all
Obligations then outstanding (whether or not then due), all in such order and
manner as shall be determined by the Lender in its sole and absolute
discretion.  The Lender shall provide
the Borrower written notice of any action taken pursuant to this paragraph as
soon as reasonably practicable after the making of the advance.

 

2.3.7        Requirements of Law.

 

In the event
that the Lender shall have determined in good faith that (a) the adoption of
any Capital Adequacy Regulation, or (b) any change in any Capital Adequacy
Regulation or in the interpretation or application thereof or (c) compliance by
the Lender or any corporation controlling the Lender with any request or
directive regarding capital adequacy (whether or not having the force of law)
from any Governmental Authority or central bank, does or shall have the effect
of reducing the rate of return on the capital of the Lender or such controlling
corporation as a consequence of the Lender’s obligations under this Agreement
to a level below that which the Lender or such corporation would have achieved
but for such adoption, change or compliance (taking into consideration the
policies of the Lender and its controlling corporation with respect to capital
adequacy) by an amount deemed by the Lender, in its discretion, to be material,
then from time to time, after submission by the Lender to the Borrower of a
written request therefor and a statement of the basis for the Lender’s
determination, the Borrower shall pay to the Lender ON DEMAND such additional
amount or amounts in order to compensate the Lender or its controlling
corporation for any such reduction.

 

21

 

2.3.8        Swap Contracts.

 

The Borrower
may request and the Lender or its affiliates may, in their sole and absolute
discretion, provide Swap Contracts although the Borrower is not required to do
so.  In the event the Borrower requests
Lender or its affiliates to procure Swap Contracts, then the Borrower agrees to
indemnify and hold the Lender or its affiliates harmless from any and all
obligations now or hereafter owing to the Lender or its affiliates.  The Borrower agrees to pay the Lender or its
affiliates all amounts owing to the Lender or its affiliates pursuant to Swap
Contracts.  In the event the Borrower
shall not have paid to the Lender or its affiliates such amounts, the Lender
may cover such amounts by an advance under the Revolving Loan, which advance
shall be deemed to have been requested by the Borrower.  The Borrower acknowledges and agrees that
the obtaining of Swap Contracts from the Lender or its affiliates (a) is in the
sole and absolute discretion of the Lender or its affiliates and (b) is subject
to all rules and regulations of the Lender or its affiliates.

 

ARTICLE III

THE COLLATERAL

 

Section 3.1             Debt
and Obligations Secured.

 

All property
and Liens assigned, pledged or otherwise granted under or in connection with
this Agreement (including, without limitation, those under Section 3.2 (Grant
of Liens)) or any of the Financing Documents shall secure (a) the payment of
all of the Obligations, and (b) the performance, compliance with and observance
by the Borrower of the provisions of this Agreement and all of the other
Financing Documents or otherwise under the Obligations.

 

Section 3.2             Grant
of Liens.

 

The Borrower
hereby assigns, pledges and grants to the Lender, and agrees that the Lender
shall have a perfected and continuing security interest in, and Lien on, (a)
all of the Borrower’s Accounts, (b) all insurance policies relating to the
foregoing and the right to receive refunds of unearned insurance premiums under
those policies, (c) all books and records in whatever media (paper, electronic
or otherwise) recorded or stored, with respect to the foregoing and all
Equipment and General Intangibles necessary or beneficial to retain, access
and/or process the information contained in those books and records; and (d)
all Proceeds and products of the foregoing. 
The Borrower further agrees that the Lender shall have in respect
thereof all of the rights and remedies of a secured party under the Uniform
Commercial Code as well as those provided in this Agreement, under each of the
other Financing Documents and under applicable Laws.

 

Section 3.3             Record
Searches.

 

As of the
Closing Date and thereafter at the time any Financing Document is executed and
delivered by the Borrower pursuant to this Section, the Lender shall have
received, in form and substance satisfactory to the Lender, such Lien or record
searches with respect to the Borrower and/or any other Person, as appropriate,
and the property covered by such Financing Document showing that the Lien of
such Financing Document will be a perfected first priority

 

22

 

Lien on the property covered by
such Financing Document subject only to Permi tted Liens or to such other
matters as the Lender may approve.

 

Section 3.4             Costs.

 

The Borrower
agrees to pay, as part of the Enforcement Costs and to the fullest extent
permitted by applicable Laws, on demand all costs, fees and expenses incurred
by the Lender in connection with the taking, perfection, preservation,
protection and/or release of a Lien on the Collateral.

 

Section 3.5             Release.

 

Upon the
indefeasible repayment in full in cash of the Obligations and performance of
all Obligations of the Borrower and all obligations and liabilities of each
other Person, other than the Lender, under this Agreement and all other
Financing Documents and the termination and/or expiration of the Commitment and
Outstanding Letter of Credit Obligations, upon the Borrower’s request and at
the Borrower’s sole cost and expense, the Lender shall release and/or terminate
any Financing Document but only if and provided that there is no commitment or
obligation (whether or not conditional) of the Lender to re-advance amounts which
would be secured thereby.

 

Section 3.6             Inconsistent
Provisions.

 

In the event
that the provisions of any Financing Document directly conflict with any
provision of this Agreement, the provisions of this Agreement govern.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

Section 4.1             Representations
and Warranties.

 

The Borrower
represents and warrants to the Lender, as follows:

 

4.1.1        Subsidiaries.

 

The Borrower
has the Subsidiaries listed on the EXHIBIT D attached hereto and made a
part hereof and no others.  Each of the
Subsidiaries is a Wholly Owned Subsidiary except as shown on EXHIBIT D,
which correctly indicates the nature and amount of the Borrower’s ownership
interests therein.

 

4.1.2        Existence.

 

The Borrower
(a) is a Registered Organization under the laws of the jurisdiction stated in
the Preamble of this Agreement, (b) is in good standing under the laws of the
jurisdiction in which it is organized, (c) has the power to own its property
and to carry on its business as now being conducted, and (d) is duly qualified
to do business and is in good standing in each jurisdiction in which the
character of the properties owned by it therein or in which the

 

23

 

transaction of its business
makes such qualification necessary.  The
Borrower is organized under the laws of only one (1) jurisdiction.

 

4.1.3        Power and Authority.

 

The Borrower
has full power and authority to execute and deliver this Agreement, the other
Financing Documents to which it is a party, to make the borrowings under this
Agreement and to incur and perform the Obligations whether under this
Agreement, the other Financing Documents or otherwise, all of which have been
duly authorized by all proper and necessary action.  No consent or approval of shareholders or any creditors of the
Borrower, and no consent, approval, filing or registration with or notice to
any Governmental Authority on the part of the Borrower, is required as a
condition to the execution, delivery, validity or enforceability of this
Agreement, the other Financing Documents or any of the Purchase Agreement
Documents, the performance by the Borrower of the Obligations.

 

4.1.4        Binding Agreements.

 

This Agreement
and the other Financing Documents executed and delivered by the Borrower have
been properly executed and delivered and constitute the valid and legally
binding obligations of the Borrower and are fully enforceable against the
Borrower in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties, and general
principles of equity regardless of whether applied in a proceeding in equity or
at law.

 

4.1.5        No Conflicts.

 

Neither the
execution, delivery and performance of the terms of this Agreement or of any of
the other Financing Documents executed and delivered by the Borrower nor the
consummation of the transactions contemplated by this Agreement will conflict
with, violate or be prevented by (a) the Borrower’s organizational or governing
documents, (b) any existing mortgage, indenture, contract or agreement binding
on the Borrower or affecting its property, or (c) any Laws.

 

4.1.6        No Defaults,
Violations.

 

(a)           No Default or Event of Default has occurred
and is continuing.

 

(b)           Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any obligation under any
existing mortgage, indenture, contract or agreement binding on it or affecting
its property in any respect which could be materially adverse to the business,
operations, property or financial condition of the Borrower, or which could
materially adversely affect the ability of the Borrower to perform its
obligations under this Agreement or the other Financing Documents, to which the
Borrower is a party.

 

24

 

4.1.7        Compliance with Laws.

 

Neither the
Borrower nor any of its Subsidiaries is in violation of any applicable Laws
(including, without limitation, any Laws relating to employment practices, to
environmental, occupational and health standards and controls) or order, writ,
injunction, decree or demand of any court, arbitrator, or any Governmental
Authority affecting the Borrower or any of its properties, the violation of
which, considered in the aggregate, could materially adversely affect the
business, operations or properties of the Borrower and/or its Subsidiaries.

 

4.1.8        Margin Stock.

 

None of the
proceeds of the Loan will be used, directly or indirectly, by the Borrower or
any Subsidiary for the purpose of purchasing or carrying, or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry, any “margin stock” within the meaning of Regulation U (12 CFR Part
221), of the Board of Governors of the Federal Reserve System or for any other
purpose which might make the transactions contemplated in this Agreement a
“purpose credit” within the meaning of Regulation U, or cause this Agreement to
violate any other regulation of the Board of Governors of the Federal Reserve
System or the Securities Exchange Act of 1934 or the Small Business Investment
Act of 1958, as amended, or any rules or regulations promulgated under any of
such statutes.

 

4.1.9        Investment Company Act;
Margin Stock.

 

Neither the
Borrower nor any of its Subsidiaries is an “investment company” within the
meaning of the Investment Company Act of 1940, as amended, nor is it, directly
or indirectly, controlled by or acting on behalf of any Person which is an
investment company within the meaning of said Act.  Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying “margin stock”
within the meaning of Regulation U (12 CFR Part 221), of the Board of Governors
of the Federal Reserve System.

 

4.1.10      Litigation.

 

Except as
otherwise disclosed to the Lender on Schedule 4.1.10 attached hereto and
made a part hereof, there are no proceedings, actions or investigations pending
or, so far as the Borrower knows, threatened before or by any court, arbitrator
or any Governmental Authority which, in any one case or in the aggregate, if
determined adversely to the interests of the Borrower or any Subsidiary, would
have a material adverse effect on the business, properties, condition
(financial or otherwise) or operations, present or prospective, of the
Borrower.

 

4.1.11      Financial Condition.

 

The
consolidated financial statements of the Borrower dated December 31, 2002,
are complete and correct and fairly present the financial position of the
Borrower and its Subsidiaries and the results of their operations and
transactions in their surplus accounts as of the date and for the period referred
to and have been prepared in accordance with GAAP applied on a consistent basis
throughout the period involved.  There
are no liabilities, direct or indirect,

 

25

 

fixed or contingent, of the
Borrower or its Subsidiaries as of the date of such financial statements that
are not reflected therein or in the notes thereto.  There has been no adverse change in the financial condition or
operations of the Borrower or its Subsidiaries since the date of such financial
statements and to the Borrower’s knowledge no such adverse change is pending or
threatened.  Neither the Borrower nor
any Subsidiary has guaranteed the obligations of, or made any investment in or
advances to, any Person, except as disclosed in such financial statements.

 

4.1.12      Full Disclosure.

 

The financial
statements referred to in Section 4.1.11 (Financial Condition), the Financing
Documents (including, without limitation, this Agreement), and the statements,
reports or certificates furnished by the Borrower in connection with the
Financing Documents (a) do not contain any untrue statement of a material fact
and (b) when taken in their entirety, do not omit any material fact necessary
to make the statements contained therein not misleading.  There is no fact known to the Borrower which
the Borrower has not disclosed to the Lender in writing prior to the date of
this Agreement with respect to the transactions contemplated by the Financing
Documents which materially and adversely affects or in the future could, in the
reasonable opinion of the Borrower materially adversely affect the condition,
financial or otherwise, results of operations, business, or assets of the
Borrower or of any Subsidiary.

 

4.1.13      Indebtedness for Borrowed
Money.

 

Except for the
Obligations and except as set forth in Schedule 4.1.13 attached hereto
and made a part hereof, the Borrower has no Indebtedness for Borrowed Money.

 

4.1.14      Taxes.

 

Each of the
Borrower and its Subsidiaries has filed all returns, reports and forms for
Taxes which, to the knowledge of the Borrower, are required to be filed, and
has paid all Taxes as shown on such returns or on any assessment received by
it, to the extent that such Taxes have become due, unless and to the extent
only that such Taxes, assessments and governmental charges are currently
contested in good faith and by appropriate proceedings by the Borrower, such
Taxes are not the subject of any Liens other than Permitted Liens, and adequate
reserves therefor have been established as required under GAAP.  All tax liabilities of the Borrower were as
of the date of audited financial statements referred to in Section 4.1.11
(Financial Condition), and are now, adequately provided for on the books of the
Borrower or its Subsidiaries, as appropriate. 
No tax liability has been asserted by the Internal Revenue Service or
any state or local authority against the Borrower for Taxes in excess of those
already paid.

 

4.1.15      ERISA.

 

With respect
to any “pension plan” as defined in SECTION 3(2) of ERISA, which plan is now or
previously has been maintained or contributed to by the Borrower and/or by any
commonly controlled entity: (a) no “accumulated funding deficiency” as defined
in Code §412 or ERISA §302 has occurred, whether or not that accumulated
funding deficiency has been waived; (b) no Reportable Event has occurred; (c)
no termination of any plan subject to

 

26

 

Title IV of ERISA has occurred;
(d) neither the Borrower nor any commonly controlled entity (as defined under
ERISA) has incurred a “complete withdrawal” within the meaning of ERISA §4203
from any  Multi-employer Plan; (e)
neither the Borrower nor any commonly controlled entity has incurred a “partial
withdrawal” within the meaning of ERISA §4205 with respect to any  Multi-employer Plan; (f) no Multi-employer
Plan to which the Borrower or any commonly controlled entity has an obligation
to contribute is in “reorganization” within the meaning of ERISA §4241 nor has notice
been received by the Borrower or any commonly controlled entity that such
a  Multi-employer Plan will be placed in
“reorganization”.

 

4.1.16      Title to Properties.

 

The Borrower
has good and marketable title to all of its properties, including, without
limitation, the Collateral and the properties and assets reflected in the
balance sheets described in Section 4.1.11 (Financial Condition).  The Borrower has legal, enforceable and
uncontested rights to use freely such property and assets.  All of such properties, including, without
limitation, the Collateral which were purchased, were purchased for fair
consideration and reasonably equivalent value in the ordinary course of
business of both the seller and the Borrower and not, by way of example only,
as part of a bulk sale.

 

4.1.17      Employee Relations.

 

Except as
disclosed on Schedule 4.1.17 attached hereto and made a part hereof, (a)
neither the Borrower nor any Subsidiary thereof nor any of the Borrower’s or
Subsidiary’s employees is subject to any collective bargaining agreement, (b)
no petition for certification or union election is pending with respect to the
employees of the Borrower or any Subsidiary and no union or collective
bargaining unit has sought such certification or recognition with respect to
the employees of the Borrower, (c) there are no strikes, slowdowns, work
stoppages or controversies pending or, to the best knowledge of Borrower after
due inquiry, threatened between the Borrower and its employees, and (d) neither
the Borrower nor any Subsidiaries is subject to an employment contract,
severance agreement, commission contract, consulting agreement or bonus
agreement.  Hours worked and payments
made to the employees of the Borrower have not been in violation of the Fair
Labor Standards Act or any other applicable law dealing with such matters.  All payments due from the Borrower or for
which any claim may be made against the Borrower, on account of wages and
employee and retiree health and welfare insurance and other benefits have been
paid or accrued as a liability on its books. 
The consummation of the transactions contemplated by the Financing
Agreement or any of the other Financing Documents, will not give rise to a
right of termination or right of re-negotiation on the part of any union under
any collective bargaining agreement to which the Borrower is a party or by
which it is bound.

 

4.1.18      Presence of Hazardous
Materials or Hazardous Materials Contamination.

 

To the best of
the Borrower’s knowledge, (a) no Hazardous Materials are located on any real
property owned, controlled or operated by of the Borrower or for which the
Borrower is, or is claimed to be, responsible, except for reasonable quantities
of necessary

 

27

 

supplies for use by the
Borrower in the ordinary course of its current line of business and stored,
used and disposed in accordance with applicable Laws; and (b) no property
owned, controlled or operated by the Borrower or for which the Borrower has, or
is claimed to have, responsibility has ever been used as a manufacturing,
storage, or dump site for Hazardous Materials nor is affected by Hazardous
Materials Contamination at any other property.

 

4.1.19      Perfection and Priority
of Collateral.

 

The Lender
has, or upon execution and recording of this Agreement and the Security
Documents will have, and will continue to have as security for the Obligations,
a valid and perfected Lien on and security interest in all Collateral, free of
all other Liens, claims and rights of third parties whatsoever except Permitted
Liens, including, without limitation, those described on Schedule 4.1.19
attached hereto and made a part hereof.

 

4.1.20      Business Names and
Addresses.

 

In the five
(5) years preceding the date hereof, the Borrower has not changed its name,
identity or corporate structure, has not conducted business under any name
other than its current name, and has not conducted its business in any
jurisdiction other than those disclosed on the EXHIBIT D.

 

4.1.21      Accounts.

 

With respect
to all Accounts and to the best of the Borrower’s knowledge (a) they are
genuine, and in all respects what they purport to be, and are not evidenced by
a judgment, an Instrument, or Chattel Paper (unless such judgment has been
assigned and such Instrument or Chattel Paper has been endorsed and delivered
to the Lender); (b) they represent bona fide transactions completed in
accordance with the terms and provisions contained in the invoices, purchase
orders and other contracts relating thereto, and the underlying transaction
therefor is in accordance with all applicable Laws; (c) the amounts shown on
the Borrower’s books and records, with respect thereto are actually and
absolutely owing to the Borrower and are not contingent or subject to reduction
for any reason other than regular discounts, credits or adjustments allowed by
the Borrower in the ordinary course of its business; (d) no payments have been
or shall be made thereon except payments turned over to the Lender by the
Borrower; (e) all Account Debtors thereon have the capacity to contract; and
(f) the goods sold, leased or transferred or the services furnished giving rise
thereto are not subject to any Liens except the security interest granted to
the Lender by this Agreement and Permitted Liens.

 

Section 4.2             Survival;
Updates of Representations and Warranties.

 

All
representations and warranties contained in or made under or in connection with
this Agreement and the other Financing Documents shall survive the Closing
Date, the making of any advance under the Loan and extension of credit made hereunder,
and the incurring of any other Obligations and shall be deemed to have been
made at the time of each request for, and again at the time the making of, each
advance under the Loan or the issuance of each Letter of Credit, except that
the representations and warranties which relate to financial statements which
are referred to in Section 4.1.11 (Financial Condition), shall also be deemed
to cover financial

 

28

 

statements furnished from time
to time to the Lender pursuant to Section 
6.1.1 (Financial Statements).

 

ARTICLE V

CONDITIONS PRECEDENT

 

Section 5.1             Conditions
to the Initial Advance and Initial Letter of Credit.

 

The making of
the initial advance under the Loan and the issuance of the initial Letter of
Credit is subject to the fulfillment on or before the Closing Date of the
following conditions precedent in a manner satisfactory in form and substance
to the Lender and its counsel:

 

5.1.1        Organizational
Documents - Borrower.

 

The Lender shall have received:

 

(a)           a certificate of good
standing for the Borrower certified by the Secretary of State, or other
appropriate Governmental Authority, of the state of formation for the Borrower;

 

(b)           a certified copy from
the appropriate Governmental Authority under which the Borrower is organized,
of the Borrower’s organizational documents and all recorded amendments thereto;

 

(c)           a certificate of
qualification to do business for the Borrower certified by the Secretary of
State or other Governmental Authority of each jurisdiction in which the
Borrower conducts business; and

 

(d)           a certificate by the
Secretary or an Assistant Secretary of the Borrower in form and substance
satisfactory to the Lender.

 

5.1.2        Consents, Licenses,
Approvals, Etc.

 

The Lender
shall have received copies of all consents, licenses and approvals, required in
connection with the execution, delivery, performance, validity and
enforceability of the Financing Documents, and such consents, licenses and
approvals shall be in full force and effect.

 

5.1.3        Note.

 

The Lender
shall have received the Revolving Credit Note conforming to the requirements
hereof and executed by a Responsible Officer of the Borrower and attested by a
duly authorized representative of the Borrower.

 

5.1.4        Financing Documents and
Collateral.

 

The Borrower
shall have executed and delivered the Financing Documents to be executed by it,
and shall have delivered original Chattel Paper, Instruments and related

 

29

 

Collateral and all opinions,
title insurance, and other documents contemplated by ARTICLE III (Collateral).

 

5.1.5        Other Financing
Documents.

 

In addition to
the Financing Documents to be delivered by the Borrower, the Lender shall have
received the Financing Documents duly executed and delivered by Persons other
than the Borrower.

 

5.1.6        Other Documents, Etc.

 

The Lender
shall have received such other certificates, opinions, documents and
instruments confirmatory of or otherwise relating to the transactions
contemplated hereby as may have been reasonably requested by the Lender.

 

5.1.7        Payment of Fees.

 

The Lender
shall have received payment of any Fees due on or before the Closing Date.

 

5.1.8        Recordings and Filings.

 

The Borrower
shall have: (a) executed and delivered all Financing Documents required to be
filed, registered or recorded in order to create, in favor of the Lender, a
perfected Lien in the Collateral (subject only to the Permitted Liens) in form
and in sufficient number for filing, registration, and recording in each office
in each jurisdiction in which such filings, registrations and recordations are
required, and (b) delivered such evidence as the Lender require that all
necessary filing fees and all recording and other similar fees, and all Taxes
and other expenses related to such filings, registrations and recordings will
be or have been paid in full.

 

5.1.9        Insurance Certificate.

 

The Lender
shall have received an insurance certificate in accordance with the provisions
of Section 6.1.8 (Insurance).

 

Section 5.2             Conditions
to all Extensions of Credit.

 

The making of
all advances under the Loan and the issuance of all Letters of Credit is
subject to the fulfillment of the following conditions precedent in a manner
satisfactory in form and substance to the Lender and its counsel:

 

5.2.1        Compliance.

 

The Borrower
shall have complied and shall then be in compliance with all terms, covenants,
conditions and provisions of this Agreement and the other Financing Documents
that are binding upon it.

 

30

 

5.2.2        Default.

 

There shall
exist no Event of Default or Default hereunder.

 

5.2.3        Representations and
Warranties.

 

The
representations and warranties of the Borrower contained among the provisions
of this Agreement shall be true and with the same effect as though such
representations and warranties had been made at the time of the making of, and
of the request for, each advance under the Loan or the issuance of each Letter
of Credit, except that the representations and warranties which relate to
financial statements which are referred to in Section 4.1.11 (Financial
Condition), shall also be deemed to cover financial statements furnished from
time to time to the Lender pursuant to Section 6.1.1 (Financial Statements).

 

5.2.4        Adverse Change.

 

No adverse
change shall have occurred in the condition (financial or otherwise),
operations or business of the Borrower that would, in the good faith judgment
of the Lender, materially impair the ability of the Borrower to pay or perform
any of the Obligations.

 

5.2.5        Legal Matters.

 

All legal
documents incident to each advance under the Loan and each of the Letters of
Credit shall be reasonably satisfactory to counsel for the Lender.

 

ARTICLE VI

COVENANTS OF THE BORROWER

 

Section 6.1             Affirmative
Covenants.

 

So long as any
of the Obligations or the Commitment shall be outstanding hereunder, the
Borrower agrees with the Lender as follows:

 

6.1.1        Financial Statements.

 

The Borrower
shall furnish to the Lender:

 

(a)           Annual Statements and Certificates.  The Borrower shall furnish to the Lender as
soon as available, but in no event more than ninety (90) days after the close
of each fiscal year of the Borrower, (i) a copy of the annual audited financial
statement in reasonable detail satisfactory to the Lender relating to the
Borrower, prepared in accordance with GAAP and examined and certified by
independent certified public accountants satisfactory to the Lender, which
financial statement shall include a balance sheet of the Borrower as of the end
of such fiscal year and statements of income, cash flows and changes in
shareholders equity of the Borrower for such fiscal year, (ii) a Compliance
Certificate, in substantially the form attached to this Agreement as EXHIBIT
C, as may be amended by the Lender from time to time, containing a detailed
computation of each financial covenant which is applicable for the period
reported and a certification that no material change has occurred to the
information contained in EXHIBIT D

 

31

 

(except as set forth in a
schedule attached to the certification), each prepared by a Responsible Officer
of the Borrower in a format acceptable to the Lender, and (iii) a management
letter in the form prepared by the Borrower’s independent certified public
accountants.

 

(b)           Annual Opinion of Accountant.  The Borrower shall furnish to the Lender as
soon as available, but in no event more than ninety (90) days after the close
of the Borrower’s fiscal years, a letter or opinion of the accountant who
examined and certified the annual financial statement relating to the Borrower
(i) stating whether anything in such accountant’s examination has revealed the
occurrence of a Default or an Event of Default hereunder, and, if so, stating
the facts with respect thereto and (ii) acknowledging that the Lender will rely
on the statement and that the Borrower knows of the intended reliance by the
Lender.

 

(c)           Quarterly Statements and Certificates.  The Borrower shall furnish to the Lender as
soon as available, but in no event more than forty five (45) days after the
close of the Borrower’s fiscal quarters, balance sheets of the Borrower as of
the close of such period, income, cash flows and changes in shareholders equity
statements for such period and a Compliance Certificate, in substantially the
form attached to this Agreement as EXHIBIT C, containing a detailed
computation of each financial covenant which is applicable for the period
reported and a certification that no change has occurred to the information
contained in EXHIBIT D (except as set forth on any schedule attached to
the certification), each prepared by a Responsible Officer of the Borrower in a
format acceptable to the Lender, all as prepared and certified by a Responsible
Officer of the Borrower and accompanied by a certificate of that officer
stating whether any event has occurred which constitutes a Default or an Event
of Default hereunder, and, if so, stating the facts with respect thereto.

 

(d)           Quarterly reports.  The Borrower shall furnish to the Lender within forty five (45)
days after the end of each fiscal quarter, a report containing the following
information:

 

(i)            a detailed aging
schedule of all Receivables by Account Debtor, in such detail, and accompanied
by such supporting information, as the Lender may from time to time reasonably
request;

 

(ii)           a current status report
(Backlog Report, a form of which is attached hereto as EXHIBIT E) in
form satisfactory to the Lender, including listing of new contracts or
installations added during the period, including the name of the contracting
officer at the agency, certified by a Responsible Officer of the Borrower; and

 

(iii)          such
other information as the Lender may reasonably request.

 

(e)           Additional Reports and Information.  The Borrower shall furnish to the Lender
promptly, such additional information, reports or statements as the Lender may
from time to time reasonably request.

 

32

 

6.1.2        Reports to SEC and to
Stockholders.

 

If requested,
the Borrower will furnish to the Lender, promptly upon the filing or making
thereof, at least one (1) copy of all financial statements, reports, notices
and proxy statements sent by the Borrower to its stockholders, and of all
regular and other reports filed by the Borrower with any securities exchange or
with the Securities and Exchange Commission.

 

6.1.3        Recordkeeping, Rights
of Inspection, Field Examination, Etc.

 

(a)           The Borrower shall, and shall cause each of
its Subsidiaries to, maintain (i) a standard system of accounting in accordance
with GAAP, and (ii) proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
properties, business and activities.

 

(b)           The Borrower shall, and shall cause each of
its Subsidiaries to, permit authorized representatives of the Lender to visit
and inspect the properties of the Borrower and its Subsidiaries, to review,
audit, check and inspect the Collateral at any time with or without notice, to
review, audit, check and inspect the Borrower’s other books of record at any
time with or without notice and to make abstracts and photocopies thereof, and
to discuss the affairs, finances and accounts of the Borrower and/or any
Subsidiaries, with the officers, directors, employees and other representatives
of the Borrower and/or any Subsidiaries and their respective accountants, all
at such times during normal business hours and other reasonable times and as
often as the Lender may reasonably request.

 

(c)           The Borrower hereby irrevocably authorizes
and directs all accountants and auditors employed by the Borrower and/or any
Subsidiaries at any time prior to the repayment in full of the Obligations to
exhibit and deliver to the Lender copies of any and all of the financial
statements, trial balances, management letters, or other accounting records of
any nature of the Borrower and/or any Subsidiaries in the accountant’s or
auditor’s possession, and to disclose to the Lender any information they may
have concerning the financial status and business operations of the Borrower
and its Subsidiaries.  Further, the
Borrower hereby authorizes all Governmental Authorities to furnish to the
Lender copies of reports or examinations relating to the Borrower and/or any
Subsidiaries, whether made by the Borrower or otherwise.

 

(d)           Any and all costs and expenses incurred by,
or on behalf of, the Lender in connection with the conduct of any of the
foregoing, including, without limitation, travel, lodging, meals, and other
expenses together with an allocated charge of $750 per day for each auditor
employed by the Lender for inspections of the Collateral and the Borrower’s
operations, shall be part of the Enforcement Costs and shall be payable to the
Lender upon demand.  The Borrower
acknowledges and agrees that such expenses may include, but shall not be
limited to, any and all out-of-pocket costs and expenses of the Lender’s
employees and agents in, and when, traveling to the Borrower’s facilities.

 

33

 

6.1.4        Existence.

 

The Borrower
shall (a) maintain, and cause each of its Subsidiaries to maintain, its
existence in good standing in the jurisdiction in which it is organized and in
each other jurisdiction where it is required to register or qualify to do
business if the failure to do so in such other jurisdiction might have a
material adverse effect on the ability of the Borrower to perform the
Obligations, on the conduct of the Borrower’s operations, on the Borrower’s financial
condition, or on the value of, or the ability of the Lender to realize upon,
the Collateral and (b) remain a Registered Organization under the laws of the
jurisdiction stated in the Preamble of this Agreement.

 

6.1.5        Compliance with Laws.

 

The Borrower
shall comply, and cause each of its Subsidiaries to comply, with all applicable
Laws and observe the valid requirements of Governmental Authorities, the
noncompliance with or the nonobservance of which might have a material adverse
effect on the ability of the Borrower to perform the Obligations, the conduct
of the Borrower’s operations, the Borrower’s financial condition, or the value
of, or the ability of the Lender to realize upon, the Collateral.

 

6.1.6        Preservation of
Properties.

 

The Borrower will,
and will cause each of its Subsidiaries to, at all times (a) maintain,
preserve, protect and keep its properties, whether owned or leased, in good
operating condition, working order and repair (ordinary wear and tear
excepted), and from time to time will make all proper repairs, maintenance,
replacements, additions and improvements thereto needed to maintain such
properties in good operating condition, working order and repair, and (b) do or
cause to be done all things necessary to preserve and to keep in full force and
effect its material franchises, leases of real and personal property, trade
names, Patents, Trademarks, Copyrights and permits which are necessary for the
orderly continuance of its business.

 

6.1.7        Line of Business.

 

The Borrower
will continue to engage substantially only in the business of computer systems
design and engineering services.

 

6.1.8        Insurance.

 

The Borrower
will, and will cause each of its Subsidiaries to, at all times maintain with
A-or better rated insurance companies such insurance as is required by
applicable Laws and such other insurance, all in such amounts not less than the
Lender shall reasonably determine from time to time, of such types and against
such risks, hazards, liabilities, casualties and contingencies as are usually
insured against in the same geographic areas by business entities engaged in
the same or similar business.  Without
limiting the generality of the foregoing, the Borrower will, and will cause
each of its Subsidiaries to, keep adequately insured all of its property
against loss or damage resulting from fire or other risks insured against by
extended coverage and maintain public liability insurance against claims for
personal injury, death or

 

34

 

property
damage occurring upon, in or about any properties occupied or controlled by it,
or arising in any manner out of the businesses carried on by it.  The Borrower shall deliver to the Lender on
the Closing Date (and thereafter on each date there is a material change in the
insurance coverage) a certificate of a Responsible Officer of the Borrower
containing a detailed list of the insurance then in effect and stating the
names of the insurance companies, the types, the amounts and rates of the
insurance, dates of the expiration thereof and the properties and risks covered
thereby.  Within thirty (30) days after
notice in writing from the Lender, the Borrower will obtain such additional
insurance as the Lender may reasonably request.

 

6.1.9        Taxes.

 

Except to the
extent that the validity or amount thereof is being contested in good faith and
by appropriate proceedings, the Borrower will, and will cause each of its
Subsidiaries to, pay and discharge all Taxes prior to the date when any
interest or penalty would accrue for the nonpayment thereof.  The Borrower shall furnish to the Lender at
such times as the Lender may require proof satisfactory to the Lender of the
making of payments or deposits required by applicable Laws.

 

6.1.10      ERISA.

 

The Borrower
will, and will cause each of its Subsidiaries and Affiliates to, comply with
the funding requirements of ERISA with respect to employee pension benefit
plans for its respective employees.  The
Borrower will not permit with respect to any employee benefit plan or plans
covered by Title IV of ERISA (a) any prohibited transaction or transactions
under ERISA or the Internal Revenue Code, which results, or may result, in any
material liability of the Borrower and/or any Subsidiary and/or Affiliate, or
(b) any Reportable Event if, upon termination of the plan or plans with respect
to which one or more such Reportable Events shall have occurred, there is or
would be any material liability of the Borrower and/or any Subsidiary and/or
Affiliate to the PBGC.  Upon the Lender’s
request, the Borrower will deliver to the Lender a copy of the most recent
actuarial report, financial statements and annual report completed with respect
to any “defined benefit plan”, as defined in ERISA.

 

6.1.11      Notification of Events of
Default and Adverse Developments.

 

The Borrower
shall promptly notify the Lender upon obtaining knowledge of the occurrence of:

 

(a)           any Event of Default;

 

(b)           any Default;

 

(c)           any litigation
instituted or threatened against the Borrower or its Subsidiaries and of the
entry of any judgment or Lien (other than any Permitted Liens) against any of
the assets or properties of the Borrower or any Subsidiary where the claims
against the Borrower or any of its Subsidiaries exceed One Million Dollars
($1,000,000) and are not covered by insurance;

 

35

 

(d)           any event, development or circumstance
whereby the financial statements furnished hereunder fail in any material
respect to present fairly, in accordance with GAAP, the financial condition and
operational results of the Borrower or any of its Subsidiaries;

 

(e)           any judicial,
administrative or arbitral proceeding pending against the Borrower or any of
its Subsidiaries and any judicial or administrative proceeding known by the
Borrower to be threatened against it or any of its Subsidiaries which, if
adversely decided, could materially adversely affect its financial condition or
operations (present or prospective);

 

(f)            the receipt by the
Borrower or any of its Subsidiaries of any notice, claim or demand from any
Governmental Authority which alleges that the Borrower or any Subsidiary is in
violation of any of the terms of, or has failed to comply with any applicable
Laws regulating its operation and business, including, but not limited to, the
Occupational Safety and Health Act and the Environmental Protection Act; and

 

(g)           any other development
in the business or affairs of the Borrower and any of its Subsidiaries which
may be materially adverse;

 

in each case describing in
detail satisfactory to the Lender the nature thereof and the action the
Borrower proposes to take with respect thereto.

 

6.1.12      Hazardous Materials;
Contamination.

 

The Borrower
agrees to:

 

(a)           give notice to the
Lender immediately upon the Borrower’s acquiring knowledge of the presence of
any Hazardous Materials and of any Hazardous Materials Contamination on any
property owned or controlled by the Borrower or for which the Borrower is, or
is claimed to be, responsible (provided that such notice shall not be required
for Hazardous Materials placed or stored on such property in accordance with
applicable Laws in the ordinary course (including, without limitation,
quantity)  of the Borrower’s line of
business expressly described in this Agreement) or of any Hazardous Materials
Contamination, with a full description thereof;

 

(b)           promptly comply with
any Laws requiring the removal, treatment or disposal of Hazardous Materials or
Hazardous Materials Contamination and provide the Lender with satisfactory
evidence of such compliance;

 

(c)           provide the Lender,
within thirty (30) days after a demand by the Lender, with a bond, letter of
credit or similar financial assurance evidencing to the Lender’s satisfaction
that the necessary funds are available to pay the cost of removing, treating,
and disposing of such Hazardous Materials or

 

36

 

Hazardous
Materials Contamination and discharging any Lien which may be established as a
result thereof on any property owned or controlled by the Borrower or for which
the Borrower is, or is claimed to be, responsible; and

 

(d)           as part of the
Obligations, defend, indemnify and hold harmless the Lender and its agents,
employees, trustees, successors and assigns from any and all claims which may now
or in the future (whether before or after the termination of this Agreement) be
asserted as a result of the presence of any Hazardous Materials or of any
Hazardous Materials Contamination on any property owned or controlled by the
Borrower or for which the Borrower is, or is claimed to be, responsible.  The Borrower acknowledges and agrees that
this indemnification shall survive the termination of this Agreement and the
Commitment and the payment and performance of all of the other Obligations.

 

6.1.13      Financial Covenants.

 

(a)           Net Worth. 
The Borrower will maintain on a consolidated basis, tested as of the
last day of each of the Borrower’s fiscal quarters, a Net Worth of not less
than an amount equal to $122,000,000 increasing annually by the sum of
(i) 50% of the Borrower’s consolidated net income (without regard to any loss)
plus (ii) 100% of the proceeds of any issue of new shares of its common stock
or other equity interests, from each fiscal year of the Borrower commencing
with the fiscal year ending in 2003.

 

(b)           Funded Debt to EBITDA Ratio.  The Borrower will maintain on a consolidated
basis a ratio of Funded Debt to EBITDA not exceeding 2.75:1.0.  This ratio will be calculated quarterly,
using the results of the twelve-month period ending with that reporting period.

 

(c)           Interest Coverage Ratio.  The Borrower will maintain on a consolidated
basis an Interest Coverage Ratio of not less than 2.5 to 1.0.  This ratio will be calculated quarterly, using
the results of the twelve-month period ending with that reporting period.

 

6.1.14      Collection of
Receivables.

 

Until such
time that the Lender shall notify the Borrower of the revocation of such
privilege, the Borrower and each of the Subsidiaries shall at its own expense
have the privilege for the account of, and in trust for, the Lender of
collecting its Receivables and receiving in respect thereto all Items of
Payment and shall otherwise completely service all of the Receivables including
(a) the billing, posting and maintaining of complete records applicable
thereto, (b) the taking of such action with respect to the Receivables as the
Lender may request or in the absence of such request, as the Borrower and each
of the Subsidiaries may deem advisable; and (c) the granting, in the ordinary
course of business, to any Account Debtor, any rebate, refund or adjustment to
which the Account Debtor may be lawfully entitled, and may accept, in
connection therewith, the return of goods, the sale or lease of which shall
have given rise to a Receivable and may take such other actions relating to the
settling of any Account

 

37

 

Debtor’s claim as may be
commercially reasonable.  The Lender
may, at its option, at any time or from time to time after and during the
continuance of an Event of Default hereunder, revoke the collection privilege
given in this Agreement to the Borrower and any one or more of the Subsidiaries
by either giving notice of its assignment of, and lien on the Collateral to the
Account Debtors or giving notice of such revocation to the Borrower.  The Lender shall not have any duty to, and
the Borrower hereby releases the Lender from all claims of loss or damage
caused by the delay or failure to collect or enforce any of the Receivables or
to preserve any rights against any other party with an interest in the
Collateral. The Lender shall be entitled at any time and from time to time to
confirm and verify Receivables.

 

6.1.15      Assignments of
Receivables.

 

Upon request,
the Borrower shall execute and deliver to the Lender written assignments, in
form and content acceptable to the Lender, of specific Receivables or groups of
Receivables; provided, however, the Lien and/or security interest granted to
the Lender under this Agreement shall not be limited in any way to or by the
inclusion or exclusion of Receivables within such assignments.  Receivables so assigned shall secure payment
of the Obligations and are not sold to the Lender whether or not any assignment
thereof, which is separate from this Agreement, is in form absolute.  The Borrower agrees that neither any
assignment to the Lender nor any other provision contained in this Agreement or
any of the other Financing Documents shall impose on the Lender any obligation
or liability of the Borrower with respect to that which is assigned and the
Borrower hereby agrees to indemnify the Lender and hold the Lender harmless
from any and all claims, actions, suits, losses, damages, costs, expenses,
fees, obligations and liabilities which may be incurred by or imposed upon the
Lender by virtue of the assignment of and Lien on the Borrower’s rights, title
and interest in, to, and under the Collateral. 
The Lender agrees that if it makes a request for assignments as
described herein that it will provided the Borrower with a reasoned explanation
for such request.

 

6.1.16      Government Accounts.

 

The Borrower
will upon request by the Lender execute any instruments and take any steps
required by the Lender in order that all moneys due and to become due under
such contracts shall be assigned to the Lender and notice thereof given to the
Governmental Authority under the Federal Assignment of Claims Act or any other
applicable Laws.  The Lender agrees that
if it makes a request as described herein that it will provided the Borrower with
a reasoned explanation for such request.

 

6.1.17      Maintenance of the
Collateral.

 

The Borrower
will maintain the Collateral in good working order, saving and excepting
ordinary wear and tear, and will not permit anything to be done to the
Collateral that may materially impair the value thereof.  The Lender, or an agent designated by the
Lender, shall be permitted to enter the premises of the Borrower and the
Subsidiaries and examine, audit and inspect the Collateral at any reasonable
time and from time to time without notice. 
The Lender shall not have any duty to, and the Borrower hereby releases
the Lender from all claims

 

38

 

of loss or
damage caused by the delay or failure to collect or enforce any of the
Receivables or to, preserve any rights against any other party with an interest
in the Collateral.

 

6.1.18      Defense of Title and
Further Assurances.

 

At its
expense, the Borrower will defend the title to the Collateral (and any part
thereof), and will immediately execute, acknowledge and deliver any renewal,
affidavit, deed, assignment, security agreement, certificate or other document
which the Lender may require in order to perfect, preserve, maintain, continue,
protect and/or extend the Lien granted to the Lender under this Agreement or
under any of the other Financing Documents and the first priority of that Lien,
subject only to the Permitted Liens. 
The Borrower hereby authorizes the filing of any financing statement or
continuation statement required under the Uniform Commercial Code.  The Borrower will from time to time do
whatever the Lender may require by way of obtaining, executing, delivering,
and/or filing landlords’ or mortgagees’ or bailees’ waivers, notices of
assignment and other notices and amendments and renewals thereof and the
Borrower will take any and all steps and observe such formalities as the Lender
may require, in order to create and maintain a valid Lien upon, pledge of, or
paramount security interest in, the Collateral, subject to the Permitted
Liens.  The Borrower shall pay to the
Lender on demand all taxes, costs and expenses incurred by the Lender in
connection with the preparation, execution, recording and filing of any such
document or instrument.  To the extent
that the proceeds of any of the Accounts or Receivables of the Borrower are
expected to become subject to the control of, or in the possession of, a party
other than the Borrower or the Lender, the Borrower shall cause all such
parties to execute and deliver on the Closing Date security documents or other
documents as requested by the Lender and as may be necessary to evidence and/or
perfect the security interest of the Lender in those proceeds.  The Borrower hereby irrevocably appoints the
Lender as the Borrower’s attorney-in-fact, with power of substitution, in the
name of the Lender or in the name of the Borrower or otherwise, for the use and
benefit of the Lender, but at the cost and expense of the Borrower and without
notice to the Borrower, to execute and deliver any and all of the instruments
and other documents and take any action which the Lender may require pursuant
the foregoing provisions of this Section 6.1.18.

 

6.1.19      Use of Premises and
Equipment.

 

The Borrower
agrees that until the Obligations are fully paid and this Agreement has been
terminated, the Lender (a) after and during the continuance of an Event of
Default, may use any of the Borrower’s owned or leased lifts, hoists, trucks
and other facilities or equipment for handling or removing the Collateral; and
(b) shall have, and is hereby granted, a right of ingress and egress to the
places where the Collateral is located, and may proceed over and through any of
the Borrower’s owned or leased property.

 

6.1.20      Protection of Collateral.

 

The Borrower
agrees that the Lender may at any time following an Event of Default take such
steps as the Lender deems reasonably necessary to protect the Lender’s interest
in, and to preserve the Collateral, including, the hiring of such security
guards or the placing of other security protection measures as the Lender deems
appropriate, may employ and

 

39

 

maintain at any of the
Borrower’s premises a custodian who shall have full authority to do all acts
necessary to protect the Lender’s interests in the Collateral and may lease
warehouse facilities to which the Lender may move all or any part of the
Collateral to the extent commercially reasonable.  The Borrower agrees to cooperate fully with the Lender’s efforts
to preserve the Collateral and will take such actions to preserve the
Collateral as the Lender may reasonably direct.  All of the Lender’s expenses of preserving the Collateral,
including any reasonable expenses relating to the compensation and bonding of a
custodian, shall be part of the Enforcement Costs.

 

Section 6.2             Negative
Covenants.

 

So long as any
of the Obligations or the Commitment shall be outstanding hereunder, the
Borrower agrees with the Lender as follows:

 

6.2.1        Capital Structure,
Merger, Acquisition or Sale of Assets.

 

The Borrower
will not enter into any merger or consolidation or amalgamation, windup or
dissolve itself (or suffer any liquidation or dissolution) or acquire all or
substantially all the assets of any Person, or sell, lease or otherwise dispose
of any of its assets (except Inventory disposed of in the ordinary course of
business prior to an Event of Default). 
Any consent of the Lender to the disposition of any assets may be
conditioned on a specified use of the proceeds of disposition.

 

6.2.2        Subsidiaries.

 

Unless the
Subsidiary executes an Additional Borrower Joinder Supplement in the form of EXHIBIT
A, the Borrower will not create or acquire any Subsidiaries.

 

6.2.3        Purchase or Redemption
of Securities, Dividend Restrictions.

 

The Borrower
will not purchase, redeem or otherwise acquire any shares of its capital stock
or warrants now or hereafter outstanding, declare or pay any dividends thereon
(other than stock dividends), apply any of its property or assets to the
purchase, redemption or other retirement of, set apart any sum for the payment
of any dividends on, or for the purchase, redemption, or other retirement of,
make any distribution by reduction of capital or otherwise in respect of, any
shares of any class of capital stock of the Borrower, or any warrants, permit
any Subsidiary to purchase or acquire any shares of any class of capital stock
of, or warrants issued by, the Borrower, make any distribution to stockholders
or set aside any funds for any such purpose, and not prepay, purchase or redeem
any Indebtedness for Borrowed Money other than the Obligations.

 

6.2.4        Indebtedness.

 

The Borrower
will not, and will not permit any Subsidiary to, create, incur, assume or
suffer to exist any Indebtedness for Borrowed Money, or permit any Subsidiary
so to do, except:

 

(a)           the
Obligations;

 

40

 

(b)           current
accounts payable arising in the ordinary course;

 

(c)           Indebtedness secured by Permitted Liens;

 

(d)           Subordinated Liabilities; and

 

(e)           Indebtedness of the
Borrower existing on the date hereof and reflected on the financial statements
furnished pursuant to Section 4.1.11 (Financial Condition).

 

6.2.5        Investments, Loans and
Other Transactions.

 

Except as
otherwise provided in this Agreement and except for investment in a limited
liability company that will own the building in which the Borrower’s
headquarters is to be located, the Borrower will not, and will not permit any
of its Subsidiaries to, (a) make, assume, acquire or continue to hold any
investment in any real property (unless used in connection with its business
and treated as a Fixed or Capital Asset of the Borrower or the Subsidiary) or
any Person, whether by stock purchase, capital contribution, acquisition of
indebtedness of such Person or otherwise (including, without limitation,
investments in any joint venture or partnership), (b) guaranty or otherwise
become contingently liable for the indebtedness or obligations of any Person in
excess of One Million Dollars ($1,000,000), or (c) make any loans or advances,
or otherwise extend credit to any Person, except:

 

(i)            any advance to an
officer of the Borrower or of any Subsidiary for travel or other business
expenses in the ordinary course of business an any advance to an officer of the
Borrower in accordance with standard practices;

 

(ii)           the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business;

 

(iii)          any
investment in Cash Equivalents, w hich are pledged to the Lender as collateral
and security for the Obligations; and

 

(iv)          trade
credit extended to customers in the ordinary course of business.

 

6.2.6        Stock of Subsidiaries.

 

The Borrower
will not sell or otherwise dispose of any shares of capital stock of any
Subsidiary (except in connection with a merger or consolidation of a Wholly
Owned Subsidiary into the Borrower or another Wholly Owned Subsidiary or with
the dissolution of any Subsidiary) or permit any Subsidiary to issue any
additional shares of its capital stock except pro rata to its
stockholders.

 

41

 

6.2.7        Subordinated
Indebtedness.

 

The Borrower
will not, and will not permit any Subsidiary to make:

 

(a)           any payment of principal of, or interest on,
any of the Subordinated Liabilities, if a Default or an Event of Default then
exists hereunder or would result from such payment;

 

(b)           any payment of the
principal or interest due on the Subordinated Liabilities as a result of
acceleration thereunder or a mandatory prepayment thereunder;

 

(c)           any amendment or
modification of or supplement to the documents evidencing or securing the
Subordinated Liabilities; or

 

(d)           payment of principal or
interest on the Subordinated Liabilities other than when due (without giving
effect to any acceleration of maturity or mandatory prepayment).

 

6.2.8        Liens; Confessed
Judgment.

 

The Borrower
agrees that it (a) will not create, incur, assume or suffer to exist any Lien
upon any of its properties or assets, whether now owned or hereafter acquired,
or permit any Subsidiary so to do, except for Liens securing the Obligations
and Permitted Liens, (b) will not agree to, assume or suffer to exist any
provision in any instrument or other document for confession of judgment,
cognovit or other similar right or remedy, (c) will not allow or suffer to
exist any Permitted Liens to be superior to Liens securing the Obligations, (d)
will not enter into any contracts for the consignment of goods to the Borrower,
(e) will not execute or suffer the filing of any financing statements or the
posting of any signs giving notice of consignments to the Borrower, (f) will
not, as a material part of its business, engage in the sale of goods belonging
to others, and (g) will not allow or suffer to exist the failure of any Lien
described in the Security Documents to attach to, and/or remain at all times
perfected on, any of the property described in the Security Documents.

 

6.2.9        Transactions with
Affiliates.

 

The Borrower
and its Subsidiaries will not enter into or participate in any transaction with
any Affiliate or, except in the ordinary course of business, with the officers,
directors, employees and other representatives of the Borrower and/or any
Subsidiary.

 

6.2.10      Other Businesses.

 

The Borrower
and its Subsidiaries will not engage directly or indirectly in any business
other than its current line of business described elsewhere in this Agreement.

 

6.2.11      ERISA Compliance.

 

Neither the
Borrower nor any Commonly Controlled Entity shall:  (a) engage in or permit any “prohibited transaction” (as defined
in ERISA); (b) cause any

 

42

 

“accumulated funding
deficiency” as defined in ERISA and/or the Internal Revenue Code; (c) terminate
any pension plan in a manner which could result in the imposition of a lien on
the property of the Borrower pursuant to ERISA; (d) terminate or consent to the
termination of any  Multi-employer Plan;
or (e) incur a complete or partial withdrawal with respect to any  Multi-employer Plan.

 

6.2.12      Prohibition on Hazardous
Materials.

 

The Borrower
shall not place, manufacture or store or permit to be placed, manufactured or
stored any Hazardous Materials on any property owned, operated or controlled by
the Borrower or for which the Borrower is responsible other than Hazardous
Materials placed or stored on such property in accordance with applicable Laws
in the ordinary course.

 

6.2.13      Method of Accounting;
Fiscal Year.

 

The Borrower
will not change the method of accounting employed in the preparation of any
financial statements furnished to the Lender under the provisions of Section
4.1.11 (Financial Statements), unless required to conform to GAAP and on the
condition that the Borrower’s accountants shall furnish such information as the
Lender may request to reconcile the changes with the Borrower’s prior financial
statements.

 

6.2.14      Disposition of
Collateral.

 

The Borrower
will not sell, discount, allow credits or allowances, transfer, assign, extend
the time for payment on, convey, lease, assign, transfer or otherwise dispose
of the Collateral, except, prior to an Event of Default, dispositions expressly
permitted elsewhere in this Agreement, the sale of Inventory in the ordinary
course of business, and the sale of unnecessary or obsolete Equipment, but only
if the proceeds of the sale of such Equipment are used to purchase similar
Equipment to replace the unnecessary or obsolete Equipment.

 

ARTICLE VII

DEFAULT AND RIGHTS AND REMEDIES

 

Section 7.1             Events
of Default.

 

The occurrence
of any one or more of the following events shall constitute an “Event of
Default” under the provisions of this Agreement:

 

7.1.1        Failure to Pay.

 

The failure of
the Borrower to pay any of the Obligations as and when due and payable in
accordance with the provisions of this Agreement, the Notes and/or any of the
other Financing Documents.

 

7.1.2        Breach of
Representations and Warranties.

 

Any
representation or warranty made in this Agreement or in any report, statement,
schedule, certificate, opinion (including any opinion of counsel for the
Borrower),

 

43

 

financial statement or other
document furnished in connection with this Agreement, any of the other
Financing Documents, or the Obligations, shall prove to have been false or
misleading when made (or, if applicable, when reaffirmed) in any material
respect.

 

7.1.3        Failure to Comply with
Covenants.

 

The failure of
the Borrower to perform, observe or comply with any covenant, condition or
agreement contained in this Agreement.

 

7.1.4        Default Under Other
Financing Documents or Obligations.

 

A default
shall occur under any of the other Financing Documents or under any other
Obligations, and such default is not cured within any applicable grace period
provided therein.

 

7.1.5        Receiver; Bankruptcy.

 

The Borrower
or any Subsidiary shall (a) apply for or consent to the appointment of a
receiver, trustee or liquidator of itself or any of its property, (b) admit in
writing its inability to pay its debts as they mature, (c) make a general
assignment for the benefit of creditors, (d) be adjudicated a bankrupt or
insolvent, (e) file a voluntary petition in bankruptcy or a petition or an
answer seeking or consenting to reorganization or an arrangement with creditors
or to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or an answer
admitting the material allegations of a petition filed against it in any
proceeding under any such law, or take corporate action for the purposes of
effecting any of the foregoing, or (f) by any act indicate its consent to,
approval of or acquiescence in any such proceeding or the appointment of any
receiver of or trustee for any of its property, or suffer any such
receivership, trusteeship or proceeding to continue undischarged for a period
of sixty (60) days, or (g) by any act indicate its consent to, approval of or
acquiescence in any order, judgment or decree by any court of competent
jurisdiction or any Governmental Authority enjoining or otherwise prohibiting
the operation of a material portion of the Borrower’s or any Subsidiary’s
business or the use or disposition of a material portion of the Borrower’s or
any Subsidiary’s assets.

 

7.1.6        Involuntary Bankruptcy,
etc.

 

An order for
relief shall be entered in any involuntary case brought against the Borrower or
any Subsidiary under the Bankruptcy Code, or (b) any such case shall be
commenced against the Borrower or any Subsidiary and shall not be dismissed
within sixty (60) days after the filing of the petition, or (c) an order,
judgment or decree under any other Law is entered by any court of competent
jurisdiction or by any other Governmental Authority on the application of a
Governmental Authority or of a Person other than the Borrower or any Subsidiary
(i) adjudicating the Borrower, or any Subsidiary  bankrupt or insolvent, or (ii) appointing a receiver, trustee or
liquidator of the Borrower or of any Subsidiary, or of a material portion of
the Borrower’s or any Subsidiary’s assets, or (iii) enjoining, prohibiting or
otherwise limiting the operation of a material portion of the Borrower’s or any
Subsidiary’s business or the use or disposition of a material portion of the
Borrower’s or any Subsidiary’s assets, and such

 

44

 

order, judgment or decree
continues unstayed and in effect for a period of thirty (30) days from the date
entered.

 

7.1.7        Judgment.

 

Unless
adequately insured in the opinion of the Lender, the entry of a final judgment
for the payment of money involving more than $500,000 against the Borrower or
any Subsidiary, and the failure by the Borrower or such Subsidiary to discharge
the same, or cause it to be discharged, within thirty (30) days from the date
of the order, decree or process under which or pursuant to which such judgment
was entered, or to secure a stay of execution pending appeal of such judgment.

 

7.1.8        Execution; Attachment.

 

Any execution
or attachment shall be levied against the Collateral, or any part thereof, and
such execution or attachment shall not be set aside, discharged or stayed
within thirty (30) days after the same shall have been levied.

 

7.1.9        Default Under Other
Borrowings.

 

Default shall
be made with respect to any Indebtedness for Borrowed Money (other than the
Loan) if the default is a failure to pay at maturity or if the effect of such
default is to accelerate the maturity of such Indebtedness for Borrowed Money
or to permit the holder or obligee thereof or other party thereto to cause any
such Indebtedness for Borrowed Money to become due prior to its stated
maturity.

 

7.1.10      Challenge to Agreements.

 

The Borrower
or any of the Guarantors shall challenge the validity and binding effect of any
provision of any of the Financing Documents or shall state its intention to
make such a challenge of any of the Financing Documents or any of the Financing
Documents shall for any reason (except to the extent permitted by its express
terms) cease to be effective or to create a valid and perfected first priority
Lien (except for Permitted Liens) on, or security interest in, any of the
Collateral purported to be covered thereby.

 

7.1.11      Liquidation, Termination
or Dissolution

 

The Borrower
shall liquidate, dissolve or terminate its existence or shall suspend or
terminate a substantial portion of its business operations without the prior
written consent of the Lender.

 

7.1.12      Swap Default.

 

An event
occurs which gives the Lender the right or option to terminate any Swap
Contract which is secured by the Collateral.

 

45

 

Section 7.2             Remedies.

 

Upon the
occurrence of any Event of Default, the Lender may at any time thereafter
exercise any one or more of the following rights, powers or remedies:

 

7.2.1        Acceleration.

 

The Lender may
declare the Obligations to be immediately due and payable, notwithstanding
anything contained in this Agreement or in any of the other Financing Documents
to the contrary, without presentment, demand, protest, notice of protest or of
dishonor, or other notice of any kind, all of which the Borrower hereby waives.

 

7.2.2        Further Advances.

 

The Lender may
from time to time without notice to the Borrower suspend, terminate or limit
any further loans or other extensions of credit under this Agreement and under
any of the other Financing Documents. 
Further, upon the occurrence of an Event of Default or Default specified
in Sections 7.1.5 (Receiver; Bankruptcy) or 7.1.6 (Involuntary Bankruptcy,
etc.), the Commitments and any agreement in any of the Financing Documents to
provide additional credit shall immediately and automatically terminate and the
unpaid principal amount of the Notes (with accrued interest thereon) and all
other Obligations then outstanding, shall immediately become due and payable without
further action of any kind and without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived by the Borrower.

 

7.2.3        Uniform Commercial
Code.

 

The Lender
shall have all of the rights and remedies of a secured party under the
applicable Uniform Commercial Code and other applicable Laws.  Upon demand by the Lender, the Borrower
shall assemble the Collateral and make it available to the Lender, at a place
designated by the Lender.  The Lender or
its agents may without notice from time to time enter upon the Borrower’s
premises to take possession of the Collateral, to remove it, to render it
unusable, to process it or otherwise prepare it for sale, or to sell or
otherwise dispose of it.

 

Any written
notice of the sale, disposition or other intended action by the Lender with
respect to the Collateral which is sent by regular mail, postage prepaid, to
the Borrower at the address set forth in Section 8.1 of this Agreement, or such
other address of the Borrower which may from time to time be shown on the
Lender’s records, at least ten (10) days prior to such sale, disposition or
other action, shall constitute commercially reasonable notice to the
Borrower.  The Lender may alternatively
or additionally give such notice in any other commercially reasonable
manner.  Nothing in this Agreement shall
require the Lender to give any notice not required by applicable Laws.

 

If any
consent, approval, or authorization of any state, municipal or other
governmental department, agency or authority or of any person, or any person,
corporation, partnership or other entity having any interest therein, should be
necessary to effectuate any sale or other disposition of the Collateral, the
Borrower agrees to execute all such applications and

 

46

 

other instruments, and to take
all other action, as may be required in connection with securing any such
consent, approval or authorization.

 

The Borrower
recognizes that the Lender may be unable to effect a public sale of all or a
part of the Collateral consisting of Investment Property by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, and other
applicable federal and state Laws.  The
Lender may, therefore, in its discretion, take such steps as it may deem
appropriate to comply with such Laws and may, for example, at any sale of the
Collateral consisting of securities restrict the prospective bidders or
purchasers as to their number, nature of business and investment intention,
including, without limitation, a requirement that the Persons making such
purchases represent and agree to the satisfaction of the Lender that they are
purchasing such securities for their account, for investment, and not with a
view to the distribution or resale of any thereof.  The Borrower covenants and agrees to do or cause to be done
promptly all such acts and things as the Lender may request from time to time
and as may be necessary to offer and/or sell the securities or any part thereof
in a manner which is valid and binding and in conformance with all applicable
Laws.  Upon any such sale or
disposition, the Lender shall have the right to deliver, assign and transfer to
the purchaser thereof the Collateral consisting of securities so sold.

 

7.2.4        Specific Rights With
Regard to Collateral.

 

In addition to
all other rights and remedies provided hereunder or as shall exist at law or in
equity from time to time, the Lender may (but shall be under no obligation to),
without notice to the Borrower, and the Borrower hereby irrevocably appoints
the Lender as its attorney-in-fact, with power of substitution, in the name of
the Lender or in the name of the Borrower or otherwise, for the use and benefit
of the Lender, but at the cost and expense of the Borrower and without notice
to the Borrower:

 

(a)           request any Account
Debtor obligated on any of the Accounts to make payments thereon directly to
the Lender, with the Lender taking control of the Proceeds thereof;

 

(b)           compromise, extend or
renew any of the Collateral or deal with the same as it may deem advisable;

 

(c)           make exchanges,
substitutions or surrenders of all or any part of the Collateral;

 

(d)           copy, transcribe, or
remove from any place of business of the Borrower or any Subsidiary all books,
records, ledger sheets, correspondence, invoices and documents, relating to or
evidencing any of the Collateral or without cost or expense to the Lender, make
such use of the Borrower’s or any Subsidiary’s place(s) of business as may be
reasonably necessary to administer, control and collect the Collateral;

 

47

 

(e)           repair, alter or supply goods if necessary
to fulfill in whole or in part the purchase order of any Account Debtor;

 

(f)            demand, collect,
receipt for and give renewals, extensions, discharges and releases of any of
the Collateral;

 

(g)           institute and prosecute
legal and equitable proceedings to enforce collection of, or realize upon, any
of the Collateral;

 

(h)           settle, renew, extend,
compromise, compound, exchange or adjust claims in respect of any of the
Collateral or any legal proceedings brought in respect thereof;

 

(i)            endorse or sign the
name of the Borrower upon any Items of Payment, certificates of title,
Instruments, Securities, stock powers, documents, documents of title, financing
statements, assignments, notices, or other writing relating to or part of the
Collateral and on any Proof of Claim in Bankruptcy against an Account Debtor;

 

(j)            clear Inventory
through customs in the Lender’s or the Borrower’s name and to sign and deliver
to customs officials powers of attorney in the Borrower’s name for such
purpose;

 

(k)           notify the Post Office
authorities to change the address for the delivery of mail to the Borrower to
such address or Post Office Box as the Lender may designate and receive and
open all mail addressed to the Borrower; and

 

(l)            take any other action
necessary or beneficial to realize upon or dispose of the Collateral or to
carry out the terms of this Agreement.

 

7.2.5        Application of Proceeds.

 

Any proceeds
of sale or other disposition of the Collateral will be applied by the Lender to
the payment of the Enforcement Costs, and any balance of such proceeds will be
applied by the Lender to the payment of the balance of the Obligations in such
order and manner of application as the Lender may from time to time in its sole
and absolute discretion determine.  If
the sale or other disposition of the Collateral fails to fully satisfy the
Obligations, the Borrower shall remain liable to the Lender for any deficiency.

 

7.2.6        Performance by Lender.

 

Upon the
occurrence and continuation of an Event of Default, the Lender without notice
to or demand upon the Borrower and without waiving or releasing any of the
Obligations or any Default or Event of Default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for
the account and at the expense of the

 

48

 

 

Borrower, and
may enter upon the premises of the Borrower for that purpose and take all such
action thereon as the Lender may consider necessary or appropriate for such
purpose and the Borrower hereby irrevocably appoints the Lender as its
attorney-in-fact to do so, with power of substitution, in the name of the
Lender or in the name of the Borrower or otherwise, for the use and benefit of
the Lender, but at the cost and expense of the Borrower and without notice to
the Borrower.  All sums so paid or
advanced by the Lender together with interest thereon from the date of payment,
advance or incurring until paid in full at the Post-Default Rate and all costs
and expenses, shall be deemed part of the Enforcement Costs, shall be paid by
the Borrower to the Lender on demand, and shall constitute and become a part of
the Obligations.

 

7.2.7        Other
Remedies.

 

The Lender may
from time to time proceed to protect or enforce its rights by an action or
actions at law or in equity or by any other appropriate proceeding, whether for
the specific performance of any of the covenants contained in this Agreement or
in any of the other Financing Documents, or for an injunction against the
violation of any of the terms of this Agreement or any of the other Financing
Documents, or in aid of the exercise or execution of any right, remedy or power
granted in this Agreement, the Financing Documents, and/or applicable
Laws.  The Lender is authorized to
offset and apply to all or any part of the Obligations all moneys, credits and
other property of any nature whatsoever of the Borrower now or at any time
hereafter in the possession of, in transit to or from, under the control or
custody of, or on deposit with, the Lender.

 

ARTICLE VIII

MISCELLANEOUS

 

Section 8.1             Notices.

 

All notices,
requests and demands to or upon the parties to this Agreement shall be in
writing and shall be deemed to have been given or made when delivered by hand
on a Business Day, or two (2) days after the date when deposited in the mail,
postage prepaid by registered or certified mail, return receipt requested, or when
sent by overnight courier, on the Business Day next following the day on which
the notice is delivered to such overnight courier, addressed as follows:

 

	
  Borrower:

  	
   

  	
  PEC Solutions, Inc.

  12730 Fair Lakes Circle

  Fairfax, Virginia 22102

  
	
   

  	
   

  	
  Attention:

  	
  Stuart Lloyd

  
	
   

  	
   

  	
   

  
	
  Lender:

  	
   

  	
  Bank of
  America, N. A.

  Commercial Bank

  1101 Wootton Parkway, Suite 400

  Rockville, Maryland 20852 

  
	
   

  	
   

  	
  Attention:

  	
  Michael J.
  Landini

  
					

 

49

 

	
  with a copy
  to:

  	
   

  	
  Kathleen M.
  Donahue, Esquire

  Troutman Sanders LLP

  1660 International Drive, Suite 600

  McLean, Virginia 22102

  

 

By written
notice, each party to this Agreement may change the address to which notice is
given to that party, provided that such changed notice shall include a street
address to which notices may be delivered by overnight courier in the ordinary
course on any Business Day.

 

Section 8.2             Amendments;
Waivers.

 

This Agreement
and the other Financing Documents may not be amended, modified, or changed in
any respect except by an agreement in writing signed by the Lender and the
Borrower.  No waiver of any provision of
this Agreement or of any of the other Financing Documents, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing.  No course of
dealing between the Borrower and the Lender and no act or failure to act from
time to time on the part of the Lender shall constitute a waiver, amendment or
modification of any provision of this Agreement or any of the other Financing
Documents or any right or remedy under this Agreement, under any of the other
Financing Documents or under applicable Laws.

 

Section 8.3             Cumulative
Remedies.

 

The rights,
powers and remedies provided in this Agreement and in the other Financing Documents
are cumulative, may be exercised concurrently or separately, may be exercised
from time to time and in such order as the Lender shall determine and are in
addition to, and not exclusive of, rights, powers and remedies provided by
existing or future applicable Laws.  In
order to entitle the Lender to exercise any remedy reserved to it in this
Agreement, it shall not be necessary to give any notice, other than such notice
as may be expressly required in this Agreement.

 

Section 8.4             Severability.

 

In case one or
more provisions, or part thereof, contained in this Agreement or in the other
Financing Documents shall be invalid, illegal or unenforceable in any respect
under any Law, then without need for any further agreement, notice or action:

 

(a)           the validity, legality
and enforceability of the remaining provisions shall remain effective and
binding on the parties thereto and shall not be affected or impaired thereby;

 

(b)           the obligation to be
fulfilled shall be reduced to the limit of such validity;

 

(c)           if such provision or
part thereof pertains to repayment of the Obligations, then, at the sole and
absolute discretion of the

 

50

 

Lender, all of
the Obligations of the Borrower to the Lender shall become immediately due and
payable; and

 

(d)           if the affected
provision or part thereof does not pertain to repayment of the Obligations, but
operates or would prospectively operate to invalidate this Agreement in whole
or in part, then such provision or part thereof only shall be void, and the
remainder of this Agreement shall remain operative and in full force and
effect.

 

Section 8.5             Assignments by
Lender.

 

The Lender
may, without notice to, or consent of, the Borrower, sell, assign or transfer
to or participate with any Person or Persons all or any part of the
Obligations, and each such Person or Persons shall have the right to enforce
the provisions of this Agreement and any of the other Financing Documents as
fully as the Lender, provided that the Lender shall continue to have the
unimpaired right to enforce the provisions of this Agreement and any of the
other Financing Documents as to so much of the Obligations that the Lender has
not sold, assigned or transferred.  In
connection with the foregoing, the Lender shall have the right to disclose to
any such actual or potential purchaser, assignee, transferee or participant all
financial records, information, reports, financial statements and documents
obtained in connection with this Agreement and any of the other Financing
Documents or otherwise.  The Lender
shall provide the Borrower written notice of any assignments made as soon as
reasonably practicable after the making thereof.

 

Section 8.6             Successors and
Assigns.

 

This Agreement
and all other Financing Documents shall be binding upon and inure to the
benefit of the Borrower and the Lender and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Lender.

 

Section 8.7             Continuing
Agreements.

 

All covenants,
agreements, representations and warranties made by the Borrower in this
Agreement, in any of the other Financing Documents, and in any certificate
delivered pursuant hereto or thereto shall survive the making by the Lender of
the Loan, the issuance of Letters of Credit and the execution and delivery of
the Notes, shall be binding upon the Borrower regardless of how long before or
after the date hereof any of the Obligations were or are incurred, and shall
continue in full force and effect so long as any of the Obligations are
outstanding and unpaid.  From time to
time upon the Lender’s request, and as a condition of the release of any one or
more of the Security Documents, the Borrower and other Persons obligated with
respect to the Obligations shall provide the Lender with such acknowledgments
and agreements as the Lender may require to the effect that there exists no
defenses, rights of setoff or recoupment, claims, counterclaims, actions or
causes of action of any kind or nature whatsoever against the Lender, its
agents and others, or to the extent there are, the same are waived and
released.

 

51

 

Section 8.8                                      Enforcement
Costs.

 

The Borrower
shall pay to the Lender on demand all Enforcement Costs, together with interest
thereon from the date incurred or advanced until paid in full at a per annum
rate of interest equal at all times to the Post-Default Rate.  Enforcement Costs shall be immediately due
and payable at the time advanced or incurred, whichever is earlier.  The provisions of this Section shall survive
the execution and delivery of this Agreement, the repayment of the other
Obligations and shall survive the termination of this Agreement.

 

Section 8.9                                      Applicable
Law; Jurisdiction.

 

8.9.1        Applicable Law.

 

As a material
inducement to the Lender to enter into this Agreement, the Borrower
acknowledges and agrees that the Financing Documents, including, this
Agreement, shall be governed by the Laws of the State, as if each of the
Financing Documents and this Agreement had each been executed, delivered,
administered and performed solely within the State even though for the
convenience and at the request of the Borrower, one or more of the Financing
Documents may be executed elsewhere. 
The Lender acknowledges, however, that remedies under certain of the
Financing Documents that relate to property outside the State may be subject to
the laws of the state in which the property is located.

 

8.9.2        Jurisdiction.

 

The Borrower
irrevocably submits to the jurisdiction of any state or federal court sitting
in the State over any suit, action or proceeding arising out of or relating to
this Agreement or any of the other Financing Documents.  The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding brought
in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.  Final judgment in any such suit, action or
proceeding brought in any such court shall be conclusive and binding upon the
Borrower and may be enforced in any court in which the Borrower is subject to
jurisdiction, by a suit upon such judgment, provided that service of process is
effected upon the Borrower in one of the manners specified in this Section or
as otherwise permitted by applicable Laws.

 

8.9.3        Appointment of Agent
for Service of Process.

 

The Borrower
hereby irrevocably designates and appoints Commonwealth Legal Services
Corporation, 4701 Cox Road, Suite 301, Glen Allen, VA 23060-6802, as the
Borrower’s authorized agent to receive on the Borrower’s behalf service of any
and all process that may be served in any suit, action or proceeding of the
nature referred to in this Section in any state or federal court sitting in the
State.  If such agent shall cease so to
act, the Borrower shall irrevocably designate and appoint without delay another
such agent in the State satisfactory to the Lender and shall promptly deliver
to the Lender evidence in writing of such other agent’s acceptance of such
appointment and its agreement that such appointment shall be irrevocable.

 

52

 

8.9.4        Service of Process.

 

The Borrower
hereby consents to process being served in any suit, action or proceeding of
the nature referred to in this Section by (a) the mailing of a copy thereof by
registered or certified mail, postage prepaid, return receipt requested, to the
Borrower at the Borrower’s address designated in or pursuant to Section 8.1
(Notices), and (b) serving a copy thereof upon the agent, if any, designated
and appointed by the Borrower as the Borrower’s agent for service of process by
or pursuant to this Section.  The
Borrower irrevocably agrees that such service (y) shall be deemed in every
respect effective service of process upon the Borrower in any such suit, action
or proceeding, and (z) shall, to the fullest extent permitted by law, be taken
and held to be valid personal service upon the Borrower.  Nothing in this Section shall affect the
right of the Lender to serve process in any manner otherwise permitted by law
or limit the right of the Lender otherwise to bring proceedings against the
Borrower in the courts of any jurisdiction or jurisdictions.

 

Section 8.10           Duplicate Originals
and Counterparts.

 

This Agreement
may be executed in any number of duplicate originals or counterparts, each of
such duplicate originals or counterparts shall be deemed to be an original and
all taken together shall constitute but one and the same instrument.

 

Section 8.11           Headings.

 

The headings
in this Agreement are included herein for convenience only, shall not constitute
a part of this Agreement for any other purpose, and shall not be deemed to
affect the meaning or construction of any of the provisions hereof.

 

Section 8.12           No Agency.

 

Nothing herein
contained shall be construed to constitute the Borrower as the Lender’s agent
for any purpose whatsoever or to permit the Borrower to pledge any of the
Lender’s credit.  The Lender shall not
be responsible nor liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof.  The
Lender shall not, by anything herein or in any of the Financing Documents or
otherwise, assume any of the Borrower’s obligations under any contract or agreement
assigned to the Lender, and the Lender shall not be responsible in any way for
the performance by the Borrower of any of the terms and conditions thereof.

 

Section 8.13           Date of Payment.

 

Should the
principal of or interest on any of the Notes become due and payable on other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and in the case of principal, interest shall be payable
thereon at the rate per annum specified in the Notes during such extension.

 

53

 

Section 8.14           Entire Agreement.

 

This Agreement
is intended by the Lender and the Borrower to be a complete, exclusive and
final expression of the agreements contained herein.  Neither the Lender nor the Borrower shall hereafter have any
rights under any prior agreements pertaining to the matters addressed by this
Agreement but shall look solely to this Agreement for definition and
determination of all of their respective rights, liabilities and
responsibilities under this Agreement.

 

Section 8.15           Waiver of Trial by
Jury.

 

THE
BORROWER AND THE LENDER HEREBY JOINTLY AND SEVERALLY WAIVE TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO WHICH THE BORROWER AND THE LENDER MAY BE PARTIES,
ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS AGREEMENT, (B) ANY OF THE
FINANCING DOCUMENTS, OR (C) THE COLLATERAL. 
THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST
ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES
WHO ARE NOT PARTIES TO THIS AGREEMENT.

 

This waiver is
knowingly, willingly and voluntarily made by the Borrower and the Lender, and
the Borrower and the Lender hereby represent that no representations of fact or
opinion have been made by any individual to induce this waiver of trial by jury
or to in any way modify or nullify its effect. 
The Borrower and the Lender further represent that they have been
represented in the signing of this Agreement and in the making of this waiver
by independent legal counsel, selected of their own free will, and that they
have had the opportunity to discuss this waiver with counsel.

 

Section 8.16           Liability of the
Lender.

 

The Borrower
hereby agrees that the Lender shall not be chargeable for any negligence,
mistake, act or omission of any accountant, examiner, agency or attorney employed
by the Lender in making examinations, investigations or collections, or
otherwise in perfecting, maintaining, protecting or realizing upon any lien or
security interest or any other interest in the Collateral or other security for
the Obligations.

 

By inspecting
the Collateral or any other properties of the Borrower or by accepting or
approving anything required to be observed, performed or fulfilled by the
Borrower or to be given to the Lender pursuant to this Agreement or any of the
other Financing Documents, the Lender shall not be deemed to have warranted or
represented the condition, sufficiency, legality, effectiveness or legal effect
of the same, and such acceptance or approval shall not constitute any warranty
or representation with respect thereto by the Lender.

 

Section 8.17           Indemnification.

 

The Borrower
agrees to indemnify and hold harmless, the Lender, the Lender’s parent and
Affiliates and the Lender’s parent’s and Affiliates’ officers, directors,
shareholders, employees and agents (each an “Indemnified Party,” and
collectively, the “Indemnified Parties”),

 

54

 

from and against any and all
claims, liabilities, losses, damages, costs and expenses (whether or not such
Indemnified Party is a party to any litigation) incurred by any Indemnified
Party with respect to, arising out of or as a consequence of (a) this Agreement
or any of the other Financing Documents, including without limitation, any
failure of the Borrower to pay when due (at maturity, by acceleration or
otherwise) any principal, interest, fee or any other amount due under this
Agreement or the other Financing Documents, or any other Event of Default (b)
the use by the Borrower of any proceeds advanced hereunder; (c) the transactions
contemplated hereunder; or (d) any claim, demand, action or cause of action
being asserted against (i) the Borrower or any of its Affiliates by any other
Person, or (ii) any Indemnified Party by the Borrower in connection with the
transactions contemplated hereunder. 
Notwithstanding anything herein or elsewhere to the contrary, the
Borrower shall not be obligated to indemnify or hold harmless any Indemnified
Party from any liability, loss or damage resulting from the gross negligence,
willful misconduct or unlawful actions of such Indemnified Party.  Any amount payable to the Lender under this
Section will bear interest at the Post-Default Rate from the due date until
paid.

 

IN WITNESS
WHEREOF, each of the parties hereto have executed and delivered this Agreement
under their respective seals as of the day and year first written above.

 

	
  WITNESS OR
  ATTEST:

  	
  PEC
  SOLUTIONS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ SHARON
  L. CLARKE

  	
   

  	
  By:

  	
  /s/ STUART
  R. LLOYD

  	
  (Seal)

  
	
   

  	
   

  	
  Name:STUART
  R. LLOYD

  
	
   

  	
   

  	
  Title:  SENIOR VICE PRESIDENT

            CHIEF FINANCIAL
  OFFICER

  	
   

  
	
  WITNESS:

  	
  BANK OF
  AMERICA, N. A.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ DERINDA
  HAMMOND

  	
   

  	
  By:

  	
  MICHAEL J.
  LANDINI

  	
  (Seal)

  
	
   

  	
   

  	
  Michael J.
  Landini

  	
   

  
	
   

  	
   

  	
  Senior Vice
  President

  	
   

  
						

 

55

 

LIST OF EXHIBITS

 

	
  A.

  	
   

  	
  Additional
  Borrower Joinder Supplement

  
	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Revolving
  Credit Note

  
	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Form of
  Compliance Certificate

  
	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Business
  Information

  
	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Backlog
  Report Form

  

 

56

 

EXHIBIT C

 

COMPLIANCE
CERTIFICATE

 

This Compliance
Certificate  (the “Certificate”) is
delivered pursuant to the Financing and Security Agreement dated as of
June 27, 2003 (together with all amendments and modifications, if any,
from time to time made thereto, the “Financing Agreement”), between PEC Solutions,
Inc. (the “Borrower”) and Bank of America, N.A (“Lender”).  Unless otherwise defined, terms used herein
(including the exhibits hereto) have the meanings provided in the Loan
Agreement.

 

The
undersigned, being the duly elected, qualified and acting
                 
of the Borrower, on behalf of the Borrower and solely in his or her capacity as
an officer of the Borrower, hereby certifies and warrants that:

 

He or she is
the
                      
of the Borrower and that, as such, he or she is authorized to execute this
Certificate on behalf of the Borrower.]

 

As of
                      ,
                      :

 

Borrower was
not in default of any of the provisions of the Financing Agreement during the
period to which this Certificate relates;

 

Net Worth.  Borrower’s Net Worth was
$                      
as computed on the Net Worth Exhibit attached hereto.

 

Funded Debt to
EBITDA. 
Borrower’s consolidated Funded Debt to EBITDA Ratio was
                      
to 1.0 as computed on the Funded Debt to EBITDA Exhibit attached hereto;

 

Interest
Coverage Ratio. 
Borrower’s consolidated Quick Ratio was
                      
to 1.0 as computed on the Interest Coverage Ratio Exhibit attached hereto.

 

IN WITNESS
WHEREOF, the undersigned has executed and delivered this certificate, this
             day of
                      ,
20    .

 

	
   

  	
  PEC
  SOLUTIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

NET WORTH EXHIBIT

 

Period
ending                           

 

NET WORTH (ON A CONSOLIDATED BASIS)

 

	
  1.

  	
  Net Worth

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  On Closing
  Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  + 50% of net
  income (no deduction for net losses)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  + 100% of
  the proceeds of equity issuances

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TOTAL

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Net Worth:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Required Net
  Worth is:

  	
   

  	
  $

  	
   

  

 

2

 

SCHEDULE 1

 

FUNDED DEBT TO
EBITDA RATIO EXHIBIT

 

12 Month
Period ending

 

	
  Funded Debt to EBITDA Ratio  (on a consolidated basis)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Funded Debt:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  all outstanding liabilities for borrowed money including capital
  leases

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  + other interest-bearing liabilities, including current and long-term
  debt

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  + letters of
  credit

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LESS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  The non-current portion of liabilities subordinated to Borrower’s
  obligations to Lender

  	
   

  	
  $(

  	
   

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  = Funded
  Debt

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  EBITDA:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  net income

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  [LESS income] [or PLUS loss] from discontinued operations
  and extraordinary items

  	
   

  	
  $(

  	
   

  	
  )

  
	
   

  	
  +

  	
  income tax

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  +

  	
  interest
  expense

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  +

  	
  depreciation

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  +

  	
  depletion

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  +

  	
  amortization

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  +

  	
  other non-cash
  charges

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  (B)

  	
  = EBITDA

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Funded Debt to EBITDA Ratio = 1(A) ÷ 2(B):

  	
   

  	
   

  	
   

  	
  to 1.0.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Required
  ratio is:

  	
   

  	
  2.75 to 1.0

  	
   

  

 

3

 

INTEREST COVERAGE RATIO (EARNINGS TO INTEREST EXPENSE)

 

	
  Calculation
  for Applicable Period:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Earnings is
  the sum of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Net Income

  	
   

  	
  $

  	
   

  
	
   

  	
  PLUS or
  MINUS

  	
   

  	
   

  	
   

  
	
   

  	
  Income or
  loss on Discontinued Operations 

  	
   

  	
  $

  	
   

  
	
   

  	
  Extraordinary
  Items

  	
   

  	
  $

  	
   

  
	
   

  	
  PLUS

  	
   

  	
   

  	
   

  
	
   

  	
  Income Taxes

  	
   

  	
  $

  	
   

  
	
   

  	
  Interest
  Expense

  	
   

  	
  $

  	
   

  
	
   

  	
  TOTAL:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Divided by

  	
   

  	
   

  	
   

  
	
   

  	
  Interest
  Expense

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Calculation
  for Applicable Period:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Required
  Minimum Interest Coverage Ratio = 2.5 to 1.0

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Earnings
  divided by Interest Expense =

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $                     divided
  by
  $                    =
             to 1.0

  	
   

  	
   

  

 

4

 

Schedule 2

 

 

5

 

EXHIBIT D

 

BUSINESS
INFORMATION

 

1.             The following is a
list of all Subsidiaries of the Borrower:

 

 

2.             The
Borrower has not conducted business under any name other than its current name
and Performance Engineering Corp. other than:

 

 

3.             The following is a
list of all places of business of the Borrower:

 

(a)           Chief
Executive Office:

 

 

(b)           Other
Places of Business:

 

 

EXHIBIT E

 

FORM OF BACKLOG REPORT

 

 

LIST OF SCHEDULES

 

	
  Schedule
  2.2.1

  	
   

  	
  Outstanding
  Letters of Credit

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.1.10

  	
   

  	
  Litigation

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.1.13

  	
   

  	
  Other
  Indebtedness

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.1.17

  	
   

  	
  Employee
  Relations

  
	
   

  	
   

  	
   

  
	
  Schedule
  4.1.19

  	
   

  	
  Permitted
  Liens

  

 

 

Schedule 2.2.1

 

OUTSTANDING
LETTERS OF CREDIT

 

	
  Beneficiary

  	
   

  	
  Letter of

  Credit No.

  	
   

  	
  Expiration

  Date

  	
   

  	
  2003

  	
   

  	
  2004

  	
   

  	
  2005

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  
	
  Metropolitan
  Life

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Insurance
  Company

  	
   

  	
  934551

  	
   

  	
  12/31/2003

  	
   

  	
  800,000.00

  	
   

  	
  600,000.00

  	
   

  	
  400,000.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Building
  IV Assoc LP

  	
   

  	
  0934837

  	
   

  	
  12/31/2003

  	
   

  	
  129,275.55

  	
   

  	
  129,275.55

  	
   

  	
  129,275.55

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Building
  VII Assoc, LC

  	
   

  	
  3038919

  	
   

  	
  12/31/2003

  	
   

  	
  1,800,000.00

  	
   

  	
  1,800,000.00

  	
   

  	
  1,500,000.00

  	
   

  	
  1,200,000.00

  	
   

  	
  900,000.00

  	
   

  	
  600,000.00

  	
   

  
	
  WXI/CMD
  Real Estate LP

  	
   

  	
  3032591

  	
   

  	
  11/30/2003

  	
   

  	
  52,733.58

  	
   

  	
  52,733.58

  	
   

  	
  52,733.58

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2,782,009.13

  	
   

  	
  2,582,009.13

  	
   

  	
  2,082,009.13

  	
   

  	
  1,200,000.00

  	
   

  	
  900,000.00

  	
   

  	
  600,000.00

  	
   

  

 

 

Schedule
4.1.10

 

LITIGATION

 

PEC and
certain officers are defendants in several class action lawsuits (now
consolidated) filed in the Eastern District of Virginia alleging violations of
sections 10(b) and 20 of the Securities Exchange Act of 1934.  The consolidated case is in its initial
stages.  Damages have not yet been
determined.

 

 

Schedule 4.1.13

 

OTHER INDEBTEDNESS

 

 

 

Schedule
4.1.17

 

EMPLOYEE RELATIONS

 

 

 

Schedule
4.1.19

 

	
  LIENS ON COLLATERAL

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Unpaid
  Principal

  	
   

  	
  Asset Covered

  	
   

  	
  Lienholder

  	
   

  	
  Balance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

TABLE OF CONTENTS

 

	
  ARTICLE
  I DEFINITIONS

  	
   

  
	
  Section
  1.1

  	
  Certain
  Defined Terms.

  	
   

  
	
  Section
  1.2

  	
  Accounting
  Terms and Other Definitional Provisions.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II THE CREDIT FACILITIES

  	
   

  
	
  Section
  2.1

  	
  The
  Revolving Credit Facility.

  	
   

  
	
  2.1.1

  	
  Revolving Credit Facility.

  	
   

  
	
  2.1.2

  	
  Procedure for Making Advances Under the Revolving
  Loan; Lender Protection Loans.

  	
   

  
	
  2.1.3

  	
  Revolving Credit Note.

  	
   

  
	
  2.1.4

  	
  Optional Prepayments of Revolving Loan.

  	
   

  
	
  2.1.5

  	
  Revolving Loan Account.

  	
   

  
	
  2.1.6

  	
  Revolving Credit Fee.

  	
   

  
	
  Section
  2.2

  	
  The
  Letter of Credit Facility.

  	
   

  
	
  2.2.1

  	
  Letters of Credit.

  	
   

  
	
  2.2.2

  	
  Letter of Credit Fees.

  	
   

  
	
  2.2.3

  	
  Terms of Letters of Credit.

  	
   

  
	
  2.2.4

  	
  Procedure for Letters of Credit.

  	
   

  
	
  2.2.5

  	
  Payments of Letters of Credit.

  	
   

  
	
  2.2.6

  	
  Change in Law; Increased Cost.

  	
   

  
	
  2.2.7

  	
  General Letter of Credit Provisions.

  	
   

  
	
  Section
  2.3

  	
  General
  Financing Provisions.

  	
   

  
	
  2.3.1

  	
  Borrower’s Representatives.

  	
   

  
	
  2.3.2

  	
  Use of Proceeds of the Loan.

  	
   

  
	
  2.3.3

  	
  Computation of Interest and Fees.

  	
   

  
	
  2.3.4

  	
  Maximum Interest Rate.

  	
   

  
	
  2.3.5

  	
  Payments.

  	
   

  
	
  2.3.6

  	
  Liens; Setoff.

  	
   

  
	
  2.3.7

  	
  Requirements of Law.

  	
   

  
	
  2.3.8

  	
  Swap Contracts.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III THE COLLATERAL

  	
   

  
	
  Section
  3.1

  	
  Debt
  and Obligations Secured.

  	
   

  
	
  Section
  3.2

  	
  Grant
  of Liens.

  	
   

  
	
  Section
  3.3

  	
  Record
  Searches.

  	
   

  
	
  Section
  3.4

  	
  Costs.

  	
   

  
	
  Section
  3.5

  	
  Release.

  	
   

  
	
  Section
  3.6

  	
  Inconsistent
  Provisions.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  Section
  4.1

  	
  Representations
  and Warranties.

  	
   

  
	
  4.1.1

  	
  Subsidiaries.

  	
   

  
	
  4.1.2

  	
  Existence.

  	
   

  
	
  4.1.3

  	
  Power and Authority.

  	
   

  
	
  4.1.4

  	
  Binding Agreements.

  	
   

  
	
  4.1.5

  	
  No Conflicts.

  	
   

  
	
  4.1.6

  	
  No Defaults, Violations.

  	
   

  
	
  4.1.7

  	
  Compliance with Laws.

  	
   

  
	
  4.1.8

  	
  Margin Stock.

  	
   

  
	
  4.1.9

  	
  Investment Company Act; Margin Stock.

  	
   

  
								

 

 

	
  4.1.10

  	
  Litigation.

  
	
  4.1.11

  	
  Financial Condition.

  
	
  4.1.12

  	
  Full Disclosure.

  
	
  4.1.13

  	
  Indebtedness for Borrowed Money.

  
	
  4.1.14

  	
  Taxes.

  
	
  4.1.15

  	
  ERISA.

  
	
  4.1.16

  	
  Title to Properties.

  
	
  4.1.17

  	
  Employee Relations.

  
	
  4.1.18

  	
  Presence of Hazardous Materials or Hazardous
  Materials Contamination.

  
	
  4.1.19

  	
  Perfection and Priority of Collateral.

  
	
  4.1.20

  	
  Business Names and Addresses.

  
	
  4.1.21

  	
  Accounts.

  
	
  Section
  4.2

  	
  Survival;
  Updates of Representations and Warranties.

  
	
   

  	
   

  
	
  ARTICLE
  V CONDITIONS PRECEDENT

  
	
  Section
  5.1

  	
  Conditions
  to the Initial Advance and Initial Letter of Credit.

  
	
  5.1.1

  	
  Organizational Documents - Borrower.

  
	
  5.1.2

  	
  Consents, Licenses, Approvals, Etc.

  
	
  5.1.3

  	
  Notes.

  
	
  5.1.4

  	
  Financing Documents and Collateral.

  
	
  5.1.5

  	
  Other Financing Documents.

  
	
  5.1.6

  	
  Other Documents, Etc.

  
	
  5.1.7

  	
  Payment of Fees.

  
	
  5.1.8

  	
  Recordings and Filings.

  
	
  5.1.9

  	
  Insurance Certificate.

  
	
  Section
  5.2

  	
  Conditions
  to all Extensions of Credit.

  
	
  5.2.1

  	
  Compliance.

  
	
  5.2.2

  	
  Default.

  
	
  5.2.3

  	
  Representations and Warranties.

  
	
  5.2.4

  	
  Adverse Change.

  
	
  5.2.5

  	
  Legal Matters.

  
	
   

  	
   

  
	
  ARTICLE
  VI COVENANTS OF THE BORROWER

  
	
  Section
  6.1

  	
  Affirmative
  Covenants.

  
	
  6.1.1

  	
  Financial Statements.

  
	
  6.1.2

  	
  Reports to SEC and to Stockholders.

  
	
  6.1.3

  	
  Recordkeeping, Rights of Inspection, Field
  Examination, Etc.

  
	
  6.1.4

  	
  Existence.

  
	
  6.1.5

  	
  Compliance with Laws.

  
	
  6.1.6

  	
  Preservation of Properties.

  
	
  6.1.7

  	
  Line of Business.

  
	
  6.1.8

  	
  Insurance.

  
	
  6.1.9

  	
  Taxes.

  
	
  6.1.10

  	
  ERISA.

  
	
  6.1.11

  	
  Notification of Events of Default and Adverse
  Developments.

  
	
  1.1.12

  	
  Hazardous Materials; Contamination.

  
	
  6.1.13

  	
  Financial Covenants.

  
	
  6.1.14

  	
  Collection of Receivables.

  
	
  6.1.15

  	
  Assignments of Receivables.

  
	
  6.1.16

  	
  Government Accounts.

  
	
  6.1.17

  	
  Maintenance of the Collateral.

  
	
  6.1.18

  	
  Defense of Title and Further Assurances.

  
	
  6.1.19

  	
  Use of Premises and Equipment.

  
	
  6.1.20

  	
  Protection of Collateral.

  
			

 

 

	
  Section
  6.2

  	
  Negative
  Covenants.

  
	
  6.2.1

  	
  Capital Structure, Merger, Acquisition or Sale of
  Assets.

  
	
  6.2.2

  	
  Subsidiaries.

  
	
  6.2.3

  	
  Purchase or Redemption of Securities, Dividend
  Restrictions.

  
	
  6.2.4

  	
  Indebtedness.

  
	
  6.2.5

  	
  Investments, Loans and Other Transactions.

  
	
  6.2.6

  	
  Stock of Subsidiaries.

  
	
  6.2.7

  	
  Subordinated Indebtedness.

  
	
  6.2.8

  	
  Liens; Confessed Judgment.

  
	
  6.2.9

  	
  Transactions with Affiliates.

  
	
  6.2.10

  	
  Other Businesses.

  
	
  6.2.11

  	
  ERISA Compliance.

  
	
  6.2.12

  	
  Prohibition on Hazardous Materials.

  
	
  6.2.13

  	
  Method of Accounting; Fiscal Year.

  
	
  6.2.14

  	
  Disposition of Collateral.

  
	
   

  	
   

  
	
  ARTICLE
  VII DEFAULT AND RIGHTS AND REMEDIES

  
	
  Section
  7.1

  	
  Events
  of Default.

  
	
  7.1.1

  	
  Failure to Pay.

  
	
  7.1.2

  	
  Breach of Representations and Warranties.

  
	
  7.1.3

  	
  Failure to Comply with Covenants.

  
	
  7.1.4

  	
  Default Under Other Financing Documents or
  Obligations.

  
	
  7.1.5

  	
  Receiver; Bankruptcy.

  
	
  7.1.6

  	
  Involuntary Bankruptcy, etc.

  
	
  7.1.7

  	
  Judgment.

  
	
  7.1.8

  	
  Execution; Attachment.

  
	
  7.1.9

  	
  Default Under Other Borrowings.

  
	
  7.1.10

  	
  Challenge to Agreements.

  
	
  7.1.11

  	
  Liquidation, Termination or Dissolution

  
	
  Section
  7.2

  	
  Remedies.

  
	
  7.2.1

  	
  Acceleration.

  
	
  7.2.2

  	
  Further Advances.

  
	
  7.2.3

  	
  Uniform Commercial Code.

  
	
  7.2.4

  	
  Specific Rights With Regard to Collateral.

  
	
  7.2.5

  	
  Application of Proceeds.

  
	
  7.2.6

  	
  Performance by Lender.

  
	
  7.2.7

  	
  Other Remedies.

  
	
   

  	
   

  
	
  ARTICLE
  VIII MISCELLANEOUS

  
	
  Section 8.1

  	
  Notices.

  
	
  Section 8.2

  	
  Amendments; Waivers.

  
	
  Section 8.3

  	
  Cumulative Remedies.

  
	
  Section 8.4

  	
  Severability.

  
	
  Section 8.5

  	
  Assignments by Lender.

  
	
  Section 8.6

  	
  Successors and Assigns.

  
	
  Section 8.7

  	
  Continuing Agreements.

  
	
  Section 8.8

  	
  Enforcement Costs.

  
	
  Section 8.9

  	
  Applicable Law; Jurisdiction.

  
	
  8.9.1

  	
  Applicable
  Law.

  
	
  8.9.2

  	
  Jurisdiction.

  
	
  8.9.3

  	
  Appointment
  of Agent for Service of Process.

  
	
  8.9.4

  	
  Service
  of Process.

  
	
  Section 8.10

  	
  Duplicate Originals and Counterparts.

  
				

 

 

	
  Section 8.11

  	
  Headings.

  
	
  Section 8.12

  	
  No Agency.

  
	
  Section 8.13

  	
  Date of Payment.

  
	
  Section 8.14

  	
  Entire Agreement.

  
	
  Section 8.15

  	
  Waiver of Trial by Jury.

  
	
  Section 8.16

  	
  Liability of the Lender.

  
	
  Section 8.17

  	
  Indemnification.

  

 

 

FINANCING
AND SECURITY AGREEMENT

 

Dated

 

June 27,
2003

 

By and
Between

 

PEC
SOLUTIONS, INC.

 

And

 

BANK OF
AMERICA, N. A.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]