Document:

Credit and Security Agreement

 
Exhibit 10.6

 
CREDIT AGREEMENT 
 
DATED AS OF DECEMBER 16, 2002 
 
PEMCO AVIATION GROUP, INC., 
PEMCO WORLD AIR SERVICES, INC., 
PEMCO AEROPLEX, INC., 
PEMCO ENGINEERS, INC., 
SPACE VECTOR CORPORATION, 
 
SOUTHTRUST BANK, AS AGENT, 
and 
 
THE
LENDERS IDENTIFIED HEREIN 

 
Table of
Contents 
 

	 	  	 	  	 	  	 	  	 Page

	
	 Article I
	  	 1

	
	 	  	 1.
	  	 DEFINITIONS
	  	 1

	
	 	  	 	  	 1.1
	  	 Defined Terms
	  	 1

	
	 	  	 	  	 1.2
	  	 Accounting Terms
	  	 24

	
	 	  	 	  	 1.3
	  	 UCC Terms
	  	 24

	
	 	  	 	  	 1.4
	  	 Construction of Terms
	  	 25

	
	 	  	 	  	 1.5
	  	 Computation of Time Periods
	  	 25

	
	 	  	 	  	 1.6
	  	 Reference to Borrowers and Borrower Parties
	  	 25

	
	 	  	 	  	 1.7
	  	 Reference to Lender and Lender Party
	  	 25

	
	 	  	 	  	 1.8
	  	 Reference to Revolving Loan Lenders
	  	 25

	
	 	  	 	  	 1.9
	  	 Reference to Term Loan Lenders
	  	 25

	
	 	  	 	  	 1.10
	  	 Computation of Applicable Margins and Financial Covenants
	  	 25

	
	 Article II
	  	 26

	
	 	  	 2.
	  	 THE REVOLVING LOAN
	  	 26

	
	 	  	 	  	 2.1
	  	 General Terms
	  	 26

	
	 	  	 	  	 2.2
	  	 Disbursement of the Revolving Loan
	  	 26

	
	 	  	 	  	 2.3
	  	 The Revolving Notes
	  	 27

	
	 	  	 	  	 2.4
	  	 Interest Rate
	  	 27

	
	 	  	 	  	 2.5
	  	 Payments of Principal and Interest
	  	 27

	
	 	  	 	  	 2.6
	  	 Use of Proceeds of Revolving Loan
	  	 27

	
	 Article III
	  	 28

	
	 	  	 3.
	  	 THE SWING LINE LOAN
	  	 28

	
	 	  	 	  	 3.1
	  	 General Terms.
	  	 28

	
	 	  	 	  	 3.2
	  	 Disbursement of the Swing Line Loan.
	  	 28

	
	 	  	 	  	 3.3
	  	 The Swing Line Note
	  	 29

	
	 	  	 	  	 3.4
	  	 Interest Rate
	  	 29

	
	 	  	 	  	 3.5
	  	 Payments of Principal and Interest
	  	 29

	
	 	  	 	  	 3.6
	  	 Use of Proceeds of Swing Line Loan
	  	 29

	
	 Article IV
	  	 29

	
	 	  	 4.
	  	 THE TERM LOAN
	  	 29

	
	 	  	 	  	 4.1
	  	 General Terms
	  	 29

	
	 	  	 	  	 4.2
	  	 The Term Notes
	  	 29

	
	 	  	 	  	 4.3
	  	 Interest Rate
	  	 29

	
	 	  	 	  	 4.4
	  	 Payments of Principal and Interest
	  	 30

 

i 

 

	
	 	 	 	 	 	 	 	  	 4.5
	  	 Use of Proceeds of Term Loan
	  	 30

	
	 	 	 	 	 Article V
	  	 30

	
	 	 	 	 	 5.
	  	 LETTERS OF CREDIT
	  	 30

	
	 	 	 	 	 	 	 	  	 5.1
	  	 General Terms
	  	 30

	
	 	 	 	 	 	 	 	  	 5.2
	  	 Issuance of a Letter of Credit
	  	 30

	
	 	 	 	 	 	 	 	  	 5.3
	  	 Reimbursement and Other Payments
	  	 31

	
	 	 	 	 	 	 	 	  	 5.4
	  	 Upon an Event of Default
	  	 31

	
	 	 	 	 	 	 	 	  	 5.5
	  	 No Liability of Issuing Lender
	  	 32

	
	 	 	 	 	 	 	 	  	 5.6
	  	 Indemnification
	  	 32

	
	 	 	 	 	 	 	 	  	 5.7
	  	 Pro Rata Participation, Drawing and Reimbursement
	  	 33

	
	 	 	 	 	 	 	 	  	 5.8
	  	 Failure to Purchase Pro Rata Share of Letter of Credit Advances
	  	 34

	
	 	 	 	 	 	 	 	  	 5.9
	  	 Letter of Credit Reports
	  	 34

	
	 	 	 	 	 Article VI
	  	 34

	
	 	 	 	 	 6.
	  	 PAYMENTS, ADDITIONAL COSTS, ETC.
	  	 34

	
	 	 	 	 	 	 	 	  	 6.1
	  	 Payment to Agent
	  	 34

	
	 	 	 	 	 	 	 	  	 6.2
	  	 Late Payments
	  	 34

	
	 	 	 	 	 	 	 	  	 6.3
	  	 Prepayment
	  	 34

	
	 	 	 	 	 	 	 	  	 6.4
	  	 Default Rate
	  	 35

	
	 	 	 	 	 	 	 	  	 6.5
	  	 No Setoff or Deduction
	  	 35

	
	 	 	 	 	 	 	 	  	 6.6
	  	 Payment on Non-Business Day; Payment Computations
	  	 35

	
	 	 	 	 	 	 	 	  	 6.7
	  	 Indemnification
	  	 35

	
	 	 	 	 	 	 	 	  	 6.8
	  	 360-Day Year
	  	 36

	
	 	 	 	 	 	 	 	  	 6.9
	  	 No Requirement to Actually Obtain Funds
	  	 36

	
	 	 	 	 	 	 	 	  	 6.10
	  	 Usury Limitation
	  	 36

	
	 	 	 	 	 Article VII
	  	 36

	
	 	 	 	 	 7.
	  	 CONDITIONS PRECEDENT
	  	 36

	
	 	 	 	 	 	 	 	  	 7.1
	  	 Documents Required for the Closing
	  	 36

	
	 	 	 	 	 	 	 	  	 7.2
	  	 Certain Events Required for Closing and for all Advances
	  	 38

	
	 	 	 	 	 	 	 	  	 7.3
	  	 Legal Matters
	  	 39

	
	 	 	 	 	 	 	 	  	 7.4
	  	 Election to Make Advances Prior to Satisfaction of Conditions Precedent
	  	 39

	
	 	 	 	 	 Article VIII
	  	 39

	
	 	 	 	 	 8.
	  	 COLLATERAL SECURITY
	  	 39

	
	 	 	 	 	 	 	 	  	 8.1
	  	 Grant of Lien and Security Interest
	  	 39

	
	 	 	 	 	 	 	 	  	 8.2
	  	 Maintenance of Lien
	  	 39

	
	 	 	 	 	 Article IX
	  	 	  	 40

 

ii 

 

	
	 	  	 9.
	  	 REPRESENTATIONS AND WARRANTIES.
	  	 40

	
	 	  	 	  	 9.1
	  	 Borrower’s Existence
	  	 40

	
	 	  	 	  	 9.2
	  	 Borrower’s Authority
	  	 40

	
	 	  	 	  	 9.3
	  	 Borrower’s Owners
	  	 40

	
	 	  	 	  	 9.4
	  	 Borrower’s Name
	  	 40

	
	 	  	 	  	 9.5
	  	 Consents or Approvals
	  	 40

	
	 	  	 	  	 9.6
	  	 Violations or Actions Pending
	  	 41

	
	 	  	 	  	 9.7
	  	 Borrower Parties’ Subsidiaries and Affiliates
	  	 41

	
	 	  	 	  	 9.8
	  	 Existing Indebtedness
	  	 41

	
	 	  	 	  	 9.9
	  	 Tax Returns
	  	 41

	
	 	  	 	  	 9.10
	  	 Financial Statements
	  	 41

	
	 	  	 	  	 9.11
	  	 Good and Marketable Title
	  	 42

	
	 	  	 	  	 9.12
	  	 Borrower’s Real Property Locations
	  	 42

	
	 	  	 	  	 9.13
	  	 Solvency
	  	 42

	
	 	  	 	  	 9.14
	  	 ERISA
	  	 42

	
	 	  	 	  	 9.15
	  	 Priority of Liens
	  	 42

	
	 	  	 	  	 9.16
	  	 Patents, Copyrights, Etc
	  	 42

	
	 	  	 	  	 9.17
	  	 Accuracy of Documents
	  	 42

	
	 	  	 	  	 9.18
	  	 Environmental Matters
	  	 42

	
	 	  	 	  	 9.19
	  	 Restrictions and Covenants Affecting the Mortgaged Property
	  	 43

	
	 	  	 	  	 9.20
	  	 Condemnation
	  	 43

	
	 	  	 	  	 9.21
	  	 Mortgaged Property Documents
	  	 43

	
	 	  	 	  	 9.22
	  	 Full Disclosure
	  	 43

	
	 	  	 	  	 9.23
	  	 Regulated Industries
	  	 44

	
	 	  	 	  	 9.24
	  	 Insurance
	  	 44

	
	 	  	 	  	 9.25
	  	 Continuing Effectiveness
	  	 44

	
	 Article X
	  	 44

	
	 	  	 10.
	  	 THE BORROWER’S COVENANTS
	  	 44

	
	 	  	 	  	 10.1
	  	 Affirmative Covenants
	  	 44

	
	 	  	 	  	 10.2
	  	 Negative Covenants
	  	 46

	
	 	  	 	  	 10.3
	  	 Financial Covenants
	  	 47

	
	 	  	 	  	 10.4
	  	 Insurance and Condemnation Covenants
	  	 48

	
	 	  	 	  	 10.5
	  	 Mortgaged Property Document Covenants
	  	 52

	
	 	  	 	  	 10.6
	  	 Escrow Deposits
	  	 53

	
	 	  	 	  	 10.7
	  	 Borrower’s General Covenants and Agreements Pertaining to the Collateral
	  	 53

	
	 	  	 	  	 10.8
	  	 Collection of Accounts; Segregation of Proceeds, Etc
	  	 54

	
	 	  	 	  	 10.9
	  	 Collection Methods
	  	 55

	
	 	  	 	  	 10.10
	  	 Verification of Accounts
	  	 55

	
	 	  	 	  	 10.11
	  	 Notice Regarding Disputed Accounts
	  	 55

	
	 	  	 	  	 10.12
	  	 Records, Schedules and Assignments
	  	 55

	
	 	  	 	  	 10.13
	  	 Visitation
	  	 55

	
	 	  	 	  	 10.14
	  	 Use of Tangible Property
	  	 56

 

iii 

 

	
	 	  	 	  	 10.15
	  	 Collateral Evidenced by Instruments or Documents
	  	 56

	
	 	  	 	  	 10.16
	  	 Maintaining Bank Accounts
	  	 56

	
	 	  	 	  	 10.17
	  	 Filing Fees and Taxes
	  	 56

	
	 	  	 	  	 10.18
	  	 Assigned Agreements
	  	 57

	
	 	  	 	  	 10.19
	  	 Underlying Documentation
	  	 57

	
	 	  	 	  	 10.20
	  	 Further Assurances
	  	 57

	
	 Article XI
	  	 57

	
	 	  	 11.
	  	 DEFAULT
	  	 57

	
	 	  	 	  	 11.1
	  	 Events of Default
	  	 57

	
	 	  	 	  	 11.2
	  	 No Advances After Default
	  	 59

	
	 	  	 	  	 11.3
	  	 Acceleration
	  	 59

	
	 	  	 	  	 11.4
	  	 General Remedies
	  	 59

	
	 	  	 	  	 11.5
	  	 Agent’s Additional Rights and Remedies
	  	 59

	
	 	  	 	  	 11.6
	  	 Right of Set-Off
	  	 61

	
	 	  	 	  	 11.7
	  	 No Limitation on Rights and Remedies
	  	 62

	
	 	  	 	  	 11.8
	  	 Repossession of the Collateral; Care and Custody of the Collateral, Etc
	  	 62

	
	 	  	 	  	 11.9
	  	 Application of Proceeds
	  	 63

	
	 	  	 	  	 11.10
	  	 Attorney-in-Fact
	  	 63

	
	 	  	 	  	 11.11
	  	 Default Costs
	  	 64

	
	 Article XII
	  	 64

	
	 	  	 12.
	  	 THE AGENT
	  	 64

	
	 	  	 	  	 12.1
	  	 Authorization and Action
	  	 64

	
	 	  	 	  	 12.2
	  	 Agent’s Notices, Etc
	  	 65

	
	 	  	 	  	 12.3
	  	 Agent’s Reliance, Etc
	  	 65

	
	 	  	 	  	 12.4
	  	 SouthTrust and Affiliates
	  	 66

	
	 	  	 	  	 12.5
	  	 Lender Credit Decision
	  	 66

	
	 	  	 	  	 12.6
	  	 Indemnification
	  	 66

	
	 	  	 	  	 12.7
	  	 Successor Agent
	  	 67

	
	 	  	 	  	 12.8
	  	 No Third Party Beneficiary
	  	 68

	
	 Article XIII
	  	 68

	
	 	  	 13.
	  	 MISCELLANEOUS
	  	 68

	
	 	  	 	  	 13.1
	  	 Termination of Agent’s Lien
	  	 68

	
	 	  	 	  	 13.2
	  	 Construction
	  	 68

	
	 	  	 	  	 13.3
	  	 Indemnity
	  	 69

	
	 	  	 	  	 13.4
	  	 Lender Party’s Consent
	  	 69

	
	 	  	 	  	 13.5
	  	 Enforcement and Waiver by Lender Party
	  	 69

	
	 	  	 	  	 13.6
	  	 No Representation, Assumption, or Duty
	  	 69

	
	 	  	 	  	 13.7
	  	 Expenses of Lender Parties
	  	 69

 

iv 

 

	
	 	  	 	  	 13.8
	  	 Attorneys’ Fees
	  	 70

	
	 	  	 	  	 13.9
	  	 Exclusiveness
	  	 70

	
	 	  	 	  	 13.10
	  	 Waiver and Release by Borrower
	  	 70

	
	 	  	 	  	 13.11
	  	 Limitation on Waiver of Notice, Etc
	  	 70

	
	 	  	 	  	 13.12
	  	 Additional Costs
	  	 70

	
	 	  	 	  	 13.13
	  	 Illegality and Impossibility
	  	 71

	
	 	  	 	  	 13.14
	  	 Assignments and Participations.
	  	 71

	
	 	  	 	  	 13.15
	  	 Binding Effect, Assignment
	  	 73

	
	 	  	 	  	 13.16
	  	 Entire Agreement, Amendments
	  	 73

	
	 	  	 	  	 13.17
	  	 Severability
	  	 74

	
	 	  	 	  	 13.18
	  	 Headings
	  	 74

	
	 	  	 	  	 13.19
	  	 Counterparts
	  	 74

	
	 	  	 	  	 13.20
	  	 Seal
	  	 74

	
	 Article XIV
	  	 74

	
	 	  	 14.
	  	 SUBMISSION TO JURISDICTION, GOVERNING LAW AND NOTICES
	  	 74

	
	 	  	 	  	 14.1
	  	 Notices
	  	 74

	
	 	  	 	  	 14.2
	  	 Governing Law
	  	 76

	
	 	  	 	  	 14.3
	  	 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL, ETC.
	  	 76

 

	 	  	 	  	 
	 	  	 EXHIBIT A
	  	 APPROVED CONTRACTS

	 	  	 EXHIBIT B
	  	 ASSETS EXCLUDED AS COLLATERAL

	 	  	 EXHIBIT C
	  	 FORM OF ASSIGNMENT AND ACCEPTANCE

	 	  	 EXHIBIT D
	  	 FORM OF COLLATERAL REPORT

	 	  	 EXHIBIT E
	  	 FORM OF COMPLIANCE CERTIFICATE

	 	  	 EXHIBIT F
	  	 LENDERS' INITIAL CREDIT PERCENTAGES

	 	  	 EXHIBIT G
	  	 PERMITTED LIENS

	 	  	 SCHEDULE 9.3
	  	 LIST OF EQUITY AGREEMENTS

	 	  	 SCHEDULE 9.4
	  	 LIST OF NAMES USED BY BORROWER AND PERSONS ACQUIRED IN LAST SIX YEARS

	 	  	 SCHEDULE 9.9
	  	 DISPUTED TAX MATTERS

	 	  	 SCHEDULE 9.12
	  	 LISTING OF REAL PROPERTY OWNED OR LEASED BY BORROWER

	 	  	 SCHEDULE 9.16
	  	 LISTING OF PATENTS, COPYRIGHTS, ETC.

	 	  	 SCHEDULE 9.24
	  	 INSURANCE POLICIES IN EFFECT

	 	  	 SCHEDULE 10.2(B)
	  	 PERMITTED TRANSFERS OF COLLATERAL

	 	  	 SCHEDULE 10.2(G)
	  	 PERMITTED EQUITY TRANSACTIONS

	 	  	 SCHEDULE 10.3(G)
	  	 LISTING OF AGREEMENTS CURRENTLY IN EFFECT WITH AFFILIATES AND PERMITTED POST-CLOSING

	 	  	 SCHEDULE 10.7(A)
	  	 LISTING OF LOCATIONS OF COLLATERAL

	 	  	 SCHEDULE 10.16
	  	 ADDITIONAL APPROVED BANK ACCOUNTS

	 	  	 	  	 

 

v 

 
CREDIT
AGREEMENT 
 
THIS CREDIT AGREEMENT
(this “Agreement”), dated as of December             , 2002, is made by and among PEMCO AVIATION GROUP, INC., a Delaware corporation, PEMCO AEROPLEX, INC., an
Alabama corporation, PEMCO ENGINEERS, INC., a Delaware corporation, PEMCO WORLD AIR SERVICES, INC., a Delaware corporation, SPACE VECTOR CORPORATION, a Delaware corporation (collectively, the “Borrowers”),
SOUTHTRUST BANK, an Alabama banking corporation (the “Agent”), those lenders executing this Agreement as Lenders, and such other lenders as may become a party hereto (collectively, the “Lenders”). As used herein,
capitalized words and phrases shall have the meanings ascribed thereto in Article I of this Agreement. 
 
W I T N E S S E T H: 
 
WHEREAS, Borrowers have requested that Lenders extend
certain credit to Borrowers, and Lenders are willing to do so on the condition that, among other things, Borrowers enter into this Agreement, and, subject to the terms and conditions of this Agreement, Lenders have agreed to extend the following
credit: (i) a revolving loan to Borrowers of up to Twenty Million and 00/100 Dollars ($20,000,000.00), (ii) a swing line loan to Borrowers of up to Five Million and 00/100 Dollars ($5,000,000.00), and (iii) a term loan to Borrowers of up to Five
Million and 00/100 Dollars ($5,000,000.00). 
 
NOW, THEREFORE, in consideration of the promises herein contained, and each intending to be legally bound hereby, the parties hereto agree as follows: 
 
DEFINITIONS. 
 
Defined Terms. As used herein, the following terms shall have the meanings set forth below (such meanings to be equally applicable to the singular and
plural forms thereof): 
 
“Acquisition” means any
acquisition (whether in a single transaction or series of related transactions) of (i) any going business, or all or substantially all of the assets of any Person, whether through purchase, merger or otherwise; or (ii) Equity Interests of any Person
of five percent (5%) or more of the Equity Interests or Voting Power of such Person. 
 
“Adjusted Funded Debt” means, for any applicable Person as of an applicable date, Funded Debt less Long-Term Unfunded Pension Liability. 
 
“Adjusted Liabilities” means, for any applicable Person as of an applicable date, Liabilities less Long-Term
Unfunded Pension Liability. 
 
“Adjusted Tangible Net
Worth” means, for any applicable Person as of an applicable date, (a) the total Equity Owner’s Equity of such Person (adjusted to take into account the Unfunded Pension Liability Adjustment), plus (b) the Subordinated Debt of such
Person, and (c) excluding, without duplication (to the extent reflected in determining Equity Owner’s Equity of such Person) (i) accumulated depreciation and amortization; and (ii) the aggregate amount of Intangible Assets of such Person and
the aggregate amount of Affiliate Assets of such Person (other than Intangible Assets taken into account with respect to the Unfunded Pension Liability Adjustment). 
 

1 

 
“Advance”
means each loan of money or credit made or extended to or for the benefit of Borrower by any Lender Party pursuant to this Agreement. 
 
“Affiliate” means, with respect to any applicable Person, (a) any officers or directors of such Person, or (b) any other Person that has
a relationship with the applicable Person whereby either of such Persons directly or indirectly controls or is controlled by or is under common control with the other of such Persons. The term “control” means the possession, directly or
indirectly, of the power, whether or not exercised to direct or cause the direction of the management or policies of any Person, whether through ownership of voting securities, by contract or otherwise. 
 
“Affiliate Assets” means, for any applicable Person as of an
applicable date, the total amount of all assets of the applicable Person arising out of contracts or agreements with Affiliates, including, but not limited to, any notes receivable. 
 
“Agent” means SouthTrust, in its capacity as Agent hereunder, its successors and assigns, and unless the
context may clearly require to the contrary, any reference to “Agent” in any Loan Document shall mean the Agent in its capacity as the Agent for the Lenders. 
 
“Agent’s Account” means the account of Agent at its office in Birmingham, Alabama established pursuant
to the terms of this Agreement. 
 
“Agent’s
Fee” means an annual fee payable by Borrowers to Agent, such annual fee to be paid in advance at the Closing and annually thereafter, all as more specifically set forth in that certain letter from Agent to Mr. John Lee dated November 8,
2002. 
 
“Agent’s Lien” means the Lien
granted to Agent by Borrowers pursuant to this Agreement and the other Security Documents. 
 
“Agreement” means this Credit Agreement, as amended or supplemented from time to time. 
 
“ALTA” means the American Land Title Association. 
 
“Amortization Expense” means the amortization expense of Borrowers for the applicable period (to the extent
included in the computation of Net Income (Loss)), according to Generally Accepted Accounting Principles. 
 
“Annualized Rolling Period” means the period from the date one year prior to the applicable date through the applicable date. 
 
“Approved Contracts” means those agreements listed on the
attached Exhibit “A” and any other agreement between Borrower and any other Person which is approved by Agent as an Approved Contract under this Agreement, provided that upon the occurrence of (i) the suspension, revocation
or termination of an Approved Contract, or (ii) a default or event of default (after the expiration of any applicable grace and cure period) under any such Approved Contract, such Approved Contract shall no longer be considered an Approved Contract
under this Agreement. 
 
“Assets Excluded From
Collateral” means those assets of Borrower which are specifically described on the attached Exhibit “B”. 
 
“Assigned Agreements” means all leases, contracts, agreements, Documents, Instruments and Chattel Paper included in the Collateral
(including the Mortgaged Property Documents). 
 
“Assigned
Leases” means all leases presently existing or hereafter made, whether written or verbal, or any letting of, or agreement for the use or occupancy of, any part of the Mortgaged Property, and each modification, extension, renewal and
guarantee thereof, including the Rents. 
 
“Assignment and
Acceptance” means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by Agent, in accordance with Section 13.14 and in substantially the form of Exhibit “C” hereto.

 

2 

 
“Assignment of Claims
Act” means the Assignment of Claims Act, as amended (31 U.S.C. Sections 3727 et. seq. and 41 U.S.C. Sections 15 et. seq.). 
 
“Assignment of Rents” means that certain Assignment of Rents and Leases dated of even date herewith, executed by Borrowers in favor of
Agent, and includes any and all extensions, revisions, modifications or amendments at any time made thereto. 
 
“Availability Reserves” means as of the next Business Day after the date of written notice of any determination thereof to Borrower by Agent, such amounts as Agent may from time to
time establish against the Revolving Loan, in Agent’s discretion, in order either (a) to preserve the value of the Collateral, the Agent’s Lien thereon or the amount realizable therefrom or (b) to provide for the payment of unanticipated
liabilities of Borrower or for the discharge of the Obligations to the extent not paid when due. 
 
“Available Amount” of any Letter of Credit means, at any time, the maximum amount available to be drawn under such Letter of Credit at such time. 
 
“Bankruptcy Law” means Title 11, U.S. Code, or any similar
Laws of any Jurisdiction for the relief of debtors, and “Bankruptcy” means the commencement of any case or other action for relief under Bankruptcy Law. 
 
“Base Rate” means the rate of interest periodically designated by SouthTrust as its Base Rate. The Base Rate
is not necessarily the lowest interest rate charged by SouthTrust. 
 
“Borrowers” means Pemco Aviation, Pemco Aeroplex, Pemco Engineers, Pemco World and Space Vector. 
 
“Borrower Parties” means Borrowers and any other Person that hereafter becomes a party to this Agreement and/or any other Loan Document,
and which Person is responsible in whole or in part for any of the Obligations. 
 
“Borrower’s Closing Affidavits” means affidavits in form and substance acceptable to Agent, and signed by a duly authorized representative of each Borrower. 
 
“Borrower’s Interest” means all right, title and
interest of Borrower of whatever kind, nature or description. 
 
“Borrower’s Representatives” means the president, chief executive officer, chief financial officer, and vice president of finance of Borrower, and any other Person designated by Borrower as Borrower’s
Representatives under this Agreement. 
 
“Borrowing
Base” means, at any time, the amount computed on the Collateral Report most recently delivered to, and accepted by, Agent in accordance with this Agreement and equal to the aggregate of: 
 
Eighty-five percent (85%) of Eligible Accounts due from prime contractors on
all U.S. Government contracts; plus 
 
Eighty-five percent (85%) of
Eligible Accounts due from governmental and commercial contracts; plus 
 
Fifty percent (50%) of Eligible Accounts which are unbilled due to the terms of an applicable contract, but with respect to which work has been performed and completed; plus 
 
The lesser of (i) fifty percent (50%) of Eligible Inventory, or (ii)
$12,000,000.00. 
 
“Business Day” means any day of
the year, other than Saturday or Sunday, on which dealings in United States Dollars are carried on in the London interbank market and banks open for business in Birmingham, Alabama are not required or authorized to close. 
 
“Capital Expenditures” means the sum of (i) all expenditures
made by a Person, directly or 
 

3 

indirectly for equipment, fixed assets, real property or improvements, or for replacements or
substitutions therefor or additions thereto, that should be, in accordance with Generally Accepted Accounting Principles, reflected as additions to property, plant or equipment on a balance sheet of such Person or which have a useful life of more
than one Year plus (ii) the aggregate principal amount of all Indebtedness (including Capitalized Leases) assumed or incurred in connection with any such expenditures. 
 
“Capitalized Lease” means a lease that is required to be capitalized for financial reporting purposes in
accordance with Generally Accepted Accounting Principles. 
 
“Cash Collateral Account” means the special cash collateral account established pursuant to Section 5.4 of this Agreement. 
 
“Cash Equivalents” means (i) securities issued or unconditionally guaranteed by the United States of America or any agency or
instrumentality thereof, backed by the full faith and credit of the United States of America and maturing within 90 days from the date of acquisition, (ii) commercial paper issued by any Person organized under the Laws of the United States of
America, maturing within 90 days from the date of acquisition and, at the time of acquisition, having a rating of at least “A-1” or the equivalent thereof by Standard & Poor’s Ratings Services or at least “P-1” or the
equivalent thereof by Moody’s Investors Service, Inc., (iii) time deposits (which shall not include demand deposit accounts) and certificates of deposit maturing within 90 days from the date of issuance and issued by a bank or trust company
organized under the Laws of the United States of America or any state thereof that has combined capital and surplus of at least $500,000,000 and that has (or is a subsidiary of a bank holding company that has) a long-term unsecured debt rating of at
least “A” or the equivalent thereof by Standard & Poor’s Ratings Services or at least “A2” or the equivalent thereof by Moody’s Investors Service, Inc., (iv) repurchase obligations with a term not exceeding seven
(7) days with respect to underlying securities of the types described in clause (i) above entered into with any bank or trust company meeting the qualifications specified in clause (iii) above, and (v) money market funds substantially all of whose
assets are comprised of securities of the types described in clauses (i) through (iv) above. 
 
“Change in Control” means a change in the Equity Interests or Voting Power of Borrower after the date of this Agreement so that, after the change, any Person and such Person’s
Affiliates (other than Michael Tennenbaum and Mass Mutual Life Insurance Company) own collectively more than twenty percent (20.0%) of the outstanding Equity Interests or Voting Power of Borrower. 
 
“Closing” means the time and place of actual execution and
delivery of this Agreement, the Notes, and except as waived by Agent, the other documents, instruments, and things required by Section 7.1 hereof. 
 
“Collateral” means all of the assets of Borrower of every kind, nature and description, wherever located, whether now owned or hereafter
acquired (other than the Assets Excluded From Collateral), including the following: 
 
Borrower’s Interest in the Mortgaged Property; 
 
the Assigned Agreements; 
 
all amounts that may be
owing from time to time by any Lender Party to Borrower in any capacity, including, without limitation, any balance or share belonging to Borrower, of any Deposit Accounts or other account with any Lender Party; and 
 
all of Borrower’s assets which are or may be subject to Article 9 of the
Uniform Commercial 
 

4 

Code, together with all replacements therefor, additions and accessions thereto, and proceeds (including,
but without limitation, insurance proceeds) and products thereof, including, without limitation, the following: 
 
Accounts (including, without limitation, notes, drafts, acceptances, letters of credit, and other rights to payment); 
 
Chattel Paper; 
 
Contract Rights; 
 
Commercial Tort Claims; 
 
Deposit Accounts and Lockbox Accounts; 
 
Documents; 
 
Equipment (including, without
limitation, all motor vehicles, trucks, trailers, rolling stock and mobile goods); 
 
General Intangibles; 
 
Instruments;

 
Intellectual Property Rights; 
 
Inventory; 
 
Investment Property; 
 
Letter-of-Credit Rights; 
 
Payment Intangibles; 
 
Supporting Obligations; 
 
Rights as seller of Goods and rights to returned or repossessed Goods; 
 
All existing and future leases and use agreements of personal property entered into by Borrower as lessor with other Persons
as lessees, including without limitation the right to receive and collect all rentals and other monies, including security deposits, at any time payable under such leases and agreements; 
 
Any existing and future leases and use agreements of personal property entered into by Borrower as lessee with other Persons
as lessors, including without limitation the leasehold interest of Borrower in such property, and all options to purchase such property or to extend any such lease or agreement; 
 
All fixtures of Borrower (including, but not limited to, all fixtures now or hereafter located on the Mortgaged Property);

 
All moneys of Borrower and all bank accounts, deposit accounts,
lock boxes and other accounts in which such moneys may at any time be on deposit or held and all investments or securities in which such moneys may at any time be invested and all certificates, instruments and documents from time to time
representing or evidencing any of the same; 
 
All claims of
Borrower in any pending litigation and/or claims for any insurance proceeds; 
 
All Records pertaining to any of the Collateral; 
 
any and all other assets of Borrower of any kind, nature, or description and which are intended to serve as collateral for the Loans under any one or more of the Security Documents; and 
 
All interest, dividends, Proceeds, products, rents, royalties, issues and
profits of any of the property described above, including, without limitation, all monies due and to become due with respect to such property, together with all rights to receive the same, and all notes, certificates of deposit, checks and other
instruments and property from time to time delivered to or otherwise possessed by any Lender Party for or on behalf of Borrower in substitution for or in addition to 
 

5 

any of said property. 
 
“Collateral Report” means a fully completed and duly executed Collateral Report and Borrowing Base
Certificates delivered by Borrowers to Agent and in the form attached hereto as Exhibit “D”. 
 
“Commitment Fee” means a fee payable at the Closing by Borrowers to Agent for the account of the Lenders in the amount of $125,000.00.

 
“Commitments” means the Revolving Loan
Commitment, the Swing Line Loan Commitment, the Term Loan Commitment, and the Letter of Credit Commitment. 
 
“Compass” means Compass Bank, an Alabama banking corporation. 
 
“Compliance Certificate” means a fully completed and duly executed certificate delivered by Borrowers to Agent and in the form attached
hereto as Exhibit “E”. 
 
“Consolidated Basis” means the consolidation of the assets, liabilities, income and losses, as applicable, of Borrowers, together with a separate statement of each of the foregoing for each Borrower whose assets,
liabilities, income and losses are the subject of the consolidation. 
 
“Credit Percentage” means, with respect to each Lender, a percentage based on a fraction, the numerator of which shall be the sum of (a) the aggregate principal amount of the Advances outstanding at such time and
owing to such Lender at such time, and (b) such Lender’s Pro Rata Share of the aggregate Available Amount of all Letters of Credit outstanding at such time, and the denominator of which shall be the sum of (a) the aggregate principal amount of
all Advances outstanding at such time and owing to the Lenders at such time, and (b) the aggregate Available Amount of all Letters of Credit outstanding at such time; provided, that in calculating such percentage and each Lender’s Pro Rata
Share, the aggregate principal amount of Swing Line Loan Advances owing to the Swing Line Lender and of Letter of Credit Advances owing to Issuing Lender shall, at such time, be considered to be owed to the Lenders that purchase, are obligated to
purchase, or if the demand required under Section 3.2(C) or 5.7(C) were made would be obligated to purchase, Swing Line Loan Advances and Letter of Credit Advances from the Swing Line Lender and Issuing Lender under the terms of this Agreement (the
Credit Percentage of Lenders as of the date of this Agreement being set forth on the attached Exhibit “F”). 
 
“Default” means the occurrence of an event described in Section 11.1 hereof regardless of whether there shall have occurred any passage
of time or giving of notice that would be necessary in order to constitute such event as an Event of Default. 
 
“Default Costs” means all Indemnified Losses incurred by any Lender Party by reason of a Default. 
 
“Defaulting Lender” means any Lender that has failed to make any Advance or purchase its Pro Rata Share of
any Swing Line Loan Advance or Letter of Credit Advance as and when required under the terms of this Agreement. 
 
“Default Rate” means a variable per annum rate of interest equal to the lesser of (1) three percent (3%) in excess of the highest Interest Rate otherwise payable on any Loan hereunder,
or (2) the maximum rate allowed by applicable Laws. 
 
“Deposit Accounts” means all bank accounts and other deposit accounts and lock boxes included in the Collateral or established for the benefit of any Lender Party pursuant to the terms of any of the Loan Documents.

 
“Depreciation Expense” means the depreciation
expense of Borrowers for the applicable period (to the extent included in the computation of Net Income (Loss)), according to Generally 
 

6 

Accepted Accounting Principles. 
 
“EBITDA” means, for any applicable Person for any applicable period, the Net Income (Loss) of such Person
for such period, plus (a) the sum of the following amounts of such Person for such period to the extent included in the determination of such Net Income (Loss): (i) Depreciation Expense, (ii) Amortization Expense and other noncash charges, (iii)
Interest Expense, (iv) Income Tax Expense, and (v) non-cash losses on asset sales for such Person; less (b) Extraordinary Receipts (and other gains on asset sales not otherwise included in Extraordinary Receipts) for such Person. 
 
“Eligible Account” means, at any time, an Account of Borrower
that conforms and continues to conform to the following conditions: 
 
The Account is part of the Collateral and the Agent’s Lien has been perfected in accordance with applicable Laws (including, without limitation, the perfection of the Lien as provided for in Section 10.7(K) of this Agreement),
provided, however, that if such Account arises under an Approved Contract, such Account will not be ineligible under this paragraph (A) until such time as Borrower fails or refuses to take the action requested by Agent to perfect the Lien as
provided under Section 10.7(K) of this Agreement; 
 
All
representations and warranties of Borrower contained in the Loan Documents with respect to such Account are true and correct in all material respects; 
 
The Account arose from a bona fide outright sale of Goods by Borrower or from services performed by Borrower in the Ordinary Course of Business, and such
Goods have been shipped to the appropriate Purchaser or its designees (or the sale has otherwise been consummated), or the services have been fully performed for the appropriate Purchaser; 
 
The Account is based upon an enforceable order or contract, written or oral, for Goods shipped or held for services performed
and the same were shipped, held, or performed in accordance with such order or contract; 
 
The title of Borrower to the Account is absolute and is not subject to any Lien except Agent’s Lien; 
 
The amount shown on the books of Borrower and on any invoice or statement delivered to Agent is owing to Borrower, less any partial payment that has been
made thereon by any Person; 
 
The Account shall be eligible only
to the extent that it is not subject to any claim of reduction, counterclaim, set off, recoupment, or any claim for credits, allowances, or adjustments by the Purchaser because of return, inferior, or damaged goods or unsatisfactory services, or for
any other reason; 
 
The Purchaser has not returned or refused to
retain, or otherwise notified Borrower of any dispute concerning, or claimed nonconformity of, any of the Goods or services from the sale of which the Account arose; 
 
The Account is due and payable not more than ninety (90) days from the date of the invoice therefor; 
 
The Account is not more than sixty (60) days past due; 
 
The Account does not arise out of a contract with, or order from, a Purchaser
that, by its terms, forbids or makes void or unenforceable the assignment by Borrower to Agent of the Account arising with respect thereto; 
 
Borrower has not received any note, trade acceptance, draft or other instrument with respect to, or in payment of, the Account nor any Chattel Paper with
respect to the Goods giving rise to the 
 

7 

Account, unless, if any such instrument or Chattel Paper has been received, Borrower immediately notifies
Agent and endorses or assigns and delivers the same to Agent; 
 
Borrower has not received any notice of the death of the Purchaser or a partner thereof; nor of the dissolution, termination of existence, insolvency, business failure, appointment of a receiver for any part of the property of,
assignment for the benefit of creditors by, or the filing of a petition in Bankruptcy, or the commencement of any proceeding under any Bankruptcy or insolvency laws by or against, the Purchaser; 
 
The Purchaser is not a foreign entity, unless (i) the Account arises pursuant
to a commercial cargo conversion or maintenance of a particular aircraft, (ii) the aircraft is under the sole possession and control of Borrower, (iii) the owner of the aircraft has no right to have possession and control of the aircraft returned to
it until the Account is paid in full, (iv) the aircraft has an estimated value of at least five times the total amount to be paid for work performed by Borrower, and (v) the Account is not more than thirty days past due; provided, however, that the
total amount of Eligible Accounts under this subparagraph (N) shall not exceed ten percent (10%) of the total amount of all Accounts; 
 
The Purchaser is not an Affiliate of Borrower; 
 
The Account is not an Account of a Purchaser with respect to which fifteen percent (15%) or more of all the Accounts from the Purchaser are not Eligible
Accounts hereunder for any reason (unless the Purchaser is the United States Government, in which case the applicable percentage shall be 50% (instead of 15%) and in making such determination, Accounts of the United States Government more than 60
days past due shall be deemed eligible until such Accounts are more than 150 days past due); 
 
The Account does not arise from a sale to the Purchaser on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or any other repurchase or return basis; 
 
If the Account, when combined with the total other Eligible Accounts of the
Purchaser, exceeds five percent (5%) of the Eligible Accounts of the Borrower at such time, then the Account will be ineligible to the extent of such excess (except in the case of an Account arising under an Approved Contract); and 
 
Agent has not deemed such Account ineligible because of uncertainty about the
creditworthiness of the Purchaser or because Agent otherwise considers the collateral value thereof to Agent to be impaired or its ability to realize such value to be insecure. 
 
In the event of any dispute under the foregoing criteria about whether an Account is or has ceased to be an
Eligible Account, the decision of Agent, to be made in Agent’s discretion, shall control. 
 
“Eligible Assignee” means (i) a Lender; (ii) an Affiliate of a Lender; (iii) a commercial bank organized under the laws of the United States, or any State thereof, and having combined
capital and surplus of at least $250,000,000.00; (iv) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof, and having combined capital and surplus of at least $250,000,000.00; (v) a
finance company, insurance company or other financial institution or fund (whether a corporation, partnership, trust or other entity) organized under the laws of the United States, or any State thereof, that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business and having combined capital and surplus of at least $250,000,000.00; and (vi) any other Person approved by Agent and Borrower, such approval not to be unreasonably
withheld or delayed. 
 

8 

 
“Eligible
Inventory” means the Inventory of Borrower (including work in process, finished goods and raw materials), valued at the lesser of cost (as established on the FIFO method of accounting) or fair market value, provided, however, that Agent may
consider any of the following classes of inventory not to be Eligible Inventory: 
 
Inventory which is not part of the Collateral, or which is part of the Collateral but with respect to which the Agent’s Lien has not been perfected in accordance with applicable Laws. 
 
Inventory with respect to which any representation or warranty contained in
any of the Loan Documents has been breached. 
 
Inventory
consisting of “perishable agricultural commodities” within the meaning of the Perishable Agricultural Commodities Act of 1930, as amended, and the regulations thereunder, or on which a Lien has arisen or may arise in favor of agricultural
producers under comparable state or local laws; 
 
Inventory
located on leaseholds as to which the lessor has not entered into a consent and agreement providing Agent with the right to receive notice of default, the right to repossess such Inventory at any time and such other rights as may be required by
Agent; 
 
Inventory to which the title of Borrower is not absolute,
or which is subject to any Lien, except Agent’s Lien; 
 
Inventory that is obsolete, unusable or otherwise unavailable for sale; 
 
Inventory consisting of promotional, marketing, packaging or shipping materials and supplies; 
 
Inventory that fails to meet all standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such
Inventory or its use and sale; 
 
Inventory that is subject to any
licensing, patent, royalty, trademark, trade name or copyright agreement with any Third Person from whom Borrower has received notice of a dispute in respect of any such agreement; 
 
Inventory located outside the United States; 
 
Inventory that is not in the possession of or under the sole control of Borrower, unless all Persons exercising dominion or
control over such Inventory shall have entered into such agreements as may be required by Agent, including agreements providing for the right of Agent to repossess such Inventory at any time and such other rights as may be required by Agent;

 
Inventory in transit (unless otherwise determined to be eligible
by Agent in its discretion after a request for such determination from Borrower); 
 
Inventory returned or repossessed by Purchasers other than Inventory that is resalable in Borrower’s Ordinary Course of Business; and 
 
Inventory with respect to which deposits or other monies have been received from any Person and with respect to which work
has not commenced or has not been performed so that the conditions to the release of such deposit or other monies have been satisfied. 
 
Additionally, Agent may exclude from Eligible Inventory all or a proportionate part of any particular portion of Borrower’s Inventory which Agent
deems ineligible because its market value has declined or because Agent otherwise considers the collateral value thereof to Agent to be impaired or its ability to realize such value to be insecure. 
 
“Environmental Laws” means all Laws of any Jurisdiction
relating to the governance or protection of the environment, including without limitation, the Comprehensive Environmental Response Compensation and Liability Act of 1980 (“CERCLA”), as amended (42 U.S.C. Sections 9601, et seq.),
the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et 
 

9 

seq.), the Resource Conservation and Recovery Act (“RCRA”), as amended (42 U.S.C.
Sections 6901, et seq.), the Clean Water Act, as amended (42 U.S.C. Sections 7401, et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Sections 2601, et seq.). 
 
“Equity Agreements” means any and all agreements of whatever
kind by, between and among any Borrower Party and relating to the Equity Interests of any Borrower Party. 
 
“Equity Interests” means any and all ownership or other equitable interests in the applicable Person, including any interest represented by any capital stock, membership interest,
partnership interest, or similar interest, but specifically excluding any interest of any Person solely as a creditor of the applicable Person. 
 
“Equity Owner” means any Person owning an Equity Interest. 
 
“Equity Owners’ Equity” means, at any time, the sum of the following accounts set forth in a balance
sheet of Borrower, adjusted to U.S. Dollars by means of applicable foreign currency exchange rates and prepared in accordance with Generally Accepted Accounting Principles consistently applied: 
 
The par or stated value of all outstanding Equity Interests; 
 
Capital surplus; and 
 
Retained earnings. 
 
“ERISA” means the Federal Employee Retirement Income Security
Act of 1974, as amended and in effect from time to time, and the regulations and published interpretations thereof. 
 
“ERISA Affiliate” means any Person that would be deemed to be under “common control” with, or a member of the same
“controlled group” as, Borrower or any of its subsidiaries, within the meaning of the Internal Revenue Code (as applicable to Plans) or ERISA. 
 
“ERISA Event” means any of the following with respect to a Plan: (i) a Reportable Event, (ii) a complete or partial withdrawal by
Borrower or any ERISA Affiliate from a Plan that results in liability under ERISA, or the receipt by Borrower or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to ERISA or that it intends
to terminate or has terminated under ERISA, (iii) the distribution by Borrower or any ERISA Affiliate under ERISA of a notice of intent to terminate any Plan or the taking of any action to terminate any Plan, (iv) the commencement of proceedings by
the PBGC under ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by Borrower or any ERISA Affiliate of a notice from any Multiemployer Plan that such action has been taken by the PBGC with respect
to such Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of any Multiemployer Plan against Borrower or any ERISA Affiliate to enforce Section 515 of ERISA, which is not dismissed within thirty (30) days, (vi) the imposition
upon Borrower or any ERISA Affiliate of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under ERISA, or the imposition or threatened imposition of any Lien upon any assets of Borrower or any ERISA Affiliate
as a result of any alleged failure to comply with the Internal Revenue Code or ERISA in respect of any Plan, (vii) the engaging in or otherwise becoming liable for a nonexempt Prohibited Transaction by Borrower or any ERISA Affiliate, (viii) a
violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the Internal Revenue Code by any fiduciary of any Plan for which Borrower or any of its ERISA Affiliates may be directly or
indirectly liable, or (ix) the adoption of an amendment to any Plan that, pursuant to the Internal Revenue Code or ERISA, would result in the loss of a tax-exempt status of the trust of which such Plan is a part of, and 
 

10 

Borrower or an ERISA Affiliate fails to timely provide security to such Plan in accordance with the
provisions of ERISA. 
 
“Event of Default” means
the occurrence of an event described in Section 11.1 hereof provided that there shall have occurred any passage of time or giving of notice that would be necessary in order to constitute such event as an Event of Default under Section 11.1.

 
“Existing Indebtedness” means Indebtedness of
Borrowers as reflected on the Most Recent Financial Statements, and which Indebtedness is not being paid or defeased with the proceeds of the Loans at Closing. 
 
“Existing Investments” means Investments of Borrowers as reflected on the Most Recent Financial Statements. 
 
“Extraordinary Receipt” means any cash received by or paid to
or for the account of any Person not in the Ordinary Course of Business, including, without limitation, tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds
constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof) and indemnity payments. 
 
“Federal Funds Rate” means, for any period, a fluctuating per annum interest rate (rounded upwards, if necessary, to the nearest 1/100 of
one percentage point) equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions
received by Agent from three federal funds brokers of recognized standing selected by Agent. 
 
“Fees” means the Agent’s Fee, the Commitment Fee, the Unused Fee, the Letter of Credit Facility Fee and the Letter of Credit Issuance Fee. 
 
“Financial Statements” means the Most Recent Financial
Statements and the income statements, balance sheets and other financial statements required to be delivered by Borrowers in accordance with this Agreement. 
 
“Financing Statements” means the UCC-1 financing statements (including any amendments and continuations) and UCC-3 financing statements
required hereunder or under any other Security Document. 
 
“Fiscal Year” means a twelve-month period of time commencing on the first day of January. 
 
“Fiscal Year-End” means the end of each Fiscal Year. 
 
“Fixed Charge Coverage Ratio” means, for any applicable Person for any applicable period, the ratio of (a)
the Operating Income of such Person, to (b) the Fixed Charges incurred by such Person. 
 
“Fixed Charges” means, for any applicable Person for any applicable period, the sum of (without duplication) (a) Interest Expense and Lease Expense for such period; plus (b) regularly scheduled principal
payments on Indebtedness of such Person during such period, including, without limitation, the principal component of all payments made in respect of capitalized lease obligations, but excluding any scheduled balloon, bullet or similar principal
payment which repays such Indebtedness in full; plus (c) all payments made in respect of any Unfunded Pension Liability. 
 
“Funded Debt” means, for any applicable Person as of an applicable date, all Indebtedness of such Person, other than Indebtedness that is
accounts payable, accrued expenses or other current 
 

11 

liabilities not incurred through the borrowing of money (provided that Funded Debt shall include all
Unfunded Pension Liability). 
 
“Generally Accepted
Accounting Principles” means generally accepted principles of accounting in effect from time to time in the United States applied in a manner consistent with those used in preparing such financial statements as have heretofore been
furnished to Agent by the applicable Person. 
 
“Governing
Body” means the board of directors of a Person (or any Person or group of Persons exercising similar authority). 
 
“Governmental Approvals” means all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and
reports to, any Governmental Authority. 
 
“Governmental
Authority” means any nation or government and any political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining thereto, which has or asserts jurisdiction
over Lender Party, Borrower, or any property of any of them. 
 
“Hazardous Materials” and “Hazardous Substances” means “hazardous materials” and “hazardous substances” as defined under any applicable Environmental Law. 
 
“Improvements” means the “Improvements” as defined
in the Mortgage. 
 
“Income Tax Expense” means the
income tax expense of Borrower for the applicable period (to the extent included in the computation of Net Income (Loss)), determined in accordance with Generally Accepted Accounting Principles. 
 
“Indebtedness” means all items of indebtedness, obligation or
liability, whether matured or unmatured, liquidated or unliquidated, direct or contingent, joint or several, including, but without limitation or duplication: 
 
All indebtedness guaranteed, directly or indirectly, in any manner, or endorsed (other than for collection or deposit in the Ordinary Course of Business)
or discounted with recourse; 
 
All indebtedness in effect
guaranteed, directly or indirectly, through agreements, contingent or otherwise: 
 
to purchase such indebtedness; or 
 
to purchase,
sell or lease (as lessee or lessor) property, products, materials or supplies or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such indebtedness or to assure the owner of the indebtedness against
loss; or 
 
to supply funds to or in any other manner invest in the
debtor; 
 
All indebtedness secured by (or which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any Lien upon property owned or acquired subject thereto, whether or not the liabilities secured thereby have been assumed; and 
 
All indebtedness incurred as the lessee of goods or services under leases
that, in accordance with Generally Accepted Accounting Principles, should not be reflected on the lessee’s balance sheet. 
 
“Indemnified Losses” means all damages, dues, penalties, fines, costs, amounts paid in settlement, taxes, losses, expenses, and fees,
including court costs and attorneys’ fees and expenses. 
 
“Intangible Assets” means, for any applicable Person as of an applicable date, the total amount of all assets of such Person consisting of goodwill patents, trade names, trademarks, copyrights, franchises,
experimental expense, organization expense, unamortized debt discount and expense, deferred assets (other than prepaid insurance and prepaid taxes), the excess of cost of shares acquired over book value of related assets and such other assets as are
properly classified as 
 

12 

“intangible assets” in accordance with Generally Accepted Accounting Principles. 
 
“Interest Expense” means the interest expense of Borrower for
the applicable period (to the extent included in the computation of Net Income (Loss)), determined in accordance with Generally Accepted Accounting Principles. 
 
“Interest Rate” means the actual interest rate at which all or any portion of the outstanding principal amount of a Note bears interest
from time to time during the term of such Note. 
 
“Investment” means any loan or advance to any Person, any purchase or other acquisition of any capital stock or other ownership or profit interest, warrants, rights, options, obligations or other securities of such
Person, any capital contribution to such Person or any other investment in such Person. 
 
“Issuing Lender” means SouthTrust and any other Person that becomes the Issuing Lender with respect to a Letter of Credit pursuant to the terms of this Agreement. 
 
“Jurisdiction” means each and every nation or any political
subdivision thereof. 
 
“Land” means the
“Land” as defined in the Mortgage. 
 
“Laws” means each and all laws, treaties, ordinances, statutes, rules, regulations, orders, injunctions, writs or decrees of any Governmental Authority, or any court or similar entity established by any thereof,
whether now in effect or hereafter enacted. 
 
“Lease
Expense” means the lease expense of Borrower with respect to operating leases for the applicable period (to the extent included in the computation of Net Income (Loss)), determined in accordance with Generally Accepted Accounting Principles
(and specifically excluding any capitalized lease obligations). 
 
“Lender Parties” means Agent, Lenders and Issuing Lender. 
 
“Lenders” means SouthTrust, Compass and any other Person that shall become a Lender hereunder pursuant to the terms hereof. 
 
“Letter of Credit” means any Letter of Credit that is issued pursuant to this Agreement (it being understood
that the SouthTrust Bond Issue Letter of Credit is not a Letter of Credit under this Agreement). 
 
“Letter of Credit Advances” means all amounts owing to Issuing Lender under any Letter of Credit Agreement, including, without limitation, all drafts paid by Issuing Lender under any
Letter of Credit and with respect to which and to the extent that Issuing Lender has not been reimbursed, and all amounts owing to Lenders who purchase their Pro Rata Share of Letter of Credit Advances in accordance with this Agreement.

 
“Letter of Credit Agreement” means this
Agreement and any other agreement providing for the issuance of the Letters of Credit as contemplated hereunder, together with any and all extensions, revisions, modifications or amendments at any time made thereto. 
 
“Letter of Credit Commitment” means the commitment of Issuing
Lender, subject to the terms of this Agreement, to issue for the account of Borrowers Letters of Credit up to the lesser of (i) Five Hundred Thousand and 00/100 Dollars ($500,000.00), or (ii) the Unused Revolving Loan Commitment. 
 
“Letter of Credit Facility Fee” means an annual fee payable
by Borrowers with respect to each Letter of Credit, in advance upon the issuance of such Letter of Credit and on the first day of each Year thereafter, and equal to one and one-quarter percent (1.25%) of the Available Amount of such Letter of
Credit. 
 
“Letter of Credit Issuance Fee” means a
fee payable by Borrowers with respect to each Letter of 
 

13 

Credit, in advance upon the issuance of such Letter of Credit, as is customarily charged by Issuing Lender
(but not more than $250.00). 
 
“Liabilities”
means all Indebtedness that, in accordance with Generally Accepted Accounting Principles, should be classified as liabilities on a balance sheet of a Person. 
 
“LIBOR Rate Interest Period” means any applicable 30-Day LIBOR Rate Interest Period, 60-Day LIBOR Rate Interest Period, or 90-Day LIBOR
Rate Interest Period. 
 
“LIBOR Rate Notice” means
any applicable 60-Day LIBOR Rate Notice or 90-Day LIBOR Rate Notice. 
 
“Lien” means any mortgage, pledge, encumbrance, charge, security interest, lien, assignment or other preferential arrangement of any nature whatsoever, including any conditional sale agreement or other title
retention agreement. 
 
“Loans” means the loans
and other extensions of credit, if any, being made by any Lender to Borrowers pursuant to this Agreement, including but not limited to the Revolving Loan, the Swing Line Loan, the Term Loan and the Letters of Credit. 
 
“Loan Documents” means this Agreement, the Notes, the
Subordination Agreement, the Security Documents, the Letter of Credit Agreements, the Borrower’s Closing Affidavits, and any and all other agreements, documents and instruments of any kind executed or delivered in connection with, or
evidencing, securing, guaranteeing or relating to, the Loans, whether heretofore, simultaneously herewith or hereafter delivered, together with any and all extensions, revisions, modifications or amendments at any time made to any of the foregoing.

 
“Lockbox Accounts” means the lockbox accounts
established pursuant to Section 10.16 of this Agreement. 
 
“Long-Term Unfunded Pension Liability” means, for any applicable Person as of an applicable date, any Unfunded Pension Liability with respect to which no payment is required to be made within one (1) year of the
applicable date. 
 
“Material Adverse Change”
means the occurrence of an event giving rise to a Material Adverse Effect. 
 
“Material Adverse Effect” means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of any Borrower Party, (b) the rights and remedies
of any Lender Party under any Loan Document, or (c) the ability of any Borrower Party to perform its Obligations under any Loan Document to which it is or is to be a party. 
 
“Month-End” means the last day of each calendar month during the term of this Agreement. 
 
“Mortgage” means that certain Leasehold Mortgage / Mortgage
and Security Agreement of even date herewith, executed by Borrowers in favor of Agent, and includes any and all extensions, revisions, modifications or amendments at any time made thereto. 
 
“Mortgaged Property” means the “Mortgaged Property” as defined in the Mortgage. 
 
“Mortgaged Property Documents” means (i) the Assigned Leases;
(ii) any and all other agreements entered into by Borrower with any Person relating to the Mortgaged Property; (iii) any and all Governmental Approvals with respect to the Mortgaged Property; and (iv) any and all operating, service, supply, and
maintenance contracts with respect to the Mortgaged Property. 
 
“Most Recent Financial Statements” means the audited balance sheet and income statement of Borrowers dated as of December 31, 2001, as supplemented by the 10-Qs filed by Borrowers with the Securities and Exchange
Commission for the Quarter-End of each March, June and 
 

14 

September of 2002. 
 
“Net Income (Loss)” means, for any applicable Person for any applicable period, the net income (loss) of
such Person for such period as determined in accordance with Generally Accepted Accounting Principles, but excluding for purposes of determining any financial ratios under this Agreement, all Extraordinary Receipts and any Income Tax Expense on such
Extraordinary Receipts and any tax deductions or credits on account of such Extraordinary Receipts. 
 
“Non-Capitalized Lease” means any lease other than a Capitalized Lease. 
 
“Notes” means the Revolving Notes, the Swing Line Note and the Term Notes. 
 
“Notice of Borrowing” means a notice from Borrower in form and substance satisfactory to Agent (and, in the
case of a Swing Line Loan Advance, in form and substance satisfactory to Swing Line Lender), to be made by telephone and confirmed in writing, specifying therein the information as may be reasonably required by Agent (and, in the case of a Swing
Line Loan Advance, as may be reasonably required by Swing Line Lender) with respect to any borrowing under this Agreement. 
 
“Notice of Issuance” means a notice from Borrowers to Agent and Issuing Lender to be made by telephone and confirmed in writing,
specifying therein the information as may be reasonably required by Agent and Issuing Lender with respect to the issuance of any Letter of Credit under this Agreement. 
 
“Obligations” means the obligations (including obligations of performance) and liabilities of any Borrower
Party to any Lender Party of every kind and description whatsoever, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, contracted or arising, or acquired by any Lender Party from any source, joint
or several, liquidated or unliquidated, regardless of how they arise or by what agreement or instrument they may be evidenced or whether they are evidenced by any agreement or instrument, and whether incurred as maker, endorser, surety, guarantor,
general partner, drawer, tort-feasor, indemnitor, account party with respect to a letter of credit or otherwise, and arising out of, incurred pursuant to and/or in connection with any Loan Document, and any and all extensions and renewals of any of
the same, including but not limited to the obligation: 
 
To pay
the principal of and interest on the Notes in accordance with the respective terms thereof and/or hereof, including any and all extensions, modifications, and renewals thereof and substitutions therefor; 
 
To pay, repay or reimburse the Lender Parties for all amounts owing hereunder
and/or under any of the other Loan Documents, including the Reimbursement Obligation and all Indemnified Losses and Default Costs; 
 
To pay, repay or reimburse to the Lender Parties all obligations under any agreements designed to provide protection for fluctuations in interest rates,
exchange rates, or forward rates, including, without limitation, interest rate exchange agreements, foreign currency exchange agreements, foreign rate currency or interest rate options, puts, warrants, and those commonly known as interest rate
“swap” agreements, and any interest rate cap or collar protection agreements. 
 
“Operating Income” means, for any applicable Person for any applicable period, EBITDA of such Person for such period, less Income Tax Expense (to the extent included in the determination of Net Income (Loss)
of such Person), plus Lease Expense (to the extent included in the determination of Net Income (Loss) of such Person). 
 
“Ordinary Course of Business” means an action taken by a Person only if: 
 

15 

 
Such action is consistent with
the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person; 
 
Such action is not required to be authorized by the Governing Body of such Person; and 
 
Such action is similar in nature and magnitude to actions customarily taken, without any authorization by any Governing Body,
in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person. 
 
“Organizational Documents” means (i) the articles of incorporation and the bylaws of a corporation, (ii) the partnership agreement and
any statement of partnership of a general partnership, (iii) the limited partnership agreement and the certificate of limited partnership of a limited partnership, (iv) the articles of organization and the operating agreement of a limited liability
company, (v) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person, and (vi) any amendment to any of the foregoing. 
 
“Participant” means any bank, financial institution, Affiliate of Lender Party, or other entity which enters
into a participation agreement with Lender Party and/or to whom Lender Party assigns all or a portion of its rights and obligations under this Agreement. 
 
“Payment Due Date” means each Month-End. 
 
“Pemco Aeroplex” means Pemco Aeroplex, Inc., an Alabama corporation. 
 
“Pemco Aviation” means Pemco Aviation Group, Inc., a Delaware corporation. 
 
“Pemco Engineers” means Pemco Engineers, Inc., a Delaware
corporation. 
 
“Pemco World” means Pemco World
Air Services, Inc., a Delaware corporation. 
 
“Permitted
Indebtedness” means: 
 
The Loans; 
 
The Existing Indebtedness; 
 
Indebtedness otherwise expressly permitted under the terms of this Agreement
or any other Loan Document, if any; 
 
Indebtedness incurred in
Borrower’s Ordinary Course of Business and not incurred through the borrowing of money, provided that such Indebtedness is either Unsecured Indebtedness or Indebtedness secured by a Permitted Lien; 
 
Subordinated Debt; and 
 
Capitalized Leases, so long as the aggregate annual payments under all
Capitalized Leases do not exceed $350,000.00. 
 
“Permitted
Investments” means: 
 
Cash Equivalents if Agent is
satisfied in Agent’s discretion that the same constitute part of the Collateral and that Agent’s Lien is properly perfected with respect thereto; 
 
Purchases and acquisitions of inventory, supplies, materials and equipment in the Ordinary Course of Business; 
 
Investments consisting of loans and advances to employees for reasonable
travel, relocation and business expenses in the Ordinary Course of Business or prepaid expenses incurred in the Ordinary Course of Business; 
 
Without duplication, Investments consisting of Permitted Indebtedness; 
 
Investments existing on the Closing Date and reflected in the Most Recent Financial Statements; 
 
Investments in connection with Acquisitions if Agent is satisfied in
Agent’s discretion that the same constitute part of the Collateral and that Agent’s Lien is properly perfected with respect thereto, and such Acquisition is otherwise permitted under this Agreement; 
 

16 

 
Investments (other than
Investments specified in clauses (A) through (F) above) in an aggregate amount that shall not exceed $100,000.00 for all such Investments from and after the Closing Date; 
 
Investments in any Equity Interest of Borrower accomplished pursuant to a purchase, redemption or retirement of such Equity
Interest not in violation of Section 10.2(G) of this Agreement or otherwise giving rise to a Default; and 
 
Any other Investments that may be approved in writing by Agent from time to time. 
 
“Permitted Liens” means: 
 
The Agent’s Lien; 
 
The Lien of the SouthTrust Bond Issue Letter of Credit Mortgage and those Liens identified on the attached Exhibit “G”;

 
The following Liens, if the granting of such Lien or the
attachment of such Lien to the Collateral (i) does not otherwise constitute a Default under the terms of this Agreement, and (ii) does not give rise to a Material Adverse Change: 
 
if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings, so long as levy and
execution thereon have been stayed and continue to be stayed, and with respect to which adequate reserves or other appropriate provisions are being maintained to the extent required by Generally Accepted Accounting Principles: 
 
Liens for taxes, assessments or charges due and payable and subject to
interest or penalty; 
 
Liens of mechanics, materialmen,
warehousemen, carriers, or other like Liens; and 
 
Adverse
judgments on appeal; 
 
Pledges or deposits made in the Ordinary
Course of Business to secure payment of workmen’s compensation; and 
 
Purchase money security interests granted in the Ordinary Course of Business to secure not more than one hundred percent (100%) of the purchase price of assets; 
 
Easements arising by reason of zoning restrictions, easements, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar encumbrances on the use of real property which do not materially detract from the value of such real property or interfere with the ordinary conduct of the business conducted and proposed to be
conducted at such real property; and 
 
Liens set forth in the
Title Insurance Policies. 
 
“Permitted Line of
Business” means aircraft maintenance and related services for governmental and commercial aircraft, and the design and manufacture of proprietary aerospace products. 
 
“Permitted Transfers of Collateral” means transfers, leases or other dispositions of the Collateral on
normal and ordinary terms and at normal prices in the Ordinary Course of Business. 
 
“Person” means any individual, corporation, partnership, limited partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, court or
Governmental Authority. 
 
“Place for Payment”
means a place for payment as from time to time designated by Agent, which place for payment currently is at the address of Agent as hereinafter provided for with respect to notices. 
 
“Plans” means all Single Employer Plans and Multiple Employer Plans, both as defined in ERISA. 
 
“Prohibited Transaction” means a “prohibited
transaction” as defined in ERISA. 
 
“Pro
Rata” or “Pro Rata Share” of any amount means, with respect to any Lender at any time (A) 
 

17 

when referring to the Advances, the Loans or the Lenders, the product of such amount times such
Lender’s Credit Percentage; (B) when referring to Revolving Loan Advances, the Revolving Loan or the Revolving Loan Lenders, the product of such amount times such Revolving Loan Lender’s Revolving Loan Credit Percentage; (C) when
referring to Term Loan Advances, the Term Loan or the Term Loan Lenders, the product of such amount times such Term Loan Lender’s Term Loan Credit Percentage; and (D) when referring to Letter of Credit Advances or the Available Amount of
the Letters of Credit, the product of such amount times such Lender’s Revolving Loan Credit Percentage. 
 
“Purchase Order” means a valid and binding order for goods to be purchased from Borrower, which order shall be evidenced by an executed purchase order of the respective Purchaser.

 
“Purchaser” means any buyer or lessee of
Inventory from Borrower, any customer for whom services have been rendered or materials furnished by Borrower, and any other Person that is now or may become obligated to Borrower on an Account. 
 
“Quarter” means a period of time of three consecutive
calendar months. 
 
“Quarter-End” means the last
day of each of March, June, September, and December. 
 
“Records” means correspondence, memoranda, tapes, discs, microfilm, microfiche, papers, books and other documents, or transcribed information of any type, whether expressed in ordinary or machine language, and all
filing cabinets and other containers in which any of the foregoing is stored or maintained. 
 
“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect and shall include any successor or other regulation or official
interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System. 
 
“Regulation “G”, Regulation “T”, Regulation “U”, and Regulation “X” means Regulation G, Regulation T,
Regulation U, and Regulation X, respectively, of the Board of Governors of the Federal Reserve System as now or from time to time hereafter in effect and shall include any successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System. 
 
“Reimbursement Obligation” means the obligation of Borrower to pay the amounts required under Section 5.3 of
this Agreement. 
 
“Rents” means all the rents,
issues, and profits now due and which may hereafter become due under or by virtue of the Assigned Leases, together with all claims and rights to the payment of money at any time arising in connection with any rejection or breach of any of the
Assigned Leases under Bankruptcy Law, including without limitation, all rights to recover damages arising out of such breach or rejection, all rights to charges payable by a tenant or trustee in respect of the leased premises following the entry of
an order for relief under Bankruptcy Law in respect of a tenant and all rentals and charges outstanding under the Assigned Leases as of the date of entry of such order for relief. 
 
“Reportable Event” means a “reportable event” as defined in ERISA, but excluding events for which
reporting has been waived. 
 
“Required Lenders”
means at any time (i) so long as there are only two Lenders, both such Lenders; and (ii) otherwise, Lenders holding Credit Percentages of at least sixty-six and two-thirds percent; provided, however, that in determining the foregoing, a Defaulting
Lender shall 
 

18 

not be considered a Required Lender, and a Defaulting Lender’s Credit Percentage shall be deemed to
be zero percent (0%). 
 
“Reserve Requirement”
with respect to a LIBOR Rate Interest Period means the weighted average during the LIBOR Rate Interest Period of the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements during the LIBOR Rate Interest Period) which is imposed under Regulation D. 
 
“Revolving Loan” means the loan which the Lenders have agreed to advance to Borrowers in accordance with the terms of Article III of this
Agreement. 
 
“Revolving Loan Advancement Termination
Date” means the earlier of (i) the Revolving Loan Maturity Date, or (ii) the date of the occurrence of an Event of Default. 
 
“Revolving Loan Advances” means all the Advances of the Revolving Loan. 
 
“Revolving Loan Applicable Margin” means a percentage based upon Borrowers’ ratio of Adjusted Funded
Debt to EBITDA, as follows: 
 

	 Ratio of Adjusted Funded Debt
 to EBITDA

	    	 Revolving Loan
 Applicable Margin

	 
	 Less than 0.5 to 1.0
	    	 2.0
	 %

	 Equal to or greater than 0.5 to 1.0, but less than 1.0 to 1.0
	    	 2.25
	 %

	 Equal to or greater than 1.0 to 1.0, but less than 1.5 to 1.0
	    	 2.5
	 %

	 Equal to or greater than 1.5 to 1.0
	    	 2.75
	 %

 
“Revolving Loan
Borrowing” means a borrowing consisting of simultaneous Revolving Loan Advances made by the Revolving Loan Lenders. 
 
“Revolving Loan Commitment” means the commitment of the Revolving Loan Lenders, subject to the terms of this Agreement, to lend Borrowers
up to the lesser of (x) Twenty Million and 00/100 Dollars ($20,000,000.00) in principal amount outstanding from time to time until the Revolving Loan Advancement Termination Date, or (y) the Borrowing Base, less the sum of (i) the Available Amount
of the Letters of Credit, plus (ii) any outstanding Letter of Credit Advances. 
 
“Revolving Loan Credit Percentage” means a percentage based on a fraction, the numerator of which shall be the aggregate principal amount of Revolving Loan Advances and Letter of Credit Advances outstanding at a
particular time and owing to a Revolving Loan Lender at such time, and the denominator of which shall be the aggregate principal amount of all Revolving Loan Advances and Letter of Credit Advances outstanding at such time and owing to all the
Revolving Loan Lenders at such time (the Revolving Loan Credit Percentages of the Revolving Loan Lenders as of the date of this Agreement being as set forth on the attached Exhibit “F” ). 
 
“Revolving Loan Lenders” means the Revolving Loan Lenders
identified on Exhibit “F” attached to this Agreement, and any other Person that becomes a Revolving Loan Lender pursuant to the terms of this Agreement. 
 
“Revolving Loan Maturity Date” means the earlier of (a) December
            , 2004 (viz., the date two Years from the date of this Agreement), or (b) the occurrence of an Event of Default. 
 
“Revolving Notes” means those certain Revolving Notes from Borrowers to the Revolving Loan 
 

19 

Lenders, dated of even date herewith, in the aggregate principal amount of $20,000,000.00, and includes
any amendment to or modification of any such note and any promissory note given in extension or renewal of, or in substitution for, such note. 
 
“Security Documents” means all documents or instruments of any kind executed or delivered in connection with the Loans, whether delivered
prior to, at, or after the Closing, wherein Agent is granted a Lien in Borrower’s assets, and all documents and instruments executed and delivered in connection with any of the foregoing, together with any and all extensions, revisions,
modifications or amendments at any time made to any of such documents or instruments, including but not limited to this Agreement, the Mortgage, the Assignment of Rents and the Financing Statements. 
 
“Solvent” and “Solvency” mean, with respect
to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair
salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for
which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or matured liability. 
 
“SouthTrust” means SouthTrust Bank, an Alabama banking corporation, its successors and assigns. 
 
“SouthTrust Bond Issue Letter of Credit” means any letter of credit issued pursuant to that certain Letter
of Credit Application and Reimbursement Agreement dated as of October 1, 2002, between Pemco Aviation and SouthTrust. 
 
“SouthTrust Bond Issue Letter of Credit Mortgage” means that certain Leasehold Mortgage / Mortgage and Security Agreement dated as of
October 1, 2002, executed by Pemco Aviation and Pemco World in favor of SouthTrust Bank, and includes any and all extensions, revisions, modifications or amendments at any time made thereto. 
 
“Space Vector” means Space Vector Corporation, a Delaware
corporation. 
 
“Subordinated Debt” means, for any
applicable Person as of an applicable date, Indebtedness of such Person that is expressly subordinated and made junior in right and time of payment to the obligations of Borrowers with respect to the Loans, and that is evidenced by one or more
written agreements having terms, conditions and provisions (including, without limitation, provisions relating to the principal amount, maturity, covenants, defaults, interest, subordination, and repayment) satisfactory in form and substance to
Agent in its sole discretion (and subject to the approval of the Required Lenders), which shall provide, at a minimum and without limitation, that such Indebtedness (a) shall mature no earlier than one year after the Term Loan Maturity Date, (b)
shall not require any scheduled payment of principal prior to one year after the Term Loan Maturity Date, and (c) shall have covenants and undertakings that, taken as a whole, are materially less restrictive than those contained in the Loan
Documents. 
 
“Subordination Agreement” means any
agreement with respect to Subordinated Debt at any time 
 

20 

entered into and approved by Agent as a Subordination Agreement under this Agreement. 
 
“Subsidiary” means, as to any Person (the “first
person”), another Person (the “second person”) with respect to which more than fifty percent (50%) of the outstanding Equity Interests of such second person shall, at the time of determination, be owned by such first person,
indirectly or indirectly, through one or more intermediaries. 
 
“Swing Line Lender” means SouthTrust. 
 
“Swing Line Loan” means the loan which the Swing Line Lender has agreed to advance to Borrowers in accordance with the terms of Article III of this Agreement. 
 
“Swing Line Loan Advances” means all the Advances of the
Swing Line Loan. 
 
“Swing Line Loan Commitment”
means the commitment of the Swing Line Lender, subject to the terms of this Agreement, until the Revolving Loan Advancement Termination Date, to lend Borrowers in principal amount outstanding from time to time up to the lesser of (i) Five Million
and 00/100 Dollars ($5,000,000.00), or (ii) the aggregate of the Unused Revolving Loan Commitments of the Lenders. 
 
“Swing Line Loan Maturity Date” means the earlier of (a) the date one (1) Business Day prior to the Revolving Loan Maturity Date, (b) the
occurrence of an Event of Default, or (c) the date of demand for payment of the Swing Line Loan by the Swing Line Lender. 
 
“Swing Line Note” means that certain Swing Line Note from Borrowers to the Swing Line Lender dated of even date herewith in the principal
amount of $5,000,000.00, and includes any amendment to or modification of such note and any promissory note given in extension or renewal of, or in substitution for, such note. 
 
“Tangible Property” means all equipment, machinery, goods, furniture, furnishings, fixtures, supplies,
tools, materials, vehicles, books, records, and other tangible personal property that are part of the Collateral. 
 
“Term Loan” means the loan which the Term Loan Lenders have agreed to advance to Borrower in accordance with the terms of Article IV of
this Agreement. 
 
“Term Loan Advances” means all
the Advances of the Term Loan. 
 
“Term Loan
Amount” means Five Million and 00/100 Dollars ($5,000,000.00). 
 
“Term Loan Applicable Margin” means a percentage based upon Borrowers’ ratio of Adjusted Funded Debt to EBITDA, as follows: 
 

	 Ratio of Adjusted Funded Debt
 to EBITDA

	    	 Term Loan
 Applicable Margin

	 
	 Less than 0.5 to 1.0
	    	 2.25
	 %

	 Equal to or greater than 0.5 to 1.0, but less than 1.0 to 1.0
	    	 2.5
	 %

	 Equal to or greater than 1.0 to 1.0, but less than 1.5 to 1.0
	    	 2.75
	 %

	 Equal to or greater than 1.5 to 1.0
	    	 3.0
	 %

 
“Term Loan
Commitment” means the commitment of the Term Loan Lenders, subject to the terms of this Agreement, to lend Borrowers up to the Term Loan Amount in accordance with Section 4.1 of this Agreement. 
 
“Term Loan Credit Percentage” means a percentage based on a
fraction, the numerator of which 
 

21 

shall be the aggregate principal amount of Term Loan Advances outstanding at a particular time and owing
to a Term Loan Lender at such time, and the denominator of which shall be the aggregate principal amount of all Term Loan Advances outstanding at such time and owing to all the Term Loan Lenders at such time (the Term Loan Credit Percentages of the
Term Loan Lenders as of the date of this Agreement being as set forth on the attached Exhibit “F” ). 
 
“Term Loan Lenders” means the Term Loan Lenders identified on Exhibit “F” attached to this Agreement, and any other Person that
becomes a Term Loan Lender pursuant to the terms of this Agreement. 
 
“Term Loan Maturity Date” means the earlier of (a) December             , 2007 (viz., the date five Years from the date of this Agreement), or (b) the
occurrence of an Event of Default. 
 
“Term Notes”
means those certain Term Notes from Borrowers to the Term Loan Lenders, dated of even date herewith, in the aggregate principal amount of $5,000,000.00, and includes any amendment to or modification of any such note and any promissory note given in
extension or renewal of, or in substitution for, such note. 
 
“Third Person” means a Person not a party to this Agreement. 
 
“Title Insurance Company” means a title insurance company acceptable to Agent in its discretion and authorized under applicable Law to issue the Title Insurance Policy. 
 
“Title Insurance Policy” means a standard ALTA form title
insurance policy with respect to the Mortgaged Property and acceptable to Agent in its discretion, dated the date of Closing, and issued by the Title Insurance Company to Agent upon the Mortgaged Property, subject only to those exceptions and
matters of title acceptable to Agent, in Agent’s discretion. 
 
“Unfunded Pension Liability” means, with respect to any Plan or Multiemployer Plan of any applicable Person as of an applicable date, the excess of its benefit liabilities under ERISA over the current value of its
assets, determined in accordance with the applicable assumptions used for funding under the Internal Revenue Code for the applicable plan year. 
 
“Unfunded Pension Liability Adjustment” means the amount by which the balance sheet of Borrowers is affected on account of
Borrowers’ Unfunded Pension Liability arising under Borrowers’ Defined Benefit Pension Plan, including balance sheet entries for long-term pension benefit liability, comprehensive loss, intangible pension asset, and deferred tax.

 
“Unsecured Indebtedness” means Indebtedness not
secured by any Lien. 
 
“Unused Fee” means the fee
payable by Borrowers to Agent for the account of the Revolving Loan Lenders (based on each such Revolving Loan Lender’s Pro Rata Share of the Revolving Loan Commitment at the applicable time) on each Quarter-End, as determined by Agent as of
such Quarter-End in an amount equal to the product of (A) one-quarter of one percent (.25%) multiplied by (B) the daily average of the Unused Revolving Loan Commitment during such Quarter. 
 
“Unused Revolving Loan Commitment” means, with respect to (i) any Revolving Loan Lender at any time, (a)
such Revolving Loan Lender’s Revolving Loan Commitment at such time, minus (b) the sum of (x) the aggregate principal amount of all Revolving Loan Advances, Swing Line Loan Advances and Letter of Credit Advances made by such Revolving Loan
Lender and outstanding at such time, plus (y) such Revolving Loan Lender’s Pro Rata Share of the aggregate Available Amount of all Letters of Credit outstanding at such time; and (ii) the Revolving Loan Lenders at any time (in the
aggregate), (a) the Revolving Loan Lenders’ Revolving Loan Commitments at such time, minus (b) the sum of (x) the aggregate principal amount of all Revolving Loan 
 

22 

Advances, Swing Line Loan Advances and Letter of Credit Advances made by the Revolving Loan Lenders and
outstanding at such time, plus (y) the aggregate Available Amount of all Letters of Credit outstanding at such time. 
 
“Voting Power” means, with respect to any Person, the right to vote for the election of the Governing Body of such Person under ordinary
circumstances. 
 
“Without Notice” means without
demand of performance or other demand, advertisement, or notice of any kind to or upon the applicable Person, except as may be required under applicable Laws or by express provision of any Loan Document. 
 
“Year” means a period of time of twelve consecutive calendar
months. 
 
“Year-End” means the end of each Year.

 
“30-Day Adjusted LIBOR Rate” means, for each
respective 30-Day LIBOR Rate Interest Period, an interest rate equal to (A) with respect to the Revolving Loan, the sum of (i) the applicable 30-Day LIBOR Rate, plus (ii) the Revolving Loan Applicable Margin; and (B) with respect to the Term Loan,
the sum of (i) the applicable 30-Day LIBOR Rate, plus (ii) the Term Loan Applicable Margin. 
 
“30-Day LIBOR Rate” means, as applicable to each respective 30-Day LIBOR Rate Interest Period, a per annum rate of interest equal to the quotient obtained (stated as an annual
percentage rate rounded upward to the next higher 100th of 1%) by dividing (A) the London Interbank Offered Rate (“LIBOR”) for a period of thirty (30) days as determined by Agent from Telerate (or such other source as Agent may select if
such a rate index is not available from Telerate), by (B) 1.00 minus any Reserve Requirement for the 30-Day LIBOR Rate Interest Period (expressed as a decimal). 
 
“30-Day LIBOR Rate Interest Period” means a period of one month from the first day of the applicable 30-Day
LIBOR Rate Interest Period to the date one month thereafter. 
 
“60-Day Adjusted LIBOR Rate” means, for each respective 60-Day LIBOR Rate Interest Period, an interest rate equal to (A) with respect to the Revolving Loan, the sum of (i) the applicable 60-Day LIBOR Rate, plus (ii)
the Revolving Loan Applicable Margin; and (B) with respect to the Term Loan, the sum of (i) the applicable 60-Day LIBOR Rate, plus (ii) the Term Loan Applicable Margin. 
 
“60-Day LIBOR Rate” means, as applicable to each respective 60-Day LIBOR Rate Interest Period, a per annum
rate of interest equal to the quotient obtained (stated as an annual percentage rate rounded upward to the next higher 100th of 1%) by dividing (A) the London Interbank Offered Rate (“LIBOR”) for a period of sixty (60) days as determined
by Agent from Telerate (or such other source as Agent may select if such a rate index is not available from Telerate), by (B) 1.00 minus any Reserve Requirement for the 60-Day LIBOR Rate Interest Period (expressed as a decimal). 
 
“60-Day LIBOR Rate Interest Period” means a period of two
months from the first day of the applicable 60-Day LIBOR Rate Interest Period to the date two months thereafter, and with respect to which a 60-Day LIBOR Rate Notice has been given. 
 
“60-Day LIBOR Rate Notice” means a written notice given to Agent by a Borrower’s Representative
providing for Borrower’s election for the outstanding principal balance of a Note to bear interest at the applicable 60-Day Adjusted LIBOR Rate for a 60-Day LIBOR Rate Interest Period, such notice to be given at least two (2) Business Days
prior to and specifying the date of the commencement of the applicable 60-Day LIBOR Rate Interest Period; provided, however, 
 

23 

that, except as may be waived by Agent in Agent’s discretion, in no event may any 60-Day LIBOR Rate
Interest Period begin until the expiration of any current LIBOR Rate Interest Period and in no event may a 60-Day Adjusted LIBOR Rate be elected at any time when the corresponding 60-Day LIBOR Rate Interest Period would extend beyond the maturity
date of the applicable Loan, and if any such 60-Day LIBOR Rate Notice is not timely received or is otherwise not properly made, such 60-Day LIBOR Rate Notice, at Agent’s election, shall not be effective. 
 
“90-Day Adjusted LIBOR Rate” means, for each respective
90-Day LIBOR Rate Interest Period, an interest rate equal to (A) with respect to the Revolving Loan, the sum of (i) the applicable 90-Day LIBOR Rate, plus (ii) the Revolving Loan Applicable Margin; and (B) with respect to the Term Loan, the sum of
(i) the applicable 90-Day LIBOR Rate, plus (ii) the Term Loan Applicable Margin. 
 
“90-Day LIBOR Rate” means, as applicable to each respective 90-Day LIBOR Rate Interest Period, a per annum rate of interest equal to the quotient obtained (stated as an annual percentage rate rounded upward to the
next higher 100th of 1%) by dividing (A) the London Interbank Offered Rate (“LIBOR”) for a period of ninety (90) days as determined by Agent from Telerate (or such other source as Agent may select if such a rate index is not available from
Telerate), by (B) 1.00 minus any Reserve Requirement for the 90-Day LIBOR Rate Interest Period (expressed as a decimal). 
 
“90-Day LIBOR Rate Interest Period” means a period of three months from the first day of the applicable 90-Day LIBOR Rate Interest Period
to the date three months thereafter, and with respect to which a 90-Day LIBOR Rate Notice has been given. 
 
“90-Day LIBOR Rate Notice” means a written notice given to Agent by a Borrower’s Representative providing for Borrower’s election for the outstanding principal balance of a
Note to bear interest at the applicable 90-Day Adjusted LIBOR Rate for a 90-Day LIBOR Rate Interest Period, such notice to be given at least two (2) Business Days prior to and specifying the date of the commencement of the applicable 90-Day LIBOR
Rate Interest Period; provided, however, that, except as may be waived by Agent in Agent’s discretion, in no event may any 90-Day LIBOR Rate Interest Period begin until the expiration of any current LIBOR Rate Interest Period and in no event
may a 90-Day Adjusted LIBOR Rate be elected at any time when the corresponding 90-Day LIBOR Rate Interest Period would extend beyond the maturity date of the applicable Loan, and if any such 90-Day LIBOR Rate Notice is not timely received or is
otherwise not properly made, such 90-Day LIBOR Rate Notice, at Agent’s election, shall not be effective. 
 
Accounting Terms. Accounting terms used and not otherwise defined in this Agreement have the meanings determined by, and all calculations with respect to accounting or financial matters unless
otherwise provided herein shall be computed in accordance with, Generally Accepted Accounting Principles. 
 
UCC Terms. As used herein, unless the context clearly requires to the contrary, terms not specifically defined herein shall have the same respective meanings as are given to those terms in the Uniform
Commercial Code as presently adopted and in effect in the State of Delaware (except in cases and with respect to Collateral when the perfection, the effect of perfection or nonperfection, and the priority of a Lien in the Collateral is governed by
another Jurisdiction, in which case such capitalized words and phrases shall have the meanings attributed to those terms under such other Jurisdiction). 
 

24 

 
Construction of Terms.
Whenever used in this Agreement, the singular number shall include the plural and the plural the singular, pronouns of one gender shall include all genders, use of the terms “herein”, “hereof”, and “hereunder” shall be
deemed to be references to this Agreement in its entirety unless otherwise specifically provided, and the word “discretion” means in the sole and absolute discretion of the applicable Person(s). 
 
Computation of Time Periods. For purposes of computation of periods of time
hereunder, the word “from” means “from and including”, the words “to” and “until” each mean “to but excluding”, and the word “through” means “through and including”. 
 
Reference to Borrowers and Borrower Parties. Any reference in this Agreement
to “Borrower” shall mean each and any Borrower, singularly, and any reference to “Borrowers” shall mean all the Borrowers, collectively; and any reference in this Agreement to “Borrower Party” shall mean each and any
Borrower Party, singularly, and any reference to “Borrower Parties” shall mean all the Borrower Parties, collectively. 
 
Reference to Lender and Lender Party. Any reference in this Agreement to “Lender” or “Lender Party” shall mean, respectively, each and
any Lender or Lender Party, singularly, and any reference to “Lenders” or “Lender Parties” shall mean, respectively, all Lenders or Lender Parties, collectively, and shall include any Person becoming a Lender or a Lender Party
pursuant to an Assignment and Acceptance. 
 
Reference to Revolving
Loan Lenders. Any reference in this Agreement to “Revolving Loan Lender” shall mean, respectively, each and any Revolving Loan Lender, singularly, and any reference to “Revolving Loan Lenders” shall mean, respectively, all
Revolving Loan Lenders, collectively, and shall include any Person becoming a Revolving Loan Lender pursuant to an Assignment and Acceptance. 
 
Reference to Term Loan Lenders. Any reference in this Agreement to “Term Loan Lender” shall mean, respectively, each and any Term Loan Lender,
singularly, and any reference to “Term Loan Lenders” shall mean, respectively, all Term Loan Lenders, collectively, and shall include any Person becoming a Term Loan Lender pursuant to an Assignment and Acceptance. 
 
Computation of Applicable Margins and Financial Covenants. 
 
For purposes of computation of the Revolving Loan Applicable Margin, the Term
Loan Applicable Margin and the financial covenants set forth in this Agreement, such computation shall be (i) determined by Agent as of each Quarter-End, based on the Compliance Certificate most recently delivered by Borrowers in accordance with the
terms of this Agreement, (ii) determined on a Consolidated Basis, and (iii) based on an Annualized Rolling Period, if applicable. 
 
Any adjustment in the Revolving Loan Applicable Margin and the Term Loan Applicable Margin shall be prospective and shall commence as of the tenth
Business Day after the delivery of the Compliance Certificate most recently delivered by Borrowers until such time as the Revolving Loan Applicable Margin and Term Loan Applicable Margin are subsequently adjusted pursuant to this Agreement (provided
that should Borrowers fail to so timely deliver a required Compliance 
 

25 

Certificate, Agent at its option may adjust the Revolving Loan Applicable Margin and the Term Loan
Applicable Margin to the highest applicable percentage as of the date the Compliance Certificate was due to be delivered). Until the Quarter-End following the Closing, the Revolving Loan Applicable Margin and the Term Loan Applicable Margin shall be
determined by reference to a Compliance Certificate delivered by Borrowers at Closing. 
 
THE REVOLVING LOAN 
 
General Terms.
Subject to the terms hereof, the Revolving Loan Lenders will lend Borrowers, from time to time until the Revolving Loan Advancement Termination Date, such amounts which shall not exceed, in the aggregate principal amount at any one time outstanding,
the Revolving Loan Commitment, less the Swing Line Loan Advances outstanding at such time, less the Availability Reserves. 
 
Each Revolving Loan Lender severally agrees, on the terms and conditions hereinafter set forth, to make Revolving Loan Advances to Borrowers from time to
time on any Business Day during the period from the date hereof until the Revolving Loan Advancement Termination Date. Each Revolving Loan Borrowing shall be in an aggregate amount of $100,000.00 or an integral multiple of $100,000.00 in excess
thereof (other than a Revolving Loan Borrowing the proceeds of which shall be used solely to repay or prepay in full outstanding Swing Line Loan Advances and a Revolving Loan Borrowing in an amount equal to the entire Unused Revolving Loan
Commitment) and shall consist of Revolving Loan Advances made simultaneously by the Revolving Loan Lenders Pro Rata. 
 
Subject to the terms hereof, Borrowers may borrow, repay without penalty or premium, and reborrow hereunder, from the date of this Agreement until the
Revolving Loan Advancement Termination Date. If at any time the unpaid principal balance of the Revolving Loan exceeds the amount Borrowers could borrow at such time as set forth herein, Borrowers shall forthwith (but no later than the end of the
Business Day following notice from Agent) pay or cause to be paid such amounts to Agent for the account of the Revolving Loan Lenders (based on each Revolving Loan Lender’s Pro Rata Share of the Revolving Loan Commitment at such time), to the
extent necessary to reduce the Revolving Loan to an amount which Borrowers could borrow at that time. 
 
Disbursement of the Revolving Loan. 
 
In order to obtain a Revolving Loan Advance, a Borrower’s Representative shall deliver a Notice of Borrowing to Agent not later than (i) with respect to Revolving Loan Advances to be made at Closing, the time of
Closing, and (ii) with respect to any other Revolving Loan Advances, 10:30 a.m. (Birmingham, Alabama time) on a date not less than two (2) Business Days prior to the date such Revolving Loan Advance is sought. 
 
Upon Agent’s receipt of a Notice of Borrowing, Agent shall deliver a
Notice of Funding to each Revolving Loan Lender at least one (1) Business Day prior to the date the Revolving Loan Advance is to be made, and each Revolving Loan Lender shall, before 10:30 A.M. (Birmingham, Alabama time) on the date of such
Revolving Loan Advance, make available to Agent at Agent’s Account, in same day funds, such Lender’s Pro Rata Share of such Revolving Loan Advance. 
 
After Agent’s receipt of such funds and upon fulfillment of any applicable conditions set forth in this Agreement, Agent will make such funds
available to Borrowers by crediting Borrower’s 
 

26 

deposit account with Agent; provided, however, that upon (i) written notice to Agent from the Swing Line
Lender given prior to the funding of the Revolving Loan Advance, Agent shall first make a portion of such funds equal to the aggregate principal amount of any Swing Line Loan Advances (plus interest accrued and unpaid thereon) available to the Swing
Line Lender (and, if applicable, each other Lender that has made a Swing Line Loan Advance that remains outstanding) for repayment of such Swing Line Loan Advances; and (ii) written notice to Agent from Issuing Lender given prior to the funding of
the Revolving Loan Advance, Agent shall first make a portion of such funds equal to the aggregate principal amount of any Letter of Credit Advances (plus interest accrued and unpaid thereon) available to Issuing Lender (and, if applicable, each
other Lender that has made a Letter of Credit Advance that remains outstanding) for repayment of such Letter of Credit Advances. 
 
The Revolving Notes. Borrowers’ obligation to repay the Revolving Loan shall be evidenced by the Revolving Notes. 
 
Interest Rate. Interest on the Revolving Loan shall be calculated as follows:

 
During the entire term of the Revolving Notes, except during any
applicable 60-Day LIBOR Rate Interest Period or 90-Day LIBOR Rate Interest Period, the outstanding principal balance of the Revolving Notes shall bear interest at the applicable 30-Day Adjusted LIBOR Rate for each applicable 30-Day LIBOR Rate
Interest Period. 
 
A Borrower’s Representative may from time
to time deliver to Agent (i) a 60-Day LIBOR Rate Notice, in which case the outstanding principal balance of the Revolving Notes shall bear interest at the applicable 60-Day Adjusted LIBOR Rate during the applicable 60-Day LIBOR Rate Interest Period,
or (ii) a 90-Day LIBOR Rate Notice, in which case the outstanding principal balance of the Revolving Notes shall bear interest at the applicable 90-Day Adjusted LIBOR Rate during the applicable 90-Day LIBOR Rate Interest Period. Following the
expiration of any applicable LIBOR Rate Interest Period, if a Borrower’s Representative shall not have timely and properly delivered a LIBOR Rate Notice for a LIBOR Rate Interest Period to commence as of the expiration of the applicable
expiring LIBOR Rate Interest Period, then the outstanding principal balance of the Revolving Notes shall automatically bear interest at the 30-Day Adjusted LIBOR Rate until the commencement of the next 60-Day LIBOR Rate Interest Period or 90-Day
LIBOR Rate Interest Period, if any. 
 
Payments of Principal and
Interest. Principal and interest on the Revolving Loan shall be payable as follows: 
 
On the first Payment Due Date following the date of the Revolving Notes, and on each successive Payment Due Date thereafter until the entire indebtedness evidenced by the Revolving Notes is paid in full, Borrowers shall pay
to Agent for the account of the Revolving Loan Lenders (based on each Revolving Loan Lender’s Pro Rata Share of the Revolving Loan Commitment at such time) all accrued and unpaid interest on the outstanding principal balance of the Revolving
Notes. 
 
If not earlier demanded pursuant to Section 11.3 hereof,
the outstanding principal balance of the Revolving Loan, together with all accrued and unpaid interest thereon, shall be due and payable to Agent for the account of the Revolving Loan Lenders (based on each Revolving Loan Lender’s Pro Rata
Share at such time) on the Revolving Loan Maturity Date. 
 
Use of
Proceeds of Revolving Loan. The proceeds of the Revolving Loan shall be used for 
 

27 

general corporate purposes, including working capital needs of Borrowers, to pay fees and expenses
associated with the closing of the Loans, and to repay Swing Line Loan Advances. 
 
THE SWING LINE LOAN. 
 
General Terms.

 
Subject to the terms hereof, the Swing Line Lender will lend
Borrowers, from time to time until the Revolving Loan Advancement Termination Date, such amounts which shall not exceed, in the aggregate principal amount at any one time outstanding, the Swing Line Loan Commitment. 
 
Subject to the terms hereof, Borrowers may borrow, repay without penalty or
premium, and reborrow hereunder, from the date of this Agreement until the Revolving Loan Advancement Termination Date. If at any time the unpaid principal balance of the Swing Line Loan exceeds the amount Borrowers could borrow at such time as set
forth herein, Borrowers shall immediately and Without Notice pay or cause to be paid such amounts to the Swing Line Lender, to the extent necessary to reduce the Swing Line Loan to an amount which Borrowers could borrow at that time. 
 
Disbursement of the Swing Line Loan. 
 
Swing Line Lender will credit or pay the proceeds of each Swing Line Loan
Advance to Borrower’s deposit account with Swing Line Lender or in such other manner as Borrowers and Swing Line Lender may agree. 
 
Subject to the terms of any other agreement among Swing Line Lender and Borrowers to the contrary (including any cash management agreement), in order to
obtain a Swing Line Loan Advance, a Borrower’s Representative shall deliver a Notice of Borrowing to Agent and Swing Line Lender not later than 10:30 a.m. (Birmingham, Alabama time) on the Business Day such Swing Line Loan Advance is sought.
Upon Swing Line Lender’s receipt of such Notice of Borrowing and upon satisfaction of the terms and conditions of this Agreement, Swing Line Lender will make such funds available to Borrowers as provided for above. Notwithstanding anything
contained herein to the contrary, Borrowers shall not be entitled to receive nor shall Swing Line Lender be required to disburse any Swing Line Loan Advance after the Revolving Loan Advancement Termination Date. 
 
Upon written demand by Swing Line Lender, with a copy of such demand to Agent,
each Revolving Loan Lender shall purchase from Swing Line Lender, and Swing Line Lender shall sell and assign to each such Revolving Loan Lender, such Revolving Loan Lender’s Pro Rata Share of any outstanding Swing Line Loan Advance as so
demanded by Agent, by making available for the account of the Swing Line Lender, by deposit to Agent’s Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Swing Line Loan Advance to be
purchased by such Revolving Loan Lender, it being agreed by Lender Parties that any Lender shall have the right to request Swing Line Lender to give such written demand not more than twice in any consecutive thirty-day period. Borrowers hereby agree
to each such sale and assignment. Each Revolving Loan Lender agrees to purchase its Pro Rata Share of an outstanding Swing Line Loan Advance on (i) the Business Day on which demand therefor is made by Swing Line Lender, provided that notice of such
demand is given not later than 1:00 P.M. (Birmingham, Alabama time) on such Business Day or (ii) the first Business Day next succeeding 
 

28 

such demand if notice of such demand is given after such time. Upon any such assignment by Swing Line
Lender to any Revolving Loan Lender of a portion of a Swing Line Loan Advance, Swing Line Lender represents and warrants to such Revolving Loan Lender that Swing Line Lender is the legal and beneficial owner of such interest being assigned by it,
but makes no other representation or warranty and assumes no responsibility with respect to such Swing Line Loan Advance, the Loan Documents or any Revolving Loan Lender. If and to the extent that any Revolving Loan Lender shall not have so made the
amount of such Swing Line Loan Advance available to Agent, such Revolving Loan Lender agrees to pay to Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by Swing Line Lender until the date
such amount is paid to Agent, at the Federal Funds Rate. If such Revolving Loan Lender shall pay to Agent such amount for the account of Swing Line Lender on any Business Day, such amount so paid in respect of principal shall constitute a Swing Line
Loan Advance made by such Revolving Loan Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Swing Line Loan Advance made by Swing Line Lender shall be reduced by such amount on such Business Day.

 
The Swing Line Note. Borrowers’ obligation to repay the
Swing Line Loan shall be evidenced by the Swing Line Note. 
 
Interest Rate. During the entire term of the Swing Line Note, the outstanding principal balance of the Swing Line Note shall bear interest at the same Interest Rate as the outstanding principal balance of the Revolving Note.

 
Payments of Principal and Interest. If not earlier demanded by
Swing Line Lender or pursuant to Section 11.3 hereof, the outstanding principal balance of the Swing Line Loan, together with all accrued and unpaid interest thereon, shall be due and payable to Agent for the account of Swing Line Lender (and each
other Lender that has made a Swing Line Loan Advance which remains outstanding) on the Swing Line Loan Maturity Date, and Borrowers shall repay to Agent for the account of the Swing Line Lender (and each other Lender that has made a Swing Line Loan
Advance which remains outstanding) the outstanding principal amount of each Swing Line Loan Advance made by each of them upon demand of Agent. 
 
Use of Proceeds of Swing Line Loan. The proceeds of the Swing Line Loan shall be used for general corporate purposes, including working capital needs of
Borrowers, and to pay fees and expenses associated with the closing of the Loans. 
 
THE TERM LOAN. 
 
General Terms. Subject
to the terms hereof, the Term Loan Lenders will lend Borrowers in a single Advance at the Closing an amount not to exceed the Term Loan Commitment, such Term Loan Advance to be made simultaneously by the Term Loan Lenders Pro Rata. 
 
The Term Notes. Borrowers’ obligation to repay the Term Loan Advances
shall be evidenced by the Term Notes. 
 
Interest Rate. Interest on
the Term Loan shall be calculated as follows: 
 

29 

 
During the entire term of the
Term Notes, except during any applicable 60-Day LIBOR Rate Interest Period or 90-Day LIBOR Rate Interest Period, the outstanding principal balance of the Term Notes shall bear interest at the applicable 30-Day Adjusted LIBOR Rate for each applicable
30-Day LIBOR Rate Interest Period. 
 
A Borrower’s
Representative may from time to time deliver to Agent (i) a 60-Day LIBOR Rate Notice, in which case the outstanding principal balance of the Term Notes shall bear interest at the applicable 60-Day Adjusted LIBOR Rate during the applicable 60-Day
LIBOR Rate Interest Period, or (ii) a 90-Day LIBOR Rate Notice, in which case the outstanding principal balance of the Term Notes shall bear interest at the applicable 90-Day Adjusted LIBOR Rate during the applicable 90-Day LIBOR Rate Interest
Period. Following the expiration of any applicable LIBOR Rate Interest Period, if a Borrower’s Representative shall not have timely and properly delivered a LIBOR Rate Notice for a LIBOR Rate Interest Period to commence as of the expiration of
the applicable expiring LIBOR Rate Interest Period, then the outstanding principal balance of the Term Notes shall automatically bear interest at the 30-Day Adjusted LIBOR Rate until the commencement of the next 60-Day LIBOR Rate Interest Period or
90-Day LIBOR Rate Interest Period, if any. 
 
Payments of Principal
and Interest. Principal and interest on the Term Loan shall be payable as follows: 
 
On the first Payment Due Date following the date of the Term Notes, and on each successive Payment Due Date thereafter until the entire indebtedness evidenced by the Term Notes is paid in full, Borrowers shall pay to Agent
for the account of the Term Loan Lenders (based on each Term Loan Lender’s Pro Rata Share) a principal payment of $83,333.33, plus all accrued and unpaid interest thereon. 
 
If not earlier demanded pursuant to Section 11.3 hereof, the outstanding principal balance of the Term Loan, together with
all accrued and unpaid interest thereon, shall be due and payable to Agent for the account of the Term Loan Lenders (based on each Term Loan Lender’s Pro Rata Share) on the Term Loan Maturity Date. 
 
Use of Proceeds of Term Loan. The proceeds of the Term Loan shall be used to
refinance existing term and other debt of Borrowers. 
 
LETTERS OF
CREDIT 
 
General Terms. Subject to the terms hereof, Borrower may
request Issuing Lender, on the terms and conditions hereinafter set forth, to issue, and Issuing Lender shall issue, Letters of Credit for the account of Borrower from time to time on any Business Day in an aggregate Available Amount for all Letters
of Credit not to exceed at any time the Letter of Credit Commitment on such Business Day. No Letter of Credit shall have an expiration date (including all rights of Borrowers or the beneficiary to require renewal) later than the earlier of (i) 60
days before the Revolving Loan Maturity Date, or (ii) one year after the date of issuance thereof. 
 
Issuance of a Letter of Credit. In order for a Letter of Credit to be issued, a Borrower’s Representative shall deliver a Notice of Issuance to Agent and Issuing Lender not later than 10:30 a.m.
(Birmingham, Alabama time) on a date not less than three (3) Business Days prior to the date the issuance of such Letter of Credit is sought, such Notice of Issuance to be accompanied by the 
 

30 

form of the Letter of Credit to be issued. If (i) the requested form of such Letter of Credit is
acceptable to Issuing Lender in its discretion, and, (ii) if required by Agent and Issuing Lender, upon execution and delivery of a Letter of Credit Agreement in form and substance satisfactory to Agent and Issuing Lender, Issuing Lender will,
subject to the other terms and conditions hereof, issue such Letter of Credit. In the event and to the extent that the provisions of any Letter of Credit Agreement shall conflict with this Agreement, the provisions of this Agreement shall govern.

 
Reimbursement and Other Payments. Borrower agrees to pay to
Agent immediately upon demand of Agent or Issuing Lender for reimbursement to Issuing Lender (i) at the time when Issuing Lender shall pay any draft presented under any Letter of Credit, a sum equal to the amount so paid under such Letter of Credit,
plus (ii) interest at the Default Rate on any amount remaining unpaid by Borrower to Issuing Lender under clause (i) above from such time until payment in full. 
 
Upon an Event of Default. In addition to any rights and remedies the Lender Parties may otherwise have under this Agreement,
if any Event of Default shall have occurred, Agent or Issuing Lender may in their discretion (i) by notice to Borrower, declare the obligation of Issuing Lender to issue any Letter of Credit to be terminated, whereupon the obligation of Issuing
Lender to issue any Letter of Credit shall forthwith terminate, and (ii) make demand upon Borrower to, and forthwith (but no later than the end of the Business Day following notice from Agent) Borrower will pay to Agent in same day funds at
Agent’s office designated in such demand, for deposit in a special Cash Collateral Account to be maintained at such office of Agent, an amount equal to the maximum amount then available to be drawn under any Letter of Credit. The Cash
Collateral Account shall be in the name of Borrower, but under the sole dominion and control of Agent, and shall be held and disbursed as follows: 
 
Agent may from time to time invest funds on deposit in the Cash Collateral Account, reinvest proceeds of any such investments which may mature or be sold,
and invest interest or other income received from any such investments, and all such investments and reinvestments shall, for purposes of this Agreement, constitute part of the funds held in the Cash Collateral Account. 
 
If at any time Agent determines that any funds held in the Cash Collateral
Account are subject to any right or claim of any Person other than claims arising under this Agreement and/or that the total amount of such funds is less than the maximum amount at such time available to be drawn under the Letters of Credit,
Borrower will, forthwith upon demand by the Agent, pay to the Agent, as additional funds to be deposited and held in the Cash Collateral Account, an amount equal to the excess of (i) such maximum amount at such time available to be drawn under the
Letters of Credit over (ii) the total amount of funds, if any, then held in the Cash Collateral Account which Agent determines to be free and clear of any such right and claim. 
 
Borrower hereby assigns, transfers and sets over, and grants to Agent a Lien on and upon, the Cash Collateral Account,
including all funds held in the Cash Collateral Account from time to time and all proceeds thereof, as security for the Obligations. Borrower agrees that, to the extent notice of sale of any securities shall be required by Law, at least five
Business Days’ Notice to Borrower of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Agent may adjourn any public or private sale from 
 

31 

time to time by announcement at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it will so adjourned. 
 
Agent may, at any time or from time to time, apply funds from time to time held in the Cash Collateral Account to the payment of (i) any Reimbursement Obligation and (ii) upon termination of all Letters of Credit and payment in full
of all the Reimbursement Obligation, in such order as Agent may elect, as shall have become or shall become due and payable by Borrower to Agent under this Agreement. 
 
Neither Borrower nor any Person claiming on behalf of or through Borrower shall have any right to withdraw any of the funds
held in the Cash Collateral Account after and during the continuance of any Default. 
 
No Liability of Issuing Lender. Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither Issuing Lender nor any of
its officers or directors shall be liable or responsible for (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by Issuing Lender against presentation of documents that do not comply with the terms
of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit. In furtherance
and not in limitation of the foregoing, Issuing Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. 
 
Indemnification. In addition to any other indemnification obligation of
Borrower under this Agreement or any other Loan Document, Borrower hereby agrees to indemnify and hold the Lender Parties harmless from and against any and all Indemnified Losses which the Lender Parties may incur or which may be claimed against the
Lender Parties by any Person by reason of or in connection with the execution and delivery or transfer of, or payment or failure to make lawful payment under, any Letter of Credit, except Borrower shall not be required to indemnify Issuing Lender
for any action taken or omitted to be taken by Issuing Lender if the same constitutes gross negligence or willful misconduct on the part of Issuing Lender. 
 

32 

 
Pro Rata Participation,
Drawing and Reimbursement. 
 
Without any further action on the
part of any Lender Party, effective immediately upon the issuance of any Letter of Credit issued under this Agreement, Issuing Lender will be deemed to have sold, transferred, and assigned to each Revolving Loan Lender at such time, and each
Revolving Loan Lender will have been deemed to have purchased and accepted from Issuing Lender, such Revolving Loan Lender’s Pro Rata Share of Issuing Lender’s interest in the applicable Letter of Credit (such Pro Rata Share to be
determined without taking into account such Revolving Loan Lender’s obligation to purchase as provided in this Section 5.7), which purchase shall obligate each Revolving Loan Lender to purchase from Issuing Lender such Revolving Loan
Lender’s Pro Rata Share of any Letter of Credit Advance in accordance with the provisions of Section 5.7(C) below, and upon such purchase, shall entitle each Revolving Loan Lender, in accordance with and subject to the provisions of this
Agreement, to receive such Revolving Loan Lender’s Pro Rata Share of any and all payments made by Borrower with respect to the applicable Letter of Credit and whether required hereunder or under any Letter of Credit Agreement. 
 
The payment by Issuing Lender of a draft drawn under any Letter of Credit
shall constitute for all purposes of this Agreement the making by Issuing Lender of a Letter of Credit Advance in the amount of such draft and shall bear interest at the Default Rate from the date of payment until the date of reimbursement by
Borrower as provided hereunder. 
 
Upon written demand by Issuing
Lender, with a copy of such demand to the Agent, each Revolving Loan Lender shall purchase from Issuing Lender, and Issuing Lender shall sell and assign to each such Revolving Loan Lender, such Revolving Loan Lender’s Pro Rata Share of any
outstanding Letter of Credit Advance as of the date of such purchase, by making available to Agent for the account of Issuing Lender, by deposit to the Agent’s Account, in same day funds, an amount equal to the portion of the outstanding
principal amount of such Letter of Credit Advance to be purchased by such Revolving Loan Lender. Promptly after receipt thereof, Agent shall transfer such funds to Issuing Lender. Borrower hereby agrees to each such sale and assignment. Each
Revolving Loan Lender agrees to purchase its Pro Rata Share of an outstanding Letter of Credit Advance on (i) the Business Day on which demand therefor is made by Issuing Lender which made such Advance, provided notice of such demand is given not
later than 11:00 a.m. (Birmingham, Alabama time) on such Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such assignment by Issuing Lender to any Revolving Loan
Lender of a portion of a Letter of Credit Advance, Issuing Lender represents and warrants to such Revolving Loan Lender that Issuing Lender is the legal and beneficial owner of such interest being assigned by it, free and clear of any Liens, but
makes no other representation or warranty and assumes no responsibility with respect to such Letter of Credit Advance, the Loan Documents or any Lender Party. If and to the extent that any Revolving Loan Lender shall not have so made the amount of
such Letter of Credit Advance available to the Agent, such Revolving Loan Lender agrees to pay to the Agent forthwith on demand of Agent such amount together with interest thereon, for each day from the date of demand by Issuing Lender until the
date such amount is paid to the Agent, at the Federal Funds Rate for its account or the account of Issuing Lender, as applicable. If such Revolving Loan Lender shall pay to Agent such amount for the account of Issuing Lender on any Business Day,
such amount so paid in respect of principal shall constitute a Letter of Credit Advance made by 
 

33 

such Revolving Loan Lender on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Letter of Credit Advance made by Issuing Lender shall be reduced by such amount on such Business Day. 
 
Failure to Purchase Pro Rata Share of Letter of Credit Advances. The failure of any Revolving Loan Lender to purchase its Pro Rata Share of any Letter of
Credit Advance as required in Section 5.7 shall not relieve any other Revolving Loan Lender of its obligation hereunder to purchase its Pro Rata Share of such Letter of Credit Advance, but no Revolving Loan Lender shall be responsible for the
failure of any other Revolving Loan Lender to purchase its Pro Rata Share of any Letter of Credit Advance. 
 
Letter of Credit Reports. Issuing Lender shall furnish to Agent and each Lender on request (such request to be made not more frequently than monthly) a written report summarizing issuance and
expiration dates of the Letters of Credit issued by Issuing Lender and drawings under all Letters of Credit. 
 
PAYMENTS, ADDITIONAL COSTS, ETC. 
 
Payment to Agent 
 
All monies payable to
Agent under this Agreement or under the Notes shall be paid directly to Agent in immediately available funds at the Place for Payment. If Agent shall send Borrower statements of amounts due hereunder, such statements shall be considered correct and
conclusively binding on Borrower unless Borrower notifies Agent to the contrary within thirty (30) days of its receipt of any statement which it deems to be incorrect. Alternatively, at its discretion, Agent may charge against any deposit account of
Borrower all or any part of any amount owed by Borrower hereunder. 
 
All payments to be made by Borrower hereunder will be made to Agent not later than 1:00 p.m. at the Place for Payment. Payments received after 1:00 p.m. at the Place for Payment shall be deemed to be payments made prior to 1:00 p.m.
at the Place for Payment on the next succeeding Business Day. Borrower hereby authorizes Agent to charge its accounts with Agent in order to cause timely payment of amounts due hereunder to be made. 
 
At the time of making each such payment, Borrower shall, subject to the other
terms and conditions of this Agreement, specify to Agent the Loan or other obligation of Borrower hereunder to which such payment is to be applied. In the event that Borrower fails to so specify the relevant Loan or if an Event of Default shall have
occurred and be continuing, Agent may apply such payments as it may determine in its discretion. 
 
Late Payments. If any scheduled payment, whether principal, interest or principal and interest, is late ten (10) days or more, Borrower agrees to pay a late charge equal to five percent (5%) of the
amount of the payment which is late, but not more than the maximum amount allowed by applicable Laws. The foregoing provision shall not be deemed to excuse a late payment or be deemed a waiver of any other rights Lender Parties may have under this
Agreement, including, subject to the terms hereof, the right to declare the entire unpaid principal and interest on all Loans immediately due and payable. 
 
Prepayment. Subject to any contrary provision herein or in any other Loan Document, Borrower 
 

34 

may prepay or cause to be prepaid the principal of any Loan in whole or, from time to time, in part,
without premium or penalty. All partial prepayments, whether voluntary or mandatory, shall be applied against principal and interest as Agent may determine in its discretion, provided that no prepayment shall entitle Borrower to cease making any
payment as otherwise scheduled hereunder. 
 
Default Rate.
Notwithstanding any provision herein or in any other Loan Document to the contrary, upon the occurrence and during the continuance of an Event of Default, the Interest Rate payable on the Loans shall be the Default Rate. 
 
No Setoff or Deduction. All payments of principal of and interest on the Loans
and other amounts payable by Borrower hereunder shall be made by Borrower without setoff or counterclaim, and, subject to the next succeeding sentence, free and clear of, and without deduction or withholding for, or on account of, any present or
future taxes, levies, imposts, duties, fees, assessments, or other charges of whatever nature, imposed by any Governmental Authority, or by any department, agency or other political subdivision or taxing authority. If any such taxes, levies,
imposts, duties, fees, assessments or other charges are imposed, Borrower will pay such additional amounts as may be necessary so that payment of principal of and interest on the Loans and other amounts payable hereunder, after withholding or
deduction for or on account thereof, will not be less than any amount provided to be paid hereunder and, in any such case, Borrower will furnish to Agent certified copies of all tax receipts evidencing the payment of such amounts within 30 days
after the date any such payment is due pursuant to applicable Laws. 
 
Payment on Non-Business Day; Payment Computations. Except as otherwise provided in this Agreement to the contrary, whenever any installment of principal of, or interest on, the Loans or other amount due hereunder becomes due and
payable on a day which is not a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, in the case of any installment of principal, interest shall be payable thereon at the rate per annum determined in
accordance with this Agreement during such extension. 
 
Indemnification. If Borrower makes any payment of principal with respect to any Loan on any other date than the last day of an interest period applicable thereto, or if Borrower fails to borrow any Loan after notice has been given to
Agent in accordance with this Agreement, or if Borrower fails to make any payment of principal or interest in respect of any Loan when due, Borrower shall reimburse Agent on demand for any resulting loss or expense incurred by Agent, including
without limitation any loss incurred in obtaining, liquidating or employing deposits from third parties, whether or not Agent shall have funded or committed to fund such loan. A statement as to the amount of such loss or expense, prepared in good
faith and in reasonable detail by Agent and submitted by Agent to Borrower, shall be conclusive and binding for all purposes absent manifest error in computation. Calculation of all amounts payable to Agent under this Section shall be made as though
Agent shall have actually funded or committed to fund such Loan through the purchase of an underlying deposit in an amount equal to the amount of such Loan in the relevant market and having a maturity comparable to the related interest period and
through the transfer of such deposit to a domestic office of Agent in the United States; provided, however, that Agent may fund such Loan in any manner it sees fit and the foregoing assumption shall be 
 

35 

utilized only for the purpose of calculation of amounts payable under this Section. 
 
360-Day Year. All interest payable under the Notes shall be calculated on the
basis of a 360-day year by multiplying the outstanding principal amount by the applicable per annum rate, multiplying the product thereof by the actual number of days elapsed, and dividing the product so obtained by 360. 
 
No Requirement to Actually Obtain Funds. Notwithstanding the fact that the
Interest Rate pursuant to the Loans may be calculated based upon Lender’s cost of funds, Borrower agrees that Lender shall not be required actually to obtain funds from such source at any time. 
 
Usury Limitation. If, at any time, the Interest Rate payable on any Loan shall
be deemed by any competent court of law or any Governmental Authority to exceed the maximum rate of interest permitted by any applicable Laws, then, for such time as the Interest Rate would be deemed excessive, its application shall be suspended and
there shall be charged instead the maximum rate of interest permissible under such Laws, and any excess interest actually collected by Lender shall be credited as a partial prepayment of principal. 
 
CONDITIONS PRECEDENT 
 
The obligation of Lenders to make the Loans and any Advance
hereunder, and the obligation of Issuing Lender to issue the Letters of Credit, is subject to the following conditions precedent: 
 
Documents Required for the Closing. Prior to or concurrently with the Closing, the following instruments and documents, duly executed by all proper
Persons and in form and substance satisfactory to Agent and Lenders, shall have been delivered to Agent: 
 
This Agreement; 
 
The Notes; 
 
The Mortgage, together with the
following: 
 
evidence that the Mortgage has been duly recorded in
all filing or recording offices that Agent may deem necessary or desirable in order to create a valid Lien on the Mortgaged Property in favor of Agent subject to no other Liens except the SouthTrust Bond Issue Letter of Credit Mortgage, and that all
filing and recording taxes and fees have been paid; 
 
the Title
Insurance Policy, with the Required Endorsements and in an amount acceptable to Agent, issued, coinsured and reinsured by the Title Insurance Company, insuring the Mortgage to be a valid Lien on the Mortgaged Property, free and clear of all Liens
(including, but not limited to, mechanics’ and materialmen’s Liens), excepting only Permitted Liens and other Liens approved by Agent in its discretion, and providing for such other affirmative insurance and such coinsurance and direct
access reinsurance as Agent may deem necessary or desirable; 
 
such consents and agreements of lessors, lessees, and other Third Parties, and such estoppel letters and other confirmations, as Agent may deem necessary or desirable; 
 
evidence that all other action that Agent may deem necessary or desirable in order to create a valid Lien on the Mortgaged
Property has been taken; 
 

36 

 
The Assignment of Rents,
together with evidence that the Assignment of Rents has been duly recorded in all filing or recording offices that Agent may deem necessary or desirable in order to create a valid Lien on the property described therein in favor of Agent and that all
filing and recording taxes and fees have been paid; 
 
The
Borrower’s Closing Affidavits; 
 
The Financing Statements,
together with evidence that the Financing Statements have been duly recorded in all filing or recording offices that Agent may deem necessary or desirable in order to create a valid Lien on the Collateral described therein, and that all filing and
recording taxes and fees have been paid; 
 
With respect to each
Borrower Party (other than a Borrower Party that is an individual), a certificate of an officer or other representative acceptable to Agent dated as of the date of this Agreement, certifying as to the incumbency and signatures of the
representative(s) of such Borrower Party signing, as applicable, this Agreement and each of the other Loan Documents, and each other document to be delivered pursuant hereto, together with the following documents attached thereto: 
 
A copy of the resolutions of such applicable Person’s Governing Body
authorizing the execution, delivery and performance of this Agreement, each of the Loan Documents, and each other document to be delivered pursuant hereto, as applicable; 
 
A copy, certified as of the most recent date practicable by the secretary of state (or similar Governmental Authority) of the
state, province, or other Jurisdiction where such Person is organized, of such Person’s Organizational Documents filed with such secretary of state (or similar Governmental Authority); 
 
A copy of such Person’s other Organizational Documents; 
 
A certificate, as of the most recent date practicable, of the secretary of
state (or similar appropriate Governmental Authority) and department of revenue or taxation (or similar appropriate Governmental Authority) of each Jurisdiction in which each Borrower Party (other than a Borrower Party that is an individual) is
organized as to the existence and good standing of each such Person within such Jurisdiction (unless such Governmental Authorities do not issue such certificates of existence and/or good standing), and a certificate, as of the most recent date
practicable, of the secretary of state (or similar appropriate Governmental Authority) of each state where any of the Collateral is located as to the qualification and good standing of each Borrower Party (other than a Borrower Party that is an
individual) as a foreign entity doing business in each such state (unless such Governmental Authorities do not issue such certificates of existence and/or good standing); 
 
Written opinions of counsel to Borrower Parties, dated as of the date of Closing and addressed to Lender Parties, in form and
substance acceptable to the Lender Parties; 
 
The Most Recent
Financial Statements; 
 
Letters and/or certificates, in form and
substance satisfactory to Agent, attesting to the Solvency of Borrower and after giving effect to the transactions contemplated hereby, from the chief financial officer of Borrower; 
 
UCC-11 reports showing no Liens superior to the Agent’s Lien, except for the Permitted Liens; 
 
Evidence satisfactory to the Lender Parties that Borrower has obtained all
insurance policies as required under this Agreement and/or any of the other Loan Documents, together with evidence satisfactory to the Lender Parties that all premiums therefor have been paid and that all such 
 

37 

policies are in full force and effect; 
 
An ALTA form survey of the Mortgaged Property dated no more than thirty (30) days before the Closing, certified to the Lender
Parties and the Title Insurance Company in a manner satisfactory to Agent by a land surveyor duly registered and licensed in the state in which the Mortgaged Property is located and acceptable to Agent, showing all buildings and other improvements,
any off-site improvements, the location of any easements, parking spaces, rights of way, building set-back lines and other dimensional regulations and the absence of encroachments, either by such improvements or on to such property, and other
defects, other than encroachments and other defects acceptable to Agent, and either (i) evidence satisfactory to the Lender Parties that none of the Mortgaged Property is located in a flood hazard area, or (ii) a flood insurance policy satisfactory
to Agent; 
 
An appraisal of the Collateral, made at
Borrower’s expense, which must be by an appraiser engaged and approved by Agent, and must be in form and substance satisfactory to the Lender Parties and meeting the requirements of the Lender Parties; 
 
An environmental/hazardous substances survey and report with respect to the
Mortgaged Property, as approved by the Lender Parties; and 
 
Receipt and approval by Agent of any other items reasonably required to be provided to Agent, and not otherwise set forth above. 
 
Certain Events Required for Closing and for all Advances. At the time of the Closing and at the time of each Advance, Agent shall be satisfied that:

 
No Default shall have occurred or be continuing; 
 
No Material Adverse Change shall have occurred; 
 
All of the Loan Documents shall have remained in full force and effect, and no
Borrower Party shall have questioned or challenged the enforceability of any provision of any of the Loan Documents; 
 
Borrower shall have paid all fees, expenses, costs, and other amounts then owing to Lender Parties, including, but not limited to the Fees; 
 
All Indebtedness to be prepaid, redeemed or defeased with the proceeds of any
Advance shall have been satisfied and extinguished; 
 
There shall
exist no action, suit, investigation, litigation or proceeding affecting any Borrower Party pending or threatened before any court, governmental agency or arbitrator that (i) could reasonably be expected to have a Material Adverse Effect or (ii)
purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document or the consummation of the transactions contemplated hereby; 
 
All Governmental Approvals necessary in connection with the Loan Documents and the transactions contemplated hereby and
thereby shall have been obtained (without the imposition of any conditions that are not acceptable to the Lender Parties) and shall remain in effect other than such Governmental Approvals the failure to obtain which shall not affect the
enforceability, validity or binding effect of any of the Loan Documents; all applicable waiting periods shall have expired without any action being taken by any competent authority; and no Law shall be applicable in the judgment of Agent that
restrains, prevents or imposes materially adverse conditions upon the Loan Documents and the transactions contemplated hereby and thereby; 
 
Borrower will be able to meet its obligations under all Plans, that the Plans are, in all material respects, funded in accordance with the minimum
statutory requirements, that no material 
 

38 

“reportable event” (as defined in ERISA, but excluding events for which reporting has been
waived) has occurred as to any such Plan and that no termination of, or withdrawal from, any such Plan has occurred or is contemplated that could result in a material liability; 
 
There shall have been delivered to Agent evidence of insurance naming Agent as insured and loss payee (as applicable) with
such responsible and reputable insurance companies or associations, and in such amounts and covering such risks, as is satisfactory to Agent or as otherwise required under any Loan Document; and 
 
There shall have been delivered to Agent the Collateral Reports and Compliance
Certificates as required under this Agreement and reflecting compliance with the terms of this Agreement. 
 
Legal Matters. At the time of Closing, all legal matters incidental thereto shall be reasonably satisfactory to Burr & Forman LLP, counsel to Agent and reasonably satisfactory to the counsel to the
Lenders; and at the time of each disbursement of each Advance, all legal matters incidental thereto shall be reasonably satisfactory to Burr & Forman LLP, counsel to Agent (it being acknowledged and agreed that Agent has no intention of
consulting Burr & Forman LLP with respect to Advances after the Closing except in cases where Agent has an issue with respect to whether or not the Advance is being made in compliance with the terms and conditions of this Agreement).

 
Election to Make Advances Prior to Satisfaction of Conditions
Precedent. In the event Lender Party, at its option, elects to make one or more Advances prior to receipt and approval of all items required by this Article, such election shall not constitute any commitment or agreement of Lender Party to make any
subsequent Advance until all items required by this Article have been delivered. 
 
COLLATERAL SECURITY 
 
Grant of Lien and Security
Interest. 
 
As security for the prompt satisfaction of all
Obligations, Borrower hereby assigns, transfers, and sets over to Agent, as agent for Lenders hereunder, all of Borrower’s right, title and interest in and to, and grants Agent, as agent for Lenders hereunder, a Lien on, upon and in the
Collateral. 
 
No submission by Borrower to Agent of a schedule or
other particular identification of Collateral shall be necessary to vest in Agent security title to and a security interest in each and every item of Collateral now existing or hereafter created and acquired, but rather such title and security
interest shall vest in Agent immediately upon the creation or acquisition or any item of Collateral hereafter created or acquired, without the necessity for any other or further action by Borrower or by Agent. 
 
Maintenance of Lien. 
 
In connection with the Agent’s Lien, Borrower will: 
 
Execute and cause to be executed such documents and instruments, including
amendments to the Security Documents and Financing Statements (including amendments thereto and continuation statements thereof) in form satisfactory to Agent as Agent, from time to time, may specify, and pay, or reimburse Agent upon demand for
paying, all costs and taxes of filing or recording the same in such Jurisdictions as Agent may designate; and 
 

39 

 
Take such other steps as
Agent, from time to time, may direct to protect, perfect, and maintain Agent’s Lien; and 
 
In addition to the foregoing, and not in limitation thereof, Borrower agrees that: 
 
A carbon, photographic, or other reproduction of this Agreement shall be sufficient as a Financing Statement and may be filed in any appropriate office in
lieu thereof; and 
 
Borrower hereby appoints Agent as its
attorney-in-fact (without requiring Agent to act as such) to execute any Financing Statement in the name of Borrower, and to perform all other acts that Agent deems appropriate to perfect and continue Agent’s Lien and to protect and preserve
the Collateral. 
 
REPRESENTATIONS AND WARRANTIES. 
 
Borrower represents and warrants to Lender Parties, knowing
that Lender Parties will rely on such representations and warranties as an inducement to make the Loans, that: 
 
Borrower’s Existence. Each Borrower (other than Pemco Aeroplex) is a duly organized and existing Delaware corporation in good standing and has full power and authority to consummate the
transactions contemplated by this Agreement. Pemco Aeroplex is a duly organized and existing Alabama corporation in good standing and has full power and authority to consummate the transactions contemplated by this Agreement. 
 
Borrower’s Authority. The execution, delivery and performance of all of
the Loan Documents have been duly authorized by all requisite action by each Borrower Party a party thereto. All of the Loan Documents have been duly executed and delivered and constitute valid and binding obligations of the Borrower Parties a party
thereto, enforceable in accordance with their respective terms (except as may be limited by applicable Bankruptcy Laws and other Laws affecting the enforceability of creditors’ rights generally and principles of equity), and Lender Parties will
be entitled to the benefits of all of the Loan Documents. 
 
Borrower’s Owners. Set forth on Schedule 9.3 is a complete and accurate list of all the Equity Agreements. 
 
Borrower’s Name. Set forth on Schedule 9.4 is a complete and accurate list of (i) all names under which Borrower has done business in
the last six years, and (ii) the names of all Persons whose assets were acquired in the last six years by Borrower outside of such Person’s Ordinary Course of Business and which assets are included as assets of Borrower on the Most Recent
Financial Statements. 
 
Consents or Approvals. 
 
Except for consents and approvals already obtained and which remain in effect,
no consent or approval of any Third Person, and no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or other Third Person is required with respect to the operation of Borrower’s business.

 
Except for the consents and approvals already obtained and which
remain in effect, no consent of any Third Person and no authorization, approval or other action by, and no notice to or filing 
 

40 

with, any Governmental Authority or other Third Person that is required has not been obtained either (i)
for the due execution, delivery, recordation, filing or performance by any Borrower Party of this Agreement or any other Loan Document or for the consummation of the transaction contemplated hereby, (ii) for the mortgage, pledge, assignment, or
grant by Borrower of the Agent’s Lien, (iii) for the perfection or maintenance of the Agent’s Lien, except for the recording of the Mortgage, the Assignment of Rents and the Financing Statements (and filings required under the Assignment
of Claims Act), or (iv) for the exercise by Lender Parties of their rights or remedies provided for in this Agreement or in any of the other Loan Documents (except as may be required by applicable Laws in connection with the foreclosure and
disposition of the Collateral). All applicable waiting periods, if any, in connection with the transactions contemplated hereby have expired without any action having been taken by any Person restraining, preventing or imposing materially adverse
conditions upon the rights of Borrower to enter into and perform its obligations under this Agreement. 
 
Violations or Actions Pending. There are no actions, suits, or proceedings pending or, to the best of Borrower’s knowledge, threatened, which might reasonably be expected to have a Material
Adverse Effect or which might impair the value of the Collateral. No Borrower Party is in violation of any agreement the violation of which will or might reasonably be expected to have a Material Adverse Effect, and no Borrower Party is in violation
of any order, judgment, or decree of any court, or any statute or governmental regulation to which any Borrower Party is subject. The execution and performance of any Loan Document by any Borrower Party will not result in any breach of or default
under any mortgage, lease, credit or loan agreement, contract or any other instrument which may bind or affect any Borrower Party. 
 
Borrower Parties’ Subsidiaries and Affiliates. No Borrower Party has any Subsidiaries or Affiliates other than as disclosed on the Most Recent
Financial Statements. 
 
Existing Indebtedness. Borrower is not in
default with respect to any of the Existing Indebtedness. 
 
Tax
Returns. Except as set forth on Schedule 9.9, all federal, state, local and other tax returns and reports of Borrower required by Laws have been completed in full and have been duly filed, and all taxes, assessments and withholdings
shown on such returns or billed to Borrower have been paid, and Borrower maintains adequate provisions and accruals in respect of all such federal, state, local and other taxes, assessments and withholdings. There are no unpaid assessments pending
against Borrower for any taxes or withholdings, and Borrower knows of no basis therefor. 
 
Financial Statements. All Financial Statements heretofore given and hereafter given to Lender Party are and will be true and complete in all material respects as of their respective dates and prepared in accordance with
Generally Accepted Accounting Principles, and fairly represent and will fairly represent the financial conditions of the Persons to which they pertain, and no Material Adverse Change has or will have occurred in the financial conditions reflected
therein after the respective date thereof upon delivery to Lender Party, except as may be disclosed in writing to Lender Party. Except as disclosed in the Most Recent Financial Statements, there has been no Material Adverse Change since December 31,
2001, and there exists no event, condition or state 
 

41 

of facts that could reasonably be expected to result in a Material Adverse Change. 
 
Good and Marketable Title. Borrower has good and marketable title to all of
its assets, including, without limitation, the Collateral, subject to no Liens, except for Permitted Liens. 
 
Borrower’s Real Property Locations. Set forth on Schedule 9.12 is a complete and accurate list of all real property owned by Borrower or in which Borrower has a leasehold interest,
showing as of the date hereof the street address, county or other relevant jurisdiction, state, and record owner thereof. 
 
Solvency. Each Borrower Party is Solvent. 
 
ERISA. Each Plan is and has been administered in compliance in all material respects with all applicable Laws, including without limitation, the
applicable provisions of ERISA and the Internal Revenue Code. No ERISA Event has occurred and is continuing or, to the knowledge of Borrower, is reasonably expected to occur with respect to any Plan, in either case that would be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. Except as reflected in the Most Recent Financial Statements, no Plan has any Unfunded Pension Liability, and neither Borrower nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA, in either instance where the same would be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect. Except as reflected in the Most Recent Financial
Statements, neither Borrower nor any ERISA Affiliate is required to contribute to or has, or has at any time had, any liability to a Plan. 
 
Priority of Liens. The Agent’s Lien constitutes a first Lien against the Collateral, prior to all other Liens, including those which may hereafter
accrue, except for the Permitted Liens. 
 
Patents, Copyrights,
Etc. Set forth on Schedule 9.16 is a complete and accurate list of all patents, trademarks, trade names, service marks, and copyrights, and all applications therefor and licenses thereof, of Borrower, reflecting the Jurisdiction in
which registered, the registration number, the date of registration and the expiration date, and Borrower owns or has the right to use all such patents, trademarks, trade names, service marks, and copyrights, and all applications therefor and
licenses thereof; and except as set forth on Schedule 9.16, no Collateral is subject to any license agreement relating to patents, trademarks, trade names, service marks, or copyrights which could, directly or indirectly, preclude or
render impracticable the realization of the Agent’s Lien or materially diminish the value of such Collateral. 
 
Accuracy of Documents. All documents furnished to Lender Party by or on behalf of Borrower as part of or in support of the application for the Loans or
the Loan Documents are true, correct, complete and accurately represent the matters to which they pertain. 
 
Environmental Matters. Neither the Mortgaged Property nor Borrower is in violation of or subject to any existing, pending or threatened investigation or inquiry by any Governmental Authority or any
remedial obligations under any applicable Environmental Laws, and there are no facts, conditions or circumstances which could result in any such investigation or inquiry if such facts, conditions and circumstances, if any, were fully disclosed to
the applicable Governmental 
 

42 

Authority, and Borrower will promptly notify Agent if Borrower becomes aware of any such facts, conditions
or circumstances or any such investigation or inquiry; Borrower has not obtained and is not required to obtain any Governmental Approvals to construct, occupy, operate or use any buildings, improvements, fixtures or equipment in connection with the
Mortgaged Property by reason of any Environmental Laws; and no Petroleum Products, Hazardous Substance, Hazardous Materials or Solid Wastes have been disposed of or released on the Mortgaged Property, and Borrower covenants and agrees that it will
not cause there to be any violation of any Environmental Law in connection with its ownership and use of the Mortgaged Property, including any violation arising from the disposal or release of Petroleum Products, Hazardous Substances, Hazardous
Materials or Solid Wastes on the Mortgaged Property. Notwithstanding anything to the contrary herein, Borrower shall indemnify and hold Lender Parties harmless from and against any fines, charges, expenses, fees, attorney fees and costs incurred by
Lender Parties in the event Borrower or the Mortgaged Property (whether or not due to any fault of Borrower) is hereafter determined to be in violation of any Environmental Laws applicable thereto. This indemnity shall survive any foreclosure or
deed in lieu of foreclosure and repayment of the Loans. 
 
Restrictions and Covenants Affecting the Mortgaged Property. Neither Borrower nor the Mortgaged Property is in violation of any easements, covenants or restrictions affecting the Mortgaged Property. 
 
Condemnation. There are no proceedings pending, or, to the best of
Borrower’s knowledge, threatened, to exercise any power of condemnation or eminent domain, with respect to the Mortgaged Property, or any interest therein. 
 
Mortgaged Property Documents. 
 
Borrower is (or, with respect to any Mortgaged Property Documents hereafter made, will be) the sole owner and holder of Borrower’s Interest in each
Mortgaged Property Document, and Borrower has not transferred or otherwise assigned any interest of Borrower as a party to any Mortgaged Property Document; 
 
each of the Mortgaged Property Documents is (or, with respect to any Mortgaged Property Documents hereafter made, will be) valid and enforceable and in
full force and effect, and has not been (or, with respect to any Mortgaged Property Documents hereafter made, will not be) altered, modified or amended in any manner whatsoever except as permitted in this Agreement, 
 
none of the Rents has been or will be assigned, pledged or in any manner
transferred or hypothecated, except pursuant to this Agreement, and 
 
none of the Rents, for any period subsequent to the date of this Agreement, has been or will be collected in advance of the time when such Rents become due under the terms of the Assigned Leases. 
 
Full Disclosure. All factual information heretofore or contemporaneously
furnished to any Lender Party in writing by or on behalf of any Borrower Party for purposes of or in connection with this Agreement and the transactions contemplated hereby is, and all other such factual information hereafter furnished to any Lender
Party by or on behalf of any Borrower Party will be, true and accurate in all material respects on the date as of which such information is supplied, dated or certified (or, if such information has been amended or supplemented, on the date as of
which any 
 

43 

such amendment or supplement is supplied, dated or certified) and not made incomplete by omitting to state
a material fact necessary to make the statements contained therein, in light of the circumstances under which such information was provided, not misleading. 
 
Regulated Industries. No Borrower Party is (i) required to register as an “investment company” under the Investment Company Act of 1940, as
amended, or (ii) a “holding company,” a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company,” or an “affiliate” of a “holding company” or of a
“subsidiary company” of a “holding company,” within the meaning of the public Utility Holding Company Act of 1935, as amended. 
 
Insurance. Schedule 9.24 sets forth a true and complete summary of all insurance policies or arrangements carried or maintained by Borrower.
The assets, properties and business of Borrower are insured against such hazards and liabilities, under such coverages and in such amounts, as are customarily maintained by prudent companies similarly situated and under policies issued by insurers
of recognized responsibility. 
 
Continuing Effectiveness. All
representations and warranties contained herein shall be deemed continuing, continually republished, and in effect at all times while Borrower remains indebted to Lender Party pursuant to the Loans and shall be deemed to be incorporated by reference
at the time of each Advance to Borrower unless Borrower specifically notifies Agent of any change therein. 
 
THE BORROWER’S COVENANTS 
 
Borrower does hereby covenant and agree with each Lender Party that, so long as any of the Obligations remain unsatisfied or any commitments hereunder remain outstanding, Borrower at all times will
comply or cause to be complied with the following covenants: 
 
Affirmative Covenants. 
 
Borrower will duly and
promptly pay and perform all of Borrower’s Obligations to Lender Party according to the terms of this Agreement and the other Loan Documents, and will cause each other Borrower Party to perform such other Borrower Party’s Obligations to
Lender Party according to the terms of this Agreement and the other Loan Documents. 
 
Borrower will use the proceeds of the Loans only for the purposes permitted herein, or as Agent may have otherwise approved from time to time; and Borrower will furnish Agent such evidence as it may reasonably require with
respect to such uses. 
 
Borrower will furnish or cause to be
furnished to the Lender Parties: 
 
Within forty-five (45) days
after each Quarter-End (a) an unaudited (management-prepared) income statement and statement of cash flows of Borrowers (on a Consolidated Basis) for such Quarter, and (b) an unaudited (management-prepared) balance sheet of Borrowers (on a
Consolidated Basis) for such Quarter, all in reasonable detail with Agent having full access to all supporting schedules and comments, and certified by Borrower’s president or principal financial officer to have been prepared in accordance with
Generally Accepted Accounting Principles consistently applied by Borrowers, except for any inconsistencies explained in such certificate; 
 

44 

 
Within ninety (90) days after
each Fiscal Year-End (a) a statement of Equity Owners’ Equity and a statement of cash flows of Borrowers (on a Consolidated Basis) for such Fiscal Year, (b) an income statement of Borrowers (on a Consolidated Basis) for such Fiscal Year, and
(c) a balance sheet of Borrowers (on a Consolidated Basis) as of such Fiscal Year-End, all in reasonable detail, including all supporting schedules and comments; such statements and balance sheets to be audited by an independent certified public
accountant acceptable to Agent, and certified by such accountants to have been prepared in accordance with Generally Accepted Accounting Principles consistently applied by Borrowers, except for any inconsistencies explained in such certificate; and
Agent shall have the right, from time to time, to discuss any Borrower Party’s affairs directly with Borrower Party’s accountants, and any such accountants are authorized and directed to give Agent any information Agent may request at any
time regarding the financial affairs of Borrower Party and are authorized and directed to furnish Agent with copies of any documents in their possession related thereto; 
 
On or before the last day of each month, a Collateral Report for the immediately preceding month, certified to be correct by
the principal financial officer or vice president of finance of Borrower; and 
 
On or before the forty-fifth (45th) day after each Quarter-End, a Compliance Certificate for the
immediately preceding Quarter, certified to be correct by the principal financial officer or vice president of finance of Borrower, together with the Schedule of Accounts, Schedule of Inventory, and such other matters as may be required pursuant to
Section 10.12 of this Agreement; and 
 
Promptly after sending or
making available or filing of the same, copies of all reports, proxy statements and financial statements that Borrower sends or makes available to its Equity Owners and all registration statements and reports that Borrower files with the Securities
and Exchange Commission (or any other similar Governmental Authority) or any successor Person. 
 
Borrower will pay or cause to be paid when due (i) the Fees and all other fees or expenses owing to Lender Party; and (ii) all expenses involved in perfecting the Agent’s Lien or the priority of
the Agent’s Lien and all other expenses of Lender Party related to the Loans, or the protection and preservation of the Collateral, or the interpretation, administration and enforcement of any provision of this Agreement or any other Loan
Document, or the preparation and negotiation of this Agreement, any of the other Loan Documents, or amendments to any of them, including, without limitation, recording fees and taxes, tax, title and lien search charges, title insurance charges, and
attorneys’ fees (including attorneys’ fees at trial and on any appeal by Borrower or Lender Party), real property taxes and insurance premiums. 
 
Borrower will permit the Lender Parties and their respective agents to have access to the Collateral at reasonable times. 
 
Borrower will cause, or permit Agent to cause, the Mortgaged Property to be
reappraised at Borrower’s expense (i) after an Event of Default, or (ii) if required by regulatory authorities. 
 
Borrower will certify to Agent upon request by Agent that: 
 
Borrower has complied with and is in compliance with all terms, covenants and conditions of this Agreement which are binding upon it; 
 
there exists no Default; or, if such is not the case, that one or more
specified Defaults have occurred; and 
 
the representations and
warranties contained in this Agreement are true with the same effect as though made on the date of such certificate. 
 

45 

 
Borrower will, when requested
so to do, make available for inspection and audit by duly authorized representatives of Agent any of its Records, and will furnish Agent any information regarding its business affairs and financial condition within a reasonable time after written
request therefor; provided that until the occurrence of a Default, an audit shall not be conducted more than twice in any consecutive twelve-month period unless Agent, in its discretion, determines that there exists a need for such audit to verify
financial information reported by Borrower. Borrower shall reimburse Agent for all costs associated with (i) one such audit during any consecutive twelve-month period, and (ii) any other audit if the audit reveals a material discrepancy in any
financial report, statement or other document provided to Lender Party pursuant to this Agreement. 
 
Borrower will keep accurate and complete Records, consistent with sound business practices. 
 
Within ten (10) days of Agent’s request therefor, Borrower will furnish or cause to be furnished to Agent copies of income tax returns filed by any
Borrower Party. 
 
Borrower will pay when due (or within applicable
grace periods) all Indebtedness due Third Parties, unless the failure so to pay such Indebtedness would not give rise to a Material Adverse Change. 
 
Borrower will notify Agent thirty (30) days in advance of any change in the location of any place of business or state of incorporation of Borrower or of
the establishment of any new place of business, or the discontinuance of any existing place of business. 
 
Borrower will notify Agent immediately if it becomes aware of the occurrence of any Default, or if it becomes aware of any Material Adverse Change or the occurrence of any event that might have or give
rise to a Material Adverse Effect. 
 
Borrower will collect its
Accounts and sell its Inventory only in the Ordinary Course of Business. 
 
Borrower will: 
 
Fund all its Plans in accordance
with no less than the minimum funding standards of Section 302 of ERISA; 
 
Furnish Agent, promptly after the filing of the same, with copies of all reports or other statements filed with the United States Department of Labor or the Internal Revenue Service with respect to all such Plans; and 
 
Promptly advise Agent of the occurrence of any Reportable Event or Prohibited
Transaction with respect to any such Plan. 
 
Borrower will cause
the Mortgaged Property to be maintained in good and safe condition and repair and shall promptly repair, replace or rebuild any part of the Mortgaged Property which may be destroyed by any casualty, or become damaged, worn or dilapidated or which
may be affected by any condemnation or similar proceeding. 
 
Borrower will, subject to the terms and conditions of any Subordination Agreement, (i) pay or cause to be paid as and when due all Subordinated Debt, (ii) otherwise comply with all of its covenants under any agreement relating to
Subordinated Debt, and (iii) promptly provide to Agent notice of each default or claim of default given or received by Borrower with respect to any Subordinated Debt. 
 
Negative Covenants. 
 
No Borrower will, without Agent’s prior written consent (and subject to the approval of the Required Lenders, which consent and approval shall not be
unreasonably withheld or delayed), 
 

46 

change its name or enter into any merger or consolidation. 
 
No Borrower will, without Agent’s prior written consent (and subject to
the approval of the Required Lenders), liquidate, reorganize, recapitalize or dissolve. 
 
Except as disclosed on Schedule 10.2(B), no Borrower will, without Agent’s prior written consent (and subject to the approval of the Required Lenders, which consent and approval shall not be unreasonably
withheld or delayed), sell, transfer, lease or otherwise dispose of, or enter into any agreement to sell, lease, transfer, assign or otherwise dispose of, all or any part of its assets, including, without limitation, the Collateral (other than
Permitted Transfers of Collateral). 
 
No Borrower will, without
Agent’s prior written consent (and subject to the approval of the Required Lenders, which consent and approval shall not be unreasonably withheld or delayed), consummate any Acquisition (i) outside the Permitted Line of Business, or (ii) if the
consideration paid with respect to such Acquisition is more than $2,500,000.00. 
 
No Borrower will, without Agent’s prior consent (and subject to the approval of the Required Lenders, which consent and approval shall not be unreasonably withheld or delayed), create or acquire any Affiliate in connection with
an Acquisition or otherwise. 
 
No Borrower will become liable,
directly or indirectly, as guarantor or otherwise for any obligation of any Person not a Borrower Party in an amount exceeding $100,000.00 in the aggregate. 
 
No Borrower will, directly or indirectly, make, create, incur, assume or suffer to exist, or enter into or suffer to exist any agreement or restriction
that prohibits or conditions the creation, incurrence or assumption of, any Lien upon or with respect to any part of the Collateral, whether now owned or hereafter acquired, or agree to do any of the foregoing, other than Permitted Liens.

 
Except for transactions described on Schedule
10.2(G), no Borrower will, without Agent’s prior written consent (and subject to the approval of the Required Lenders, which consent and approval shall not be unreasonably withheld or delayed), issue, redeem, purchase or retire any of
its Equity Interests or grant or issue any warrant, right or option pertaining thereto or any other security convertible into any of the foregoing if the same would give rise to a Default or result in a Change in Control. 
 
No Borrower will amend or modify any of its Organizational Documents without
the prior written consent of Agent (and subject to the approval of the Required Lenders, which consent and approval shall not be unreasonably withheld or delayed). 
 
No Borrower will directly or indirectly apply any part of the proceeds of any Loan to the purchasing or carrying of any
“margin stock” within the meaning of Regulation G, Regulation T, Regulation U, or Regulation X, or any regulations, interpretations or rulings thereunder. 
 
No Borrower will treat, store, handle, discharge, or dispose of any Hazardous Materials, Petroleum Products, or Solid Wastes
except in compliance with all Environmental Laws. 
 
Financial
Covenants. 
 
Borrower will maintain or cause to be maintained at
all times during the term of this Agreement: 
 
A Fixed Charge
Coverage of not less than 1.2 to 1.0; 
 
Adjusted Tangible Net
Worth of not less than $24,300,000.00, plus 60% of the Net Income as of each Quarter-End beginning March 31, 2003; and 
 
A ratio of Adjusted Liabilities to Adjusted Tangible Net Worth of not more than 2.5 to 1.0; and 
 
A Borrowing Base such that the balance of the Revolving Loan will not, at any
time, exceed the Borrowing Base; 
 

47 

 
No Borrower will declare or
pay any dividends, or make any other payment or distribution on account of its Equity Interests in an amount such that such payment or other distribution shall give rise to a Default. 
 
No Borrower will make any other Investment other than Permitted Investments. 
 
No Borrower will, without Agent’s prior written consent (and subject to
the approval of the Required Lenders, which consent and approval shall not be unreasonably withheld or delayed), incur, create, assume, or permit to exist any other Indebtedness except Permitted Indebtedness. 
 
Except as the same may relate to the Loans, no Borrower will enter into any
agreement with respect to any of its Existing Indebtedness which is Indebtedness for borrowed money if the effect of such agreement is to 
 
Increase the interest rate on such Indebtedness; 
 
Change the dates upon which payments of principal, interest or other scheduled payments are due on such Indebtedness (other than to extend such dates);

 
Change any default or event of default (other than to delete or
make less restrictive any default provision) with respect to such Indebtedness; 
 
Add any covenant with respect to such Indebtedness; 
 
Change the redemption or prepayment provisions of such Indebtedness (other than to extend the dates therefor or to reduce the premiums payable in connection therewith); or 
 
Materially increase the obligations of Borrower or confer additional material rights to the holder of such Indebtedness in a
manner adverse to Borrower or Lender Parties. 
 
Except as
otherwise approved by Agent (and subject to the approval of the Required Lenders, which approval shall not be unreasonably withheld or delayed), Borrowers (in the aggregate) will not make Capital Expenditures in an aggregate amount in any Fiscal
Year after the Fiscal Year ending December 31, 2002 in excess of $6,000,000.00. 
 
Except for agreements reflected in the Most Recent Financial Statements, agreements currently in effect and listed on Schedule 10.3 (G) attached hereto, agreements which provide only for either Permitted Investments or
Permitted Indebtedness, and agreements which are the subject of the Subordination Agreement, no Borrower will enter into any agreement, transaction or series of transactions where any Affiliate, Subsidiary, shareholder, director, or officer of
Borrower Party is a party thereto, except in the Ordinary Course of Business and upon fair and reasonable terms that are no less favorable to it than would obtain in a comparable arm’s length transaction with a Person other than an Affiliate,
Subsidiary, shareholder, director, or officer of Borrower Party. 
 
Insurance and Condemnation Covenants. 
 
Borrower
will obtain and maintain, or cause to be obtained and maintained, at all times while Borrower is indebted to Lenders, at Borrower’s sole expense: (a) the Title Insurance Policy; (b) all-risk insurance with respect to all insurable property
comprising the Tangible Property, against loss or damage by fire, lightning, windstorm, explosion, hail, tornado and such hazards as are presently included in so-called “all-risk” coverage and against such other insurable hazards as Agent
may require, in an amount not less than 100% of the full replacement cost, including the cost of debris removal, without deduction for depreciation and sufficient to prevent Agent and Borrower from becoming a coinsurer, such insurance to be in
builder’s risk (non-reporting) form during and with respect to any construction on the Land; (c) if and to the extent any portion of the Improvements is in a special flood hazard area, a flood insurance policy in an amount equal to the lesser
of the aggregate principal face amount of the Notes or the maximum amount available; 
 

48 

 
(d) comprehensive general
public liability insurance, on an “occurrence” basis, for the benefit of Borrower and Agent as named insureds; (e) statutory workers’ compensation insurance with respect to any work on or about the Mortgaged Property; and (f) such
other insurance as may from time to time be required by Agent (including but not limited to boiler and machinery insurance, earthquake insurance, and war risk insurance) and against other insurable hazards or casualties which at the time are
commonly insured against in the case of premises similarly situated, due regard being given to the height, type, construction, location, use and occupancy of buildings and improvements. All insurance policies shall be issued and maintained by
insurers, in amounts, with deductibles, and in form satisfactory to Agent, and shall require not less than thirty (30) days’ prior written notice to Agent of any cancellation or change of coverage. All insurance policies maintained, or caused
to be maintained, by Borrower with respect to Borrower’s Tangible Property, except for public liability insurance, shall provide that each such policy shall be primary without right of contribution from any other insurance that may be carried
by Borrower or Agent and that all of the provisions thereof, except the limits of liability, shall operate in the same manner as if there were a separate policy covering each insured. If any insurer which has issued a policy of title, hazard,
liability or other insurance required pursuant to this Agreement or any other Loan Document becomes insolvent or the subject of any Bankruptcy, receivership or similar proceeding or if in Agent’s opinion the financial responsibility of such
insurer is or becomes inadequate, Borrower shall, in each instance promptly upon the request of Agent and at Borrower’s expense, obtain and deliver to Agent a like policy (or, if and to the extent permitted by Agent, a certificate of insurance)
issued by another insurer, which insurer and policy meet the requirements of this Agreement or such other Loan Documents, as the case may be. Without limiting the discretion of Agent with respect to required endorsements to insurance policies, all
such policies for loss of or damage to the Mortgaged Property shall contain a standard mortgage clause (without contribution) naming Agent as mortgagee with loss proceeds payable to Agent notwithstanding (i) any act, failure to act or negligence of
or violation of any warranty, declaration or condition contained in any such policy by any named insured; (ii) the occupation or use of the Mortgaged Property for purposes more hazardous than permitted by the terms of any such policy; (iii) any
foreclosure or other action by Agent under the Loan Documents; or (iv) any change in title to or ownership of the Mortgaged Property or any portion thereof, and shall further contain the agreement of the insurer waiving all rights of set off,
counterclaim or deductions against Borrower. The originals of each initial insurance policy (or to the extent permitted by Agent, a copy of the original policy and a satisfactory certificate of insurance) shall be delivered to Agent at the time of
execution of this Agreement, with premiums fully paid, and each renewal or substitute policy (or certificate) shall be delivered to Agent, with premiums fully paid, at least ten (10) days before the termination of the policy it renews or replaces.
Borrower shall pay all premiums on policies required hereunder as they become due and payable and promptly deliver to Agent evidence satisfactory to Agent of the timely payment thereof. In the event Borrower fails to provide, maintain, keep in force
or deliver and furnish to Agent the insurance required by this Section, Agent may procure such insurance or single-interest insurance for such risks covering Agent’s interest, and Borrower will pay all premiums thereon promptly upon demand by
Agent. Until such payment is made by Borrower, the amount of all such premiums shall be added to and become part of the Obligations. If any loss occurs at any time when Borrower has failed to perform Borrower’s covenants and agreements in this
Section, Agent shall nevertheless be entitled 
 

49 

to the benefit of all insurance covering the loss and held by or for Borrower, to the same extent as if it
had been made payable to Agent. Upon any foreclosure of the Mortgage or transfer of title to the Mortgaged Property in extinguishment of the whole or any part of the Loans or any other amounts owing by Borrower to Lender Party, all of
Borrower’s right, title and interest in and to the insurance policies referred to in this Section (including unearned premiums) and all proceeds payable thereunder shall thereupon vest in the purchaser at foreclosure or other such transferee,
to the extent permissible under such policies, and Agent is hereby irrevocably appointed by Borrower as attorney-in-fact for Borrower to assign any such policy to said purchaser or other such transferee without accounting to Borrower for any
unearned premiums thereon. Agent shall have the right (but not the obligation) to make proof of loss for, settle and adjust any claim under, and receive the proceeds of, all insurance for loss of or damage to the Mortgaged Property, and the expenses
incurred by Agent in the adjustment and collection of insurance proceeds shall be added to and become part of the Obligations and shall be due and payable to Agent on demand. Agent shall not be, under any circumstances, liable or responsible for
failure to collect or exercise diligence in the collection of any of such proceeds or for the obtaining, maintaining or adequacy of any insurance or for failure to see to the proper application of any amount paid over to Borrower. Any such proceeds
received by Agent shall be applied and disbursed as provided in this Agreement. Borrower appoints Agent as Borrower’s attorney-in-fact to cause the issuance of or an endorsement of any policy and to otherwise bring Borrower into compliance with
the provisions of this Section and to make any claim for, receive payment for, and execute and endorse any documents, checks or other instruments in payment for loss, theft, or damage under any such insurance policy. 
 
Subject to the provisions of the immediately succeeding paragraph and any
contrary provisions in any Mortgage, after deducting from any casualty insurance proceeds all of its expenses incurred in the collection and administration of such sums, including attorney’s fees, Agent shall apply the same at its option (i) to
the payment of the Obligations, whether or not due and in whatever order Agent elects, (in which case a portion of or the entire Obligations shall, at Agent’s option, immediately become due and payable), (ii) to the repair and/or restoration of
the Improvements, or (iii) for any other purposes or objects for which Agent is entitled to advance funds under any Loan Document, all without affecting any Lien created by any Security Document, and any balance of such monies then remaining shall
be paid to Borrower or the Person lawfully entitled thereto. Agent shall not be held responsible for any failure to collect any insurance proceeds due under the terms of any policy regardless of the cause of such failure. 
 
Notwithstanding the provisions of the immediately preceding paragraph to the
contrary, Agent agrees that the proceeds of any casualty insurance or any part thereof (after deducting therefrom all of its expenses incurred in the collection and administration of such sums, including reasonable attorney’s fees) payable on
account of loss or damage to the Improvements will be made available by Agent to be applied by Borrower to restoration or repair of the Improvements provided the following conditions are met: 
 
there exists no Default and Agent is satisfied that the occurrence of such
event (after making the insurance proceeds available as provided herein) will not give rise to a Default; 
 
Borrower presents sufficient evidence satisfactory to Agent that (A) the Improvements are capable of being, and will be, restored in compliance with all applicable Laws to an architectural whole and to
substantially the same condition and value as prior to the casualty, (B) restoration of 
 

50 

the Improvements to an architectural whole will be completed on or before the Term Loan Maturity Date, (C)
there are sufficient funds from such insurance proceeds and other available monies, to completely restore or repair the Improvements to an architectural whole, and (D) Agent will not incur any liability to any other Person as a result of such use or
release of insurance proceeds; 
 
all parties having existing or
expected possessory interests in the Improvements agree to continue, in a manner satisfactory to Agent, to fulfill the contract terms then in effect following the restoration or repair (including, without limitation, the payment of rent or other
sums without abatement or reduction except as approved by Agent in its discretion), or Borrower shall deliver security satisfactory to Agent in its discretion, to substitute for the loss of income caused by the failure of any such possessory
interest to agree to continue to fulfill the contract terms then in effect following restoration or repair; and 
 
Borrower shall enter into such agreements and deliver such other documents and other things as may reasonably be required by Agent in connection with the disbursement of all such proceeds.

 
If the foregoing conditions are satisfied within
ninety (90) days of the date of loss, then the insurance proceeds shall be held by Agent and, after deducting from said insurance proceeds all of its expenses incurred in the collection and administration of such sums, including attorney’s
fees, Agent shall disburse the net insurance proceeds to or on behalf of Borrower (pursuant to a procedure satisfactory to Agent) as repair or restoration progresses and to the extent such proceeds are required to defray the expenses of such
restoration or repair; and to the extent any such proceeds are not required to defray the expenses of such restoration or repair, Agent may, at its option, apply any such unused proceeds as provided for in the immediately preceding paragraph (B) of
this Section. At all times during such restoration or repair, Borrower shall deposit with Agent funds which, when added to insurance proceeds on deposit with Agent, are sufficient to complete the restoration or repair of the Improvements to an
architectural whole, as determined by Agent, in Agent’s discretion, in accordance with the approved plans and specifications and all applicable Laws. 
 
If the conditions set forth in clauses (1) through (4) of this Section are not satisfied within ninety (90) days of the date of loss, then
the insurance proceeds shall be disbursed as provided for in the immediately preceding paragraph (B) of this Section. 
 
If all or any portion of the Mortgaged Property shall be damaged or taken through condemnation (which term shall include any damage or taking by any
Governmental Authority and any transfer by private sale in lieu thereof), either temporarily or permanently, other than an insubstantial taking for the purpose of widening existing roads bordering the Land which does not adversely affect access or
the use of the Mortgaged Property for its intended purposes, then a portion of or the entire Obligations shall, at the option of Agent, immediately become due and payable. Borrower, immediately upon obtaining knowledge of the institution, or the
proposed, contemplated or threatened institution of any action or proceeding for the taking through condemnation of the Mortgaged Property or any part thereof will notify Agent, and Agent is hereby authorized, at its option, to commence, appear in
and prosecute, through counsel selected by Agent, in its own or in Borrower’s name, any action or proceeding relating to any condemnation. Borrower may compromise or settle any claim for compensation, but shall not make any compromise or
settlement for an award unless all of the Obligations are paid and 
 

51 

satisfied in full, without the prior written consent of Agent. All such compensation, awards, damages,
claims, rights of action and proceeds and the right thereto are hereby assigned by Borrower to Agent, and Agent is authorized, at its option, to collect and receive all such compensation, awards or damages and to give proper receipts and
acquittances therefor without any obligation to question the amount of any such compensation, awards or damages. After deducting from said condemnation proceeds all of its expenses incurred in the collection and administration of such sums,
including reasonable attorney’s fees, the net proceeds shall be dealt with by Agent in accordance with, and subject to, the same terms and conditions as set forth in Paragraph (B) or Paragraph (C), as applicable, of Section 10.4 hereof as if
the condemnation proceeds were insurance proceeds and as if the date the condemnation proceeds become payable to Borrower was the date of loss. 
 
Mortgaged Property Document Covenants. 
 
Except as may otherwise be expressly provided for in this Agreement, including the immediately following paragraph, Borrower shall (a) observe and perform
all the obligations imposed upon Borrower under each Mortgaged Property Document; (b) not do, or permit to be done, anything to impair the security of any Mortgaged Property Document; (c) promptly send to Agent copies of each notice of default which
Borrower shall send or receive under the Mortgaged Property Documents; (d) enforce the performance and observance of the provisions of each Mortgaged Property Documents; (e) not collect any of the Rents except as set forth in this Agreement; (f) not
subordinate any Mortgaged Property Document to any Lien, or permit, consent, or agree to any such subordination without the prior written consent of Agent; (g) not materially alter, modify or change the terms of any Mortgaged Property Document, nor
give any consent to exercise any option required or permitted by such terms, without the prior written consent of Agent in each such case (and subject to the approval of the Required Lenders); (h) not cancel or terminate any Mortgaged Property
Document, or accept a surrender of any Mortgaged Property Document without the prior written consent of Agent in each such case (and subject to the approval of the Required Lenders); (i) not convey or transfer, and shall not suffer or permit a
conveyance or transfer of, the Mortgaged Property, or of any interest in the Mortgaged Property, so as to effect directly or indirectly, approximately or remotely, a merger of the estates and rights of, or a termination or diminution of the
obligations of any other party to and under any Assigned Lease; (j) not alter, modify or change the terms of any guaranty of any Mortgaged Property Document, and shall not cancel or terminate any such guaranty, without the prior written consent of
Agent in each such case (and subject to the approval of the Required Lenders); (k) not consent to any assignment of, or subletting under, any Assigned Lease without the prior written consent of Agent; (l) at Agent’s request, execute any
documentation confirming the assignment and transfer to Agent of each Mortgaged Property Document; and (m) execute and deliver, at the request of Agent, all other further assurances, confirmations and assignments in the Mortgaged Property Documents
as Agent shall, from time to time, reasonably require in order to evidence or secure the rights of Agent hereunder. 
 
Notwithstanding the provisions of the immediately preceding paragraph, so long as there shall not exist any Default, then Borrower shall have the right to
continue to exercise all its rights and perform its obligations under the Mortgaged Property Documents, including the right to collect each payment of Rents at the time of the date provided in the applicable Assigned Lease for such payment.

 

52 

 
Escrow Deposits. Upon the
occurrence of an Event of Default and at the option of Agent and further to secure the payment of taxes, assessments, other charges, and insurance premiums applicable or attributable to the Mortgaged Property, Borrower shall upon request of Agent
deposit with Agent, on the first day of each month, such amounts as, in the estimation of Agent, shall be necessary to pay such taxes, assessments, charges and premiums as they become due; said deposits to be held and to be used by Agent to pay such
taxes, assessments, charges and premiums as the same accrue and are payable. Payment from said sums for said purposes shall be made by Agent at its discretion and may be made even though such payments will benefit subsequent owners of the Mortgaged
Property. Said deposits shall not be, nor be deemed to be, trust funds, but may be, to the extent permitted by applicable Law, commingled with the general funds of Agent, and no interest shall be payable in respect thereof. If said deposits are
insufficient to pay the taxes and assessments, insurance premiums and other charges in full as the same become payable, Borrower will deposit with Agent such additional sum or sums as may be required in order for Agent to pay such taxes and
assessments, insurance premiums and other charges in full. Upon any Event of Default, Agent may, at its option, apply any money in the fund relating from said deposits to the payment of the Obligations in such manner as it may elect. 
 
Borrower’s General Covenants and Agreements Pertaining to the Collateral.
Borrower covenants and agrees that: 
 
The addresses of
Borrower’s principal place of business (or chief executive office if more than one), the office where Borrower keeps and will keep Borrower’s Records, including, without limitation, those Records concerning all of Borrower’s Accounts
and the other Collateral, and the place or places at which all of Borrower’s Inventory, Equipment and other Tangible Property is and will be located are correctly set forth on Schedule 10.7(A); and Borrower shall immediately
advise Agent in writing of any change in any of said addresses. Borrower shall not remove such Records or any of the Collateral from the place or places set forth on Schedule 10.7(A), except for removal of Inventory upon its sale in
Borrower’s Ordinary Course of Business, nor shall Borrower keep any of such Records or the Collateral at any other locations unless (i) Borrower gives Agent at least 10 days’ written notice thereof and of the new location, and (ii) the new
location is within the continental United States of America. Borrower shall give Agent at least 10 days’ prior written notice of Borrower’s opening of any new office or place of business or of its closing of any existing office or place of
business, and any such office or place of business shall be within the continental United States of America. 
 
Borrower is and shall remain the owner of all real estate on which any of the locations described in subparagraph (A) next above are located; or if not, except as otherwise agreed to by Agent, Borrower
has heretofore obtained from each owner of said real estate a written waiver or subordination (in form and substance satisfactory to Agent) of any landlord’s Lien or other Lien said owner might have with respect to the Collateral, and Borrower
has delivered the same to Agent. 
 
Upon request of Agent, Borrower
shall promptly deliver to Agent the certificates of title for any motor vehicles now or hereafter included in the Collateral that are subject to the title Laws of any state of the United States of America or any other Jurisdiction and shall join
with Agent in executing any applications and other documents and taking any other actions necessary or desirable in Agent’s opinion to perfect Agent’s Lien in such vehicles. Agent may retain possession 
 

53 

of such certificates of title until payment in full of all the Obligations and/or until Agent’s Lien
is terminated. 
 
Agent may correct any and all patent errors in
this Agreement or any financing statements or other documents executed in connection herewith. 
 
Borrower shall diligently perform all of its material obligations under each and every contract or Purchase Order in connection with which Accounts are created or exist in accordance with the terms
thereof and will not commit or permit any breach on Borrower’s part in connection with any such contract or Purchase Order. 
 
Borrower shall furnish to Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in
connection with the Collateral as Agent may reasonably request, all in reasonable detail. 
 
Borrower shall keep and maintain at its own cost and expense satisfactory and complete Records of the Collateral at its principal place of business, including without limitation, a record of all payments received and all
credits granted with respect to the Collateral and all other dealings with the Collateral. Upon request of Agent, Borrower shall make proper entries in its books disclosing the assignment of the Collateral to Agent, and Borrower shall segregate its
Records concerning the Collateral and mark the same with Agent’s name or in such other manner as shall be satisfactory to Agent. After the occurrence of and during the continuance of any Default, Borrower shall deliver and turn over to Agent
any such Records at any time on demand of Agent. 
 
Borrower shall
obtain a waiver of any lien claims or rights that any owners or mortgagees of any real estate (or of any possessory interest therein) on which the Collateral, or any part thereof, is now or hereafter may be located, may have with respect to the
Collateral, or shall secure an agreement wherein such Persons subordinate their rights, titles, interests and lien claims to Agent’s Lien in, on and upon the Collateral. 
 
Promptly after Borrower’s learning thereof, Borrower shall inform Agent in writing of any material delay or default in
Borrower’s performance of any of its obligations to any Purchaser or under any Assigned Agreement, if such delay or default may give rise to any assertion of any material claims, offsets or counterclaims by any Purchaser, or any Material
Adverse Change. 
 
Borrower shall provide Agent with copies of all
agreements between Borrower and any warehouse at which any Collateral may, from time to time, be kept and all lease or similar agreements between Borrower and any other Person, whether Borrower is lessor or lessee thereunder. 
 
If any Account arises out of a contract with the United States of America, or
any other Governmental Authority (other than an Account arising under an Approved Contract), Borrower shall promptly notify Agent thereof in writing; and upon demand of Agent, and with respect to all Accounts, Borrower shall execute any instruments
and take any other action required or requested by Agent to perfect Agent’s Lien on and right to collect such Account under the provisions of the Assignment of Claims Act or other applicable Law. 
 
Collection of Accounts; Segregation of Proceeds, Etc. Borrower covenants and
agrees that, except to the extent that Agent’s exercise of its rights and remedies hereunder or under any other Loan Document shall prevent Borrower from doing so, Borrower will, at Borrower’s sole expense, collect from the Purchaser on
each Account all amounts due thereon as and when the same shall become due; and in the event of any default by any Purchaser justifying such action, Borrower shall have the authority, at Borrower’s sole expense, to repossess any merchandise

 

54 

covered by any such Account in accordance with the terms thereof and any applicable Law and to take such
other action with respect to any such Account or the merchandise covered thereby as Borrower, in the absence of instructions from Agent, may deem advisable. 
 
Collection Methods. Borrower agrees that no court action or other legal proceedings for garnishment, attachment, repossession of property, detinue, or any
attempt to repossess any merchandise covered by any Account other than through legal proceedings, shall be done or attempted to be done by Borrower except by or under the direction of competent legal counsel. Borrower agrees to indemnify and hold
Agent harmless from any loss or liability of any kind or character which may be asserted or sought to be asserted against Agent by virtue of any suit filed, process issued or any repossession or attempted repossession done or attempted by Borrower
or at Borrower’s direction or any endeavors that Borrower may make to collect or enforce any Accounts or repossess any goods covered by any Account. 
 
Verification of Accounts. Borrower agrees that any of Agent’s officers, employees or agents shall have the right, at any time or times hereafter, in
Agent’s name or in the name of Borrower, to verify with any Purchaser the validity or amount of, or any other matter relating to, any Accounts by mail, telephone, telegraph or otherwise, provided that until the occurrence of a Default, Agent
shall give Borrower prior notice of such verification. 
 
Notice
Regarding Disputed Accounts. Borrower covenants and agrees that if any Purchaser disputes amounts owing to Borrower by such Purchaser in excess of the lesser of (i) $200,000.00 (in the aggregate), or (ii) 2.5% of the total amount of the Accounts of
such Purchaser, Borrower shall promptly provide Agent with written notice thereof, explaining in detail the reason for the dispute, all claims related thereto and the amount in controversy. 
 
Records, Schedules and Assignments. Borrower covenants and agrees that
Borrower shall keep accurate Records of Borrower’s Accounts and Inventory, and shall promptly deliver to Agent (i) within 30 days after each Month-End (except after an Event of Default, in which case such delivery shall be made on demand of
Agent), a detailed aged trial balance, in form and substance acceptable to Agent, of all then-existing Accounts (“Schedule of Accounts”), (ii) within 30 days after each Month-End (except after an Event of Default, in which case such
delivery shall be made on demand of Agent), a current schedule of Inventory (“Schedule of Inventory”), (iii) upon Agent’s demand, the original or a copy of all Documents evidencing or relating to the Accounts or Inventory so
scheduled, (iv) upon Agent’s demand, such other information relating to the then-existing Accounts and Inventory as Agent shall reasonably request, and (v) upon Agent’s demand, formal written assignments or schedules specifically
describing the Accounts and Inventory and confirming Agent’s Lien thereon. 
 
Visitation. Borrower agrees to permit representatives of the Lender Parties from time to time to visit and inspect the Collateral, all Records related thereto, the premises upon which any of the Collateral is located, and any of the
other offices and properties of Borrower; to examine the assets, books of account, and Records of Borrower; to discuss the affairs and finances of Borrower with and be advised as to the same by the officers thereof; and to verify the amount,
quantity, value and condition of, or any other matter relating to, the Collateral, all at such 
 

55 

reasonable times and intervals as Agent may desire. 
 
Use of Tangible Property. Borrower covenants and agrees (a) to comply with all
applicable Laws governing the use of all Tangible Property, (b) to maintain all Tangible Property in good condition and repair (normal wear and tear excepted), (c) to comply with the terms of any lease covering the premises wherein any Tangible
Property is located and all orders, ordinances or Laws of any Governmental Authority concerning such premises or the conduct of business therein; and (d) not to lease or hire any of the Tangible Property to any Person or permit the same to be leased
or used for hire otherwise than pursuant to any Permitted Liens (it being understood that a sublease of any premises being leased by Borrower shall not be a violation of this Section). 
 
Collateral Evidenced by Instruments or Documents. Borrower covenants and agrees that upon Borrower’s receipt of any
Collateral which is evidenced or secured by an agreement, Instrument, Document or Chattel Paper and upon demand of Agent, Borrower shall deliver the original thereof (or each executed or original counterpart if more than one) to Agent, together with
appropriate endorsements and/or assignments in form and substance acceptable to Agent. 
 
Maintaining Bank Accounts. Borrower covenants and agrees that until the termination of Agent’s Lien: 
 
Except as may otherwise be agreed by Lender Parties or as set forth on Schedule 10.16, Borrower shall maintain all of its operating,
disbursement and lockbox accounts only with SouthTrust, and all of its other bank accounts (including payroll accounts) with SouthTrust or other Lender Parties (the “Approved Bank Accounts”). 
 
Upon an Event of Default and demand of Agent, Borrower shall maintain
lockboxes (each a “Lockbox Account”) only with SouthTrust and with other banks (each a “Lockbox Bank”) that have entered into a letter or other agreement (each a “Lockbox Agreement”) approved by and acceptable to Agent
in its discretion. Neither Borrower nor any Person claiming on behalf of or through Borrower shall have any right to withdraw any of the funds held in a Lockbox Account and in connection therewith: 
 
Borrower shall immediately instruct each Person obligated at any time to make
any payment to Borrower for any reason to make such payment to a Lockbox Account, and shall pay to Agent for deposit in an Approved Bank Account as may be from time to time designated by Agent, at the end of each Business Day, all proceeds of
Collateral and all other cash received by it on such day; 
 
Borrower shall instruct each Lockbox Bank to transfer to an Approved Bank Account designated by Agent, at the end of each Business Day, in same day funds, an amount equal to the credit balance of the Lockbox Account in such Lockbox
Bank; and 
 
Upon any termination of any Lockbox Agreement or other
agreement with respect to the maintenance of a Lockbox Account by Borrower or any Lockbox Bank, Borrower shall immediately notify all Persons that were making payments to such Lockbox Account to make all future payments to another Lockbox Account or
to an Approved Bank Account designated by Agent. Borrower agrees to terminate any or all Lockbox Account and Lockbox Agreements upon request by Agent. 
 
Filing Fees and Taxes. Borrower covenants and agrees to pay all recording and filing fees, revenue stamps, taxes and other expenses and charges payable in
connection with the execution 
 

56 

and delivery to Lender Parties of this Agreement and the other Loan Documents, and the recording, filing,
satisfaction, continuation and release of any mortgages, financing statements or other instruments filed or recorded in connection herewith or therewith. 
 
Assigned Agreements. Except in Borrower’s Ordinary Course of Business, Borrower covenants and agrees that it shall not (a) cancel or terminate any
Assigned Agreement or consent to or accept any cancellation or termination thereof; (b) amend or otherwise modify any Assigned Agreement or give any consent, waiver or approval thereunder; (c) waive any default or breach of any Assigned Agreement;
or (d) take any other action in connection with any Assigned Agreement, and, notwithstanding the foregoing, in each case where any such action (i) may give rise to a Material Adverse Change, or (ii) arises under an Approved Contract, such action
shall only be taken with Agent’s prior written consent (and subject to the approval of the Required Lenders). 
 
Underlying Documentation. Borrower covenants and agrees that Borrower will, upon the request therefor by Agent, promptly deliver possession to Agent of
any or all of the Assigned Agreements (and, if requested by Agent, endorsed to Agent). 
 
Further Assurances. Borrower covenants and agrees that, at Borrower’s cost and expense, upon request of Agent, Borrower shall duly execute and deliver, or cause to be duly executed and delivered, to Agent such further
instruments and documents and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of Agent or its counsel to carry out more effectively the provisions and purposes of this Agreement. 
 
DEFAULT 
 
Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default hereunder:

 
Borrower shall fail to pay as and when due any installment of
principal or interest or fee or any other amount payable under this Agreement or any Note, which failure is not cured within ten (10) days of written notice thereof given by Agent to Borrower, provided, however, that Agent shall not be required to
give such notice more than twice in any consecutive twelve-month period, nor upon maturity of any Note. 
 
Any Borrower Party shall fail to pay, perform or observe any other obligation, condition, or covenant to be observed or performed by it under this Agreement or any other Loan Document, and such failure
shall continue for ten (10) days after the earlier of: 
 
Notice of
such failure from Agent; or 
 
Any Borrower Party knows of any such
failure; or 
 
Agent is notified of such failure or should have
been so notified pursuant to the provisions of this Agreement or any other Loan Document. 
 
There shall occur any Event of Default as defined and provided under the SouthTrust Bond Issue Letter of Credit Mortgage or any Loan Document. 
 
There shall occur any default or event of default (after any applicable grace or cure period) as provided under any agreement
relating to Subordinated Debt. 
 

57 

 
There shall occur any default
or event of default (after the expiration of any applicable grace and cure period) under any agreement of Borrower with any Person and relating to the borrowing of money. 
 
The validity or enforceability of this Agreement or any other Loan Document, or any part thereof, shall be contested by any
Borrower Party, and/or any Borrower Party shall deny that it has any or further liability or obligation hereunder or thereunder. 
 
Assignment or attempted assignment by Borrower of this Agreement, any rights hereunder, or any Advance to be made hereunder, or the conveyance, lease,
mortgage, or any other alienation or encumbrance of the Collateral or any interest therein without the prior written consent of Agent (and subject to the approval of all Lenders), except for transfers permitted hereunder or under any other Loan
Document. 
 
Except as otherwise permitted herein, the transfer of
Borrower’s interest in, or rights under, this Agreement by operation of law or otherwise, including, without limitation, such transfer by Borrower as debtor in possession under the Bankruptcy Code, or by a trustee for Borrower under the
Bankruptcy Code, to any Third Person, whether or not the obligations of Borrower under this Agreement are assumed by such Third Person. 
 
The institution of a foreclosure or other possessory action against Collateral having a value in excess of $250,000.00. 
 
Substantial damage to, or partial or total destruction of, the Improvements by
fire or other casualty or the taking of any of the Improvements, temporarily or permanently, by eminent domain, and Borrower’s failure to restore, repair, replace, or rebuild the Improvements as and when required under the terms of any Loan
Document (so long as such failure to restore, repair, replace or rebuild is not attributable to Lender Party’s failure to comply with its obligations under the Loan Documents with respect thereto). 
 
Failure or refusal by the Title Insurance Company, by reason of any matter
affecting title to the Collateral, to insure any Advance as giving rise to a valid first Lien, subject only to the Permitted Liens. 
 
The dissolution of any Borrower Party, or any Change in Control. 
 
Any financial statement, representation, warranty or certificate made or furnished by any Borrower Party to Lender Party in connection with this
Agreement, or as inducement to Lender Party to enter into this Agreement, or in any separate statement or document to be delivered hereunder to Lender Party, shall be materially false, incorrect, or incomplete when made. 
 
Any Material Adverse Change, or the existence of any other condition which in
Agent’s reasonable determination, constitutes an impairment of any Borrower Party’s ability to perform its obligations under this Agreement or any other Loan Document. 
 
Any Borrower Party shall admit its inability to pay its debts as they mature, or shall make an assignment for the benefit of
itself or any of its creditors. 
 
Proceedings in Bankruptcy, or
for reorganization of any Borrower Party, or for the readjustment of any of its debts, under the Bankruptcy Code, as amended, or any part thereof, or under any other Laws, whether state or federal, for the relief of debtors, now or hereafter
existing, shall be commenced by any Borrower Party, or shall be commenced against any Borrower Party and shall not be discharged within sixty (60) days of commencement. 
 
A receiver or trustee shall be appointed for any Borrower Party or for any substantial part of its assets, or any proceedings
shall be instituted for the dissolution or the full or partial liquidation of 
 

58 

any Borrower Party, and such receiver or trustee shall not be discharged within thirty (30) days of his
appointment, or such proceedings shall not be discharged within sixty (60) days of its commencement, or any Borrower Party shall discontinue business or materially change the nature of its business. 
 
Borrower shall suffer a final judgment for payment of money in excess of
$100,000.00 and shall not discharge the same within a period of thirty (30) days unless, pending further proceedings, execution has not been commenced or if commenced has been effectively stayed. 
 
Provided that with respect to each of the foregoing, an Event
of Default will be deemed to have occurred upon the occurrence of the applicable event without notice being required if Agent is prevented from giving notice by Bankruptcy or other applicable Law. 
 
No Advances After Default. Upon the occurrence and during the continuance of
any Default, and notwithstanding any provision contained herein or in any other Loan Document to the contrary, Lender Parties shall have the absolute right to refuse to make, and shall be under no obligation to make, any further Advances or issue
any Letters of Credit. 
 
Acceleration. All Obligations shall, at
the option of Agent, become immediately due and payable, Without Notice, upon the occurrence of an Event of Default without further action of any kind. 
 
General Remedies. Upon the occurrence of any Event of Default, Lender Parties shall have, in addition to the rights and remedies given them by this
Agreement and the other Loan Documents, all those allowed by all applicable Laws, including but without limitation, the Uniform Commercial Code as enacted in any Jurisdiction in which any Collateral may be located. Without limiting the generality of
the foregoing, Agent may immediately, Without Notice, sell at public or private sale or otherwise realize upon, the whole or, from time to time, any part of the Collateral, or any interest which Borrower may have therein. 
 
Agent’s Additional Rights and Remedies. Upon the occurrence of any Event
of Default and except as may otherwise be prohibited or expressly provided for to the contrary under applicable Law, in addition to any rights or remedies Lender Parties may otherwise have under this Agreement, any other Loan Documents, or under
applicable Laws, Without Notice, Agent shall have the right to take any or all of the following actions at the same or different times: 
 
To cancel Lender Parties’ obligations arising under this Agreement; 
 
To institute appropriate proceedings to specifically enforce performance of the terms and conditions of this Agreement;

 
To take immediate possession of the Collateral; 
 
To appoint or seek appointment of a receiver, Without Notice and without
regard to the solvency of Borrower or the adequacy of the security, for the purpose of preserving the Collateral, preventing waste, and to protect all rights accruing to Lender Parties by virtue of this Agreement and the other Loan Documents. All
expenses incurred in connection with the appointment of such receiver, or in protecting, preserving, or improving the Collateral, shall be charged against Borrower and shall be secured by the Agent’s Lien; 
 
To proceed to perform any and all of the duties and obligations and exercise
all the rights and remedies of Borrower contained in the Assigned Agreements as fully as Borrower could itself; 
 

59 

 
To take possession of the
Mortgaged Property and/or the Rents and have, hold, manage, lease and operate the Mortgaged Property on such terms and for such period of time as Agent may in its discretion deem proper, and, either with or without taking possession of the Mortgaged
Property in Agent’s own name: 
 
make any payment or perform
any act which Borrower has failed to make or perform, in such manner and to such extent as Agent may deem necessary to protect the security provided for in this Agreement, or otherwise, including without limitation, the right to appear in and defend
any action or proceeding purporting to affect the security provided for in this Agreement, or the rights or powers of Agent; 
 
lease the Mortgaged Property or any portion thereof in such manner and for such Rents as Agent shall determine in its discretion; or 
 
demand, sue for, or otherwise collect and receive from all Persons all Rents,
including those past due and unpaid, with full power to make from time to time all alterations, renovations, repairs or replacements of and to the Mortgaged Property (or any part thereof) as may seem proper to Agent and to apply the Rents to the
payment of (in such order of priority as Agent, in its discretion, may determine): 
 
all expenses of managing the Mortgaged Property, including, without limitation, the salaries, fees and wages of a managing agent and such other employees as Agent may deem necessary or desirable; 
 
all taxes, charges, claims, assessments, water rents, sewer rents, and any
other liens, and premiums for all insurance which Agent may deem necessary or desirable, and the cost of all alterations, renovations, repairs, or replacements, and all expenses incidental to taking and retaining possession of the Mortgaged
Property; 
 
all or any portion of the Loans; and/or 
 
all costs and attorneys’ fees incurred in connection therewith.

 
In connection with the foregoing, Borrower hereby authorizes and
directs each party to any Mortgaged Property Document (other than Borrower), upon receipt from Agent of written notice to the effect that an Event of Default exists, to perform all of its obligations under the Mortgaged Property Document as directed
by Agent, and to continue to do as so directed until otherwise notified by Agent. 
 
To notify Purchasers that Accounts have been assigned to Agent, demand and receive information from Purchasers with respect to Accounts, forward invoices to Purchasers directing them to make payments to Agent, collect all
Accounts in Agent’s or Borrower’s name and take control of any cash or non-cash proceeds of Collateral; 
 
To enforce payment of any Accounts, to prosecute any action or proceeding with respect to Accounts, to extend the time of payment of any and all Accounts,
to make allowances and adjustments with respect thereto and to issue credits in the name of Agent or Borrower; 
 
To settle, compromise, extend, renew, release, terminate or discharge, in whole or in part, any Account or deal with the same as Agent may deem advisable; 
 
To require Borrower to open all mail only in the presence of a representative
of Agent, who may take therefrom any remittance on Collateral; 
 
To charge, set-off and otherwise apply all or any part of the Obligations against the Deposit Accounts, or any part thereof; 
 
To exercise any and all rights and remedies of Borrower under or in connection with any 
 

60 

Assigned Agreement or otherwise in respect of the Collateral, including, without limitation, any and all
rights of Borrower to demand or otherwise require payment of any amount under, or performance of any provision of, any Assigned Agreement; 
 
To enter upon the premises of Borrower or any other place or places where the Collateral is located and kept, and through self-help and without judicial
process, without first obtaining a final judgment or giving Borrower notice and opportunity for a hearing on the validity of Agent’s claim, without any pre-seizure hearing as a condition to repossession through court action and without any
obligation to pay rent to Borrower, to remove the Collateral therefrom to the premises of Agent or of any agent of Agent, for such time as Agent may desire, in order effectively to collect or liquidate the Collateral; 
 
To require Borrower, upon the request of Agent, to assemble the Inventory,
Equipment and any other property included in the Collateral and make it available to Agent at places which Agent shall select, whether at Borrower’s premises or elsewhere, and to make available to Agent all of Borrower’s premises and
facilities for the purpose of Agent’s taking possession of, removing or putting the Inventory and such other goods in salable form; 
 
To collect, receive, appropriate, repossess and realize upon the Collateral, or any part thereof, and to sell, lease, assign, give option or options to
purchase, or sell or otherwise dispose of and deliver the Collateral (or contract to do so), or any part thereof, in one or more parcels, at public or private sale or sales, at any exchange broker’s board or at any of Agent’s offices or
elsewhere, at such prices as Agent may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Agent shall have the right upon any such public sale or sales, and to the extent permitted by Law, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of redemption, which equity of redemption Borrower hereby releases. Borrower waives all claims, damages, and demands against Agent arising out of the repossession, retention or
sale of the Collateral; 
 
To use, and to permit any purchaser of
any of the Collateral from Agent to use without charge, Borrower’s labels, General Intangibles, and advertising matter or any property of a similar nature, as it pertains to, or is included in, any of the Collateral, in advertising for sale,
preparing for sale and selling any Collateral, and finishing the manufacture, processing, fabrication, packaging and delivery of the Inventory, and Borrower’s rights under all licenses and all franchise agreements shall inure to Agent’s
benefit; 
 
To send any written notice to Borrower required by Law
or this Agreement in the manner set forth in this Agreement; and any notice sent by Agent in such manner at least ten (10) Business Days (counting the date of sending) prior to the date of a proposed disposition of the Collateral shall be deemed to
be reasonable notice (provided, however, that nothing contained herein shall be deemed to require 10 days’ notice if, under the applicable circumstances, a shorter period of time would be allowed under applicable Law); and 
 
To exercise, in addition to all other rights which it has under this Agreement
or other applicable Law, all of the rights and remedies of a secured party upon default under the Uniform Commercial Code or other applicable Law. 
 
Right of Set-Off. Upon the occurrence of and during the continuance of any Event of Default, Lender Party may, and is hereby authorized by Borrower, at
any time and from time to time, to the fullest extent permitted by applicable Laws, and Without Notice to Borrower, set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time 
 

61 

held and any other Indebtedness at any time owing by Lender Party to, or for the credit or the account of,
Borrower against any or all of the Obligations of Borrower now or hereafter existing whether or not such Obligations have matured and irrespective of whether Lender Party has exercised any other rights that it has or may have with respect to such
Obligations, including without limitation any acceleration rights. The aforesaid right of set-off may be exercised by Lender Party against Borrower or against any trustee in Bankruptcy, debtor in possession, assignee for the benefit of the
creditors, receiver, or execution, judgment or attachment creditor of Borrower, or such trustee in Bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding the
fact that such right of set-off shall not have been exercised by Lender Party prior to the making, filing or issuance, or service upon Lender Party of, or of notice of, any such petition; assignment for the benefit of creditors; appointment or
application for the appointment of a receiver; or issuance of execution, subpoena, order or warrant. Lender Party agrees to promptly notify Borrower after any such set-off and application, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of Lender Party under this Section are in addition to the other rights and remedies (including, without limitation, other rights of set-off) which Lender Party may have. 
 
No Limitation on Rights and Remedies. The enumeration of the powers, rights
and remedies in this Article shall not be construed to limit the exercise thereof to such time as an Event of Default occurs if, under applicable Law or any other provision of this Agreement or any other Loan Document, Lender Party has any of such
powers, rights and remedies regardless of whether an Event of Default has occurred, and any limitation contained herein or in any of the other Loan Documents as to Lender Party’s exercise of any power, right or remedy for a period of time only
during the continuance of an Event of Default shall only be applicable at such time as Lender Party shall have actual knowledge that such Event of Default is no longer continuing and for a reasonable time thereafter as may be necessary for Lender
Party to cease the exercise of such powers, rights and remedies (it being expressly understood and agreed that until such time as Lender Party shall obtain such knowledge and after the expiration of such reasonable time, Lender Party shall have no
liability whatsoever for the commencement of or continuing exercise of any such power, right or remedy). 
 
Repossession of the Collateral; Care and Custody of the Collateral, Etc. Borrower agrees to give Agent notice in the manner set forth in this Agreement within 24 hours of the time of repossession of
the Collateral, or any part thereof, by Agent as to any other property of Borrower alleged to have been left on, upon or in the repossessed Collateral at the time of repossession; and such notice shall be an express condition precedent to any action
or suit for loss or damages in connection therewith. Borrower further agrees that Agent may hold any such property of Borrower without liability for a reasonable time after any such notice is received, and that Agent will have a reasonable time to
notify Borrower as to where Borrower can collect such property. Borrower agrees that if Agent shall repossess the Collateral, or any part thereof, at a time when no Event of Default shall have occurred hereunder, and the repossessed Collateral is
thereafter returned to Borrower, the damages therefor, if any, shall not exceed the fair rental value of the repossessed Collateral for the time it was in Agent’s possession. Borrower hereby expressly and irrevocably consents to, and to the
extent that Borrower may lawfully do so, invites Agent and its 
 

62 

agents to come upon any premises on which the Collateral, or any part thereof, is now or hereafter located
for any and all purposes related to the Collateral including without limitation repossession of the Collateral, or any part thereof. To the extent that Borrower may lawfully do so, Borrower further covenants and warrants that (a) any entry by Agent
and its agents upon such premises for the purpose of repossessing the Collateral, or any part thereof, shall not be trespass upon such premises, and (b) any such repossession shall not constitute conversion of the Collateral, or any part thereof,
and Borrower further agrees to indemnify and hold Agent harmless against, and hereby releases Agent from any actions, costs, obligations or expenses arising directly, indirectly or remotely from any attempt to enter such premises and repossess the
Collateral, or any part thereof. Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if it takes such reasonable actions for that purpose as Borrower shall request in writing,
but Agent shall have sole power to determine whether such actions are reasonable. Any omission to do any act not requested by Borrower shall not be deemed a failure to exercise reasonable care. Borrower shall at all times be responsible for the
preservation of the Collateral and shall be liable for any failure to realize upon, or to exercise any right or power with respect to, the Collateral, or for any delay in so doing, whether or not the Collateral is in Borrower’s possession.

 
Application of Proceeds. Except as otherwise expressly required
to the contrary by applicable Law or any Loan Document, the net cash proceeds resulting from the exercise of any of the rights and remedies of Lender Parties under this Agreement, after deducting all charges, expenses, costs and attorneys’ fees
relating thereto, shall be applied by Agent to the payment of the Obligations, whether due or to become due, in such order and in such proportions as Agent may elect; and Borrower shall remain liable to Lender Parties for any deficiency.

 
Attorney-in-Fact. Borrower hereby constitutes and appoints
Agent, or any other Person whom Agent may designate, as Borrower’s attorney-in-fact (such appointment being coupled with an interest and being irrevocable until Agent’s Lien shall have been terminated in writing as set forth in this
Agreement), at Borrower’s sole cost and expense, to exercise any one or more of the following rights and powers at any time after the occurrence and during the continuance of an Event of Default (and all acts of such attorney-in-fact or
designee taken pursuant to this Section are hereby ratified and approved by Borrower, and said attorney or designee shall not be liable for any acts or omissions nor for any error of judgment or mistake of fact or law): 
 
To take or to bring, in the name of Agent or in the name of Borrower, all
steps, action, suits or proceeding deemed by Agent necessary or desirable to effect collection of the Accounts; 
 
To settle, adjust, compromise, extend, renew, discharge, terminate or release the Accounts in whole or in part; 
 
To settle, adjust or compromise any legal proceedings brought to collect the Accounts; 
 
To notify Purchasers to make payments on the Accounts directly to Agent or to a Lockbox designated by Agent; 
 
To transmit to Purchasers notice of Agent’s interest in the Accounts and
to demand and receive from such Purchasers at any time, in the name of Agent or of Borrower or of the designee of Agent, information concerning the Accounts and the amounts owing thereon; 
 
To use Borrower’s stationery and sign the name of Borrower to verifications of the Accounts and 
 

63 

notices thereof to Purchasers; 
 
To sell or assign any of the Collateral upon such terms, for such amounts and at such time or times as Agent deems advisable,
and to execute any bills of sale or assignments in the name of Borrower in relation thereto; 
 
To take control, in any manner, of any item of payment on, or proceeds of, Collateral; 
 
To prepare, file and sign Borrower’s name on any proof of claim in Bankruptcy or similar document against any Purchaser; 
 
To prepare, file and sign Borrower’s name on any notice of lien,
assignment or satisfaction of lien or similar document in connection with the Collateral; 
 
To sign or endorse the name of Borrower upon any Chattel Paper, Document, Instrument, invoice, freight bill, bill of lading, warehouse receipt or similar document or agreement relating to the Collateral; 
 
To use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Collateral to which Borrower has access; 
 
To enter into contracts or agreements for the processing, fabrication, packaging and delivery of the Collateral as said attorney-in-fact or designee or Agent may from time to time deem appropriate and
charge Borrower’s account for any reasonable costs thereby incurred; 
 
To receive, take, endorse, assign and deliver in Agent’s name or in the name of Borrower any and all checks, notes, drafts and other instruments; 
 
To receive, open and dispose of all mail addressed to Borrower and to notify postal authorities to change the address for the
delivery thereof to such address as Agent may designate; and 
 
To
do all acts and things necessary, in Agent’s discretion, to fulfill Borrower’s obligations under this Agreement and to otherwise carry out the purposes of this Agreement. 
 
Default Costs. Borrower hereby agrees to pay to each Lender Party upon demand all Default Costs incurred by such Lender
Party, which agreement shall be a continuing agreement and shall survive payment of the Loans and termination of this Agreement. 
 
THE AGENT. 
 
Authorization and Action. Each Lender hereby appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Loan
Documents as are delegated to Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters expressly provided for in the Loan Documents as being subject to the consent,
discretion or approval of Agent without the requirement of the approval of any Lender, such matters shall be subject to the sole discretion of Agent, its directors, officers, agents and employees. As to any matters expressly provided for in the Loan
Documents as being subject to the consent, discretion or approval of the Required Lenders or of all of the Lenders, such matters shall be subject to the sole discretion of each Lender. In addition to the other matters specifically provided for
herein as requiring approval or consent of all of the Lenders or of the Required Lenders, Agent shall not take any of the following actions without the prior written consent of all of the Lenders: 
 
modify, amend or waive compliance with any provision of this Agreement or any
of the other Loan Documents; 
 
release any obligor or any of the
Obligations or any of the Collateral; or 
 

64 

 
waive any Default or Event of
Default under Section 11.1(A) of this Agreement. 
 
As to any other matters not expressly provided for by the Loan Documents, Agent shall be entitled to request instructions from the Required Lenders in exercising any discretion or taking any action and shall be fully protected in so
acting or refraining from acting upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lender Parties and all holders of Notes; provided, however, that Agent shall not be required to take any
action that exposes Agent to personal liability or that is contrary to this Agreement or applicable Law. 
 
In the event that the Agent has knowledge of a Default or Event of Default or receives a notice thereof from a Lender or a Borrower, the
Agent shall give prompt notice thereof to the Lenders (provided that Agent shall be deemed to have knowledge only if the officers of Agent primarily responsible for administration of the Loans have actual knowledge of such Default or Event of
Default, and in no event shall any knowledge of a Default or Event of Default be imputed to Agent). Agent may, in its discretion, or shall upon direction of the Required Lenders, give any notice pursuant to this Agreement that is necessary for
commencement of any cure period. Upon the occurrence of an Event of Default, the Lenders shall consult with each other as to a course of action to pursue with regard to such Event of Default. After the Lenders shall have consulted with one another,
Agent shall promptly propose a course of action (the “Initial Proposal”) to be taken by Lenders including but not limited to: 
 
(A)    declaring an Event of Default, sending appropriate notices, or accelerating payment under the
Notes; or 
 
commencing collection proceedings against one or more
of the Borrowers; or 
 
waiving such Event of Default.

 
The Initial Proposal shall be in writing and
given to Lenders in the manner specified for giving notice hereunder. After five (5) Business Days from the Lenders’ receipt of the Initial Proposal, Agent shall commence steps to carry out the Initial Proposal, unless Agent shall have received
written notice from any of the Lenders that the Initial Proposal has been rejected. If the Initial Proposal is rejected by any of the Lenders, and an alternate proposal is not agreed upon by all of the Lenders within ten (10) days of the date of the
Initial Proposal, Agent shall, and it is hereby authorized, empowered, directed and instructed to take any action consistent with ordinary and prudent commercial banking standards to collect the amounts due under the Loans and to protect and
preserve the respective rights and interest of the Lenders as is authorized by any of the Loan Documents. Lenders agree that any actions taken by Agent pursuant to this paragraph shall be deemed a reasonable course of conduct, and the Lenders
hereby, approve, ratify and affirm such actions. Once a course of action has been approved, as required herein, it may be withdrawn with approval of all of the Lenders. 
 
Agent’s Notices, Etc. Agent agrees to give to each Lender prompt notice of each notice of Default given to it by
Borrower pursuant to the terms of this Agreement. 
 
Agent’s
Reliance, Etc. Neither Agent (nor any of its directors, officers, agents or employees) shall be liable for any action taken or omitted to be taken under or in connection with the Loan Documents, except for its own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, Agent: (a) may treat the payee of any Note as the holder thereof until 
 

65 

Agent receives and accepts an Assignment and Acceptance entered into by the Lender that is the payee of
such Note, as assignor, and an Eligible Assignee, as assignee; (b) may consult with legal counsel (including counsel for any Lender Party), independent public accountants and other experts selected by it and shall not be liable for any action taken
or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with the Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of any Loan Document
on the part of any Lender Party or to inspect the property (including the books and records) of any Lender Party; (e) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any Lien created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; and (f) shall incur no liability under or in respect of
any Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, telecopy or telex) believed by it to be genuine and signed or sent by the proper Person. 
 
SouthTrust and Affiliates. With respect to its Commitments, the Advances made
by it and the Notes issued to it, SouthTrust shall have the same rights and powers under the Loan Documents as any other Lender and may exercise the same as though it were not an Agent; and the term “Lender” shall, unless otherwise
expressly indicated, include SouthTrust in its capacity as a lender under this Agreement. SouthTrust and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and
generally engage in any kind of business with, Borrower and any other Lender, any of their respective Subsidiaries and any Person who may do business with or own securities of any such Person, all as if SouthTrust were not Agent and without any duty
to account therefor to any Person. 
 
Lender Credit Decision. Each
Lender acknowledges that it has, independently and without reliance upon Agent or any other Lender and based on the financial statements of Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this Agreement. 
 
Indemnification 
 
Each Lender severally
agrees to indemnify Agent (to the extent not promptly reimbursed by Borrower) from and against such Lender’s Pro Rata Share of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by Agent under the Loan Documents;
provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or 
 

66 

disbursements resulting from Agent’s gross negligence or willful misconduct. Without limitation of
the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its Pro Rata Share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by Borrower under this Agreement, to the extent that
Agent is not promptly reimbursed for such costs and expenses by Borrower. The failure of any Lender to reimburse Agent promptly upon demand for its Pro Rata Share of any amount required to be paid by Lender to Agent as provided herein shall not
relieve any other Lender of its obligation hereunder to reimburse Agent for its Pro Rata Share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse Agent for such other Lender’s Pro Rata Share of
such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section shall survive the payment in full of principal, interest and all other amounts
payable hereunder and under the other Loan Documents. 
 
Each
Lender severally agrees to indemnify Issuing Lender (to the extent not promptly reimbursed by Borrower) from and against such Lender’s Pro Rata Share of any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against Issuing Lender in any way relating to or arising out of the Loan Documents or any action taken or omitted by Issuing
Lender under the Loan Documents; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Issuing
Lender’s gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse Issuing Lender promptly upon demand for its Pro Rata Share of any costs and expenses (including, without limitation, fees and
expenses of counsel) payable by Borrower under this Agreement, to the extent that Issuing Lender is not promptly reimbursed for such costs and expenses by Borrower. The failure of any Lender to reimburse Issuing Lender promptly upon demand for its
Pro Rata Share of any amount required to be paid by the Lender Parties to Issuing Lender as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse Issuing Lender for its Pro Rata Share of such amount, but no
Lender shall be responsible for the failure of any other Lender to reimburse Issuing Lender for such other Lender’s Pro Rata Share of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement
and obligations of each Lender contained in this Section shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents. 
 
Successor Agent. Agent may resign at any time by giving written notice thereof
to the Lender Parties and Borrower, and may be removed at any time with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent’s giving of notice of resignation or the Required Lenders’ removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lender Parties, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States or of any State thereof and having a combined capital and surplus of at least
$250,000,000.00. Upon the acceptance of any appointment as Agent hereunder by a successor Agent and upon the execution and filing or recording of such financing statements, or amendments thereto, and such amendments or supplements to the Security
Documents, and such other instruments or notices, as may be 
 

67 

necessary or desirable, or as the Required Lenders may request, in order to continue the perfection of the
Liens granted or purported to be granted by the Security Documents, such successor Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under the Loan Documents. After any retiring Agent’s resignation or removal hereunder as Agent, the provisions of this Article XVII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement. 
 
No Third
Party Beneficiary. The provisions of this Article 12 are solely for the benefit of the Lender Parties, and no Person other than the Lender Parties is intended to be a beneficiary of the rights and obligations of Lender Parties under this Article 12,
and Lender Parties shall have the right to amend or modify this Article 12, or waive any requirement under this Article 12, without the consent or approval of any other Person (except Lender Parties shall notify Borrowers as to any such amendment or
modification). 
 
MISCELLANEOUS 
 
Termination of Agent’s Lien. This Agreement and the Agent’s Lien
will not be terminated until one of Agent’s officers signs a written termination or satisfaction agreement to such effect. Even if all of the Obligations owing to Lender Parties at any time should be paid, Agent’s Lien will continue to
secure any Obligation of Borrower thereafter arising until the written termination or satisfaction agreement referred to above has been executed by Agent. Except as otherwise expressly provided for in this Agreement, no termination of this Agreement
shall in any way affect or impair the representations, warranties, agreements, covenants, obligations, duties and Obligations of Borrower or the powers, rights, and remedies of Lender Party under this Agreement with respect to any transaction or
event occurring prior to such termination, all of which shall survive such termination. Except as may otherwise expressly be provided herein to the contrary, in no event shall Agent be obligated to terminate Agent’s Lien or return or release
the Collateral or any portion thereof to Borrower (a) until payment in full of the Obligations, or (b) if Lender Party is obligated to extend credit to or for the benefit of Borrower under this Agreement. 
 
Construction. The provisions of this Agreement shall be in addition to those
of any other Loan Document and any guaranty, pledge or security agreement, mortgage, deed of trust, security deed, note or other evidence of liability given by Borrower to Lender Party to or for the benefit of, all of which shall be construed as
complementary to each other, and all existing liabilities and obligations of Borrower to Lender Party and any Liens heretofore granted to or for the benefit of Lender Party shall, except and only to the extent expressly provided herein to the
contrary, remain in full force and effect, and shall not be released, impaired, diminished, or in any other way modified or amended as a result of the execution and delivery of this Agreement or any other Loan Document or by the agreements and
undertaking of Borrower contained herein and therein. Nothing herein contained shall prevent Lender Party from enforcing any or all other notes, guaranties, pledges or security agreements, mortgages, deeds of trust, or security deeds in accordance
with their respective terms. In the event of a conflict between any of the provisions of this Agreement, the Notes, any one or more of the Security Documents or any other Loan 
 

68 

Document, the provisions most favorable to Lender Party shall control. 
 
Indemnity. Borrower hereby agrees to indemnify Lender Party and its officers,
directors, agents, and attorneys against, and to hold Lender Party and all such other Persons harmless from all Indemnified Losses resulting from any representation or warranty made by Borrower or on Borrower’s behalf pursuant to this Agreement
having been false when made, or resulting from Borrower’s breach of any of the covenants set forth in this Agreement, which indemnification is in addition to, and not in derogation of, any statutory, equitable, or common law right or remedy
Lender Party may have for breach of representation, warranty, statement or covenant or otherwise may have under any of the Loan Documents. This agreement of indemnity shall be a continuing agreement and shall survive payment of the Loans and
termination of this Agreement. 
 
Lender Party’s Consent.
Except where otherwise expressly provided in the Loan Documents, in any instance where the approval, consent, or the exercise of Lender Party’s judgment or discretion is required or permitted, the granting or denial of such approval or consent
and the exercise of such judgment or discretion shall be (a) within the sole discretion of the applicable Lender Party; and (b) deemed to have been given only by a specific writing intended for the purpose given and executed by the applicable Lender
Party. 
 
Enforcement and Waiver by Lender Party. Subject to the
terms and conditions of this Agreement, Lender Party shall have the right at all times to enforce the provisions of this Agreement, the Notes, and each of other Loan Documents in strict accordance with the terms hereof and thereof, notwithstanding
any conduct or custom on the part of Lender Party in refraining from so doing at any time or times. The failure of Lender Party at any time or times to enforce its rights under such provisions, strictly in accordance with the same, shall not be
construed as having created a custom in any way or manner contrary to specific provisions of this Agreement or as having in any way or manner modified or waived the same. All rights and remedies of Lender Party are cumulative and the exercise of one
right or remedy shall not be deemed a waiver or release of any other right or remedy. 
 
No Representation, Assumption, or Duty. Nothing, including any Advance or acceptance of any document or instrument, shall be construed as a representation or warranty, express or implied, to any Person by Lender Party. Any
inspection or audit of the Collateral or the Records of Borrower, or the procuring of documents and financial and other information, by or on behalf of Lender Party shall be for Lender Party’s protection only, and shall not constitute any
assumption of responsibility by Lender Party with respect thereto or relieve Borrower of any of Borrower’s obligations. 
 
Expenses of Lender Parties. Borrower will, on demand, reimburse Lender Party for all expenses incurred by Lender Party in connection with the closing of
the Loans (except the legal fees of Compass incurred in connection with the closing of the Loans shall be limited to $5,000.00) and the preparation, negotiation, amendment, modification, interpretation, administration, and/or enforcement of this
Agreement and the other Loan Documents and/or in the collection of any amounts owing from Borrower or any other Person to Lender Party under this Agreement or any other Loan Document and, until so paid, the amount of such expenses shall be added to
and 
 

69 

become part of the amount of the Obligations. 
 
Attorneys’ Fees. If at any time or times hereafter Lender Party employs counsel to advise or provide other
representation with respect to this Agreement, any Loan Document, or any other agreement, document or instrument heretofore, now or hereafter executed by Borrower Party and delivered to Lender Party with respect to the Obligations, or to commence,
defend or intervene, file a petition, complaint, answer, motion or other pleadings or to take any other action in or with respect to any pending, threatened or anticipated suit or proceeding relating to this Agreement, any Loan Document, or any
other agreement, instrument or document heretofore, now or hereafter executed by Borrower and delivered to Lender Party with respect to the Obligations, or to represent Lender Party in any litigation with respect to the affairs of Borrower, or to
enforce any rights of Lender Party or obligations of Borrower or any other Person which may be obligated to Lender Party by virtue of this Agreement, any Loan Document, or any other agreement, document or instrument heretofore, now or hereafter
delivered to Lender Party by or for the benefit of Borrower with respect to the Obligations, or to collect from Borrower any amounts owing hereunder, then in any such event, all of the attorneys’ fees incurred by Lender Party arising from such
services and any expenses, costs and charges relating thereto shall constitute additional obligations of Borrower payable on demand and, until so paid, shall be added to and become part of the Obligations. 
 
Exclusiveness. This Agreement, the Notes, the Security Documents, and any
other Loan Documents made pursuant hereto are made for the sole protection of Borrower, Lender Party, and Lender Party’s successors and assigns, and no other Person shall have any right of action hereunder. 
 
Waiver and Release by Borrower. Borrower (A) waives protest of all commercial
paper at any time held by Lender Party on which Borrower is any way liable; (B) waives notice of acceleration and of intention to accelerate; (C) waives notice and opportunity to be heard, after acceleration, before exercise by Lender Party of the
remedies of self-help, set-off, or of other summary procedures permitted by any applicable Laws or by any agreement with Borrower, and except where required hereby or by any applicable Laws which requirement cannot be waived, notice of any other
action taken by Lender Party; and (D) releases the Lender Parties and their respective officers, attorneys, agents and employees from all claims for loss or damage caused by any act or omission on the part of any of them except willful misconduct or
gross negligence. 
 
Limitation on Waiver of Notice, Etc.
Notwithstanding any provision of this Agreement to the contrary, to the extent that any applicable Law expressly limits any waiver of any right contained herein or in any other Loan Document (including any waiver of any notice or other demand), such
waiver shall be ineffective to such extent. 
 
Additional Costs. In
the event that any applicable Law now or hereafter in effect and whether or not presently applicable to Lender Party, or any interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration
thereof, or compliance by Lender Party with any guideline, request or directive of any such Governmental Authority (whether or not having the force of law), shall (i) affect the basis of taxation of payments to 
 

70 

Lender Party of any amounts payable by Borrower under this Agreement (other than taxes imposed on the
overall net income of Lender Party), or (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Lender Party, or (iii) impose any other
condition with respect to this Agreement, the Notes or the Loans, or (iv) affect the amount of capital required or expected to be maintained by Lender Party, and the result of any of the foregoing is to increase the cost to Lender Party of making,
funding or maintaining the Loans or to reduce the amount of any amount receivable by Lender Party thereon, then Borrower shall pay to Lender Party from time to time, upon request by Lender Party, additional amounts sufficient to compensate Lender
Party for such increased cost or reduced amount receivable to the extent Lender Party is not compensated therefor in the computation of the interest rate applicable to the Loans. A statement as to the amount of such increased cost or reduced amount
receivable, prepared in good faith and in reasonable detail by Lender Party and submitted by Lender Party to Borrower, shall be conclusive and binding for all purposes absent manifest error in computation. 
 
Illegality and Impossibility. In the event that any applicable Law now or
hereafter in effect and whether or not presently applicable to Lender Party, or any interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by Lender Party with
any guideline, request or directive of such Governmental Authority (whether or not having the force of law), including without limitation exchange controls, shall make it unlawful or impossible for Lender Party to maintain any Loan under this
Agreement, Borrower shall upon receipt of reasonable notice thereof from Lender Party repay in full the then outstanding principal amount of such Loan, together with all accrued interest thereon to the date of payment and all amounts owing to Lender
Party, (a) on the last day of the then current interest period applicable to such Loan if Lender Party may lawfully continue to maintain such Loan to such day, or (b) immediately if Lender Party may not continue to maintain such Loan to such day.

 
Assignments and Participations. 
 
Each Lender may assign to one or more Eligible Assignees all or a portion of
its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment or Commitments, the Advances owing to it and the Note or Notes held by it); provided, however, that (i) each such
assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under this Agreement and the other Loan Documents, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a
Lender or an assignment of all of a Lender’s rights and obligations under this Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than $1,000,000.00, (iii) each such assignment shall be to an Eligible Assignee, and (iv) the parties to each such assignment shall execute and deliver to Agent, for its
acceptance, an Assignment and Acceptance, together with any Note or Notes subject to such assignment and a processing fee of $5,000.00. 
 
Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (i) the assignee
thereunder shall be a party hereto 
 

71 

and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder, and (ii) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). 
 
By executing and
delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such
assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any Lien created or purported to be created under or in connection with, this Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or any other Lender Party or the performance or observance by any
Lender Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the Financial
Statements and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that
it is an Eligible Assignee; (vi) such assignee appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a
Lender. 
 
Agent shall maintain at its principal office a copy of
each Assignment and Acceptance delivered to and accepted by it and a record of the names and addresses of the Lender Parties and the Commitment of, and principal amount of the Advances owing to, each Lender from time to time (the
“Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrower, Agent and Lender Parties may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available for inspection by Borrower or Lender at any reasonable time and from time to time upon reasonable prior notice. 
 
Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee, together with any Note or Notes subject to such assignment, Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form as required by this Agreement, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to Borrower and each Lender. In the 
 

72 

case of any assignment by Lender, within five Business Days after its receipt of such notice, Borrower, at
its own expense, shall execute and deliver to Agent in exchange for the surrendered Note or Notes a new Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Lender has retained a Commitment hereunder, a new Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the Note or Notes so surrendered. 
 
Each Lender may sell participations to one or more Persons (other than any
Lender Party or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it and the Note or Notes (if any) held by
it); provided, however, that (i) such Lender’s obligations under this Agreement (including, without limitation, its Commitments) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv) Borrower, Agent and the other Lender Parties shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Lender Party therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or release all or substantially all of the
Collateral. 
 
Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section, disclose to the assignee or participant or proposed assignee or participant, any information relating to Borrower furnished to such Lender by or on behalf of any
Borrower Party; provided, however, that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any confidential information received by it from such
Lender. 
 
Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a Lien in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Lenders in
accordance with Regulation A of the Board of Governors of the Federal Reserve System. 
 
Binding Effect, Assignment. This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and permitted assigns of the parties hereto. Borrower has no right to assign any of its rights or
obligations hereunder without the prior written consent of the Lender Parties. 
 
Entire Agreement, Amendments. This Agreement, including the Exhibits hereto, all of which are hereby incorporated herein by reference, and the documents executed and delivered pursuant hereto, constitute the entire agreement between
the parties, and may be amended only by a writing signed on behalf of each party. 
 

73 

 
Severability. If any provision
of this Agreement, the Notes, or any of the other Loan Documents shall be held invalid under any applicable Laws, such invalidity shall not affect any other provision of this Agreement or such other instrument or agreement that can be given effect
without the invalid provision, and, to this end, the provisions hereof are severable. 
 
Headings. The section and paragraph headings hereof are inserted for convenience of reference only, and shall not alter, define, or be used in construing the text of such sections and paragraphs. 
 
Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. 
 
Seal. This Agreement is intended to take effect as an instrument under seal. 
 
SUBMISSION TO JURISDICTION, GOVERNING LAW AND NOTICES 
 
Notices. Any notices or consents required or permitted by this Agreement shall be in writing and shall be deemed delivered if
delivered in person or if sent by certified mail, postage prepaid, return receipt requested, or telegraph, or facsimile, as follows, unless such address is changed by written notice hereunder: 
 
If to Borrowers 
 
Pemco Aviation Group, Inc. 
1943 50th Street North 
Birmingham, Alabama 35212 
Attention: Mr. John Lee

Facsimile #205-592-0195 
 
Pemco Aeroplex, Inc. 
1943 50th Street North 
Birmingham, Alabama 35212 
Attention: Mr. John Lee

Facsimile #205-592-0195 
 
Pemco World Air Services, Inc. 
1943 50th Street North 
Birmingham, Alabama 35212 
Attention: Mr. John Lee

Facsimile #205-592-0195 
 
Pemco Engineers, Inc. 
1943 50th Street North 
Birmingham, Alabama 35212 
Attention: Mr. John Lee

Facsimile #205-592-0195 
 

74 

 
Space Vector Corporation 
1943 50th Street North 
Birmingham, Alabama 35212 
Attention: Mr. John Lee 
Facsimile #205-592-0195

 
with a copy to:

 
Thomas C. Clark, III, Esq.

Maynard, Cooper & Gale, P.C. 
2400 AmSouth/Harbert Plaza, 1901 Sixth Avenue North 
Birmingham, Alabama 35203-2618 
Facsimile #(205) 254-1999 
 
If to SouthTrust (whether as a Lender or as Agent): 
 
SouthTrust Bank 
P.O. Box 2554 
Birmingham, Alabama 35290 
Attention: Alabama Corporate Banking Department 
Facsimile #(205) 254-5911 
 
with a copy to: 
 
Ray D. Gibbons, Esq. 
Burr & Forman LLP 
3100 SouthTrust Tower 
Birmingham, Alabama 35203 
Facsimile #(205) 458-5100 
 
If to Compass: 
 
Compass Bank 
Corporate Banking Center 
15 South 20th Street, Suite 201 
Birmingham, Alabama 35233 
Attention: Corporate Banking 
Facsimile #(205) 297-3926 
 
with a copy to: 
 
William S. Wright, Esq. 
Balch & Bingham LLP

1710 Sixth Avenue North, P.O. Box 306 
Birmingham, Alabama 35201-0306 
Facsimile #205-226-8798 
 
and with a copy to Agent 
 

75 

 
Governing Law. This Agreement
is entered into and performable in Jefferson County, Alabama, and the substantive Laws, without giving effect to principles of conflict of laws, of the United States and the State of Alabama shall govern the construction of this Agreement and the
documents executed and delivered pursuant hereto, and the rights and remedies of the parties hereto and thereto, except to the extent that the location of any Collateral in a state or Jurisdiction other than Alabama requires that the perfection of
Agent’s Lien, and the enforcement of certain of Agent’s remedies with respect to the Collateral, be governed by the Laws of such other state or Jurisdiction. 
 
SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL, ETC. 
 
BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY: 
 
SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF ALABAMA, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ALABAMA, AND APPELLATE COURTS FROM ANY THEREOF;

 
CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

 
AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS SET FORTH IN THIS AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH AGENT SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO; AND 
 
AGREES THAT NOTHING HEREIN SHALL
AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION. 
 
BORROWER AND LENDER PARTY HEREBY: 
 
IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM OF ANY TYPE AS TO ANY MATTER ARISING
DIRECTLY OR INDIRECTLY OUT OF OR WITH RESPECT TO THIS AGREEMENT, THE NOTE, ANY OF THE OTHER LOAN DOCUMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH; AND 
 
AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND
BARGAINED FOR AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY OF ANY KIND WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

76 

 
IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized representatives as of the day and year first above written. 
 
[SIGNATURE PAGES TO FOLLOW] 
 
 

77 

 
SIGNATURE
PAGE—BORROWERS 
 

	 PEMCO AVIATION GROUP, INC.

	
	 By:
	 	 /s/    John R.
Lee        

	 	

	 Its:
	 	 
	 	

 

	 PEMCO AEROPLEX, INC.

	
	 By:
	 	 /s/    John R.
Lee        

	 	

	 Its:
	 	 
	 	

 

	 PEMCO ENGINEERS, INC.

	
	 By:
	 	 /s/    John R.
Lee        

	 	

	 Its:
	 	 
	 	

 

	 PEMCO WORLD AIR SERVICES, INC.

	
	 By:
	 	 /s/    John R.
Lee        

	 	

	 Its:
	 	 
	 	

 

	 SPACE VECTOR CORPORATION

	
	 By:
	 	 /s/    John R.
Lee        

	 	

	 Its:
	 	 
	 	

 
 
 

78 

 
STATE OF ALABAMA 
COUNTY OF
                                        

 
I, the undersigned, a Notary Public in and for
said County in said State, hereby certify that
                                        ,
whose name as
                                        
of Pemco Aviation Group, Inc., a Delaware corporation, is signed to the foregoing instrument, and who is known to me, acknowledged before me that, being informed of the contents of such instrument, he/she, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation. 
 
Given under my hand and official seal, this the              day of December, 2002. 
 
[SEAL] 

	

	 Notary Public

	
	 My Commission Expires:
                                    

 
STATE OF ALABAMA

COUNTY OF
                                        

 
I, the undersigned, a Notary Public in and for
said County in said State, hereby certify that
                                        ,
whose name as
                                        
of Pemco Aeroplex, Inc., an Alabama corporation, is signed to the foregoing instrument, and who is known to me, acknowledged before me that, being informed of the contents of such instrument, he/she, as such officer and with full authority, executed
the same voluntarily for and as the act of said corporation. 
 
Given under my hand and official seal, this the              day of December, 2002. 
 
[SEAL] 

	

	 Notary Public

	
	 My Commission Expires:
                                    

 
STATE OF ALABAMA

COUNTY OF
                                        

 
I, the undersigned, a Notary Public in and for
said County in said State, hereby certify that
                                        ,
whose name as
                                        
of Pemco Engineers, Inc., a Delaware corporation, is signed to the foregoing instrument, and who is known to me, acknowledged before me that, being informed of the contents of such instrument, he/she, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation. 
 
Given under my hand and official seal, this the              day of December, 2002. 
 
[SEAL] 

	

	 Notary Public

	
	 My Commission Expires:
                                    

 
 

79 

 
STATE OF ALABAMA 
COUNTY OF
                                        

 
I, the undersigned, a Notary Public in and for
said County in said State, hereby certify that
                                        ,
whose name as
                                        
of Pemco World Air Services, Inc., a Delaware corporation, is signed to the foregoing instrument, and who is known to me, acknowledged before me that, being informed of the contents of such instrument, he/she, as such officer and with full
authority, executed the same voluntarily for and as the act of said corporation. 
 
Given under my hand and official seal, this the              day of December, 2002. 
 
[SEAL] 

	

	 Notary Public

	
	 My Commission Expires:
                                    

 
STATE OF ALABAMA

COUNTY OF
                                        

 
I, the undersigned, a Notary Public in and for
said County in said State, hereby certify that
                                        ,
whose name as
                                        
of Space Vector Corporation, a Delaware corporation, is signed to the foregoing instrument, and who is known to me, acknowledged before me that, being informed of the contents of such instrument, he/she, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation. 
 
Given under my hand and official seal, this the              day of December, 2002. 
 
[SEAL] 

	

	 Notary Public

	
	 My Commission Expires:
                                    

 

80 

 
SIGNATURE
PAGE—SOUTHTRUST 
 
 

	 SOUTHTRUST BANK, as a Revolving Loan
 Lender, as a Term Loan Lender, as Swing Line
 Lender, and as Issuing
Lender

	
	 By:
	 	 /s/    Austin
Davis        

	 	

	 Its:
	 	 
	 	

 
STATE OF ALABAMA

COUNTY OF JEFFERSON 
 
I, the undersigned, a Notary Public in and for said County in said State, hereby certify that
                                        ,
whose name as
                                        
             of SouthTrust Bank, an Alabama banking corporation, is signed to the foregoing instrument, and who is known to me, acknowledged before me that, being informed of the
contents of such instrument, he/she, as such officer and with full authority, executed the same voluntarily for and as the act of said banking corporation. 
 
Given under my hand and official seal, this the              day of
December, 2002. 
 
[SEAL] 

	

	 Notary Public

	
	 My Commission Expires:
                                    

 
Instructions for
Wire Transfers to Agent: 
SouthTrust Bank—Birmingham, Alabama 
ABA #062 0000 90 
Account No.:
                                        
             
Reference:                                   
                       
Attention:                                   
                         
 

81 

 
SIGNATURE
PAGE—COMPASS 
 
 

	 COMPASS BANK, as a Revolving Loan Lender
 and as a Term Loan Lender

	
	 By
	 	 /s/    Alex
Morton        

	 	

	 Its:
	 	 
	 	

 
 
STATE OF ALABAMA 
COUNTY OF JEFFERSON

 
I, the undersigned, a Notary Public in and for
said County in said State, hereby certify that
                                        ,
whose name as
                                        
of Compass Bank, an Alabama banking corporation, is signed to the foregoing instrument, and who is known to me, acknowledged before me that, being informed of the contents of such instrument, he/she, as such officer and with full authority, executed
the same voluntarily for and as the act of said banking corporation. 
 
Given under my hand and official seal, this the              day of December, 2002. 
 
[SEAL] 

	

	 Notary Public

	
	 My Commission Expires:
                                    

 
 

82 

 
EXHIBIT A

APPROVED CONTRACTS 
 
Current contracts with The Government of the United States of America 
 
Current contracts with Northwest Airlines 
 
Current contracts with General Electric Capital Aviation Services (GECAS) 
 
Current contracts with Lockheed Martin 
 
Current contracts with McDonnell Douglas Corporation, A Wholly Owned
Subsidiary of the Boeing Company 
 
Current contracts with The
Boeing Company 
 
New contracts with entities listed above on this
Exhibit A will be deemed automatically an Approved Contract if (i) the new contract is for similar services with reasonably similar terms and conditions, (ii) Borrower gives written notice to Agent that such contract is intended to be an Approved
Contract, and (iii) Agent approves such contract as an Approved Contract (and as a condition of such approval, Agent may require, among other things, a copy of the new contract and financial information regarding the party to the contract to
evidence that such party and such party’s creditworthiness are acceptable to Agent). 
 

83 

 
EXHIBIT B

ASSETS EXCLUDED AS COLLATERAL 
 
None 
 

84 

 
EXHIBIT C

FORM OF ASSIGNMENT AND ACCEPTANCE 
 
ASSIGNMENT AND ACCEPTANCE 
 
Reference is made to that certain Credit Agreement dated as of December
        , 2002 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Pemco Aviation Group, Inc., Pemco Aeroplex, Inc., Pemco World Air
Services, Inc., Pemco Engineers, Inc., Space Vector Corporation (the “Borrowers”), the Agent and the other Lender Parties (both as defined in the Credit Agreement). Terms defined in the Credit Agreement are used herein with the same
meaning. 
 
The “Assignor” and the
“Assignee” referred to on Schedule 1 hereto agree as follows: 
 
1.     The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor’s rights and obligations under the
Credit Agreement as of the date hereof equal to the percentage interest specified on Schedule 1 hereto of all outstanding rights and obligations under the Credit Agreement and the other Loan Documents. After giving effect to such sale and
assignment, the Assignee’s Commitments and the amount of the Advances owing to the Assignee will be as set forth on Schedule 1 hereto. 
 
2.    The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection
with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the
Loan Documents or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by
any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto; and (iv) attaches the Note or Notes held by the Assignor and requests that Agent exchange such Note or Notes for a new
Note or Notes payable to the order of the Assignee in an amount equal to the Commitments assumed by the Assignee pursuant hereto or new Notes payable to the order of the Assignee in an amount equal to the Commitments assumed by the Assignee pursuant
hereto and the Assignor in an amount equal to the Commitments retained by the Assignor under the Credit Agreement, respectively, as specified on Schedule 1 hereto. 
 
3.    The Assignee (i) confirms that it has received a copy of the Credit Agreement,
together with such financial information and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon Agent, the Assignor or any other Lender Party and based on such documents and information as it shall deem 
 

85 

appropriate at the time, continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to Agent by the
terms thereof, together with such powers and discretion as are reasonably incidental thereto; and (v) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender Party. 
 
4.    Following the execution of this Assignment and Acceptance, this document will be delivered to Agent for acceptance and recording by Agent. The effective date for this Assignment and Acceptance (the
“Effective Date”) shall be the date of acceptance hereof by Agent, unless otherwise specified on Schedule 1 hereto. 
 
5.    Upon such acceptance and recording by Agent, as of the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and the other Loan Documents and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender Party thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement and the other Loan Documents. 
 
6.    Upon such acceptance and recording by Agent, from and after the Effective Date, Agent shall make all payments
under the Credit Agreement and the Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees with respect thereto) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments under the Credit Agreement and the Notes for periods prior to the Effective Date directly between themselves. 
 
7.    This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of
Alabama. 
 
8.    This
Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. 
 
IN WITNESS WHEREOF, the Assignor and the Assignee have
caused Schedule 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon. 
 
 

	 [NAME OF ASSIGNOR], as Assignor
	 	 [NAME OF ASSIGNEE], as Assignee

	
	 By:                                     
                                        
       
  
 Title:                                    
                                        
     
  
 Date:                                    
                                 ,
20      
	 	 By:                                     
                                        
       
  
 Title:                                    
                                        
     
  
 Date:                                    
                                 ,
20      

 

86 

 
Accepted and Approved this
             
day of
                    , 20             
 
[NAME OF AGENT] 
 
By:                                     
                                        
        
 
Title:                                    
                                        
      
 
Date:                                    
                                 , 20      

 
 

87 

 
SCHEDULE 1

to 
ASSIGNMENT AND ACCEPTANCE 
 

	
	 A.
	  	 Assignor’s Credit Percentage before assignment
	  	  
	 %

	
	 B.
	  	 Assignor’s Credit Percentage being assigned
	  	  
	 %

	
	 C.
	  	 Assignor’s Credit Percentage remaining after assignment
	  	  
	 %

	
	 	  	 Note: The sum of B and C must total A.
	  	 	 
	
	 A.
	  	 Aggregate outstanding Advances of Assignor before assignment
	  	 $
	                 

	
	 B.
	  	 Aggregate outstanding Advances of Assignor after assignment
	  	 $
	  

	
	 C.
	  	 Aggregate outstanding Advances of Assignee after assignment
	  	 $
	  

	
	 A.
	  	 Maximum principal amount of Revolving Note payable to Assignor before
assignment
	  	 $
	  

	
	 B.
	  	 Maximum principal amount of Revolving Note payable to Assignor after
assignment
	  	 $
	  

	
	 C.
	  	 Maximum principal amount of Revolving Note payable to Assignee after
assignment
	  	 $
	  

	
	 A.
	  	 Maximum principal amount of Term Note payable to Assignor before
assignment
	  	 $
	  

	
	 B.
	  	 Maximum principal amount of Term Note payable to Assignor after
assignment
	  	 $
	  

	
	 C.
	  	 Maximum principal amount of Term Note payable to Assignee after
assignment
	  	 $
	  

 

	 [NAME OF ASSIGNOR], as Assignor
	 	 [NAME OF ASSIGNEE], as Assignee

	
	 By:                                     
                                        
       
  
 Title:                                    
                                        
     
  
 Date:                                    
                                 ,
20      
	 	 By:                                     
                                        
       
  
 Title:                                    
                                        
     
  
 Date:                                    
                                 ,
20      

 
Accepted and Approved
this              
day of
                    , 20             
 
[NAME OF AGENT] 
 
By:                                     
                                        
        
 
Title:                                    
                                        
      
 

88 

 
Date:                                    
                                 , 20      

 
 
 
 
EXHIBIT D 
FORM OF COLLATERAL REPORT 
 
COLLATERAL REPORT AND BORROWING BASE CERTIFICATE 
 
To:  SouthTrust Bank, as Agent 
P.O. Box 2554 
Birmingham, Alabama 35290 
Attention: Corporate Banking Department 
 
Pursuant to that certain Credit Agreement, dated as of December         , 2002 (as amended
from time to time, the “Credit Agreement”) among PEMCO AVIATION GROUP, INC., a Delaware corporation, PEMCO AEROPLEX, INC., an Alabama corporation, PEMCO ENGINEERS, INC., a Delaware corporation, PEMCO WORLD AIR
SERVICES, INC., a Delaware corporation, SPACE VECTOR CORPORATION, a Delaware corporation (the “Borrowers”), SOUTHTRUST BANK, an Alabama banking corporation, as Agent (the “Agent”), and the other Lender Parties
identified therein, the undersigned submits this Collateral Report and Borrowing Base Certificate. As used herein, capitalized words and phrases shall have the meanings set forth in the Credit Agreement. 
 

	
	 I.
	  	 Borrowing Base
	  	 	 
	
	 A.
	  	 Accounts Receivable due from prime contractors on all U.S. Government
contracts

	
	 	  	 1. Total unpaid balances of Accounts Receivable due from prime contractors on all
U.S. Government Contracts at                 , 20    .
	  	 $
	                     

	
	 	  	 2. All such Accounts which are not Eligible Accounts
	  	 $
	  

	
	 	  	 3. Item I.A.1. minus I.A.2.
	  	 $
	  

	
	 	  	 4. 85% of Item I.A.3
	  	 $
	  

	
	 B.
	  	 Accounts Receivable due from governmental and commercial
contracts

	
	 	  	 1. Total unpaid balances of Accounts Receivable due from governmental and commercial
contracts at                 , 20    .
	  	 $
	  

	
	 	  	 2. All such Accounts which are not Eligible Accounts
	  	 $
	  

	
	 	  	 3. Item I.B.1. minus I.B.2.
	  	 $
	  

	
	 	  	 4. 85% of Item I.B.3
	  	 $
	  

 

89 

	
	 C.
	  	 Accounts Receivable which are unbilled due to the terms of an applicable contract, but with respect to which work has
been performed and completed
	  	 	 
	
	 	  	 1. Total unpaid balances of Accounts Receivable which are unbilled due to the terms
of an applicable contract, but with respect to which work has been performed and completed at                 , 20    .
	  	 $
	                     

	
	 	  	 2. All such Accounts which are not Eligible Accounts
	  	 $
	  

	
	 	  	 3. Item I.C.1. minus I.C.2.
	  	 $
	  

	
	 	  	 4. 50% of Item I.C.3
	  	 $
	  

	
	 D.
	  	 Inventory
	  	 	 
	
	 	  	 1. Total value of Inventory
at            ,20.
	  	 $
	  

	
	 	  	 2. Amount of Inventory which is not Eligible Inventory
	  	 $
	  

	
	 	  	 3. Item I.D.1. minus Item I.D.2.
	  	 $
	  

	
	 	  	 4. The lesser of (i) $12,000,000.00, or (ii) 50% of Item I.D.3
	  	 $
	  

	
	 II.
	  	 Availability
	  	 	 
	
	 A.
	  	 1. Accounts Availability, Item I.A.4.
	  	 $
	  

	
	 	  	 2. Accounts Availability, Item I.B.4.
	  	 $
	  

	
	 	  	 3. Accounts Availability, Item I.C.4.
	  	 $
	  

	
	 	  	 4. Inventory Availability, Item I.D.4.
	  	 $
	  

	
	 	  	 5. Total Availability (total of Item II.A.1., plus Item II.A.2., plus Item II.A.3,
plus Item II.A.4)
	  	 $
	  

	
	 B.
	  	 Outstanding Revolving Loan Advances and Availability Reserves
	  	 	 
	
	 	  	 1. Outstanding Revolving Loan Advances
	  	 $
	  

	
	 	  	 2. Availability Reserves
	  	 $
	  

	
	 	  	 3. Total Outstanding Advances and Reserves Item II.B.1, plus Item
II.B.2
	  	 $
	  

	
	 C.
	  	 Availability
	  	 	 
	
	 	  	 The lesser of (a) Item II.A.5. minus Item II.B.3. or (b) $20,000,000.00 minus Item II
B.3. (mandatory prepayment if less than $0; availability if greater than $0)
	  	 $
	  

 
The undersigned
represents and warrants to Agent that: 
 

90 

 

	A.	 	The representations and warranties contained in the Credit Agreement are true and correct on and as of the date hereof. 

 

	B.	 	No Default or Event of Default has occurred and is continuing. 

 

	C.	 	All information set forth in this Collateral Report and Borrowing Base Certificate is true, complete, and accurate. 

 

	Executed	 	this              day of
                                        
        , 20    . 

 

	 PEMCO AVIATION GROUP, INC.

	
	 By:
	 	 
	 	

	 Its:
	 	 
	 	

 

	 PEMCO AEROPLEX, INC.

	
	 By:
	 	 
	 	

	 Its:
	 	 
	 	

 
 

	 PEMCO ENGINEERS, INC.

	
	 By:
	 	 
	 	

	 Its:
	 	 
	 	

 
 

	 PEMCO WORLD AIR SERVICES, INC.

	
	 By:
	 	 
	 	

	 Its:
	 	 
	 	

 

	 SPACE VECTOR CORPORATION

	
	 By:
	 	 
	 	

	 Its:
	 	 
	 	

 
 
 
 

91 

 
EXHIBIT E

FORM OF COMPLIANCE CERTIFICATE 
 
COMPLIANCE CERTIFICATE 
FOR THE PERIOD ENDING                             

 
To:    SouthTrust Bank, as Agent

          P.O. Box 2554 
          Birmingham, Alabama 35290 
          Attention: Corporate Banking Department 
 
Pursuant to that certain Credit Agreement, dated as of December
            , 2002 (as amended from time to time, the “Credit Agreement”) among PEMCO AVIATION GROUP, INC., a Delaware corporation, PEMCO AEROPLEX, INC., an
Alabama corporation, PEMCO ENGINEERS, INC., a Delaware corporation, PEMCO WORLD AIR SERVICES, INC., a Delaware corporation, SPACE VECTOR CORPORATION, a Delaware corporation (the “Borrowers”), SOUTHTRUST BANK, an
Alabama banking corporation, as Agent (the “Agent”), and the other Lender Parties identified therein, the undersigned submits this Compliance Certificate and certifies that the covenants and financial tests described in the Credit
Agreement are as follows: 
 

	
	 I.
	  	 Financial Statements and Reports
	  	 Compliance (Please Indicate)

	
	 A.
	  	 Annual CPA audited, Fiscal Year-End financial statements within 90 days after each
Fiscal Year-End
	  	 Yes
	  	 No

	
	 B.
	  	 Quarterly unaudited financial statements within 45 days after each
Quarter-End
	  	 Yes
	  	 No

	
	 C.
	  	 On or before the last day of each month, a Collateral Report for the immediately
preceding month
	  	 Yes
	  	 No

	
	 II.
	  	 Adjusted Tangible Net Worth
	  	 	  	 
	
	 	  	 Minimum of $24,300,000, plus 60% of Net Income as of each Quarter-End beginning March
31, 2003
	  	 	  	 
	
	 	  	 Actual Adjusted Tangible Net Worth for this reporting period equals $
                    
	  	 Yes
	  	 No

	
	 III.
	  	 Adjusted Liabilities to Adjusted Tangible Net Worth
	  	 	  	 
	
	 	  	 Maximum of 2.5 to 1.0 allowed.
	  	 	  	 
	
	 	  	 As of the month
ending                              
	  	 	  	 
	
	 	  	 $                            /$       
                       =                
              
	  	 Yes
	  	 No

	
	 	  	     Adjusted
                Adjusted
	  	 	  	 

 

92 

	
	 	  	     Liabilities
                TNW
                        Ratio
	  	 	  	 	  	 
	 IV.
	  	 Fixed Charge Coverage Ratio
	  	 	  	 	  	 
	 	  	 A minimum of 1.2 to 1.0 required at end of each calculated period.
	  	 	  	 	  	 
	 	  	 Numerator (Operating Income):
	  	 	  	 	  	 
	 	  	 EBITDA
	  	 $                    
	  	 	  	 
	 	  	 Less:    Income Tax Expense
	  	 $                    
	  	 	  	 
	 	  	 Plus:     Lease Expense
	  	 $                    
	  	 	  	 
	 	  	 TOTAL:
	  	 $                    
	  	 	  	 
	
	 	  	 Denominator (Fixed Charges):
	  	 	  	 	  	 
	 	  	 Regularly Scheduled Debt Payments
	  	 $                    
	  	 	  	 
	 	  	 Plus:    Interest Expense
	  	 $                    
	  	 	  	 
	 	  	             Lease & Rental Expense
	  	 $                    
	  	 	  	 
	 	  	             All payments on Unfunded Pension
Liability
	  	 $                    
	  	 	  	 
	 	  	 TOTAL:
	  	 $                    
	  	 	  	 
	
	 	  	 $                             divided by
        $                             =  
                                  
	  	 Yes
	  	 No

	 	  	     Numerator                                
        Denominator                    Ratio
	  	 	  	 	  	 

 
A.    The undersigned represents and warrants to Agent that the undersigned has individually reviewed the provisions of the Credit Agreement and that a review of the activities of Borrowers during the period
covered by this Compliance Certificate has been made by or under the supervision of the undersigned with a view to determining whether Borrowers have kept, observed, performed and fulfilled all of its obligations under the Credit Agreement.

 
B.    Borrowers have
observed and performed each and every undertaking contained in the Credit Agreement, and no Default or Event of Default has occurred and is continuing. 
 
C.    That all information set forth in this Compliance Certificate is true, complete, and accurate. 
 
Executed this
                     day of
                    , 20        . 
 

	 PEMCO AVIATION GROUP, INC.

	
	 By:
	 	 
	 	

	 Its:
	 	 
	 	

 

	 PEMCO AEROPLEX, INC.

 

93 

	
	 By:
	 	 
	 	

	 Its:
	 	 
	 	

 

	 PEMCO ENGINEERS, INC.

	
	 By:
	 	 
	 	

	 Its:
	 	 
	 	

 
 

	 PEMCO WORLD AIR SERVICES, INC.

	
	 By:
	 	 
	 	

	 Its:
	 	 
	 	

 
 

	 SPACE VECTOR CORPORATION

	
	 By:
	 	 
	 	

	 Its:
	 	 
	 	

 

94 

 
EXHIBIT F

LENDERS’ INITIAL CREDIT PERCENTAGES 
 

	 Lender

	  	 Revolving Loan Commitment

	  	 Term Loan Commitment

	  	 Total Commitments

	    	 Revolving Loan Credit Percentage

	 	    	 Term Loan Credit Percentage

	 	    	 Credit Percentage

	 
	 SouthTrust
	  	 $
	 12,500,000
	  	 $
	 2,500,000
	  	 $
	 15,000,000
	    	 62.5
	 %
	    	 50
	 %
	    	 60
	 %

	 Compass
	  	 $
	 7,500,000
	  	 $
	 2,500,000
	  	 $
	 10,000,000
	    	 37.5
	 %
	    	 50
	 %
	    	 40
	 %

	
	 Total
	  	 $
	 20,000,000
	  	 $
	 5,000,000
	  	 $
	 25,000,000
	    	 100
	 %
	    	 100
	 %
	    	 100
	 %

 

95 

 
EXHIBIT G

PERMITTED LIENS 
 
 

96 

 
SCHEDULE 9.3

LIST OF EQUITY AGREEMENTS 
 
Pemco Aviation - None, except as reflected in Pemco Aviation’s filings with the Securities
and Exchange Commission 
 
Pemco
Aeroplex - None 
 
Pemco
World - None 
 
Pemco
Engineers - None 
 
Space
Vector - None 
 

97 

 
SCHEDULE 9.4

LIST OF NAMES USED BY BORROWER AND PERSONS 
ACQUIRED IN LAST SIX YEARS 
 

	 Name of Borrower

	    	 Other Names Used

	
	 Pemco Aviation Group, Inc.
	    	 Precision Standard, Inc.*

	
	 Pemco Aeroplex, Inc
	    	 None

	
	 Pemco Engineers, Inc.
	    	 Precision Standard Corp. (former name)

	
	 Pemco World Air Services, Inc.
	    	 None

	
	 Space Vector Corporation
	    	 None

 

	*	 	Pemco Aviation Group, Inc. is the surviving corporation of a merger with Precision 

Standard, Inc., a Colorado corporation 
 

	(ii)	 	None 

 

98 

 
SCHEDULE 9.9

DISPUTED TAX MATTERS 
 
Notice from Alabama Department of Revenue regarding Precision Standard, Inc., a Colorado corporation, not filing an Alabama tax return in
1998—notice dated July 15, 2002. 
 

99 

 
SCHEDULE
9.12 
LISTING OF REAL PROPERTY OWNED OR LEASED BY BORROWER 
 

	 TYPE OF
 FACILITY

	  	 STREET
 ADDRESS

	  	 COUNTY/
 PARISH
 AND STATE

	  	 APPLICABLE
 BORROWER

	  	 RECORD
 OWNER

	 Industrial Building
	  	 9223 Deering Ave.
 Chatsworth, CA 91311-5804
	  	 Los Angeles County, California
	  	 Space Vector Corporation
	  	 Siegel &
 Associates, Inc.

	
	 Industrial Building
	  	 9223 Eton Ave.
 Chatsworth, CA 91311-5808
	  	 Los Angeles County, California
	  	 Space Vector Corporation
	  	 Siegel &
 Associates, Inc.

	
	 Industrial Building
	  	 9207 Deering Ave #B
 Chatsworth, CA 91311-6960
	  	 Los Angeles County, California
	  	 Space Vector Corporation
	  	 Siegel &
 Associates, Inc.

	
	 Industrial Building
	  	 2398 Railroad St.
 Corona, CA
 92880-5410
	  	 Riverside County, California
	  	 Pemco Engineers, Inc.
	  	 Marie Cook

	
	 Office Building
	  	 12000 E. 47th Ave. #400
 Denver, CO
 80239-3115
	  	 Denver County, Colorado
	  	 Pemco World Air Services, Inc.
	  	 Omni Development Corporation

	
	 Aircraft Manufacturing
 & Maintenance Facility
	  	 1943 50th St. North
 Birmingham, AL
 35212-1098
	  	 Jefferson County, Alabama
	  	 Pemco Aeroplex, Inc.
	  	 City of Birmingham, Alabama

	
	 Land
	  	 50th St. North
 Birmingham, AL
 35212
	  	 Jefferson County, Alabama
	  	 Pemco Aeroplex, Inc.
	  	 CSX Transportation

	 Aircraft Manufacturing &
 Maintenance Facility
	  	 100 Pemco Dr.
 Dothan, AL
 36303-9617
	  	 Houston County, Alabama
	  	 Pemco World Air Services, Inc.
	  	 Dothan-Houston County Airport Authority

	
	 Aircraft Maintenance Facility
	  	 4311 General Howard Dr.
 Clearwater, FL
 33762-3533
	  	 Pinellas County, Florida
	  	 Air International, Inc.
	  	 Pinellas County, Florida

	 —  —  —  —  —  Nothing Follows—  —  —  —  —  

 

100 

 
SCHEDULE
9.16 
LISTING OF PATENTS, COPYRIGHTS, ETC. 
 

101 

 
SCHEDULE
9.24 
INSURANCE POLICIES IN EFFECT 
 

	 TYPE OF COVERAGE

	  	 CARRIER

	  	 POLICY PERIOD

	  	 LIMITS

	 Products/Aviation General Liability
	  	 Lloyd’s Aircraft Builders Council
	  	 04/16/02-04/16/03
	  	 Limits of Liability
 Combined Single Limit
 Personal Injury/Property
 Damage $500,000,000 Grounding $125,000,000 Combined Single Limit Military and non Military $500,000,000

	
	 Property
	  	 Zurich
	  	 04/01/02-04/01/03
	  	 $275,000,000 Limit on Any one occurrence

	
	 Commercial Auto
	  	 Hartford
	  	 04/01/02-04/01/03
	  	 Limits of Liability $1,000,000

	
	 Workers Compensation
	  	 American International
	  	 04/01/02-04/01/03
	  	 Limits $1,000,000 each accident

	
	 Directors and Officers Liability
	  	 American International
	  	 04/01/02-04/01/03
	  	 Limit of Liability $10,000,000 Defense Cost, Securities Claims
$250,000

	
	 Comprehensive Dishonesty Disappearance & Destruction
	  	 National Union Fire
	  	 04/01/02-04/01/03
	  	 Limits of Liability $5,000,000

	
	 Foreign General Liability
	  	 Chubb
	  	 04/01/02-04/01/03
	  	 Limits of Liability $1,000,000 Per occurrence

	
	 Fiduciary Liability
	  	 National Union Fire
	  	 04/01/02-04/01/03
	  	 Limit of Liability $5,000,000

	
	 Kidnap and Ransom Extortion
	  	 National Union Fire
	  	 04/01/02-04/01/03
	  	 Limits $20,000,000

 

102 

 
SCHEDULE
10.2(B) 
PERMITTED TRANSFERS OF COLLATERAL 
 
Sale of Borrower’s lease and related leasehold improvements on the facility located at 4311 General
Howard Dr., Clearwater, Florida 33762-3533. 
 

103 

 
SCHEDULE
10.2(G) 
PERMITTED EQUITY TRANSACTIONS 
 
Transaction under Borrower’s Non-Qualified Stock Option Plan dated June 1, 1999, as amended and restated
May 17, 2001. 
 
Treasury stock transaction as
permitted in this Agreement. 
 

104 

 
SCHEDULE
10.3(G) 
LISTING OF AGREEMENTS CURRENTLY IN EFFECT 
WITH AFFILIATES AND PERMITTED POST-CLOSING 
 
None 
 

105 

 
SCHEDULE
10.7(A) 
LISTING OF LOCATIONS OF COLLATERAL 
 

	 Pemco Aviation Group, Inc.
	 	 1943 North 50th Street Birmingham, Alabama 35201

	
	 Pemco Aeroplex, Inc.
	 	 1943 North 50th Street Birmingham, Alabama 35201

	
	 Pemco World Air Services, Inc.
	 	 100 Pemco Drive Dothan, Alabama 36303

	
	 Pemco Engineers, Inc.
	 	 2398 Railroad Street Corona, California 92880

	
	 Space Vector Corporation
	 	 9223 Deering Avenue Chatsworth, California 91311

	
	 Source One Spares - (Consignment Inventory)
	 	 15370 Vickery Drive Houston, Texas 77032

 

 
SCHEDULE
10.16 
ADDITIONAL APPROVED BANK ACCOUNTS 
 

	 Lock Box Account
	  	 Wells Fargo Bank - ABA 1020-0007-6 - 2648019142

	
	 Lock Box Account
	  	 Wells Fargo Bank - ABA 1020-0007-6 - 0578128209

	
	 Lock Box Account
	  	 Wells Fargo Bank - ABA 1020-0007-6 - 0578128191

	
	 Lock Box Account
	  	 Wells Fargo Bank - ABA 1020-0007-6 - 0578128290

	
	 Lock Box Account
	  	 Wells Fargo Bank - ABA 1020-0007-6 - 0578128225

	
	 Tax Account
	  	 Wells Fargo Bank - ABA 1020-0007-6 - 2648019150

 
Current ACH arrangement
with AmSouth for Payroll to remain in effect.Loan Agreement

 
Exhibit 10.7

 

LOAN AGREEMENT 

 
 
 
Dated November 26, 2002

 
 
 
By and between 
 
 
 
DOTHAN-HOUSTON COUNTY AIRPORT AUTHORITY 
 
 
 
and 
 
 
 
PEMCO AVIATION GROUP, INC. 
 
 
 

 
The interest of the Dothan-Houston County Airport Authority in any payments, revenues and receipts derived
by it under this Loan Agreement has been assigned to SouthTrust Bank, as Trustee under Trust Indenture dated October 1, 2002 from the Dothan-Houston County Airport Authority. 
 

 
This Loan Agreement was prepared by Heyward C. Hosch of Walston, Wells, Anderson & Bains, LLP, Financial Center, 505 North 20th Street, Suite 500, Birmingham, Alabama 35203
             
 

 
LOAN
AGREEMENT 
 
This LOAN AGREEMENT
dated October 1, 2002 is made and entered into by the DOTHAN-HOUSTON COUNTY AIRPORT AUTHORITY, a public corporation and instrumentality under the laws of the State of Alabama and its successors and assigns (the “Issuer”), and
PEMCO AVIATION GROUP, INC., a Delaware corporation and its successors and assigns (the “User”). 
 
Recitals 
 
Pursuant to and for the purposes expressed in Article 1 of Chapter 3 of Title 4 of the Code of Alabama 1975 (the “Enabling Law”), the Issuer and the User have duly authorized, executed and
delivered this Loan Agreement simultaneously with the issuance and sale by the Issuer of $2,500,000 Variable/Fixed Rate Revenue Bonds (Pemco Aviation Group, Inc. Project) under and pursuant to Trust Indenture dated October 1, 2002 (the
“Indenture”) from the Issuer to SouthTrust Bank, as trustee, in order to finance “airport facilities” under the aforesaid law and more particularly described herein. 
 
NOW THEREFORE, for and in consideration of the premises and the mutual covenants and agreements herein
contained, the Issuer and the User hereby covenant, agree and bind themselves as follows: 
 
ARTICLE I 
 
DEFINITIONS AND REPRESENTATIONS 
 
SECTION 1.01    Definitions and Rules of Construction 
 
For all purposes of this Loan Agreement, except as otherwise expressly provided or unless the context otherwise requires: 
 
(1)    All references in
this instrument to designated “Articles”, “Sections” and other subdivisions are to the designated Articles, Sections and subdivisions of this instrument as originally executed. 
 
(2)    The terms
“herein”, “hereof” and “hereunder” and other words of similar import refer to this Loan Agreement as a whole and not to any particular Article, Section or other subdivision. 
 
(3)    Capitalized
terms used herein without definition shall have the respective meanings set forth therefor in the Indenture or the Enabling Law as such terms are defined in the recitals hereto. 
 
SECTION 1.02    Representations by the Issuer 
 
The Issuer makes the following representations 
 

1 

 
(a)    The Issuer is duly incorporated under the provisions of the Enabling Law and has the power to enter into the transactions contemplated by this Loan Agreement and to carry out its obligations hereunder. The
Issuer is not in default under any of the provisions contained in its Certificate of Incorporation, its by-laws, or in the laws of the State. By proper corporate action the Issuer has duly authorized the execution and delivery of the Bonds and the
Financing Documents to which it is a party, intending to be legally bound thereby. 
 
(b)    The Issuer has determined that the issuance of the Bonds, the advance of the proceeds thereof
to the User as provided in the Indenture and this Loan Agreement for the acquisition of the Project, and the operation of the Project by the User, will accomplish the purposes of the Enabling Law. 
 
(c)    The Bonds will be
issued and delivered contemporaneously with the delivery of this Loan Agreement. 
 
SECTION 1.03    Representations by the User 
 
The User makes the following representations: 
 
(a)    The User is a Delaware corporation and is duly qualified to do business in the State, is not in
violation of any provisions of its articles of incorporation, its bylaws or the laws of the State of Delaware, has power to enter into this Loan Agreement, and by proper corporate action has duly authorized the execution and delivery of this Loan
Agreement. 
 
(b)    The Project is located wholly within the State and will be used and operated by the User in accordance with the purposes of the Enabling Law. 
 
ARTICLE II 
 
ACQUISITION OF THE PROJECT 
 
SECTION 2.01    Advance of Bond Proceeds; Agreement to Acquire Project

 
(a) Simultaneously with the delivery of this
Loan Agreement the Issuer shall cause the Bond Proceeds to be deposited in the Construction Fund. The Issuer shall cause the Bond Proceeds to be advanced to the User by withdrawals from the Construction Fund, in accordance with the requirements of
the Indenture, for the payment of Project Costs (including reimbursement to the User for Project Costs) at such times and in such amounts as shall be directed by the User. The Bond Proceeds shall be used solely for the payment of Project Costs as
provided in the Indenture. 
 
(b) The User shall
acquire, construct, equip, and install the Project in accordance with the Enabling Law with due diligence and shall cause the Project to be placed in service as soon as practicable. 
 
(c) In the event the Bond Proceeds are insufficient to pay in full all Project Costs and to complete the
Project, the User shall be obligated to complete the acquisition and construction of the Project 

 

2 

at its own expense and the User shall pay any such deficiency and shall save the Issuer whole and harmless from any obligation to pay such
deficiency. The User shall not by reason of the payment of such deficiency from its own funds be entitled to any abatement of or diminution in User Agreement Payments. 
 
SECTION 2.02            No Warranty by
Issuer 
 
THE USER RECOGNIZES THAT SINCE
THE PLANS AND SPECIFICATIONS FOR ACQUIRING AND CONSTRUCTING THE PROJECT ARE FURNISHED BY IT, THE ISSUER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, NOR OFFERS ANY ASSURANCES THAT THE PROJECT WILL BE SUITABLE FOR THE USER’S PURPOSES OR NEEDS
OR THAT THE BOND PROCEEDS WILL BE SUFFICIENT TO PAY IN FULL ALL PROJECT COSTS. 
 
SECTION 2.03            Certificate of Completion of the Project 
 
(a)    The completion of the Project shall be evidenced to the Trustee by a certificate
signed by an Authorized User Representative on behalf of the User stating that all Project Costs have been paid, and all facilities and improvements necessary in connection with the Project have been acquired and installed and all costs and expenses
incurred in connection therewith have been paid. Notwithstanding the foregoing, such certificate shall state that it is given without prejudice to any rights against any vendor, contractor, subcontractor or other person not a party to this Loan
Agreement which exist at the date of such certificate or which may subsequently come into being. 
 
(b)    After the delivery of the aforesaid certificate to the Trustee, any moneys then remaining in the Construction Fund shall be transferred to the Bond Fund and applied as
provided in the Indenture. 
 
ARTICLE III

 
TERM AND PAYMENT PROVISIONS

 
SECTION
3.01            Term of Loan Agreement 
 
This Loan Agreement shall be effective upon delivery and shall remain in full force and effect until the Indenture Indebtedness is paid in
full except as otherwise provided herein with respect to any specific covenant which by its terms survives the termination of this Loan Agreement. 
 
SECTION 3.02            User Bond Payments; Draws Under Letter of
Credit 
 
(a)    The
User shall make User Bond Payments to the Trustee, for the account of the Issuer, at times and in amounts as follows: 
 
(1)    On or before 10:00 a.m. (Birmingham, Alabama time), on each Bond Payment Date, the User shall
pay to the Trustee, for the account of the Issuer, an amount equal to the Debt Service on the Bonds due on such Bond Payment Date; provided, however, that (i) any amount already on deposit in the Bond Fund on the due date of such User Bond Payment
and available for 

 

3 

the payment of Debt Service on such Bond Payment Date shall be credited against the amount of such User Bond Payment, and (ii) any amount
drawn by the Trustee pursuant to the Letter of Credit for the payment of such Debt Service shall be credited against such User Bond Payment; and 
 
(2)    On or before 10:00 a.m. (Birmingham, Alabama time), on each Tender Date, the User shall pay to
the Trustee, for the account of the Issuer, an amount equal to the purchase price of Bonds tendered (or deemed tendered) for purchase on such Tender Date; provided, however, that (i) any amount already on deposit in the Bond Purchase Fund on such
Tender Date that is available for the payment of the purchase price of such Tendered Bonds shall be credited against the amount of such User Bond Payment, and (ii) any amount drawn by the Trustee pursuant to the Letter of Credit for the payment of
the purchase price of such Tendered Bonds shall be credited against such User Bond Payment. 
 
(b)    On each Bond Payment Date the Trustee shall, without making any prior claim or demand on the User for the payment of User Bond Payments with respect to Bonds other than
Pledged Bonds, make a draw on the Letter of Credit in an amount equal to the amount of Debt Service due on such Bond Payment Date on Bonds other than Pledged Bonds. The User shall receive a credit against User Bond Payments for the amount so drawn.
No draw shall be made under the Letter of Credit with respect to Debt Service on Pledged Bonds and the User shall receive no credit against User Bond Payments with respect to Pledged Bonds for any amounts drawn under the Letter of Credit.

 
(c)    On each Tender Date
the Trustee shall, without making any prior claim or demand on the User for User Bond Payments with respect to the purchase price of Tendered Bonds, and without taking into account any proceeds anticipated from the remarketing of Bonds by the
Remarketing Agent, make a draw under the Letter of Credit in an amount equal to the purchase price of all Bonds to be purchased on such Tender Date. The User shall receive a credit against User Bond Payments for the amount so drawn. 
 
(d)    The User hereby authorizes and
directs the Trustee to draw moneys under the Letter of Credit in accordance with the provisions of the Indenture and this Loan Agreement to the extent necessary to pay the Debt Service on the Bonds or to pay the purchase price of Tendered Bonds if
and when due pursuant to the Indenture and the Letter of Credit. 
 
(e)    All User Bond Payments shall be made in funds immediately available to the Trustee at its Principal Office on the related Bond Payment Date or Tender Date, as the case may be. 
 
(f)    If any User Bond Payment is due on
a day which is not a Business Day, such payment may be made on the first succeeding day which is a Business Day with the same effect as if made on the day such payment was due. 
 
(g)    The User acknowledges, covenants, and agrees that: 
 
(1)    the amounts of the
User Bond Payments shall be determined on the basis of the amounts due to the Bondholders as Debt Service on the Bonds and not on the amount of Bond Proceeds deposited in the Construction Fund; and 
 

4 

 
(2)    until the Indenture Indebtedness is paid in full the User shall make User Bond Payments in such amounts and at such times as shall be necessary to enable the Trustee to pay in full in accordance with the
Indenture (i) all Debt Service on the Bonds when and as the same becomes due and payable, whether at stated maturity and due dates, by call for acceleration pursuant to Section 6.02 hereof, by optional or mandatory redemption, or otherwise, and (ii)
the purchase prices of all Tendered Bonds when and as the same become due and payable. 
 
SECTION 3.03        Administrative Expense Payments 
 
(a)    The User shall make Administrative Expense Payments to the Issuer or to the Trustee, as the case may be, as
follows: 
 
(1)    the acceptance fee of the Trustee and the annual (or other regular) fees, charges and expenses of the Trustee, Tender Agent and Remarketing Agent; 
 
(2)    any amount to
which the Trustee may be entitled under Section 13.07 of the Indenture; and 
 
(3)    the reasonable expenses of the Issuer incurred at the request of the User, or in the performance of its duties under any of the Financing Documents, or in connection with any
litigation which may at any time be instituted involving the Project, the Financing Documents, or in the pursuit of any remedies under the Financing Documents. 
 
(b)    All Administrative Expense Payments shall be due and payable within 10 days after receipt by the User of an
invoice therefor. 
 
SECTION
3.04        Overdue User Agreement Payments 
 
Any overdue User Bond Payment shall bear interest from the related Bond Payment Date until paid at the Post-Default Rate for overdue User Bond Payments. Any overdue Administrative Expense Payment shall
bear interest from the date due until paid at the Post-Default Rate for such Administrative Expense Payments specified in the Indenture. 
 
SECTION 3.05        Advances by Issuer or Trustee 
 
If the User shall fail to perform any of its covenants in
this Loan Agreement, the Issuer or the Trustee may, at any time and from time to time, after written notice to the User if no User Agreement Default exists, make advances to effect performance of any such covenant on behalf of the User. Any money so
advanced by the Issuer or the Trustee, together with interest at the base or prime rate of the Trustee plus 2%, shall be paid upon demand. 
 
SECTION 3.06        Indemnity of Issuer and Trustee 
 
(a)    The User agrees to pay, and to
indemnify and hold the Issuer and the Trustee and the Credit Obligor harmless against, any and all liabilities, losses, damages, claims or actions (including all 
 

5 

reasonable attorneys’ fees and expenses of the Issuer and Trustee and the Credit Obligor), of any
nature whatsoever incurred by the Issuer and the Trustee and the Credit Obligor without willful misconduct on their part arising from or in connection with their performance or observance of any covenant or condition on their part to be observed or
performed under the Financing Documents, including without limitation, (1) any injury to, or the death of, any person or any damage to property at the Project, or in any manner growing out of or connected with the use, nonuse, condition or
occupation of the Project or any part thereof, (2) any damage, injury, loss or destruction of the Project, (3) any other act or event occurring upon, or affecting, any part of the Project, (4) violation by the User of any contract, agreement or
restriction affecting the Project or the use thereof of which the User has notice and which shall have existed at the commencement of the term hereof or shall have been approved by the User, or of any law, ordinance or regulation affecting the
Project or any part thereof or the ownership, occupancy or use thereof, (5) the presence, as a result of the action or inaction of the User, of any pollutants, contaminants, toxic or hazardous wastes, and/or other substances regulated by law or
which might create a hazard to health and safety, hereafter on, under or included in the Project Site, and any clean up or other remedial action with respect to any thereof, and User’s violation of any law, rule, regulation, order, ruling,
notice or decree of any Governmental Authority relating to pollution or the protection of human health or the environment, and (6) liabilities, losses, damages, claims or actions arising out of or relating to (i) any errors or omissions of any
nature whatsoever contained in any legal proceedings or official representation pertaining to the Bonds and (ii) any fraud or misrepresentations or omissions contained in the proceedings of the Issuer relating to the issuance of the Bonds which, if
known to the purchasers of the Bonds, might be considered a material factor in their decision to purchase the Bonds, unless the same resulted from a representation or warranty of the Issuer or the Trustee or the Credit Obligor in the Financing
Documents or any certificate delivered by the Issuer or the Trustee or the Credit Obligor pursuant thereto being false or misleading in a material respect and such representation or warranty was not based upon a similar representation or warranty of
the User furnished to the Issuer or the Trustee or the Credit Obligor in connection therewith. 
 
(b)    The User hereby agrees that the Issuer and the Trustee and the Credit Obligor shall not incur any liability to the User, and shall be indemnified against all liabilities, in
exercising or refraining from asserting, maintaining or exercising any right, privilege or power of the Issuer or the Trustee under the Financing Documents if the Issuer or the Trustee as the case may be is acting in good faith and without willful
misconduct or in reliance upon a written request by the User. 
 
(c)    If any indemnifiable party shall be obligated to pay any claim, liability or loss, and if in accordance with all applicable provisions of this Section the User shall be obligated to indemnify and hold such
indemnifiable party harmless against such claim, liability or loss, then, in such case, the User shall have a primary obligation to pay such claim, liability or loss on behalf of such indemnifiable party and may not defer discharge of its indemnity
obligation hereunder until such indemnifiable party shall have first paid such claim, liability or loss and thereby incurred actual loss. 
 
(d)    Nothing in this Loan Agreement shall be deemed to provide indemnification to any indemnifiable party with
respect to liabilities arising from the fraud, negligence, reckless or willful misconduct of any of the indemnifiable party, to provide indemnification to any attorneys of any indemnifiable party with respect to liabilities arising from any
negligence, mistake, error or omission in any legal opinion provided by such party in its professional capacity, nor to provide indemnification to any accountants or financial advisors of any indemnifiable party with respect to liabilities arising
from any opinion, audit, report or other document provided by such party in its professional capacity. 
 

6 

 
(e)    In case any claim shall be made or any action shall be brought against one or more of the indemnifiable party, in respect of which indemnity is sought under this Section 3.06, then each indemnifiable party
against whom a claim has been made or an action has been brought shall promptly notify the User in writing, and the User shall promptly assume the defense of such claim or action, including the employment of counsel and the payment of all expenses.
Any indemnifiable party shall have the right to employ separate counsel in any such action and to participate in the defense or such action, but the fees and expenses of such counsel shall be at the expense or such indemnifiable party unless (a) the
employment of such counsel has been specifically authorized by the User in writing, or (b) the User has failed to assume the defense of such action and employ counsel within 20 Business Days after receiving the notice referred to herein, or (c) the
named parties to any such action (including any impleaded parties) include both such indemnifiable party and the User or an affiliate of the User, and such indemnifiable party shall have been advised by counsel chosen by the User that representation
of such indemnifiable party and the User or an affiliate of the User by the same counsel would be inappropriate under applicable standards of professional conduct due to actual or potential differing interests between them (in which case, if such
indemnifiable party notifies the User in writing that it elects to employ separate counsel at the expense of the User, the User shall not have the right to assume the defense of such action on behalf of such indemnifiable party). It is understood
that the User shall, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys at any time for all such indemnifiable party not having actual or potential differing interests among themselves, which firm shall be designated in writing by the User. The User shall be liable for any
settlement of any such action effected without its written consent, but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the User agrees to indemnify and hold harmless any indemnifiable party
from and against any loss, liability, damage or expense by reason of such settlement or judgment. 
 
(f)    Any provision of this Loan Agreement or any other Financing Document to the contrary notwithstanding, the
Issuer retains the right to (i) enforce any applicable federal or state law or regulation or resolution of the Issuer and (ii) enforce any rights accorded Issuer by federal or state law or regulation or resolution of the Issuer, and nothing in this
Loan Agreement shall be construed as an express or implied waiver thereof. 
 
(g)    The covenants of indemnity contained in this Section shall survive the termination of this Loan Agreement with respect to events or occurrences happening prior to or upon the
termination of this Loan Agreement and shall remain in full force and effect until the commencement of an action with respect to any such event or occurrence shall be prohibited by law. 
 

7 

 
SECTION
3.07        Obligations of User Unconditional 
 
The obligation of the User to make all User Agreement Payments and all other payments provided for herein and to perform and observe the
other agreements and covenants on its part herein contained shall be absolute and unconditional, irrespective of any rights of set-off, recoupment or counterclaim it might otherwise have against the Issuer. The User will not suspend or discontinue
any such payment or fail to perform and observe any of its other agreements and covenants contained herein or terminate this Loan Agreement for any cause whatsoever, including, without limiting the generality of the foregoing, any acts or
circumstances that may constitute an eviction or constructive eviction, failure of consideration or commercial frustration of purpose, the invalidity or unenforceability of the Bonds or any of the Financing Documents or any provision thereof, the
invalidity or unconstitutionality of the Enabling Law or any provision thereof, any damage to or destruction of the Project or any part thereof, the taking by eminent domain of title to or the right to temporary use of all or any part of the
Project, any failure of the Credit Obligor to make a payment pursuant to the Letter of Credit or to reinstate the appropriate amount thereof, any change in the tax or other laws or administrative rulings, actions or regulations of the United States
of America or of the State or any political or taxing subdivision of either thereof, or any failure of the Issuer to perform and observe any agreement or covenant, whether express or implied, any duty, liability or obligation arising out of or in
connection with this Loan Agreement. Notwithstanding the foregoing, the User may, at its own cost and expense and in its own name or in the name of the Issuer, prosecute or defend any action or proceeding, or take any other action involving third
persons which the User deems reasonably necessary in order to secure or protect its rights hereunder. 
 
ARTICLE IV 
 
ASSIGNMENT OF LOAN AGREEMENT 
 
SECTION 4.01        Assignment by User 
 
The User may assign this Loan Agreement and its obligations hereunder with the consent of the Credit Obligor and without the consent of
Issuer or the Trustee or the Holders, subject to the following conditions: 
 
(1)    The User will not assign this Loan Agreement to any person unless the operations of such person are consistent with, and in furtherance of, the purpose of the Enabling Law.
The User shall, prior to any such assignment, deliver to the Trustee and the Credit Obligor an Opinion of Bond Counsel acceptable to the Trustee to the effect that such assignment will not cause the interest on the Bonds to be Taxable. 
 
(2)    The User shall,
within 30 days after the delivery thereof, furnish to the Trustee a true and complete copy of each such assignment. 
 

8 

 
SECTION
4.02        Assignment by Issuer 
 
The Issuer has, simultaneously with the delivery of this Loan Agreement, assigned its interest in and pledged any money receivable under this Loan Agreement (other than certain rights to
indemnification and reimbursement) to the Trustee as security for payment of the Bonds, and the User hereby consents to such assignment and pledge. The Issuer has in the Indenture obligated itself to follow the instructions of the Trustee or the
Bondholders or a certain percentage thereof in the election or pursuit of any remedies herein vested in it. The Trustee shall have all rights and remedies herein accorded to the Issuer and any reference herein to the Issuer shall be deemed, with the
necessary changes in detail, to include the Trustee, and the Trustee and the Bondholders are deemed to be third party beneficiaries of the covenants, agreements and representations of the User herein contained. Neither the Issuer nor the User will
unreasonably withhold any consent herein or in the Indenture required of either of them. The User shall not be deemed to be a party to the Indenture or the Bonds and reference in this Loan Agreement to the Indenture and the Bonds shall not impose
any liability or obligation upon the User other than its specific obligations and liabilities undertaken in this Loan Agreement. 
 
ARTICLE V 
 
COVENANTS AND REPRESENTATIONS OF THE USER 
 
Until the Indenture Indebtedness is paid in full: 
 
(a)    Except as otherwise permitted by
the Credit Documents, the User will maintain and preserve its existence as a Delaware corporation and will not voluntarily dissolve or merge or consolidate with, or transfer substantially all of its assets to another Person without first discharging
its obligations under this Loan Agreement. 
 
(b)    The User will do, execute, acknowledge and deliver such further acts, conveyances, mortgages, financing statements and assurances as the Issuer or the Trustee shall require for accomplishing the purposes of
the Financing Documents. The User will cause this Loan Agreement, any amendments to this Loan Agreement and other instruments of further assurance, including financing statements and continuation statements, to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed in such places as may be required by law fully to preserve and protect the rights of the Issuer and the Trustee to all property comprising the Trust Estate. 
 
ARTICLE VI 
 
EVENTS OF DEFAULT AND REMEDIES 
 
SECTION
6.01        Events of Default 
 
Any one or more of the following shall constitute an event of default (a “User Agreement Default”) under this Loan Agreement (whatever the reason for such event and whether it shall be
voluntary or 
 

9 

 
involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): 
 
(1)    default in the payment of any User Bond Payment when such User Bond Payment becomes due and
payable; or 
 
(2)    default in the performance, or breach, of any covenant or warranty of the User in this Loan Agreement (other than a covenant or warranty, a default in the performance or breach of which is elsewhere in this
Section specifically described), and the continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the User and the Credit Obligor by the Issuer or by the Trustee a written notice
specifying such default or breach and requiring it to be remedied and stating that such notice is a “notice of default” hereunder; or 
 
(3)    the occurrence of an Act of Insolvency with respect to the User; or 
 
(4)    The occurrence of
an event of default under the Indenture. 
 
SECTION 6.02        Remedies on Default 
 
Whenever any such User Agreement Default shall have happened and be continuing, the Issuer or the Trustee may, with the consent of the
Credit Obligor, take any of the following remedial steps: 
 
(1)    Declare a User Bond Payment to be immediately due and payable in the amount required to pay in full all Indenture Indebtedness, whereupon said User Bond Payment in said
amount shall become immediately due and payable; 
 
(2)    Take whatever proceedings may appear necessary or desirable at law or in equity to collect the User Bond Payments then due, whether by declaration or otherwise, or to enforce any obligation or
covenant or agreement of the User under this Loan Agreement or by law. 
 
SECTION 6.03        Availability of Remedies 
 
(a)    No remedy herein conferred upon or reserved to the Issuer or the Trustee is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Loan Agreement or now or hereafter existing at law or in equity or by statute. No delay or
omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof but any such right or power may be exercised from time to time and as often as may be deemed
expedient. 
 
(b)    In the
event any agreement contained in this Loan Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach
hereunder. 
 
(c)    All
rights, remedies and powers provided by this Article may be exercised only to the extent the exercise thereof does not violate any applicable provision of law in the premises, and all the 
 

10 

provisions of this Article are intended to be subject to all applicable mandatory provisions of law which
may be controlling in the premises and to be limited to the extent necessary so that they will not render this Loan Agreement invalid or unenforceable. 
 
SECTION 6.04        Agreement to Pay Attorneys’ Fees and Expenses 
 
In the event the User should default under any of the
provisions of this Loan Agreement and the Issuer or the Trustee (in its own name or in the name and on behalf of the Issuer) should employ attorneys or incur other expenses for the collection of rent or the enforcement of performance or observance
of any obligation or agreement on the part of the User herein contained, the User will on demand therefor pay to the Issuer or the Trustee (as the case may be) the reasonable fee of such attorneys and such other reasonable expenses so incurred.

 
ARTICLE VII 
 
INTERNAL REVENUE CODE 
 
SECTION
7.01        Covenants Regarding Section 103 and Sections 141-150 of the Code 
 
(a)    The Issuer and the User do each hereby covenant and agree for the benefit of the Owners that neither the Issuer
nor the User will take any action, omit to take any action, permit any action to be taken or fail to require any action to be taken, which would cause the interest payable with respect to the Bonds to be or become Taxable. Without limiting the
generality of the foregoing, the User covenants and agrees that (a) the proceeds of the Bonds shall not be used or applied in such manner as to cause any Bond to be or become an “arbitrage bond” as that term is defined in Section 148 of
the Code, (b) ninety-five percent (95%) or more of the net proceeds will be used for the acquisition of “airports” (within the meaning of Treas. Reg. ‘1.103-8(e)), (c) the net proceeds of the Bonds shall not be used for the
acquisition, construction, reconstruction or improvement of any property which would cause the average maturity of the Bonds to exceed one hundred twenty percent (120%) of the average reasonably expected economic life of the facilities financed with
the net proceeds of the Bonds, within the meaning of Section 147(b) of the Code, (d) none of the net proceeds shall be used to acquire (directly or indirectly) any land (or any interest therein) to be used for farming purposes; (e) less than
twenty-five percent (25%) of the net proceeds shall be used to acquire (directly or indirectly) the Project Site or any other land (or any interest therein), (f) none of the net proceeds shall be used to acquire any property or any interest therein
(including, without limitation, buildings, structures, facilities, improvements, equipment, machinery or other personal property) the first use of which property was not pursuant to such acquisition with the proceeds, if such property is personal
property, and if such property is a building (and the equipment therefor), unless “rehabilitation expenditures” are made with respect to such property in an amount not less than fifteen percent (15%) of the cost of such property financed
with the proceeds of the Bonds within two years after the date such property was acquired, all within the meaning of Section 147(d) of the Code; (g) neither the Bonds nor any proceeds therefrom shall ever be federally guaranteed, as such term is
defined in Section 149(b) of the Code, except as expressly permitted by said Section 149(b), and (h) no more than two percent of the face amount of the Bonds shall be used to pay issuance costs. 
 

11 

 
(b)    The User, acting on behalf of the Issuer, shall, in a timely manner, make all determinations and calculations, file all reports, forms, and returns, remit all moneys and take all other action necessary for
compliance with the provisions of Section 148(f) (or any successor provision) of the Internal Revenue Code with respect to rebate payments to the United States of America. 
 
(c)    The Issuer and the User hereby agree that the Bond Proceeds shall be applied
solely to Project Costs and the Project shall be located on real property owned by the Issuer and leased to the User, acting through Pemco World Air Services, Inc. as a subsidiary and Affiliate thereof, pursuant to the Lease Agreement. 
 
(d)    Pursuant to Section 142(b)(1)(B) of
the Internal Revenue Code the User, for itself and all Affiliates thereof and all successors in interest under the Lease Agreement, does hereby: 
 
(1)    make an irrevocable election (binding on the User and all all Affiliates thereof and successors
in interests under the Lease Agreement) not to claim depreciation or an investment credit with respect to the Project, 
 
(2)    represent and warrant that the term of the Lease Agreement (32 years) is not more than 80% of
the reasonably expected economic life of the Project (40 years), and 
 
(3)    agree that the User (and all Affiliates thereof and all successors in interest under the Lease Agreement) shall have no option to purchase the Project other than at fair
market value as of the time such option is exercised. 
 
(e)    The User, for itself and all Affiliates thereof and all successors in interest under the Lease Agreement, does hereby represent, warrant, certify and declare that: 
 
(1)    the Project shall
be operated as a hanger for the repair, maintenance and overhaul of aircraft and the Project will directly serve the general public within the meaning of Treas. Reg. Section 1.103-8(a)(2), 
 
(2)    the Project must
be located at, or in close proximity to, the take off and landing area in order to perform its function, 
 
(3)    the Project shall be used solely for servicing aircraft and enabling aircraft to take off and
land. 
 
SECTION
7.02        User’s Obligation Upon Determination of Taxability 
 
(a)    Upon the occurrence of a Determination of Taxability, the Trustee shall notify the User in writing that all
Outstanding Bonds shall be subject to mandatory redemption in accordance with the terms thereof on the date specified by the Trustee, which date shall be within 90 days after such Determination of Taxability irrespective of whether the User has
violated any covenant or representation in this Loan Agreement. Within seven days after the receipt of such notice the User shall pay to the Trustee the amount required to pay in full all Indenture Indebtedness. 
 

12 

 
(b)    There shall be credited against such payment otherwise required by this Section all amounts which shall have been paid to the Trustee pursuant to the Letter of Credit with respect to such payment of Debt
Service on the Outstanding Bonds. 
 
(c)    Upon payment by the User of the amount specified in subsection (c) of this Section or upon a draw by the Trustee on the Letter of Credit which shall be made by the Trustee in a timely manner so as to effect
the redemption within the number of days specified in Section 7.02(a) hereof, the Bonds shall be redeemed as provided therein and the Issuer and the Trustee shall take any and all action required to effect such redemption. 
 
ARTICLE VIII 
 
SPECIAL COVENANTS OF ISSUER AND 
PROVISIONS OF GENERAL APPLICATION 
 
SECTION 8.01        Corporate Existence of Issuer 
 
The Issuer shall not consolidate with or merge into any other
corporation or transfer its property substantially as an entirety except as provided in the Indenture. 
 
SECTION 8.02        Redemption of Bonds by Issuer 
 
(a)    The Issuer will redeem any or all
of the Bonds in accordance with any scheduled mandatory redemption provisions of the Bonds and the Indenture and upon the occurrence of any event or contingency requiring the mandatory redemption of Bonds, all in accordance with the applicable
provisions of the Bonds and the Indenture. 
 
(b)    If no User Agreement Default exists, the Issuer will exercise any right of optional redemption with respect to the Bonds only upon the written request of the User and in accordance with the Indenture.

 
SECTION
8.03        Investment of Funds 
 
The Issuer shall cause any money held as a part of the Special Funds which may by the terms of the Indenture be invested to be so invested or reinvested by the Trustee in Qualified Investments solely
at the request of, and solely as directed by, the User. The Issuer and the Trustee shall have no liability or responsibility for any loss resulting from investments made pursuant to this Section. 
 
SECTION
8.04        Issuer’s Liabilities Limited 
 
(a)    The covenants and agreements contained in this Loan Agreement shall never constitute or give rise to a personal
or pecuniary liability or charge against the general credit of the Issuer, and in the event of a breach of any such covenant or agreement, no personal or pecuniary liability or charge payable directly or indirectly from the general assets or
revenues of the Issuer shall arise therefrom. Nothing 
 

13 

contained in this Section, however, shall relieve the Issuer from the observance and performance of the
covenants and agreements on its part contained herein. 
 
(b)    No recourse under or upon any covenant or agreement of this Loan Agreement shall be had against any past, present or future incorporator, officer or member of the Board of Directors of the Issuer, or of any
successor corporation, either directly or through the Issuer, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Loan Agreement is
solely a corporate obligation, and that no personal liability whatever shall attach to, or is or shall be incurred by, any incorporator, officer or member of the Board of Directors of the Issuer or any successor corporation, or any of them, under or
by reason of the covenants or agreements contained in this Loan Agreement. 
 
SECTION 8.05        Prior Agreements 
 
This Loan Agreement shall completely and fully supersede all prior agreements, both written and oral, between the Issuer and the User
relating to the issuance of the Bonds and the acquisition of the Project. Neither the Issuer nor the User shall hereafter have any rights under such prior agreements, except as otherwise herein provided, but shall look solely to this Loan Agreement
for definition and determination of all of their respective rights, liabilities and responsibilities relating to the Project. 
 
SECTION 8.06        Execution Counterparts 
 
This Loan Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same instrument. 
 
SECTION 8.07        Binding Effect; Governing Law 
 
This Loan Agreement shall inure to the benefit of, and shall
be binding upon, the Issuer, the User and their respective successors and assigns. This Loan Agreement shall be governed exclusively by the applicable laws of the State. 
 
SECTION 8.08        Severability 
 
In the event any provision of this Loan Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 
 
SECTION 8.09        Article and Section Captions 
 
The Article and Section headings and captions contained herein
are included for convenience only and shall not be considered a part hereof or affect in any manner the construction or interpretation hereof. 
 
SECTION 8.10        Notices 
 
(a)    Any request, demand, authorization,
direction, notice, consent, or other document provided or permitted by this Loan Agreement to be made upon, given or furnished to, or filed with, the Issuer, the 
 

14 

User, the Trustee or the Credit Obligor shall be sufficient for every purpose hereunder if in writing and
(except as otherwise provided in this Loan Agreement) either (i) delivered personally to the party or, if such party is not an individual, to an officer, or other legal representative of the party to whom the same is directed (provided that any
document delivered personally to the Trustee must be delivered to a corporate trust officer at its Principal Office during normal business hours) at the address specified in Section 1.10 of the Indenture or (ii) mailed by first-class, registered or
certified mail, postage prepaid, addressed as specified in Section 1.10 of the Indenture. Any of such parties may change the address for receiving any such notice or other document by giving notice of the change to the other parties as provided in
this Section. 
 
(b)    Any
such notice or other document shall be deemed delivered when actually received by the party to whom directed (or, if such party is not an individual, to an officer, or other legal representative of the party) at the address specified pursuant to
this Section, or, if sent by mail, three days after such notice or document is deposited in the United States mail, proper postage prepaid, addressed as provided above. 
 
SECTION 8.11    Amendment of Indenture and this Loan Agreement

 
(a)    The Issuer will
not cause or permit the amendment of the Indenture or the execution of any amendment or supplement to the Indenture without the prior written consent of the User. Prior to the termination of the Credit Documents the Issuer and the User shall have no
power to modify, alter, amend or terminate this Loan Agreement without the prior written consent of the Credit Obligor. Prior to the payment in full of the Indenture Indebtedness, the Issuer and the User shall have no power to modify, alter, amend
or terminate this Loan Agreement without the prior written consent of the Trustee and then only as provided in the Indenture. The Issuer will not amend the Indenture or any indenture supplemental thereto without the prior written consent of the
User. 
 
(b)    This Loan
Agreement may not be amended unless there has first been delivered to the Trustee, the Credit Obligor, the User and the Remarketing Agent an Opinion of Bond Counsel that such action will not, whether solely or in conjunction with any other fact or
circumstance, cause the interest on the Bonds to be or to become Taxable. 
 

15 

 
IN WITNESS
WHEREOF, the Issuer and the User have caused this Loan Agreement to be executed, sealed and attested in their respective names by officers thereof duly authorized thereunto. 
 
DOTHAN-HOUSTON COUNTY AIRPORT AUTHORITY 
 
By:
                    /s/Dick
Bell                     
 
    Chair 
 
S E A L 
 
Attest:
                                        

                    Secretary 
 
PEMCO AVIATION GROUP, INC. 
 
By:
                    /s/John R.
Lee                     
 
    Its 
 
S E A L         
 
Attest:
                                        

 
            Its
                                        

 
 
 

16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00047-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00047-of-00352.parquet"}]]