Document:

Exhibit 10.1

 

EXECUTION COPY

 

FIRST LIEN CREDIT AGREEMENT

 

among

 

KRATOS DEFENSE & SECURITY SOLUTIONS,
INC.,

 

KEYBANK NATIONAL ASSOCIATION,

 

as Administrative Agent,

Lender and

Letter of Credit Issuing Lender

 

and

 

THE OTHER FINANCIAL

INSTITUTIONS PARTIES HERETO

 

with

 

KEYBANC CAPITAL MARKETS,

 

as Lead Arranger and

Book Runner

 

Dated as of December 31, 2007

 

$25,000,000 Revolving Credit Facility

$50,000,000 Term Loan Facility

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  SECTION I. DEFINITIONS AND ACCOUNTING TERMS

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  DEFINED TERMS

  	
  1

  
	
  1.2

  	
  USE OF CERTAIN TERMS

  	
  32

  
	
  1.3

  	
  ACCOUNTING TERMS

  	
  32

  
	
  1.4

  	
  ROUNDING

  	
  32

  
	
  1.5

  	
  EXHIBITS AND SCHEDULES

  	
  32

  
	
  1.6

  	
  REFERENCES TO AGREEMENTS AND LAWS

  	
  33

  
	
   

  	
   

  	
   

  
	
  SECTION II. THE COMMITMENTS AND EXTENSIONS OF CREDIT

  	
  33

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  LOANS; MAXIMUM AMOUNTS

  	
  33

  
	
  2.2

  	
  BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS

  	
  34

  
	
  2.3

  	
  LETTERS OF CREDIT.

  	
  34

  
	
  2.4

  	
  PREPAYMENTS

  	
  38

  
	
  2.5

  	
  REDUCTION OR TERMINATION OF
  COMMITMENTS

  	
  42

  
	
  2.6

  	
  PRINCIPAL AND INTEREST

  	
  43

  
	
  2.7

  	
  FEES

  	
  44

  
	
  2.8

  	
  COMPUTATION OF INTEREST AND FEES

  	
  44

  
	
  2.9

  	
  MAKING PAYMENTS

  	
  45

  
	
  2.10

  	
  FUNDING SOURCES

  	
  46

  
	
  2.11

  	
  COLLATERAL

  	
  46

  
	
  2.12

  	
  ADDITIONAL LOAN COMMITMENTS

  	
  46

  
	
   

  	
   

  
	
  SECTION III. TAXES, YIELD PROTECTION AND ILLEGALITY

  	
  48

  
	
   

  	
   

  
	
  3.1

  	
  TAXES

  	
  48

  
	
  3.2

  	
  ILLEGALITY

  	
  49

  
	
  3.3

  	
  INABILITY TO DETERMINE RATES

  	
  50

  
	
  3.4

  	
  INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY

  	
  50

  
	
  3.5

  	
  BREAKFUNDING COSTS

  	
  51

  
	
  3.6

  	
  MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION

  	
  51

  
	
  3.7

  	
  SURVIVAL

  	
  52

  
	
   

  	
   

  	
   

  
	
  SECTION IV. CONDITIONS PRECEDENT TO EXTENSIONS OF
  CREDIT 

  	
  52

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  CONDITIONS OF INITIAL EXTENSION
  OF CREDIT

  	
  52

  
	
  4.2

  	
  CONDITIONS TO ALL EXTENSIONS OF
  CREDIT

  	
  56

  
	
   

  	
   

  	
   

  
	
  SECTION V. REPRESENTATIONS AND WARRANTIES

  	
  57

  
				

 

 

i

 

	
  5.1

  	
  EXISTENCE AND QUALIFICATION;
  POWER; COMPLIANCE WITH LAWS

  	
  57

  
	
  5.2

  	
  POWER; AUTHORIZATION; ENFORCEABLE
  OBLIGATIONS

  	
  58

  
	
  5.3

  	
  NO LEGAL BAR

  	
  58

  
	
  5.4

  	
  EQUITY SECURITIES AND OWNERSHIP

  	
  58

  
	
  5.5

  	
  FINANCIAL STATEMENTS; PROJECTIONS; NO MATERIAL ADVERSE
  EFFECT

  	
  59

  
	
  5.6

  	
  LITIGATION

  	
  59

  
	
  5.7

  	
  NO DEFAULT; CONTINUED BUSINESS

  	
  59

  
	
  5.8

  	
  OWNERSHIP OF PROPERTY; LIENS

  	
  60

  
	
  5.9

  	
  TAXES

  	
  60

  
	
  5.10

  	
  MARGIN REGULATIONS; INVESTMENT COMPANY ACT

  	
  60

  
	
  5.11

  	
  ERISA COMPLIANCE; EMPLOYEE MATTERS

  	
  60

  
	
  5.12

  	
  INTANGIBLE ASSETS

  	
  61

  
	
  5.13

  	
  COMPLIANCE WITH LAWS

  	
  62

  
	
  5.14

  	
  ENVIRONMENTAL COMPLIANCE

  	
  62

  
	
  5.15

  	
  INSURANCE

  	
  62

  
	
  5.16

  	
  SWAP OBLIGATIONS

  	
  62

  
	
  5.17

  	
  SOLVENCY

  	
  62

  
	
  5.18

  	
  DISCLOSURE

  	
  62

  
	
  5.19

  	
  PATRIOT ACT

  	
  63

  
	
  5.20

  	
  RELATED TRANSACTIONS

  	
  63

  
	
  5.21

  	
  SECURITY INTEREST IN COLLATERAL

  	
  64

  
	
  5.22

  	
  PERMITS, ETC

  	
  64

  
	
  5.23

  	
  MATERIAL CONTRACTS

  	
  64

  
	
  5.24

  	
  CERTAIN FEES

  	
  64

  
	
  5.25

  	
  AFFILIATE TRANSACTIONS

  	
  64

  
	
  5.26

  	
  DORMANT SUBSIDIARIES

  	
  64

  
	
   

  	
   

  	
   

  
	
  SECTION VI. AFFIRMATIVE COVENANTS

  	
  65

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  FINANCIAL STATEMENTS

  	
  65

  
	
  6.2

  	
  CERTIFICATES, NOTICES AND OTHER
  INFORMATION

  	
  66

  
	
  6.3

  	
  PAYMENT OF TAXES

  	
  69

  
	
  6.4

  	
  PRESERVATION OF EXISTENCE

  	
  69

  
	
  6.5

  	
  MAINTENANCE OF PROPERTIES

  	
  69

  
	
  6.6

  	
  MAINTENANCE OF INSURANCE

  	
  69

  
	
  6.7

  	
  COMPLIANCE WITH LAWS

  	
  70

  
	
  6.8

  	
  INSPECTION RIGHTS

  	
  70

  
	
  6.9

  	
  KEEPING OF RECORDS AND BOOKS OF
  ACCOUNT

  	
  71

  
	
  6.10

  	
  COMPLIANCE WITH ERISA

  	
  71

  
	
  6.11

  	
  COMPLIANCE WITH AGREEMENTS

  	
  71

  
	
  6.12

  	
  SUBSIDIARY GUARANTIES AND PLEDGE OF OWNERSHIP INTERESTS

  	
  71

  
	
  6.13

  	
  FURTHER ASSURANCES

  	
  72

  
	
  6.14

  	
  USE OF PROCEEDS

  	
  72

  
	
  6.15

  	
  LANDLORD WAIVERS

  	
  73

  

 

ii

 

	
  6.16

  	
  ADDITIONAL MATERIAL REAL ESTATE ASSETS

  	
  73

  
	
  6.17

  	
  SWAP CONTRACTS

  	
  73

  
	
  6.18

  	
  RATINGS

  	
  73

  
	
  6.19

  	
  DORMANT SUBSIDIARIES

  	
  73

  
	
   

  	
   

  	
   

  
	
  SECTION VII. NEGATIVE COVENANTS

  	
  74

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  INDEBTEDNESS

  	
  74

  
	
  7.2

  	
  LIENS

  	
  76

  
	
  7.3

  	
  FUNDAMENTAL CHANGES

  	
  78

  
	
  7.4

  	
  DISPOSITIONS

  	
  78

  
	
  7.5

  	
  INVESTMENTS

  	
  79

  
	
  7.6

  	
  RESTRICTED PAYMENTS

  	
  81

  
	
  7.7

  	
  ERISA

  	
  81

  
	
  7.8

  	
  CHANGE IN NATURE OF BUSINESS

  	
  82

  
	
  7.9

  	
  TRANSACTIONS WITH AFFILIATES

  	
  82

  
	
  7.10

  	
  USE OF PROCEEDS

  	
  82

  
	
  7.11

  	
  CERTAIN INDEBTEDNESS PAYMENTS,
  ETC.

  	
  82

  
	
  7.12

  	
  FINANCIAL COVENANTS

  	
  82

  
	
  7.13

  	
  ACCOUNTING CHANGES

  	
  83

  
	
  7.14

  	
  GUARANTY UNDER MATERIAL
  INDEBTEDNESS AGREEMENT

  	
  83

  
	
  7.15

  	
  AMENDMENTS TO ORGANIZATION AGREEMENTS, MATERIAL CONTRACTS
  AND SECOND LIEN LOAN DOCUMENTS

  	
  83

  
	
  7.16

  	
  NO FURTHER NEGATIVE PLEDGES

  	
  84

  
	
  7.17

  	
  RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS

  	
  84

  
	
  7.18

  	
  SALES AND LEASE BACKS

  	
  84

  
	
  7.19

  	
  DEPOSIT ACCOUNTS

  	
  85

  
	
  7.20

  	
  ISSUANCE OF DISQUALIFIED CAPITAL STOCK

  	
  85

  
	
   

  	
   

  
	
  SECTION VIII. EVENTS OF DEFAULT AND REMEDIES

  	
  85

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  EVENTS OF DEFAULT

  	
  85

  
	
  8.2

  	
  REMEDIES UPON EVENT OF DEFAULT

  	
  87

  
	
   

  	
   

  	
   

  
	
  SECTION IX. ADMINISTRATIVE AGENT

  	
  89

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT

  	
  89

  
	
  9.2

  	
  DELEGATION OF DUTIES

  	
  90

  
	
  9.3

  	
  LIABILITY OF ADMINISTRATIVE AGENT

  	
  90

  
	
  9.4

  	
  RELIANCE BY ADMINISTRATIVE AGENT

  	
  90

  
	
  9.5

  	
  NOTICE OF DEFAULT

  	
  91

  
	
  9.6

  	
  CREDIT DECISION; DISCLOSURE OF
  INFORMATION BY ADMINISTRATIVE AGENT

  	
  91

  
	
  9.7

  	
  INDEMNIFICATION OF ADMINISTRATIVE
  AGENT

  	
  91

  
	
  9.8

  	
  ADMINISTRATIVE AGENT IN
  INDIVIDUAL CAPACITY

  	
  92

  
	
  9.9

  	
  SUCCESSOR ADMINISTRATIVE AGENT

  	
  92

  

 

iii

 

	
  9.10

  	
  DESIGNATION OF ARRANGER; NO
  AFFILIATE LIABILITY

  	
  93

  
	
   

  	
   

  	
   

  
	
  SECTION X. MISCELLANEOUS

  	
  93

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  AMENDMENTS; CONSENTS

  	
  93

  
	
  10.2

  	
  TRANSMISSION AND EFFECTIVENESS OF COMMUNICATIONS AND
  SIGNATURES

  	
  94

  
	
  10.3

  	
  ATTORNEY COSTS, EXPENSES AND
  TAXES

  	
  95

  
	
  10.4

  	
  SUCCESSORS AND ASSIGNS

  	
  96

  
	
  10.5

  	
  SET-OFF

  	
  99

  
	
  10.6

  	
  SHARING OF PAYMENTS

  	
  99

  
	
  10.7

  	
  NO SETOFF

  	
  99

  
	
  10.8

  	
  NO WAIVER; CUMULATIVE REMEDIES

  	
  100

  
	
  10.9

  	
  USURY

  	
  100

  
	
  10.10

  	
  COUNTERPARTS

  	
  101

  
	
  10.11

  	
  INTEGRATION

  	
  101

  
	
  10.12

  	
  NATURE OF LENDERS’ OBLIGATIONS

  	
  101

  
	
  10.13

  	
  SURVIVAL OF REPRESENTATIONS AND
  WARRANTIES

  	
  101

  
	
  10.14

  	
  INDEMNITY BY BORROWER

  	
  101

  
	
  10.15

  	
  NONLIABILITY OF LENDER

  	
  102

  
	
  10.16

  	
  NO THIRD PARTIES BENEFITED

  	
  103

  
	
  10.17

  	
  SEVERABILITY

  	
  103

  
	
  10.18

  	
  CONFIDENTIALITY

  	
  103

  
	
  10.19

  	
  FURTHER ASSURANCES

  	
  105

  
	
  10.20

  	
  HEADINGS

  	
  105

  
	
  10.21

  	
  TIME OF THE ESSENCE

  	
  105

  
	
  10.22

  	
  FOREIGN LENDERS

  	
  105

  
	
  10.23

  	
  REMOVAL AND REPLACEMENT OF LENDERS

  	
  105

  
	
  10.24

  	
  GOVERNING LAW

  	
  106

  
	
  10.25

  	
  WAIVER OF RIGHT TO TRIAL BY JURY

  	
  106

  
	
  10.26

  	
  PATRIOT ACT NOTIFICATION

  	
  107

  
	
  10.27

  	
  ENTIRE AGREEMENT

  	
  107

  

 

iv

 

EXHIBITS

 

	
  A

  	
  Form of
  Request for Extension of Credit

  
	
   

  	
   

  
	
  B

  	
  Form of
  Compliance Certificate

  
	
   

  	
   

  
	
  C-1

  	
  Form of
  Term Loan Note

  
	
   

  	
   

  
	
  C-2

  	
  Form of
  Revolving Note

  
	
   

  	
   

  
	
  D

  	
  Form of
  Assignment and Assumption

  
	
   

  	
   

  
	
  E

  	
  Form of
  Pledge and Security Agreement

  
	
   

  	
   

  
	
  F

  	
  Form of
  Multi-Party Guaranty

  
	
   

  	
   

  
	
  G

  	
  Forms
  of Opinions of Counsel

  
	
   

  	
   

  
	
  H

  	
  Form of
  Collateral Questionnaire

  
	
   

  	
   

  
	
  I

  	
  Form of
  Intercreditor Agreement

  
	
   

  	
   

  
	
  J

  	
  Form of
  Acceptance Letter

  
	
   

  	
   

  
	
  K

  	
  Form of
  Landlord Waiver

  

 

v

 

SCHEDULES

 

	
  2.1

  	
  Commitments
  and Pro Rata Shares

  
	
   

  	
   

  
	
  5.1(a)

  	
  Exceptions
  to Good Standing

  
	
   

  	
   

  
	
  5.1(b)

  	
  Subsidiaries

  
	
   

  	
   

  
	
  5.4

  	
  Equity
  Securities and Ownership

  
	
   

  	
   

  
	
  5.11

  	
  ERISA
  Compliance; Employee Matters

  
	
   

  	
   

  
	
  5.15

  	
  Insurance

  
	
   

  	
   

  
	
  5.25

  	
  Affiliate
  Transactions

  
	
   

  	
   

  
	
  5.26

  	
  Dormant
  Subsidiaries

  
	
   

  	
   

  
	
  7.1(b)

  	
  Existing
  Indebtedness and Liens

  
	
   

  	
   

  
	
  7.1(e)

  	
  Existing
  Foreign Intercompany Indebtedness

  
	
   

  	
   

  
	
  7.4

  	
  Disposition
  of Property

  
	
   

  	
   

  
	
  7.5

  	
  Investments

  
	
   

  	
   

  
	
  7.12(a)

  	
  Maximum
  First Lien Leverage Ratio

  
	
   

  	
   

  
	
  7.12(b)

  	
  Maximum
  Total Leverage Ratio

  
	
   

  	
   

  
	
  7.12(c)

  	
  Minimum
  Liquidity Ratio

  
	
   

  	
   

  
	
  7.12(d)

  	
  Minimum
  Fixed Charge Coverage Ratio

  
	
   

  	
   

  
	
  7.12(e)

  	
  Minimum
  Consolidated EBITDA

  
	
   

  	
   

  
	
  10.2

  	
  Offshore
  and Domestic Lending Offices, Addresses for Notices

  

 

vi

 

FIRST LIEN CREDIT AGREEMENT

 

This
FIRST LIEN CREDIT AGREEMENT (“Agreement”) is entered into as of December 31,
2007, by and among KRATOS DEFENSE & SECURITY SOLUTIONS, INC., a
Delaware corporation (“Borrower”), KEYBANK NATIONAL ASSOCIATION, as Administrative
Agent, as a Lender and as Issuing Lender hereunder, such other lenders as shall
from time to time be party hereto, with KEYBANC CAPITAL MARKETS as Lead
Arranger and Book Runner hereunder.

 

RECITAL

 

Borrower
has requested that Lenders and Issuing Lender provide (i) a senior secured
revolving credit facility of up to $25,000,000 and (ii) a senior secured
term loan facility of up to $50,000,000, and Lenders, Issuing Lender and
Administrative Agent are willing to do so on the terms and conditions set forth
herein.

 

In
consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

 

SECTION I.  DEFINITIONS AND
ACCOUNTING TERMS

 

1.1                               DEFINED TERMS.   As used in this Agreement, the following terms
shall have the meanings set forth below:

 

“Acceptance Letter” means an acceptance letter
among Borrower, Administrative Agent and a New Lender, substantially in the
form attached hereto as Exhibit J.

 

“Acquisition” means any transaction or
series of related transactions for the purpose of or resulting, directly or
indirectly, in (a) the acquisition of all or substantially all of the
assets of a Person, or of any line of business or any division of a Person, (b) the
acquisition of 100% of the capital stock, partnership interests or equity of
any Person, or otherwise causing any Person to become a wholly-owned
Subsidiary, or (c) a merger or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary).

 

“Additional Fourth Quarter 2007 Add-Backs” means the
following: (i) amounts representing general corporate expenses of the
Borrower and its Subsidiaries expected in good faith by the Borrower not to be
incurred in the future (other than in the fiscal quarter ending March 31,
2008) and not to exceed $954,000, (ii) operating losses associated with
the Borrower’s ENS operations not to exceed $383,000, (iii) non-recurring
legal expenses not to exceed $1,260,000 and (iv) expected savings in
respect of Haverstick corporate overhead not to exceed $475,000; provided, however, for avoidance of doubt, if Borrower or
any of its Subsidiaries receives in any future period any insurance proceeds in
respect of the legal expenses referred to in clause (iii) of this
definition, such proceeds shall not be taken into account in calculating
Consolidated EBITDA for such period.

 

1

 

“Additional First Quarter 2008 Add-Backs” means amounts
representing general corporate expenses of the Borrower and its Subsidiaries
expected in good faith by the Borrower not to be incurred in the future and not
to exceed $275,000.

 

“Administrative Agent” means KeyBank National
Association, in its capacity as administrative agent under any of the Loan
Documents, or any successor administrative agent.

 

“Administrative Agent’s Office” means
Administrative Agent’s address and, as appropriate, account as set forth on
Schedule 10.2, or such other address or account as Administrative Agent
hereafter may designate by written notice to Borrower and Lenders.

 

“Administrative Agent-Related Persons” means
Administrative Agent (including any successor agent), together with its
Affiliates (including, in the case of KeyBank, the Arranger), and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.

 

“Affiliate” means any Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with another Person.  A Person
shall be deemed to be “controlled by” any other Person if such other Person
possesses, directly or indirectly, power (a) to vote 10% or more of the
securities (on a fully diluted basis) having ordinary voting power for the
election of directors or managing general partners; or (b) to direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise.

 

“Agreement” means this First Lien
Credit Agreement, as amended, restated, extended, supplemented or otherwise
modified in writing from time to time.

 

“Annual Payments” means, with respect to any Material
Contract, (x) the total amount of the payments expected to be paid or
received, as applicable,  under such
Material Contract (y) divided by the total number of years of the term of
such Material Contract.

 

“Applicable Margin” means the following amounts
per annum (expressed in basis points per annum), based upon the Total Leverage
Ratio:

 

	
   

  	
   

  	
  Revolving

  	
   

  	
  Revolving

  	
   

  	
   

  	
   

  	
  Term Loan

  	
   

  	
  Term Loan Base

  
	
   

  	
   

  	
  Offshore Rate

  	
   

  	
  Base Rate

  	
   

  	
  Commitment

  	
   

  	
  Offshore Rate

  	
   

  	
  Rate Margin

  
	
  Total Leverage Ratio

  	
   

  	
  Margin (bps)

  	
   

  	
  Margin (bps)

  	
   

  	
  Fee (bps)

  	
   

  	
  Margin (bps)

  	
   

  	
  (bps)

  
	
  X > 3.50

  	
   

  	
  325.0

  	
   

  	
  225.0

  	
   

  	
  75.0

  	
   

  	
  750.0

  	
   

  	
  650.0

  
	
  X is > 2.50 but
  < 3.50

  	
   

  	
  275.0

  	
   

  	
  175.0

  	
   

  	
  60.0

  	
   

  	
  750.0

  	
   

  	
  650.0

  
	
  X is > 2.00 but
  < 2.50

  	
   

  	
  250.0

  	
   

  	
  150.0

  	
   

  	
  50.0

  	
   

  	
  750.0

  	
   

  	
  650.0

  
	
  X is > 1.50 but
  < 2.00

  	
   

  	
  225.0

  	
   

  	
  125.0

  	
   

  	
  40.0

  	
   

  	
  750.0

  	
   

  	
  650.0

  
	
  X < 1.5

  	
   

  	
  200.0

  	
   

  	
  100.0

  	
   

  	
  30.0

  	
   

  	
  750.0

  	
   

  	
  650.0

  

 

For purposes of Borrower’s
payment of interest in accordance with Section 2.6 and the Commitment Fee
specified in Section 2.7(a), each Applicable Margin calculated in
accordance with the most recent Compliance Certificate received by
Administrative Agent shall be in effect from the date such Compliance
Certificate is received by Administrative Agent to but excluding the date the
next Compliance Certificate is received; provided, however,
that (i) during any such period beginning on or after the receipt by the
Administrative Agent of the Compliance 

 

2

 

Certificate with respect to the fiscal year
ending December 31, 2008 for which the Total Leverage Ratio is less than
or equal to 3.25:1.00, the Applicable Margin with respect to Term Loans for
such period shall be reduced by 50 basis points from the rate otherwise set
forth in the table above, (ii) the Applicable Margin from the Closing Date
until Administrative Agent’s receipt of Borrower’s first Compliance Certificate
shall be determined as if the Total Leverage Ratio were in excess of 3.50:1.00,
and (iii) if at any time Borrower has not submitted to Administrative
Agent the applicable information as and when required under Section 6.2(a),
the Applicable Margin shall be determined as if the Total Leverage Ratio were
in excess of 3.50:1.00.  For the
avoidance of doubt, any reduction in the Applicable Margin pursuant to the grid
or provisions above shall not be permanent and shall be in effect only for so
long as the applicable Compliance Certificate demonstrates that the Total
Leverage Ratio is at or below the requisite level.  In the event that any financial statement
delivered pursuant to Section 6.1 or Compliance Certificate delivered
pursuant to Section 6.2 is shown to be inaccurate (regardless of whether
this Credit Agreement or the Commitments are in effect when such inaccuracy is
discovered), and such inaccuracy, if corrected would have led to a higher
Applicable Margin for any period (an “Applicable Period”)
than the Applicable Margin applied for such Applicable Period, then (i) Borrower
shall immediately deliver to Administrative Agent a correct Compliance
Certificate for such Applicable Period, (ii) the Applicable Margin shall
be determined by reference to the corrected Compliance Certificate (but in no
event shall the Lenders owe any amounts to Borrower), and (iii) Borrower
shall immediately pay to the Administrative Agent the additional interest owing
as a result of such increased Applicable Margin for such Applicable Period,
which payment shall be promptly applied by the Administrative Agent in
accordance with the terms hereof.  This
paragraph shall not limit the rights of the Administrative Agent and the
Lenders hereunder.

 

“Applicable Payment Date” means, (a) as to any
Offshore Rate Loan, the last day of the relevant Interest Period or every
ninety days, whichever is earlier, any date that such Loan is prepaid or
converted in whole or in part and the Maturity Date; and (b) as to any
other Obligations; the last Business Day of each calendar quarter and the
Maturity Date; provided, further, that interest
accruing at the Default Rate shall be payable from time to time upon demand of
Administrative Agent.

 

“Approved Fund” means any Fund
that is administered or managed by (a) a Lender, (b) an Affiliate of
a Lender or (c) an entity or an Affiliate of an entity that administers or
manages a Lender.

 

“Arranger” means KeyBanc Capital
Markets, in its capacity as “Lead Arranger” and “Book Runner.”

 

“Asset Sale” means a
Disposition in one transaction or a series of transactions, of all or any part
of Borrower’s or any of its Subsidiaries’ businesses, assets or properties of
any kind, whether real, personal, or mixed and whether tangible or intangible,
whether now owned or hereafter acquired, including, without limitation,
contract rights, intellectual property and the Equity Securities of any of
Borrower’s Subsidiaries, other than inventory sold or leased in the ordinary
course of business.

 

3

 

“Assignment and Assumption” means
an assignment and assumption entered into by a Lender and an assignee (with the
consent of any party whose consent is required by Section 10.4), and
accepted by the Administrative Agent, in substantially the form of Exhibit D
or any other form approved by the Administrative Agent.

 

“Attorney Costs” means and includes all
reasonable attorney’s and other fees and disbursements of any law firm or other
external counsel and the allocated cost of internal legal services and all
disbursements of internal counsel.

 

“Audited Financial Statements” means the
audited consolidated balance sheet, income statement and cash flows of Borrower
and its Subsidiaries for each 52 or 53 week year, as applicable, on or about December 31.

 

“Bankruptcy Code” means Title 11
of the United States Code entitled “Bankruptcy,” as now and hereafter in
effect, or any successor statute.

 

“Base Rate” means a fluctuating rate
per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1
% and (b) the rate of interest in effect for such day as publicly
announced from time to time by KeyBank as its “prime rate.” Such prime rate is
a rate set by KeyBank based upon various factors including KeyBank’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.  Any change in such
prime rate announced by KeyBank shall take effect at the opening of business on
the day specified in the public announcement of such change.  If KeyBank ceases to establish or publish a
prime rate, the applicable Base Rate thereafter shall be instead the prime rate
reported in The Wall Street Journal (or the average prime rate if a high and a
low prime rate are therein reported).

 

“Base Rate Loan” means a Loan made in not
less than the Minimum Amount pursuant to Requisite Notice to Administrative
Agent by delivering a Request for Extension of Credit not later than the
Requisite Time and specified to be a Base Rate Loan or if not designated
otherwise.  Interest on each Base Rate
Loan shall be calculated using the Applicable Margin for the Base Rate
effective as of the date of the advance of such Base Rate Loan.

 

“Borrower” has the meaning set forth
in the introductory paragraph hereto.

 

“Borrowing” and “Borrow” each mean a borrowing of Loans
hereunder.

 

“Business Day” means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banks in Cleveland,
Ohio; New York, New York; San Francisco, California; or (if interest is being
determined by reference to the Offshore Rate) London, England are generally authorized
or obligated, by law or executive order, to close.

 

“Call Protection Expiry
Date” has the meaning set forth in Section 2.4(a).

 

“Capital Leases” means any and all leases
under which certain obligations are required to be capitalized on the books of a
lessee in accordance with GAAP.

 

4

 

“Cash Equivalents” means, as at
any date of determination, (i) marketable securities (a) issued or
directly and unconditionally guaranteed as to interest and principal by the
United States Government, or (b) issued by any agency of the United States
the obligations of which are backed by the full faith and credit of the United
States, in each case maturing within one year after such date; (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within one year after such date and having, at the time
of the acquisition thereof, a rating of at least A-1 from S&P or at least
P-1 from Moody’s; (iii) commercial paper maturing no more than one year
from the date of creation thereof and having, at the time of the acquisition
thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates
of deposit or bankers’ acceptances maturing within one year after such date and
issued or accepted by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of Columbia
that (a) is at least “adequately capitalized” (as defined in the
regulations of its primary Federal banking regulator), and (b) has Tier 1
capital (as defined in such regulations) of not less than $100,000,000; and (v) shares
of any money market mutual fund that (a) has at least ninety five percent
(95%) of its assets invested continuously in the types of investments referred
to in clauses (i) and (ii) above, (b) has net assets of not less
than $500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody’s.

 

“Cash Acquisition Consideration” means the
amount of cash paid or payable in connection with an Acquisition including,
without limitation, (a) all amounts recorded on the books of Borrower or
any Subsidiary as deferred liabilities (whether or not characterized as an
earn-out) determined as of the Acquisition date, (b) contingent
liabilities (whether or not characterized as an earn-out) determined as of the
date paid, (c) Indebtedness assumed or incurred in connection with such Acquisition
and (d) Indebtedness of such Persons as are acquired in such Acquisition.

 

“Change of Control” means (a) the
acquisition of, or, if earlier, the shareholder or director approval of the
acquisition of, ownership or voting control, directly or indirectly,
beneficially or of record, on or after the Closing Date, by any Person or group
(within the meaning of Rule 13d-3 of the SEC under the Securities Exchange
Act of 1934, as then in effect), of (i) shares representing more than
thirty-five percent 35% of the aggregate ordinary Voting Power and/or economic
interest represented by the issued and outstanding capital stock of Borrower or
(ii) the power (whether or not exercised) to elect a majority of the
members of the board of directors (or similar governing body) of Borrower; (b) during
any period of twelve (12) consecutive months, the occupation of a majority of
the seats (other than vacant seats) on the board of directors or other
governing body of Borrower by Persons who were neither (i) nominated by
the board of directors or other governing body of Borrower nor (ii) appointed
by directors so nominated; (c) the occurrence of a change in control, or
other similar provision, as defined in any Material Indebtedness Agreement or (d) the
termination of the employment of Eric DeMarco by the Borrower, whether
initiated by the Borrower or by Mr. DeMarco, in substantially the role
served by him as of the Closing Date, unless an interim or permanent successor
reasonably acceptable to Administrative Agent and the Requisite Lenders is
immediately appointed, such acceptance not to be unreasonably withheld.

 

5

 

“Closing Date” means the date all the
conditions precedent in Section 4.1 are satisfied or waived in accordance
with Section 4.1.

 

“Code” means the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute thereto.

 

“Collateral” has the
meaning set forth in the Pledge and Security Agreement.

 

“Collateral Questionnaire” means a
certificate substantially in the form of Exhibit H that provides
information with respect to the personal or mixed property of each Credit
Party.

 

“Commitment” means, for each Lender, the
amount set forth opposite such Lender’s name on Schedule 2.1, as such amount
may be reduced or adjusted from time to time in accordance with the terms of
this Agreement (collectively, the “Combined
Commitments”).

 

“Commitment Fee” has the meaning set forth
in Section 2.7 hereof.

 

“Compliance Certificate” means a certificate substantially
in the form of Exhibit B, properly completed and signed by a Responsible
Officer of Borrower.

 

“Consolidated Capital
Expenditures” means, for any period, the aggregate of all
expenditures of Borrower and its Subsidiaries during such period determined on
a consolidated basis that, in accordance with GAAP, are or should be included
in “purchase of property and equipment (including the portion of liabilities
under any Capital Lease that is or should be capitalized in accordance with
GAAP) or which should otherwise be capitalized” including, for the avoidance of
doubt, expenditures in respect of software to the extent capitalized in
accordance with GAAP.

 

“Consolidated Current
Assets” means, as at any date of determination, the total assets of Borrower and
its Subsidiaries on a consolidated basis that may properly be classified as
current assets in conformity with GAAP after deducting any appropriate and
adequate reserves therefor in conformity with GAAP, excluding cash and Cash
Equivalents.

 

“Consolidated Current
Liabilities” means, as at any date of determination, the total
liabilities of Borrower and its Subsidiaries on a consolidated basis that may
properly be classified as current liabilities in conformity with GAAP,
excluding (i) the current portion of long term debt, (ii) other
Indebtedness with a stated maturity of less than one year that is outstanding
at such time and (iii) obligations in respect of revolving loans under any
working capital credit facility.

 

“Consolidated EBITDA” means, for any period,  (x) the sum of the following, provided that the items contained in
clauses (b)-(g) below shall be added to (a) only to the extent they
have been deducted in the calculation of Consolidated Net Income:

 

(a)           Consolidated Net Income; provided that all items of gain and income
that are properly classified as extraordinary in accordance with GAAP (but do
not fall within clauses (b)-(h) below) shall be excluded from such
Consolidated Net Income;

 

6

 

(b)           Consolidated Interest
Charges;

 

(c)           the amount of taxes, based
on or measured by income, used or included in the determination of such
Consolidated Net Income;

 

(d)           the amount of depreciation
and amortization expense deducted in determining such Consolidated Net Income,
including any impairment of goodwill or other purchased intangibles as defined
under FAS 142 or FAS 144;

 

(e)           any non-cash stock based compensation
charges in such period pursuant to GAAP;

 

(f)            the amount of non-cash costs
from the disposal of assets or changes to GAAP; and

 

(g)           the amount of earn-out or
similar payments required to be reported as compensation expense instead of
goodwill;

 

(h)           solely with respect to the
fiscal quarter ended December 31, 2007, the Additional Fourth Quarter 2007
Add-Backs;

 

(i)            solely with respect to the
fiscal quarter ended March 31, 2008, the Additional First Quarter 2008
Add-Backs;

 

(j)            upon the implementation of
FAS 141R, the amount of the purchase price and related transaction costs of any
Acquisition required to be expensed during such period that would otherwise
have been classified as goodwill prior to such implementation;

 

(k)           other non-cash items
reducing Consolidated Net Income (excluding any such non-cash item to the
extent that it represents an accrual or reserve for potential cash items in any
future period or amortization of a prepaid cash item that was paid in a prior
period);

 

minus

(x)            other non-cash items
increasing Consolidated Net Income for such period (excluding any such non-cash
item to the extent it represents the reversal of an accrual or reserve for
potential cash item in any prior period);

 

(y)           the amount of interest
income included in the determination of such Consolidated Net Income; and

 

(z)            the Rental Variance.

 

Notwithstanding the foregoing, for purposes
of calculating the Consolidated EBITDA for any period that includes any fiscal
quarter that ended prior to the Closing Date, the deemed Consolidated EBITDA
for such Fiscal Quarter shall be (i) for the fiscal quarter ended March 31,
2007, $4,776,000, (ii) for the fiscal quarter ended June 30, 2007,
$2,336,000 and (iii) for the fiscal quarter ended September 30, 2007,
$4,583,000.

 

7

 

“Consolidated Excess Cash Flow” means:

 

(i) with
respect to fiscal year 2008, an amount (if positive) determined for Borrower
and its Subsidiaries on a consolidated basis equal to:

 

(a) The
amount set forth on the audited Consolidated Statements of Cash Flows of
Borrower for fiscal year 2008 across from the heading “Net cash provided by
continuing operations”;

 

minus

 

(b) the
sum, without duplication, of the amounts for such period of:

 

(1) voluntary
and scheduled repayments of Indebtedness (excluding repayments of any revolving
credit indebtedness except to the extent the obligation of the relevant lenders
to make such revolving credit available is permanently reduced or terminated in
connection with such repayments, to the extent of such reduction or
termination);

 

(2) Consolidated
Capital Expenditures paid in cash (net of any proceeds of related financings
with respect to such expenditures); and

 

(3) the
proceeds used to make mandatory prepayments pursuant to Section 2.4(b)(i),
2.4(b)(ii) and 2.4(b)(vi), only to the extent included in clause (i)(a) above;
and

 

 (ii) for any period ending after fiscal
year 2008, an amount (if positive) determined for Borrower and its Subsidiaries
on a consolidated basis equal to:

 

(a) the
sum, without duplication, of the amounts for such period of:

 

(1) Consolidated
EBITDA;

 

(2) interest
income;

 

(3) extraordinary
cash gains and extraordinary cash other income; and

 

(4) the
Consolidated Working Capital Adjustment;

 

minus

 

(b) the
sum, without duplication, of the amounts for such period of:

 

(1) voluntary
and scheduled repayments of Indebtedness (excluding repayments of any revolving
credit indebtedness except to the extent the obligation of the relevant lenders
to make such revolving credit available is permanently reduced or terminated in
connection with such repayments, to the extent of such reduction or
termination);

 

(2) Consolidated
Capital Expenditures paid in cash (net of any proceeds of related financings
with respect to such expenditures);

 

8

 

(3) Consolidated
Interest Charges to the extent payable in cash;

 

(4) provisions
for current taxes based on income of Borrower and its Subsidiaries and payable
in cash with respect to such period; and

 

(5) the
proceeds used to make mandatory prepayments pursuant to Section 2.4(b)(i),
2.4(b)(ii) and 2.4(b)(vi), only to the extent included in clause (i)(a) above.

 

“Consolidated Interest Charges” means, for any
period, for Borrower and its Subsidiaries on a consolidated basis, the sum of (a) all
interest, premium payments, fees, charges and related expenses payable by
Borrower and its Subsidiaries in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
(b) the portion of rent payable by Borrower and its Subsidiaries with
respect to such period under Capital Leases that is treated as interest in
accordance with GAAP and (c) the portion of rent under any Synthetic Lease
Obligation that would be treated as interest in accordance with GAAP if the
Synthetic Lease Obligation were treated as a Capital Lease under GAAP.

 

“Consolidated Net Income” means, (i) the net
income (or loss) of Borrower and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP, minus (ii) the sum of:

 

(a)           the income (or loss) of any Person (other than a
Subsidiary of Borrower) in which any other Person (other than Borrower or any
of its Subsidiaries) has a joint interest, except to the extent of the amount
of dividends or other distributions actually paid to Borrower or any of its
Subsidiaries by such Person during such period, plus

 

(b)           the income (or loss) of any Person accrued prior to the
date it becomes a Subsidiary of Borrower or is merged into or consolidated with
Borrower or any of its Subsidiaries or that Person’s assets are acquired by
Borrower or any of its Subsidiaries; plus

 

(c)           the income (or loss) of any Subsidiary of Borrower to the
extent that the declaration or payment of dividends or similar distributions by
that Subsidiary of that income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary,
plus

 

(d)           any after tax gains or losses attributable to Asset Sales
or returned surplus assets of any Pension Plan, plus

 

(e)           the income (or loss) from discontinued operations.

 

“Consolidated Working Capital” means, as at any date of determination, the excess or deficiency of
Consolidated Current Assets over Consolidated Current Liabilities.

 

“Consolidated Working Capital Adjustment” means, for any period on a consolidated basis, the amount (which may be
a positive or a negative number) by which Consolidated Working Capital as of
the beginning of such period exceeds (or is less than) Consolidated 

 

9

 

Working Capital as
of the end of such period, as adjusted for any non-cash changes in deferred tax
assets and deferred tax liabilities of Borrower and its Subsidiaries; provided,
however, the Consolidated Working Capital Adjustment may be decreased by an
amount determined by the Administrative Agent in its reasonable discretion to
reflect a decrease in the accounts payable of Borrower and its Subsidiaries
resulting from a material decrease in the historic consolidated days payable of
Borrower and its Subsidiaries.

 

“Continuation” and “Continue” mean, with respect to any
Offshore Rate Loan, the continuation of such Offshore Rate Loan as an Offshore
Rate Loan on the last day of the Interest Period for such Loan.

 

“Contractual Obligation” means, as to any Person,
any provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which it or any
of its property is bound.

 

“Conversion” and “Convert” mean, with respect to any Loan,
the conversion of such Loan from or into another type of Loan.

 

“Credit Party” means Borrower and each
Guarantor.

 

“Debtor Relief Laws” means the Bankruptcy Code,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States of America
or other applicable jurisdictions from time to time in effect affecting the
rights of creditors generally.

 

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

 

“Default Rate” means an interest rate that
is two percent (2.0%) per annum in excess of the interest rate otherwise
payable hereunder with respect to the applicable Loans (or, in the case of any
fees and other amounts, at a rate which is two percent (2.0%) per annum in
excess of the interest rate otherwise payable hereunder for Base Rate Loans).

 

“Disclosure Letter” means that Disclosure
Letter of even date herewith and delivered to Administrative Agent together
with this Agreement, as the same may be updated from time to time with the
consent of the Requisite Lenders.

 

“Disposition” or “Dispose” mean the sale, lease or sub
lease (as lessor or sublessor), assignment, conveyance, transfer, License
Disposition or other disposition (including any sale and leaseback transaction)
of any property by any Person, or any exchange of property by such Person with
any other Person, including any sale, assignment, transfer or other disposal
with or without recourse of any notes or accounts receivable or any rights and
claims associated therewith; provided,
however, that an issuance by a Person of its Equity Securities shall
not be a Disposition.

 

“Disqualified Capital
Stock” means an Equity Security that, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the 

 

10

 

happening of any event, (a) matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the first anniversary of the Maturity Date with respect to
the Term Loans, (b) is convertible into or exchangeable (unless at the
sole option of the issuer thereof) for (i) debt securities or (ii) any
Equity Securities of the type referred to in clause (a) above, in each
case at any time prior to the first anniversary of the Maturity Date with
respect to the Term Loans, (c) contains any repurchase obligation that may
come into effect prior to payment in full of all Obligations, (d) requires
cash dividend payments prior to one year after the Maturity Date with respect
to the Term Loans, (e) does not provide that any claims of any holder of
such Equity Security may have against Borrower or any of its Subsidiaries
(including any claims as judgment creditor or other creditor in respect of
claims for the breach of any covenant contained therein) shall be fully
subordinated (including a full remedy bar) to the Obligations in a manner
satisfactory to Administrative Agent, (f) provides the holders of such
Equity Security with any rights to receive any cash upon the occurrence of a
change of control prior to the first anniversary date on which the Obligations
have been irrevocably paid in full, unless the rights to receive such cash are
contingent upon the Obligations being irrevocably paid in full, or (g) is
prohibited by the terms of this Agreement.

 

“Dollar,”  “USD” and “$”
mean lawful money of the United States of America.

 

“Domestic Subsidiary” means a Subsidiary that is
not a Foreign Subsidiary.

 

“Dormant Subsidiaries” has the
meaning set forth in Section 5.26 hereof.

 

“Eligible Assignee” means (a) a financial
institution organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus of at least $100,000,000; (b) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development, or a political
subdivision of any such country, and having a combined capital and surplus of
at least $100,000,000, provided that such bank is acting through a branch or
agency located in the United States; (c) any Lender or any Affiliate of a
Lender or an Approved Fund; (d) any other entity which is an “accredited
investor” (as defined in Regulation D under the Securities Act of 1933, as
amended) which extends credit or buys loans as one of its businesses, including
but not limited to, insurance companies, mutual funds and lease financing
companies; or (e) any Person (other than a natural Person) approved by
Borrower (so long as no Default or Event of Default has occurred and is
continuing) and Administrative Agent. 
Neither Borrower nor any Affiliate of Borrower shall be an Eligible
Assignee.

 

“Employee Benefits Plan” means any “employee benefit
plan” as defined in Section 3(3) of ERISA, including without
limitation, a 401k plan, employee stock purchase program, deferred compensation
program or similar programs maintained by Borrower or any of its Subsidiaries
within the past five years from the date hereof.

 

“Environmental Laws” means all Laws relating to
environmental, health, safety and land use matters applicable to Borrower or
any of its properties.

 

11

 

“Equity Securities” of any Person means (a) all
common stock, preferred stock, participations, shares, partnership interests or
other equity interests in such Person (regardless of how designated and whether
or not voting or non-voting) and (b) all warrants, options and other
rights to acquire any of the foregoing, other than convertible debt securities
which have not been converted into common stock, preferred stock,
participations, shares, partnership interests or other equity interests in any
such Person.

 

“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to time, or any
successor Federal statute. 

 

“ERISA Affiliate” means any trade or business
(whether or not incorporated) under common control with Borrower or any of its
Subsidiaries within the meaning of Sections 414(b) or (c) of the Code
(and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code). 
Any former ERISA Affiliate of Borrower or any of its Subsidiaries shall
continue to be considered an ERISA Affiliate of Borrower or any such Subsidiary
within the meaning of this definition with respect to the period such entity
was an ERISA Affiliate of Borrower or such Subsidiary and with respect to
liabilities arising after such period for which Borrower or such Subsidiary
could be liable under the Code or ERISA.

 

“ERISA Event” means (i) a “reportable
event” within the meaning of Section 4043 of ERISA and the regulations
issued thereunder with respect to any Pension Plan; (ii) the failure to
meet the minimum funding standard of Section 412 of the Code with respect
to any Pension Plan (whether or not waived in accordance with Section 412(d) of
the Code) or the failure to make by its due date a required installment under Section 412(m) of
the Code with respect to any Pension Plan or the failure to make any required
contribution to a Multiemployer Plan; (iii) notice of intent to terminate
a Pension Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the withdrawal by Borrower, any of its Subsidiaries or any of
their respective ERISA Affiliates from any Pension Plan with two or more
non-related contributing sponsors or the termination of any such Pension Plan
resulting in liability to Borrower, any of its Subsidiaries or any of their
respective ERISA Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might reasonably constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; (vii) the withdrawal of
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
in a complete or partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA) from any Multiemployer Plan if there is any liability or
potential liability therefor, or the receipt by Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A
or 4042 of ERISA; (viii) the occurrence of an act or omission which could
give rise to the imposition on Borrower, any of its Subsidiaries or any of
their respective ERISA Affiliates of fines, penalties, taxes or related charges
under Chapter 43 of the Code or under Section 409, Section 502(c), (i) or
(l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan or the assets thereof, or against Borrower, any of
its Subsidiaries or any of their respective ERISA 

 

12

 

Affiliates in connection with any Employee
Benefit Plan; (x) receipt from the Internal Revenue Service of notice of
the failure of any Pension Plan (or any other Employee Benefit Plan intended to
be qualified under Section 401(a) of the Code) to qualify under Section 401(a) of
the Code, or the failure of any trust forming part of any Pension Plan to
qualify for exemption from taxation under Section 501(a) of the Code;
or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of
the Code or pursuant to ERISA with respect to any Pension Plan.

 

“Eurodollar Reserve Percentage” means, for any
day during any Interest Period, the reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day, whether or not
applicable to any Lender, under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for determining the maximum
reserve requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently referred
to as “Eurocurrency liabilities”).

 

“Event of Default” means any of the events
specified in Section 8.

 

“Exchange Act” means the Securities
Exchange Act of 1934, as amended from time to time, or any successor federal
statute.

 

“Existing Indebtedness” means (i) Indebtedness
and other obligations outstanding under that certain Credit Agreement, dated as
of October 2, 2006, between Borrower, KeyBank National Association,
KeyBank Capital Markets and the lenders thereunder, as amended prior to the
Closing Date and (ii) Indebtedness and other obligations outstanding under
that certain Loan Agreement, dated as of January 16, 2004, between
Haverstick Consulting, Inc. and Menard, Inc., as amended prior to the
Closing Date.

 

“Extension of Credit” means (a) a Borrowing,
Conversion or Continuation of Loans and (b) a Letter of Credit Action
wherein a new Letter of Credit is issued or which has the effect of increasing
the amount of, extending the maturity of, or making a material modification to
an outstanding Letter of Credit or the reimbursement of drawings thereunder.

 

“Extraordinary Receipts” means any cash
received by or paid to or for the account of Borrower or any of it Subsidiaries
not in the ordinary course of business, pension plan reversions, judgments,
proceeds of settlements or other consideration of any kind in connection with
any cause of action, condemnation awards (and payments in lieu thereof),
indemnity payments and any purchase price adjustment received in connection
with any purchase agreement (including the Merger Agreement) and proceeds of
insurance, in each case net of all actual and reasonable costs incurred by
Borrower or any of its Subsidiaries in connection with such non-ordinary course
cash receipt (excluding, however, (i) any Net Asset Sale Proceeds, Net
Insurance/Condemnation Proceeds, Net Cash Equity Proceeds or the net cash
proceeds from the incurrence of any Indebtedness of Borrower or any of its
Subsidiaries, in each case, which are subject to Section 2.4(b) and (ii) proceeds
from the Westfield Receivable.

 

“Facilities Letter” means that certain
Facilities Letter, dated October 24, 2007, by and between Arranger and
Borrower, including all attachments thereto.

 

“Federal Funds Rate” means, for any day, the
rate per annum (rounded upwards to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds

 

13

 

transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such
next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to KeyBank on such day on such transactions as determined
by Administrative Agent.

 

“Fee Letter” means that certain Fee
Letter, dated December 31, 2007, by and between Arranger and Borrower.

 

“First Lien Leverage Ratio” means, as of any date of
determination, for Borrower and its Subsidiaries on a consolidated basis, the
ratio of (a) the aggregate amount of Indebtedness less the sum of (i) the
aggregate amount of Indebtedness under the Second Lien Credit Agreement, (ii) Subordinated
Debt as of such date and (iii) unsecured obligations in respect of
earn-out payments, holdback amounts or other similar obligations in connection
with Acquisitions by Borrower or any of its Subsidiaries (including in
connection with the MRC and Haverstick Acquisitions) to the extent payable in
cash to (b) Consolidated EBITDA for the period of the four quarters ending
on, or ending most recently prior to, such date.

 

“First-Tier Material Foreign Subsidiary” means a direct
Foreign Subsidiary of either Borrower or a Domestic Subsidiary that is also a
Material Subsidiary.

 

“Fixed Charge Coverage Ratio” means as of any date of
determination the ratio of (a) Borrower’s Consolidated EBITDA for the
preceding four quarters most recently ended to (b) the sum of (i) scheduled
principal amortization payments made pursuant to this Agreement and the Second
Lien Credit Agreement, (ii) Consolidated Interest Charges to the extent
paid in cash, (iii) consolidated income taxes to the extent paid in cash
(less cash income tax refunds actually received attributable to taxes paid in
the current or immediately prior fiscal year), (iv) Consolidated Capital
Expenditures, (v) cash losses resulting from discontinued operations, (vi) cash
payments made by Borrower or any of its Subsidiaries in respect of earn-out,
holdback or other similar obligations in connection with Acquisitions
(including in connection with the MRC and Haverstick Acquisitions), all as
determined in accordance with GAAP and in each case for the four quarters most
recently ended.

 

“Foreign Subsidiary” means a Subsidiary that is
organized outside of the United States of America.

 

“Fund” means any
Person (other than a natural person) that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business.

 

“GAAP” means generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or
such other principles as may be approved by a significant segment of the
accounting

 

14

 

profession, that are applicable to the
circumstances as of the date of determination (except as otherwise set forth in
Section 1.3), consistently applied.

 

“Governmental Authority” means (a) any
international, foreign, federal, state, county or municipal government, or
political subdivision thereof, (b) any governmental or quasi-governmental
agency, authority, board, bureau, commission, department, instrumentality,
central bank or public body, or (c) any court, administrative tribunal or
public utility.

 

“Guarantor” shall mean each Domestic
Subsidiary which is a Material Subsidiary in existence on the date hereof (as
set forth on Schedule 5.1 hereof) and thereafter any other Domestic
Subsidiary that shall become an obligor under the Multi-Party Guaranty pursuant
to the terms of Section 6.12 hereof.

 

“Guaranty Obligation” means, as to any Person,
any (a) guaranty by such Person of Indebtedness of, or other obligation
payable or performable by, any other Person or (b) assurance, agreement,
letter of responsibility, letter of awareness, undertaking or arrangement given
by such Person to an obligee of any other Person with respect to the payment or
performance of an obligation by, or the financial condition of, such other
Person, whether direct, indirect or contingent, including any purchase or
repurchase agreement covering such obligation or any collateral security
therefor, any agreement to provide funds (by means of loans, capital
contributions or otherwise) to such other Person, any agreement to support the
solvency or level of any balance sheet item of such other Person or any “keep-well”
or other arrangement of whatever nature, in each such case, given for the
purpose of assuring or holding harmless such obligee against loss with respect
to any obligation of such other Person; provided,
however, that the term Guaranty Obligation shall not include
performance bond or other bond guarantees or endorsements of instruments for
deposit or collection in the ordinary course of business.  The amount of any Guaranty Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, covered by such Guaranty
Obligation or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the Person in good
faith.

 

“Haverstick” means
Haverstick Consulting, Inc., an Indiana corporation.

 

“Hazardous Substance” means any substance,
material or waste, including asbestos and petroleum (including crude oil or any
fraction thereof), which is or becomes designated, classified or regulated as “toxic,”
“hazardous,” a “pollutant” or similar designation under any Laws.

 

“Historical Financial
Statements” means as of the Closing Date, (i) the audited
financial statements of Borrower and its Subsidiaries, for the fiscal year
ended December 31, 2006, consisting of a consolidated balance sheet, a
consolidated statement of income and a consolidated cash flow statement for
such fiscal year, and (ii) for the interim period from December 31,
2006, to the Closing Date, internally prepared, unaudited financial statements
of Borrower and its Subsidiaries, consisting of a consolidated balance sheet, a
consolidated statement of income and a consolidated cash flow statement for
each quarterly period completed prior to forty-five (45) days before the
Closing Date, in the case of clauses (i) and (ii), certified by a
Responsible Officer of Borrower as fairly presenting in all material respects
the financial

 

15

 

condition, results of operations and cash
flows of Borrower and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes.

 

“Incremental Trigger Date” has the meaning set forth
in Section 2.12.

 

“Indebtedness” means, as to any Person:

 

(a)           all obligations of such
Person for borrowed money;

 

(b)           all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments or
upon which interest payments are customarily paid and all obligations in
respect of drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money;

 

(c)           any direct or contingent
obligations of such Person arising under letters of credit (including standby
and commercial), banker’s acceptances, bank guaranties, surety bonds and
similar instruments, but excluding performance bonds and guaranties thereof,
other than in the form of a letter of credit;

 

(d)           the Swap Termination Value
of any Swap Contract;

 

(e)           with or without recourse,
all obligations of such Person to pay the deferred purchase price of property
or services in cash, including any
obligations in respect of earn-out payments, holdback amounts or other similar
obligations in connection with Acquisitions by Borrower or any of its
Subsidiaries, but excluding all trade payables
incurred in the ordinary course of business having a term of less than six (6) months
and not overdue by more than sixty (60) days, provided that (i) up to
$3,000,000 at any time outstanding of trade payables incurred in the ordinary
course of business having a term of less than six (6) months and not
overdue by more than ninety (90) days shall not be considered Indebtedness
hereunder and (ii) up to $1,000,000 at any time outstanding of trade
payables incurred in the ordinary course of business having a term of less than
six (6) months and not overdue by more than one hundred and twenty (120)
days shall not be considered Indebtedness hereunder;

 

(f)            indebtedness (excluding
prepaid interest thereon) secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising under conditional
sales or other title retention agreements);

 

(g)           Capital Leases or Synthetic
Lease Obligations, where (i) the amount of Indebtedness in the case of
Capital Leases shall be the amount of the capitalized lease liability properly
classified as a liability on a balance sheet in conformity with GAAP and (ii) the
amount of Indebtedness in the case of Synthetic Lease Obligations shall be the
sum of all outstanding principal advances and any other sums advanced and
outstanding pursuant to the Synthetic Lease Obligations;

 

(h)           all obligations under asset
securitization financing transactions, including recourse sales of receivables
but exclusive of nonrecourse sales of receivables;

 

16

 

(i)            all indebtedness secured by
any Lien on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is nonrecourse to the credit of that Person;

 

(j)            all obligations of such
Person, contingent or otherwise, to purchase, redeem, retire or otherwise
acquire for value any Capital  Stock of
such Person; and

 

(k)           all Guaranty Obligations of
such Person in respect of any of the foregoing obligations of any other Person.

 

For all purposes of this
Agreement, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (to the extent the joint venture consists of a
legal entity where a joint venturer has pass-through liability for all of the
debts of the joint venture) in which such Person is a general partner or a
joint venturer, unless (other than with respect to clause (g) above) such
Indebtedness is expressly made non-recourse to such Person (subject to
customary recourse exceptions acceptable to Requisite Lenders).

 

“Indemnified Liabilities” has the meaning set forth
in Section 10.14.

 

“Indemnitees” has the meaning set forth
in Section 10.14.

 

“Intercreditor Agreement”
means an intercreditor agreement in the form of Exhibit I among the
Administrative Agent, the Second Lien Administrative Agent and the Credit
Parties.

 

“Interest Period” means for each Offshore
Rate Loan, (i) initially, the period commencing on the date such Offshore
Rate Loan is disbursed or Continued or Converted into such Offshore Rate Loan,
and (ii) thereafter, the period commencing on the last day of the preceding
Interest Period, and ending, in each case, on the earlier of (x) the
scheduled Maturity Date, or (y) one, two, three or six months thereafter,
as elected by Borrower; provided that:

 

(a)           any Interest
Period that would otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Business Day;

 

(b)           any Interest
Period which begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and

 

(c)           unless
Administrative Agent otherwise consents, there may not be more than five (5) Interest
Periods for Offshore Rate Loans in effect at any time.

 

“Intellectual Property Security Agreement” means the
Patent Security Agreement, the Trademark Security Agreement, and the Copyright
Security Agreement, each dated as of the date hereof, executed in favor of
Administrative Agent (for the account of each Lender in accordance with its Pro
Rata Share).

 

17

 

“Internal Control Event” means a
material weakness in, or fraud that involves management of, Borrower, which
fraud has a material effect on Borrower’s internal controls over financial and
other reporting, in each case as described in the Securities Laws, whether or
not Borrower is subject thereto.

 

“Investment” means, as to any Person,
any investment by such Person, whether by means of the purchase or other
acquisition of stock or other securities of any other Person or by means of a
loan, creating a debt, capital contribution, guaranty or other debt or equity
participation or interest in any other Person. 
For purposes of covenant compliance, the amount of any Investment shall
be the amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.

 

“IRS” means the United States Internal Revenue
Service.

 

“Issuing Lender” means KeyBank National
Association, or any other Lender, who from time to time effects a Letter of
Credit Action in accordance with the terms of this Agreement.

 

“KeyBank” means KeyBank National
Association.

 

“Landlord Waiver” means a
landlord waiver, substantially in the form of Exhibit K hereto (or in such
other form or with such modifications as shall be approved by the
Administrative Agent).

 

“Laws” or “Law”
means all international, foreign, federal, state and local statutes, treaties,
rules, guidelines, regulations, ordinances, codes and administrative or
judicial precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and all applicable
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.

 

“LCC Working Capital
Adjustment” means the working capital adjustment due to the
Borrower in accordance with the terms of the asset purchase agreement by and
between LCC International, Inc. and Wireless Facilities, Inc.
pertaining to the sale of Wireless Facilities’ domestic engineering business.

 

“Lender” means each lender from time
to time party hereto and, as the context requires, Issuing Lender.

 

“Lending Office” means, as to any Lender, the
office or offices of such Lender described as such on Schedule 10.2, or such
other office or offices as a Lender may from time to time notify Administrative
Agent.

 

“Letter of Credit” has the meaning set forth
in Section 2.1(c).  A Letter of
Credit may be a performance letter of credit or a financial letter of credit.

 

“Letter of Credit Action” means the issuance,
supplement, amendment, renewal, extension, modification or other action
relating to a Letter of Credit hereunder.

 

18

 

“Letter of Credit Application”
means an application for a Letter of Credit Action from time to time in use by
Issuing Lender.

 

“Letter of Credit Expiration Date”
means the scheduled Maturity Date with respect to Revolving Loans.

 

“Letter of Credit Sublimit”
means an amount equal to $10,000,000. 
The Letter of Credit Sublimit is part of, and not in addition to, the
combined Revolving Commitments.

 

“Letter of Credit Usage”
means, as at any date of determination, the aggregate amount available to be
drawn under all outstanding Letters of Credit plus the aggregate amount of all
drawings under the Letters of Credit not reimbursed by Borrower or converted
into Loans.

 

“License Disposition”
means, in respect of any patent, trademark, copyright, mask work, trade secret
or other intellectual property right owned or held by Borrower or any of its
Subsidiaries (the “IP Holder”)
which is material to Borrower or any of its Subsidiaries (together, “Material IP”), (i)   the granting by the IP Holder
of an exclusive license across all or substantially all fields, uses or regions
to any Person other than Borrower or another Subsidiary, (ii) the granting
of any license by the IP Holder that conveys directly or indirectly to any
Person other than Borrower or its Subsidiaries all or substantially all of the
economic value of such Material IP, or (iii) the abandonment by the IP
Holder of such Material IP.

 

“Lien” means (i) any
mortgage, pledge, hypothecation, assignment, deposit arrangement in the nature
of cash collateral accounts or security interests, encumbrance, lien (statutory
or other), fixed or floating charge, or other security interest of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable Laws of any jurisdiction), including the
interest of a purchaser of accounts receivable and (ii) in the case of Securities,
any purchase option, call or similar right of a third party with respect to
such Securities.

 

“Liquidity Ratio”
means as of any date of determination, for Borrower and its Subsidiaries on a
consolidated basis and in accordance with GAAP, the ratio of (a) the sum
of cash on hand, Cash Equivalents, and billed and unbilled accounts receivable
(excluding accounts receivable owing from any Affiliate, shareholder or
employee of Borrower or any of its Subsidiaries) to (b) current
liabilities (excluding current liabilities of discontinued operations, current
deferred tax liabilities and deferred revenue); provided that for all periods ending in the four fiscal
quarter period prior to the Maturity Date, current liabilities shall exclude
the Obligations.

 

“Loan” means any
advance made by any Lender to Borrower as provided in Section 2 that is
either a Revolving Loan or a Term Loan (collectively, the “Loans”).

 

“Loan Documents”
means this Agreement, the Intercreditor Agreement, each Note, the Multi-Party
Guaranty, the Security Documents, each Letter of Credit Application, each
Request for Extension of Credit, the Post-Closing Letter, the Fee Letter and
each certificate, each fee letter, and each other instrument or agreement from
time to time executed by Borrower or any of its Subsidiaries or any Responsible
Officer and delivered in connection with this Agreement.

 

19

 

“Make-Whole Amount”
has the meaning set forth in Section 2.4(d).

 

“Material
Adverse Change” shall mean, when used with respect to
Borrower and its Subsidiaries or Haverstick and its Subsidiaries, as the case
may be, any change or effect that is materially adverse or unfavorable to the
business or the operations, assets, liabilities, employee relationships,
customer or supplier relationships, earnings or results of operations,
financial projections or forecasts, or the business prospects and condition
(financial or otherwise), of the Borrower and its Subsidiaries, taken as a
whole, or Haverstick and its Subsidiaries, taken as a whole, as the case may
be; provided however, that a Material
Adverse Change shall not be deemed to have occurred upon any change or effect
related to the happening of any event due to (i) the occurrence of a
natural or man-made disaster, (ii) armed conflict, (iii) act of
terrorism, (iv) riot, (v) act of state, (vi) a failure by
Haverstick to meet internal projections or forecasts or published revenue or
earnings predictions for any period ending on or after the date of this Agreement,
provided, however, that the facts and
circumstances underlying any such failure may, except as may be provided in
clauses (i), (ii), (iii), (iv), (v), (vii) and (viii) of this
definition, be considered in determining whether a Material Adverse Change has
occurred, (vii) conditions generally affecting the industries in which
Haverstick participates, national, regional or world economies or financial
markets or (viii) any effect arising primarily out of or resulting
primarily from actions contemplated by the parties in connection with, or which
is primarily attributable to, the announcement or pendency of this Agreement
and the transactions contemplated hereby.

 

“Material Adverse Effect”
means any set of circumstances or events which (a) has any material
adverse effect upon the validity or enforceability of any Loan Document or the
rights and remedies of Administrative Agent and Lenders hereunder or
thereunder, (b) is material and adverse to the prospects, financial
condition, business, assets or operations of Borrower and its Subsidiaries,
taken as a whole, (c) has any material adverse effect upon the value or
condition of the Collateral, taken as a whole, or (d) materially impairs
the ability of any Credit Party to perform the Obligations.

 

“Material
Contract” means, collectively, (i) any contract
or agreement listed in the Disclosure Letter, (ii) any contract or
agreement requiring Annual Payments to be made or providing for Annual Payments
to be received, in each case in excess of $2,000,000, (iii) any other
contract or other arrangement to which Borrower or any of its Subsidiaries is a
party (other than the Loan Documents) for which breach, nonperformance,
cancellation or failure to renew could reasonably be expected to have a
Material Adverse Effect and (iv) any agreement or instrument evidencing or
governing Indebtedness (other than a Loan Document or any Second Lien Loan
Document).

 

“Material Indebtedness Agreement”
shall mean any debt instrument, lease (capital, operating or otherwise),
guaranty, contract, commitment, agreement or other arrangement evidencing any
Indebtedness of the Borrower or any of its Subsidiaries in excess of
$2,500,000.

 

“Material Lease”
means any lease existing on the Closing Date or entered into by Borrower or any
of its Subsidiaries after the Closing Date with annual payments in excess of
$250,000.

 

20

 

“Material
Real Estate Asset” means (i) any fee-owned real
estate asset having a fair market value in excess of $2,000,000 as of any date
of determination, or (ii) any fee-owned real estate asset that the
Requisite Lenders have determined is material to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Borrower
or any Subsidiary.

 

“Material Subsidiary”
means each Subsidiary of Borrower that has (a) assets as of the end of
most recent fiscal year of Borrower in excess of $2,000,000 or (b) net
revenues in excess of $5,000,000 for the most recent fiscal year of Borrower.

 

“Maturity Date”
means (a) with respect to Revolving Loans, the earlier of (x) December 31,
2011 or (y) the date upon which the Revolving Commitments may be
terminated in accordance with the terms of this Agreement or (b) with
respect to Term Loans, the earlier of (x) December 31, 2012 or (y) the
date that all Term Loans shall become due and payable in full hereunder,
whether by acceleration or otherwise.

 

“Merger Agreement”
means that certain Agreement and Plan of Merger, dated as of November 2,
2007, by and among Borrower, Kratos Government Solutions, Inc., Haverstick
Acquisition Corporation and Haverstick, pursuant to which Haverstick, subject
to certain conditions, will become the indirect wholly-owned subsidiary of
Borrower.

 

“Merger Documents”
means the Merger Agreement and all agreements attached as exhibits thereto or
executed in connection therewith, all schedules and exhibits attached to any of
them, and all certificates and other documents executed in connection
therewith.

 

“Minimum Amount”
means, with respect to each of the following actions, the minimum amount and
any multiples in excess thereof set forth opposite such action:

 

	
  Type of Action

  	
   

  	
  Minimum

  Amount

  	
   

  	
  Multiples in

  excess thereof

  	
   

  
	
  Borrowing or prepayment of, or Conversion
  into, Base Rate Loans

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  Borrowing, prepayment or Continuation of,
  Conversion into, Offshore Rate Loans

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  Letter of Credit Action

  	
   

  	
  $

  	
  25,000

  	
   

  	
  None

  	
   

  
	
  Reduction in Commitment

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  $

  	
  1,000,000

  	
   

  

 

“MRC” means Madison
Research Corporation, an Alabama corporation.

 

“Multiemployer Plan”
means any employee benefit plan of the type described in Section 4001(a)(3) of
ERISA.

 

“Multi-Party Guaranty”
means that Multi-Party Guaranty in the form attached hereto as Exhibit F.

 

“Net Asset
Sale Proceeds” means, with respect to any Asset Sale
resulting in gross proceeds of more than $5,500,000, an amount equal to:  (i) the sum of cash payments and Cash
Equivalents received by Borrower or any of its Subsidiaries from such Asset
Sale (including any cash or Cash Equivalents received by way of deferred
payment pursuant to, or by monetization of, a note receivable or otherwise, but
only as and when so received), minus (ii) any bona fide direct costs
incurred in connection with such Asset Sale, including (a) income or gains
taxes paid or payable by the seller as a result of any gain recognized in
connection with such Asset Sale

 

21

 

during the tax period
applicable to the sale (after taking into account any available tax credits or
deductions and any tax-sharing arrangements), (b) payment of the
outstanding principal amount of, premium or penalty, if any, and interest on
any Indebtedness (other than the Loans) that is secured by a Lien on the stock
or assets in question and that is required to be repaid under the terms thereof
as a result of such Asset Sale, and (c) a reasonable reserve for any
indemnification payments (fixed or contingent) attributable to seller’s
indemnities and representations and warranties to purchaser in respect of such
Asset Sale undertaken by Borrower or any of its Subsidiaries in connection with
such Asset Sale; provided that upon release of any such reserve, the amount
released shall be considered Net Asset Sale Proceeds); provided, however,
that if at any time during the term of this Agreement Borrower and its
Subsidiaries have made Asset Sales resulting in gross proceeds of more than
$8,250,000, thereafter the amount described in clauses (i) and (ii) of
this definition with respect to all Asset Sales (regardless of size) shall be
considered Net Asset Sale Proceeds.

 

“Net Cash
Equity Proceeds” means cash proceeds from a capital
contribution to, or the issuance of any Equity Securities of, Borrower or any
of its Subsidiaries, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including reasonable legal
fees and expenses.

 

“Net
Insurance/Condemnation Proceeds” means an amount equal
to:  (i) any cash payments or
proceeds received by Borrower or any of its Subsidiaries (a) under any
casualty, business interruption or “key man” insurance policies in respect of
any covered loss thereunder, or (b) as a result of the taking of any
assets of Borrower or any of its Subsidiaries by any Person pursuant to the
power of eminent domain, condemnation or otherwise, or pursuant to a sale of
any such assets to a purchaser with such power under threat of such a taking,
minus (ii) (a) any actual and reasonable costs incurred by Borrower
or any of its Subsidiaries in connection with the adjustment or settlement of
any claims of Borrower or such Subsidiary in respect thereof, and (b) any
bona fide direct costs incurred in connection with any sale of such assets as
referred to in clause (i)(b) of this definition, including income taxes
paid or payable as a result of any gain recognized in connection therewith
(after taking into account any available tax credits or deductions and any
tax-sharing arrangements).

 

“New Lenders” has
the meaning set forth in Section 2.12.

 

“New Note” has the
meaning set forth in Section 2.12.

 

“New Term Loan Commitments”
has the meaning set forth in Section 2.12.

 

“New Term Loans” has
the meaning set forth in Section 2.12.

 

“No-Call
Expiry Date” has the meaning set forth in Section 2.4(a).

 

“Note” means a
promissory note made by Borrower in favor of a Lender evidencing the Loans made
by such Lender, substantially in the form of either Exhibit C-1 or C-2, as
applicable (collectively, the “Notes”).

 

“Obligations” means
all advances to, and debts, liabilities, obligations, covenants and duties of,
Borrower or any of its Subsidiaries arising under any Loan Document and under
any

 

22

 

Swap Contract (entered into
with any Lender or Affiliate thereof), whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due,
now existing or hereafter arising and including interest that accrues after the
commencement of any proceeding under any Debtor Relief Laws by or against
Borrower or any Subsidiary of Borrower.

 

“Offshore Rate”
means for any Interest Period with respect to each Offshore Rate Loan
comprising part of the same Borrowing, a rate per annum determined by
Administrative Agent as the offered rate for Dollar deposits in the approximate
amount of the requested Offshore Rate Loan and having a maturity comparable to
such Interest Period, which rate appears (i) on the British Bankers’
Association internet web page (http://www.bba.org.uk/public/libor/), or
via (ii) Reuters (BBALIBORS), Bloomberg, Moneyline Telerate (Page 3750)
or any other information provider of the British Bankers’ Association daily
Libor rates as of 11:00 A.M., London time, on the date (an “Interest Determination Date”) which is the
second day on which banks are open for interbank deposits in London prior to
the commencement of such Interest Period. 
If, on the Interest Determination Date for such Interest Period, the
Administrative Agent is unable to obtain any quotation as provided above, the
Offshore Rate for the relevant Interest Period shall be the rate per annum that
the Administrative Agent determines in good faith to be the arithmetic mean
(rounded, if necessary, to the nearest sixth decimal place) of all the per
annum rates of interest at which deposits in Dollars in an amount comparable to
the requested Offshore Rate Loan in Dollars in respect of which the Offshore
Rate is then being determined for a period comparable to such Interest Period
are offered by Administrative Agent to prime banks in the London interbank
market at approximately 11:00 A.M., London time on such Interest
Determination Date.  The Administrative
Agent shall provide to Borrower, upon request, details as to the manner in
which the Offshore Rate is calculated, but such calculation shall be conclusive
and binding absent manifest error.  The
Offshore Rate for each outstanding Offshore Rate Loan shall be adjusted
automatically as of the effective date of any change in the Eurodollar Reserve
Percentage by dividing (i) the Offshore Rate by (ii) one minus the
Eurodollar Reserve Percentage.  The
determination of the Eurodollar Reserve Percentage and the Offshore Rate by
Administrative Agent shall be conclusive in the absence of manifest error.

 

“Offshore Rate Loan”
means a Loan made in not less than the Minimum Amount pursuant to Requisite
Notice to Administrative Agent and by deliverance of a Request for Extension of
Credit not later than the Requisite Time and specified to be an Offshore Rate
Loan.

 

Interest on each
Offshore Rate Loan shall be calculated using the Applicable Margin for the
Offshore Rate effective as of the date of the advance, Continuation or
Conversion, as applicable, of such Offshore Rate.

 

“Organization Documents”
means, (a) with respect to any corporation, the certificate or articles of
incorporation and the bylaws; (b) with respect to any limited liability
company, the articles of formation and operating agreement; and (c) with
respect to any partnership, joint venture, trust or other form of business
entity, the partnership or joint venture agreement and any agreement,
instrument, filing or notice with respect thereto filed in connection with its
formation with the secretary of state or other department in the state of its
formation, in each case as amended from time to time.

 

23

 

“Original Term Lender” means any Lender with an Original Term Loan
Commitment.

 

“Original
Term Loan” means a term loan made by a Lender to Borrower pursuant to Section 2.1(b).

 

“Original Term Loan Commitment” means, in the aggregate, $50,000,000 and,
with respect to any Term Lender, such Term Lender’s Pro Rata Share of such
amount as set forth on Schedule 2.1 attached hereto.

 

“Other
Taxes” has the meaning specified in Section 3.1.

 

“Outstanding Obligations”
means, as of any date, and giving effect to making any Extensions of Credit
requested on such date and all payments, repayments and prepayments made on
such date, (a) when reference is made to all Lenders, the sum of (i) the
aggregate outstanding principal amount of all Loans, and (ii) all Letter
of Credit Usage, and (b) when reference is made to one Lender, the sum of (i) the
aggregate outstanding principal amount of all Loans made by such Lender, and (ii) such
Lender’s ratable risk participation in all Letter of Credit Usage.

 

“PBGC” means the
Pension Benefit Guaranty Corporation or any successor thereto established under
ERISA.

 

“Pension Plan” means
any “employee pension benefit plan” (as such term is defined in Section 3(2) of
ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA
and is or was during the past five years sponsored or maintained by Borrower or
any Subsidiary or ERISA Affiliate or to which Borrower or Subsidiary or any
ERISA Affiliate contributes or has or, during the past five years, had an
obligation to contribute, including without limitation any multiple employer
plan (as described in Section 4064(a) of ERISA).

 

“Permitted Acquisition”
has the meaning specified in Section 7.5(e).

 

“Permitted Exceptions”
means with respect to the property subject to any Material Lease as to which
Administrative Agent is granted a security interest in accordance with Section 6.15: 
(a) Liens arising by operation of law, materialmen’s, mechanics’, workers’,
repairmen’s, employees’, carriers’, warehousemen’s and other like Liens in
connection with any improvements or arising in the ordinary course of business
for amounts that either are not more than thirty (30) days past due or are
being diligently contested in good faith by appropriate proceedings and that
have been bonded for not less than the full amount in dispute (or as to which
other security arrangements satisfactory to Administrative Agent have been
made), which bonding (or arrangements) shall comply with applicable
requirements of Laws, and has effectively stayed any execution or enforcement
of such Liens; (b) Liens arising out of judgments or awards with respect
to which appeals or other proceedings for review are being prosecuted in good faith
and for the payment of which adequate reserves have been provided as required by GAAP or other
appropriate provisions have been made, so long as such proceedings have the
effect of staying the execution of such judgments or awards; (c) all
encumbrances, exceptions, restrictions, easements, rights of way, servitudes,
encroachments and irregularities in title, other than Liens which, in the
reasonable assessment of the Administrative Agent, do not materially impair the
value of the real property security or the use of such real property security

 

24

 

for its intended purpose; (d) a
Lien consisting of a deposit or pledge made, in the ordinary course of
business, in connection with, or to secure payment of, obligations under worker’s
compensation, unemployment insurance or similar legislation; and (e) Permitted
Liens.

 

“Permitted Indebtedness”
has the meaning specified in Section 7.1.

 

“Permitted Investments
“ has the meaning specified in Section 7.5.

 

“Permitted Liens “
has the meaning specified in Section 7.2.

 

“Permitted Swap Obligations” means all
obligations (contingent or otherwise) of Borrower or any of its Subsidiaries
existing or arising under Swap Contracts, provided that such obligations are
(or were) entered into by such Person for the purpose of (i) directly
mitigating risks associated with liabilities, commitments or assets held or
reasonably anticipated by such Person, or changes in the value of securities
issued by such Person in conjunction with a securities repurchase program not
otherwise prohibited hereunder; or (ii) directly mitigating the dilution
associated with the issuance of convertible securities by Borrower, and in any
event not for purposes of speculation or taking a “market view.”

 

“Person” means any
individual, trustee, corporation, general partnership, limited partnership,
limited liability company, joint stock company, trust, unincorporated
organization, bank, business association, firm, joint venture, Governmental
Authority, or otherwise.

 

“Pledge and Security Agreement”
means that certain Pledge and Security Agreement dated as of the date hereof,
in favor of Administrative Agent (for the account of each Lender in accordance
with its Pro Rata Share) by Borrower and each Guarantor in the form of Exhibit E
hereto.

 

“Prepayment
Date” has the meaning set forth in Section 2.4(e).

 

“Prepayment
Premium” means, with respect to any prepayment of any
Original Term Loans, (i) if such prepayment occurs after the No-Call
Expiry Date but on or prior to the three (3) year anniversary of the
Closing Date, 3.0% of the principal amount of the Original Term Loans then
being prepaid, (ii) if such prepayment occurs after the three (3) year
anniversary of the Closing Date but on or prior to the four (4) year
anniversary of the Closing Date, 2.0% of the principal amount of the Original
Term Loans then being prepaid and (iii) if such prepayment occurs after
the four (4) year anniversary of the Closing Date but on or prior to the
Call Protection Expiry Date, 1.0% of the principal amount of the Original Term
Loans then being prepaid.

 

“Projections”
has the meaning set forth in Section 5.5(b).

 

“Pro Rata Share”
means:

 

(a)           with respect to a
Lender’s obligation to make Revolving Loans, participate in Letters of Credit,
reimburse the Issuing Lender, and receive payments of principal, interest,
fees, costs, and expenses with respect thereto, (x) prior to the Revolving
Commitment being terminated or reduced to zero, the percentage obtained by
dividing (i) such Lender’s Revolving

 

25

 

Commitment, by (ii) the
aggregate Revolving Commitment of all Lenders and (y) from and after the
time the Revolving Commitment has been terminated or reduced to zero, the
percentage obtained by dividing (i) the aggregate unpaid principal amount
of such Lender’s Revolving Outstandings by (ii) the aggregate unpaid
principal amount of all Revolving Outstandings;

 

(b)           with respect to a
Lender’s obligation to make a Term Loan and receive payments of principal,
interest, fees, costs and expenses with respect thereto, (x) prior to the
making of the Term Loans, the percentage obtained by dividing (i) such
Lender’s Term Loan Commitment, by (ii) the aggregate amount of all Lenders’
Term Loan Commitments, and (y) from and after the making of the Term
Loans, the percentage obtained by dividing (i) the principal amount of
such Lender’s Term Loan by (ii) the principal amount of all Term Loans of
all Lenders; and

 

(c)           with respect to all
other matters as to a particular Lender, (x) during any period when
Revolving Commitments have not been terminated or Revolving Outstandings or the
Term Loans have not been paid in full, the percentage obtained by dividing (i) such
Lender’s Revolving Commitment plus the aggregate outstanding principal amount
of Term Loans held by such Lender, by (ii) the aggregate amount of
Revolving Commitment of all Lenders plus the aggregate outstanding principal
amount of Term Loans; provided that in the event the Revolving Commitments have
been terminated or reduced to zero, Pro Rata Share shall be the percentage
obtained by dividing (A) the principal amount of such Lender’s Revolving
Outstandings plus the unpaid principal amount of such Lender’s Term Loan by (B) the
principal amount of all outstanding Revolving Outstandings plus the unpaid
outstanding principal amount of all Term Loans of all Lenders.

 

“PT” means Pacific
Time.

 

“Register”
has the meanings set forth in Section 10.4(c)

 

“Related Transactions”
means the transactions contemplated by the Merger Documents.

 

“Rental Variance” means the difference, if positive, of
the amount of cash consolidated operating lease expense over the amount of
consolidated operating lease expense determined in accordance with GAAP as
shown on the financial statements of Borrower required to be delivered pursuant
to Section 6.1.

 

“Reportable Event”
means any of the events set forth in Section 4043(b) of ERISA or the
regulations thereunder, a withdrawal from a Multiemployer Plan described in Section 4063
of ERISA, or a cessation of operations described in Section 4062(e) of
ERISA.

 

“Request for Extension of Credit”
means, unless otherwise specified herein, (a) with respect to a Borrowing,
Conversion or Continuation of Loans, a written request substantially in the
form of Exhibit A, and (b) with respect to a Letter of Credit Action,
a Letter of Credit Application; in each case duly completed and signed by a
Responsible Officer of Borrower.

 

“Requisite Lenders” means (a) with respect to matters
relating solely to Revolving Lenders, Revolving Lenders holding or being
responsible for 51% or more of the sum of all Revolving Outstandings and all
unutilized Revolving Commitments, (b) with respect to matters relating
solely to Term Lenders, Term Lenders holding or being responsible for 51% or
more of

 

26

 

the
sum of all outstanding Term Loans, and (c) with respect to all other
matters, Lenders holding or being responsible for 51% or more of all
outstanding Loans and unutilized Commitments; provided
however, that with respect to clause (c) of this definition, to
the extent KeyBank National Association holds Revolving Commitments in an
aggregate amount of at least $15,000,000, then at least two Lenders shall be
required.

 

“Requisite Notice”
means, unless otherwise provided herein, (a) irrevocable written notice to
the intended recipient or (b) except with respect to Letter of Credit
Actions (which must be in writing), irrevocable telephonic notice to the
intended recipient, promptly followed by a written notice to such
recipient.  Such notices shall be (i) delivered
to such recipient at the address or telephone number specified on Schedule 10.2
or as otherwise designated by such recipient by Requisite Notice to
Administrative Agent, and (ii) if made by Borrower, given or made by a
Responsible Officer of Borrower.  Any
written notice delivered in connection with any Loan Document shall be in the
form, if any, prescribed herein or therein. 
Any notice sent by other than hardcopy shall be promptly confirmed by a
telephone call to the recipient and, if requested by Administrative Agent, by a
manually-signed hardcopy thereof.

 

“Requisite Time”
means, with respect to any of the actions listed below, the time and date set
forth below opposite such action:

 

	
  Type of Action

  	
   

  	
  Applicable Time

  	
   

  	
  Date of Action

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Delivery of Request for Extension of Credit, for or notice for:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·       Borrowing or prepayment
  of, or Conversion into, Base Rate Loans

  	
   

  	
  10:00 a.m. PT

  	
   

  	
  Same
  date as such Borrowing, prepayment or Conversion

  
	
  ·       Borrowing, prepayment or
  Continuation of, or Conversion into, Offshore Rate Loans or Termination of
  Commitment

  	
   

  	
  10:00 a.m. PT

  	
   

  	
  3
  Business Days prior to such Borrowing, prepayment Continuation, Conversion or
  Termination of Commitment

  
	
  ·       Letter of Credit Action

  	
   

  	
  10:00 a.m. PT

  	
   

  	
  2
  Business Days prior to such action (or such lesser time which is acceptable
  to Issuing Lender)

  
	
  ·       Payments by Lenders or
  Borrower to Administrative Agent

  	
   

  	
  10:00 a.m. PT

  	
   

  	
  On
  date payment is due

  

 

“Responsible Officer”
means the chief executive officer, president, the chief financial officer, any
vice president of finance, the treasurer, the assistant treasurer or the
corporate controller of Borrower.  Any
document or certificate hereunder that is signed by a Responsible Officer of
Borrower shall be conclusively presumed to have been authorized by all
necessary corporate, partnership and/or other action on the part of Borrower
and such Responsible Officer shall be conclusively presumed to have acted on
behalf of Borrower.

 

“Restricted Payment”
means:

 

(a)           the
declaration or payment of any dividend or distribution by Borrower or any
Subsidiary, either in cash or property, on any shares of Equity Securities of
any class of Borrower or any Subsidiary;

 

(b)           any
other payment or distribution by Borrower or any Subsidiary in respect of its
Equity Securities, either directly or indirectly; and

 

27

 

(c)           any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement,
defeasance (including in-substance or legal defeasance), sinking fund or
similar payment with respect to the Indebtedness under the Second Lien Credit
Agreement.

 

“Revolving
Commitment” means, in the aggregate $25,000,000, as
reduced from time to time pursuant to Section 2.5, and, with respect to
any Revolving Lender, such Revolving Lender’s Pro Rata Share of such amounts as
set forth on Schedule 2.1 attached hereto.

 

“Revolving
Lender” means any Lender with a Revolving Commitment.

 

“Revolving
Loan” means a revolving loan made by a Lender to
Borrower pursuant to Section 2.1(a).

 

“Revolving
Loan Availability” means, at any time, the remainder
of (i) the aggregate Revolving Commitments at such time minus (ii) the
aggregate Revolving Outstandings at such time.

 

“Revolving
Outstandings” means, at any time, the sum of (a) the
aggregate principal amount of all outstanding Revolving Loans, plus (b) the
aggregate amount of all Letter of Credit Usage.

 

“Second
Lien Administrative Agent” shall mean KeyBank National
Association, in its capacity as administrative agent under the Second Lien
Credit Agreement or any successor administrative agent thereunder.

 

“Second
Lien Credit Agreement” shall mean (i) that
certain credit agreement dated as of the date hereof among Borrower, KeyBank
National Association, as a lender and as administrative agent, such other
lenders as shall from time to time be party thereto, with KeyBanc Capital
Markets as lead arranger and book runner thereunder, as amended, restated,
supplemented or modified from time to time to the extent permitted by this
Agreement and the Intercreditor Agreement and (ii) any other credit
agreement, loan agreement, note agreement, promissory note, indenture or other
agreement or instrument evidencing or governing the terms of any indebtedness
or other financial accommodation that has been incurred to extend (subject to
the limitations set forth herein and in the Intercreditor Agreement) or
refinance in whole or in part the indebtedness and other obligations
outstanding under the (x) credit agreement referred to in clause (i) or
(y) any subsequent Second Lien Credit Agreement, unless such agreement or
instrument expressly provides that it is not intended to be and is not a Second
Lien Credit Agreement hereunder.  Any
reference to the Second Lien Credit Agreement hereunder shall be deemed a
reference to any Second Lien Credit Agreement then in existence.

 

“Second
Lien Lender” means a “Lender” as defined in the Second
Lien Credit Agreement.

 

“Second
Lien Loan Documents” shall mean the Second Lien Credit
Agreement and the other Loan Documents as defined in the Second Lien Credit
Agreement, including other security documents, guaranties and the notes issued
thereunder.

 

28

 

“Second
Lien Loans” shall mean the senior secured second lien
term loan facility in the principal amount of $10,000,000, made on
the Closing Date under the Second Lien Credit Agreement.

 

“Securities”
means any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as “securities” or any certificates
of interest, shares or participations in temporary or interim certificates for
the purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.

 

“Securities
Laws” means the Securities Act of 1933, the Securities
Exchange Act of 1934, Sarbanes-Oxley Act of 2002 and the applicable accounting
and auditing principles, rules, standards and practices promulgated, approved
or incorporated by the Securities and Exchange Commission or the Public Company
Accounting Oversight Board, as each of the foregoing may be amended and in
effect on any applicable date hereunder.

 

“Security Documents”
means the Pledge and Security Agreement and the Intellectual Property Security
Agreements.

 

“Solvent” means, as
to any Person at any time, that (i) the fair value of the property of such
Person is greater than the amount of such Person’s liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(32) of the
Bankruptcy Code; (ii) the present fair saleable value of the property 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; (iii) such Person is able to realize upon its property and pay
its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business; (iv) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature; and (v) 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 unreasonably small capital.

 

“Subordinated Debt”
means any subordinated Indebtedness of Borrower or its Subsidiaries in form and
substance and on terms satisfactory to Requisite Lenders in their sole and
absolute discretion and expressly approved by Requisite Lenders after the date
hereof.

 

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

 

29

 

“Swap Contract” means
(a) any and all rate swap transactions, basis swaps, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond index swaps
or options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, or any
other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any
such transaction is governed by or subject to any master agreement, and (b) any
and all transactions of any kind, and the related confirmations, which are
subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association, Inc.,
or any other master agreement.

 

“Swap Termination Value”
means, in respect of any one or more Swap Contracts, after taking into account
the effect of any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts have
been closed out and termination value(s) determined in accordance
therewith, such termination value(s), and (b) for any date prior to the
date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include any Lender).

 

“Synthetic Lease Obligations”
means all monetary obligations of a Person under (a) a so-called
synthetic, off-balance sheet or tax retention lease, or (b) an agreement
for the use or possession of property creating obligations which do not appear
on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as secured debt of such
Person (without regard for accounting treatment).

 

“Term Lender” means any Lender with a Term Loan
Commitment.

 

“Term Loan” means (i) an Original Term Loan and (ii) if
applicable, a New Term Loan.

 

“Term Loan Commitment” means an Original Term Loan Commitment or a
New Term Loan Commitment.

 

“Terrorism Laws”  means any of the following (a) Executive
Order 13224 issued by the President of the United States, (b) the
Terrorism Sanctions Regulations (Title 31 Part 595 of the U.S. Code of
Federal Regulations), (c) the Terrorism List Governments Sanctions
Regulations (Title 31 Part 596 of the U.S. Code of Federal Regulations), (d) the
Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597
of the U.S. Code of Federal Regulations), (e) the Patriot Act (as it may
be subsequently codified), (f) all other present and future legal
requirements of any Governmental Authority addressing, relating to, or
attempting to eliminate, terrorist acts and acts of war and (g) any
regulations promulgated pursuant thereto or pursuant to any legal requirements
of any Governmental Authority governing terrorist acts or acts of war.

 

“To the best knowledge of”
means, when modifying a representation, warranty or other statement of any
Person, that the fact or situation described therein is known by such Person
(or, (i) in the case of Borrower, known by any Responsible Officer or
executive officer of Borrower,

 

30

 

or, (ii) in the case of
any other Person other than a natural Person, known by any officer of such
Person) making the representation, warranty or other statement, or with the
exercise of reasonable due diligence under the circumstances (in accordance
with the standard of what a reasonable Person in similar circumstances would
have done) would have been known by such Person (or, (i) in the case of
Borrower, would have been known by any Responsible Officer or executive officer
of Borrower, or, (ii) in the case of any other Person other than a natural
Person, would have been known by any executive officer of such Person).

 

“Total Commitments”
means an amount equal to the aggregate amount of all Commitments (i.e.,
initially $75,000,000), as the same may decrease pursuant to Section 2.5.

 

“Total Leverage Ratio”
means, as of any date of determination, for Borrower and its Subsidiaries on a
consolidated basis, the ratio of (a) the aggregate amount of Indebtedness
as of such date to (b) Consolidated EBITDA for the period of the four
fiscal quarters ending on, or ending most recently prior to, such date.

 

“Treasury Rate” means, at
any date, the yield to maturity as of such date of United States Treasury
securities with a constant maturity (as compiled and published in the most
recent Federal Reserve Statistical Release H.15 (519) that has become publicly
available at least two Business Days prior to such date (or, if such
Statistical Release is no longer published, any publicly available source of
similar market data)) most nearly equal to the period from such date to the
date which is two years following the Closing Date.

 

“Unfunded Pension Liability”
means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16)
of ERISA, over the current value of that Pension Plan’s assets, determined in
accordance with the assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.

 

“USA Patriot Act”
means United States Public Law 107-56, the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
Patriot Act of 2001), as amended from time to time and the rules and
regulations promulgated thereunder from time to time in effect.

 

“Voting Power” shall
mean, with respect to any Person, the exclusive ability to control, through the
ownership of shares of capital stock, partnership interests, membership
interests or otherwise, the election of members of the board of directors or
other similar governing body of such Person. 
The holding of a designated percentage of Voting Power of a Person means
the ownership of shares of capital stock, partnership interests, membership
interests or other interests of such Person sufficient to control exclusively
the election of that percentage of the members of the board of directors or
similar governing body of such Person.

 

“Westfield
Receivable” means certain receivables of Borrower
related to the pending sale to Westfield Corporation of the wireless network
built, owned and operated by Borrower in various Westfield Shopping Malls
throughout the U.S.

 

31

 

1.2          USE OF CERTAIN TERMS.

 

(a)           All
terms defined in this Agreement shall have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto or thereto,
unless otherwise defined therein.

 

(b)           As
used herein, unless the context requires otherwise, the masculine, feminine and
neuter genders and the singular and plural include one another.

 

(c)           The
words “herein” and “hereunder” and words of similar import when used in any
Loan Document shall refer to the Loan Documents as a whole and not to any
particular provision thereof.  The term “including”
is by way of example and not limitation. 
References herein to a Section, subsection or clause shall, unless the
context otherwise requires, refer to the appropriate Section, subsection or
clause in this Agreement.

 

(d)           The
term “or” is disjunctive; the term “and” is conjunctive.  The term “shall” is mandatory; the term “may”
is permissive.

 

1.3          ACCOUNTING
TERMS.  Except as otherwise expressly provided
herein, all accounting terms not defined in this Agreement shall be construed
in conformity with GAAP.  If at any time
any change in GAAP would affect the computation of any financial ratio or
requirement set forth in any Loan Document, and Borrower, Administrative Agent
or any Lender shall so request, Borrower and Administrative Agent shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the
approval of Requisite Lenders), provided that, until so amended, such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and Borrower shall provide to Administrative Agent and Lenders
reconciliation statements requested by Administrative Agent (reconciling the
computations of such financial ratios and requirements from the then-current
GAAP computations to the computations under GAAP prior to such change) in
connection therewith.  Financial
statements and other information required to be delivered by Borrower to
Lenders pursuant to Section 6.1 shall be prepared in accordance with GAAP
as in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in Section 6.1(d), if
applicable).  Subject to the foregoing,
calculations in connection with the definitions, covenants and other provisions
hereof shall utilize accounting principles and policies in conformity with
those used to prepare the Historical Financial Statements.

 

1.4          ROUNDING.  Any
financial ratios required to be maintained by Borrower pursuant to this
Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of
places by which such ratio is expressed in this Agreement and rounding the
result up or down to the nearest number (with a round-up if there is no nearest
number), to the number of places by which such ratio is expressed in this
Agreement.

 

1.5          EXHIBITS AND SCHEDULES.  All
exhibits and schedules to this Agreement, either as originally existing or as
the same may from time to time be supplemented, modified or amended with the
consent of Requisite Lenders, are incorporated herein by this reference.

 

32

 

1.6          REFERENCES
TO AGREEMENTS AND LAWS.  Unless otherwise expressly provided
herein, (a) references to agreements (including the Loan Documents) and
other contractual instruments shall include all amendments, restatements,
extensions, supplements and other modifications thereto (unless prohibited by
any Loan Document), and (b) references to any Law shall include all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting such Law.

 

SECTION II.

THE COMMITMENTS AND EXTENSIONS OF CREDIT

 

2.1          LOANS; MAXIMUM AMOUNTS. 
Subject to the terms and conditions set forth in this Agreement, each
Lender severally agrees to make Loans to (and to issue or participate in
Letters of Credit for the account of) the Borrower as follows:

 

(a)           Revolving
Loans.  Each Lender severally
agrees to make, Convert and Continue loans on a revolving basis in Dollars from
time to time until the Maturity Date in such Revolving Lender’s Pro Rata Share
of such aggregate amounts as Borrower may from time to time request from all
such Revolving Lenders; provided, however,
that (i) the Revolving Outstandings of all Revolving Lenders shall not
exceed at any time the combined Revolving Commitments, as the same may be from
time to time adjusted in accordance with this Agreement and (ii) the
Revolving Outstandings of each Revolving Lender shall not at any time exceed
such Revolving Lender’s Revolving Commitment, as the same may be from time to
time adjusted in accordance with this Agreement.  The amount of the combined Revolving
Commitments initially totals $25,000,000. 
The Revolving Loans  are a
revolving credit and, subject to the terms and conditions hereof, Borrower may
borrow, Convert, Continue, prepay and reborrow Loans as set forth herein
without premium or penalty.

 

(b)           Original Term Loans.  Subject to the terms and conditions set forth
in this Agreement, each Term Lender severally agrees to make a loan to the
Borrower in Dollars on the Closing Date in an amount equal to such Term Lender’s
Pro Rata Share of the Original Term Loan Commitment.  The Original Term Loan Commitment shall
expire concurrently with the making of the Original Term Loans on the Closing Date.  Once prepaid or repaid, the Original Term
Loans may not be reborrowed.  The
Original Term Loans shall be repaid in accordance with Section 2.4 and Section 2.6.

 

(c)           Letters of Credit.  Subject to Section 2.3, the Issuing
Lender agrees to issue Letters of Credit, in each case containing such terms
and conditions as are permitted by this Agreement (each, a “Letter of
Credit”), at the request of and for the account of the Borrower from
time to time before the Letter of Credit Expiration Date, and, as more fully
set forth in Section 2.3, each Revolving Lender agrees to purchase a
participation in each such Letter of Credit.

 

(d)           Notes.  Loans made by each Lender shall be, at the
request of such Lender, evidenced by one or more Notes.  The date, amount and maturity of each Lender’s
Loans and payments and other particulars with respect thereto may be endorsed
on schedule(s) attached to its Note by each Lender and/or recorded on one
or more loan accounts or records maintained by such Lender in the ordinary course
of business.  Such Notes, loan accounts
and records shall be

 

33

 

conclusive absent manifest
error of the amount of such Loans and payments thereon.  Any failure to record or any error in doing
so shall not, however, limit or otherwise affect the obligation of Borrower to
pay any amount owing with respect to the Loans.

 

2.2          BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.

 

(a)           Borrower may irrevocably request a
Borrowing, Continuation or Conversion of any Loan, in each case, in a Minimum
Amount therefor by delivering a Request for Extension of Credit therefor by
Requisite Notice to Administrative Agent not later than the Requisite Time
therefor.  All Borrowings, Conversions
and Continuations of Loans shall constitute Base Rate Loans unless properly and
timely otherwise designated in the applicable Request for Extension of Credit.

 

(b)           Following receipt of a Request for
Extension of Credit, Administrative Agent shall promptly notify each applicable
Lender of its Pro Rata Share thereof by Requisite Notice.  In the case of a Borrowing of Loans, each
applicable Lender shall make the funds for its Loan available to Administrative
Agent at Administrative Agent’s Office not later than the Requisite Time
therefor on the Business Day specified in such Request for Extension of
Credit.  Upon satisfaction of the
applicable conditions set forth in Section 4.2 (and, in the case of the
initial Extension of Credit hereunder, Section 4.1), all funds so received
shall be made available to Borrower in Dollars. 
Administrative Agent shall promptly notify Borrower and Lenders of the
interest rate applicable to any Loan other than a Base Rate Loan upon
determination of same.

 

(c)           Except as otherwise provided herein, an
Offshore Rate Loan may be Continued or Converted only as of the last day of the
Interest Period for such Offshore Rate Loan. 
During the existence of a Default or Event of Default, no Loans may be
requested as, Converted into or Continued as Offshore Rate Loans without the
consent of Requisite Lenders, and Requisite Lenders may demand that any or all
of the then outstanding Offshore Rate Loans be Converted immediately into Base
Rate Loans.

 

(d)           If a Loan is to be made on the same date
that another Loan is due and payable, Borrower or Lenders, as the case may be,
shall, unless Administrative Agent otherwise requests, make available to
Administrative Agent the net amount of funds giving effect to both such Loans
and the effect for purposes of this Agreement shall be the same as if separate
transfers of funds had been made with respect to each such Loan.

 

(e)           The failure of any Lender to make any
Loan on any date shall not relieve any other Lender of any obligation to make a
Loan on such date, but no Lender shall be responsible for the failure of any
other Lender to so make its Loan.

 

2.3          LETTERS OF CREDIT.

 

(a)           The
Letter of Credit Sublimit.  Subject to the terms and conditions
set forth in this Agreement, until the Letter of Credit Expiration Date,
Issuing Lender shall take such Letter of Credit Actions as Borrower may from
time to time request; provided, however,
that (i) the Revolving Outstandings of each Lender shall not at any time
exceed such Lender’s Revolving Commitment; (ii) the Revolving Outstandings
of all Lenders shall not at any time exceed the

 

34

 

combined Revolving Commitments;
and (iii) Letter of Credit Usage shall not at any time exceed the Letter
of Credit Sublimit.

 

(b)           Letter
of Credit Actions.  Subject to the terms and conditions
set forth in this Agreement, until the Letter of Credit Expiration Date,
Issuing Lender shall take such Letter of Credit Actions as Borrower may from
time to time request.  Subject to subsection
(g) below and unless consented to by Issuing Lender and Requisite Lenders,
no Letter of Credit may expire more than twelve (12) months after the date of
its issuance or last renewal; provided,
however, that no Letter of Credit shall expire after the Letter of
Credit Expiration Date unless Borrower shall post cash collateral with respect
to such Letter of Credit in such manner as is reasonably satisfactory to
Issuing Lender and the amount of the Letter of Credit does not exceed the
Letter of Credit Sublimit.

 

(c)           Requesting Letter of Credit Actions.  Borrower
may irrevocably request a Letter of Credit Action in a Minimum Amount therefor
by delivering a Letter of Credit Application therefor to Issuing Lender, with a
copy to Administrative Agent (who shall notify all Revolving Lenders) by Requisite
Notice not later than the Requisite Time therefor.  Each Letter of Credit Action shall be in a
form acceptable to Issuing Lender in its sole discretion.  Unless Administrative Agent notifies Issuing
Lender that such Letter of Credit Action is not permitted hereunder, or Issuing
Lender notifies Administrative Agent that it has determined that such Letter of
Credit Action is contrary to any Laws or policies of Issuing Lender, Issuing
Lender shall, upon satisfaction of the applicable conditions set forth in Section 4.2
with respect to any Letter of Credit Action constituting an Extension of
Credit, effect such Letter of Credit Action. 
This Agreement shall control in the event of any conflict with any
Letter of Credit Application.  Upon the
issuance of a Letter of Credit, each Revolving Lender shall be deemed to have
purchased from Issuing Lender a risk participation therein in an amount equal
to such Revolving Lender’s Pro Rata Share times the amount of such Letter of
Credit.

 

(d)           Reimbursement
of Payments Under Letters of Credit.  Borrower shall reimburse Issuing Lender
through Administrative Agent for any payment that Issuing Lender makes under a
Letter of Credit on or before the date of such payment; provided, however, that if the conditions
precedent set forth in Section 4.2 can be satisfied, Borrower may request
a Borrowing of a Revolving Loan pursuant to Section 2.2 to reimburse
Issuing Lender for such payment, or, failing to make such request, Borrower
shall be deemed to have requested a Borrowing of Base Rate Loans on such
payment date pursuant to subsection (e) below.

 

(e)           Funding
by Lender When Issuing Lender Not Reimbursed.  Upon any drawing under a
Letter of Credit, Issuing Lender shall notify Administrative Agent and
Borrower.  If Borrower fails to timely
make the payment required pursuant to subsection (d) above, Issuing Lender
shall notify Administrative Agent of such fact and the amount of such
unreimbursed payment.  Administrative
Agent shall promptly notify each Revolving Lender of its Pro Rata Share of such
amount by Requisite Notice.  Each
Revolving Lender shall make funds in an amount equal its Pro Rata Share of such
amount available to Administrative Agent at Administrative Agent’s Office not
later than the Requisite Time therefor on the Business Day specified by
Administrative Agent, Administrative Agent shall remit the funds so received to
Issuing Lender.  The obligation of each
Revolving Lender to so reimburse Issuing Lender shall be absolute and unconditional
and shall not be affected by the occurrence of a Default or Event

 

35

 

of Default or any other
occurrence or event.  Any such
reimbursement shall not relieve or otherwise impair the obligation of Borrower
to reimburse Issuing Lender for the amount of any payment made by Issuing
Lender under any Letter of Credit, together with interest as provided herein.

 

(f)            Nature of Revolving Lenders’ Funding.  If
the conditions precedent set forth in Section 4.2 can be satisfied (except
for the giving of a Request for Extension of Credit) on any date Borrower is
obligated to, but fails to, reimburse Issuing Lender for a drawing under a
Letter of Credit, the funding by Revolving Lenders pursuant to the previous
subsection shall be deemed to be a Borrowing of Base Rate Loans (without regard
to the Minimum Amount therefor) deemed requested by Borrower.  If the conditions precedent set forth in Section 4.2
cannot be satisfied on the date Borrower is obligated to, but fails to,
reimburse Issuing Lender for a drawing under a Letter of Credit, the funding by
Revolving Lenders pursuant to the previous subsection shall be deemed to be a
funding by each Revolving Lender of its risk participation in such Letter of
Credit, and each Revolving Lender making such funding shall thereupon acquire a
pro rata participation, to the extent of its reimbursement, and interest in the
claim of Issuing Lender against Borrower in respect of such payment and shall
share in accordance with that pro rata participation, in any payment made by
Borrower with respect to such claim.  Any
amounts made available by a Revolving Lender under its risk participation shall
be payable by Borrower upon demand of Administrative Agent, and shall bear
interest at a rate per annum equal to the Default Rate.

 

(g)           Obligations Absolute.  The
obligation of Borrower to pay to Issuing Lender the amount of any payment made
by Issuing Lender under any Letter of Credit shall be absolute, unconditional,
and irrevocable.  Without limiting the
foregoing, Borrower’s obligation shall not be affected by any of the following
circumstances:

 

(i)            any
lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other agreement or instrument relating thereto;

 

(ii)           any
amendment or waiver of or any consent to departure from such Letter of Credit,
this Agreement, or any other agreement or instrument relating hereto or
thereto;

 

(iii)          the
existence of any claim, setoff, defense, or other rights which Borrower may
have at any time against Issuing Lender, Administrative Agent or any Lender,
any beneficiary of such Letter of Credit (or any persons or entities for whom
any such beneficiary may be acting) or any other Person, whether in connection
with such Letter of Credit, this Agreement, or any other agreement or
instrument relating thereto, or any unrelated transactions;

 

(iv)          any
demand, statement, or any other document presented under such Letter of Credit
proving to be forged, fraudulent, invalid, or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect whatsoever so
long as any such document appeared to comply with the terms of the Letter of
Credit;

 

(v)           any
payment made by Issuing Lender under such Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for
the benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any

 

36

 

transferee of such Letter of Credit, including any arising in
connection with any proceeding under any Debtor Relief Laws;

 

(vi)          the
existence, character, quality, quantity, condition, packing, value or delivery
of any property purported to be represented by documents presented in
connection with such Letter of Credit or for any difference between any such
property and the character, quality, quantity, condition, or value of such
property as described in such documents;

 

(vii)         the
time, place, manner, order or contents of shipments or deliveries of property
as described in documents presented in connection with such Letter of Credit or
the existence, nature and extent of any insurance relative thereto;

 

(viii)        the
solvency or financial responsibility of any party issuing any documents in
connection with such Letter of Credit;

 

(ix)           any
failure or delay in notice of shipments or arrival of any property;

 

(x)            any
error in the transmission of any message relating to such Letter of Credit not
caused by Issuing Lender, or any delay or interruption in any such message;

 

(xi)           any
error, neglect or default of any correspondent of Issuing Lender in connection
with such Letter of Credit;

 

(xii)          any
consequence arising from acts of God, wars, insurrections; civil unrest,
terrorist action, disturbances, labor disputes, emergency conditions or other
causes beyond the control of Issuing Lender;

 

(xiii)         so
long as Issuing Lender in good faith determines that the document appears to
comply with the terms of the Letter of Credit, the form, accuracy, genuineness
or legal effect of any contract or document referred to in any document
submitted to Issuing Lender in connection with such Letter of Credit; and

 

(xiv)        any
other circumstances whatsoever where Issuing Lender has acted in good faith.

 

In addition, Borrower will promptly examine a copy of each Letter of
Credit and amendments thereto delivered to it and, in the event of any claim of
noncompliance with Borrower’s instructions or other irregularity, Borrower will
immediately notify Issuing Lender in writing. 
Borrower shall be conclusively deemed to have waived any such claim
against Issuing Lender and its correspondents unless such notice is given as
aforesaid.

 

(h)           Role of
Issuing Lender.  Each Revolving Lender and Borrower
agree that, in paying any drawing under a Letter of Credit, Issuing Lender
shall not have any responsibility to obtain any document (other than any sight
draft, certificates and documents expressly required by the Letter of Credit)
or to ascertain or inquire as to the validity or accuracy of any such document
or the authority of the Person executing or delivering any such document.  No Administrative Agent-Related Person, nor
Issuing Lender, nor any of the respective correspondents, participants or
assignees of Issuing Lender shall be liable to any Revolving Lender for any
action taken or omitted in connection herewith at the request or with the
approval

 

37

 

of Revolving Lenders or
Requisite Lenders, as applicable; any action taken or omitted in the absence of
gross negligence or willful misconduct; or the due execution, effectiveness,
validity or enforceability of any document or instrument related to any Letter
of Credit.  Borrower hereby assumes all
risks of the acts or omissions of any beneficiary or transferee with respect to
its use of any Letter of Credit; provided,
however, that this assumption is not intended to, and shall not,
preclude Borrower’s pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement.  No Administrative Agent-Related Person, nor
Issuing Lender, nor any of the respective correspondents, participants or
assignees of Issuing Lender, shall be liable or responsible for any of the matters
described in subsection (g) above. 
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, and Issuing Lender shall not be responsible for the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason.

 

(i)            Applicability of ISP98 and UCP.  Unless
otherwise expressly agreed by Issuing Lender and Borrower when a Letter of
Credit is issued and subject to applicable laws, performance under Letters of
Credit by Issuing Lender, its correspondents, and beneficiaries will be
governed by, with respect to standby Letters of Credit, the rules of the “International
Standby Practices 1998” (ISP98) or such later revision as may be published by
the International Chamber of Commerce (the “ICC”).

 

(j)            Letter of Credit Fee.  On each Applicable Payment Date, Borrower
shall pay to Administrative Agent in arrears, for the account of each Revolving
Lender in accordance with its Pro Rata Share, a Letter of Credit fee equal to
the Applicable Margin for Offshore Rate Loans that are Revolving Loans on a per
annum basis times the actual daily maximum amount available to be drawn under
each Letter of Credit for the period since the later of the Closing Date and
the previous Applicable Payment Date.  If
there is any change in the Applicable Margin during any quarter, the actual
daily amount shall be computed and multiplied by the Applicable Margin
separately for each period during such quarter that such Applicable Margin was
in effect.

 

(k)           Fronting Fee and Documentary and Processing Charges Payable to Issuing
Lender.  On each Applicable
Payment Date, Borrower shall pay to Administrative Agent for the sole account
of Issuing Lender a fronting fee in an amount equal to 0.125% per annum on the daily
average face amount of all outstanding Letters of Credit, payable in
arrears.  In addition, Borrower shall pay
directly to Issuing Lender, upon demand, for its sole account its customary
documentary and processing charges in accordance with its standard schedule, as
from time to time in effect, for any Letter of Credit Action or other
occurrence relating to a Letter of Credit for which such charges are
customarily made.  Such fees and charges
are nonrefundable.

 

2.4          PREPAYMENTS.

 

(a)           Voluntary Prepayments.

 

(i)            Revolving Loans.  Upon
Requisite Notice to Administrative Agent not later than the Requisite Time
therefor, Borrower may at any time and from time to time voluntarily prepay

 

38

 

Revolving Loans in part in the
Minimum Amount therefor or in full without premium or penalty.  Administrative Agent will promptly notify
each Revolving Lender of such voluntary prepayment and of such Lender’s Pro
Rata Share of such prepayment.  Any
prepayment of a Revolving Loan shall be accompanied by all accrued interest
thereon and, in the case of any Revolving Loan that is an Offshore Rate Loan,
the amounts set forth in Section 3.5.

 

(ii)           Term Loans.  Borrower may not voluntarily prepay Original
Term Loans on or prior to the two (2) year anniversary of the Closing Date
(the “No-Call Expiry Date”).  After the No-Call Expiry Date, upon Requisite
Notice to Administrative Agent not later than the Requisite Time therefor,
Borrower may at any time and from time to time voluntarily prepay Original Term
Loans in part in the Minimum Amount therefor or in full, provided,
however, that with respect to any voluntary prepayment of the
Original Term Loans occurring at anytime after the No-Call Expiry Date but on
or prior to the five (5) year anniversary of the Closing Date (the “Call Protection Expiry Date”), Borrower shall pay to the
Original Term Lenders the applicable Prepayment Premium.  Upon Requisite Notice to Administrative Agent
not later than the Requisite Time therefor, Borrower may at any time and from
time to time voluntarily prepay New Term Loans in part in the Minimum Amount
therefor or in full  without premium or
penalty.  Administrative Agent will
promptly notify each Term Lender of such voluntary prepayment and of such Lender’s
Pro Rata Share of such prepayment.  Any
prepayment of a Term Loan shall be accompanied by all accrued interest thereon
and, in the case of any Term Loan that is an Offshore Rate Loan, the amounts
set forth in Section 3.5.

 

(iii)          Application
of Voluntary Prepayments.  Any
prepayment of any Revolving Loan pursuant to Section 2.4(a)(i) shall
be applied to repay outstanding Revolving Loans to the full extent
thereof.  Any voluntary prepayment of any
Original Term Loans or New Term Loans pursuant to Section 2.4(a)(ii) shall
be applied to repay such Original Term Loans or New Term Loans on a pro rata
basis (in accordance with the respective outstanding principal amounts thereof)
and shall be further applied on a pro rata basis to reduce the remaining scheduled
Installments of principal of such Original Term Loans or New Term Loans, as
applicable.

 

(b)           Mandatory Prepayments.

 

(i)            Asset Sales.  No later than the first Business Day
following the date of receipt by Borrower or any of its Subsidiaries of any Net
Asset Sale Proceeds, Borrower shall prepay Loans and/or Revolving Commitments
shall be permanently reduced as set forth in Section 2.4(c) or
2.4(e), as applicable, in an aggregate amount equal to such Net Asset Sale
Proceeds.

 

(ii)           Insurance/Condemnation
Proceeds.  No later than the
first Business Day following the date of receipt by Borrower or any of its
Subsidiaries, or Administrative Agent as loss payee, of any Net
Insurance/Condemnation Proceeds, Borrower shall prepay Loans and/or Revolving
Commitments shall be permanently reduced as set forth in Section 2.4(c) or
2.4(e), as applicable, in an aggregate amount equal to such Net
Insurance/Condemnation Proceeds; provided, (i) so
long as no Default or Event of Default shall have occurred and be continuing, and
(ii) to the extent that aggregate Net Insurance/Condemnation Proceeds from
the Closing Date through the applicable date of determination do not exceed
$7,500,000,  Borrower shall have the
option, directly or through one or more of its Subsidiaries to invest such Net
Insurance/Condemnation Proceeds within one hundred eighty (180) days of receipt
thereof in long term productive assets

 

39

 

of the general type used in the business of Borrower and its Subsidiaries,
which investment may include the repair, restoration or replacement of the
applicable assets thereof; provided further, pending any such investment all
such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied
to prepay Revolving Loans to the extent outstanding (without a reduction in
Revolving Commitments).

 

(iii)          Issuance of Equity Securities.  On the date of receipt by Borrower or any of
its Subsidiaries of any Net Cash Equity Proceeds which, when combined with any
other Net Cash Equity Proceeds received by Borrower or any of its Subsidiaries
since the Closing Date, total in excess of $50,000,000, Borrower shall prepay
the Loans and/or the Revolving Commitments shall be permanently reduced as set
forth in Section 2.4(c) or 2.4(e), as applicable, in an aggregate
amount equal to one hundred percent (100%) of such Net Cash Equity Proceeds in
excess of $50,000,000; provided, however,
that in the event any Net Cash Equity Proceeds received by Borrower or any of
its Subsidiaries which, when combined with all other Net Cash Equity Proceeds
received by Borrower or any of its Subsidiaries since the Closing Date do not
total in excess of $50,000,000, are not used in the manner described in the
second proviso of Section 7.5(e) hereof within 90 days of such
receipt, Borrower shall prepay the Loans and/or the Revolving Commitments shall
be permanently reduced as set forth in Section 2.4(c) or 2.4(e), as
applicable, in an aggregate amount equal to one hundred percent (100%) of such
Net Cash Equity Proceeds.

 

(iv)          Issuance of Debt.  On
the date of receipt by Borrower or any of its Subsidiaries of any cash proceeds
from the incurrence of any Indebtedness of Borrower or any of its Subsidiaries
(other than with respect to any Indebtedness permitted to be incurred pursuant
to Section 7.1), Borrower shall prepay the Loans and/or the Revolving
Commitments shall be permanently reduced as set forth in Section 2.4(c) or
2.4(e), as applicable, in an aggregate amount equal to one hundred percent
(100%) of such proceeds, net of underwriting discounts and commissions and
other reasonable costs and expenses associated therewith, including reasonable
legal fees and expenses.

 

(v)           Consolidated Excess Cash Flow.  In the event that there shall be Consolidated
Excess Cash Flow for any fiscal year (commencing with Fiscal Year 2008),
Borrower shall, no later than ninety (90) days after the end of such fiscal
year, prepay the Loans and/or the Revolving Commitments shall be permanently
reduced as set forth in Section 2.4(c) or 2.4(e), as applicable, in
an aggregate amount equal to seventy-five percent (75%) of such Consolidated
Excess Cash Flow.

 

(vi)          Extraordinary Receipts. 
No later than the first Business Day following the date of receipt by
Borrower or any of its Subsidiaries of any Extraordinary Receipts, Borrower
shall prepay the Loans and/or the Revolving Commitments shall be permanently
reduced as set forth in Section 2.4(c) or 2.4(e), as applicable, in
an aggregate amount equal to such Extraordinary Receipts.

 

(vii)         Revolving Loans.  If
for any reason the Revolving Outstandings exceed the combined Revolving
Commitments as in effect or as reduced because of any limitation set forth in
this Agreement or otherwise, Borrower shall immediately prepay Revolving Loans
in an aggregate amount equal to such excess.

 

40

 

(viii)        Prepayment Certificate. 
Concurrently with any mandatory prepayment of the Loans and/or reduction
of the Revolving Commitments pursuant to Sections 2.4(b)(i)-(vi), Borrower
shall deliver to Administrative Agent a certificate of a Responsible Officer
demonstrating the calculation of the amount of the applicable net proceeds or
other applicable financial tests or proceeds giving rise to the prepayment, as
the case may be.  In the event that
Borrower shall subsequently determine that the actual amount received exceeded
the amount set forth in such certificate, Borrower shall promptly make an
additional prepayment of the Loans and/or the Revolving Commitments shall be
permanently reduced in an amount equal to such excess, and Borrower shall
concurrently therewith deliver to Administrative Agent a certificate of a
Responsible Officer demonstrating the derivation of such excess.

 

(c)           Application
of Mandatory Prepayments. 
Subject to Section 2.4(e) below, any mandatory prepayment of
any Loan pursuant to Section 2.4(b) shall be applied in the following
order: first, to prepay Term Loans on a pro
rata basis (in accordance with the respective outstanding principal amounts
thereof) and shall be further applied in inverse order of maturity to reduce
the remaining scheduled installments of principal of the Term Loans; second, to prepay the Revolving Loans to the full extent
thereof and to further permanently reduce the Revolving Commitments by the
amount of such prepayment (provided that in no event shall the Revolving
Commitments be permanently reduced pursuant to this Section 2.4(c) below
$15,000,000) and third, to prepay Second Lien
Loans in accordance with the terms of the Second Lien Credit Agreement; provided however that mandatory prepayments made pursuant to
Section 2.4(b)(vi) (solely in respect of the LCC Working Capital
Adjustment) and Section 2.4(b)(vii), shall not be applied to prepay Term
Loans but shall be applied to prepay any outstanding Revolving Loans (but not
to permanently reduce Revolving Commitments).

 

(d)           Applicable
Premiums on Mandatory Prepayments of Term Loans.

 

(i)            If,
on or prior to the No-Call Expiry Date, Borrower is required pursuant to Section 2.4(b) (other
than pursuant to Section 2.4(b)(v)) to prepay all or any part of the
principal balance of any Original Term Loan, then Borrower shall pay to
Administrative Agent, for the benefit of all Original Term Lenders, an amount
equal to the sum of (I) the excess of (1) the present value at such
time, computed using a discount rate equal to the Treasury Rate plus 50 basis
points, of (x) the principal amount of such Original Term Loans then being
prepaid plus (y) all required interest payments due on such Original Term
Loans then being prepaid through the No-Call Expiry Date, computed using the
Offshore Rate for an Interest Period of three months plus the Applicable Margin
in effect on such date, over (2) the principal amount of such Original
Term Loans then being prepaid plus (II) an additional amount equal to 3.0%
of the principal amount of the Original Term Loans then being prepaid (the “Make-Whole Amount”).

 

(ii)                                  If,
after the No-Call Expiry Date but on or prior to the Call Protection Expiry
Date, Borrower is required pursuant to Section 2.4(b) (other than
pursuant to Section 2.4(b)(v)) to prepay all or any part of the principal
balance of any Original Term Loan, then Borrower shall pay to Administrative
Agent, for the benefit of all Original Term Lenders, the applicable Prepayment
Premium.

 

41

 

(e)           Waiver of Certain Prepayments.

 

(i)            Anything contained
herein to the contrary notwithstanding, in the event Borrower is required to
make any mandatory prepayment of any Loans (other than mandatory prepayments to
be applied directly to outstanding Revolving Loans pursuant to Section 2.4(c)),
not less than five (5) Business Days prior to the date (the “Prepayment Date”) on which Borrower is required to make
such mandatory prepayment (or, if shorter, promptly upon Borrower’s becoming
aware of any event requiring such mandatory prepayment), Borrower shall notify
Administrative Agent of the amount of such prepayment, and Administrative Agent
will promptly thereafter notify each Term Lender of the amount of such Lender’s
Pro Rata Share of such mandatory prepayment and such Lender’s option to refuse
such amount.  Each such Lender may
exercise such option by giving written notice to Borrower and Administrative
Agent of its election to do so on or before the first Business Day prior to the
Prepayment Date (it being understood that any Lender which does not notify
Borrower and Administrative Agent of its election to exercise such option on or
before the first Business Day prior to the Prepayment Date shall be deemed to
have elected, as of such date, not to exercise such option to decline
payments).  On the Prepayment Date,
Borrower shall pay to Administrative Agent the amount of the mandatory
prepayment, which amount shall be applied (i) in an amount equal to that
portion of the mandatory prepayment payable to those Lenders that have elected
not to exercise such option, to prepay the Term Loans of such Lenders (which
prepayment shall be applied to the scheduled Installments of principal of the
Term Loans in accordance with Section 2.4(c)), and (ii) to the extent
of any excess (the “Declined Prepayment
Amount”), to prepay the Revolving Loans in accordance with Section 2.4(e)(ii).

 

(ii)           Promptly upon receiving
notice from the Term Lenders of their respective intent to waive receipt of
mandatory prepayments pursuant to Section 2.4(e)(i), but in any event no
later than the first Business Day prior to the Prepayment Date, Administrative
Agent will notify each Revolving Lender of the amount of such Lender’s Pro Rata
Share of the applicable Declined Prepayment Amount and such Lender’s option to
refuse such amount.  Each such Lender may
exercise such option by giving written notice to Borrower and Administrative
Agent of its election to do so on or before the Prepayment Date (it being
understood that any Lender which does not notify Borrower and Administrative
Agent of its election to exercise such option on or before the Prepayment Date
shall be deemed to have elected, as of such date, not to exercise such option
to decline payments).  On the Prepayment
Date, the Declined Prepayment Amount shall be applied (i) in an amount
equal to that portion of the Declined Prepayment Amount payable to those
Lenders that have elected not to exercise such option, to prepay the Revolving
Loans of such Lenders to the full extent thereof and to further permanently
reduce the Revolving Commitments by the amount of such prepayment, and (ii) to
the extent of any further excess, to prepay the Second Lien Loans in accordance
with the terms of the Second Lien Credit Agreement; provided,
however, that in no event shall the Revolving Commitments be
permanently reduced pursuant to this Section 2.4(e)(ii) below
$15,000,000.

 

2.5          REDUCTION
OR TERMINATION OF COMMITMENTS.  Upon Requisite Notice to
Administrative Agent not later than the Requisite Time therefor, Borrower may
at any time and from time to time, without premium or penalty, permanently and
irrevocably reduce the

 

42

 

Revolving Commitments in a Minimum Amount therefor to an amount not
less than the Revolving Outstandings at such time or terminate the Revolving
Commitments.  Any such reduction or
termination shall be accompanied by payment of all accrued and unpaid commitment
fees with respect to the portion of the Revolving Commitments being reduced or
terminated.  Administrative Agent shall
promptly notify Revolving Lenders of any such request for reduction or
termination of the Revolving Commitments. 
Each Revolving Lender’s Commitment shall be reduced by an amount equal
to such Revolving Lender’s Pro Rata Share times the amount of such reduction.

 

2.6          PRINCIPAL AND INTEREST.

 

(a)           Except as otherwise
provided hereunder, if not sooner paid, Borrower agrees to pay the outstanding
principal amount of each Loan on the Maturity Date.

 

(b)           The principal amounts
of the Original Term Loans shall be repaid in consecutive quarterly
installments in the aggregate amounts set forth below on the last day of each
Fiscal Quarter, commencing March 31, 2008:

 

	
  Fiscal Quarter Ending

  	
   

  	
  Original Term Loan

  Installments

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  625,000.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  625,000.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  625,000.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  625,000.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  1,250,000.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  1,250,000.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  1,250,000.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  1,250,000.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  2,500,000.00

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  2,500,000.00

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  2,500,000.00

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  2,500,000.00

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  4,062,500.00

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  4,062,500.00

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  4,062,500.00

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  4,062,500.00

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  4,062,500.00

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  4,062,500.00

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  4,062,500.00

  	
   

  

 

43

 

	
  Fiscal Quarter Ending

  	
   

  	
  Original Term Loan

  Installments

  	
   

  
	
  Maturity Date

  	
   

  	
  $

  	
  4,062,500.00

  	
   

  
					

 

Notwithstanding the foregoing, (x) such installments shall be
reduced in connection with any voluntary or mandatory prepayments of the
Original Term Loans, as the case may be, in accordance with Sections 2.4(a)(iii) and
2.4(c), as applicable.

 

(c)                                  Subject
to subsection (d) below, and unless otherwise specified herein, Borrower
shall pay interest on the unpaid principal amount of each Loan (before and
after default, before and after maturity, before and after judgment, and before
and after the commencement of any proceeding under any Debtor Relief Laws) from
the date borrowed until paid in full (whether by acceleration or otherwise) on
each Applicable Payment Date at a rate per annum equal to the interest rate
determined in accordance with the definition of such type of Loan, plus the
Applicable Margin specified in the definition in this Agreement of Applicable
Margin with respect to such type of Loan.

 

(d)                                 Notwithstanding
subsection (c) of this Section, upon the occurrence and during the
continuance of an Event of Default, the principal amount of all Loans
outstanding and, to the extent permitted by applicable law, any interest
payments on the Loans or any fees or other amounts owed hereunder, shall
thereafter bear interest (including post petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws, whether or not
allowed in such a proceeding) payable on demand at the Default Rate.  Payment or acceptance of the increased rates
of interest provided for in this section is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Administrative Agent or
any Lender.

 

2.7                               FEES.

 

(a)                                  Commitment Fee.  Borrower shall pay to Administrative Agent
(for the account of each Revolving Lender according to its Pro Rata Share) the
respective commitment fee (the “Commitment
Fee”) set forth in
the definition of Applicable Margin, calculated on the average unused amount of
the combined Revolving Commitments.  The
Commitment Fee shall be calculated and payable quarterly in arrears on each
Applicable Payment Date.  The Commitment
Fee shall continue to accrue at all times, including at any time during which
one or more conditions in Section 4 are not met.

 

(b)                                 Other Fees.  Borrower shall pay to
Administrative Agent, Arranger and Lenders all fees and other amounts specified
in the Facilities Letter and the Fee Letter in the amounts and at the times
specified therein.  All fees payable
under the Facilities Letter and the Fee Letter are solely for the account of
Administrative Agent, Arranger and/or the Lenders, as applicable, and are
nonrefundable.

 

2.8                               COMPUTATION OF INTEREST AND FEES.  Computation
of interest on Base Rate Loans when the Base Rate is determined by KeyBank’s “prime
rate” shall be calculated on the basis of a year of 365 or 366 days, as the
case may be, and the actual number of days elapsed.

 

44

 

Computation of other types of
interest and all fees shall be calculated on the basis of a year of 360 days
and the actual number of days elapsed, which results in a higher yield to
Lenders than a method based on a year of 365 or 366 days.  Interest shall accrue on each Loan for the
day on which the Loan is made, and shall not accrue on a Loan, or any portion
thereof, for the day on which the Loan or such portion is paid, provided that
any Loan that is repaid on the same day on which it is made shall bear interest
for one day.

 

2.9                               MAKING
PAYMENTS.

 

(a)                                  Except
as otherwise provided herein, all payments by Borrower or any Lender hereunder
shall be made to Administrative Agent at Administrative Agent’s Office not
later than the Requisite Time for such type of payment.  All payments received after such Requisite
Time shall be deemed received on the next succeeding Business Day.  All payments shall be made in immediately
available funds in lawful money of the United States of America.  All payments by Borrower shall be made
without condition or deduction for any counterclaim, defense, recoupment or
setoff.

 

(b)                                 Upon
satisfaction of any applicable terms and conditions set forth herein,
Administrative Agent shall promptly pay amounts received in accordance with the
prior subsection available in like funds as received, as follows:  (i) if
payable to Borrower, by crediting such account as Borrower may designate in
writing to Administrative Agent from time to time, and (ii) if payable to
any Lender, by wire transfer to such Lender at its Lending Office.  In the case of amounts held by Administrative
Agent that are payable to Borrower, if any applicable terms and conditions are
not so satisfied, Administrative Agent shall return any funds it is holding
that would otherwise be payable to Borrower to the Lenders making such funds
available, without interest.

 

(c)                                  Subject
to the definition of “Interest Period,” if any payment to be made by Borrower
shall come due on a day other than a Business Day, payment shall instead be
considered due on the next succeeding Business Day, and such extension of time
shall be reflected in computing interest and fees.

 

(d)                                 Unless
Borrower or any Lender has notified Administrative Agent prior to the date any
payment to be made by it is due, that it does not intend to remit such payment,
Administrative Agent may, in its sole and absolute discretion, assume that
Borrower or Lender, as the case may be, has timely remitted such payment and
may, in its sole and absolute discretion and in reliance thereon, make
available such payment to the Person entitled thereto.  If such payment was not in fact remitted to
Administrative Agent in immediately available funds, then:

 

(i)                                     if
Borrower failed to make such payment, each Lender shall forthwith on demand
repay to Administrative Agent the amount of such assumed payment made available
to such Lender, together with interest thereon in respect of each day from and
including the date such amount was made available by Administrative Agent to
such Lender to the date such amount is repaid to Administrative Agent at the
Federal Funds Rate; and

 

(ii)                                  if
any Lender failed to make such payment, Administrative Agent shall be entitled
to recover such corresponding amount on demand from such Lender.  If such Lender does not pay 

 

45

 

such corresponding amount forthwith upon Administrative Agent’s demand
therefor, Administrative Agent promptly shall notify Borrower, and Borrower
shall pay such corresponding amount to Administrative Agent.  Administrative Agent also shall be entitled
to recover from such Lender interest on such corresponding amount in respect of
each day from the date such corresponding amount was made available by
Administrative Agent to Borrower to the date such corresponding amount is
recovered by Administrative Agent, (A) from such Lender at a rate per
annum equal to the daily Federal Funds Rate, and (B) from Borrower, at a
rate per annum equal to the interest rate applicable to such Borrowing.  Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its Commitment or to prejudice any rights
which Administrative Agent or Borrower may have against any Lender as a result
of any default by such Lender hereunder.

 

(e)                                  If
Administrative Agent or any Lender is required at any time to return to
Borrower, or to a trustee, receiver, liquidator, custodian, or any official
under any proceeding under Debtor Relief Laws, any portion of a payments made
by Borrower, each Lender shall, on demand of Administrative Agent, return its
share of the amount to be returned, plus interest thereon from the date of such
demand to the date such payment is made at a rate per annum equal to the daily
Federal Funds Rate.

 

2.10                        FUNDING SOURCES.  Nothing
in this Agreement shall be deemed to obligate any Lender to obtain the funds
for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

 

2.11                        COLLATERAL.  Borrower’s Obligations are
secured by or will be secured by the Security Documents.

 

2.12                        ADDITIONAL
LOAN COMMITMENTS.

 

(a)                                  On
such date (the “Incremental Trigger Date”) as
the Administrative Agent shall receive a Compliance Certificate from the
Borrower demonstrating that the Total Leverage Ratio has been less than
3.75:1.00 for two consecutive quarters (as reflected in the two most recently
delivered Compliance Certificates), commitments for a new term loan tranche
(the “New Term Loan Commitment”) shall
automatically be provided in an amount equal to the full amount of the Second
Lien Loans then outstanding (but in no event greater than $10,000,000), and the
additional term loans (the “New Term Loans”)
to be made in connection therewith shall be used solely for the purpose of
discharging the Second Lien Loans in full.

 

(b)                                 Upon
receipt of such Compliance Certificate, the Administrative Agent shall promptly
notify the Borrower, the Lenders and the Second Lien Lenders that the
Incremental Trigger Date has occurred. 
Upon such notice, (i) each Second Lien Lender shall promptly
execute an Acceptance Letter in the form of Exhibit G, whereupon such
Second Lien Lender shall become a Lender hereunder (a “New Lender”)
with a New Term Loan Commitment equal to its Pro Rata Share (as defined in the
Second Lien Credit Agreement) of the principal amount of the Second Lien Loans,
(ii) Borrower shall execute a Note to each New Lender in the amount of the
New Lender’s New Term Loan Commitment (a “New Note”) and
(iii) Borrower, Administrative Agent and the Lenders shall execute such
modifications to this Credit Agreement 

 

46

 

as Administrative Agent shall
reasonably request, whereupon the New Lender shall become, and have the rights
and obligations of a “Lender”.  Each New
Note shall constitute a “Note” for all purposes of this Credit Agreement.  Borrower shall also execute and deliver to
Administrative Agent and the Lenders such additional documents, instruments,
certifications and opinions as the Requisite Lenders may require in their sole
and absolute discretion, including, without limitation, a Compliance
Certificate, demonstrating compliance with all covenants and all
representations and warranties set forth in the Loan Documents, in each case
after giving effect to the increase, and any amendments to the Security
Documents as the Requisite Lenders may request, and Borrower shall pay any
updated Uniform Commercial Code searches, all filing costs and fees, Attorney
Costs and any and all intangible taxes or other taxes, assessments or charges
or any similar fees, taxes or expenses arising in connection with such New Term
Loan Commitments.

 

(c)                                  Borrower
shall make any payments required pursuant to Section 3.5 as a result of
any breakage of Offshore Loan contracts in connection with the Term Loan
Commitments of the New Lenders, as applicable.

 

(d)                                 Except
as set forth below, the terms and provisions of the New Term Loans made on the
Incremental Trigger Date shall be identical to those of the Original Term
Loans, and in any event (i) the final maturity of the New Term Loans shall
be no shorter than the final maturity of the Original Term Loans and (ii) the
rate of interest applicable to the New Term Loans shall be the same as that
payable with respect to Original Term Loans and (iii) the New Term Loans
shall share ratably with the Original Term Loans in all mandatory prepayments
made pursuant to Section 2.4(b). 
Notwithstanding the foregoing, (i) the New Term Loans shall not be
subject to the call protection, prepayment premium and make-whole provisions
set forth in Sections 2.4(a)(ii) and 2.4(d), as applicable, and may be
prepaid by Borrower from time to time, upon Requisite Notice to Administrative
Agent not later than the Requisite Time therefore, in part in the Minimum
Amount or in full without premium or penalty and (ii) the New Term Loans
shall not be subject to the amortization schedule applicable to Original Term
Loans as set forth in Section 2.5(b), and shall instead be repaid in
consecutive equal quarterly installments of $25,000 on the last day of each
fiscal quarter, commencing on the last day of the fiscal quarter during which
the Incremental Trigger Date occurs, with the balance due on the Maturity Date
with respect to Term Loans.

 

(e)                                  The
obligation of the Administrative Agent and the New Lenders to make Loans in
respect of the New Term Loan Commitments pursuant to this Section 2.12
shall be conditioned upon satisfaction of the following conditions precedent
which must be satisfied prior to the effectiveness of any New Term Loan
Commitment:

 

(i)                                     No Event of Default. 
No Default or Event of Default shall exist on such Incremental Trigger
Date either before or after giving effect to the New Term Loan Commitments.

 

(ii)                                  Discharge of Second Lien Loans.  The Administrative Agent shall be satisfied
that all Obligations under and as defined in the Second Lien Credit Agreement
have been discharged in full simultaneously with the issuance of the New Term
Loans and that all Liens created by and securing Indebtedness under the Second
Lien Loan Documents have been released.

 

47

 

(iii)                               Representations and Warranties. The representations and
warranties made by Borrower in the Loan Documents or otherwise made by or on
behalf of Borrower or any of its respective Subsidiaries in connection
therewith or after the date thereof shall be true and correct in all material
respects on the Incremental Trigger Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case such representations and warranties shall have been true and correct in
all material respects as of such earlier date, both immediately before and
after giving effect thereto; and

 

(iv)                              Other. Borrower shall satisfy such other conditions to the
New Term Loan Commitments as Administrative Agent may require in its reasonable
discretion (including, without limitation, financial information, evidence of
release of collateral securing the Second Lien Loans and reasonably
satisfactory evidence, including opinions, of due authorization, execution,
delivery, enforceability and absence of conflicts typically delivered in
connection with extension of credit to a business entity).

 

SECTION III.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.1                               TAXES.

 

(a)                                  Any
and all payments by Borrower to or for the account of Administrative Agent or
any Lender under any Loan Document shall be made free and clear of and without
deduction for any and all present or future taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges (including, but
not limited to, estimated taxes), and all liabilities with respect thereto, excluding,
in the case of Administrative Agent and each Lender, (i) taxes imposed on
or measured by its net income, (ii) franchise taxes imposed on it (in lieu
of net income taxes) by the jurisdiction (or any political subdivision thereof)
under the Laws of which Administrative Agent or such Lender, as the case may
be, is organized or maintains a lending office; (iii) any branch profits
tax imposed by the United States of America or any similar tax imposed by
another jurisdiction in which Borrower is located; (iv) applicable
withholding tax imposed by Sections 1441 and 1442 of the Code that is withheld
by Administrative Agent from a payment to any Foreign Lender (as defined in Section 10.22
of this Agreement) pursuant to Section 10.22; and (v) any penalties, interest,
costs and expenses (including Attorney Costs) imposed on Administrative Agent
or any Lender arising from a determination by any Governmental Authority that
Administrative Agent did not properly withhold any tax or other amount from
payments made in respect of any Foreign Lender (all such non-excluded taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and liabilities being hereinafter referred to as “Taxes”). 
If Borrower shall be required by any Laws to deduct any Taxes from or in
respect of any sum payable under any Loan Document to Administrative Agent or
any Lender (other than as a result of a breach by a Foreign Lender of its
obligations under Section 10.22 of this Agreement), (A) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), Administrative Agent and such Lender receives an amount equal to
the sum it would have received had no such deductions been made, (B) Borrower
shall make such deductions, (C) Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable Laws, and (D) within 

 

48

 

30 days after the date of such
payment, Borrower shall furnish to Administrative Agent (who shall forward the
same to such Lender) the original or a certified copy of a receipt evidencing
payment thereof.

 

(b)                                 In
addition, Borrower agrees to pay any and all present or future stamp,
recording, filing, transfer, court or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any payment made
under any Loan Document or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, any Loan Document
(hereinafter referred to as “Other Taxes”).

 

(c)                                  If
Borrower shall be required by the Laws of any jurisdiction outside the United
States to deduct any Taxes from or in respect of any sum payable under any Loan
Document to Administrative Agent or any Lender, Borrower shall also pay to such
Lender or Administrative Agent (for the account of such Lender), at the time
interest is paid, such additional amount that the respective Administrative
Agent or such Lender specifies as necessary to preserve the after tax yield
(after factoring in United States (federal and state) taxes imposed on or
measured by net income) such Lender would have received if such deductions (including
deductions applicable to additional sums payable under this Section) had not
been made.

 

(d)                                 Borrower
agrees to indemnify, defend and hold Administrative Agent and each Lender
harmless for (i) the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section) paid by Administrative Agent and such Lender; and (ii) any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto; provided
that (A) Borrower shall not be obligated to indemnify the Administrative
Agent or any Lender for any penalties described in clause (ii) above to
the extent the Administrative Agent or such Lender, as applicable, (1) had
actual knowledge of the existence of the tax, interest, or expense, the
non-payment of which gave rise to such penalties, and (2) failed to give
Borrower notice of such tax, interest or expense within ten (10) Business
Days after the Administrative Agent or such Lender received actual knowledge of
the existence thereof; and (B) except to the extent contemplated in clause
(A) of this Section 3.1(d), nothing contained in this subsection (d) shall
be deemed to imply any obligation on the part of the Administrative Agent or
any Lender to provide Borrower with the notice of any such tax, penalty,
interest or expense.  Payment under this
subsection (d) shall be made within 30 days after the date the Lender or
the Administrative Agent makes a demand therefor.

 

3.2                               ILLEGALITY.  If any Lender determines
that any Laws have made it unlawful, or that any Governmental Authority has
asserted that it is unlawful, for any Lender or its applicable Lending Office
to make, maintain or fund Offshore Rate Loans, or materially restricts the
authority of such Lender to purchase or sell, or to take deposits of, Dollars
in the applicable offshore Dollar market, or to determine or charge interest
rates based upon the Offshore Rate, then, on notice thereof by Lender to
Borrower through Administrative Agent, any obligation of such Lender to make
Offshore Rate Loans shall be suspended until such Lender notifies
Administrative Agent and Borrower that the circumstances giving rise to such
determination no longer exist.  Upon
receipt of such notice, Borrower shall, upon demand from such Lender (with a
copy to Administrative Agent), prepay or Convert all Offshore Rate Loans of
such Lender, either on the last day of the Interest Period thereof, if such
Lender may lawfully continue to 

 

49

 

maintain such Offshore Rate Loans to such day, or immediately, if
Lender may not lawfully continue to maintain such Offshore Rate Loans.  Each Lender agrees to designate a different
Lending Office if such designation will avoid the need for such notice and will
not, in the good faith judgment of such Lender, otherwise be materially
disadvantageous to such Lender.

 

3.3                               INABILITY TO DETERMINE RATES.  If,
in connection with any Request for Extension of Credit involving any Offshore
Rate Loan, Administrative Agent determines that (a) Dollar deposits are
not being offered to banks in the applicable offshore dollar market for the
applicable amount and Interest Period of the requested Offshore Rate Loan, (b) adequate
and reasonable means do not exist for determining the underlying interest rate
for such Offshore Rate Loan, or (c) such underlying interest rate does not
adequately and fairly reflect the cost to Lender of funding such Offshore Rate
Loan, Administrative Agent will promptly notify Borrower and all Lenders.  Thereafter, the obligation of all Lenders to
make or maintain such Offshore Rate Loan shall be suspended until
Administrative Agent revokes such notice. 
Upon receipt of such notice, Borrower may revoke any pending request for
a Borrowing of Offshore Rate Loans or, failing that, be deemed to have
converted such request into a request for a Borrowing of Base Rate Loans in the
amount specified therein.

 

3.4                               INCREASED
COST AND REDUCED RETURN; CAPITAL ADEQUACY.

 

(a)                                  If
any Lender determines that any Laws announced after the date hereof

 

(i)                                     impose
on such Lender any Tax, duty, or other charge with respect to any Offshore Rate
Loans or its obligation to make Offshore Rate Loans (other than as a result of
any change in the rate of applicable taxes imposed on or measured by the net
income of Administrative Agent or any Lender);

 

(ii)                                  change
the basis on which Taxes are imposed on any amounts payable to such Lender
under this Agreement in respect of any Offshore Rate Loans;

 

(iii)                               impose
or modify any reserve, special deposit, or similar requirement (other than the
reserve requirement utilized in the determination of the Offshore Rate)
relating to any extensions of credit or other assets of, or any deposits with
or other liabilities or commitments of, such Lender (including its Commitment);
or

 

(iv)                              impose
on such Lender or on the offshore Dollar interbank market any other condition
affecting this Agreement or any of such extensions of credit or liabilities or
commitments;

 

and the result of any of the foregoing is to increase the cost to such
Lender of making, Converting into, Continuing, or maintaining any Offshore Rate
Loans or to reduce any sum received or receivable by such Lender under this
Agreement with respect to any Offshore Rate Loans, then from time to time upon
demand of such Lender (with a copy of such demand to Administrative Agent),
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such increased cost or reduction (except to the extent that
such increased cost or reduction is an amount subject to Section 3.1, in
which case the sum received or receivable by such Lender shall be increased in
accordance with the provisions of Section 3.1).

 

50

 

(b)                                 If
any Lender determines that any change in or the interpretation of any Laws
announced after the date hereof have the effect of reducing the rate of return
on the capital of such Lender or compliance by such Lender (or its Lending
Office) or any corporation controlling such Lender as a consequence of such
Lender’s obligations hereunder (taking into consideration its policies with
respect to capital adequacy and such Lender’s desired return on capital), then
from time to time upon demand of such Lender (with a copy of such demand to
Administrative Agent), Borrower shall pay to such Lender such additional
amounts as will compensate such Lender for such reduction; provided, however, that Borrower shall not
be required to pay additional amounts to compensate any Lender for (i) any
applicable withholding tax imposed by Sections 1441 and 1442 of the Code that
is withheld by Administrative Agent from a payment to any Foreign Lender
pursuant to Section 10.22, (ii) any reduction in connection with any
penalties, interest, costs and expenses (including Attorney Costs) arising from
a determination by any Governmental Authority that Administrative Agent did not
properly withhold any tax or other amount from payments made in respect of any
Foreign Lender; or (iii) any change in the rate of applicable taxes
imposed on or measured by net income.

 

3.5                               BREAKFUNDING COSTS.  Upon
demand of any Lender (with a copy to Administrative Agent) from time to time,
Borrower shall promptly compensate such Lender for and hold such Lender
harmless from any loss, cost or expense incurred by it as a result of:

 

(a)                                  any
Continuation, Conversion, payment or prepayment of any Loan other than a Base
Rate Loan on a day other than the last day of the Interest Period for such Loan
(whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise); or

 

(b)                                 any
failure by Borrower (for a reason other than the failure of such Lender to make
a Loan) to prepay, borrow, Continue or Convert any Loan other than a Base Rate
Loan on the date or in the amount notified by Borrower;

 

including any loss of anticipated profits and any loss or expense
arising from the liquidation or reemployment of funds obtained by it to
maintain such Loan or from fees payable to terminate the deposits from which such
funds were obtained.  Borrower shall also
pay any customary administrative fees charged by such Lender in connection with
the foregoing.

 

3.6                               MATTERS
APPLICABLE TO ALL REQUESTS FOR COMPENSATION.

 

(a)                                  The
Administrative Agent or any Lender claiming compensation under this Section 3
shall deliver to Borrower a certificate setting forth in reasonable detail the
additional amount or amounts to be paid to it hereunder, which shall be
conclusive in the absence of clearly demonstrable error.  In determining such amount, Lenders may use
any reasonable averaging and attribution methods.  For purposes of this Section 3, a Lender
shall be deemed to have funded each Offshore Rate Loan at the Offshore Rate for
such Loan by a matching deposit or other borrowing in the offshore Dollar
interbank market, whether or not such Offshore Rate Loan was in fact so funded.

 

(b)                                 Borrower
shall not be obligated to pay any amount under this Section 3 which arose
prior to the date which is 180 days preceding the date of such demand or is
attributable to periods prior to the date which is 180 days preceding the date
of such demand; provided, 

 

51

 

however, that in the event any Law is enacted
that retroactively imposes any cost or charge upon the Administrative Agent or
any Lender that would otherwise be a basis for compensation under Sections 3.1
through 3.5, the Administrative Agent or such Lender may make a demand for such
compensation through and including the date which is 180 days after the date
upon which such Law takes effect.

 

(c)                                  Upon
any Lender making a claim for compensation under Section 3.1 or 3.4,
Borrower may remove and replace such Lender in accordance with Section 10.23
hereof.

 

3.7                               SURVIVAL.  All of Borrower’s
obligations under this Section 3 shall survive for a period of one (1) year
after the later of termination of the Commitments, and payment in full of all
Obligations; provided, however,
that the obligation of Borrower to make any payment under this Section 3
is contingent upon the receipt by Borrower of the certificate described in Section 3.6(a) within
the later of (a) 180 days after the later of the repayment of all Loans,
the termination of all Letters of Credit and the termination of the Commitment,
or (b) in the case of any Law retroactively imposing any cost or charge
upon the Administrative Agent or any Lender, 180 days after the date upon which
such Law takes effect.

 

SECTION IV.

CONDITIONS PRECEDENT TO EXTENSIONS OF CREDIT

 

4.1                               CONDITIONS OF INITIAL EXTENSION OF CREDIT.  The
obligation of each Lender to make its initial Extension of Credit hereunder is
subject to satisfaction (or waiver by Administrative Agent) of the following
conditions precedent:

 

(a)                                  Loan Documents and Other Closing Deliverables.  Unless waived by Administrative Agent and
Lenders, Administrative Agent’s receipt of the following, each of which shall
be originals unless otherwise specified or agreed to by Administrative Agent,
each properly executed by a Responsible Officer of the applicable Credit Party,
each dated on, or in the case of third party certificates, recently before the
Closing Date and each in form and substance satisfactory to Administrative
Agent, Lenders and their legal counsel:

 

(i)                                     executed
counterparts of this Agreement, sufficient in number for distribution to
Administrative Agent, Lenders and Borrower;

 

(ii)                                  the
Notes executed by Borrower in favor of each Lender, each in a principal amount
equal to such Lender’s Commitment;

 

(iii)                               the
Multi-Party Guaranty;

 

(iv)                              the
Pledge and Security Agreement, together with such certificates, stock powers,
registrations and other supporting documents as Administrative Agent shall
reasonably require;

 

(v)                                 the
Intellectual Property Security Agreements together with such certificates,
stock powers, registrations and other supporting documents as Administrative
Agent shall reasonably require;

 

(vi)                              executed
counterparts of the Intercreditor Agreement;

 

52

 

(vii)                           the
Second Lien Loan Documents;

 

(viii)                        such
certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of Borrower as Administrative Agent
may require to establish the identities of and verify the authority and
capacity of each Responsible Officer thereof authorized to act as a Responsible
Officer thereof;

 

(ix)                                sufficient
copies of each Organization Document of each Credit Party, as applicable, and,
to the extent applicable, certified as of a recent date by the appropriate
governmental official, for each Lender, each dated the Closing Date or a recent
date prior thereto;

 

(x)                                   resolutions
of the Board of Directors or similar governing body of each Credit Party
approving and authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents and the Merger Documents to which it is
a party or by which it or its assets may be bound as of the Closing Date,
certified as of the Closing Date by its secretary or an assistant secretary as
being in full force and effect without modification or amendment;

 

(xi)                                a
good standing certificate from the applicable Governmental Authority of each
Credit Party’s jurisdiction of incorporation, organization or formation and in
each jurisdiction in which it is qualified as a foreign corporation or other
entity to do business, each dated a recent date prior to the Closing Date;

 

(xii)                             a
certificate signed by a Responsible Officer of Borrower (A) that the
representations and warranties made by Borrower herein are true and correct on
and as of the Closing Date (except to the extent such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date), (B) that Borrower is in
compliance with all the terms and provisions of the Loan Documents to which it
is a party, and no Default or Event of Default shall have occurred and be
continuing or would result from the consummation of the borrowing contemplated
hereby, and (C) that there has been no event or circumstance since the
date of the Audited Financial Statements which could reasonably be expected to
have a Material Adverse Effect;

 

(xiii)                          opinions
of counsel to Borrower in substantially the form of Exhibit G and
otherwise in form and substance reasonably satisfactory to Administrative
Agent;

 

(xiv)                         such
reliance letters as Administrative Agent shall request providing for the right
of the Administrative Agent and the Lenders to rely on any legal opinions,
solvency opinions or fairness opinions delivered to Borrower or any of its
Subsidiaries in connection with the Related Transactions, in each case
addressed to the Administrative Agent and Lenders; and

 

(xv)                            such
other assurances, certificates, documents, consents or opinions as
Administrative Agent, Issuing Lender or Requisite Lenders reasonably may
require.

 

(b)                                 Fees and Expenses. 
Any fees and expenses required to be paid by Borrower or any of its
Subsidiaries to Administrative Agent, Arranger or any Lender on or before the
Closing Date pursuant to the Facilities Letter, the Fee Letter, any Loan
Document or otherwise shall have been paid.

 

53

 

(c)                                  Attorney Costs. 
Unless waived by Administrative Agent, Borrower shall have paid all
Attorney Costs of Administrative Agent to the extent invoiced prior to or on
the Closing Date, plus such additional amounts of Attorney Costs as shall
constitute its reasonable estimate of Attorney Costs incurred or to be incurred
by it through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between Borrower and
Administrative Agent).

 

(d)                                 Litigation. 
Administrative Agent and its counsel shall have been provided sufficient
information concerning any and all outstanding litigation involving Borrower or
its Subsidiaries and shall be satisfied with the same, in its sole and absolute
discretion.

 

(e)                                  Related Transactions. 
Administrative Agent shall have received:

 

(i)                                     evidence,
reasonably satisfactory to Administrative Agent, that the Borrower has
completed, or concurrently with the initial credit extension hereunder will
complete, the Related Transactions in accordance with the terms of the Merger
Documents (without any amendment thereto or waiver thereunder unless consented
to by Administrative Agent). 
Administrative Agent shall have received a copy of the Merger Documents
and all instruments, documents and agreements related thereto, certified in
certificate of a Responsible Officer of Borrower, dated the Closing Date, as
correct and complete; and

 

(ii)                                  evidence
reasonably satisfactory to it that since December 31, 2006, there shall
have been no Material Adverse Change with respect to Borrower and its
Subsidiaries or Haverstick and its Subsidiaries.

 

(f)                                    Existing Indebtedness. 
On the Closing Date, Borrower and its Subsidiaries shall have (i) repaid
in full all Existing Indebtedness, (ii) terminated any commitments to lend
or make other extensions of credit thereunder, (iii) delivered to
Administrative Agent all documents or instruments necessary to release all
Liens securing Existing Indebtedness or other obligations of Borrower and its
Subsidiaries thereunder being repaid on the Closing Date, and (iv) made
arrangements satisfactory to Administrative Agent with respect to the cancellation
of any letters of credit outstanding thereunder or the issuance of Letters of
Credit to support the obligations of Borrower and its Subsidiaries with respect
thereto.

 

(g)                                 Authorizations and Consents. 
Each Credit Party shall have obtained all governmental authorizations
and all consents of other Persons, in each case that are necessary or advisable
in connection with the transactions contemplated by the Loan Documents and the
Merger Documents and each of the foregoing shall be in full force and effect
and in form and substance 

reasonably satisfactory to Administrative Agent.  All applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority
which would restrain, prevent or otherwise impose adverse conditions on the
transactions contemplated by the Loan Documents or the Merger Documents or the
financing thereof and no action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the foregoing shall
be pending, and the time for any applicable agency to take action to set aside
its consent on its own motion shall have expired.

 

54

 

(h)                                 Collateral.  In order
to create in favor of Administrative Agent, for the benefit of Lenders, a
valid, perfected first priority security interest in the personal property
Collateral, Administrative Agent shall have received:

 

(i)                                     evidence
satisfactory to Administrative Agent of the compliance by each Credit Party of
their obligations under the Pledge and Security Agreement and the other
Security Documents (including their obligations to execute and deliver UCC
financing statements, originals of securities, instruments and chattel paper
and any agreements governing deposit and/or securities accounts as provided
therein);

 

(ii)                                  A
completed Collateral Questionnaire dated the Closing Date and executed by a
Responsible Officer of each Credit Party, together with all attachments
contemplated thereby, including (A) the results of a recent search, by a
Person satisfactory to Administrative Agent, of all effective UCC financing
statements (or equivalent filings) made with respect to any personal or mixed
property of any Credit Party in the jurisdictions specified in the Collateral Questionnaire,
together with copies of all such filings disclosed by such search, and (B) UCC
termination statements (or similar documents) duly executed by all applicable
Persons for filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements (or equivalent filings)
disclosed in such search (other than any such financing statements in respect
of Permitted Liens);

 

(iii)                               opinions
of counsel (which counsel shall be reasonably satisfactory to Administrative
Agent) with respect to the creation and perfection of the security interests in
favor of Administrative Agent in such Collateral and such other matters
governed by the laws of each jurisdiction in which any Credit Party or any
personal property Collateral is located as Administrative Agent may reasonably
request, in each case in form and substance reasonably satisfactory to
Administrative Agent; and

 

(iv)                              evidence
that each Credit Party shall have taken or caused to be taken any other action,
executed and delivered or caused to be executed and delivered any other
agreement, document and instrument (including without limitation, any
intercompany notes evidencing Indebtedness permitted to be incurred pursuant to
Section 7.1(e)) and made or caused to be made any other filing and
recording (other than as set forth herein) reasonably required by Collateral
Agent.

 

(v)                                 executed
notices of assignment of claims in connection with United States government
receivables complying with the terms of the Assignment of Claims Act of 1940,
31 U.S.C. § 3727, 41 U.S.C. § 15. and otherwise acceptable in form to
Administrative Agent, to be held by the Administrative Agent, and written
authorization in form and substance satisfactory to Administrative Agent
authorizing Administrative Agent to file such notices with the appropriate
governmental authorities at Administrative Agent’s discretion upon an Event of
Default.

 

(vi)                              with
respect to each Material Lease, a Landlord Waiver from the landlord under such
Material Lease; provided that no such Landlord Waiver shall be required with
respect to any Material Lease that could not be obtained after the Credit Party
that is the lessee under such Material Lease shall have used its reasonable
best efforts to do so.

 

55

 

(i)                                     Control Agreements. 
Administrative Agent shall have received a duly executed control
agreement covering any applicable account collateral to the extent required
under the Pledge and Security Agreement.

 

(j)                                     Financial Statements; Projections.  Lenders shall have received from Borrower (i) the
Historical Financial Statements, (ii) pro forma consolidated and
consolidating financial statements of Borrower and its Subsidiaries as at the
Closing Date, and reflecting the consummation of the Haverstick Acquisition,
the related financings and the other transactions contemplated by the Loan
Documents and the Merger Documents to occur on or prior to the Closing Date,
which pro forma financial statements shall be in form and substance satisfactory
to Administrative Agent, and (iii) the Projections.

 

(k)                                  Evidence of Insurance. 
Administrative Agent shall have received a certificate from Borrower’s
insurance broker or other evidence satisfactory to it that all insurance
required to be maintained pursuant to Section 6.6 is in full force and
effect, together with endorsements naming Administrative Agent, for the benefit
of Lenders, as additional insured and loss payee thereunder to the extent
required under Section 6.6.

 

(l)                                     Solvency Certificate. 
On the Closing Date, Administrative Agent shall have received a
certificate from Borrower dated as of the Closing Date and addressed to
Administrative Agent and Lenders, and in form, scope and substance satisfactory
to Administrative Agent, with appropriate attachments and demonstrating that
after giving effect to the consummation of the Merger Documents and the
Extensions of Credit to be made on the Closing Date, Borrower and its
Subsidiaries are and will be Solvent.

 

(m)                               Due Diligence.  Other
than changes occurring in the ordinary course of business, no information or
materials are or should have been available to Borrower and its Subsidiaries as
of the Closing Date that are materially inconsistent with the material
previously provided to Administrative Agent for its due diligence review of
Borrower and its Subsidiaries.

 

(n)                                 Minimum EBITDA.  The
pro forma financial statements delivered pursuant to Section 4.1(j) shall
demonstrate in form and substance reasonably satisfactory to Administrative
Agent that on the Closing Date and immediately after giving effect to any
Extensions of Credit to be made on the Closing Date and the payment of all fees
and expenses required to be paid in cash on the Closing Date, Borrower shall
have generated trailing twelve month Consolidated EBITDA of at least
$15,000,000.

 

(o)                                 Proceeds of Second Lien Credit Agreement.  Borrower shall have received $10,000,000 in
gross proceeds from borrowings under the Second Lien Credit Agreement.

 

(p)                                 Post-Closing Agreement. 
Administrative Agent shall have received a fully executed copy of the
Post-Closing Letter, setting forth post-closing obligations of the Borrower and
its Subsidiaries with respect to certain conditions set forth in this Section 4.1,
in form and substance satisfactory to Administrative Agent in all respects.

 

4.2                               CONDITIONS TO ALL EXTENSIONS OF CREDIT.  In
addition to any applicable conditions precedent set forth elsewhere in this Section 4
or in Section 2, the obligation of each 

 

56

 

Lender to honor any Request for Extension of Credit other than a
Conversion or Continuation is subject to the following conditions precedent:

 

(a)                                  the
representations and warranties of Borrower contained in each of the Loan
Documents shall be correct on and as of the date of such Extension of Credit,
except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they shall be true and correct as of
such earlier date;

 

(b)                                 no
Default or Event of Default exists, or would result from such proposed
Extension of Credit;

 

(c)                                  Administrative
Agent shall have timely received a Request for Extension of Credit by Requisite
Notice by the Requisite Time;

 

(d)                                 Administrative
Agent shall have received, in form and substance satisfactory to it, such other
assurances, certificates, documents or consents related to the foregoing as
Administrative Agent and Requisite Lenders reasonably may require; and

 

(e)                                  no
order, judgment or decree of any Governmental Authority shall purport to
restrain any Lender from making any Loans to be made by it; no injunction or
other restraining order shall have been issued, shall be pending or noticed
with respect to any action, suit or proceeding seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated by this Agreement or the making of
Loans hereunder.

 

Each Request
for Extension of Credit by Borrower shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.2(a) and (b) have
been satisfied on and as of the date of such Extension of Credit.

 

SECTION V.

REPRESENTATIONS AND WARRANTIES

 

Borrower
represents and warrants to Administrative Agent and Lenders that:

 

5.1                               EXISTENCE AND QUALIFICATION; POWER;
COMPLIANCE WITH LAWS.

 

(a)                                  Each
Credit Party is duly organized, validly existing and, except as set forth on
Schedule 5.1(a), in good standing under the Laws of the state of its
organization, has the requisite power and authority and the legal right to own,
lease and operate its properties, to conduct its business as currently
conducted, is duly qualified and in good standing under the Laws of every
jurisdiction where it is required to be so qualified, except where the failure
to be so qualified could not be reasonably expected to have a Material Adverse
Effect, and is in compliance with all Laws except to the extent that
noncompliance could not be reasonably expected to have a Material Adverse
Effect.

 

(b)                                 Schedule 5.1(b) attached
hereto lists, as of the Closing Date, each of the  Subsidiaries.

 

57

 

(c)                                  Immediately
after giving effect to the Related Transactions, the Borrower will indirectly
own 100% of the issued and outstanding Equity Securities of Haverstick and its
Subsidiaries.

 

5.2                               POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS.  Each Credit Party has the requisite
power and authority and the legal right to make, deliver and perform each Loan
Document to which it is a party and Borrower has the corporate or other entity
power and authority to borrow hereunder and has taken all necessary action to
authorize the borrowings on the terms and conditions of this Agreement and to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents to which it is a party. 
No consent or authorization of, filing with, or other act by or in
respect of any Governmental Authority or any other Person, is required in connection
with the borrowings hereunder or with the execution, delivery, performance,
validity or enforceability of this Agreement or any of the other Loan
Documents.  The Loan Documents have been
duly executed and delivered by each Credit Party which is a party hereto, and
constitute legal, valid and binding obligations of such Credit Party,
enforceable against such Credit Party in accordance with their respective
terms.

 

5.3                               NO LEGAL BAR.  The
execution, delivery, and performance by each Credit Party of the Loan Documents
to which it is a party and compliance with the provisions thereof have been
duly authorized by all requisite action on the part of such Credit Party and do
not and will not (a) violate or conflict with, or result in a breach of,
or require any consent under (i) any Organization Documents of the Credit
Parties, (ii) any applicable material Laws, rules, or regulations or any
order, writ, injunction, or decree of any Governmental Authority or arbitrator,
or (iii) any material Contractual Obligation of such Credit Party or any
of its Subsidiaries or by which any of them or any of their property is bound
or subject, (b) constitute a default under any material agreement or
instrument, (c) require any registration with, consent or approval of,
notice to, or any other action to, with or by, and Governmental Authority, or (d) result
in, or require, the creation or imposition of any Lien on any of the properties
of such Credit Party or any of its Subsidiaries (other than the Liens granted
in connection herewith).

 

5.4                               EQUITY
SECURITIES AND OWNERSHIP.  The Equity
Securities of each of Borrower and its Subsidiaries has been duly authorized
and validly issued and is fully paid and non-assessable.  Except as set forth on Schedule 5.4, as of
the date hereof, there is no existing option, warrant, call, right, commitment
or other agreement to which Borrower or any of its Subsidiaries is a party
requiring, and there is no membership interest or other Equity Security of
Borrower or any of its Subsidiaries outstanding which upon conversion or
exchange would require, the issuance by Borrower or any of its Subsidiaries of
any additional membership interests or other Equity Securities of Borrower or
any of its Subsidiaries or other Equity Securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase, a
membership interest or other Equity Security of Borrower or any of its
Subsidiaries.  Schedule 5.4 sets forth a
true, complete and correct list as of the Closing Date, both before and after
giving effect to the Loan Documents and the Related Transactions, of the name
of Borrower and each of its Subsidiaries and indicates for each such Person
(other than Borrower) its ownership (by holder and percentage interest) and the
type of entity of each of them, and the number and class of authorized and
issued Equity Securities of such Subsidiary. 
Except as set forth on Schedule 5.4, as of the Closing Date, neither
Borrower nor any of its Subsidiaries has any equity investments in any other
corporation or entity.

 

58

 

5.5                               FINANCIAL
STATEMENTS; PROJECTIONS; NO MATERIAL ADVERSE EFFECT.

 

(a)                                  The
Historical Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present in all material respects the
financial condition of Borrower and its Subsidiaries as of the date thereof and
their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (iii) to the extent required by
GAAP, show all material indebtedness and other liabilities, direct or
contingent, of Borrower and its Subsidiaries as of the date thereof.

 

(b)                                 On
and as of the relevant date of determination, the Projections of Borrower and
its Subsidiaries for the period of fiscal year 2007 through and including
fiscal year 2012, including quarterly projections for each month during fiscal
years 2007 and 2008 (the “Projections”)
are based on good faith estimates and assumptions made by the management of
Borrower and as of the relevant date of determination, management of Borrower
believed that the Projections were reasonable and attainable.

 

(c)                                  Since
December 31, 2006, (i) there has been no event or circumstance which
could reasonably be expected to have a Material Adverse Effect and (ii) except
as set forth on Schedule 5.5 hereto and as disclosed in the Borrower’s public
filings with the Securities and Exchange Commission from time to time, no
Internal Control Event has occurred.

 

5.6                               LITIGATION.  Except as disclosed in the Disclosure
Letter, there are (a) no lawsuits, investigations or
proceedings of or before an arbitrator or Governmental Authority pending or, to
the best of knowledge of Borrower, threatened by or against Borrower or any of
its Subsidiaries or against any of their properties or revenues which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect, (b) no orders, writs, injunctions, judgments, or decrees of any
court or government agency or instrumentality to which the Borrower or any of
its Subsidiaries is a party or by which the property or assets of them are
bound, or (c) no grievances, disputes, or controversies outstanding with
any union or other organization of the employees of Borrower or any of its
Subsidiaries, or, to the knowledge of Borrower or such Subsidiaries, threats of
work stoppage, strike, or pending demands for collective bargaining, which
could reasonably be expected to cause or result in a Material Adverse Effect.

 

5.7                               NO DEFAULT; CONTINUED BUSINESS.  Neither
Borrower nor any its Subsidiaries are in default under or with respect to any
Contractual Obligation which could reasonably be expected to have a Material
Adverse Effect, and no Default or Event of Default has occurred and is
continuing or will result from the consummation of this Agreement or any of the
other Loan Documents, or the making of the Extensions of Credit hereunder.  There exists no actual, pending, or, to
Borrower’s knowledge, any threatened termination, cancellation or limitation
of, or any modification or change in the business relationship of Borrower or
any Subsidiary and any customer or supplier, or any group of customers or
suppliers, whose purchases or supplies, individually or in the aggregate, could
reasonably be expected to cause or result in a Material Adverse Effect, and
there exists no present condition or state of facts or circumstances that could
reasonably be expected to have a Material Adverse Effect or prevent any Credit
Party from 

 

59

 

conducting such business or the transactions contemplated by this
Agreement in substantially the same manner in which it was previously
conducted.

 

5.8                               OWNERSHIP OF PROPERTY; LIENS.  Borrower
and its Subsidiaries have valid fee or leasehold interests in all real property
which they use in their respective businesses, and Borrower and its
Subsidiaries have good and marketable title to all their other property, and
none of such property is subject to any Lien, except as permitted in Section 7.2.

 

5.9                               TAXES.  Borrower and its
Subsidiaries have timely filed all material tax returns which are required to
be filed, and have paid, or made provision for the payment of, all taxes
whether or not shown as due on any tax return, except (a) such taxes, if
any, as are being contested in good faith by appropriate proceedings and as to
which adequate reserves have been both established and maintained in accordance
with GAAP, and (b) immaterial taxes in de
minimis amounts; provided,
however, that in each case no material item or portion of property
of Borrower or any of its Subsidiaries is in jeopardy of being seized, levied
upon or forfeited.  Borrower knows of no
proposed tax assessment against Borrower or any of its Subsidiaries which is
not being actively contested by Borrower or such Subsidiary in good faith and
by appropriate proceedings and as to which adequate reserves have been both
established and maintained in accordance with GAAP.

 

5.10                        MARGIN
REGULATIONS; INVESTMENT COMPANY ACT.

 

(a)                                  Neither
Borrower for any of its Subsidiaries is engaged nor will it engage, principally
or as one of its important activities, in the business of extending credit for
the purpose of “purchasing” or “carrying” “margin stock” within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect.  No part of the proceeds of
any Extensions of Credit hereunder will be used for “purchasing” or “carrying” “margin
stock” as so defined or for any purpose which violates, or which would be
inconsistent with, the provisions of Regulations T, U or X of such Board of
Governors.

 

(b)                                 Neither
Borrower nor any of its Subsidiaries is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.

 

5.11                        ERISA
COMPLIANCE; EMPLOYEE MATTERS.

 

(a)                                  Each
Employee Benefits Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other applicable Laws.  Each Employee Benefits Plan that is intended
to qualify under Section 401(a) of the Code has received a favorable
determination or opinion letter from the IRS or an application for such a
letter is currently being processed by the IRS with respect thereto and, to the
best knowledge of Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. 
Borrower and each ERISA Affiliate have made all required contributions
to each Pension Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any
Pension Plan.  There has been no
prohibited transaction (which is not otherwise exempt under Section 4975
of the Code) or violation of the fiduciary responsibility rules under
ERISA with respect to any 

 

60

 

Employee Benefits Plan that has
or could reasonably be expected to have a Material Adverse Effect.

 

(b)                                 (i) No
ERISA Event has occurred or, to the best of knowledge of Borrower or any
Subsidiary or ERISA Affiliate, is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) neither Borrower
nor any Subsidiary or ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
Borrower nor any Subsidiary or ERISA Affiliate has incurred, or, to the best of
knowledge of Borrower or any Subsidiary or ERISA Affiliate, reasonably expects
to incur, any liability (and, to the best of knowledge of Borrower or any
Subsidiary or ERISA Affiliate, no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither
Borrower nor any Subsidiary or ERISA Affiliate has engaged in a transaction
that could be subject to Sections 4069 or 4212(c) of ERISA.  Except to the extent required under Section 4980B
of the Code, no Employee Benefit Plan provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employee of Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates extending beyond the end of the month in which any such retired or
former employee terminates employment.

 

(c)                                  Borrower
and each of its Subsidiaries has good labor relations.  Borrower, its Subsidiaries, and their
respective employees, agents and representatives have not committed any
material unfair labor practice as defined in the National Labor Relations
Act.  Neither Borrower nor any of its
Subsidiaries has been or is engaged in any unfair labor practice that could
reasonably be expected to have a Material Adverse Effect.  There has been and is (a) no unfair labor
practice charge or complaint pending against Borrower or any of its
Subsidiaries, or to the best knowledge of Borrower, threatened against any of
them before the National Labor Relations Board or any other Governmental
Authority and no grievance or arbitration proceeding arising out of or under
any collective bargaining agreement or similar agreement that is so pending
against Borrower or any of its Subsidiaries or to the best knowledge of
Borrower, threatened against any of them, (b) no labor dispute, strike,
lockout, slowdown or work stoppage in existence or threatened against,
involving or affecting Borrower or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect, (c) no labor
union, labor organization, trade union, works council, or group of employees of
Holdings or any of its Subsidiaries has made a pending demand for recognition
or certification, and there are no representation or certification proceedings
or petitions seeking a representation proceeding presently pending or
threatened to be brought or filed with the National Labor Relations Board or
any other Governmental Authority, and (d) to the best knowledge of
Borrower, no union representation question existing with respect to any of the
employees of Holdings or any of its Subsidiaries and, to the best knowledge of
Borrower, no labor union organizing activity with respect to any employees of
Borrower or any of its Subsidiaries that is taking place, except (with respect
to any matter specified in clause (a), (b), (c), or (d) above, either
individually or in the aggregate) such as is not reasonably likely to have a
Material Adverse Effect or as disclosed in Schedule 5.11.

 

5.12                        INTANGIBLE ASSETS.  Borrower
and its Subsidiaries own, or possess the right to use, all trademarks, trade
names, copyrights, patents, patent rights, franchises, licenses and other 

 

61

 

intangible assets that are used in the conduct of their respective
businesses as now operated or could obtain such right without causing a
Material Adverse Effect, and none of such items, to the best knowledge of
Borrower, conflicts with the valid trademark, trade name, copyright, patent,
patent right or intangible asset of any other Person to the extent that such
conflict has or could reasonably be expected to have a Material Adverse Effect.

 

5.13                        COMPLIANCE WITH LAWS.  Borrower
and its Subsidiaries are in compliance in all material respects with all
material Laws that are applicable to such Person.

 

5.14                        ENVIRONMENTAL COMPLIANCE.  Borrower
and its Subsidiaries conduct in the ordinary course of business a review of the
effect of existing Environmental Laws and claims alleging potential liability
or responsibility for violation of any Environmental Law on their respective
businesses, operations and properties, and as a result thereof Borrower has
reasonably concluded that such Environmental Laws and claims do not, and could
not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.

 

5.15                        INSURANCE.  The properties of Borrower
and its Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of Borrower, in such amounts, with such deductibles
and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where Borrower
or such Subsidiary operates.  Schedule
5.15 sets forth a list of all insurance maintained by or on behalf of the
Credit Parties and each of their Subsidiaries as of the Closing Date and, as of
the Closing Date, all premiums in respect of such insurance have been paid.

 

5.16                        SWAP OBLIGATIONS.  Neither
Borrower nor any of its Subsidiaries has incurred any outstanding obligations
under any Swap Contracts, other than Permitted Swap Obligations.  Borrower has undertaken its own independent
assessment of its consolidated assets, liabilities and commitments and has
considered appropriate means of mitigating and managing risks associated with
such matters and has not relied on any swap counterparty or any Affiliate of
any swap counterparty in determining whether to enter into any Swap Contract.

 

5.17                        SOLVENCY.  Borrower has received
consideration that is the reasonable equivalent value of the obligations and liabilities
Borrower has incurred in favor of Administrative Agent and the Lenders.  Each Credit Party is Solvent and each Credit
Party will be Solvent after giving effect to (i) the execution and
delivery of the Loan Documents to Administrative Agent and the Lenders and the
Extensions of Credit thereunder and (ii)  the Related Transactions (on a
pro forma basis).

 

5.18                        DISCLOSURE.  No statement, information,
report, representation, or warranty made by any Credit Party in any Loan
Document or furnished to Lender in connection with any Loan Document contains
any untrue statement of a material fact or, when viewed together with Borrower’s
periodic reports filed under the Exchange Act and the rules and
regulations promulgated thereunder, omits to state any material fact necessary
to make the statements herein or therein not misleading; provided that, with respect to projected
financial information, the Borrower represents only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time.  After due inquiry by Borrower,
there is no 

 

62

 

known fact that any Credit Party has not disclosed to Administrative
Agent and the Lenders that has or is reasonably likely to have a Material
Adverse Effect.

 

5.19                        PATRIOT
ACT.

 

(a)                                  Neither
the Loans contemplated hereunder nor the use of the proceeds thereof will
violate the Anti-Terrorism Order, the USA Patriot Act, the Trading with the
Enemy Act, as amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
or any enabling legislation or executive order relating thereto.

 

(b)                                 Neither
Borrower nor any Subsidiary (1) is a Person described or designated in the
Specially Designated Nationals and Blocked Persons List of the Office of
Foreign Assets Control or in Section 1 of the Anti-Terrorism Order, or (2) to
the best knowledge of Borrower, engages in any dealings or transactions with
any such Person.  The Borrower and its
Subsidiaries are in compliance, in all material respects, with the USA Patriot
Act.

 

(c)                                  No
part of the proceeds from the Loans hereunder will be used, directly or
indirectly, for any payments to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices Act of 1977, as amended.

 

5.20                        RELATED
TRANSACTIONS.

 

(a)                                  Borrower
has heretofore furnished Administrative Agent true and correct copies of the
Merger Documents.

 

(b)                                 The
Related Transactions have been (or, on the Closing Date, shall concurrently be)
completed in compliance with the terms of the Merger Documents and all
applicable Laws.  No material provision
of the Merger Documents was (or shall be) amended or waived in connection with
the transactions described therein unless consented to by Administrative Agent,
which consent shall not be unreasonably withheld.  All material and necessary authorizations,
consents, approvals, exceptions or other actions by or notices to or filings
with any court or administrative or governmental body or other Person required
in connection with the execution, delivery or performance of the Merger
Documents or the consummation of the Related Transactions are (or, on the
Closing Date, shall concurrently be) final and in full force and effect.

 

(c)                                  The
execution and delivery of the Merger Documents did not, and the consummation of
the Related Transactions will not, materially violate any material statute or
regulation of the United States (including any securities law) or of any state
or other applicable jurisdiction, or any material order, judgment or decree of
any court or governmental body binding on Borrower or any Subsidiary, or result
in a breach of, or constitute a default under, any material agreement,
indenture, instrument or other document, or any judgment, order or decree, to
which Borrower or any Subsidiary is a party or by which Borrower or any
Subsidiary is bound.

 

63

 

5.21                        SECURITY
INTEREST IN COLLATERAL.  The provisions of
this Agreement and the other Loan Documents create legal and valid Liens on all
the Collateral in favor of Administrative Agent, for the benefit of
Administrative Agent and the Lenders, and such Liens constitute perfected and
continuing Liens on the Collateral, securing the Obligations, enforceable
against the applicable Loan Party and all third parties, and having priority
over all other Liens on the Collateral except in the case of (a) Liens
permitted pursuant to Section 7.2, to the extent any such Liens would have
priority over the Liens in favor of Collateral Agent pursuant to any applicable
law and (b) Liens perfected only by possession (including possession of
any certificate of title) to the extent Administrative Agent has not obtained
or does not maintain possession of such Collateral.

 

5.22                        PERMITS,
ETC.  Each Credit Party has, and is in compliance
with, all permits, licenses, authorizations, approvals, entitlements and
accreditations required for such Person lawfully to own, lease, manage or
operate, or to acquire, each business currently owned, leased, managed or
operated, or to be acquired, by such Person, which, if not obtained, could
reasonably be expected to have a Material Adverse Effect.  No condition exists or event has occurred
which, in itself or with the giving of notice or lapse of time or both, would
result in the suspension, revocation, impairment, forfeiture or non-renewal of
any such permit, license, authorization, approval, entitlement or
accreditation, and there is no claim that any thereof is not in full force and
effect, except, to the extent any such condition, event or claim could not be
reasonably be expected to have a Material Adverse Effect.

 

5.23                        MATERIAL CONTRACTS.  Set forth in the Disclosure Letter is a true,
correct and complete list of all the Material Contracts in effect on the
Closing Date.  All such Material
Contracts, together with any updates provided pursuant to Section 6.2(l),
are in full force and effect and no defaults currently exist thereunder (other
than as described in the Disclosure Letter or in such updates).

 

5.24                        CERTAIN
FEES.  No broker’s or finder’s fee or commission
will be payable with respect hereto or any of the transactions contemplated
hereby.

 

5.25                        AFFILIATE
TRANSACTIONS.  Except as set forth
on Schedule 5.25, as of the date of this Agreement, there are no existing or
proposed agreements, arrangements, understandings, or transactions between any
Credit Party and any of the officers, members, managers, directors,
stockholders, parents, other interest holders, employees, or Affiliates (other
than other Credit Parties) of any Credit Party or any members of their
respective immediate families, and none of the foregoing Persons are directly
or indirectly indebted to or have any direct or indirect ownership,
partnership, or voting interest in any Affiliate of any Credit Party or any
Person with which any Credit Party has a business relationship or which
competes with any Credit Party.

 

5.26                        DORMANT
SUBSIDIARIES.  None of the
Subsidiaries of Borrower set forth on Schedule 5.26 (the “Dormant
Subsidiaries”) have any material continuing operations or conduct
any material business and all are in the process of being dissolved by the
Borrower.  Borrower is using its
reasonable best efforts to complete the dissolution process with respect to
each Dormant Subsidiary in a timely manner.

 

64

 

SECTION VI.

AFFIRMATIVE COVENANTS

 

So long as any
Obligation (excluding inchoate indemnity obligations) remains unpaid or
unperformed, or any portion of the Commitments or any Letter of Credit remain
outstanding, Borrower shall, and shall (except in the case of Borrower’s
reporting covenants set forth in Sections 6.1 and 6.2(a)-(c)), cause each
Subsidiary, to:

 

6.1                               FINANCIAL STATEMENTS.  Deliver
to Administrative Agent and each Lender, in form and detail satisfactory to
Administrative Agent and Requisite Lenders:

 

(a)                                  as
soon as available, but in any event within 90 days after the end of each fiscal
year of Borrower, a consolidated balance sheet, a consolidated statement of
income and a consolidated cash flow statement of Borrower and its Subsidiaries
as at the end of such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail,
audited and accompanied by a report and opinion of an independent certified
public accountant of nationally recognized standing, which report and opinion
shall be prepared in accordance with GAAP and shall not be subject to any
qualifications or exceptions as to the scope of the audit nor to any
qualifications or exceptions not reasonably acceptable to Requisite Lenders;

 

(b)                                 as
soon as available, but in any event within 45 days after the end of each of the
first three fiscal quarters of each fiscal year of Borrower, a consolidated balance
sheet, a consolidated statement of income and a consolidated cash flow
statement of Borrower and its Subsidiaries as at the end of such fiscal
quarter, and for such fiscal quarter and for the portion of Borrower’s fiscal
year then ended, setting forth in each case in comparative form the figures for
the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail and
certified by a Responsible Officer of Borrower as fairly presenting in all
material respects the financial condition, results of operations and cash flows
of Borrower and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes.

 

(c)                                  as
soon as available, but in any event within 45 days after the end of each fiscal
month of Borrower (including months which began prior to the Closing Date), a
consolidated balance sheet, a consolidated statement of income and a
consolidated cash flow statement of Borrower and its Subsidiaries as at the end
of such fiscal month, and for such fiscal month and for the 

portion of Borrower’s fiscal year then ended, setting forth in each
case in comparative form the figures for the corresponding fiscal month of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail and certified by a Responsible Officer of Borrower as
fairly presenting in all material respects the financial condition, results of
operations and cash flows of Borrower and its Subsidiaries in accordance with
GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes; provided, however, that with respect to
the delivery of such financial statements during fiscal year 2008, there shall
be no requirement to deliver comparisons to the corresponding month from the
prior fiscal year.

 

65

 

(d)                                 if,
as a result of any change in accounting principles and policies (or the
application thereof) from those used in the preparation of the Historical
Financial Statements, the consolidated financial statements of Borrower and its
Subsidiaries delivered pursuant to Section 6.1(a) or 6.1(b) will
differ in any material respect from the consolidated financial statements that
would have been delivered pursuant to such sections had no such change in
accounting principles and policies been made, then, together with the first
delivery of such financial statements after such change, one or more statements
of reconciliation for all such prior financial statements in form and substance
satisfactory to Administrative Agent.

 

Reports
required to be delivered pursuant to clauses (a), (b) and (c) of this
Section 6.1 shall be deemed to have been delivered on the date on which
Borrower posts such reports on Borrower’s internet website at the website
address listed on Schedule 10.2 hereof or when such report is posted on the
Securities and Exchange Commission’s website at www.sec.gov.; provided that (x) Borrower
shall notify Administrative Agent of the posting of any such new material, and (y) in
every instance Borrower shall provide paper copies of the Compliance
Certificates required by clause (a) of Section 6.2 to Administrative
Agent and each Lender.  Except for the
Compliance Certificates referred to in such clause (a) of Section 6.2,
Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the reports referred to in clauses (a) and (b) of
this Section 6.1, and in any event shall have no responsibility to monitor
compliance by Borrower with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such reports.

 

6.2                               CERTIFICATES, NOTICES AND OTHER INFORMATION.  Deliver
to Administrative Agent and each Lender, in form and detail satisfactory to
Administrative Agent and Requisite Lenders:

 

(a)                                  within
five (5) days after the delivery of the financial statements referred to
in Sections 6.1(a) and (b), a duly completed Compliance Certificate signed
by a Responsible Officer of Borrower;

 

(b)                                 promptly
after the same are available, copies of each annual report, proxy or financial
statement or other report or communication sent to the stockholders of
Borrower, and copies of all annual, regular, periodic and special reports and
registration statements which Borrower may file or be required to file with the
Securities and Exchange Commission under Sections 13 or 15(d) of the
Exchange Act, and not otherwise required to be delivered to Administrative
Agent pursuant hereto;

 

(c)                                  promptly
after the occurrence thereof, notice of any Default or Event of Default;

 

(d)                                 notice
of any change in accounting policies or financial reporting practices by
Borrower or any Subsidiary that is material to Borrower or to Borrower and its
Subsidiaries on a consolidated basis;

 

(e)                                  promptly
after the commencement thereof, notice of any litigation, investigation or
proceeding affecting Borrower where the reasonably expected damages to Borrower
exceed 

 

66

 

$2,500,000, or in which injunctive relief or similar relief is sought,
which relief, if granted, could reasonably be expected to have a Material
Adverse Effect;

 

(f)                                    promptly
after the occurrence thereof, notice of any Reportable Event with respect to
any Pension Plan or the intent to terminate any Pension Plan, or the
institution of proceedings or the taking or expected taking of any other action
to terminate any Pension Plan or withdraw from any Pension Plan;

 

(g)                                 (i) in
advance of, if known, or promptly after the occurrence of any ERISA Event, a
written notice specifying the nature thereof, what action Borrower, its
Subsidiaries or any of their respective ERISA Affiliates has taken, is taking
or proposes to take with respect thereto and, when known, any action taken or
threatened by the IRS, the Department of Labor or the PBGC with respect
thereto; and (ii) promptly following such ERISA Event, copies of (1) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates with the IRS with respect to each Pension Plan; (2) all notices
received by Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies
of such other documents or governmental reports or filings relating to any
Employee Benefit Plan as Administrative Agent shall reasonably request;

 

(h)                                 promptly
after the occurrence thereof, notice of any Material Adverse Effect;

 

(i)                                     as
soon as practicable and in any event no later than January 31 of each
fiscal year, a consolidated plan and financial forecast for such fiscal year
and each fiscal year (or portion thereof) through the final maturity date of
the Loans (a “Financial Plan”), including (i) a
forecasted consolidated and consolidating balance sheet and forecasted
consolidated and consolidating statements of income and cash flows of Borrower
and its Subsidiaries for each such fiscal year, together with pro forma
Compliance Certificates for each such fiscal year and an explanation of the
assumptions on which such forecasts are based, (ii) forecasted
consolidated statements of income and cash flows of Borrower and its
Subsidiaries for each month of the fiscal year then beginning, (iii) forecasts
demonstrating projected compliance with the requirements of Section 7.12
through the Maturity Date of the Term Loans, and (iv) forecasts
demonstrating adequate liquidity through the Maturity Date of the Term Loans,
together, in each case, with an explanation of the assumptions on which such
forecasts are based all in form and substance reasonably satisfactory to
Administrative Agent and accompanied by a certificate from a Responsible Office
of Borrower certifying that the projections contained therein are based upon
good faith estimates and assumptions believed by Borrower to be reasonable at
the time made and at the time of delivery thereof; provided,
however, that with respect to fiscal year 2008, the monthly
forecasts described in clause (ii) above may be delivered up to 90 days
after the Closing Date.

 

(j)                                     as
soon as practicable and in any event by the last day of each fiscal year, a
report in form and substance satisfactory to Administrative Agent outlining all
material insurance coverage maintained as of the date of such report by
Borrower and its Subsidiaries and all material insurance coverage planned to be
maintained by Borrower and its Subsidiaries in the immediately succeeding
fiscal year;

 

67

 

 

(k)           with reasonable
promptness, written notice of any change in the board of directors (or similar
governing body) of Borrower;

 

(l)            promptly, and in
any event within ten Business Days (i) after any Material Contract of
Borrower or any of its Subsidiaries is terminated or amended in a manner that
would (x) decrease
the revenue to be received by any Credit Party during any fiscal year under
such Material Contract by more than 25% or (y) increase the cost to be
paid by any Credit Party during any fiscal year under such Material Contract by
more than 25%, and (ii) after any new Material Contract is
entered into, a written statement describing such event, with copies of such
material amendments or new contracts, delivered to Administrative Agent (to the
extent such delivery is permitted by the terms of any such Material Contract,
provided that no such prohibition on delivery shall be effective if it were
bargained for by Borrower or its applicable Subsidiary with the intent of
avoiding compliance with this Section 6.2(l)), and an explanation of any
actions being taken with respect thereto;

 

(m)          as soon as
practicable (but, in any event, within 7 days) following receipt thereof,
copies of all environmental audits and reports with respect to environmental
matters at any facility of Borrower or its Subsidiaries or which relate to any
environmental liabilities of Borrower or its Subsidiaries which, in any such
case, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect;

 

(n)           at least thirty (30)
days prior to the occurrence of any change (i) in any Credit Party’s
corporate name, (ii) in any Credit Party’s identity or corporate
structure, or (iii) in any Credit Party’s Federal Taxpayer Identification
Number, Borrower will furnish to the Administrative Agent notice thereof.  Borrower agrees not to effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
Administrative Agent to continue at all times following such change to have a
valid, legal and perfected security interest in all the Collateral and for the
Collateral at all times following such change to have a valid, legal and
perfected security interest as contemplated in the Security Documents.  Borrower will furnish to Administrative Agent
prompt written notice of any Lien (other than Permitted Liens) or claims made
or asserted against any Collateral or interest therein.  Borrower also agrees promptly to notify
Administrative Agent in writing if any material portion of the Collateral is
lost, damaged or destroyed;

 

(o)           each year, at the
time of delivery of annual financial statements with respect to the preceding
fiscal year pursuant to Section 6.1(a), a certificate (i) either
confirming that there has been no material change in such information since the
date of the Collateral Questionnaire delivered on the Closing Date or the date
of the most recent certificate delivered pursuant to this Section and/or identifying
such changes, and (ii) updating the Collateral Questionnaire to reflect
material changes in such information since the date of the Collateral
Questionnaire delivered on the Closing Date or the date of the most recent
certificate delivered pursuant to this Section;

 

(p)           promptly (i) if
any Credit Party obtains knowledge that any Credit Party or any Person which
owns, directly or indirectly, any Equity Securities of any Credit Party, or any
other holder at any time of any direct or indirect equitable, legal or
beneficial interest therein is the subject of any of the Terrorism Laws, such
Credit Party will notify Administrative Agent and (ii)

 

68

 

upon the request of any Lender, such Credit Party will provide any
information such Lender believes is reasonably necessary to be delivered to
comply with the Patriot Act; and

 

(q)           promptly, such other
data and information as from time to time may be reasonably requested by
Administrative Agent.

 

(r)            concurrently with
the delivery of all reports, statements and other information delivered
pursuant to the Second Lien Credit Agreement, copies of such reports,
statements and other information, except to the extent that such information
has already been delivered to the Administrative Agent and the Lenders in
accordance with the terms hereof; and

 

(s)           concurrent notice of
and a copy of each amendment (or proposed amendment) to the Second Lien Credit
Agreement, regardless of whether such amendment is permitted under the
Intercreditor Agreement without the consent of the Administrative Agent and/or
the Lenders.

 

Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of Borrower setting forth details of the
occurrence referred to therein and stating what action Borrower has taken and
proposes to take with respect thereto. 
The annual reports, proxies, financial statements or other
communications required by Section 6.2(b) above shall be deemed to
have been delivered on the date on which Borrower posts such reports on
Borrower’s website on the Internet at the website address listed on Schedule
10.2 hereof or when such report is posted on the Securities and Exchange
Commission’s website at www.sec.gov; provided
that Borrower shall notify Administrative Agent of the posting of any such new
material.  Administrative Agent shall
have no obligation to request the delivery or to maintain copies of the reports
and communications referred to in Section 6.2(b), and in any event shall
have no responsibility to monitor compliance by Borrower with any such request
for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such reports and communications.

 

6.3          PAYMENT OF TAXES.  Pay
and discharge when due all taxes, assessments, and governmental charges, except
for (a) any such tax, assessment, charge, or levy which is a Lien
permitted under Section 7.2(i) and (b) immaterial taxes in de minimis amounts.

 

6.4          PRESERVATION OF EXISTENCE.  Preserve
and maintain its existence, governmental authorizations, licenses, permits,
rights, franchises and privileges necessary or desirable in the normal conduct
of its business, except (i) as permitted by Section 7.3, or (ii) where
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

 

6.5          MAINTENANCE OF PROPERTIES.  Maintain,
preserve and protect all of its material properties and equipment necessary in
the operation of its business in good order and condition, subject to wear and
tear in the ordinary course of business, and not permit any waste of its
properties, except where failure to do so could not reasonably be expected to
have a Material Adverse Effect.

 

6.6          MAINTENANCE OF INSURANCE.  Borrower
will maintain or cause to be maintained, with financially sound and reputable
insurers, (i) business interruption insurance reasonably satisfactory to
Administrative Agent, and (ii) casualty insurance, such public liability
insurance, third party property damage insurance with respect to liabilities,
losses or damage in 

 

69

 

respect of the
assets, properties and businesses of Borrower and its Subsidiaries as are
customarily carried or maintained under similar circumstances by Persons of
established reputation of similar size and engaged in similar businesses, in
each case in such amounts (giving effect to self insurance which comports with
the requirements of this Section and provided that adequate reserves
therefor are maintained in accordance with GAAP), with such deductibles,
covering such risks and otherwise on such terms and conditions as shall be
customary for such Persons.  Each such
policy of insurance shall (i) name Administrative Agent, on behalf of
Lenders as an additional insured thereunder as its interests may appear, and (ii) in
the case of each casualty insurance policy, contain a loss payable clause or
endorsement, satisfactory in form and substance to Administrative Agent, that
names Administrative Agent, on behalf of Lenders, as the loss payee thereunder
and provides for at least thirty (30) days’ prior written notice to
Administrative Agent of any modification or cancellation of such policy and
that no act or default of Borrower or any other Person shall affect the right
of Administrative Agent to recover under such policy or policies in case of
loss or damage.

 

6.7          COMPLIANCE WITH LAWS.

 

(a)           Comply
with the requirements of all applicable Laws and orders of any Governmental
Authority, noncompliance with which could reasonably be expected to have a
Material Adverse Effect.

 

(b)           Conduct its operations and keep and
maintain its property in material compliance with all Environmental Laws.

 

6.8          INSPECTION RIGHTS.  At
any time during regular business hours and as often as reasonably requested
upon reasonable notice, permit Administrative Agent or any Lender, or any
employee, agent or representative thereof, to examine, audit and make copies
and abstracts from Borrower’s records and books of account and to visit and
inspect its and its Subsidiaries’ properties and to discuss its affairs,
finances and accounts with any of its officers and key employees, and, upon
request, furnish promptly to Administrative Agent or any Lender true copies of
all financial information and internal management reports made available to
their senior management.  Notwithstanding
any provision of this Agreement to the contrary, so long as no Default or Event
of Default shall have occurred and be continuing, neither Borrower nor any of
its Subsidiaries shall be required to disclose, permit the inspection,
examination, photocopying or making extracts of, or discuss, any document,
information or other matter that (i) constitutes non-financial trade
secrets or non-financial proprietary information, or (ii) the disclosure
of which to any Lender, or its designated representative, is then prohibited by
law or any agreement binding on Borrower or any of its Subsidiaries that was
not entered into by Borrower or any such Subsidiary for the purpose of
concealing information from the Lenders. 
Borrower shall, however, furnish to Administrative Agent such
information concerning Borrower’s intellectual property (including, without
limitation, application and registration numbers for any filings in connection
with such intellectual property) as is reasonably necessary to permit
Administrative Agent (on behalf of itself and the other Lenders) to perfect a
security interest in such intellectual property.  Borrower will, upon the request of
Administrative Agent or Requisite Lenders, participate in a meeting of
Administrative Agent and Lenders once during each fiscal year to be held at
Borrower’s corporate offices (or at such other location as may be agreed to by
Borrower 

 

70

 

and Administrative Agent) at such time as may be agreed to by Borrower
and Administrative Agent.

 

6.9          KEEPING OF RECORDS AND BOOKS OF
ACCOUNT.  Keep
records and books of account adequate to prepare financial statements in
conformity with GAAP, consistently applied, and in conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over Borrower or any applicable Subsidiary.

 

6.10        COMPLIANCE WITH ERISA.  Cause,
and cause each of its ERISA Affiliates to:  (a) maintain each
Employee Benefits Plan in compliance in all material respects with the
applicable provisions of ERISA, the Code and other applicable Laws; (b) to
take all actions to cause each Employee Benefits Plan which is qualified under Section 401(a) of
the Code to maintain such qualification; and (c) make all required
contributions to any Pension Plan subject to Section 412 of the Code.

 

6.11        COMPLIANCE WITH AGREEMENTS.  Promptly
and fully comply with all Contractual Obligations to which any one or more of
them is a party, except for any such Contractual Obligations (a) the
nonperformance of which would not cause a Default or Event of Default, (b) then
being contested by any of them in good faith by appropriate proceedings, or (c) if
the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.

 

6.12        SUBSIDIARY GUARANTIES AND PLEDGE OF
OWNERSHIP INTERESTS.

 

(a)           Domestic Subsidiaries.  In the event that the aggregate gross
revenues or assets of Borrower and Guarantors for any fiscal year ending after
the Closing Date when taken together with 65% of the aggregate gross revenues
and assets of Borrower’s Foreign Subsidiaries as to which 65% of the ownership
interests thereof have been pledged in favor of Administrative Agent for the
benefit of Lenders, is less than 95% of the aggregate gross revenues or assets
of Borrower and its Subsidiaries on a consolidated basis for such fiscal year,
Borrower will, within 90 days after the end of such fiscal year, cause one or
more additional Domestic Subsidiaries to execute and deliver to Administrative
Agent a joinder to the Multi-Party Guaranty and to the Pledge and Security
Agreement along with any such other supporting documentation, certificates
(accompanied by irrevocable undated stock powers, duly endorsed in blank),
corporate governance and authorization documents as may be deemed reasonably
necessary or advisable by Administrative Agent such that the aggregate gross
revenues and assets for such fiscal year of Borrower and Guarantors, when taken
together with 65% of the aggregate gross revenues and assets of Borrower’s
Foreign Subsidiaries as to which 65% of the ownership interests thereof have
been pledged in favor of Administrative Agent for the benefit of Lenders, equal
to at least 95% of the aggregate gross revenues and assets of Borrower and its
Subsidiaries on a consolidated basis for such fiscal year.  In addition, in the event that (x) Borrower
creates or acquires a Domestic Subsidiary which is a Material Subsidiary, or (y) any
Domestic Subsidiary of Borrower that has not previously executed a joinder to
the Multi-Party Guaranty and the Pledge and Security Agreement becomes a
guarantor in respect of the obligations of Borrower or any Subsidiary under any
Material Indebtedness Agreement, Borrower shall within forty-five (45) days
(unless a longer period is agreed to by Administrative Agent) (i) cause
such Domestic Subsidiary to execute and deliver to Administrative Agent a
joinder to the Multi-Party Guaranty

 

71

 

and the Pledge
and Security Agreement along with any such other supporting documentation,
certificates (accompanied by irrevocable undated stock powers, duly endorsed in
blank), corporate governance and authorization documents as may be deemed
necessary or advisable by Administrative Agent, (ii) execute and deliver a
supplement to the Pledge and Security Agreement pledging to Administrative
Agent (for the benefit of each Lender in accordance with its Pro Rata Share)
the ownership interests in such Domestic Subsidiary, and (iii) deliver to
Administrative Agent (for the benefit of each Lender in accordance with its Pro
Rata Share) the outstanding share certificates (or other evidence of its
equity) evidencing such pledged ownership interests.

 

(b)           Foreign Subsidiary Stock Pledge.  In
the event Borrower or any Domestic Subsidiary creates or acquires a First-Tier
Material Foreign Subsidiary, Borrower shall and shall cause its Domestic
Subsidiaries to, within 90 days (unless a longer period is agreed to by
Administrative Agent), (i) pledge to Administrative Agent, for the benefit
of the Lenders, 65% of the ownership interest owned by a Credit Party pursuant
to the Pledge and Security Agreement, (ii) deliver to Agent, for the
benefit of the Lenders, the outstanding shares certificates (or other evidence
of equity), as applicable, evidencing such pledged ownership interest, and (iii) take
such further actions as Administrative Agent reasonably requests to perfect the
security interest in such pledged ownership interests; provided, however, that, if Administrative
Agent, in its sole discretion after consultation with Borrower, determines that
the cost of perfecting, in a foreign jurisdiction, the Administrative Agent’s
security interest, for the benefit of the Lenders, in such ownership interests
relating to any First-Tier Material Foreign Subsidiary is impractical or
cost-prohibitive, then the Administrative Agent may agree to forego the foreign
perfection of such security interest.

 

6.13        FURTHER ASSURANCES.  At any time or from
time to time upon the request of Administrative Agent, each Credit Party will,
at its expense, promptly execute, acknowledge and deliver such further
documents and do such other acts and things as Administrative Agent or
Requisite Lenders may reasonably request in order to effect fully the purposes
of the Loan Documents, including providing Lenders with any information
reasonably requested pursuant to Section 10.26.  In furtherance and not in limitation of the
foregoing, each Credit Party shall take such actions as Administrative Agent
may reasonably request from time to time to ensure that the Obligations are
guaranteed by the Guarantors and are secured by substantially all of the assets
of Borrower and its Material Subsidiaries and all of the outstanding Equity
Securities of Borrower and its Material Subsidiaries (subject to limitations
contained in the Loan Documents with respect to Foreign Subsidiaries), and
shall give Administrative Agent prompt written notice of its acquisition of any
asset or assets with a value representing more than 5% of the combined assets
of Borrower and its Subsidiaries as at the Closing Date to the extent that
Collateral Agent’s security interest therein to secure the Obligations will not
be perfected by the Uniform Commercial Code filings currently in effect at such
time.

 

6.14        USE OF PROCEEDS.  Use the proceeds of Extensions of Credit for
lawful corporate purposes including (i) the Related Transactions, (ii) the
refinancing of existing indebtedness of 
Borrower, its Subsidiaries and Haverstick and its Subsidiaries on the
Closing Date and (iii) working capital and general corporate purposes,
including Acquisitions, not otherwise in contravention of this Agreement.  No part of the proceeds of any Loan and no
Letter of Credit 

 

72

 

will be used, whether directly
or indirectly, for any purpose that entails a violation of any law, including
Regulations T, U and X of the Board of Governors of the Federal Reserve System.

 

6.15        LANDLORD WAIVERS.  Concurrently with entering into any Material
Lease after the Closing Date, use its reasonable best efforts to obtain a
Landlord Waiver with respect to such Material Lease and the property leased
thereby.

 

6.16        ADDITIONAL MATERIAL REAL ESTATE ASSETS.  In the event that any Credit Party acquires a
Material Real Estate Asset after the Closing Date or any real property asset
owned or leased on the Closing Date becomes a Material Real Estate Asset and
such interest has not otherwise been made subject to the Lien of the Security
Documents in favor of Administrative Agent, for the benefit of lenders, then
such Credit Party, contemporaneously with acquiring such Material Real Estate
Asset, or promptly after a real estate asset owned or leased on the Closing
Date becomes a Material Real Estate Asset, shall take all such actions and
execute and deliver, or cause to be executed and delivered, all such mortgages,
documents, instruments, agreements, opinions and certificates as Administrative
Agent shall reasonably require with respect to each such Material Real Estate
Asset to create in favor of Administrative Agent, for the benefit of Lenders, a
valid and, subject to any filing and/or recording referred to herein, perfected
first priority security interest in such Material Real Estate Assets.  In addition to the foregoing, Borrower shall,
at the request of Requisite Lenders, deliver, from time to time, to
Administrative Agent such appraisals as are required by law or regulation of
Material Real Estate Assets with respect to which Administrative Agent has been
granted a Lien.

 

6.17        SWAP CONTRACTS.  No later than one hundred and twenty (120)
days following the Closing Date and at all times thereafter, Borrower shall
enter into, and shall thereafter maintain, or caused to be maintained, one or
more Swap Contracts with one or more financial institutions acceptable to
Requisite Lenders for a term of not less than three years and otherwise in form
and substance reasonably satisfactory to Requisite Lenders, which Swap
Contracts shall effectively limit the interest rate to Borrower with respect to
an aggregate notional principal amount of not less than twenty-five percent
(25%) of the aggregate principal amount of the Term Loans outstanding from time
to time to a fixed or maximum interest rate acceptable to Requisite Lenders.

 

6.18        RATINGS.  If requested by the Administrative Agent or
any Lender, Borrower shall use its commercially reasonable efforts to cooperate
with any Lender in obtaining and causing to be maintained a shadow corporate by
Standard & Poor’s Ratings Service and Moody’s Investors Service, Inc.

 

6.19        DORMANT SUBSIDIARIES.  Borrower shall not permit any of the Dormant
Subsidiaries to have any material continuing operations or conduct any material
business and shall use its reasonable best efforts to complete the dissolution
process with respect to each Dormant Subsidiary in a timely manner.

 

73

 

SECTION VII.

NEGATIVE COVENANTS

 

So long as any Obligations remain unpaid or
unperformed, or any portion of the Commitments or any Letter of Credit remain
outstanding, Borrower shall not, nor shall it permit any Subsidiary to,
directly or indirectly:

 

7.1          INDEBTEDNESS.  Create,
incur, assume or suffer to exist any Indebtedness except for the following (“Permitted
Indebtedness”) :

 

(a)           (x) Indebtedness under the Loan
Documents and (y) Indebtedness
incurred under the Second Lien Credit Agreement in an aggregate principal amount not to exceed $10,000,000
plus any accrued interest or fees and, subject to the terms of the
Intercreditor Agreement, Indebtedness incurred to refinance, renew or replace
such Indebtedness in whole or in part; provided that, (i) the terms
and conditions of such Indebtedness, taken as a whole, are no less favorable in
any material respect to the obligors thereof or the Lenders than the Second
Lien Credit Agreement, (ii) no Subsidiary of Borrower that is not a
Guarantor hereunder shall be a guarantor of such refinancing, renewal or
replacement, (iii) the average life to maturity thereof is greater than or
equal to that of the Second Lien Loans, and (iv) the aggregate principal amount of the
replacement or refinancing Indebtedness shall equal the aggregate principal
amount of the Indebtedness being replaced or refinanced, and the yield on the
replaced or refinanced Indebtedness shall not be greater than the yield on the
Indebtedness being replaced or refinanced;

 

(b)           Indebtedness outstanding on the date
hereof and listed on Schedule 7.1 hereto;

 

(c)           Indebtedness of Borrower and its
Subsidiaries under loans and Capital Leases incurred by Borrower or any of its
Subsidiaries to finance the acquisition by such Person of real property,
improvements, fixtures, equipment or other fixed assets (together with
attachments, ascensions, additions, “soft costs” and proceeds thereof); provided that in each case, (i) such
Indebtedness is incurred by such Person at the time of, or not later than six (6) months
after, the acquisition by such Person of the property so financed, (ii) such
Indebtedness does not exceed the purchase price of the property so financed,
and (iii) the aggregate of all such Indebtedness at any time outstanding
does not exceed $2,500,000;

 

(d)           Indebtedness of Borrower and its
Subsidiaries under initial or successive refinancings, refundings, renewals or
extensions of any Indebtedness permitted by subsections (b), (c), (j), (k), (l) and
(m) of this Section 7.1; provided
that, with respect to any such refinanced, refunded, renewed or extended
Indebtedness, (i) the amount of such Indebtedness is not increased at the
time of such refinancing, refunding, renewal or extension except by an amount
equal to the reasonable premium or other amount paid, and reasonable fees and
expenses incurred, in connection with such refinancing and by an amount equal
to any utilized commitments thereunder, (ii) the terms and conditions
thereof, including those relating to amortization, maturity, collateral and
subordination, are not less favorable to the Lenders than the Indebtedness
being refinanced, refunded, renewed or extended, (iii) the weighted
average life of the principal payments pursuant to such Indebtedness shall be
no shorter than the weighted average life of such payments pursuant to such
Indebtedness immediately prior to such refinancing, refunding, renewal or
extension, (iv) such Indebtedness shall not include 

 

74

 

Indebtedness
of an obligor that was not an obligor with respect to the Indebtedness being
refinanced, refunded, renewed or extended and (v) such Indebtedness shall
not be refinanced, refunded, renewed or extended if any Default or Event of
Default has occurred and is continuing or would result therefrom;

 

(e)           Indebtedness of Borrower to any of
Borrower’s Subsidiaries, Indebtedness of any of Borrower’s Subsidiaries to
Borrower or Indebtedness of any of Borrower’s Subsidiaries to any of Borrower’s
other Subsidiaries; provided that
the aggregate amount of Indebtedness of Borrower or any Guarantor to any
Foreign Subsidiary or any Subsidiary which is not a Guarantor, other than the
Indebtedness of Foreign Subsidiaries in existence on the Closing Date as set
forth on Schedule 7.1(e), does not exceed $500,000 at any time outstanding; and
provided further that (i) all such Indebtedness shall be evidenced
by promissory notes and all such notes shall be subject to a first priority
Lien pursuant to the Pledge and Security Agreement, (ii) all such
Indebtedness shall be unsecured and subordinated in right of payment to the
payment in full of the Obligations pursuant to the terms of the applicable
promissory notes or an intercompany subordination agreement that in any such
case, is reasonably satisfactory to Administrative Agent, and (iii) any
payment by any such Guarantor Subsidiary under any guaranty of the Obligations
shall result in a pro tanto reduction of the amount of any Indebtedness owed by
such Subsidiary to Borrower or to any of its Subsidiaries for whose benefit
such payment is made.

 

(f)            Subordinated Debt as the same shall
have been approved by Requisite Lenders; provided
that the aggregate amount of such Subordinated Debt at any time outstanding
shall not exceed $5,000,000;

 

(g)           [Intentionally omitted];

 

(h)           Indebtedness incurred in favor of
sellers in connection with Permitted Acquisitions, to the extent permitted in
the definition thereof, and provided that all such Indebtedness shall be
unsecured and subordinated in right of payment to the payment in full of the
Obligations on terms and subject to documentation reasonably satisfactory to
Requisite Lenders;

 

(i)            Indebtedness arising in the ordinary
course of business in connection with the corporate credit card programs of
Borrower and its Subsidiaries in an amount not to exceed $1,035,000 at any time
outstanding.

 

(j)            Guaranty Obligations of Borrower or
any of its Subsidiaries guarantying Indebtedness otherwise permitted hereunder
of Borrower or any Subsidiary of Borrower;

 

(k)           Indebtedness arising from the
honoring of a check, draft or similar instrument against insufficient funds or
from the endorsement of instruments for collection in the ordinary course of
Borrower’s or any Subsidiary’s’ business;

 

(l)            Permitted Swap Obligations;

 

(m)          Indebtedness of Borrower or any of its
Subsidiaries with respect to surety, appeal, indemnity, performance or other
similar bonds arising in the ordinary course of business

 

75

 

(n)           Indebtedness with respect to
agreements providing for indemnification, adjustment of purchase price, earnest
money or similar obligations in connection with Acquisitions or Dispositions
otherwise permitted by this Agreement;

 

(o)           Indebtedness with respect to cash
deposited by customers to obtain the right to delivery of future goods or
services; and

 

(p)           Other unsecured Indebtedness not
included in (a) through (o) above and not exceeding, in the aggregate
at any one time $2,500,000; provided that
all such Indebtedness shall be subordinated in right of payment to the payment
in full of the Obligations on terms and subject to documentation reasonably
satisfactory to Requisite Lenders.

 

7.2          LIENS.  Incur,
assume or suffer to exist, any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except for the following (“Permitted Liens”):

 

(a)           Liens existing on the date hereof and
listed on Schedule 7.1 and any renewals or extensions thereof; provided that the property covered thereby
is not increased and any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 7.1(b);

 

(b)           Liens pursuant to any Loan Document
and, subject to the Intercreditor Agreement, the Second Lien Loan Documents;

 

(c)           Liens on the property or assets of
any Person which becomes a Subsidiary of Borrower after the date of this
Agreement or acquired after the date of this Agreement; provided that (i) such Liens exist at
the time such Person became a Subsidiary or the assets were acquired, (ii) such
Liens were not created in contemplation of the acquisition of such Person or
assets and (iii) such Liens do not at any time apply to any other assets
or properties of the Borrower;

 

(d)           Rights of vendors or lessors under
conditional sale agreements, Capital Leases or other agreements relating to
Indebtedness described in Section 7.1(c) or other title retention
agreements; provided that in each
case, (i) such rights secure or otherwise relate to Permitted
Indebtedness, (ii) such rights do not extend to any property other than
property acquired with the proceeds of such Permitted Indebtedness (together
with accessions, additions, replacements and proceeds thereof), and (iii) such
rights do not secure any Indebtedness other than Permitted Indebtedness;

 

(e)           Liens incurred in the ordinary course
of business in connection with leases, subleases, licenses and sublicenses
granted to Persons not interfering in any material respect with the business of
Borrower and its Subsidiaries and any interest or title of a lessee or licensee
under any such leases, subleases, licenses or sublicenses;

 

(f)            Liens arising in connection with
judgments not constituting an Event of Default pursuant to Section 8.1(i);

 

(g)           [Intentionally omitted];

 

76

 

(h)           Liens required in connection with the
corporate credit card program of Borrower and its Subsidiaries, provided that
any Collateral securing such Liens shall not exceed $300,000 at any time.

 

(i)            Liens for taxes not yet due or which
are being contested in good faith and by appropriate proceedings, if adequate
reserves with respect thereto are maintained on the books of the applicable
Person in accordance with GAAP;

 

(j)            carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s, landlord’s or other like Liens arising
in the ordinary course of business which are not overdue for a period of more
than 60 days or which are being contested in good faith and by appropriate
proceedings, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP;

 

(k)           pledges or deposits in connection
with worker’s compensation, unemployment insurance and other social security
legislation;

 

(l)            deposits to secure the performance
of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business (including,
without limitation, Liens securing all those obligations described in Section 7.1(m));

 

(m)          easements, rights-of-way,
restrictions, Liens granted by a third-party lessor to any Person and other
similar encumbrances affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of any Person;

 

(n)           Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties and
in connection with the importation of goods in the ordinary course of
Borrower’s and its Subsidiaries’ businesses;

 

(o)           Liens arising in the ordinary course
of business solely by virtue of any statutory or common law provision relating
to banker’s liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with a creditor depository
institution; provided that (i) such deposit account is not a dedicated
cash collateral account and is not subject to restrictions against access by
Borrower in excess of those set forth by regulations promulgated by the Federal
Reserve Board, and (ii) such deposit account is not intended by Borrower
or any Subsidiary to provide collateral to the depository institution;

 

(p)           Liens on insurance proceeds in favor
of insurance companies with respect to the financing of insurance premiums, in
each case arising in the ordinary course of business; and

 

(q)           purported Liens evidenced by the
filing of Uniform Commercial Code precautionary financing statements relating
to operating leases entered into in the ordinary course of business.

 

77

 

(r)            Liens not otherwise permitted
hereunder on the property or assets of Borrower and any of its Subsidiaries
securing Indebtedness, provided
the aggregate Indebtedness secured thereby does not exceed $500,000, and such
Liens either (a) do not encumber any Collateral or (b) are
subordinated to the Liens securing the Obligations on terms and subject to
documentation satisfactory to the Administrative Agent;

 

provided, however, that in no event shall any
Lien (other than Liens granted pursuant to the Security Documents) be permitted
to exist on, or in respect of, (i) any depositary or investment account
containing any cash or Cash Equivalent of Borrower or any of its Domestic
Subsidiaries, except for Liens in favor of the entity (and its affiliates) with
which any such depository or investment account is maintained or (ii) any
Collateral consisting of Securities pledged pursuant to the Security Documents.

 

7.3          FUNDAMENTAL CHANGES.  Merge
or consolidate with or into any Person or liquidate, wind-up or dissolve
itself, or permit or suffer any liquidation or dissolution or sell all or
substantially all of its assets, except that:

 

(a)           any Subsidiary may merge with (i) Borrower,
provided that Borrower shall be
the continuing or surviving corporation, (ii) any Guarantor Subsidiary or,
if such Subsidiary is not a Guarantor, with any other Subsidiary, and (iii) any
joint venture, partnership or other Person, so long as such joint venture,
partnership and other Person will, as a result of making such merger and all
other contemporaneous related transactions, become a Guarantor Subsidiary or,
if such Subsidiary is not a guarantor, a Subsidiary;

 

(b)           any Subsidiary may sell or transfer
all or substantially all of its assets (through voluntary liquidation,
dissolution or winding up or otherwise), to Borrower or to another Subsidiary
that is a Guarantor or, if the selling or transferring Subsidiary is not a
Guarantor, to any other Subsidiary;

 

(c)           Borrower may merge into or
consolidate with any other Person; provided
that (i) Borrower is the surviving corporation, and (ii) prior to and
immediately after giving effect to such merger or consolidation, no Default or
Event of Default shall have occurred and be continuing;

 

(d)           any Subsidiary may merge or
consolidate with or into any other Person or sell all or substantially all of
its assets to the extent such transaction is a Disposition otherwise permitted
under Section 7.4 (other than Section 7.4(c)) or an Investment
otherwise permitted under Section 7.5 (other than Section 7.5(c)) and
prior to and immediately after giving effect to such merger or consolidation,
no Default or Event of Default shall have occurred and be continuing; and

 

7.4          DISPOSITIONS.  Make
any Dispositions, except:

 

(a)           Dispositions of assets (i) that
do not constitute Asset Sales or (ii) made to Borrower or any Guarantor
Subsidiary;

 

(b)           Dispositions consisting of subleases
of leased real property no longer necessary to the operation of the applicable
Credit Party’s business;

 

78

 

(c)           Dispositions permitted by Section 7.3;

 

(d)           Dispositions of the property
described on Schedule 7.4;

 

(e)           Dispositions which constitute the
making or liquidating of Permitted Investments; and

 

(f)            Dispositions which constitute the
incurrence (but not the enforcement) of Permitted Liens;

 

(g)           Dispositions of surplus equipment or
damaged, obsolete or worn out property, whether now owned or hereafter
acquired, in the ordinary course of business;

 

(h)           Asset Sales, the proceeds of which
when aggregated with the proceeds of all other Asset Sales made since the
Closing Date, are less than $10,000,000; provided (1) the consideration
received for such assets shall be in an amount at least equal to the fair
market value thereof (determined in good faith by the board of directors of
Borrower (or similar governing body)), (2) no less than eighty percent
(80%) thereof shall be paid in cash, and (3) the Net Asset Sale Proceeds
thereof shall be applied as required by Section 2.4(b)(i).

 

7.5          INVESTMENTS.  Make
any Investments, except for the following (“Permitted Investments”):

 

(a)           Investments existing on the Closing
Date and set forth on Schedule 7.5;

 

(b)           Investments in cash and Cash
Equivalents, and which conform to the investment policies adopted by the Board
of Directors of Borrower from time to time;

 

(c)           Investments permitted by Section 7.1
or Section 7.3;

 

(d)           Investments (i) in any
Securities received in satisfaction or partial satisfaction thereof from
financially troubled account debtors, and (ii) constituting deposits,
prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past practices of Borrower and its Subsidiaries;

 

(e)           Investments constituting
Acquisitions; provided that each
such Acquisition (each, a “Permitted
Acquisition”) meets the following criteria: (i) in the case of
a merger, amalgamation or other combination including Borrower, Borrower shall
be the surviving entity, (ii) in the case of a merger, amalgamation or
other combination including a Credit Party (other than Borrower), a Credit
Party shall be the surviving entity; (iii) the business to be acquired
shall be (x) in same business or lines of business in which Borrower and
its Subsidiaries are engaged as of the Closing Date and (y) shall have had
positive Consolidated EBITDA for the four quarter period most recently ended
prior to the date of such acquisition, (iv) no Default or Event of Default
shall exist prior to or after giving effect to such Acquisition or shall result
therefrom, (v) all transactions in connection therewith shall be
consummated, in all material respects, in accordance with all applicable Laws, (vi) Borrower
shall have provided to Administrative Agent and each of the Lenders, at least
ten (10) Business Days prior to such Acquisition, a certificate of a
Responsible Officer of Borrower showing pro
forma compliance with Section 7.12 hereof,

 

79

 

both
before and after the proposed Acquisition, together with all relevant financial
information with respect to such Acquisition, including the aggregate
consideration for such Acquisition and any other information required to
demonstrate compliance with Section 7.12, (vii) such Acquisition
shall have been approved by the board of directors or other governing body or
controlling Person of the Person from whom the business is acquired, (viii) (A) the
aggregate consideration in respect of all Acquisitions occurring after the
Closing Date, whether consisting of Cash Acquisition Consideration or Equity
Securities, shall not exceed (x) $200,000,000 during the term of this
Agreement and (y) $100,000,000 in any twelve month period and (B) the
aggregate Cash Acquisition Consideration in respect of all Acquisitions
occurring after the Closing Date shall not exceed $25,000,000 during the term
of this Agreement, in each case unless otherwise approved by the Requisite Lenders;
provided further, that the amount set
forth in clause (viii)(B) of this Section 7.5(e) may be
increased by Net Cash Equity Proceeds (not to exceed $50,000,000 in the
aggregate during the term of this Agreement) received by the Borrower after the
Closing Date, so long as any such Net Cash Equity Proceeds are actually used to
fund a Permitted Acquisition within 90 days of such receipt by Borrower; and provided further that the amount of consideration paid in
respect of any Acquisition, regardless of the form of that consideration, shall
be deemed to be the total purchase price of such Acquisition (including all
fees and expenses paid in connection therewith), regardless of how any portion
of such purchase price may be treated for purposes of calculating Consolidated
EBITDA hereunder or for any other purpose.

 

(f)            Investments of Borrower and its
Subsidiaries in Permitted Swap Obligations;

 

(g)           Advances to officers, directors and
employees of Borrower and its Subsidiaries for travel, entertainment, relocation
and analogous ordinary business purposes;

 

(h)           Investments of Borrower in any of its
Subsidiaries and Investments of any Subsidiary of Borrower in Borrower or
another Subsidiary of Borrower; provided, however,
that in the case of any such Investments that are equity Investments, the
Equity Securities represented thereby shall be pledged to the Administrative
Agent pursuant to the Pledge and Security Agreement; and provided
further, that the aggregate amount of Investments by Borrower and
Guarantors in Foreign Subsidiaries and non-Guarantor Subsidiaries (which are
not otherwise permitted under this Section 7.5), other than Investments in
respect of any Indebtedness of Foreign Subsidiaries in existence on the date
hereof as set forth on Schedule 7.1(e) that has been converted into Equity
Interests in such Subsidiary after the date hereof, does not exceed $500,000 at
any time outstanding;

 

(i)            Extensions of credit to customers or
suppliers of Borrower and its Subsidiaries in the ordinary course of business
and any Investments received in satisfaction or partial satisfaction thereof;

 

(j)            Guaranty Obligations permitted by Section 7.1;

 

(k)           Investments received by Borrower or
any of its Subsidiaries as distributions on claims in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;

 

80

 

(l)            Investments of any Subsidiary
existing at the time it becomes a Subsidiary of Borrower, provided that such
Investments were not made in anticipation of such Person becoming a Subsidiary
of Borrower; and

 

(m)          Investments consisting of loans to
employees, officers and directors, the proceeds of which shall be used to
purchase Equity Securities of Borrower or its Subsidiaries.and

 

(n)           Other Investments not exceeding
$2,500,000 in the aggregate at any time outstanding.

 

7.6          RESTRICTED PAYMENTS.  Make
any Restricted Payments, except as follows:

 

(a)           Borrower or any Subsidiary, as
applicable, may pay dividends or other distributions (i) on account of any
shares of any class of capital stock of Borrower now or hereafter outstanding
solely in shares of that class of stock to holders of that class or (ii) payable
by a Subsidiary to Borrower or to a Guarantor Subsidiary;

 

(b)           Borrower may distribute rights
pursuant to a shareholder rights plan or redeem such rights, provided that such
redemption is in accordance with the terms of such shareholder rights plan;

 

(c)           Borrower may make Restricted Payments
or purchase its own Equity Securities in connection with or pursuant to any of
its Employee Benefits Plans or in connection with the death, retirement or
termination of its employees, officers or directors, in an amount not to exceed
$1,000,000 in the aggregate in any fiscal year or $3,000,000 in the aggregate
over the life of this Agreement;

 

(d)           Borrower may repurchase fractional
shares of capital stock arising out of stock dividends, splits or combinations,
business combinations or conversion of convertible securities; and

 

(e)           Subject to the terms of the
Intercreditor Agreement, Borrower may make regularly scheduled payments of
principal and interest with respect of the Indebtedness incurred under the
Second Lien Credit Agreement in accordance with the terms thereof, and only to
the extent required by the Second Lien Credit Agreement.

 

(f)            Upon the occurrence of
the Incremental Trigger Date and the making of New Term Loans pursuant to Section 2.12,
Borrower may prepay the full amount of the Indebtedness incurred under the
Second Lien Credit Agreement solely with the proceeds of the New Term Loans.

 

7.7          ERISA.  At
any time engage in a transaction which could be subject to Section 4069 or
4212(c) of ERISA, or permit any Employee Benefits Plan to (a) engage
in any non-exempt “prohibited transaction” (as defined in Section 4975 of
the Code); (b) fail to comply with ERISA or any other applicable Laws; or (c) incur
any material “accumulated funding deficiency” (as defined in Section 302
of ERISA), which, with respect to each event listed above could reasonably be
expected to have a Material Adverse Effect.

 

81

 

7.8          CHANGE IN NATURE OF BUSINESS.  Engage,
either directly or indirectly through Affiliates or Acquisitions in any line of
business other than the business of designing, engineering, installing and
testing C5ISR (command/control, communications, computing, combat,
intelligence, surveillance and reconnaissance) systems, providing engineering
design support and systems integration services for weapons systems and
associated support systems, operating and maintaining technical services for
military target ranges and weapons system ranges, providing technical support
solutions for federal, state, local and municipal government agencies, and
providing a variety of communication products and surveillance products for
federal government agencies, any other business incidental or reasonably
related thereto, or any businesses that are, as determined by the Board of
Directors of Borrower in its good faith reasonable judgment, appropriate
extensions thereof.

 

7.9          TRANSACTIONS WITH AFFILIATES.  Enter
into any transaction of any kind with any Affiliate (other than transactions
among Credit Parties) of Borrower other than arm’s-length transactions with
Affiliates that are otherwise permitted hereunder and except as follows:

 

(a)           reasonable and customary fees in
Borrower’s industry paid to members of the board of directors (or similar
governing body) of Borrower; and

 

(b)           reasonable and customary compensation
arrangements and benefit plans for officers and other employees of Borrower and
its Subsidiaries entered into or maintained in the ordinary course of business;
provided that such transactions
could not reasonably be expected to have a Material Adverse Effect on Borrower
or any Subsidiary.

 

7.10        USE OF PROCEEDS.  Use the proceeds of the Loans for any purpose
other than (i) the consummation of the Related Transactions, (ii) the
refinancing of existing indebtedness of 
Borrower, its Subsidiaries and Haverstick and its Subsidiaries on the
Closing Date and (iii) working capital and general corporate purposes of
Borrower and its Subsidiaries, including Acquisitions, not otherwise in
contravention of this Agreement.

 

7.11        CERTAIN INDEBTEDNESS PAYMENTS, ETC.  (a) Pay,
prepay, redeem, purchase, defease or otherwise satisfy in any manner prior to
the scheduled payment thereof any portion of any Subordinated Debt or the
Second Lien Loans (except as otherwise permitted under Sections 7.6(e) and
7.6(f)) or (b) amend, modify or otherwise change the terms of any
document, instrument or agreement evidencing Subordinated Debt or the Second
Lien Loans such that such amendment, modification or change would (i) cause
the outstanding aggregate principal amount of all such Subordinated Debt or the
Second Lien Loans so amended, modified or changed to be increased (except as a
consequence of the deferral of cash interest payments by adding such payments
to the principal amount thereof) as a consequence of such amendment,
modification or change, (ii) increase the interest rate applicable
thereto, or (iii) accelerate the scheduled payment thereof.

 

7.12        FINANCIAL COVENANTS.

 

(a)           Maximum First Lien Leverage Ratio.  Permit the First Lien
Leverage Ratio, determined as of the last day of any fiscal quarter of Borrower
(measured on a rolling four quarter basis for the trailing four fiscal
quarters) to be greater than the correlative ratio indicated

 

82

 

in the table
set forth on Schedule 7.12(a); provided, however,
that upon the occurrence of the Incremental Trigger Date and the making of New
Term Loans pursuant to Section 2.12, the provisions of this Section 7.12(a) shall
cease to apply to the Borrower and its Subsidiaries and shall be of no further
effect.

 

(b)           Maximum
Total Leverage Ratio.  Permit
the Total Leverage Ratio, determined as of the last day of any fiscal quarter
of Borrower (measured on a rolling four quarter basis for the trailing four
fiscal quarters) to be greater than the correlative ratio indicated in the
table set forth on Schedule 7.12(b).

 

(c)           Minimum Liquidity Ratio.  Permit
the Liquidity Ratio at any time to be less than the correlative ratio indicated
in the table set forth on Schedule 7.12(c).

 

(d)           Minimum Fixed Charge Coverage Ratio.  Permit
the Fixed Charge Coverage Ratio, determined as of the last day of any fiscal
quarter of Borrower (measured on a rolling four quarter basis for the trailing
four fiscal quarters) to be less than the correlative ratio indicated in the
table set forth on Schedule 7.12(d).

 

(e)           Minimum Consolidated
EBITDA.  Permit Consolidated
EBITDA, determined as of the last day of any fiscal quarter of Borrower
(measured on a rolling four quarter basis for the trailing four fiscal
quarters), to be less than the correlative amount indicated in the table set
forth on Schedule 7.12(e).

 

(f)            Certain Calculations.  With respect to any period during which a Permitted
Acquisition or an Asset Sale has occurred, for purposes of determining
compliance with each of the financial covenants set forth in Sections 7.12(a),
(b), (d) and (e), if during such period the Borrower or any Subsidiary
shall have made any Permitted Acquisition or Asset Sale, Consolidated EBITDA
and the components of Consolidated Fixed Charges for such period shall be
calculated after giving pro forma
effect to such Permitted Acquisition or Asset Sale and any Indebtedness
incurred or repaid in connection therewith as if such Permitted Acquisition,
Asset Sale or Indebtedness had occurred or been incurred or repaid, as
applicable, on the first day of such period; provided
that, with respect to Permitted Acquisitions, the pro forma effect and add-backs may be
derived from the financial statements delivered in connection with the
Permitted Acquisition pursuant to Section 7.5(e)(vi), as approved by the
Administrative Agent (which approval shall not be unreasonably withheld).

 

7.13        ACCOUNTING CHANGES.  Change
(i) its fiscal year (currently ending on December 31), or (ii) its
accounting practices except as required by GAAP.

 

7.14        GUARANTY UNDER MATERIAL INDEBTEDNESS
AGREEMENT.  Permit any Domestic
Subsidiary of Borrower to be or become liable as an obligor under any Material
Indebtedness Agreement unless such Subsidiary shall also be a Guarantor under
this Agreement prior to or concurrently therewith.  Permit any Foreign Subsidiary of Borrower to
be or become liable as an obligor under any Material Indebtedness Agreement
unless 65% of the ownership interests thereof have been pledged in favor of
Administrative Agent for the benefit of Lenders.

 

7.15        AMENDMENTS
TO ORGANIZATION AGREEMENTS, MATERIAL CONTRACTS AND SECOND LIEN LOAN DOCUMENTS.  (a) Amend or permit any

 

83

 

amendments to any Credit Party’s Organization Documents; (b) amend
or permit any amendments to, or terminate or waive any provision of, any
Material Contract requiring Annual Payments to be
made or providing for Annual Payments to be received, in each case in excess of
$5,000,000 if
such amendment, termination, or waiver would (i) decrease the revenue to
be received by any Credit Party during any fiscal year under such Material
Contract by more than 25% or (ii) increase the cost to be paid by any
Credit Party during any fiscal year under such Material Contract by more than
25%; or (c) amend or
permit any material amendment to any Second Lien Loan Document in contravention
of the Intercreditor Agreement.

 

7.16        NO FURTHER NEGATIVE PLEDGES.  Except with respect to (a) specific
property encumbered to secure payment of particular Indebtedness permitted
hereby or to be sold pursuant to an executed agreement with respect to an Asset
Sale permitted under Section 7.4, (b) the Second Lien Credit Agreement and any
collateral documents related thereto as in effect on the date hereof and (c) restrictions by
reason of customary provisions restricting assignments, subletting or other
transfers contained in leases, licenses, contracts with Governmental
Authorities and similar agreements entered into in the ordinary course of
business (provided that such restrictions are limited to the property or assets
secured by such Liens or the property or assets subject to such leases,
licenses or similar agreements, as the case may be) permit any Credit Party to
enter into any agreement prohibiting the creation or assumption of any Lien
upon any of its properties or assets, whether now owned or hereafter acquired.

 

7.17        RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS.  Except as provided herein and in the Second
Lien Credit Agreement, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary of Borrower to (a) pay dividends or make any other
distributions on any of such Subsidiary’s Equity Securities owned by Borrower
or any other Subsidiary of Borrower, (b) repay or prepay any Indebtedness
owed by such Subsidiary to Borrower or any other Subsidiary of Borrower, (c) make
loans or advances to Borrower or any other Subsidiary of Borrower, or (d) transfer
any of its property or assets to Borrower or any other Subsidiary of Borrower
other than restrictions (i) in agreements evidencing Indebtedness permitted
by Section 7.1(c) that impose restrictions on the property so
acquired, (ii) by reason of customary provisions restricting assignments,
subletting or other transfers contained in leases, licenses, contracts with
Governmental Authorities, joint venture agreements and similar agreements
entered into in the ordinary course of business, and (iii) create
customary restrictions  on the
Disposition of assets contained in agreements relating to the sale of assets
pending such sale, provided such restrictions and conditions apply only to the
assets that are to be sold and such sale is permitted hereunder.  No Credit Party shall, nor shall it permit
its Subsidiaries to, enter into any Contractual Obligation which would prohibit
a Subsidiary of Borrower from becoming a Credit Party.

 

7.18        SALES AND LEASE BACKS.  Directly or indirectly become or remain
liable as lessee or as a guarantor or other surety with respect to any lease of
any property (whether real, personal or mixed), whether now owned or hereafter
acquired, which such Credit Party (a) has sold or transferred or is to
sell or to transfer to any other Person (other than Borrower or any of its
Subsidiaries) or (b) intends to use for substantially the same purpose as
any other property which has been or is to be sold or transferred by such
Credit Party to any Person (other than Borrower or any of its Subsidiaries) in
connection with such lease.

 

84

 

7.19        DEPOSIT ACCOUNTS.  Except for any cash collateral account permitted
under Section 6.1(i) and 6.2(h) and necessary to support the
credit card program of Borrower and its Subsidiaries, establish or maintain a
Deposit Account or Securities Account (as each such term is defined in the
Pledge and Security Agreement) that is not subject to a Control Agreement (as
defined in the Pledge and Security Agreement) and no Credit Party will deposit
Collateral (including the proceeds thereof) or the proceeds of Loans in a
Deposit Account or Securities Account that is not subject to a Control
Agreement, except as may be permitted under the Pledge and Security Agreement.

 

7.20        ISSUANCE OF DISQUALIFIED CAPITAL STOCK.   Issue or sell any Disqualified Capital
Stock.

 

SECTION VIII.

EVENTS OF DEFAULT AND REMEDIES

 

8.1          EVENTS OF DEFAULT.  Any
one or more of the following events shall constitute an Event of Default:

 

(a)           Borrower fails to pay (i) when
due the principal of and premium, if any, on any Loan whether at stated
maturity, by acceleration or otherwise; or (ii) when due any installment
of principal of any Loan, by notice of voluntary prepayment, by mandatory
prepayment or otherwise; or

 

(b)           Borrower fails to pay interest on any
Outstanding Obligation, the Commitment Fee or any other fees due hereunder
within three (3) Business Days after the date when due; or

 

(c)           Any default occurs in the observance
or performance of any agreement contained in Section 6.4 or Section 7;
or

 

(d)           Any default occurs in the observance
or performance of any agreement contained in Section 6.1 and such default continues
for three (3) days; or

 

(e)           The occurrence of an Event of Default
(as such term is or may hereafter be specifically defined in any other Loan
Document) under any other Loan Document; or Borrower fails to perform or
observe any other covenant or agreement (not specified in subsections (a), (b) (c) or
(d) above) contained in any Loan Document on its part to be performed or
observed and such failure continues for 30 days; or

 

(f)            Any representation, warranty,
certification or other statement made or deemed made by any Credit Party in any
in any Loan Document proves to have been incorrect in any material respect when
made or deemed made; or

 

(g)           Any Credit Party (x) defaults on
any payment when due, which remains uncured beyond any applicable cure period,
of principal or interest on any Indebtedness (other than Indebtedness
hereunder) having an aggregate principal amount in excess of $3,500,000, or (y) defaults
in the observance or performance of any other agreement or covenant relating to
any Indebtedness (other than Indebtedness hereunder) or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur, the effect of which

 

85

 

default
or other event is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
any Indebtedness in excess of $3,500,000 to become payable or cash collateral
in respect thereof to be demanded on account of such default or other event; or
(ii) the occurrence under any Swap Contract of an “Early Termination Date”
(or such similar term as defined in such Swap Contract) resulting from (x) any
event of default under such Swap Contract as to which Borrower or any
Subsidiary is the “Defaulting Party” (or such similar term as defined in such
Swap Contract) or (y) any termination event under any Swap Contract (as
defined therein) as to which Borrower or any Subsidiary is an affected party
(as so defined) (other than termination events resulting solely from changes in
the value of Borrower’s stock price or other rates, prices or indices
underlying any such Swap Contract), and as to which, in either event, the “Swap
Termination Value” (or such similar term as defined in such Swap Contract) owed
by Borrower or such Subsidiary as a result thereof is greater than $3,500,000;
or

 

(h)           Any Loan Document, at any time after
its execution and delivery and for any reason other than the agreement of all
Lenders or satisfaction in full of all the Obligations, ceases to be in full
force and effect or is declared by a court of competent jurisdiction to be null
and void, invalid or unenforceable in any respect; or Administrative Agent
shall not have or shall cease to have a valid and perfected Lien in any
Collateral purported to be covered by the Security Documents with the priority
required by the relevant Security Document, in each case for any reason other than
the failure of Administrative Agent to take any action within its control; or
any Credit Party contests the validity or enforceability of any Loan Document
or denies that it has any or further liability or obligation under any Loan
Document to which it is a party, or purports to revoke, terminate or rescind
any such Loan Document; or

 

(i)            A final judgment (to the extent not
covered by insurance (less any deductible) from a solvent insurer who has
accepted tender of defense and is defending such action) against Borrower or
any Subsidiary is entered for the payment of money in excess of $3,500,000 and
such judgment remains unpaid, unvacated, unbonded or unstayed by appeal or
otherwise for a period of thirty (30) days from the date of its entry, or any
non-monetary final judgment is entered against Borrower or any Subsidiary that
could reasonably be expected to have a Material Adverse Effect and such
judgment remains unvacated, unbonded or unstayed by appeal or otherwise for a
period of thirty (30) days from the date of its entry.

 

(j)            (i) A court of competent
jurisdiction shall enter a decree or order for relief in respect of Borrower or
any of its Subsidiaries in an involuntary case under the Bankruptcy Code or
under any other Debtor Relief Laws now or hereafter in effect, which decree or
order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be
commenced against Borrower or any of its Subsidiaries under the Bankruptcy Code
or under any other Debtor Relief Laws now or hereafter in effect; or a decree
or order of a court having jurisdiction in the premises for the appointment of
a receiver, liquidator, sequestrator, trustee, custodian or other officer
having similar powers over Borrower or any of its Subsidiaries, or over all or
a substantial part of its property, shall have been entered; or there shall
have occurred the involuntary appointment of an interim receiver, trustee or
other custodian of Borrower or any of its Subsidiaries for all or a substantial
part of its property; or a warrant of attachment, execution or similar process
shall have been issued against any substantial part of the property of Borrower
or any of its Subsidiaries, and any such event described in this 

 

86

 

clause
(ii) shall continue for sixty (60) days without having been dismissed,
bonded or discharged; or

 

(k)           (i) Borrower or any of its
Subsidiaries shall have an order for relief entered with respect to it or shall
commence a voluntary case under the Bankruptcy Code or under any other Debtor
Relief Laws now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or Borrower or any of its
Subsidiaries shall make any assignment for the benefit of creditors; or (ii) Borrower
or any of its Subsidiaries shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts become due; or
the board of directors (or similar governing body) of Borrower or any of its
Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise
authorize any action to approve any of the actions referred to herein or in Section 8.1(j);
or

 

(l)            (i) An ERISA Event occurs with
respect to a Pension Plan or Multiemployer Plan which has resulted or could
reasonably be expected to result in liability of the Borrower or its
Subsidiaries under Title IV of ERISA to the Pension Plan, Multiemployer Plan or
the PBGC in an aggregate amount in excess of $3,500,000; (ii) the
aggregate amount of Unfunded Pension Liability among all Pension Plans at any
time exceeds $3,500,000; (iii) Borrower or any Subsidiary or any ERISA
Affiliate fails to pay when due, after the expiration of any applicable grace
period, any installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$3,500,000; or (iv) the events listed in clauses (i), (ii) and (iii) in
the aggregate have resulted or could reasonably be expected to result in
liability of Borrower or its Material Subsidiaries in excess of $3,500,000; or

 

(m)          There occurs any Change of Control; or

 

(n)           There occurs a change in the assets,
liabilities, financial condition, operations, affairs or prospects of Borrower
and its Subsidiaries, taken as a whole, which in the reasonable determination
of Requisite Lenders has had or could reasonably be expected to have a Material
Adverse Effect.

 

8.2          REMEDIES UPON EVENT OF DEFAULT.  Without
limiting any other rights or remedies of Administrative Agent or Lenders
provided for elsewhere in this Agreement, or the other Loan Documents, or by
applicable Law, or in equity, or otherwise, subject to the Intercreditor
Agreement:

 

(a)           Upon the occurrence, and during the
continuance, of any Event of Default other than an Event of Default described
in Section 8.1(j) or (k):

 

(i)            Requisite Lenders may request
Administrative Agent to, and Administrative Agent thereupon shall, terminate
the Commitments and/or declare all or any part of the unpaid principal of all
Loans, all interest accrued and unpaid thereon and all other amounts payable
under the Loan Documents to be immediately due and payable, whereupon the same
shall become and be immediately due and payable, without protest, presentment,
notice of dishonor, demand or further notice of any kind, all of which are
expressly waived by Borrower; and/or

 

87

 

(ii)           Issuing Lender, with the approval of
Administrative Agent on behalf of Requisite Lenders, may demand immediate
payment by Borrower of an amount equal to the aggregate amount of all
outstanding Letter of Credit Usage to be held in a blocked Letter of Credit
cash collateral account held with KeyBank.

 

(b)           Upon the occurrence of any Event of
Default described in Section 8.1(j) or (k):

 

(i)            the Commitments and all other
obligations of Administrative Agent or Lenders shall automatically terminate
without notice to or demand upon Borrower, which are expressly waived by Borrower;

 

(ii)           the unpaid principal of all Loans,
all interest accrued and unpaid thereon and all other amounts payable under the
Loan Documents shall be immediately due and payable, without protest,
presentment, notice of dishonor, demand or further notice of any kind, all of
which are expressly waived by Borrower; and

 

(iii)          an amount equal to the aggregate
amount of all outstanding Letter of Credit Usage shall be immediately due and
payable to Issuing Lender without notice to or demand upon Borrower, which are
expressly waived by Borrower, to be held in a blocked Letter of Credit cash
collateral account held with KeyBank.

 

(c)           If, on or prior to the No-Call Expiry
Date, all or any part of the principal balance of any Original Term Loan is
declared to be immediately due and payable pursuant to subsections (a) or (b) of
this Section 8.2, then Borrower shall pay to Administrative Agent, for the
benefit of all Original Term Lenders, an amount equal to the Make-Whole Amount
with respect to such principal balance at such time.  If, after the No-Call Expiry Date but on or
prior to the Call Protection Expiry Date, all or any part of the principal
balance of any Original Term Loan is declared to be immediately due and payable
pursuant to subsections (a) or (b) of this Section 8.2, then
Borrower shall pay to Administrative Agent, for the benefit of all Original
Term Lenders, the applicable Prepayment Premium with respect to such principal
balance at such time.

 

(d)           Upon the occurrence of any Event of
Default, Lenders and Administrative Agent, or any of them, without notice to
(except as expressly provided for in any Loan Document) or demand upon
Borrower, which are expressly waived by Borrower (except as to notices
expressly provided for in any Loan Document), may proceed to (but only with the
consent of Requisite Lenders) protect, exercise and enforce their rights and
remedies under the Loan Documents against Borrower and such other rights and
remedies as are provided by Law or equity (including, without limitation, the provisions
of the applicable Uniform Commercial Code).

 

(e)           Except as permitted by Section 10.5,
no Lender may exercise any rights or remedies with respect to the Obligations
without the consent of Requisite Lenders in their sole and absolute
discretion.  Subject to the Intercreditor
Agreement, the order and manner in which Administrative Agent’s and Lenders’
rights and remedies are to be exercised shall be determined by Requisite
Lenders in their sole and absolute discretion. 
Subject to the Intercreditor Agreement, regardless of how a Lender may
treat payments for the purpose of its own accounting, for the purpose of
computing the Obligations hereunder, payments shall be applied

 

88

 

first,
to costs and expenses (including Attorney Costs) incurred by Administrative
Agent and each Lender, second, to the payment of accrued and unpaid interest on
the Loans to and including the date of such application, third, to the payment
of the Make-Whole Amount, if any, on any Loan, fourth, to the payment of the
unpaid principal of the Loans, and fifth, to the payment of all other amounts
(including fees) then owing to Administrative Agent and Lenders under the Loan
Documents, in each case (other than with respect to the Make-Whole Amount and
any applicable fees that are not shared ratably, which amounts shall be paid as
otherwise directed herein) paid pro rata to each Lender in the same proportions
that the aggregate Obligations owed to each Lender under the Loan Documents
bear to the aggregate Obligations owed under the Loan Documents to all Lenders,
without priority or preference among Lenders. 
Each Credit Party acknowledges the relative rights, priorities and
agreements, as set forth in the Intercreditor Agreement and this Agreement,
including as set forth in this Section 8.2(e).  No application of payments will cure any
Event of Default, or prevent acceleration, or continued acceleration, of
amounts payable under the Loan Documents, or prevent the exercise, or continued
exercise, of rights or remedies of Administrative Agent and Lenders hereunder
or thereunder or at Law or in equity.

 

SECTION IX.

ADMINISTRATIVE AGENT

 

9.1          APPOINTMENT AND AUTHORIZATION OF
ADMINISTRATIVE AGENT.

 

(a)           Each
Lender hereby irrevocably (subject to Section 9.9) appoints, designates
and authorizes Administrative Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. 
Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall Administrative Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Administrative
Agent.  Without limiting the generality
of the foregoing sentence, the use of the term “agent” in this Agreement with
reference to Administrative Agent is not intended to connote any fiduciary or
other implied (or express) obligations arising under agency doctrine of any
applicable law.  Instead, such term is
used merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting parties.

 

(b)           Issuing Lender shall act on behalf of
Lenders with respect to any Letters of Credit issued by it and the documents
associated therewith until such time and except for so long as Administrative
Agent may agree at the request of Requisite Lenders to act for such Issuing
Lender with respect thereto; provided,
however, that Issuing Lender shall have all of the benefits and
immunities (i) provided to Administrative Agent in this Section 9 with respect to any acts taken or
omissions suffered by Issuing Lender in connection with Letters of Credit
issued by it or proposed to be issued by it and the application and agreements
for letters of credit pertaining to the Letters of Credit as fully as if the
term “Administrative Agent” as used in this Section 9

 

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included
Issuing Lender with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to Issuing Lender.

 

9.2          DELEGATION OF DUTIES.  Administrative
Agent may execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties.  Administrative Agent shall not
be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.

 

9.3          LIABILITY OF ADMINISTRATIVE AGENT.  No
Administrative Agent-Related Person shall (i) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any Lender for any recital, statement,
representation or warranty made by Borrower or any Subsidiary or Affiliate of
Borrower, or any officer thereof, contained in this Agreement or in any other
Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by Administrative Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of Borrower or any other party to
any Loan Document to perform its obligations hereunder or thereunder.  No Administrative Agent-Related Person shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of Borrower or any of Borrower’s Subsidiaries or Affiliates.

 

9.4          RELIANCE BY ADMINISTRATIVE AGENT.

 

(a)           Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to Borrower), independent accountants and
other experts selected by Administrative Agent. 
Administrative Agent shall be fully justified in failing or refusing to
take any action under any other Loan Document unless it shall first receive
such advice or concurrence of Requisite Lenders as it deems appropriate and, if
it so requests, it shall first be indemnified to its satisfaction by Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.  Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of Requisite
Lenders or all Lenders, if required hereunder, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of
Lenders.  Where this Agreement expressly
permits or prohibits an action unless Requisite Lenders otherwise determine,
and in all other instances, Administrative Agent may, but shall not be required
to, initiate any solicitation for the consent or a vote of Lenders.

 

(b)           For purposes of determining
compliance with the conditions specified in Section 4.1, each Lender that
has executed this Agreement shall be deemed to have consented to,

 

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approved
or accepted or to be satisfied with, each document or other matter either sent
by Administrative Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to such Lender.

 

9.5          NOTICE OF DEFAULT.  Administrative
Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to Administrative Agent for
the account of Lenders, unless Administrative Agent shall have received written
notice from a Lender or Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a “notice of
default”.  Administrative Agent will
notify Lenders of its receipt of any such notice.  Administrative Agent shall take such action
with respect to such Default or Event of Default as may be directed by
Requisite Lenders in accordance with Section 8; provided, however, that unless and until Administrative
Agent has received any such direction, Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable or in
the best interest of Lenders.

 

9.6          CREDIT DECISION; DISCLOSURE OF
INFORMATION BY ADMINISTRATIVE AGENT.  Each Lender
acknowledges that no Administrative Agent-Related Person has made any
representation or warranty to it, and that no act by Administrative Agent
hereinafter taken, including any consent to and acceptance of any assignment or
review of the affairs of Borrower and its Subsidiaries, shall be deemed to
constitute any representation or warranty by any Administrative Agent-Related
Person to any Lender as to any matter, including whether Administrative
Agent-Related Persons have disclosed material information in their
possession.  Each Lender, including any
Lender by assignment, represents to Administrative Agent that it has,
independently and without reliance upon any Administrative Agent-Related Person
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
Borrower and its Subsidiaries, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter
into this Agreement and to extend credit to Borrower hereunder.  Each Lender also represents that it will,
independently and without reliance upon any Administrative Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of Borrower.  Except
for notices, reports and other documents expressly required to be furnished to
Lenders by Administrative Agent herein, Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Borrower or any of its Subsidiaries
which may come into the possession of any Administrative Agent-Related Person.

 

9.7          INDEMNIFICATION OF ADMINISTRATIVE
AGENT.  Lenders shall indemnify
upon demand each Administrative Agent-Related Person (to the extent not
reimbursed by or on behalf of Borrower and without limiting the obligation of
Borrower to do so), pro rata, and
hold 

 

91

 

harmless each Administrative
Agent-Related Person from and against any and all Indemnified Liabilities
incurred by it; provided, however,
that no Lender shall be liable for the payment to any Administrative
Agent-Related Person of any portion of such Indemnified Liabilities resulting
from such Person’s gross negligence or willful misconduct; provided, further, that no action taken in
accordance with the directions of Requisite Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this
Section.  Without limitation of the
foregoing, each Lender shall reimburse Administrative Agent upon demand for its
ratable share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that Administrative Agent is not reimbursed for such expenses by or on behalf
of Borrower.  The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of Administrative Agent.

 

9.8          ADMINISTRATIVE AGENT IN INDIVIDUAL
CAPACITY.  KeyBank and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with Borrower and its
Subsidiaries and Affiliates as though KeyBank were not Administrative Agent or
Issuing Lender hereunder and without notice to or consent of Lenders.  Lenders acknowledge that, pursuant to such
activities, KeyBank or its Affiliates may receive information regarding
Borrower or its Affiliates (including information that may be subject to
confidentiality obligations in favor of Borrower or such Affiliate) and
acknowledge that Administrative Agent shall be under no obligation to provide
such information to them.  With respect
to its Loans, KeyBank shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
Administrative Agent or Issuing Lender.

 

9.9          SUCCESSOR ADMINISTRATIVE AGENT.  Administrative
Agent may, and at the request of Requisite Lenders (which, for purposes hereof,
so long as KeyBank National Association holds at least 20% of the Combined
Commitments as of the Closing Date, must include KeyBank National Association)
shall, resign as Administrative Agent upon 30 days’ notice to Lenders.  If Administrative Agent resigns under this
Agreement, Requisite Lenders shall appoint from among Lenders a successor
administrative agent for Lenders which successor administrative agent shall be
approved by Borrower.  If no successor
administrative agent is appointed prior to the effective date of the
resignation of Administrative Agent, Administrative Agent may appoint, after
consulting with Lenders and Borrower and upon approval of Borrower (other than
at any time as there exists a Default or an Event of Default) which will not be
unreasonably withheld, a successor administrative agent from among
Lenders.  Upon the acceptance of its
appointment as successor administrative agent hereunder, such successor
administrative agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term “Administrative
Agent” shall mean such successor administrative agent and the
retiring Administrative Agent’s appointment, powers and duties as
Administrative Agent shall be terminated. 
After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Section 9 and Sections 10.3
and 10.14 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was 

 

92

 

Administrative Agent under this
Agreement.  If no successor
administrative agent has accepted appointment as Administrative Agent (whether
due to absence of Borrower approval or otherwise) by the date which is 30 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become
effective and Lenders shall perform all of the duties of Administrative Agent
hereunder until such time, if any, as Requisite Lenders appoint a successor
agent as provided for above. 
Notwithstanding the foregoing, however, KeyBank may not be removed as
Administrative Agent at the request of Requisite Lenders unless KeyBank shall
also simultaneously be replaced as “Issuing
Lender” hereunder pursuant to documentation in form and substance
reasonably satisfactory to KeyBank.  Any
Administrative Agent hereunder must hold a Commitment in an amount not less
than the $5,000,000.

 

9.10        DESIGNATION OF ARRANGER; NO AFFILIATE
LIABILITY.  The parties hereto hereby
designate KeyBanc Capital Markets, an Affiliate of KeyBank as “Sole Arranger”
and “Sole Book Runner” under this Agreement. 
None of Lenders (or Affiliates of Lenders) identified from time to time
herein by the titles “Lead Arranger,” “Book Runner,” or similar titles shall
have any right, power, obligation, liability, responsibility or duty under this
Agreement in such capacity.  Without
limiting the foregoing, none of Lenders (or Affiliates of Lenders) so
identified shall have or be deemed to have any fiduciary relationship with any
Lender.  Each Lender acknowledges that it
has not relied, and will not rely, on any of Lenders (or Affiliates of Lenders)
so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.

 

SECTION X.

MISCELLANEOUS

 

10.1        AMENDMENTS; CONSENTS.  Subject
to the terms of the Intercreditor Agreement, no amendment, modification,
supplement, extension, termination or waiver of any provision of this Agreement
or any other Loan Document, no approval or consent thereunder, and no consent
to any departure by Borrower therefrom shall be effective unless in writing
signed by Requisite Lenders and acknowledged by Administrative Agent, and each
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. 
Except as otherwise expressly provided herein, without the approval in
writing of Administrative Agent and all Lenders that would be affected thereby,
no amendment, modification, supplement, termination, waiver or consent may be
effective:

 

(a)           To reduce the amount of principal,
principal prepayments or the rate of interest payable on, any Loan, or the
amount of any fee or other amount payable to any Lender under the Loan
Documents (unless such modification is consented to by each Lender entitled to
receive such fee) or to waive an Event of Default consisting of the failure of
Borrower to pay when due principal, interest or any Commitment Fee;

 

(b)           To postpone any date fixed for any
payment of principal of, prepayment of principal of, or any installment of
interest on, any Loan or any installment of any Commitment Fee, to extend the
term of, or increase the amount of, any Lender’s Commitment (it being
understood that a waiver of an Event of Default shall not constitute an
extension or increase in the Commitment of any Lender) or modify the Pro Rata
Share of any Lender;

 

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(c)                                  To
release collateral in which Lenders have a security interest to secure the
performance of Borrower’s obligations under the Loan Documents constituting
more than $2,500,000;

 

(d)                                 To
release all or substantially all of the Guarantors from the Guaranty except as
expressly provided in the Loan Documents;

 

(e)                                  To
amend the definition of “Requisite Lenders” or “Pro Rata Share” or the
provisions of Section 4, Section 9, this Section 10.1 or Section 10.6;

 

(f)                                    To
consent to the assignment or transfer by any Credit Party of any of its rights
and obligations under any Loan Document; and

 

(g)                                 To
amend any provision of this Agreement that expressly requires the consent or
approval of all Lenders;

 

provided, however,
that (i) no amendment, waiver or consent shall, unless in writing and
signed by Issuing Lender in addition to Requisite Lenders or all Lenders, as
the case may be, affect the rights or duties of Issuing Lender, (ii) no
amendment, waiver or consent shall, unless in writing and signed by
Administrative Agent in addition to Requisite Lenders or all Lenders, as the
case may be, affect the rights or duties of Administrative Agent, (iii) the
Facilities Letter and the Fee Letter (or any similar letters that may be
entered into from time to time) may be amended, or rights or privileges
thereunder waived, in a writing executed by the parties thereto, and (iv) any
waiver, amendment or modification of the Intercreditor Agreement (and any
related definitions) may be effected by an agreement or agreements in writing
entered into among the Administrative Agent, the Second Lien Administrative
Agent (with the consent of the Requisite Lenders but without the consent of any
Credit Party, so long as such amendment, waiver or modification does not impose
any additional duties or obligations on the Credit Parties or alter or impair
any right of any Credit Party under the Loan Documents).  Any amendment, modification, supplement,
termination, waiver or consent pursuant to this Section shall apply
equally to, and shall be binding upon, all Lenders and Administrative Agent.

 

10.2                        TRANSMISSION
AND EFFECTIVENESS OF COMMUNICATIONS AND SIGNATURES.

 

(a)                                  Modes of Delivery.  Except
as otherwise provided in any Loan Document, notices, requests, demands,
directions, agreements and documents delivered in connection with the Loan
Documents (collectively, “communications”) shall be transmitted by Requisite
Notice to the number and address set forth on Schedule 10.2, may be delivered
by the following modes of delivery, and shall be effective as follows:

 

	
  Mode of Delivery

  	
   

  	
  Effective on earlier of actual receipt and:

  
	
  Courier

  	
   

  	
  Scheduled delivery date

  
	
  Facsimile

  	
   

  	
  When transmission in
  legible form complete

  
	
  Mail

  	
   

  	
  Fourth Business Day after
  deposit in U.S. mail first class postage pre-paid

  
	
  Personal delivery

  	
   

  	
  When received

  
	
  Telephone

  	
   

  	
  When conversation
  completed

  

 

94

 

provided, however, that communications
delivered to Administrative Agent pursuant to Section 2 must be in writing
and shall not be effective until actually received by Administrative Agent.

 

(b)                                 Reliance by Administrative Agent and Lenders.  Administrative Agent and Lenders shall be
entitled to rely and act on any communications purportedly given by or on
behalf of Borrower even if (i) such communications (A) were not made
in a manner specified herein, (B) were incomplete or (C) were not
preceded or followed by any other notice specified herein, or (ii) the
terms thereof, as understood by the recipient, varied from any subsequent
related communications provided for herein. 
Borrower shall indemnify Administrative Agent and Lenders from any loss,
cost, expense or liability as a result of relying on any communications
permitted herein.

 

(c)                                  Effectiveness of Facsimile Documents and Signatures.  Documents and agreements delivered from time
to time in connection with the Loan Documents may be transmitted and/or signed
by facsimile.  The effectiveness of any
such documents and signatures shall, subject to applicable Law, have the same
force and effect as hardcopies with manual signatures and shall be binding on
all Borrower and its Subsidiaries and Administrative Agent and Lenders.  Administrative Agent may also request that
any such documents and signature be confirmed by a manually-signed hardcopy
thereof; provided, however, that the failure to
request or deliver any such manually-signed hardcopy shall not affect the
effectiveness of any facsimile documents or signatures.

 

10.3                        ATTORNEY
COSTS, EXPENSES AND TAXES.  Borrower agrees (a) to pay or reimburse
Administrative Agent and each Lender for all reasonable costs and expenses
incurred in connection with the development, preparation, negotiation and
execution of the Loan Documents (including the expenses in connection with the
obtainment and maintenance by any Lender of a shadow corporate rating as
described in Section 6.18), and the development, preparation, negotiation
and execution of any amendment, waiver, consent, supplement or modification to
any Loan Documents, and any other documents prepared in connection herewith or
therewith, including all reasonable Attorney Costs, and (b) to pay or
reimburse Administrative Agent and each Lender for all costs and expenses
incurred in connection with any refinancing, restructuring, reorganization (including
a bankruptcy reorganization), collection and enforcement or attempted
enforcement, or preservation of any rights under any Loan Documents, and any
other documents prepared in connection herewith or therewith, or in connection
with any refinancing, or restructuring of any such documents in the nature of a
“workout” or of any insolvency or bankruptcy proceeding, including Attorney
Costs.  The foregoing costs and expenses
shall include all reasonable search, filing, and appraisal charges and fees and
recording, filing, transfer, court, documentary, stamp or similar taxes related
thereto, and other out-of-pocket expenses incurred by Administrative Agent or
any Lender and the cost of independent public accountants and other outside
experts retained by Administrative Agent or any Lender.  Any amount payable by Borrower under this Section shall
bear interest from the tenth (10th) Business Day following the date of demand
for payment at the Default Rate, unless waived by Administrative Agent.  The agreements in this Section shall
survive repayment of all Obligations.

 

95

 

10.4                        SUCCESSORS AND ASSIGNS.

 

(a)                                  Successors
and Assigns Generally.  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted
hereby, except that the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of the
Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an
assignee in accordance with the provisions of paragraph (b) of this Section 10.4,
(ii) by way of participation in accordance with the provisions of
paragraph (d) of this Section 10.4 or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of paragraph (f) of
this Section 10.4 (and any other attempted assignment or transfer by any
party hereto shall be null and void). 
Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent provided in
paragraph (d) of this Section 10.4 and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent
and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.

 

(b)                                 Assignments by Lenders. 
Any Lender may at any time assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that
any such assignment shall be subject to the following conditions.

 

(i)                                     Minimum Amounts.

 

(A)                              in
the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and

 

(B)                                in
any case not described in paragraph (b)(i)(A) of this Section 10.4,
the aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the applicable Commitment is not then in effect,
the principal outstanding balance of the Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of
the Trade Date) shall not be less than $5,000,000, in the case of any
assignment in respect of a Revolving Loan/Revolving Commitment, or $1,000,000,
in the case of any assignment in respect of a Term Loan, unless the
Administrative Agent otherwise consents (such consent not to be unreasonably
withheld or delayed).

 

(ii)                                  Proportionate Amounts. 
Each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement
with respect to the Loan or the Commitment assigned, except that this clause (ii) shall
not prohibit any Lender from assigning all or a portion of its rights and
obligations among separate Loan tranches (i.e., either Revolving
Loans/Revolving Commitments or Term Loans) on a non-pro rata basis.

 

96

 

(iii)                               Required Consents. 
No consent shall be required for any assignment except to the extent
required by paragraph (b)(i)(B) of this Section 10.4 and, in
addition:

 

(A)                              the consent of the
Administrative Agent (such consent not to be unreasonably withheld or delayed)
shall be required for assignments in respect of (i) a Revolving Loan/Revolving
Commitment if such assignment is to a Person that is not a Revolving Lender
with a Revolving Commitment, an Affiliate of such Revolving Lender or an
Approved Fund with respect to such Revolving Lender or (ii) a Term Loan to
a Person who is not an Eligible Assignee; and

 

(B)                                the consent of the Issuing Lender
(such consent not to be unreasonably withheld or delayed) shall be required for
any assignment that increases the obligation of the assignee to participate in
exposure under one or more Letters of Credit (whether or not then outstanding).

 

(iv)                              Assignment and Assumption. 
The parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500, and the assignee, if it is not a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)                                 No Assignment to Borrower. 
No such assignment shall be made to the Borrower or any of the Borrower’s
Affiliates or Subsidiaries.

 

(vi)                              No Assignment to Natural Persons. 
No such assignment shall be made to a natural person.

 

Subject to acceptance and recording thereof
by the Administrative Agent pursuant to paragraph (c) of this Section 10.4,
from and after the effective date specified in each Assignment and Assumption,
the assignee thereunder shall be a party to this Agreement and, to the extent
of the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections
III, 10.3, 10.14 and 10.15 of this Agreement with respect to facts and
circumstances occurring prior to the effective date of such assignment.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (d) of this Section 10.4.

 

(c)                                  Register.  The
Administrative Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at one of its offices in Cleveland, Ohio a copy of
each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may
treat each

 

97

 

Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

 

(d)                                 Participations.  Any
Lender may at any time, without the consent of, or notice to, the Borrower or
the Administrative Agent, sell participations to any Person (other than a
natural person or the Borrower or any of the Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative
Agent and the Lenders and the Issuing Lender shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

 

Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any  provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver which (A) extends the Maturity Date as
to such Participant or any other date upon which any payment of money is due to
such Participant, (B) reduces the rate of interest owing to such
Participant, any fee or any other monetary amount owing to such Participant, or
(C) reduces the amount of any installment of principal owing to such
Participant all as described in Sections 10.1(a) and 10.1(b).  Subject to paragraph (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Section III to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section 10.4.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.5 as
though it were a Lender, provided such Participant agrees to be subject to Section 10.6
as though it were a Lender.

 

(e)                                  Limitations upon Participant Rights.  A Participant shall not be entitled to
receive any greater payment under Section III than the applicable Lender
would have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant is
made with the Borrower’s prior written consent. 
A Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section III unless the Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 10.22 as
though it were a Lender.

 

(f)                                    Certain Pledges.  Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or assignment shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

 

98

 

10.5                        SET-OFF.  Subject to the Intercreditor Agreement, in
addition to any rights and remedies of Administrative Agent and Lenders or any
assignee or participant of any Lender or any Affiliate thereof (each, a “Proceeding Party”) provided by law, upon the occurrence and during the
continuance of any Event of Default, each Proceeding Party is authorized at any
time and from time to time, without prior notice to Borrower, any such notice
being waived by Borrower to the fullest extent permitted by law, to proceed
directly, by right of set-off, banker’s lien, or otherwise, against any assets
of Borrower and its Subsidiaries which may be in the hands of such Proceeding
Party (including all general or special, time or demand, provisional or other
deposits and other indebtedness owing by such Proceeding Party to or for the
credit or the account of Borrower) and apply such assets against the
Obligations, irrespective of whether such Proceeding Party shall have made any
demand therefor and although such Obligations may be unmatured.  Each Lender agrees promptly to notify
Borrower and Administrative Agent after any such set-off and application made
by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.

 

10.6                        SHARING OF
PAYMENTS.  Subject to the
Intercreditor Agreement, each Lender severally agrees that if it, through the
exercise of any right of setoff, banker’s lien or counterclaim against Borrower
or otherwise, receives payment on account of the Outstanding Obligations held
by it that is ratably more than any other Lender receives in payment on account
of the Outstanding Obligations held by such other Lender, then, subject to
applicable Laws:  (a) the Lender exercising the right of setoff,
banker’s lien or counterclaim or otherwise receiving such payment shall
purchase, and shall be deemed to have simultaneously purchased, from such other
Lender a participation in the Outstanding Obligations held by the other Lender
and shall pay to such other Lender a purchase price in an amount so that the
share of the Outstanding Obligations held by each Lender after the exercise of
the right of setoff, banker’s lien or counterclaim or receipt of payment shall
be in the same proportion that existed prior to the exercise of the right of
setoff, banker’s lien or counterclaim or receipt of payment; and (b) such
other adjustments and purchases of participations shall be made from time to
time as shall be equitable to ensure that all Lenders share any payment
obtained in respect of the Outstanding Obligations ratably in accordance with
each Lender’s share of the Outstanding Obligations immediately prior to, and
without taking into account, the payment; provided
that, if all or any portion of a disproportionate payment obtained as a result
of the exercise of the right of setoff, banker’s lien, counterclaim or
otherwise is thereafter recovered from the purchasing Lender by Borrower or any
Person claiming through or succeeding to the rights of Borrower, the purchase
of a participation shall be rescinded and the purchase price thereof shall be
restored to the extent of the recovery, but without interest.  Each Lender that purchases a participation in
the Outstanding Obligations pursuant to this Section shall from and after
the purchase have the right to give all notices, requests, demands, directions
and other communications under this Agreement with respect to the portion of
the Outstanding Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Outstanding Obligations
purchased.  Borrower expressly consents
to the foregoing arrangements and agrees that any Lender holding a
participation in an Obligation so purchased may exercise any and all rights of
setoff, banker’s lien or counterclaim with respect to the participation as
fully as if Lender were the original owner of the Obligation purchased.

 

10.7                        NO SETOFF.  As to any and all funds, securities or
other assets of Borrower which are now or hereafter held by Administrative
Agent or any Lender as collateral pursuant to this

 

99

 

Agreement or any other Loan
Document for any of the Obligations (collectively the “Collateral Assets”), Administrative Agent
and Lenders agree that they shall not exercise any right of setoff or
recoupment against nor shall they assert any security interest in the
Collateral Assets in connection with any other obligation owed to
Administrative Agent or any Lender which is unrelated to this Agreement or the
Loan Documents, except for:   (i) recovery for any items
deposited with Administrative Agent or any Lender and returned unpaid or as to
which claims have been asserted as to breach of transfer or presentment warranties,
(ii) overdrafts on any account which generated the funds which constitute
part of the Collateral Assets, (iii) automated clearing house entries, and
(iv) Administrative Agent or any Lender’s usual and customary fees for
services rendered in connection with the assets or bank accounts which
constitute the Collateral Assets.

 

10.8                        NO WAIVER;
CUMULATIVE REMEDIES.

 

(a)                                  No
failure by any Lender or Administrative Agent to exercise, and no delay by any
Lender or Administrative Agent in exercising, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege under any Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. 
Without limiting the generality of the foregoing, the terms and
conditions of Section 4 may be waived in whole or in part, with or without
terms or conditions, in respect of any Extension of Credit without prejudicing
Administrative Agent’s or Lender’s rights to assert them in whole or in part in
respect of any other Extension of Credit.

 

(b)                                 The
rights, remedies, powers and privileges herein or therein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by Law.  Any decision by
Administrative Agent or any Lender not to require payment of any interest (including
interest at the Default Rate), fee, cost or other amount payable under any Loan
Document or to calculate any amount payable by a particular method on any
occasion shall in no way limit or be deemed a waiver of Administrative Agent’s
or Lender’s right to require full payment thereof, or to calculate an amount
payable by another method that is not inconsistent with this Agreement, on any
other or subsequent occasion.

 

(c)                                  The
terms and conditions of Section 9 are for the sole benefit of
Administrative Agent and Lenders.

 

10.9                        USURY.  Notwithstanding anything to the contrary
contained in any Loan Document, the interest and fees paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the “Maximum
Rate”).  If Administrative Agent or any
Lender shall receive interest or a fee in an amount that exceeds the Maximum
Rate, the excessive interest or fee shall be applied to the principal of the
Outstanding Obligations or, if it exceeds the unpaid principal, refunded to
Borrower.  In determining whether the
interest or a fee contracted for, charged, or received by Administrative Agent
or any Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not
principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate,

 

100

 

and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations.

 

10.10                 COUNTERPARTS.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

10.11                 INTEGRATION.  This Agreement, together with the other Loan
Documents and any letter agreements referred to herein, comprises the complete
and integrated agreement of the parties on the subject matter hereof and
supersedes all prior agreements, written or oral, on the subject matter hereof.  In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern; provided that the inclusion of
supplemental rights or remedies in favor of Administrative Agent or Lenders in
any other Loan Document shall not be deemed a conflict with this Agreement.  Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.

 

10.12                 NATURE OF LENDERS’
OBLIGATIONS.  Nothing contained in
this Agreement or any other Loan Document and no action taken by Administrative
Agent or Lenders or any of them pursuant hereto or thereto may, or may be
deemed to, make Lenders a partnership, an association, a joint venture or other
entity, either among themselves or with Borrower or any Affiliate of Borrower.  Each Lender’s obligation to make any
Extension of Credit pursuant hereto is several and not joint or joint and
several; provided that, in the
case of the initial Extension of Credit only, each Lender’s obligation is
conditioned upon the performance by all other Lenders of their obligations to
make the initial Extension of Credit.  A
default by any Lender will not increase the Pro Rata Share attributable to any
other Lender.

 

10.13                 SURVIVAL OF
REPRESENTATIONS AND WARRANTIES.  All
representations and warranties made hereunder and in any Loan Document,
certificate or statement delivered pursuant hereto or thereto or in connection
herewith or therewith shall survive the execution and delivery thereof but
shall terminate the later of (a) when the Commitments are terminated and
all Letters of Credit have been terminated or have expired and (b) when no
Obligations remain outstanding under any Loan Document.  Such representations and warranties have been
or will be relied upon by Administrative Agent and each Lender, notwithstanding
any investigation made by Administrative Agent or any Lender or on their
behalf.

 

10.14                 INDEMNITY BY BORROWER.

 

(a)                                  Borrower
agrees to indemnify, defend (subject to Indemnitees’ selection of counsel),
save and hold harmless each Administrative Agent-Related Person and each Lender
and each of their respective Affiliates, directors, officers, agents, attorneys
and employees (each, an “Indemnitee”)
from and against:  (a) any and all claims, demands, actions or causes
of action that are asserted against any Indemnitee by any Person (other than
Administrative Agent or any Lender) relating directly or indirectly to a claim,
demand, action or cause of action that such Person asserts or may assert
against Borrower, any of its Affiliates or any its officers or directors; (b) any
and all claims, demands, actions or causes of action arising out of or relating

 

101

 

to, the Loan Documents, any
predecessor loan documents, the Commitments, the use or contemplated use of the
proceeds of any Loan, property that is the subject of any Material Lease or any
other collateral given to secure the obligations of Borrower under this
Agreement, or the relationship of Borrower, Administrative Agent and Lenders
under this Agreement; (c) any administrative or investigative proceeding
by any Governmental Authority arising out of or related to a claim, demand,
action or cause of action described in subsection (a) or (b) above;
and (d) all liabilities, claims, actions, loss, damages, including,
without limitation, foreseeable and unforeseeable consequential damages, costs
and expenses (including sums paid in settlement of claims and all consultant,
expert and legal fees and expenses of Indemnitees’ counsel) directly or
indirectly arising out of or resulting from any Hazardous Substance being
present at any time in or around any part of Borrower’s or any Subsidiary’s
properties (leasehold or fee), or in the soil, groundwater or soil vapor on or
under Borrower’s or any Subsidiary’s properties (leasehold or fee), including
those incurred in connection with any investigation of site conditions or any
clean-up, remedial, removal or restoration work, or any resulting damages or
injuries to the person or property of any third parties or to any natural
resources; (e) any and all liabilities, losses, costs or expenses (including
Attorney Costs) that any Indemnitee suffers or incurs as a result of the
assertion of any foregoing claim, demand, action, cause of action or
proceeding, or as a result of the preparation of any defense in connection with
any foregoing claim, demand, action, cause of action or proceeding, in all
cases, whether or not an Indemnitee is a party to such claim, demand, action,
cause of action or proceeding, including those liabilities caused by an
Indemnitee’s own comparative, contributory or sole negligence (all the foregoing,
collectively, the “Indemnified Liabilities”);
provided that no Indemnitee shall be entitled to
indemnification for any loss caused by its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction in a final,
non-appealable order or for any loss asserted against it by another Indemnitee.  To the extent that the undertakings to
defend, indemnify, pay and hold harmless set forth in this Section 10.14
may be unenforceable in whole or in part because they are violative of any law
or public policy, the applicable Credit Party shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees
or any of them.

 

(b)                                 To
the extent permitted by applicable law, no Credit Party shall assert, and each
Credit Party hereby waives, any claim against each Administrative Agent-Related
Person and each Lender and each of their respective Affiliates, directors,
officers, agents, attorneys and employees, on any theory of liability, for
special, indirect, consequential or punitive damages  (as opposed to direct or actual damages)
(whether or not the claim therefor is based on contract, tort or duty imposed
by any applicable legal requirement) arising out of, in connection with, as a
result of, or in any way related to, this Agreement or any Loan Document or any
agreement or instrument contemplated hereby or thereby or referred to herein or
therein, the transactions contemplated hereby or thereby, any Loan or the use
of the proceeds thereof or any act or omission or event occurring in connection
therewith, and each Credit Party hereby waives, releases and agrees not to sue
upon any such claim or any such damages, whether or not accrued and whether or
not known or suspected to exist in its favor.

 

10.15                 NONLIABILITY OF
LENDER.  Borrower acknowledges and
agrees that:

 

(a)                                  Any
inspections of any property of Borrower made by or through Administrative Agent
or Lenders are for purposes of administration of the Loan Documents only, and
Borrower

 

102

 

is not entitled to rely upon
the same (whether or not such inspections are at the expense of Borrower);

 

(b)                                 By
accepting or approving anything required to be observed, performed, fulfilled
or given to Administrative Agent or Lenders pursuant to the Loan Documents,
neither Administrative Agent nor Lenders shall be deemed to have warranted or
represented the sufficiency, legality, effectiveness or legal effect of the
same, or of any term, provision or condition thereof, and such acceptance or
approval thereof shall not constitute a warranty or representation to anyone
with respect thereto by Administrative Agent or Lenders;

 

(c)                                  The
relationship between Borrower and Administrative Agent and Lenders is, and
shall at all times remain, solely that of borrower and lenders; neither
Administrative Agent nor Lenders shall under any circumstance be deemed to be
in a relationship of confidence or trust or a fiduciary relationship with
Borrower or its Affiliates, or to owe any fiduciary duty to Borrower or its
Affiliates; neither Administrative Agent nor any Lender undertakes or assumes
any responsibility or duty to Borrower or its Affiliates to select, review, inspect,
supervise, pass judgment upon or inform Borrower or its Affiliates of any
matter in connection with their property or the operations of Borrower or its
Affiliates; Borrower and its Affiliates shall rely entirely upon their own
judgment with respect to such matters; and any review, inspection, supervision,
exercise of judgment or supply of information undertaken or assumed by Lender
in connection with such matters is solely for the protection of Lenders and
neither Borrower nor any other Person is entitled to rely thereon; and

 

(d)                                 Neither
Administrative Agent nor Lenders shall be responsible or liable to any Person
for any loss, damage, liability or claim of any kind relating to injury or
death to Persons or damage to property caused by the actions, inaction or
negligence of Borrower and/or its Affiliates and Borrower hereby indemnifies
and holds Administrative Agent and Lenders harmless from any such loss, damage,
liability or claim.

 

10.16                 NO THIRD PARTIES
BENEFITED.  This Agreement is made
for the purpose of defining and setting forth certain obligations, rights and
duties of Borrower, Administrative Agent and Lenders in connection with the
Extensions of Credit, and is made for the sole benefit of Borrower,
Administrative Agent and Lenders, and Administrative Agent and Lenders’
successors and assigns.  Except as
provided in Sections 10.14 and 10.22, no other Person shall have any rights of
any nature hereunder or by reason hereof.

 

10.17                 SEVERABILITY.  Any provision of the Loan Documents that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

 

10.18                 CONFIDENTIALITY.  Administrative Agent and each Lender
shall use any confidential non-public information concerning Borrower and its
Subsidiaries that is furnished to Administrative Agent or such Lender by or on
behalf of Borrower and its Subsidiaries in connection with the Loan Documents
that has been identified in writing as confidential at the time so furnished (collectively,
“Confidential Information”) solely
for the purpose of evaluating

 

103

 

and providing products and
services to them and administering and enforcing the Loan Documents, and it
will hold the Confidential Information in confidence in accordance with such
Person’s customary procedures for handling confidential of the same nature.  Notwithstanding the foregoing, Administrative
Agent and each Lender may disclose Confidential Information to:  (a) their
Affiliates, or any of their or their Affiliates’ directors, officers,
employees, advisors, or representatives (collectively, the “Representatives”) whom it determines need
to know such information for the purposes set forth in this Section (it
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Confidential Information and
instructed to keep such Confidential Information confidential); (b) any
bank or financial institution or other entity to which such Lender has assigned
or desires to assign an interest or participation in the Loan Documents or the
Obligations or indirect contractual counterparties (or the professional
advisors thereto) in connection with Swap Contracts, provided that any such foregoing recipient of such
Confidential Information agrees to keep such Confidential Information
confidential as specified herein; (c) any governmental agency or
regulatory body having or claiming to have authority to regulate or oversee any
aspect of Administrative Agent’s or such Lender’s business or that of their
Representatives in connection with the exercise of such authority or claimed
authority; (d) to the extent necessary or appropriate to effect or
preserve Administrative Agent or such Lender’s or any of their Affiliates’
security (if any) for any Obligation or to enforce any right or remedy or in
connection with any claims asserted by or against Administrative Agent or such
Lender or any of its Representatives; (e) pursuant to any subpoena or any
similar legal or regulatory process so long as Borrower is, or has been, to the
extent possible, given notice of such legal or regulatory process and the
opportunity to seek a protective order; (f) to any rating agency when
required by it, provided that, prior to any disclosure, such rating agency
shall undertake in writing to preserve the confidentiality of any confidential
information relating to the Credit Parties received by it from any of the
Agents or any Lender; and (g) disclosures to any Lender’s financing
sources, provided that prior to any disclosure, such financing source is
informed of the confidential nature of the information.  For purposes hereof, the term “Confidential Information” shall not
include information that (x) is in Administrative Agent’s or such Lender’s
possession prior to its being provided by or on behalf of Borrower and its
Subsidiaries, provided that such
information is not known by Administrative Agent or such Lender to be subject
to another confidentiality agreement with, or other legal or contractual
obligation of confidentiality to, Borrower, (y) is or becomes publicly
available (other than through a breach hereof by Administrative Agent or such
Lender), or (z) becomes available to Administrative Agent or such Lender
on a nonconfidential basis, provided
that the source of such information was not known by Administrative Agent or
such Lender to be bound by a confidentiality agreement or other legal or
contractual obligation of confidentiality with respect to such information.  Administrative Agent and each Lender acknowledges
that (i) the Confidential Information may include material non-public
information concerning the Borrower or a Subsidiary, as the case may be, (ii) it
has developed compliance procedures regarding the use of material, non-public
information and (iii) it will handle material non-public information
concerning the Borrower or a Subsidiary in accordance with all Laws, including
federal and state securities Laws applicable to Administrative Agent or such
Lender, as applicable, provided
that neither Administrative Agent nor any Lender shall in any way be
responsible for compliance with such Laws by Borrower or any of its
Subsidiaries and provided, further,
that nothing in this sentence shall limit the right of Administrative Agent or
any Lender to disclose Confidential Information as otherwise permitted in this Section 10.18.

 

104

 

10.19                 FURTHER
ASSURANCES.  Borrower and its
Subsidiaries shall, at their expense and without expense to Administrative
Agent or Lenders, do, execute and deliver such further acts and documents as
any Lender or Administrative Agent from time to time reasonably requires for
the assuring and confirming unto Lenders of the rights hereby created or
intended now or hereafter so to be, or for carrying out the intention or
facilitating the performance of the terms of any Loan Document.

 

10.20                 HEADINGS.  Section headings in this Agreement
and the other Loan Documents are included for convenience of reference only and
are not part of this Agreement or the other Loan Documents for any other
purpose.

 

10.21                 TIME OF THE
ESSENCE.  Time is of the essence of
the Loan Documents.

 

10.22                 FOREIGN LENDERS.  Each Lender that is a “foreign
corporation, partnership or trust” within the meaning of the Code (a “Foreign Lender”) shall deliver to Administrative Agent, prior to receipt of any
payment subject to withholding under the Code (or after accepting an assignment
of an interest herein), two duly signed completed copies of either Form W-8BEN
or any successor thereto (relating to such Person and entitling it to a
complete exemption from withholding on all payments to be made to such Person
by Borrower pursuant to this Agreement) or Form W-8ECI or any successor
thereto (relating to all payments to be made to such Person by Borrower
pursuant to this Agreement) of the IRS or such other evidence satisfactory to
Borrower and Administrative Agent that no withholding under the United States federal
income tax laws is required with respect to such Person.  Thereafter and from time to time, each such
Person shall (a) promptly submit to Administrative Agent such additional
duly completed and signed copies of one of such forms (or such successor forms
as shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United States laws and
regulations to avoid, or such evidence as is satisfactory to Borrower and
Administrative Agent of any available exemption from, United States withholding
taxes in respect of all payments to be made to such Person by Borrower pursuant
to this Agreement, and (b) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the re-designation of its Lending Office) to
avoid any requirement of applicable Laws that Borrower make any deduction or
withholding for taxes from amounts payable to such Person.  If such Persons fail to deliver the above
forms or other documentation, then Administrative Agent may withhold from any
interest payment to such Person an amount equivalent to the applicable
withholding tax imposed by Sections 1441 and 1442 of the Code.  If any Governmental Authority asserts that
Administrative Agent did not properly withhold any tax or other amount from
payments made in respect of such Person, such Person shall indemnify
Administrative Agent therefor, including all penalties and interest and costs
and expenses (including Attorney Costs) of Administrative Agent.  The obligation of Lenders under this Section shall
survive the payment of all Obligations and the resignation or replacement of
Administrative Agent.

 

10.23                 REMOVAL AND REPLACEMENT OF LENDERS.

 

Under any circumstances set forth in this
Agreement providing that Borrower shall have the right to remove and replace a
Lender as a party to this Agreement, Borrower may, upon notice to such Lender
and Administrative Agent, remove such Lender by causing such Lender to

 

105

 

assign its
Commitment to one or more other Lenders or Eligible Assignees acceptable to
Borrower, Administrative Agent and Issuing Lender; provided, however, that
during the existence of any Event of Default, Borrower may not remove or
replace a Lender pursuant to this Section 10.23.  Any removed or replaced Lender shall be
entitled to (x) payment in full of all principal, interest, fees and other
amounts owing to such Lender or such Lender’s affiliated Indemnitees under any
Loan Document through the date of termination or assignment (including any
amounts payable pursuant to Section 3.5 and any applicable prepayment
compensation under Section 2.4), (y) appropriate assurances and
indemnities (which may include letters of credit) as such Lender may reasonably
require with respect to its participation interest in any Letters of Credit and
(z) a release of such Lender from its obligations under the Loan Documents.  Any Lender being replaced shall execute and
deliver an Assignment and Assumption covering such Lender’s Commitment, and
shall otherwise comply with Section 10.4 (and Borrower shall be
responsible for payment of any processing and recordation fee payable under Section 10.4(b)(iv)).  Administrative Agent shall distribute an
amended Schedule 2.1, which shall
thereafter be incorporated into this Agreement, to reflect adjustments to
Lenders and their Commitments.

 

10.24                 GOVERNING LAW.

 

(a)                                  THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK; PROVIDED THAT ADMINISTRATIVE AGENT AND EACH LENDER SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)                                 ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, BORROWER, ADMINISTRATIVE AGENT AND EACH LENDER
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS.  BORROWER,
ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR
OTHER DOCUMENT RELATED HERETO.  BORROWER,
ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED
BY THE LAW OF SUCH STATE.

 

10.25                 WAIVER OF RIGHT
TO TRIAL BY JURY.  EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH

 

106

 

CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

10.26                 PATRIOT ACT
NOTIFICATION.  Each Lender subject
to the Act and the Administrative Agent (for itself and not on behalf of any
Lender) hereby notifies Borrower (and each Subsidiary) that, pursuant to the
requirements of the USA Patriot Act, it is required to obtain, verify and
record information that identifies Borrower (and, to the extent requested, each
Subsidiary), which information includes the name and address of Borrower (and,
to the extent requested, each Subsidiary) and other information that will allow
such Lender or Administrative Agent to identify Borrower (and, to the extent
requested, each Subsidiary) in accordance with the USA Patriot Act.

 

10.27                 ENTIRE AGREEMENT.  This Agreement and the other Loan
Documents represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties.  There are no
unwritten oral agreements between the parties.

 

[SIGNATURES ON FOLLOWING PAGE.]

 

107

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed as of the
date fast above written.

 

	
  KRATOS DEFENSE & SECURITY SOLUTIONS,

  	
  KEYBANK NATIONAL ASSOCIATION,

  
	
  INC.,

  	
  as
  Administrative Agent,

  
	
  a
  Delaware corporation,

  	
  Issuing
  Lender and Lender

  
	
  as
  Borrower

  	
   

  

 

 

	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   Raed Y. Alfayourmi

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   Vice President

  

 

Signature Page to First Lien Credit
Agreement

 

 

SCHEDULE 7.12(a)

 

MAXIMUM FIRST LIEN LEVERAGE RATIO

 

	
  Fiscal Quarter

  Ending

  	
   

  	
  First Lien

  Leverage

  Ratio

  	
   

  
	
  December 31, 2007

  	
   

  	
  4.76:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  4.70:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  3.82:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  3.60:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  3.22:1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  2.97:1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  2.75:1.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  2.51:1.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  2.33:1.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  2.00:1.00

  	
   

  
	
  June 30, 2010

  	
   

  	
  1.85:1.00

  	
   

  
	
  September 30, 2010 and thereafter

  	
   

  	
  1.75:1.00

  	
   

  

 

 

SCHEDULE 7.12(b)

 

MAXIMUM TOTAL LEVERAGE RATIO

 

	
  Fiscal Quarter

  Ending

  	
   

  	
  Total

  Leverage

  Ratio

  	
   

  
	
  December 31, 2007

  	
   

  	
  5.68:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  5.60:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  4.46:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  4.22:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  3.76:1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  3.50:1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  3.26:1.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  2.98:1.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  2.78:1.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  2.50:1.00

  	
   

  
	
  June 30, 2010

  	
   

  	
  2.40:1.00

  	
   

  
	
  September 30, 2010 and thereafter

  	
   

  	
  2.25:1.00

  	
   

  

 

 

SCHEDULE 7.12(c)

 

MINIMUM LIQUIDITY RATIO

 

	
  Fiscal Quarter

  Ending

  	
   

  	
  Liquidity

  Ratio

  	
   

  
	
  December 31, 2007

  	
   

  	
  1.33:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  1.42:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  1.41:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  1.43:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  1.56:1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  1.58:1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  1.58:1.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  1.60:1.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  1.60:1.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  1.49:1.00

  	
   

  
	
  June 30, 2010

  	
   

  	
  1.49:1.00

  	
   

  
	
  September 30, 2010

  	
   

  	
  1.53:1.00

  	
   

  
	
  December 31, 2010

  	
   

  	
  1.54:1.00

  	
   

  
	
  March 31, 2011

  	
   

  	
  1.53:1.00

  	
   

  
	
  June 30, 2011

  	
   

  	
  1.53:1.00

  	
   

  
	
  September 30, 2011

  	
   

  	
  1.54:1.00

  	
   

  
	
  December 31, 2011

  	
   

  	
  1.55:1.00

  	
   

  
	
  March 31, 2012

  	
   

  	
  1.54:1.00

  	
   

  
	
  June 30, 2012

  	
   

  	
  1.53:1.00

  	
   

  
	
  September 30, 2012

  	
   

  	
  1.55:1.00

  	
   

  
	
  December 31, 2012

  	
   

  	
  1.42:1.00

  	
   

  

 

 

SCHEDULE 7.12(d)

 

MINIMUM FIXED CHARGE COVERAGE RATIO

 

	
  Fiscal Quarter

  Ending

  	
   

  	
  Fixed

  Charge

  Coverage

  Ratio

  	
   

  
	
  December 31, 2007

  	
   

  	
  0.50:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  0.56:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  0.62:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  0.81:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  1.05:1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  1.02:1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  1.12:1.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  1.09:1.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  1.11:1.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  1.06:1.00

  	
   

  
	
  June 30, 2010 and thereafter

  	
   

  	
  1.10:1.00

  	
   

  

 

 

SCHEDULE 7.12(e)

 

MINIMUM CONSOLIDATED EBITDA

 

	
  Fiscal Quarter

  Ending

  	
   

  	
  Consolidated

  EBITDA

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  16,129

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  15,870

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  18,106

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  17,907

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  19,372

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  19,781

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  20,388

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  21,053

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  21,522

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  21,540

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  21,664

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  22,501

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  23,444

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  24,399

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  25,153

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  25,797

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  26,455

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  26,729

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  27,011

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  27,285

  	
   

  
	
  December 31, 2012

  	
   

  	
  $

  	
  27,575Exhibit 10.2

 

EXECUTION COPY

 

 

SECOND LIEN CREDIT AGREEMENT

 

among

 

KRATOS DEFENSE & SECURITY SOLUTIONS,
INC.,

 

 

KEYBANK NATIONAL ASSOCIATION,

 

as Administrative Agent

and Lender,

 

and

 

THE OTHER FINANCIAL

INSTITUTIONS PARTIES HERETO

 

with

 

KEYBANC CAPITAL MARKETS,

 

as Lead Arranger and

Book Runner

 

Dated as of December 31, 2007

 

$10,000,000 Term Loan Facility

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  SECTION I.

  	
  DEFINITIONS
  AND ACCOUNTING TERMS

  	
  1

  
	
   

  	
   

  
	
  1.1

  	
  DEFINED
  TERMS

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  USE OF
  CERTAIN TERMS

  	
  28

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  ACCOUNTING
  TERMS

  	
  29

  
	
   

  	
   

  	
   

  
	
  1.4

  	
  ROUNDING

  	
  29

  
	
   

  	
   

  	
   

  
	
  1.5

  	
  EXHIBITS AND
  SCHEDULES

  	
  29

  
	
   

  	
   

  	
   

  
	
  1.6

  	
  REFERENCES
  TO AGREEMENTS AND LAWS

  	
  29

  
	
   

  	
   

  
	
  SECTION II.

  	
  THE
  COMMITMENTS AND EXTENSIONS OF CREDIT

  	
  30

  
	
   

  	
   

  
	
  2.1

  	
  LOANS;
  MAXIMUM AMOUNTS

  	
  30

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  BORROWINGS,
  CONVERSIONS AND CONTINUATIONS OF LOANS

  	
  30

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  PREPAYMENTS

  	
  31

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  PRINCIPAL
  AND INTEREST

  	
  34

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  FEES

  	
  35

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  COMPUTATION
  OF INTEREST AND FEES

  	
  35

  
	
   

  	
   

  	
   

  
	
  2.7

  	
  MAKING
  PAYMENTS

  	
  35

  
	
   

  	
   

  	
   

  
	
  2.8

  	
  FUNDING
  SOURCES

  	
  36

  
	
   

  	
   

  	
   

  
	
  2.9

  	
  COLLATERAL

  	
  37

  
	
   

  	
   

  	
   

  
	
  2.10

  	
  INCREMENTAL
  TRIGGER DATE

  	
  37

  
	
   

  	
   

  
	
  SECTION III.

  	
  TAXES, YIELD
  PROTECTION AND ILLEGALITY

  	
  37

  
	
   

  	
   

  
	
  3.1

  	
  TAXES

  	
  37

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  ILLEGALITY

  	
  38

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  INABILITY TO
  DETERMINE RATES

  	
  39

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  INCREASED
  COST AND REDUCED RETURN; CAPITAL ADEQUACY

  	
  39

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  BREAKFUNDING
  COSTS

  	
  40

  
	
   

  	
   

  	
   

  
	
  3.6

  	
  MATTERS APPLICABLE
  TO ALL REQUESTS FOR COMPENSATION

  	
  40

  
	
   

  	
   

  	
   

  
	
  3.7

  	
  SURVIVAL

  	
  41

  
	
   

  	
   

  
	
  SECTION IV.

  	
  CONDITIONS
  PRECEDENT TO EXTENSION OF CREDIT

  	
  41

  
	
   

  	
   

  
	
  4.1

  	
  CONDITIONS
  OF EXTENSION OF CREDIT

  	
  41

  
								

 

i

 

	
  SECTION V.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  46

  
	
   

  	
   

  
	
  5.1

  	
  EXISTENCE
  AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS.

  	
  46

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  POWER;
  AUTHORIZATION; ENFORCEABLE OBLIGATIONS

  	
  47

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  NO LEGAL BAR

  	
  47

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  EQUITY
  SECURITIES AND OWNERSHIP

  	
  47

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  FINANCIAL
  STATEMENTS; PROJECTIONS; NO MATERIAL ADVERSE EFFECT

  	
  48

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  LITIGATION

  	
  48

  
	
   

  	
   

  	
   

  
	
  5.7

  	
  NO DEFAULT;
  CONTINUED BUSINESS

  	
  48

  
	
   

  	
   

  	
   

  
	
  5.8

  	
  OWNERSHIP OF
  PROPERTY; LIENS

  	
  49

  
	
   

  	
   

  	
   

  
	
  5.9

  	
  TAXES

  	
  49

  
	
   

  	
   

  	
   

  
	
  5.10

  	
  MARGIN
  REGULATIONS; INVESTMENT COMPANY ACT

  	
  49

  
	
   

  	
   

  	
   

  
	
  5.11

  	
  ERISA
  COMPLIANCE; EMPLOYEE MATTERS

  	
  50

  
	
   

  	
   

  	
   

  
	
  5.12

  	
  INTANGIBLE
  ASSETS

  	
  51

  
	
   

  	
   

  	
   

  
	
  5.13

  	
  COMPLIANCE
  WITH LAWS

  	
  51

  
	
   

  	
   

  	
   

  
	
  5.14

  	
  ENVIRONMENTAL
  COMPLIANCE

  	
  51

  
	
   

  	
   

  	
   

  
	
  5.15

  	
  INSURANCE

  	
  51

  
	
   

  	
   

  	
   

  
	
  5.16

  	
  SWAP
  OBLIGATIONS

  	
  52

  
	
   

  	
   

  	
   

  
	
  5.17

  	
  SOLVENCY

  	
  52

  
	
   

  	
   

  	
   

  
	
  5.18

  	
  DISCLOSURE

  	
  52

  
	
   

  	
   

  	
   

  
	
  5.19

  	
  PATRIOT ACT

  	
  52

  
	
   

  	
   

  	
   

  
	
  5.20

  	
  RELATED
  TRANSACTIONS

  	
  53

  
	
   

  	
   

  	
   

  
	
  5.21

  	
  SECURITY
  INTEREST IN COLLATERAL

  	
  53

  
	
   

  	
   

  	
   

  
	
  5.22

  	
  PERMITS, ETC

  	
  53

  
	
   

  	
   

  	
   

  
	
  5.23

  	
  MATERIAL
  CONTRACTS

  	
  54

  
	
   

  	
   

  	
   

  
	
  5.24

  	
  CERTAIN FEES

  	
  54

  
	
   

  	
   

  	
   

  
	
  5.25

  	
  AFFILIATE
  TRANSACTIONS

  	
  54

  
	
   

  	
   

  	
   

  
	
  5.26

  	
  CLOSING DATE
  FOREIGN SUBSIDIARIES

  	
  54

  
	
   

  	
   

  
	
  SECTION VI.

  	
  AFFIRMATIVE
  COVENANTS

  	
  54

  
	
   

  	
   

  
	
  6.1

  	
  FINANCIAL
  STATEMENTS

  	
  54

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  CERTIFICATES,
  NOTICES AND OTHER INFORMATION

  	
  56

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  PAYMENT OF
  TAXES

  	
  59

  
				

 

ii

 

	
  6.4

  	
  PRESERVATION
  OF EXISTENCE

  	
  59

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  MAINTENANCE
  OF PROPERTIES

  	
  59

  
	
   

  	
   

  	
   

  
	
  6.6

  	
  MAINTENANCE
  OF INSURANCE

  	
  59

  
	
   

  	
   

  	
   

  
	
  6.7

  	
  COMPLIANCE
  WITH LAWS

  	
  60

  
	
   

  	
   

  	
   

  
	
  6.8

  	
  INSPECTION
  RIGHTS

  	
  60

  
	
   

  	
   

  	
   

  
	
  6.9

  	
  KEEPING OF
  RECORDS AND BOOKS OF ACCOUNT

  	
  61

  
	
   

  	
   

  	
   

  
	
  6.10

  	
  COMPLIANCE
  WITH ERISA

  	
  61

  
	
   

  	
   

  	
   

  
	
  6.11

  	
  COMPLIANCE
  WITH AGREEMENTS

  	
  61

  
	
   

  	
   

  	
   

  
	
  6.12

  	
  SUBSIDIARY
  GUARANTIES AND PLEDGE OF OWNERSHIP INTERESTS

  	
  61

  
	
   

  	
   

  	
   

  
	
  6.13

  	
  FURTHER
  ASSURANCES

  	
  62

  
	
   

  	
   

  	
   

  
	
  6.14

  	
  USE OF
  PROCEEDS

  	
  63

  
	
   

  	
   

  	
   

  
	
  6.15

  	
  LANDLORD
  WAIVERS

  	
  63

  
	
   

  	
   

  	
   

  
	
  6.16

  	
  ADDITIONAL
  MATERIAL REAL ESTATE ASSETS

  	
  63

  
	
   

  	
   

  	
   

  
	
  6.17

  	
  DORMANT
  SUBSIDIARIES

  	
  63

  
	
   

  	
   

  
	
  SECTION VII.

  	
  NEGATIVE
  COVENANTS

  	
  63

  
	
   

  	
   

  
	
  7.1

  	
  INDEBTEDNESS

  	
  63

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  LIENS

  	
  65

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  FUNDAMENTAL
  CHANGES

  	
  67

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  DISPOSITIONS

  	
  68

  
	
   

  	
   

  	
   

  
	
  7.5

  	
  INVESTMENTS

  	
  69

  
	
   

  	
   

  	
   

  
	
  7.6

  	
  RESTRICTED
  PAYMENTS

  	
  70

  
	
   

  	
   

  	
   

  
	
  7.7

  	
  ERISA

  	
  71

  
	
   

  	
   

  	
   

  
	
  7.8

  	
  CHANGE IN
  NATURE OF BUSINESS

  	
  71

  
	
   

  	
   

  	
   

  
	
  7.9

  	
  TRANSACTIONS
  WITH AFFILIATES

  	
  71

  
	
   

  	
   

  	
   

  
	
  7.10

  	
  USE OF
  PROCEEDS

  	
  72

  
	
   

  	
   

  	
   

  
	
  7.11

  	
  CERTAIN
  INDEBTEDNESS PAYMENTS, ETC

  	
  72

  
	
   

  	
   

  	
   

  
	
  7.12

  	
  FINANCIAL
  COVENANTS

  	
  72

  
	
   

  	
   

  	
   

  
	
  7.13

  	
  ACCOUNTING
  CHANGES

  	
  73

  
	
   

  	
   

  	
   

  
	
  7.14

  	
  GUARANTY
  UNDER MATERIAL INDEBTEDNESS AGREEMENT

  	
  73

  
	
   

  	
   

  	
   

  
	
  7.15

  	
  AMENDMENTS
  TO ORGANIZATION AGREEMENTS, MATERIAL CONTRACTS AND FIRST LIEN LOAN DOCUMENTS

  	
  73

  
	
   

  	
   

  	
   

  
	
  7.16

  	
  NO FURTHER
  NEGATIVE PLEDGES

  	
  73

  
				

 

iii

 

	
  7.17

  	
  RESTRICTIONS
  ON SUBSIDIARY DISTRIBUTIONS

  	
  74

  
	
   

  	
   

  	
   

  
	
  7.18

  	
  SALES AND
  LEASE BACKS

  	
  74

  
	
   

  	
   

  	
   

  
	
  7.19

  	
  DEPOSIT
  ACCOUNTS

  	
  74

  
	
   

  	
   

  	
   

  
	
  7.20

  	
  ISSUANCE OF
  DISQUALIFIED CAPITAL STOCK

  	
  75

  
	
   

  	
   

  
	
  SECTION VIII.

  	
  EVENTS OF
  DEFAULT AND REMEDIES

  	
  75

  
	
   

  	
   

  
	
  8.1

  	
  EVENTS OF
  DEFAULT

  	
  75

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  REMEDIES
  UPON EVENT OF DEFAULT

  	
  77

  
	
   

  	
   

  
	
  SECTION IX.

  	
  ADMINISTRATIVE
  AGENT

  	
  79

  
	
   

  	
   

  
	
  9.1

  	
  APPOINTMENT
  AND AUTHORIZATION OF ADMINISTRATIVE AGENT

  	
  79

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  DELEGATION
  OF DUTIES

  	
  79

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  LIABILITY OF
  ADMINISTRATIVE AGENT

  	
  79

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  RELIANCE BY
  ADMINISTRATIVE AGENT

  	
  80

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  NOTICE OF
  DEFAULT

  	
  80

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  CREDIT
  DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE AGENT

  	
  80

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  INDEMNIFICATION
  OF ADMINISTRATIVE AGENT

  	
  81

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  ADMINISTRATIVE
  AGENT IN INDIVIDUAL CAPACITY

  	
  81

  
	
   

  	
   

  	
   

  
	
  9.9

  	
  SUCCESSOR
  ADMINISTRATIVE AGENT

  	
  82

  
	
   

  	
   

  	
   

  
	
  9.10

  	
  DESIGNATION
  OF ARRANGER; NO AFFILIATE LIABILITY

  	
  82

  
	
   

  	
   

  	
   

  
	
  9.11

  	
  INTERCREDITOR
  AGREEMENT

  	
  83

  
	
   

  	
   

  
	
  SECTION X.

  	
  MISCELLANEOUS

  	
  83

  
	
   

  	
   

  
	
  10.1

  	
  AMENDMENTS;
  CONSENTS

  	
  83

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  TRANSMISSION
  AND EFFECTIVENESS OF COMMUNICATIONS AND SIGNATURES

  	
  84

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  ATTORNEY
  COSTS, EXPENSES AND TAXES

  	
  85

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  SUCCESSORS
  AND ASSIGNS

  	
  85

  
	
   

  	
   

  	
   

  
	
  10.5

  	
  SET-OFF

  	
  88

  
	
   

  	
   

  	
   

  
	
  10.6

  	
  SHARING OF
  PAYMENTS

  	
  88

  
	
   

  	
   

  	
   

  
	
  10.7

  	
  NO SETOFF

  	
  89

  
	
   

  	
   

  	
   

  
	
  10.8

  	
  NO WAIVER;
  CUMULATIVE REMEDIES

  	
  89

  
	
   

  	
   

  	
   

  
	
  10.9

  	
  USURY

  	
  90

  
	
   

  	
   

  	
   

  
	
  10.10

  	
  COUNTERPARTS

  	
  90

  
					

 

iv

 

	
  10.11

  	
  INTEGRATION

  	
  90

  
	
   

  	
   

  	
   

  
	
  10.12

  	
  NATURE OF
  LENDERS’ OBLIGATIONS

  	
  91

  
	
   

  	
   

  	
   

  
	
  10.13

  	
  SURVIVAL OF
  REPRESENTATIONS AND WARRANTIES

  	
  91

  
	
   

  	
   

  	
   

  
	
  10.14

  	
  INDEMNITY BY
  BORROWER

  	
  91

  
	
   

  	
   

  	
   

  
	
  10.15

  	
  NONLIABILITY
  OF LENDER

  	
  92

  
	
   

  	
   

  	
   

  
	
  10.16

  	
  NO THIRD
  PARTIES BENEFITED

  	
  93

  
	
   

  	
   

  	
   

  
	
  10.17

  	
  SEVERABILITY

  	
  93

  
	
   

  	
   

  	
   

  
	
  10.18

  	
  CONFIDENTIALITY

  	
  93

  
	
   

  	
   

  	
   

  
	
  10.19

  	
  FURTHER
  ASSURANCES

  	
  94

  
	
   

  	
   

  	
   

  
	
  10.20

  	
  HEADINGS

  	
  95

  
	
   

  	
   

  	
   

  
	
  10.21

  	
  TIME OF THE
  ESSENCE

  	
  95

  
	
   

  	
   

  	
   

  
	
  10.22

  	
  FOREIGN
  LENDERS

  	
  95

  
	
   

  	
   

  	
   

  
	
  10.23

  	
  REMOVAL AND
  REPLACEMENT OF LENDERS

  	
  95

  
	
   

  	
   

  	
   

  
	
  10.24

  	
  GOVERNING
  LAW

  	
  96

  
	
   

  	
   

  	
   

  
	
  10.25

  	
  WAIVER OF
  RIGHT TO TRIAL BY JURY

  	
  96

  
	
   

  	
   

  	
   

  
	
  10.26

  	
  PATRIOT ACT
  NOTIFICATION

  	
  97

  
	
   

  	
   

  	
   

  
	
  10.27

  	
  ENTIRE AGREEMENT

  	
  97

  

 

v

 

	
  EXHIBITS

  
	
   

  	
   

  	
   

  
	
  A

  	
  Form of
  Request for Extension of Credit

  	
   

  
	
   

  	
   

  	
   

  
	
  B

  	
  Form of
  Compliance Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  C

  	
  Form of
  Term Loan Note

  	
   

  
	
   

  	
   

  	
   

  
	
  D

  	
  Form of
  Assignment and Assumption

  	
   

  
	
   

  	
   

  	
   

  
	
  E

  	
  Form of
  Pledge and Security Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  F

  	
  Form of
  Multi-Party Guaranty

  	
   

  
	
   

  	
   

  	
   

  
	
  G

  	
  Forms of
  Opinions of Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
  H

  	
  Form of
  Collateral Questionnaire

  	
   

  
	
   

  	
   

  	
   

  
	
  I

  	
  Form of
  Intercreditor Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  J

  	
  Form of
  Landlord Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Commitments
  and Pro Rata Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1(a)

  	
  Exceptions
  to Good Standing

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1(b)

  	
  Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Equity
  Securities and Ownership

  	
   

  
	
   

  	
   

  	
   

  
	
  5.11

  	
  ERISA
  Compliance; Employee Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  5.15

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  5.25

  	
  Affiliate
  Transactions

  	
   

  
	
   

  	
   

  	
   

  
	
  5.26

  	
  Dormant
  Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1(b)

  	
  Existing
  Indebtedness and Liens

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1(e)

  	
  Existing
  Foreign Intercompany Indebtedness

  	
   

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  Disposition
  of Property

  	
   

  
				

 

vi

 

	
  7.5

  	
  Investments

  	
   

  
	
   

  	
   

  	
   

  
	
  7.12(a) 

  	
  Maximum
  First Lien Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  
	
  7.12(b) 

  	
  Maximum
  Total Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  
	
  7.12(c) 

  	
  Minimum
  Liquidity Ratio

  	
   

  
	
   

  	
   

  	
   

  
	
  7.12(d) 

  	
  Minimum
  Fixed Charge Coverage Ratio

  	
   

  
	
   

  	
   

  	
   

  
	
  7.12(e) 

  	
  Minimum
  Consolidated EBITDA

  	
   

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Offshore and
  Domestic Lending Offices, Addresses for Notices

  	
   

  

 

vii

 

SECOND LIEN CREDIT AGREEMENT

 

This SECOND LIEN CREDIT AGREEMENT (“Agreement”)
is entered into as of December 31, 2007, by and among KRATOS DEFENSE &
SECURITY SOLUTIONS, INC., a Delaware corporation (“Borrower”), KEYBANK NATIONAL ASSOCIATION, as
Administrative Agent, as a Lender hereunder, such other lenders as shall from
time to time be party hereto, with KEYBANC CAPITAL MARKETS as Lead Arranger and
Book Runner hereunder.

 

RECITAL

 

Borrower has requested that Lenders provide a
senior secured term loan facility of up to $10,000,000, and Lenders and
Administrative Agent are willing to do so on the terms and conditions set forth
herein.

 

In consideration of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:

 

SECTION I.

DEFINITIONS AND ACCOUNTING TERMS

 

1.1          DEFINED TERMS.  As used in this Agreement, the following terms shall have
the meanings set forth below:

 

“Acquisition”
means any transaction or series of related transactions for the purpose of or
resulting, directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of a Person, or of any line of business or any
division of a Person, (b) the acquisition of 100% of the capital stock,
partnership interests or equity of any Person, or otherwise causing any Person
to become a wholly-owned Subsidiary, or (c) a merger or consolidation or
any other combination with another Person (other than a Person that is a
Subsidiary).

 

“Additional Fourth Quarter 2007 Add-Backs”
means the following: (i) amounts representing general corporate expenses
of the Borrower and its Subsidiaries expected in good faith by the Borrower not
to be incurred in the future (other than in the fiscal quarter ending March 31,
2008) and not to exceed $954,000, (ii) operating losses associated with
the Borrower’s ENS operations not to exceed $383,000, (iii) non-recurring
legal expenses not to exceed $1,260,000 and (iv) expected savings in
respect of Haverstick corporate overhead not to exceed $475,000; provided, however, for avoidance of doubt, if Borrower or
any of its Subsidiaries receives in any future period any insurance proceeds in
respect of the legal expenses referred to in clause (iii) of this
definition, such proceeds shall not be taken into account in calculating
Consolidated EBITDA for such period.

 

“Additional First Quarter 2008 Add-Backs”
means amounts representing general corporate expenses of the Borrower and its
Subsidiaries expected in good faith by the Borrower not to be incurred in the
future and not to exceed $275,000.

 

“Administrative
Agent” means KeyBank National Association, in its
capacity as administrative agent under any of the Loan Documents, or any
successor administrative agent.

 

 

“Administrative Agent’s
Office” means Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.2, or such other address or
account as Administrative Agent hereafter may designate by written notice to
Borrower and Lenders.

 

“Administrative
Agent-Related Persons” means Administrative Agent
(including any successor agent), together with its Affiliates (including, in
the case of KeyBank, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.

 

“Affiliate”
means any Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with another Person.  A Person shall be deemed to be “controlled by”
any other Person if such other Person possesses, directly or indirectly, power (a) to
vote 10% or more of the securities (on a fully diluted basis) having ordinary
voting power for the election of directors or managing general partners; or (b) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.

 

“Agreement”
means this Second Lien Credit Agreement, as amended, restated, extended,
supplemented or otherwise modified in writing from time to time.

 

“Annual Payments”
means, with respect to any Material Contract, (x) the total amount of the
payments expected to be paid or received, as applicable,  under such Material Contract (y) divided
by the total number of years of the term of such Material Contract.

 

“Applicable Margin”
means the following amounts per annum: in the case of the Offshore Rate Margin,
800.0 basis points, and in the case of the Base Rate Margin, 700.0 basis
points.

 

For purposes of Borrower’s payment of
interest in accordance with Section 2.4, during any Interest Period
beginning on or after the receipt by the Administrative Agent of the Compliance
Certificate with respect to the fiscal year ending December 31, 2008 for
which the Total Leverage Ratio is less than or equal to 3.25:1.00 until the
earlier of the date by which the next Compliance Certificate is required to be
delivered and the actual date of delivery of the next Compliance Certificate,
the Applicable Margin with respect to both Offshore Rate Loans and Base Rate
Loans for such Interest Period shall be reduced by 50 basis points from the rate
otherwise set forth above.  For the
avoidance of doubt, any reduction in the Applicable Margin pursuant to the
provisions above shall not be permanent and shall be in effect only for so long
as the applicable Compliance Certificate demonstrates that the Total Leverage
Ratio is at or below the requisite level. 
In the event that any financial statement delivered pursuant to Section 6.1
or Compliance Certificate delivered pursuant to Section 6.2 is shown to be
inaccurate (regardless of whether this Credit Agreement is in effect when such
inaccuracy is discovered), and such inaccuracy, if corrected would have led to
a higher Applicable Margin for any period (an “Applicable
Period”) than the Applicable Margin applied for such Applicable
Period, then (i) Borrower shall immediately deliver to Administrative
Agent a correct Compliance Certificate for such Applicable Period, (ii) the
Applicable Margin shall be determined by reference to the corrected Compliance
Certificate (but in no event shall the Lenders owe any amounts to Borrower),
and (iii) Borrower shall immediately pay to the Administrative Agent the
additional interest owing as a result of such increased Applicable Margin for
such Applicable Period, which

 

2

 

payment shall
be promptly applied by the Administrative Agent in accordance with the terms
hereof.  This paragraph shall not limit
the rights of the Administrative Agent and the Lenders hereunder.

 

“Applicable Payment
Date” means, (a) as to any Offshore Rate Loan,
the last day of the relevant Interest Period or every ninety days, whichever is
earlier, any date that such Loan is prepaid or converted in whole or in part
and the Maturity Date; and (b) as to any other Obligations; the last
Business Day of each calendar quarter and the Maturity Date; provided, further, that interest accruing at the Default
Rate shall be payable from time to time upon demand of Administrative Agent.

 

“Approved Fund”
means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

“Arranger”
means KeyBanc Capital Markets, in its capacity as “Lead Arranger” and “Book
Runner.”

 

“Asset Sale” means a
Disposition in one transaction or a series of transactions, of all or any part
of Borrower’s or any of its Subsidiaries’ businesses, assets or properties of
any kind, whether real, personal, or mixed and whether tangible or intangible,
whether now owned or hereafter acquired, including, without limitation,
contract rights, intellectual property and the Equity Securities of any of
Borrower’s Subsidiaries, other than inventory sold or leased in the ordinary
course of business.

 

“Assignment and
Assumption” means
an assignment and assumption entered into by a Lender and an assignee (with the
consent of any party whose consent is required by Section 10.4), and
accepted by the Administrative Agent, in substantially the form of Exhibit D
or any other form approved by the Administrative Agent.

 

“Attorney Costs”
means and includes all reasonable attorney’s and other fees and disbursements
of any law firm or other external counsel and the allocated cost of internal
legal services and all disbursements of internal counsel.

 

“Audited Financial
Statements” means the audited consolidated balance
sheet, income statement and cash flows of Borrower and its Subsidiaries for
each 52 or 53 week year, as applicable, on or about December 31.

 

“Bankruptcy Code”
means Title 11 of the United States Code entitled “Bankruptcy,” as now and
hereafter in effect, or any successor statute.

 

“Base Rate”
means a fluctuating rate per annum equal to the higher of (a) the Federal
Funds Rate plus 1/2 of 1 % and (b) the rate of interest in effect for such
day as publicly announced from time to time by KeyBank as its “prime rate.”
Such prime rate is a rate set by KeyBank based upon various factors including
KeyBank’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. 
Any change in such prime rate announced by KeyBank shall take effect at
the opening of business on the day specified in the

 

3

 

public
announcement of such change.  If KeyBank
ceases to establish or publish a prime rate, the applicable Base Rate
thereafter shall be instead the prime rate reported in The Wall Street Journal
(or the average prime rate if a high and a low prime rate are therein
reported).

 

“Base Rate Loan”
means a Loan made in not less than the Minimum Amount pursuant to Requisite
Notice to Administrative Agent by delivering (a) the initial request for
extension of credit on the Closing Date as more fully set forth in Section 2.2(a) hereof
or (b) thereafter, a Request for Extension of Credit not later than the
Requisite Time and specified to be a Base Rate Loan or if not designated
otherwise.  Interest on each Base Rate
Loan shall be calculated using the Applicable Margin for the Base Rate
effective as of the date of the advance of such Base Rate Loan.

 

“Borrower”
has the meaning set forth in the introductory paragraph hereto.

 

“Borrowing”
and “Borrow” each mean a
borrowing of Loans hereunder.

 

“Business Day”
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day
on which banks in Cleveland, Ohio; New York, New York; San Francisco,
California; or (if interest is being determined by reference to the Offshore
Rate) London, England are generally authorized or obligated, by law or
executive order, to close.

 

“Capital Leases”
means any and all leases under which certain obligations are required to be
capitalized on the books of a lessee in accordance with GAAP.

 

“Cash Equivalents”
means, as at any date of determination, (i) marketable securities (a) issued
or directly and unconditionally guaranteed as to interest and principal by the
United States Government, or (b) issued by any agency of the United States
the obligations of which are backed by the full faith and credit of the United
States, in each case maturing within one year after such date; (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within one year after such date and having, at the time
of the acquisition thereof, a rating of at least A-1 from S&P or at least
P-1 from Moody’s; (iii) commercial paper maturing no more than one year
from the date of creation thereof and having, at the time of the acquisition
thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates
of deposit or bankers’ acceptances maturing within one year after such date and
issued or accepted by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia that (a) is at least “adequately capitalized” (as defined in the
regulations of its primary Federal banking regulator), and (b) has Tier 1
capital (as defined in such regulations) of not less than $100,000,000; and (v) shares
of any money market mutual fund that (a) has at least ninety five percent
(95%) of its assets invested continuously in the types of investments referred
to in clauses (i) and (ii) above, (b) has net assets of not less
than $500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody’s.

 

“Cash Acquisition
Consideration” means the amount of cash paid or
payable in connection with an Acquisition including, without limitation, (a) all
amounts recorded on the books of Borrower or any Subsidiary as deferred
liabilities (whether or not characterized as an

 

4

 

earn-out)
determined as of the Acquisition date, (b) contingent liabilities (whether
or not characterized as an earn-out) determined as of the date paid, (c) Indebtedness
assumed or incurred in connection with such Acquisition and (d) Indebtedness
of such Persons as are acquired in such Acquisition.

 

“Change of Control”
means (a) the acquisition of, or, if earlier, the shareholder or director
approval of the acquisition of, ownership or voting control, directly or
indirectly, beneficially or of record, on or after the Closing Date, by any
Person or group (within the meaning of Rule 13d-3 of the SEC under the
Securities Exchange Act of 1934, as then in effect), of (i) shares
representing more than thirty-five percent 35% of the aggregate ordinary Voting
Power and/or economic interest represented by the issued and outstanding
capital stock of Borrower or (ii) the power (whether or not exercised) to
elect a majority of the members of the board of directors (or similar governing
body) of Borrower; (b) during any period of twelve (12) consecutive
months, the occupation of a majority of the seats (other than vacant seats) on
the board of directors or other governing body of Borrower by Persons who were
neither (i) nominated by the board of directors or other governing body of
Borrower nor (ii) appointed by directors so nominated; (c) the
occurrence of a change in control, or other similar provision, as defined in
any Material Indebtedness Agreement or (d) the termination of the
employment of Eric DeMarco by the Borrower, whether initiated by the Borrower
or by Mr. DeMarco, in substantially the role served by him as of the
Closing Date, unless an interim or permanent successor reasonably acceptable to
Administrative Agent and the Requisite Lenders is immediately appointed, such
acceptance not to be unreasonably withheld.

 

“Closing Date”
means the date all the conditions precedent in Section 4.1 are satisfied
or waived in accordance with Section 4.1.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor statute thereto.

 

“Collateral” has the
meaning set forth in the Pledge and Security Agreement.

 

“Collateral Questionnaire”
means a certificate substantially in the form of Exhibit H that provides
information with respect to the personal or mixed property of each Credit
Party.

 

“Commitment”
means, in the aggregate $10,000,000, and for each Lender, the amount set forth
opposite such Lender’s name on Schedule 2.1, as such amount may be reduced or
adjusted from time to time in accordance with the terms of this Agreement
(collectively, the “Combined Commitments”).

 

“Compliance
Certificate” means a certificate substantially in the
form of Exhibit B, properly completed and signed by a Responsible Officer
of Borrower.

 

“Consolidated Capital Expenditures”
means, for any period, the aggregate of all expenditures of Borrower and its
Subsidiaries during such period determined on a consolidated basis that, in
accordance with GAAP, are or should be included in “purchase of property and
equipment (including the portion of liabilities under any Capital Lease that is
or should be capitalized in accordance with GAAP) or which should otherwise be
capitalized” including, for

 

5

 

the avoidance
of doubt, expenditures in respect of software to the extent capitalized in
accordance with GAAP.

 

“Consolidated Current Assets” means,
as at any date of determination, the total assets of Borrower and its
Subsidiaries on a consolidated basis that may properly be classified as current
assets in conformity with GAAP after deducting any appropriate and adequate
reserves therefor in conformity with GAAP, excluding cash and Cash Equivalents.

 

“Consolidated Current Liabilities”
means, as at any date of determination, the total liabilities of Borrower and its
Subsidiaries on a consolidated basis that may properly be classified as current
liabilities in conformity with GAAP, excluding (i) the current portion of
long term debt, (ii) other Indebtedness with a stated maturity of less
than one year that is outstanding at such time and (iii) obligations in
respect of revolving loans under any working capital credit facility.

 

“Consolidated EBITDA”
means, for any period, (x) the sum of the following, provided that the items contained in
clauses (b)-(g) below shall be added to (a) only to the extent they
have been deducted in the calculation of Consolidated Net Income:

 

(a)           Consolidated Net Income; provided that all items of gain and income
that are properly classified as extraordinary in accordance with GAAP (but do not
fall within clauses (b)-(h) below) shall be excluded from such
Consolidated Net Income;

 

(b)           Consolidated Interest Charges;

 

(c)           the amount of taxes, based on or
measured by income, used or included in the determination of such Consolidated
Net Income;

 

(d)           the amount of depreciation and
amortization expense deducted in determining such Consolidated Net Income,
including any impairment of goodwill or other purchased intangibles as defined
under FAS 142 or FAS 144;

 

(e)           any non-cash stock based compensation
charges in such period pursuant to GAAP;

 

(f)            the amount of non-cash costs from
the disposal of assets or changes to GAAP;

 

(g)           the amount of earn-out or similar
payments required to be reported as compensation expense instead of goodwill;

 

(h)           solely
with respect to the fiscal quarter ended December 31, 2007, the Additional
Fourth Quarter 2007 Add-Backs;

 

(i)            solely
with respect to the fiscal quarter ended March 31, 2008, the Additional
First Quarter 2008 Add-Backs;

 

6

 

(j)            upon
the implementation of FAS 141R, the amount of the purchase price and related
transaction costs of any Acquisition required to be expensed during such period
that would otherwise have been classified as goodwill prior to such implementation;

 

(k)           other
non-cash items reducing Consolidated Net Income (excluding any such non-cash
item to the extent that it represents an accrual or reserve for potential cash
items in any future period or amortization of a prepaid cash item that was paid
in a prior period);

 

minus

 

(x)            other
non-cash items increasing Consolidated Net Income for such period (excluding
any such non-cash item to the extent it represents the reversal of an accrual
or reserve for potential cash item in any prior period);

 

(y)           the
amount of interest income included in the determination of such Consolidated
Net Income; and

 

(z)            the
Rental Variance.

 

Notwithstanding the foregoing, for purposes
of calculating the Consolidated EBITDA for any period that includes any fiscal
quarter that ended prior to the Closing Date, the deemed Consolidated EBITDA
for such Fiscal Quarter shall be (i) for the fiscal quarter ended March 31,
2007, $4,776,000, (ii) for the fiscal quarter ended June 30, 2007,
$2,336,000 and (iii) for the fiscal quarter ended September 30, 2007,
$4,583,000.

 

“Consolidated Excess
Cash Flow” means:

 

(i) with
respect to fiscal year 2008, an amount (if positive) determined for Borrower
and its Subsidiaries on a consolidated basis equal to:

 

(a) The amount of set forth on the audited
Consolidated Statements of Cash Flows of Borrower for fiscal year 2008 across
from the heading “Net cash provided by continuing operations”;

 

minus

 

(b) the sum, without duplication, of the
amounts for such period of:

 

(1) voluntary and scheduled repayments
of Indebtedness (excluding repayments of any revolving credit indebtedness
except to the extent the obligation of the relevant lenders to make such
revolving credit available is permanently reduced or terminated in connection
with such repayments, to the extent of such reduction or termination);

 

(2) Consolidated Capital Expenditures
paid in cash (net of any proceeds of related financings with respect to such
expenditures); and

 

(3) the proceeds used to make mandatory
prepayments pursuant to Section 2.4(b)(i), 2.4(b)(ii) and 2.4(b)(vi),
only to the extent included in clause (i)(a) above; and

 

7

 

(ii) for any period ending after fiscal
year 2008, an amount (if positive) determined for Borrower and its Subsidiaries
on a consolidated basis equal to:

 

(a) the sum, without duplication, of the
amounts for such period of:

 

(1) Consolidated EBITDA;

 

(2) interest income;

 

(3) extraordinary cash gains and
extraordinary cash other income; and

 

(4) the Consolidated Working Capital
Adjustment;

 

minus

 

(b) the sum, without duplication, of the
amounts for such period of:

 

(1) voluntary and scheduled repayments
of Indebtedness (excluding repayments of any revolving credit indebtedness
except to the extent the obligation of the relevant lenders to make such
revolving credit available is permanently reduced or terminated in connection
with such repayments, to the extent of such reduction or termination);

 

(2) Consolidated Capital Expenditures
paid in cash (net of any proceeds of related financings with respect to such
expenditures);

 

(3) Consolidated Interest Charges to the
extent payable in cash;

 

(4) provisions for current taxes based
on income of Borrower and its Subsidiaries and payable in cash with respect to
such period; and

 

(5) the proceeds used to make mandatory
prepayments pursuant to Section 2.4(b)(i), 2.4(b)(ii) and 2.4(b)(vi),
only to the extent included in clause (i)(a) above.

 

“Consolidated
Interest Charges” means, for any period, for Borrower
and its Subsidiaries on a consolidated basis, the sum of (a) all interest,
premium payments, fees, charges and related expenses payable by Borrower and
its Subsidiaries in connection with borrowed money (including capitalized
interest) or in connection with the deferred purchase price of assets, in each
case to the extent treated as interest in accordance with GAAP, (b) the
portion of rent payable by Borrower and its Subsidiaries with respect to such
period under Capital Leases that is treated as interest in accordance with GAAP
and (c) the portion of rent under any Synthetic Lease Obligation that
would be treated as interest in accordance with GAAP if the Synthetic Lease
Obligation were treated as a Capital Lease under GAAP.

 

“Consolidated Net Income”
means, (i) the net income (or loss) of Borrower and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP, minus (ii) the sum of:

 

8

 

(a)                                  the income (or loss) of any Person (other than a Subsidiary
of Borrower) in which any other Person (other than Borrower or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Borrower or any of its
Subsidiaries by such Person during such period, plus

 

(b)                                 the income (or loss) of any Person accrued prior to the date
it becomes a Subsidiary of Borrower or is merged into or consolidated with
Borrower or any of its Subsidiaries or that Person’s assets are acquired by
Borrower or any of its Subsidiaries; plus

 

(c)                                  the income (or loss) of any Subsidiary of Borrower to the
extent that the declaration or payment of dividends or similar distributions by
that Subsidiary of that income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary,
plus

 

(d)                                 any after tax gains or losses attributable to Asset Sales or
returned surplus assets of any Pension Plan, plus

 

(e)                                  the income (or loss) from discontinued operations.

 

“Consolidated Working Capital” means, as at any date of determination, the excess or deficiency of
Consolidated Current Assets over Consolidated Current Liabilities.

 

“Consolidated Working Capital
Adjustment” means, for any period on
a consolidated basis, the amount (which may be a positive or a negative number)
by which Consolidated Working Capital as of the beginning of such period exceeds
(or is less than) Consolidated Working Capital as of the end of such period, as adjusted for any non-cash changes in deferred tax assets and deferred
tax liabilities of Borrower and its Subsidiaries;  provided, however, the Consolidated
Working Capital Adjustment may be decreased by an amount determined by the
Administrative Agent in its reasonable discretion to reflect a decrease in the
accounts payable of Borrower and its Subsidiaries resulting from a material
decrease in the historic consolidated days payable of Borrower and its
Subsidiaries.

 

“Continuation” and “Continue” mean, with respect to any
Offshore Rate Loan, the continuation of such Offshore Rate Loan as an Offshore
Rate Loan on the last day of the Interest Period for such Loan.

 

“Contractual Obligation” means, as to
any Person, any provision of any security issued by such Person or of any
agreement, instrument or undertaking to which such Person is a party or by
which it or any of its property is bound.

 

“Conversion” and “Convert” mean, with respect to any Loan,
the conversion of such Loan from or into another type of Loan.

 

“Credit Party” means Borrower
and each Guarantor.

 

“Debtor Relief Laws” means the
Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement, 

 

9

 

receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States of America
or other applicable jurisdictions from time to time in effect affecting the
rights of creditors generally.

 

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

 

“Default Rate” means an
interest rate that is two  percent  (2.0%) per annum in excess of the interest rate otherwise
payable hereunder with respect to the applicable Loans (or, in the case of any
fees and other amounts, at a rate which is two percent  (2.0%)
per annum in excess of the interest rate otherwise payable hereunder for Base
Rate Loans).

 

“Disclosure Letter” means that
Disclosure Letter of even date herewith and delivered to Administrative Agent
together with this Agreement, as the same may be updated from time to time with
the consent of the Requisite Lenders.

 

“Disposition” or “Dispose” means the sale, lease or sub
lease (as lessor or sublessor), assignment, conveyance, transfer, License
Disposition or other disposition (including any sale and leaseback transaction)
of any property by any Person, or any exchange of property by such Person with
any other Person, including any sale, assignment, transfer or other disposal
with or without recourse of any notes or accounts receivable or any rights and
claims associated therewith; provided,
however, that an issuance by a Person of its Equity Securities shall
not be a Disposition.

 

“Disqualified Capital Stock” means an Equity Security
that, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, (a) matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the first anniversary of
the Maturity Date with respect to the Term Loans, (b) is convertible into
or exchangeable (unless at the sole option of the issuer thereof) for (i) debt
securities or (ii) any Equity Securities of the type referred to in clause
(a) above, in each case at any time prior to the first anniversary of the
Maturity Date with respect to the Term Loans, (c) contains any repurchase
obligation that may come into effect prior to payment in full of all
Obligations, (d) requires cash dividend payments prior to one year after
the Maturity Date with respect to the Term Loans, (e) does not provide
that any claims of any holder of such Equity Security may have against Borrower
or any of its Subsidiaries (including any claims as judgment creditor or other
creditor in respect of claims for the breach of any covenant contained therein)
shall be fully subordinated (including a full remedy bar) to the Obligations in
a manner satisfactory to Administrative Agent, (f) provides the holders of
such Equity Security with any rights to receive any cash upon the occurrence of
a change of control prior to the first anniversary date on which the
Obligations have been irrevocably paid in full, unless the rights to receive
such cash are contingent upon the Obligations being irrevocably paid in full,
or (g) is prohibited by the terms of this Agreement.

 

“Dollar,”  “USD” and “$”
mean lawful money of the United States of America.

 

10

 

“Domestic Subsidiary” means a
Subsidiary that is not a Foreign Subsidiary.

 

“Dormant
Subsidiaries” has the meaning set forth
in Section 5.26 hereof.

 

“Eligible Assignee” means (a) a
financial institution organized under the laws of the United States, or any
state thereof, and having a combined capital and surplus of at least
$100,000,000; (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000, provided
that such bank is acting through a branch or agency located in the United
States; (c) any Lender or any Affiliate of a Lender or an Approved Fund; (d) any
other entity which is an “accredited investor” (as defined in Regulation D
under the Securities Act of 1933, as amended) which extends credit or buys
loans as one of its businesses, including but not limited to, insurance
companies, mutual funds and lease financing companies; or (e) any Person
(other than a natural Person) approved by Borrower (so long as no Default or
Event of Default has occurred and is continuing) and Administrative Agent.  Neither Borrower nor any Affiliate of
Borrower shall be an Eligible Assignee.

 

“Employee Benefits Plan” means any “employee
benefit plan” as defined in Section 3(3) of ERISA, including without
limitation, a 401k plan, employee stock purchase program, deferred compensation
program or similar programs maintained by Borrower or any of its Subsidiaries
within the past five years from the date hereof.

 

“Environmental Laws” means all Laws
relating to environmental, health, safety and land use matters applicable to
Borrower or any of its properties.

 

“Equity Securities” of any Person
means (a) all common stock, preferred stock, participations, shares,
partnership interests or other equity interests in such Person (regardless of
how designated and whether or not voting or non-voting) and (b) all
warrants, options and other rights to acquire any of the foregoing, other than
convertible debt securities which have not been converted into common stock,
preferred stock, participations, shares, partnership interests or other equity
interests in any such Person.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time,
or any successor Federal statute.

 

“ERISA Affiliate” means any
trade or business (whether or not incorporated) under common control with
Borrower or any of its Subsidiaries within the meaning of Sections 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).  Any former ERISA Affiliate of Borrower or any
of its Subsidiaries shall continue to be considered an ERISA Affiliate of
Borrower or any such Subsidiary within the meaning of this definition with
respect to the period such entity was an ERISA Affiliate of Borrower or such
Subsidiary and with respect to liabilities arising after such period for which
Borrower or such Subsidiary could be liable under the Code or ERISA.

 

“ERISA Event” means (i) a
“reportable event”
within the meaning of Section 4043 of ERISA and the regulations issued
thereunder with respect to any Pension Plan; (ii) the failure to meet the
minimum funding standard of Section 412 of the Code with respect to any
Pension Plan 

 

11

 

(whether or not waived in
accordance with Section 412(d) of the Code) or the failure to make by
its due date a required installment under Section 412(m) of the Code
with respect to any Pension Plan or the failure to make any required
contribution to a Multiemployer Plan; (iii) notice of intent to terminate
a Pension Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the withdrawal by Borrower, any of its Subsidiaries or any of
their respective ERISA Affiliates from any Pension Plan with two or more
non-related contributing sponsors or the termination of any such Pension Plan
resulting in liability to Borrower, any of its Subsidiaries or any of their
respective ERISA Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might reasonably constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; (vii) the withdrawal of
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
in a complete or partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA) from any Multiemployer Plan if there is any liability or
potential liability therefor, or the receipt by Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A
or 4042 of ERISA; (viii) the occurrence of an act or omission which could
give rise to the imposition on Borrower, any of its Subsidiaries or any of
their respective ERISA Affiliates of fines, penalties, taxes or related charges
under Chapter 43 of the Code or under Section 409, Section 502(c), (i) or
(l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan or the assets thereof, or against Borrower, any of
its Subsidiaries or any of their respective ERISA Affiliates in connection with
any Employee Benefit Plan; (x) receipt from the Internal Revenue Service
of notice of the failure of any Pension Plan (or any other Employee Benefit
Plan intended to be qualified under Section 401(a) of the Code) to
qualify under Section 401(a) of the Code, or the failure of any trust
forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of
the Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29)
or 412(n) of the Code or pursuant to ERISA with respect to any Pension
Plan.

 

“Eurodollar Reserve Percentage” means, for any
day during any Interest Period, the reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day, whether or not
applicable to any Lender, under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for determining the maximum
reserve requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently referred
to as “Eurocurrency liabilities”).

 

“Event of Default” means any of
the events specified in Section 8.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time, or any successor
federal statute.

 

“Existing Indebtedness” means (i) Indebtedness
and other obligations outstanding under that certain Credit Agreement, dated as
of October 2, 2006, between Borrower, KeyBank National Association,
KeyBank Capital Markets and the lenders thereunder, as amended prior to 

 

12

 

the Closing Date and (ii) Indebtedness
and other obligations outstanding under that certain Loan Agreement, dated as
of January 16, 2004, between Haverstick Consulting, Inc. and Menard, Inc.,
as amended prior to the Closing Date.

 

“Extension of Credit” means a
Borrowing, Conversion or Continuation of Loans.

 

“Extraordinary Receipts” means any cash received by
or paid to or for the account of Borrower or any of it Subsidiaries not in the
ordinary course of business,  pension
plan reversions, judgments, proceeds of settlements or other consideration of
any kind in connection with any cause of action, condemnation awards (and
payments in lieu thereof), indemnity payments and any purchase price adjustment
received in connection with any purchase agreement (including the Merger
Agreement) and proceeds of insurance, in each case net of all actual and
reasonable costs incurred by Borrower or any of its Subsidiaries, in connection
with such non-ordinary course cash receipt (excluding, however, (i) any
Net Asset Sale Proceeds, Net Insurance/Condemnation Proceeds, Net Cash Equity
Proceeds or the net cash proceeds from the incurrence of any Indebtedness of
Borrower or any of its Subsidiaries, in each case, which are subject to Section 2.3(b) and
(ii) proceeds from the Westfield Receivable.

 

“Facilities Letter” means that
certain Facilities Letter, dated October 24, 2007, by and between Arranger
and Borrower, including all attachments thereto.

 

“Federal Funds Rate” means, for any
day, the rate per annum (rounded upwards to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to KeyBank on such
day on such transactions as determined by Administrative Agent.

 

“Fee Letter” means that
certain Fee Letter, dated December     , 2007, by and
between Arranger and Borrower.

 

“First Lien Administrative Agent” means KeyBank National
Association, in its capacity as administrative agent under the First Lien
Credit Agreement or any successor administrative agent thereunder.

 

“First Lien Credit Agreement” means (i) that certain
credit agreement dated as of the date hereof among Borrower, KeyBank National
Association, as a lender and as administrative agent, such other lenders as
shall from time to time be party thereto, with KeyBanc Capital Markets as lead
arranger and book runner thereunder, as amended, restated, supplemented or
modified from time to time to the extent permitted by this Agreement and the Intercreditor
Agreement.

 

“First Lien Event of Default” shall have the meaning
assigned to the term “Event of Default” in the First Lien Credit Agreement.

 

13

 

“First Lien Lender” means a “Lender” as defined
in the First Lien Credit Agreement.

 

“First Lien Leverage Ratio” means, as of
any date of determination, for Borrower and its Subsidiaries on a consolidated
basis, the ratio of (a) the aggregate amount of Indebtedness less the sum
of (i) the aggregate amount of Indebtedness under this Agreement, (ii) Subordinated
Debt as of such date and (iii) unsecured obligations in respect of
earn-out payments, holdback amounts or other similar obligations in connection
with Acquisitions by Borrower or any of its subsidiaries (including in
connection with the MRC and Haverstick Acquisitions)  to
the extent payable in cash  to (b) Consolidated
EBITDA for the period of the four quarters ending on, or ending most recently
prior to, such date.

 

“First Lien Loan Documents” means the First Lien Credit
Agreement and the other Loan Documents as defined in the First Lien Credit
Agreement, including other security documents, guaranties and the notes issued
thereunder.

 

“First Lien Loans” means, collectively, the
First Lien Term Loan and the First Lien Revolving Loans.

 

“First Lien Obligations” shall have the meaning assigned to the term “Obligations” in the First
Lien Credit Agreement.

 

“First Lien Revolving Loans” shall have the meaning assigned to the term “Revolving Loan” in the
First Lien Credit Agreement.

 

“First Lien Term Loan” shall have the meaning assigned to the term “Original Term Loan” in
the First Lien Credit Agreement.

 

“First-Tier Material Foreign
Subsidiary” means a direct Foreign Subsidiary of either
Borrower or a Domestic Subsidiary that is also a Material Subsidiary.

 

“Fixed Charge Coverage Ratio” means as of
any date of determination the ratio of (a) Borrower’s Consolidated EBITDA
for the preceding four quarters most recently ended to (b) the sum of (i) scheduled
principal amortization payments made pursuant to this Agreement and the Second
Lien Credit Agreement, (ii) Consolidated Interest Charges to the extent
paid in cash, (iii) consolidated income taxes to the extent paid in cash
(less cash income tax refunds actually received attributable to taxes paid in
the current or immediately prior fiscal year), (iv) Consolidated Capital
Expenditures, (v) cash losses resulting from discontinued operations, (vi) cash
payments made by Borrower or any of its Subsidiaries in respect of earn-out,
holdback or other similar obligations in connection with Acquisitions
(including in connection with the MRC and Haverstick Acquisitions), all as
determined in accordance with GAAP and in each case for the four quarters most
recently ended.

 

“Foreign Subsidiary” means a
Subsidiary that is organized outside of the United States of America.

 

“Fund” means any Person (other than a natural person) that
is (or will be) engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary course of
its business.

 

14

 

“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or such other principles as may be approved by a
significant segment of the accounting profession, that are applicable to the
circumstances as of the date of determination (except as otherwise set forth in
Section 1.3), consistently applied.

 

“Governmental Authority” means (a) any
international, foreign, federal, state, county or municipal government, or
political subdivision thereof, (b) any governmental or quasi-governmental
agency, authority, board, bureau, commission, department, instrumentality,
central bank or public body, or (c) any court, administrative tribunal or
public utility.

 

“Guarantor” shall mean
each Domestic Subsidiary which is a Material Subsidiary in existence on the
date hereof (as set forth on Schedule 5.1 hereof) and thereafter any other
Domestic Subsidiary that shall become an obligor under the Multi-Party Guaranty
pursuant to the terms of Section 6.12 hereof.

 

“Guaranty Obligation” means, as to
any Person, any (a) guaranty by such Person of Indebtedness of, or other
obligation payable or performable by, any other Person or (b) assurance,
agreement, letter of responsibility, letter of awareness, undertaking or
arrangement given by such Person to an obligee of any other Person with respect
to the payment or performance of an obligation by, or the financial condition
of, such other Person, whether direct, indirect or contingent, including any
purchase or repurchase agreement covering such obligation or any collateral
security therefor, any agreement to provide funds (by means of loans, capital
contributions or otherwise) to such other Person, any agreement to support the
solvency or level of any balance sheet item of such other Person or any “keep-well”
or other arrangement of whatever nature, in each such case, given for the
purpose of assuring or holding harmless such obligee against loss with respect
to any obligation of such other Person; provided,
however, that the term Guaranty Obligation shall not include
performance bond or other bond guarantees or endorsements of instruments for
deposit or collection in the ordinary course of business.  The amount of any Guaranty Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, covered by such Guaranty
Obligation or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the Person in good
faith.

 

“Haverstick” means Haverstick Consulting, Inc., an Indiana
corporation.

 

“Hazardous Substance” means any
substance, material or waste, including asbestos and petroleum (including crude
oil or any fraction thereof), which is or becomes designated, classified or
regulated as “toxic,” “hazardous,” a “pollutant” or similar designation under
any Laws.

 

“Historical Financial Statements” means as of the Closing
Date, (i) the audited financial statements of Borrower and its Subsidiaries,
for the fiscal year ended December 31, 2006, consisting of a consolidated
balance sheet, a consolidated statement of income and a consolidated cash flow
statement for such fiscal year, and (ii) for the interim period from December 31,
2006, to the Closing Date, internally prepared, unaudited financial statements
of 

 

15

 

Borrower and its
Subsidiaries, consisting of a consolidated balance sheet, a consolidated
statement of income and a consolidated cash flow statement for each quarterly
period completed prior to forty-five (45) days before the Closing Date, in the
case of clauses (i) and (ii), certified by a Responsible Officer of
Borrower as fairly presenting in all material respects the financial condition,
results of operations and cash flows of Borrower and its Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes.

 

“Indebtedness” means, as to
any Person:

 

(a)                                  all obligations of such
Person for borrowed money;

 

(b)                                 all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments or
upon which interest payments are customarily paid and all obligations in
respect of drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money;

 

(c)                                  any direct or contingent
obligations of such Person arising under letters of credit (including standby
and commercial), banker’s acceptances, bank guaranties, surety bonds and
similar instruments, but excluding performance bonds and guaranties thereof,
other than in the form of a letter of credit;

 

(d)                                 the Swap Termination Value
of any Swap Contract;

 

(e)                                  with or without recourse,
all obligations of such Person to pay the deferred purchase price of property
or services in cash, including any
obligations in respect of earn-out payments, holdback amounts or other similar
obligations in connection with Acquisitions by Borrower or any of its
Subsidiaries, but excluding all trade payables
incurred in the ordinary course of business having a term of less than six (6) months
and not overdue by more than sixty (60) days, provided that (i) up to
$3,000,000 at any time outstanding of trade payables incurred in the ordinary
course of business having a term of less than six (6) months and not
overdue by more than ninety (90) days shall not be considered Indebtedness
hereunder and (ii) up to $1,000,000 at any time outstanding of trade
payables incurred in the ordinary course of business having a term of less than
six (6) months and not overdue by more than one hundred and twenty (120)
days shall not be considered Indebtedness hereunder;

 

(f)                                    Capital Leases or Synthetic
Lease Obligations, where (i) the amount of Indebtedness in the case of
Capital Leases shall be the amount of the capitalized lease liability properly
classified as a liability on a balance sheet in conformity with GAAP and (ii) the
amount of Indebtedness in the case of Synthetic Lease Obligations shall be the
sum of all outstanding principal advances and any other sums advanced and
outstanding pursuant to the Synthetic Lease Obligations;

 

(g)                                 all obligations under asset
securitization financing transactions, including recourse sales of receivables
but exclusive of nonrecourse sales of receivables;

 

(h)                                 all indebtedness secured by
any Lien on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is nonrecourse to the credit of that Person;

 

16

 

(i)                                     all obligations of such
Person, contingent or otherwise, to purchase, redeem, retire or otherwise
acquire for value any Capital  Stock of
such Person; and

 

(j)                                     all Guaranty Obligations of
such Person in respect of any of the foregoing obligations of any other Person.

 

For all purposes of this Agreement, the Indebtedness
of any Person shall include, the Indebtedness of any partnership or joint
venture (to the extent the joint venture consists of a legal entity where a
joint venturer has pass-through liability for all of the debts of the joint
venture) in which such Person is a general partner or a joint venturer, unless
other than with respect to clause (g) above) such Indebtedness is
expressly made non-recourse to such Person (subject to customary recourse
exceptions acceptable to Requisite Lenders).

 

“Indemnified Liabilities” has the
meaning set forth in Section 10.14.

 

“Indemnitees” has the
meaning set forth in Section 10.14.

 

“Intercreditor Agreement” means an intercreditor agreement in the form of Exhibit I
among the Administrative Agent, the First Lien Administrative Agent and the
Credit Parties.

 

“Interest Period” means for each
Offshore Rate Loan, (i) initially, the period commencing on the date such
Offshore Rate Loan is disbursed or Continued or Converted into such Offshore
Rate Loan, and (ii) thereafter, the period commencing on the last day of
the preceding Interest Period, and ending, in each case, on the earlier of (x) the
scheduled Maturity Date, or (y) one, two, three or six months thereafter,
as elected by Borrower; provided that:

 

(a)                                  any Interest
Period that would otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Business Day;

 

(b)                                 any Interest
Period which begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and

 

(c)                                  unless
Administrative Agent otherwise consents, there may not be more than five (5) Interest
Periods for Offshore Rate Loans in effect at any time.

 

“Intellectual Property Security
Agreement” means the Patent Security Agreement, the Trademark
Security Agreement, and the Copyright Security Agreement, each dated as of the
date hereof, executed in favor of Administrative Agent (for the account of each
Lender in accordance with its Pro Rata Share).

 

“Internal Control Event” means a material weakness
in, or fraud that involves management of, Borrower, which fraud has a material
effect on Borrower’s internal controls over financial and other reporting, in
each case as described in the Securities Laws, whether or not Borrower is
subject thereto.

 

17

 

“Investment” means, as to
any Person, any investment by such Person, whether by means of the purchase or
other acquisition of stock or other securities of any other Person or by means
of a loan, creating a debt, capital contribution, guaranty or other debt or
equity participation or interest in any other Person.  For purposes of covenant compliance, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.

 

“IRS” means the
United States Internal Revenue Service.

 

“KeyBank” means KeyBank
National Association.

 

“Landlord Waiver” means a landlord waiver, substantially in
the form of Exhibit J hereto (or in such other form or with such
modifications as shall be approved by the Administrative Agent).

 

“Laws” or “Law” means all international, foreign,
federal, state and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.

 

“LCC Working Capital Adjustment” means the
working capital adjustment due to the Borrower in accordance with the terms of
the asset purchase agreement by and between LCC International, Inc. and
Wireless Facilities, Inc. pertaining to the sale of Wireless Facilities’
domestic engineering business.

 

“Lender” means each lender from time to time party
hereto.

 

“Lending Office” means, as to
any Lender, the office or offices of such Lender described as such on Schedule
10.2, or such other office or offices as a Lender may from time to time notify
Administrative Agent.

 

“License Disposition” means, in
respect of any patent, trademark, copyright, mask work, trade secret or other
intellectual property right owned or held by Borrower or any of its
Subsidiaries (the “IP Holder”)
which is material to Borrower or any of its Subsidiaries (together, “Material IP”), (i)   the granting by the IP Holder of an
exclusive license across all or substantially all fields, uses or regions to
any Person other than Borrower or another Subsidiary, (ii) the granting of
any license by the IP Holder that conveys directly or indirectly to any Person
other than Borrower or its Subsidiaries all or substantially all of the
economic value of such Material IP, or (iii) the abandonment by the IP
Holder of such Material IP.

 

“Lien” means (i) any
mortgage, pledge, hypothecation, assignment, deposit arrangement (including in
the nature of, cash collateral accounts or security interests), encumbrance,
lien (statutory or other), fixed or floating charge, or other security interest
of any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any 

 

18

 

financing statement under
the Uniform Commercial Code or comparable Laws of any jurisdiction), including
the interest of a purchaser of accounts receivable and (ii) in the case of
Securities, any purchase option, call or similar right of a third party with
respect to such Securities.

 

“Liquidity Ratio” means as of
any date of determination, for Borrower and its Subsidiaries on a consolidated
basis and in accordance with GAAP, the ratio of (a) the sum of cash on
hand, Cash Equivalents, and billed and unbilled accounts receivable (excluding
accounts receivable owing from any Affiliate, shareholder or employee of
Borrower or any of its Subsidiaries) to (b) current liabilities (excluding
current liabilities of discontinued operations, current deferred tax
liabilities and deferred revenue); provided
that for all periods ending in the four fiscal quarter period prior to the
Maturity Date, current liabilities shall exclude the Obligations.

 

“Loan” means any
advance made by any Lender to Borrower as provided in Section 2.1(a) that
is a Term Loan (collectively, the “Loans”).

 

“Loan Documents” means this
Agreement, the Intercreditor Agreement, each Note, the Multi-Party Guaranty,
the Security Documents, each Request for Extension of Credit, the Post-Closing
Letter, the Fee Letter, each certificate, each fee letter, and each other
instrument or agreement from time to time executed by Borrower or any of its
Subsidiaries or any Responsible Officer and delivered in connection with this
Agreement.

 

“Material Adverse Change” means, when used with
respect to Borrower and its Subsidiaries or Haverstick and its Subsidiaries, as
the case may be, any change or effect that is materially adverse or unfavorable
to the business or the operations, assets, liabilities, employee relationships,
customer or supplier relationships, earnings or results of operations,
financial projections or forecasts, or the business prospects and condition
(financial or otherwise), of the Borrower and its Subsidiaries, taken as a
whole, or Haverstick and its Subsidiaries, taken as a whole, as the case may
be; provided however, that a Material
Adverse Change shall not be deemed to have occurred upon any change or effect
related to the happening of any event due to (i) the occurrence of a
natural or man-made disaster, (ii) armed conflict, (iii) act of
terrorism, (iv) riot, (v) act of state, (vi) a failure by
Haverstick to meet internal projections or forecasts or published revenue or
earnings predictions for any period ending on or after the date of this
Agreement, provided, however, that the facts and
circumstances underlying any such failure may, except as may be provided in
clauses (i), (ii), (iii), (iv), (v), (vii) and (viii) of this definition,
be considered in determining whether a Material Adverse Change has occurred, (vii) conditions
generally affecting the industries in which Haverstick participates, national,
regional or world economies or financial markets or (viii) any effect
arising primarily out of or resulting primarily from actions contemplated by
the parties in connection with, or which is primarily attributable to, the
announcement or pendency of this Agreement and the transactions contemplated
hereby.

 

“Material Adverse Effect” means any set
of circumstances or events which (a) has any material adverse effect upon
the validity or enforceability of any Loan Document or the rights and remedies
of Administrative Agent and Lenders hereunder or thereunder, (b) is
material and adverse to the prospects, financial condition, business, assets or
operations of Borrower and its Subsidiaries, taken as a whole, (c) has any
material adverse effect upon the value or condition of 

 

19

 

the Collateral, taken as a
whole, or (d) materially impairs the ability of any Credit Party to
perform the Obligations.

 

“Material Contract” means, collectively, (i) any
contract or agreement listed in the Disclosure Letter, (ii) any
contract or agreement requiring Annual Payments to be made or providing for
Annual Payments to be received, in each case in excess of $2,000,000, (iii) any
other contract or other arrangement to which Borrower or any of its
Subsidiaries is a party (other than the Loan Documents) for which breach,
nonperformance, cancellation or failure to renew could reasonably be expected
to have a Material Adverse Effect and (iv) any agreement or instrument
evidencing or governing Indebtedness (other than a Loan Document or any First
Lien Loan Document).

 

“Material Indebtedness Agreement” shall mean any
debt instrument, lease (capital, operating or otherwise), guaranty, contract,
commitment, agreement or other arrangement evidencing any Indebtedness of the
Borrower or any of its Subsidiaries in excess of $2,500,000.

 

“Material Lease” means any
lease existing on the Closing Date or entered into by Borrower or any of its
Subsidiaries after the Closing Date with annual payments in excess of $250,000.

 

“Material Real Estate Asset” means (i) any
fee-owned real estate asset having a fair market value in excess of $2,000,000
as of any date of determination, or (ii) any fee-owned real estate asset
that the Requisite Lenders have determined is material to the business,
operations, properties, assets, condition (financial or otherwise) or prospects
of Borrower or any Subsidiary.

 

“Material Subsidiary” means each
Subsidiary of Borrower that has (a) assets as of the end of most recent
fiscal year of Borrower in excess of $2,000,000 or (b) net revenues in
excess of $5,000,000 for the most recent fiscal year of Borrower.

 

“Maturity Date” means the
earlier of (x) June 30, 2013 or (y) the date that all Term Loans
shall become due and payable in full hereunder, whether by acceleration or
otherwise.

 

“Merger Agreement” means that
certain Agreement and Plan of Merger, dated as of November 2, 2007, by and
among Borrower, Kratos Government Solutions, Inc., Haverstick Acquisition
Corporation and Haverstick, pursuant to which Haverstick, subject to certain
conditions, will become the indirect wholly-owned subsidiary of Borrower.

 

“Merger Documents” means the
Merger Agreement and all agreements attached as exhibits thereto or executed in
connection therewith, all schedules and exhibits attached to any of them, and
all certificates and other documents executed in connection therewith.

 

“Minimum Amount” means, with
respect to each of the following actions, the minimum amount and any multiples
in excess thereof set forth opposite such action:

 

	
  Type of Action

  	
   

  	
  Minimum

  Amount

  	
   

  	
  Multiples in

  excess thereof

  	
   

  
	
  Borrowing or prepayment of, or Conversion into, Base Rate Loans

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  Borrowing, prepayment or Continuation of, Conversion into, Offshore
  Rate Loans

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  500,000

  	
   

  

 

20

 

“MRC” means Madison
Research Corporation, an Alabama corporation.

 

“Multiemployer Plan” means any
employee benefit plan of the type described in Section 4001(a)(3) of
ERISA.

 

“Multi-Party Guaranty” means that
Multi-Party Guaranty dated as of the date hereof, executed by each Guarantor in
favor of the Administrative Agent in the form attached hereto as Exhibit F.

 

“Net Asset Sale Proceeds” means, with respect to any
Asset Sale resulting in gross proceeds of more than $5,500,000, an amount equal
to:  (i) the sum of cash payments
and Cash Equivalents received by Borrower or any of its Subsidiaries from such
Asset Sale (including any cash or Cash Equivalents received by way of deferred
payment pursuant to, or by monetization of, a note receivable or otherwise, but
only as and when so received), minus (ii) any bona fide direct costs
incurred in connection with such Asset Sale, including (a) income or gains
taxes paid or payable by the seller as a result of any gain recognized in
connection with such Asset Sale during the tax period applicable to the sale
(after taking into account any available tax credits or deductions and any
tax-sharing arrangements), (b) payment of the outstanding principal amount
of, premium or penalty, if any, and interest on any Indebtedness (other than
the Loans and the First Lien Loans) that is secured by a Lien on the stock or
assets in question and that is required to be repaid under the terms thereof as
a result of such Asset Sale, and (c) a reasonable reserve for any indemnification
payments (fixed or contingent) attributable to seller’s indemnities and
representations and warranties to purchaser in respect of such Asset Sale
undertaken by Borrower or any of its Subsidiaries in connection with such Asset
Sale; provided that upon release of any such
reserve, the amount released shall be considered Net Asset Sale Proceeds); provided, however, that if at any time during the term of
this Agreement Borrower and its Subsidiaries have made Asset Sales resulting in
gross proceeds of more than $8,250,000, thereafter the amount described in
clauses (i) and (ii) of this definition with respect to all Asset
Sales (regardless of size) shall be considered Net Asset Sale Proceeds.

 

“Net Cash Equity Proceeds” means cash proceeds from a
capital contribution to, or the issuance of any Equity Securities of, Borrower
or any of its Subsidiaries, net of underwriting discounts and commissions and
other reasonable costs and expenses associated therewith, including reasonable
legal fees and expenses.

 

“Net Insurance/Condemnation Proceeds” means an amount equal
to:  (i) any cash payments or
proceeds received by Borrower or any of its Subsidiaries (a) under any
casualty, business interruption or “key man” insurance policies in respect of
any covered loss thereunder, or (b) as a result of the taking of any
assets of Borrower or any of its Subsidiaries by any Person pursuant to the
power of eminent domain, condemnation or otherwise, or pursuant to a sale of
any such assets to a purchaser with such power under threat of such a taking,
minus (ii) (a) any actual and reasonable costs incurred by Borrower
or any of its Subsidiaries in connection with the adjustment or settlement of
any claims of Borrower or such Subsidiary in respect thereof, and (b) any
bona fide direct costs incurred in connection with any sale of such assets as
referred to in clause (i)(b) of this definition, including income taxes
paid or payable as a result of any gain 

 

21

 

recognized in connection
therewith (after taking into account any available tax credits or deductions
and any tax-sharing arrangements).

 

“Note” means a
promissory note made by Borrower in favor of a Lender evidencing the Loans made
by such Lender, substantially in the form of Exhibit C (collectively, the “Notes”).

 

“Obligations” means all
advances to, and debts, liabilities, obligations, covenants and duties of,
Borrower or any of its Subsidiaries arising under any Loan Document and under
any Swap Contract (entered into with any Lender or Affiliate thereof), whether
direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest that accrues after the commencement of any proceeding under
any Debtor Relief Laws by or against Borrower or any Subsidiary of Borrower.

 

“Offshore Rate” means for any
Interest Period with respect to each Offshore Rate Loan comprising part of the
same Borrowing, a rate per annum determined by Administrative Agent as the
offered rate for Dollar deposits in the approximate amount of the requested
Offshore Rate Loan and having a maturity comparable to such Interest Period,
which rate appears (i) on the British Bankers’ Association internet web page (http://www.bba.org.uk/public/libor/),
or via (ii) Reuters (BBALIBORS), Bloomberg, Moneyline Telerate (Page 3750)
or any other information provider of the British Bankers’ Association daily
Libor rates as of 11:00 A.M., London time, on the date (an “Interest Determination Date”) which is
the second day on which banks are open for interbank deposits in London prior
to the commencement of such Interest Period. 
If, on the Interest Determination Date for such Interest Period, the
Administrative Agent is unable to obtain any quotation as provided above, the
Offshore Rate for the relevant Interest Period shall be the rate per annum that
the Administrative Agent determines in good faith to be the arithmetic mean
(rounded, if necessary, to the nearest sixth decimal place) of all the per
annum rates of interest at which deposits in Dollars in an amount comparable to
the requested Offshore Rate Loan in Dollars in respect of which the Offshore
Rate is then being determined for a period comparable to such Interest Period
are offered by Administrative Agent to prime banks in the London interbank
market at approximately 11:00 A.M., London time on such Interest
Determination Date.  The Administrative
Agent shall provide to Borrower, upon request, details as to the manner in
which the Offshore Rate is calculated, but such calculation shall be conclusive
and binding absent manifest error.  The
Offshore Rate for each outstanding Offshore Rate Loan shall be adjusted
automatically as of the effective date of any change in the Eurodollar Reserve
Percentage by dividing (i) the Offshore Rate by (ii) one minus the
Eurodollar Reserve Percentage.  The
determination of the Eurodollar Reserve Percentage and the Offshore Rate by
Administrative Agent shall be conclusive in the absence of manifest error.

 

“Offshore Rate Loan” means a Loan
made in not less than the Minimum Amount pursuant to Requisite Notice to
Administrative Agent and by deliverance of a Request for Extension of Credit
not later than the Requisite Time and specified to be an Offshore Rate Loan.

 

Interest on each Offshore Rate Loan shall be
calculated using the Applicable Margin for the Offshore Rate effective as of
the date of the advance, Continuation or Conversion, as applicable, of such
Offshore Rate.

 

22

 

“Organization Documents” means, (a) with
respect to any corporation, the certificate or articles of incorporation and
the bylaws; (b) with respect to any limited liability company, the
articles of formation and operating agreement; and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership or joint venture agreement and any agreement, instrument, filing or
notice with respect thereto filed in connection with its formation with the secretary
of state or other department in the state of its formation, in each case as
amended from time to time.

 

“Other Taxes” has the meaning specified in Section 3.1.

 

“Outstanding Obligations” means, as of
any date, and giving effect to making any Extensions of Credit requested on
such date and all payments, repayments and prepayments made on such date, (a) when
reference is made to all Lenders, the sum of the aggregate outstanding
principal amount of all Loans, and (b) when reference is made to one
Lender, the sum of the aggregate outstanding principal amount of all Loans made
by such Lender.

 

“PBGC” means the
Pension Benefit Guaranty Corporation or any successor thereto established under
ERISA.

 

“Pension Plan” means any “employee
pension benefit plan” (as such term is defined in Section 3(2) of
ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA
and is or was during the past five years sponsored or maintained by Borrower or
any Subsidiary or ERISA Affiliate or to which Borrower or Subsidiary or any
ERISA Affiliate contributes or has or, during the past five years, had an
obligation to contribute, including without limitation any multiple employer
plan (as described in Section 4064(a) of ERISA).

 

“Permitted Acquisition” has the meaning
specified in Section 7.5(e).

 

“Permitted Exceptions” means with
respect to the property subject to any Material Lease as to which
Administrative Agent is granted a security interest in accordance with Section 6.15: 
(a) Liens arising by operation of law, materialmen’s, mechanics’, workers’,
repairmen’s, employees’, carriers’, warehousemen’s and other like Liens in
connection with any improvements or arising in the ordinary course of business
for amounts that either are not more than thirty (30) days past due or are
being diligently contested in good faith by appropriate proceedings and that
have been bonded for not less than the full amount in dispute (or as to which
other security arrangements satisfactory to Administrative Agent have been
made), which bonding (or arrangements) shall comply with applicable
requirements of Laws, and has effectively stayed any execution or enforcement
of such Liens; (b) Liens arising out of judgments or awards with respect
to which appeals or other proceedings for review are being prosecuted in good
faith and for the payment of which adequate reserves have been provided as required by GAAP or other
appropriate provisions have been made, so long as such proceedings have the
effect of staying the execution of such judgments or awards; (c) all
encumbrances, exceptions, restrictions, easements, rights of way, servitudes,
encroachments and irregularities in title, other than Liens which, in the
reasonable assessment of the Administrative Agent, do not materially impair the
value of the real property security or the use of such real property security
for its intended purpose; (d) a Lien consisting of a deposit or pledge
made, in the ordinary course 

 

23

 

of business, in connection
with, or to secure payment of, obligations under worker’s compensation,
unemployment insurance or similar legislation; and (e) Permitted Liens.

 

“Permitted Indebtedness” has the
meaning specified in Section 7.1.

 

“Permitted Investments “ has the
meaning specified in Section 7.5.

 

“Permitted Liens “ has the
meaning specified in Section 7.2.

 

“Permitted Swap
Obligations” means all obligations (contingent or otherwise) of
Borrower or any of its Subsidiaries existing or arising under Swap Contracts, provided that such obligations are (or were) entered into by
such Person for the purpose of (i) directly mitigating risks associated
with liabilities, commitments or assets held or reasonably anticipated by such
Person, or changes in the value of securities issued by such Person in
conjunction with a securities repurchase program not otherwise prohibited
hereunder; or (ii) directly mitigating the dilution associated with the
issuance of convertible securities by Borrower, and in any event not for
purposes of speculation or taking a “market view.”

 

“Person” means any
individual, trustee, corporation, general partnership, limited partnership,
limited liability company, joint stock company, trust, unincorporated
organization, bank, business association, firm, joint venture, Governmental
Authority, or otherwise.

 

“Pledge and Security Agreement” means that
certain Pledge and Security Agreement dated as of the date hereof, in favor of
Administrative Agent (for the account of each Lender in accordance with its Pro
Rata Share) by Borrower and each Guarantor in the form of Exhibit E
hereto.

 

“Post-Closing Letter” means that certain
Post-Closing Letter dated as of the date hereof, executed by Borrower in favor
of Administrative Agent and the First Lien Administrative Agent.

 

“Prepayment Date” has the meaning set forth in Section 2.3(e).

 

“Projections” has the meaning set forth in Section 5.5(b).

 

“Pro Rata Share” means with
respect to a Lender’s obligation to make a Term Loan and receive payments of
principal, interest, fees, costs and expenses with respect thereto, (x) prior
to the making of the Term Loans, the percentage obtained by dividing (i) such
Lender’s Commitment, by (ii) the aggregate amount of all Lenders’
Commitments, and (y) from and after the making of the Term Loans, the
percentage obtained by dividing (i) the principal amount of such Lender’s
Term Loan by (ii) the aggregate principal amount of all Term Loans of all
Lenders.

 

“PT” means Pacific
Time.

 

“Register” has the meanings set forth in Section 10.4(c)

 

“Related Transactions” means the transactions
contemplated by the Merger Documents.

 

24

 

“Rental Variance” means the difference, if positive, of the amount of cash
consolidated operating lease expense over the amount of consolidated operating
lease expense determined in accordance with GAAP as shown on the financial
statements of Borrower required to be delivered pursuant to Section 6.1.

 

“Reportable Event” means any of
the events set forth in Section 4043(b) of ERISA or the regulations
thereunder, a withdrawal from a Multiemployer Plan described in Section 4063
of ERISA, or a cessation of operations described in Section 4062(e) of
ERISA.

 

“Request for Extension of Credit” means, unless
otherwise specified herein, with respect to (a) the initial Borrowing on
the Closing Date a written request for extension of credit in form and
substance satisfactory to the Administrative Agent (which request shall also be
a joint request from the Borrower to the First Lien Administrative Agent), or (b) any
subsequent Conversion or Continuation of Loans, a written request substantially
in the form of Exhibit A duly completed and
signed by a Responsible Officer of Borrower.

 

“Requisite Lenders” means Lenders holding or being responsible for 51% or more of the sum
of all outstanding Term Loans.

 

“Requisite Notice” means, unless
otherwise provided herein, (a) irrevocable written notice to the intended
recipient or (b) irrevocable telephonic notice to the intended recipient,
promptly followed by a written notice to such recipient.  Such notices shall be (i) delivered to
such recipient at the address or telephone number specified on Schedule 10.2 or
as otherwise designated by such recipient by Requisite Notice to Administrative
Agent, and (ii) if made by Borrower, given or made by a Responsible
Officer of Borrower.  Any written notice
delivered in connection with any Loan Document shall be in the form, if any,
prescribed herein or therein.  Any notice
sent by other than hardcopy shall be promptly confirmed by a telephone call to
the recipient and, if requested by Administrative Agent, by a manually-signed
hardcopy thereof.

 

“Requisite Time” means, with
respect to any of the actions listed below, the time and date set forth below
opposite such action:

 

	
  Type of Action

  	
   

  	
  Applicable
  Time

  	
   

  	
  Date of
  Action

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Delivery of Request for
  Extension of Credit, for or notice for:

  	
   

  	
   

  	
   

  	
   

  
	
  ·                  Borrowing or
  prepayment of, or Conversion into, Base Rate Loans

  	
   

  	
  10:00 a.m.
  PT

  	
   

  	
  Same date as such
  Borrowing, prepayment or Conversion

  
	
  ·                  Borrowing,
  prepayment or Continuation of, or Conversion into, Offshore Rate Loans or
  Termination of Commitment

  	
   

  	
  10:00 a.m.
  PT

  	
   

  	
  3 Business Days prior to
  such Borrowing, prepayment Continuation, Conversion or Termination of
  Commitment

  
	
  ·                  Payments by
  Lenders or Borrower to Administrative Agent

  	
   

  	
  10:00 a.m.
  PT

  	
   

  	
  On date payment is due

  

 

“Responsible Officer” means the
chief executive officer, president, the chief financial officer, any vice
president of finance, the treasurer, the assistant treasurer or the corporate
controller of Borrower.  Any document or
certificate hereunder that is signed by a Responsible Officer of Borrower shall
be conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of Borrower and such Responsible
Officer shall be conclusively presumed to have acted on behalf of Borrower.

 

25

 

“Restricted Payment” means:

 

(a)           the declaration or payment of any
dividend or distribution by Borrower or any Subsidiary, either in cash or
property, on any shares of Equity Securities of any class of Borrower or any
Subsidiary; and

 

(b)           any other payment or distribution by
Borrower or any Subsidiary in respect of its Equity Securities, either directly
or indirectly.

 

“Securities” means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as “securities”
or any certificates of interest, shares or participations in temporary or
interim certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.

 

“Securities Laws” means the Securities Act of
1933, the Securities Exchange Act of 1934, Sarbanes-Oxley Act of 2002 and the
applicable accounting and auditing principles, rules, standards and practices
promulgated, approved or incorporated by the Securities and Exchange Commission
or the Public Company Accounting Oversight Board, as each of the foregoing may
be amended and in effect on any applicable date hereunder.

 

“Security Documents” means the
Pledge and Security Agreement and the Intellectual Property Security
Agreements.

 

“Solvent” means, as to
any Person at any time, that (i) the fair value of the property of such
Person is greater than the amount of such Person’s liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(32) of the
Bankruptcy Code; (ii) the present fair saleable value of the property 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; (iii) such Person is able to realize upon its property and pay
its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business; (iv) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature; and (v) 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 unreasonably small capital.

 

“Subordinated Debt” means any
subordinated Indebtedness of Borrower or its Subsidiaries in form and substance
and on terms satisfactory to Requisite Lenders in their sole and absolute
discretion and expressly approved by Requisite Lenders after the date hereof.

 

“Subsidiary” of a Person
means a corporation, partnership, joint venture, limited liability company or
other business entity of which a majority of the shares of securities or other
interests having ordinary voting power for the election of directors or other
governing body (other than securities or interests having such power only by
reason of the happening of a contingency) are at the time beneficially owned or
controlled, directly, or indirectly through one or more 

 

26

 

intermediaries, or both, by
such Person.  Unless otherwise specified,
all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall
refer to a Subsidiary or Subsidiaries of Borrower.

 

“Swap Contract” means (a) any
and all rate swap transactions, basis swaps, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, or any
other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any
such transaction is governed by or subject to any master agreement, and (b) any
and all transactions of any kind, and the related confirmations, which are
subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association, Inc.,
or any other master agreement.

 

“Swap Termination Value” means, in
respect of any one or more Swap Contracts, after taking into account the effect
of any legally enforceable netting agreement relating to such Swap Contracts, (a) for
any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination
value(s), and (b) for any date prior to the date referenced in clause (a) the
amount(s) determined as the mark-to-market value(s) for such Swap
Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts
(which may include any Lender).

 

“Synthetic Lease Obligations” means all
monetary obligations of a Person under (a) a so-called synthetic,
off-balance sheet or tax retention lease, or (b) an agreement for the use
or possession of property creating obligations which do not appear on the
balance sheet of such Person but which, upon the insolvency or bankruptcy of
such Person, would be characterized as secured debt of such Person (without
regard for accounting treatment).

 

“Taxes” has the meaning specified in Section 3.1.

 

“Term Loan” means a term loan made by a Lender to Borrower pursuant to Section 2.1(a).

 

“Terrorism Laws”  means
any of the following (a) Executive Order 13224 issued by the President of
the United States, (b) the Terrorism Sanctions Regulations (Title 31 Part 595
of the U.S. Code of Federal Regulations), (c) the Terrorism List
Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of
Federal Regulations), (d) the Foreign Terrorist Organizations Sanctions
Regulations (Title 31 Part 597 of the U.S. Code of Federal Regulations), (e) the
Patriot Act (as it may be subsequently codified), (f) all other present
and future legal requirements of any Governmental Authority addressing,
relating to, or attempting to eliminate, terrorist acts and acts of war and (g) any
regulations promulgated pursuant thereto or pursuant to any legal requirements
of any Governmental Authority governing terrorist acts or acts of war.

 

27

 

“To the best knowledge of” means, when
modifying a representation, warranty or other statement of any Person, that the
fact or situation described therein is known by such Person (or, (i) in
the case of Borrower, known by any Responsible Officer or executive officer of
Borrower, or, (ii) in the case of any other Person other than a natural
Person, known by any officer of such Person) making the representation,
warranty or other statement, or with the exercise of reasonable due diligence
under the circumstances (in accordance with the standard of what a reasonable
Person in similar circumstances would have done) would have been known by such
Person (or, (i) in the case of Borrower, would have been known by any
Responsible Officer or executive officer of Borrower, or, (ii) in the case
of any other Person other than a natural Person, would have been known by any
executive officer of such Person).

 

“Total Leverage Ratio” means, as of
any date of determination, for Borrower and its Subsidiaries on a consolidated
basis, the ratio of (a) the aggregate amount of Indebtedness as of such
date to (b) Consolidated EBITDA for the period of the four fiscal quarters
ending on, or ending most recently prior to, such date.

 

“Unfunded Pension Liability” means the
excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16)
of ERISA, over the current value of that Pension Plan’s assets, determined in
accordance with the assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.

 

“USA Patriot Act” means United
States Public Law 107-56, the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act
of 2001), as amended from time to time and the rules and regulations
promulgated thereunder from time to time in effect.

 

“Voting Power” shall mean,
with respect to any Person, the exclusive ability to control, through the
ownership of shares of capital stock, partnership interests, membership
interests or otherwise, the election of members of the board of directors or
other similar governing body of such Person. 
The holding of a designated percentage of Voting Power of a Person means
the ownership of shares of capital stock, partnership interests, membership
interests or other interests of such Person sufficient to control exclusively
the election of that percentage of the members of the board of directors or
similar governing body of such Person.

 

“Westfield
Receivable” means certain receivables
of Borrower related to the pending sale to Westfield Corporation of the wireless
network built, owned and operated by Borrower in various Westfield Shopping
Malls throughout the U.S.

 

1.2          USE OF CERTAIN TERMS

 

(a)           All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto or thereto, unless otherwise defined therein.

 

(b)           As used herein, unless the context
requires otherwise, the masculine, feminine and neuter genders and the singular
and plural include one another.

 

28

 

(c)           The words “herein” and “hereunder”
and words of similar import when used in any Loan Document shall refer to the
Loan Documents as a whole and not to any particular provision thereof.  The term “including” is by way of example and
not limitation.  References herein to a
Section, subsection or clause shall, unless the context otherwise requires,
refer to the appropriate Section, subsection or clause in this Agreement.

 

(d)           The term “or” is disjunctive; the
term “and” is conjunctive.  The term “shall”
is mandatory; the term “may” is permissive.

 

1.3          ACCOUNTING TERMS.  Except as otherwise expressly provided herein, all
accounting terms not defined in this Agreement shall be construed in conformity
with GAAP.  If at any time any change in
GAAP would affect the computation of any financial ratio or requirement set
forth in any Loan Document, and Borrower, Administrative Agent or any Lender
shall so request, Borrower and Administrative Agent shall negotiate in good
faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of Requisite
Lenders), provided that, until so amended, such
ratio or requirement shall continue to be computed in accordance with GAAP
prior to such change therein and Borrower shall provide to Administrative Agent
and Lenders reconciliation statements requested by Administrative Agent
(reconciling the computations of such financial ratios and requirements from
the then-current GAAP computations to the computations under GAAP prior to such
change) in connection therewith. 
Financial statements and other information required to be delivered by
Borrower to Lenders pursuant to Section 6.1 shall be prepared in
accordance with GAAP as in effect at the time of such preparation (and
delivered together with the reconciliation statements provided for in Section 6.1(d),
if applicable).  Subject to the
foregoing, calculations in connection with the definitions, covenants and other
provisions hereof shall utilize accounting principles and policies in
conformity with those used to prepare the Historical Financial Statements.

 

1.4          ROUNDING.  Any financial ratios required to be maintained by Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than
the number of places by which such ratio is expressed in this Agreement and
rounding the result up or down to the nearest number (with a round-up if there
is no nearest number), to the number of places by which such ratio is expressed
in this Agreement.

 

1.5          EXHIBITS AND SCHEDULES.  All exhibits and schedules to this Agreement, either as
originally existing or as the same may from time to time be supplemented,
modified or amended with the consent of Requisite Lenders, are incorporated
herein by this reference.

 

1.6          REFERENCES TO AGREEMENTS AND
LAWS.  Unless otherwise expressly
provided herein, (a) references to agreements (including the Loan
Documents) and other contractual instruments shall include all amendments,
restatements, extensions, supplements and other modifications thereto (unless
prohibited by any Loan Document), and (b) references to any Law shall
include all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting such Law.

 

29

 

SECTION II.

THE COMMITMENTS AND EXTENSIONS OF CREDIT

 

2.1          LOANS; MAXIMUM AMOUNTS.

 

(a)           Term Loan.  Subject to the terms and conditions set forth
in this Agreement, each Lender severally agrees to make a loan to the Borrower
in Dollars on the Closing Date in an amount equal to such Lender’s Pro Rata
Share of the Commitment.  The Commitment
shall expire concurrently with the making of the Term Loans on the Closing
Date.  Once prepaid or repaid, the Term
Loans may not be reborrowed.  The Term
Loans shall be repaid in accordance with Section 2.3 and Section 2.4.

 

(b)           Notes.  Loans made by each Lender shall
be, at the request of such Lender, evidenced by one or more Notes.  The date, amount and maturity of each Lender’s
Loans and payments and other particulars with respect thereto may be endorsed
on schedule(s) attached to its Note by each Lender and/or recorded on one
or more loan accounts or records maintained by such Lender in the ordinary
course of business.  Such Notes, loan
accounts and records shall be conclusive absent manifest error of the amount of
such Loans and payments thereon.  Any
failure to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of Borrower to pay any amount owing with
respect to the Loans.

 

2.2          BORROWINGS, CONVERSIONS AND
CONTINUATIONS OF LOANS.

 

(a)           Borrower may irrevocably request (i) the
Borrowing of the Term Loans on the Closing Date by delivering the initial
Request for Extension of Credit in form and substance satisfactory to the
Administrative Agent (which request shall also be a joint request from the
Borrower to the First Lien Administrative Agent) and (ii) a Continuation or
Conversion of any Loan by delivering a Request for Extension of Credit, in each
case, in a Minimum Amount therefor by Requisite Notice to Administrative Agent
not later than the Requisite Time therefor. 
All Borrowings, Conversions and Continuations of Loans shall constitute
Base Rate Loans unless properly and timely otherwise designated in the initial
Request for Extension of Credit or any subsequent Request for Extension of
Credit.

 

(b)           Following receipt of a Request for
Extension of Credit, Administrative Agent shall promptly notify each applicable
Lender of its Pro Rata Share thereof by Requisite Notice.  In the case of a Borrowing of Loans, each
applicable Lender shall make the funds for its Loan available to Administrative
Agent at Administrative Agent’s Office not later than the Requisite Time
therefor on the Business Day specified in such Request for Extension of
Credit.  Upon satisfaction of the
conditions set forth in Section 4.1, all funds so received shall be made
available to Borrower in Dollars. 
Administrative Agent shall promptly notify Borrower and Lenders of the
interest rate applicable to any Loan other than a Base Rate Loan upon
determination of same.

 

(c)           Except as otherwise provided herein,
an Offshore Rate Loan may be Continued or Converted only as of the last day of
the Interest Period for such Offshore Rate Loan.  During the existence of a Default or Event of
Default, no Loans may be requested as, Converted into or Continued as Offshore
Rate Loans without the consent of Requisite Lenders, and Requisite 

 

30

 

Lenders
may demand that any or all of the then outstanding Offshore Rate Loans be
Converted immediately into Base Rate Loans.

 

(d)           The failure of any Lender to make any
Loan on any date shall not relieve any other Lender of any obligation to make a
Loan on such date, but no Lender shall be responsible for the failure of any
other Lender to so make its Loan.

 

2.3          PREPAYMENTS.

 

(a)           Voluntary Prepayments.

 

(i)            Term Loans. 
Subject to the terms of the Intercreditor Agreement, upon Requisite
Notice to Administrative Agent not later than the Requisite Time therefor,
Borrower may at any time and from time to time voluntarily prepay Term Loans in
part in the Minimum Amount therefor or in full.  Administrative Agent will promptly notify each
Lender of such voluntary prepayment and of such Lender’s Pro Rata Share of such
prepayment.  Any prepayment of a Term
Loan shall be accompanied by all accrued interest thereon and, in the case of
any Term Loan that is an Offshore Rate Loan, the amounts set forth in Section 3.5.

 

(ii)           Application of Voluntary Prepayments.  Any voluntary prepayment of any Term Loan
pursuant to Section 2.3(a)(i) shall be applied to repay outstanding
Term Loans on a pro rata basis (in accordance with the respective outstanding
principal amounts thereof) and shall be further applied on a pro rata basis to
reduce the remaining scheduled installments of principal of the Term Loans.

 

(b)           Mandatory Prepayments.

 

(i)            Asset Sales. 
No later than the first Business Day following the date of receipt by
Borrower or any of its Subsidiaries of any Net Asset Sale Proceeds, Borrower
shall (to the extent not otherwise required to be actually applied to the
prepayment of the First Lien Obligations, and subject to the Intercreditor
Agreement) prepay Loans as set forth in Section 2.3(c) or 2.3(e), as
applicable, in an aggregate amount equal to such Net Asset Sale Proceeds.

 

(ii)           Insurance/Condemnation Proceeds.  No later than the first Business Day following
the date of receipt by Borrower or any of its Subsidiaries, or Administrative
Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower shall
(to the extent not otherwise required to be actually applied to the prepayment
of the First Lien Obligations, and subject to the Intercreditor Agreement)
prepay Loans as set forth in Section 2.3(c) or 2.3(e), as applicable,
in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, (i) so long as no Default or Event of Default
shall have occurred and be continuing, and (ii) to the extent that
aggregate Net Insurance/Condemnation Proceeds from the Closing Date through the
applicable date of determination do not exceed $7,500,000,  Borrower shall have the option, directly or
through one or more of its Subsidiaries to invest such Net
Insurance/Condemnation Proceeds within one hundred eighty (180) days of receipt
thereof in long term productive 

 

31

 

assets
of the general type used in the business of Borrower and its Subsidiaries,
which investment may include the repair, restoration or replacement of the
applicable assets thereof.

 

(iii)          Issuance of Equity Securities.  On the date of receipt by Borrower or any of
its Subsidiaries of any Net Cash Equity Proceeds which, when combined with any
other Net Cash Equity Proceeds received by Borrower or any of its Subsidiaries
since the Closing Date, total  in excess of
$50,000,000, Borrower shall (to the extent not otherwise required to be
actually applied to the prepayment of the First Lien Obligations, and subject
to the Intercreditor Agreement) prepay the Loans as set forth in Section 2.3(c) or
2.3(e), as applicable, in an aggregate amount equal to one hundred percent
(100%) of such Net Cash Equity Proceeds in excess of $50,000,000; provided, however, that in the event any Net Cash Equity
Proceeds received by Borrower or any of its Subsidiaries which, when combined
with all other Net Cash Equity Proceeds received by Borrower or any of its
Subsidiaries since the Closing Date do not total  in
excess of $50,000,000, are not used in the manner described in the second
proviso of Section 7.5(e) hereof within 90 days of such receipt,
Borrower shall (to the extent not otherwise required to be actually applied to
the prepayment of the First Lien Obligations, and subject to the Intercreditor
Agreement) prepay the Loans as set forth in Section 2.3(c) or 2.3(e),
as applicable, in an aggregate amount equal to one hundred percent (100%) of
such Net Cash Equity Proceeds.

 

(iv)          Issuance of Debt.  On the date of receipt by Borrower or any of
its Subsidiaries of any cash proceeds from the incurrence of any Indebtedness
of Borrower or any of its Subsidiaries (other than with respect to any
Indebtedness permitted to be incurred pursuant to Section 7.1), Borrower
shall (to the extent not otherwise required to be actually applied to the
prepayment of the First Lien Obligations, and subject to the Intercreditor
Agreement) prepay the Loans as set forth in Section 2.3(c) or 2.3(e),
as applicable, in an aggregate amount equal to one hundred percent (100%) of
such proceeds, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including reasonable legal
fees and expenses.

 

(v)           Consolidated Excess Cash Flow.  In the event that there shall be Consolidated
Excess Cash Flow for any fiscal year (commencing with Fiscal Year 2008),
Borrower shall (to the extent not otherwise required to be actually applied to
the prepayment of the First Lien Obligations, and subject to the Intercreditor
Agreement), no later than ninety (90) days after the end of such fiscal year,
prepay the Loans as set forth in Section 2.3(c) or 2.3(e), as
applicable, in an aggregate amount equal to seventy-five percent (75%) of such
Consolidated Excess Cash Flow.

 

(vi)          Extraordinary Receipts.  No later than the first Business Day
following the date of receipt by Borrower or any of its Subsidiaries of any
Extraordinary Receipts, Borrower shall (to the extent not otherwise required to
be actually applied to the prepayment of the First Lien Obligations, and
subject to the Intercreditor Agreement) prepay the Loans as set forth in Section 2.3(c) or
2.3(e), as applicable, in an aggregate amount equal to such Extraordinary
Receipts.

 

32

 

(vii)         New Term Loans.   On the date of receipt by Borrower of the
proceeds of the New Term Loans (as defined in the First Lien Credit Agreement)
Borrower shall apply one hundred percent (100%) 
of such proceeds to prepay the Loans as set forth in Section 2.3(c).

 

(viii)        Prepayment Certificate. 
Concurrently with any mandatory prepayment of the Loans pursuant to
Sections 2.3(b)(i)-(vi), Borrower shall deliver to Administrative Agent a certificate
of a Responsible Officer demonstrating the calculation of the amount of the
applicable net proceeds or other applicable financial tests or proceeds giving
rise to the prepayment, as the case may be. 
In the event that Borrower shall subsequently determine that the actual
amount received exceeded the amount set forth in such certificate, Borrower
shall promptly make an additional prepayment of the Loans in an amount equal to
such excess, and Borrower shall concurrently therewith deliver to Administrative
Agent a certificate of a Responsible Officer demonstrating the derivation of
such excess.

 

(c)           Application of Mandatory
Prepayments.  Subject to Section 2.4(e) below,
any mandatory prepayment of any Loan pursuant to Section 2.3(b) shall,
subject to the terms of the Intercreditor Agreement, be applied to prepay Term
Loans on a pro rata basis (in accordance with the respective outstanding
principal amounts thereof) and shall be further applied in inverse order of
maturity to reduce the remaining scheduled installments of principal of the
Term Loans.

 

(d)           [Intentionally Omitted.]

 

(e)           Waiver of Certain
Prepayments.  Anything
contained herein to the contrary notwithstanding and excluding any mandatory
prepayment made pursuant to Section 2.3(b)(vii), in the event Borrower is
required to make any mandatory prepayment of the Term Loans, not less than five
(5) Business Days prior to the date (the “Prepayment
Date”) on which Borrower is required to make such mandatory
prepayment, Borrower shall notify Administrative Agent of the amount of such
prepayment (or, if shorter, promptly upon Borrower’s becoming aware of any
event requiring such mandatory prepayment), and Administrative Agent will
promptly thereafter notify each Lender of the amount of such Lender’s Pro Rata
Share of such mandatory prepayment and such Lender’s option to refuse such
amount.  Each such Lender may exercise
such option by giving written notice to Borrower and Administrative Agent of
its election to do so on or before the first Business Day prior to the
Prepayment Date (it being understood that any Lender which does not notify
Borrower and Administrative Agent of its election to exercise such option on or
before the first Business Day prior to the Prepayment Date shall be deemed to
have elected, as of such date, not to exercise such option to decline
payments).  On the Prepayment Date,
Borrower shall pay to Administrative Agent the amount of the mandatory
prepayment, which amount shall be applied in an amount equal to that portion of
the mandatory prepayment payable to those Lenders that have elected not to
exercise such option, to prepay the Term Loans of such Lenders (which
prepayment shall be applied to the scheduled installments of principal of the
Term Loans in accordance with Section 2.3(c)).

 

33

 

2.4          PRINCIPAL AND INTEREST.

 

(a)           Except as otherwise provided
hereunder, if not sooner paid, Borrower agrees to pay the outstanding principal
amount of each Term Loan on the Maturity Date.

 

(b)           The principal amounts of the Term
Loans shall be repaid in consecutive quarterly installments in the aggregate
amounts set forth below on the last day of each fiscal quarter, commencing March 31,
2008:

 

	
  Fiscal Quarter Ending

  	
   

  	
  Term Loan

  Installments

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  December 31, 2012

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  March 31, 2013

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  Maturity Date

  	
   

  	
  $

  	
  9,475,000

  	
   

  

 

Notwithstanding the foregoing, (x) such
installments shall be reduced in connection with any voluntary or mandatory
prepayments of the Term Loans, as the case may be, in accordance with Sections
2.3(a)(ii) and 2.3(c), as applicable.

 

(c)           Subject to subsection (d) below, and unless otherwise
specified herein, Borrower shall pay interest on the unpaid principal amount of
each Loan (before and after default, before and after maturity, before and
after judgment, and before and after the commencement of any 

 

34

 

proceeding under any Debtor Relief Laws) from the
date borrowed until paid in full (whether by acceleration or otherwise) on each
Applicable Payment Date at a rate per annum equal to the interest rate
determined in accordance with the definition of such type of Loan, plus the Applicable Margin specified in the definition in
this Agreement of Applicable Margin with respect to such type of Loan.

 

(d)           Notwithstanding subsection (c) of this Section, upon
the occurrence and during the continuance of an Event of Default, the principal
amount of all Loans outstanding and, to the extent permitted by applicable law,
any interest payments on the Loans or any fees or other amounts owed hereunder,
shall thereafter bear interest (including post petition interest in any
proceeding under the Bankruptcy Code or other applicable bankruptcy laws,
whether or not allowed in such a proceeding) payable on demand at the Default
Rate.  Payment or acceptance of the
increased rates of interest provided for in this section is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of
Administrative Agent or any Lender.

 

2.5          FEES.  Borrower shall pay to Administrative Agent,
Arranger and Lenders all fees and other amounts specified in the Facilities
Letter and the Fee Letter in the amounts and at the times specified
therein.  All fees payable under the
Facilities Letter and the Fee Letter are solely for the account of
Administrative Agent, Arranger and/or the Lenders, as applicable, and are
nonrefundable.

 

2.6          COMPUTATION OF
INTEREST AND FEES.  Computation of interest on
Base Rate Loans when the Base Rate is determined by KeyBank’s “prime rate”
shall be calculated on the basis of a year of 365 or 366 days, as the case may
be, and the actual number of days elapsed. 
Computation of other types of interest and all fees shall be calculated
on the basis of a year of 360 days and the actual number of days elapsed, which
results in a higher yield to Lenders than a method based on a year of 365 or
366 days.  Interest shall accrue on each
Loan for the day on which the Loan is made, and shall not accrue on a Loan, or
any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on
which it is made shall bear interest for one day.

 

2.7          MAKING PAYMENTS.  Except as otherwise
provided herein, all payments by Borrower or any Lender hereunder shall be made
to Administrative Agent at Administrative Agent’s Office not later than the
Requisite Time for such type of payment. 
All payments received after such Requisite Time shall be deemed received
on the next succeeding Business Day.  All
payments shall be made in immediately available funds in lawful money of the
United States of America.  All payments
by Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff.

 

(a)           Upon satisfaction of any applicable
terms and conditions set forth herein, Administrative Agent shall promptly pay
amounts received in accordance with the prior subsection available in like
funds as received, as follows:  (i) if payable to Borrower, by
crediting such account as Borrower may designate in writing to Administrative
Agent from time to time, and (ii) if payable to any Lender, by wire
transfer to such Lender at its Lending Office. 
In the case of amounts held by Administrative Agent that are payable to
Borrower, if any applicable terms and conditions are not so satisfied,
Administrative Agent shall return any funds it is 

 

35

 

holding
that would otherwise be payable to Borrower to the Lenders making such funds
available, without interest.

 

(b)           Subject to the definition of “Interest
Period,” if any payment to be made by Borrower shall come due on a day other than
a Business Day, payment shall instead be considered due on the next succeeding
Business Day, and such extension of time shall be reflected in computing
interest and fees.

 

(c)           Unless Borrower or any Lender has
notified Administrative Agent prior to the date any payment to be made by it is
due, that it does not intend to remit such payment, Administrative Agent may,
in its sole and absolute discretion, assume that Borrower or Lender, as the
case may be, has timely remitted such payment and may, in its sole and absolute
discretion and in reliance thereon, make available such payment to the Person
entitled thereto.  If such payment was
not in fact remitted to Administrative Agent in immediately available funds,
then:

 

(i)            if
Borrower failed to make such payment, each Lender shall forthwith on demand
repay to Administrative Agent the amount of such assumed payment made available
to such Lender, together with interest thereon in respect of each day from and
including the date such amount was made available by Administrative Agent to
such Lender to the date such amount is repaid to Administrative Agent at the
Federal Funds Rate; and

 

(ii)           if any Lender failed to make such payment, Administrative
Agent shall be entitled to recover such corresponding amount on demand from
such Lender.  If such Lender does not pay
such corresponding amount forthwith upon Administrative Agent’s demand
therefor, Administrative Agent promptly shall notify Borrower, and Borrower
shall pay such corresponding amount to Administrative Agent.  Administrative Agent also shall be entitled
to recover from such Lender interest on such corresponding amount in respect of
each day from the date such corresponding amount was made available by
Administrative Agent to Borrower to the date such corresponding amount is
recovered by Administrative Agent, (A) from such Lender at a rate per
annum equal to the daily Federal Funds Rate, and (B) from Borrower, at a
rate per annum equal to the interest rate applicable to such Borrowing.  Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its Commitment or to prejudice any rights
which Administrative Agent or Borrower may have against any Lender as a result
of any default by such Lender hereunder.

 

(d)           If Administrative Agent or any Lender
is required at any time to return to Borrower, or to a trustee, receiver,
liquidator, custodian, or any official under any proceeding under Debtor Relief
Laws, any portion of a payments made by Borrower, each Lender shall, on demand
of Administrative Agent, return its share of the amount to be returned, plus
interest thereon from the date of such demand to the date such payment is made
at a rate per annum equal to the daily Federal Funds Rate.

 

2.8          FUNDING SOURCES.  Nothing in this Agreement
shall be deemed to obligate any Lender to obtain the funds for any Loan in any
particular place or manner or to constitute a 

 

36

 

representation by any Lender
that it has obtained or will obtain the funds for any Loan in any particular
place or manner.

 

2.9          COLLATERAL.  Borrower’s Obligations are
secured by or will be secured by the Security Documents.

 

2.10        INCREMENTAL TRIGGER DATE.  Upon receipt of notice from the First Lien
Administrative Agent that the Incremental Trigger Date (as defined in the First
Lien Credit Agreement) has occurred, each Lender shall promptly execute an
Acceptance Letter (as defined in the First Lien Credit Agreement), whereupon
such Lender shall become a lender under the First Lien Credit Agreement with a
commitment to fund a new term loan tranche under the First Lien Credit
Agreement (but in no event greater than $10,000,000) equal to its Pro Rata
Share of the principal amount of the Loans.

 

SECTION III.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.1          TAXES.

 

(a)         Any and all
payments by Borrower to or for the account of Administrative Agent or any
Lender under any Loan Document shall be made free and clear of and without
deduction for any and all present or future taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges (including, but
not limited to, estimated taxes), and all liabilities with respect thereto,
excluding, in the case of Administrative Agent and each Lender, (i) taxes
imposed on or measured by its net income, (ii) franchise taxes imposed on
it (in lieu of net income taxes) by the jurisdiction (or any political
subdivision thereof) under the Laws of which Administrative Agent or such
Lender, as the case may be, is organized or maintains a lending office; (iii) any
branch profits tax imposed by the United States of America or any similar tax
imposed by another jurisdiction in which Borrower is located; (iv) applicable
withholding tax imposed by Sections 1441 and 1442 of the Code that is withheld by
Administrative Agent from a payment to any Foreign Lender (as defined in Section 10.22
of this Agreement) pursuant to Section 10.22; and (v) any penalties,
interest, costs and expenses (including Attorney Costs) imposed on
Administrative Agent or any Lender arising from a determination by any
Governmental Authority that Administrative Agent did not properly withhold any
tax or other amount from payments made in respect of any Foreign Lender (all
such non-excluded taxes, duties, levies, imposts, deductions, assessments,
fees, withholdings or similar charges, and liabilities being hereinafter
referred to as “Taxes”).  If Borrower shall be required by any Laws to
deduct any Taxes from or in respect of any sum payable under any Loan Document
to Administrative Agent or any Lender (other than as a result of a breach by a
Foreign Lender of its obligations under Section 10.22 of this Agreement), (A) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), Administrative Agent and such Lender receives an amount equal to
the sum it would have received had no such deductions been made, (B) Borrower
shall make such deductions, (C) Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable Laws, and (D) within 30 days after the date of such
payment, Borrower shall furnish to Administrative Agent (who shall forward the
same to such Lender) the original or a certified copy of a receipt evidencing
payment thereof.

 

37

 

(b)        In addition,
Borrower agrees to pay any and all present or future stamp, recording, filing,
transfer, court or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as “Other Taxes”).

 

(c)         If Borrower
shall be required by the Laws of any jurisdiction outside the United States to
deduct any Taxes from or in respect of any sum payable under any Loan Document
to Administrative Agent or any Lender, Borrower shall also pay to such Lender
or Administrative Agent (for the account of such Lender), at the time interest
is paid, such additional amount that the respective Administrative Agent or
such Lender specifies as necessary to preserve the after tax yield (after
factoring in United States (federal and state) taxes imposed on or measured by
net income) such Lender would have received if such deductions (including
deductions applicable to additional sums payable under this Section) had not
been made.

 

(d)        Borrower
agrees to indemnify, defend and hold Administrative Agent and each Lender
harmless for (i) the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section) paid by Administrative Agent and such Lender; and (ii) any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto; provided
that (A) Borrower shall not be obligated to indemnify the Administrative
Agent or any Lender for any penalties described in clause (ii) above to
the extent the Administrative Agent or such Lender, as applicable, (1) had
actual knowledge of the existence of the tax, interest, or expense, the
non-payment of which gave rise to such penalties, and (2) failed to give
Borrower notice of such tax, interest or expense within ten (10) Business
Days after the Administrative Agent or such Lender received actual knowledge of
the existence thereof; and (B) except to the extent contemplated in clause
(A) of this Section 3.1(d), nothing contained in this subsection (d) shall
be deemed to imply any obligation on the part of the Administrative Agent or
any Lender to provide Borrower with the notice of any such tax, penalty,
interest or expense.  Payment under this
subsection (d) shall be made within 30 days after the date the Lender or
the Administrative Agent makes a demand therefor.

 

3.2          ILLEGALITY.

 

If any Lender determines that any Laws have made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Offshore Rate Loans, or materially restricts the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the applicable offshore
Dollar market, or to determine or charge interest rates based upon the Offshore
Rate, then, on notice thereof by Lender to Borrower through Administrative
Agent, any obligation of such Lender to make Offshore Rate Loans shall be
suspended until such Lender notifies Administrative Agent and Borrower that the
circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, Borrower shall,
upon demand from such Lender (with a copy to Administrative Agent), prepay or
Convert all Offshore Rate Loans of such Lender, either on the last day of the
Interest Period thereof, if such Lender may lawfully continue to maintain such
Offshore Rate Loans to such day, or immediately, if Lender may not lawfully
continue to maintain such Offshore Rate Loans. 
Each Lender agrees to designate a different Lending Office if such 

 

38

 

designation will avoid the
need for such notice and will not, in the good faith judgment of such Lender,
otherwise be materially disadvantageous to such Lender.

 

3.3          INABILITY
TO DETERMINE RATES.

 

If, in connection with any Request for Extension of
Credit involving any Offshore Rate Loan, Administrative Agent determines that (a) Dollar
deposits are not being offered to banks in the applicable offshore dollar
market for the applicable amount and Interest Period of the requested Offshore
Rate Loan, (b) adequate and reasonable means do not exist for determining
the underlying interest rate for such Offshore Rate Loan, or (c) such
underlying interest rate does not adequately and fairly reflect the cost to
Lender of funding such Offshore Rate Loan, Administrative Agent will promptly
notify Borrower and all Lenders. 
Thereafter, the obligation of all Lenders to make or maintain such
Offshore Rate Loan shall be suspended until Administrative Agent revokes such
notice.  Upon receipt of such notice,
Borrower may revoke any pending request for a Borrowing of Offshore Rate Loans
or, failing that, be deemed to have converted such request into a request for a
Borrowing of Base Rate Loans in the amount specified therein.

 

3.4          INCREASED COST AND REDUCED RETURN;
CAPITAL ADEQUACY.

 

(a)                                  If any Lender determines that any Laws announced after the
date hereof

 

(i)            impose
on such Lender any Tax, duty, or other charge with respect to any Offshore Rate
Loans or its obligation to make Offshore Rate Loans (other than as a result of
any change in the rate of applicable taxes imposed on or measured by the net
income of Administrative Agent or any Lender);

 

(ii)           change the basis on which Taxes are imposed on any amounts
payable to such Lender under this Agreement in respect of any Offshore Rate
Loans;

 

(iii)          impose or modify any reserve, special deposit, or similar
requirement (other than the reserve requirement utilized in the determination
of the Offshore Rate) relating to any extensions of credit or other assets of,
or any deposits with or other liabilities or commitments of, such Lender
(including its Commitment); or

 

(iv)          impose on such Lender or on the offshore Dollar interbank
market any other condition affecting this Agreement or any of such extensions
of credit or liabilities or commitments;

 

and the result of any of the
foregoing is to increase the cost to such Lender of making, Converting into,
Continuing, or maintaining any Offshore Rate Loans or to reduce any sum
received or receivable by such Lender under this Agreement with respect to any
Offshore Rate Loans, then from time to time upon demand of such Lender (with a
copy of such demand to Administrative Agent), Borrower shall pay to such Lender
such additional amounts as will compensate such Lender for such increased cost
or reduction (except to the extent that such increased cost or reduction is an
amount subject to Section 3.1, in which case the sum received or
receivable by such Lender shall be increased in accordance with the provisions
of Section 3.1).

 

39

 

(b)           If any Lender determines that any
change in or the interpretation of any Laws announced after the date hereof
have the effect of reducing the rate of return on the capital of such Lender or
compliance by such Lender (or its Lending Office) or any corporation
controlling such Lender as a consequence of such Lender’s obligations hereunder
(taking into consideration its policies with respect to capital adequacy and
such Lender’s desired return on capital), then from time to time upon demand of
such Lender (with a copy of such demand to Administrative Agent), Borrower
shall pay to such Lender such additional amounts as will compensate such Lender
for such reduction; provided, however,
that Borrower shall not be required to pay additional amounts to compensate any
Lender for (i) any applicable withholding tax imposed by Sections 1441 and
1442 of the Code that is withheld by Administrative Agent from a payment to any
Foreign Lender pursuant to Section 10.22, (ii) any reduction in
connection with any penalties, interest, costs and expenses (including Attorney
Costs) arising from a determination by any Governmental Authority that
Administrative Agent did not properly withhold any tax or other amount from
payments made in respect of any Foreign Lender; or (iii) any change in the
rate of applicable taxes imposed on or measured by net income.

 

3.5          BREAKFUNDING
COSTS.

 

Upon demand of any Lender (with a copy to
Administrative Agent) from time to time, Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

 

(a)           any Continuation, Conversion, payment
or prepayment of any Loan other than a Base Rate Loan on a day other than the
last day of the Interest Period for such Loan (whether voluntary, mandatory,
automatic, by reason of acceleration, or otherwise); or

 

(b)           any failure by Borrower (for a reason
other than the failure of such Lender to make a Loan) to prepay, borrow,
Continue or Convert any Loan other than a Base Rate Loan on the date or in the
amount notified by Borrower;

 

including any loss of
anticipated profits and any loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain such Loan or from fees payable
to terminate the deposits from which such funds were obtained.  Borrower shall also pay any customary
administrative fees charged by such Lender in connection with the foregoing.

 

3.6          MATTERS APPLICABLE TO ALL REQUESTS FOR
COMPENSATION.

 

(a)           The Administrative Agent or any
Lender claiming compensation under this Section 3 shall deliver to
Borrower a certificate setting forth in reasonable detail the additional amount
or amounts to be paid to it hereunder, which shall be conclusive in the absence
of clearly demonstrable error.  In determining
such amount, Lenders may use any reasonable averaging and attribution
methods.  For purposes of this Section 3,
a Lender shall be deemed to have funded each Offshore Rate Loan at the Offshore
Rate for such Loan by a matching deposit or other borrowing in the offshore
Dollar interbank market, whether or not such Offshore Rate Loan was in fact so
funded.

 

(b)           Borrower shall not be obligated to pay any amount under
this Section 3 which arose prior to the date which is 180 days preceding
the date of such demand or is attributable to

 

40

 

periods
prior to the date which is 180 days preceding the date of such demand; provided, however, that in the event any
Law is enacted that retroactively imposes any cost or charge upon the
Administrative Agent or any Lender that would otherwise be a basis for
compensation under Sections 3.1 through 3.5, the Administrative Agent or such
Lender may make a demand for such compensation through and including the date
which is 180 days after the date upon which such Law takes effect.

 

(c)           Upon any Lender making a claim for
compensation under Section 3.1 or 3.4, Borrower may remove and replace
such Lender in accordance with Section 10.23 hereof.

 

3.7          SURVIVAL.

 

All of Borrower’s obligations under this Section 3
shall survive for a period of one (1) year after the later of termination
of the Commitments, and payment in full of all Obligations; provided, however, that the obligation of
Borrower to make any payment under this Section 3 is contingent upon the
receipt by Borrower of the certificate described in Section 3.6(a) within
the later of (a) 180 days after the later of the repayment of all Loans
and the termination of the Commitment, or (b) in the case of any Law
retroactively imposing any cost or charge upon the Administrative Agent or any
Lender, 180 days after the date upon which such Law takes effect.

 

SECTION IV.

CONDITIONS PRECEDENT TO EXTENSION OF CREDIT

 

4.1          CONDITIONS
OF EXTENSION OF CREDIT.

 

The obligation of each Lender to make the Term Loans
hereunder is subject to satisfaction (or waiver by Administrative Agent) of the
following conditions precedent:

 

(a)           Loan Documents and Other
Closing Deliverables.  Unless
waived by Administrative Agent and Lenders, Administrative Agent’s receipt of
the following, each of which shall be originals unless otherwise specified or
agreed to by Administrative Agent, each properly executed by a Responsible
Officer of the applicable Credit Party, each dated on, or in the case of third
party certificates, recently before the Closing Date and each in form and
substance satisfactory to Administrative Agent, Lenders and their legal
counsel:

 

(i)            executed
counterparts of this Agreement, sufficient in number for distribution to
Administrative Agent, Lenders and Borrower;

 

(ii)           the Notes executed by Borrower in favor of each Lender,
each in a principal amount equal to such Lender’s Commitment;

 

(iii)          the Multi-Party Guaranty;

 

(iv)          the Pledge and Security Agreement, together with such
certificates, stock powers, registrations and other supporting documents as
Administrative Agent shall reasonably require;

 

(v)           the
Intellectual Property Security Agreements;

 

41

 

(vi)          executed counterparts of the Intercreditor Agreement;

 

(vii)         the First Lien Loan Documents;

 

(viii)        such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of Borrower as
Administrative Agent may require to establish the identities of and verify the
authority and capacity of each Responsible Officer thereof authorized to act as
a Responsible Officer thereof;

 

(ix)           sufficient copies of each Organization Document of each
Credit Party, as applicable, and, to the extent applicable, certified as of a
recent date by the appropriate governmental official, for each Lender, each
dated the Closing Date or a recent date prior thereto;

 

(x)            resolutions
of the Board of Directors or similar governing body of each Credit Party
approving and authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents and the Merger Documents to which it is
a party or by which it or its assets may be bound as of the Closing Date,
certified as of the Closing Date by its secretary or an assistant secretary as
being in full force and effect without modification or amendment;

 

(xi)           a good standing certificate from the applicable
Governmental Authority of each Credit Party’s jurisdiction of incorporation,
organization or formation and in each jurisdiction in which it is qualified as
a foreign corporation or other entity to do business, each dated a recent date
prior to the Closing Date;

 

(xii)          a certificate signed by a Responsible Officer of Borrower (A) that
the representations and warranties made by Borrower herein are true and correct
on and as of the Closing Date (except to the extent such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date), (B) that Borrower is in
compliance with all the terms and provisions of the Loan Documents to which it
is a party, and no Default or Event of Default shall have occurred and be
continuing or would result from the consummation of the borrowing contemplated
hereby, and (C) that there has been no event or circumstance since the
date of the Audited Financial Statements which could reasonably be expected to
have a Material Adverse Effect;

 

(xiii)         opinions of counsel to Borrower in substantially the form of
Exhibit G and otherwise in form and substance reasonably satisfactory to
Administrative Agent;

 

(xiv)        such reliance letters as Administrative Agent shall request
providing for the right of the Administrative Agent and the Lenders to rely on
any legal opinions, solvency opinions or fairness opinions delivered to
Borrower or any of its Subsidiaries in connection with the Related
Transactions, in each case addressed to the Administrative Agent and Lenders;
and

 

(xv)         such other assurances, certificates, documents, consents or
opinions as Administrative Agent or Requisite Lenders reasonably may require.

 

42

 

(b)           Fees
and Expenses.  Any fees and expenses required to be paid by
Borrower or any of its Subsidiaries to Administrative Agent, Arranger or any
Lender on or before the Closing Date pursuant to the Facilities Letter, the Fee
Letter, any Loan Document or otherwise shall have been paid.

 

(c)           Attorney Costs.  Unless waived by Administrative Agent,
Borrower shall have paid all Attorney Costs of Administrative Agent to the
extent invoiced prior to or on the Closing Date, plus such additional amounts
of Attorney Costs as shall constitute its reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude final
settling of accounts between Borrower and Administrative Agent).

 

(d)           Litigation.  Administrative Agent and its counsel shall
have been provided sufficient information concerning any and all outstanding
litigation involving Borrower or its Subsidiaries and shall be satisfied with
the same, in its sole and absolute discretion.

 

(e)           Related Transactions.  Administrative Agent shall have received:

 

(i)            evidence,
reasonably satisfactory to Administrative Agent, that the Borrower has
completed, or concurrently with the initial credit extension hereunder will
complete, the Related Transactions in accordance with the terms of the Merger
Documents (without any amendment thereto or waiver thereunder unless consented
to by Administrative Agent). 
Administrative Agent shall have received a copy of the Merger Documents
and all instruments, documents and agreements related thereto, certified in
certificate of a Responsible Officer of Borrower, dated the Closing Date, as
correct and complete; and

 

(ii)           evidence reasonably satisfactory to it that since December 31,
2006, there shall have been no Material Adverse Change with respect to Borrower
and its Subsidiaries or Haverstick and its Subsidiaries.

 

(f)            Existing Indebtedness.  On the Closing Date, Borrower and its Subsidiaries
shall have (i) repaid in full all Existing Indebtedness, (ii) terminated
any commitments to lend or make other extensions of credit thereunder, (iii) delivered
to Administrative Agent all documents or instruments necessary to release all
Liens securing Existing Indebtedness or other obligations of Borrower and its
Subsidiaries thereunder being repaid on the Closing Date, and (iv) made
arrangements satisfactory to Administrative Agent with respect to the
cancellation of any letters of credit outstanding thereunder or the issuance of
Letters of Credit under the First Lien Credit Agreement to support the
obligations of Borrower and its Subsidiaries with respect thereto.

 

(g)           Authorizations and
Consents.  Each Credit Party
shall have obtained all governmental authorizations and all consents of other
Persons, in each case that are necessary or advisable in connection with the
transactions contemplated by the Loan Documents and the Merger Documents and
each of the foregoing shall be in full force and effect and in form and
substance reasonably satisfactory to Administrative Agent.  All applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority
which would restrain, prevent or otherwise impose adverse conditions on the
transactions contemplated 

 

43

 

by the Loan
Documents or the Merger Documents or the financing thereof and no action,
request for stay, petition for review or rehearing, reconsideration, or appeal
with respect to any of the foregoing shall be pending, and the time for any
applicable agency to take action to set aside its consent on its own motion
shall have expired.

 

(h)           Collateral.  In order to create in favor of Administrative
Agent, for the benefit of Lenders, a valid, perfected security interest in the
personal property Collateral, Administrative Agent shall have received:

 

(i)            evidence
satisfactory to Administrative Agent of the compliance by each Credit Party of
their obligations under the Pledge and Security Agreement and the other
Security Documents (including their obligations to execute and deliver UCC
financing statements, originals of securities, instruments and chattel paper
and any agreements governing deposit and/or securities accounts as provided
therein);

 

(ii)           A completed Collateral Questionnaire dated the Closing
Date and executed by a Responsible Officer of each Credit Party, together with
all attachments contemplated thereby, including (A) the results of a
recent search, by a Person satisfactory to Administrative Agent, of all
effective UCC financing statements (or equivalent filings) made with respect to
any personal or mixed property of any Credit Party in the jurisdictions
specified in the Collateral Questionnaire, together with copies of all such
filings disclosed by such search, and (B) UCC termination statements (or
similar documents) duly executed by all applicable Persons for filing in all
applicable jurisdictions as may be necessary to terminate any effective UCC financing
statements (or equivalent filings) disclosed in such search (other than any
such financing statements in respect of Permitted Liens);

 

(iii)          opinions of counsel (which counsel shall be reasonably
satisfactory to Administrative Agent) with respect to the creation and
perfection of the security interests in favor of Administrative Agent in such
Collateral and such other matters governed by the laws of each jurisdiction in
which any Credit Party or any personal property Collateral is located as Administrative
Agent may reasonably request, in each case in form and substance reasonably
satisfactory to Administrative Agent; and

 

(iv)          evidence that each Credit Party shall have taken or caused
to be taken any other action, executed and delivered or caused to be executed
and delivered any other agreement, document and instrument (including without
limitation, any intercompany notes evidencing Indebtedness permitted to be
incurred pursuant to Section 7.1(e)) and made or caused to be made any
other filing and recording (other than as set forth herein) reasonably required
by Collateral Agent.

 

(v)           executed
notices of assignment of claims in connection with United States government
receivables complying with the terms of the Assignment of Claims Act of 1940,
31 U.S.C. § 3727, 41 U.S.C. § 15 and otherwise acceptable in form to
Administrative Agent, to be held by the Administrative Agent, and written
authorization in form and substance satisfactory to Administrative Agent
authorizing 

 

44

 

Administrative Agent to file such notices with the
appropriate governmental authorities at Administrative Agent’s discretion upon
an Event of Default.

 

(vi)          with respect to each Material Lease, a Landlord Waiver from
the landlord under such Material Lease; provided that
no such Landlord Waiver shall be required with respect to any Material Lease
that could not be obtained after the Credit Party that is the lessee under such
Material Lease shall have used its reasonable best efforts to do so.

 

(i)            Control Agreements.  Administrative Agent shall have received a
duly executed control agreement covering any applicable account collateral to
the extent required under the Pledge and Security Agreement.

 

(j)            Financial Statements;
Projections.  Lenders shall
have received from Borrower (i) the Historical Financial Statements, (ii) pro
forma consolidated and consolidating financial statements of Borrower and its
Subsidiaries as at the Closing Date, and reflecting the consummation of the
Haverstick Acquisition, the related financings and the other transactions
contemplated by the Loan Documents and the Merger Documents to occur on or
prior to the Closing Date, which pro forma financial statements shall be in
form and substance satisfactory to Administrative Agent, and (iii) the
Projections.

 

(k)           Evidence of
Insurance.  Administrative
Agent shall have received a certificate from Borrower’s insurance broker or
other evidence satisfactory to it that all insurance required to be maintained
pursuant to Section 6.6 is in full force and effect, together with
endorsements naming Administrative Agent, for the benefit of Lenders, as
additional insured and loss payee thereunder to the extent required under Section 6.6.

 

(l)            Solvency Certificate.  On the Closing Date, Administrative Agent
shall have received a certificate from Borrower dated as of the Closing Date
and addressed to Administrative Agent and Lenders, and in form, scope and
substance satisfactory to Administrative Agent, with appropriate attachments and
demonstrating that after giving effect to the consummation of the Merger
Documents and the Extensions of Credit to be made on the Closing Date, Borrower
and its Subsidiaries are and will be Solvent.

 

(m)          Due Diligence.  Other than changes occurring in the ordinary
course of business, no information or materials are or should have been
available to Borrower and its Subsidiaries as of the Closing Date that are
materially inconsistent with the material previously provided to Administrative
Agent for its due diligence review of Borrower and its Subsidiaries.

 

(n)           Minimum EBITDA.  The pro forma financial statements delivered
pursuant to Section 4.1(j) shall demonstrate in form and substance
reasonably satisfactory to Administrative Agent that on the Closing Date and
immediately after giving effect to any Extensions of Credit to be made on the
Closing Date and the payment of all fees and expenses required to be paid in
cash on the Closing Date, Borrower shall have generated trailing twelve month
Consolidated EBITDA of at least $15,000,000.

 

(o)           Proceeds of First Lien
Credit Agreement.  Borrower
shall have received $65,500,000 in gross proceeds from borrowings under the
First Lien Credit Agreement.

 

45

 

(p)           Representations and
Warranties.  The
representations and warranties of Borrower contained in each of the Loan
Documents shall be correct on and as of the date of such Extension of Credit,
except to the extent that such representations and warranties specifically refer
to an earlier date, in which case they shall be true and correct as of such
earlier date.

 

(q)           No Default or Event of
Default.  no Default or Event
of Default exists, or would result from such proposed Extension of Credit.

 

(r)            Notice of Borrowing.  Administrative Agent shall have timely
received a Request for Extension of Credit by Requisite Notice by the Requisite
Time.

 

(s)           Other Assurances,
Certificates and Documents. 
Administrative Agent shall have received, in form and substance
satisfactory to it, such other assurances, certificates, documents or consents
related to the foregoing as Administrative Agent and Requisite Lenders
reasonably may require.

 

(t)            No Orders, Judgment or
Decrees.  No order, judgment
or decree of any Governmental Authority shall purport to restrain any Lender
from making any Loans to be made by it; no injunction or other restraining
order shall have been issued, shall be pending or noticed with respect to any
action, suit or proceeding seeking to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, the transactions
contemplated by this Agreement or the making of Loans hereunder.

 

(u)           Post-Closing Agreement. 
Administrative Agent shall have received a fully executed copy of the
Post-Closing Letter, setting forth post-closing obligations of the Borrower and
its Subsidiaries with respect to certain conditions set forth in this Section 4.1,
in form and substance satisfactory to Administrative Agent in all respects.

 

SECTION V.

REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants to Administrative
Agent and Lenders that:

 

5.1          EXISTENCE AND QUALIFICATION; POWER;
COMPLIANCE WITH LAWS.

 

(a)           Each Credit Party is duly organized,
validly existing and, except as set forth on Schedule 5.1(a), in good standing
under the Laws of the state of its organization, has the requisite power and
authority and the legal right to own, lease and operate its properties, to
conduct its business as currently conducted, is duly qualified and in good
standing under the Laws of every jurisdiction where it is required to be so
qualified, except where the failure to be so qualified could not be reasonably
expected to have a Material Adverse Effect, and is in compliance with all Laws
except to the extent that noncompliance could not be reasonably expected to
have a Material Adverse Effect.

 

(b)           Schedule 5.1(b) attached
hereto lists, as of the Closing Date, each of the Subsidiaries.

 

46

 

(c)           Immediately after giving effect to
the Related Transactions, the Borrower will indirectly own 100% of the issued
and outstanding Equity Securities of Haverstick and its Subsidiaries.

 

5.2          POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS.

 

Each Credit Party has the requisite power and
authority and the legal right to make, deliver and perform each Loan Document
to which it is a party and Borrower has the corporate or other entity power and
authority to borrow hereunder and has taken all necessary action to authorize
the borrowings on the terms and conditions of this Agreement and to authorize
the execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party.  No
consent or authorization of, filing with, or other act by or in respect of any
Governmental Authority or any other Person, is required in connection with the
borrowings hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the other Loan Documents.  The Loan Documents have been duly executed
and delivered by each Credit Party which is a party hereto, and constitute
legal, valid and binding obligations of such Credit Party, enforceable against
such Credit Party in accordance with their respective terms.

 

5.3          NO LEGAL BAR.

 

The execution, delivery, and performance by each
Credit Party of the Loan Documents to which it is a party and compliance with
the provisions thereof have been duly authorized by all requisite action on the
part of such Credit Party and do not and will not (a) violate or conflict
with, or result in a breach of, or require any consent under (i) any
Organization Documents of the Credit Parties, (ii) any applicable material
Laws, rules, or regulations or any order, writ, injunction, or decree of any
Governmental Authority or arbitrator, or (iii) any material Contractual
Obligation of such Credit Party or any of its Subsidiaries or by which any of
them or any of their property is bound or subject, (b) constitute a
default under any material agreement or instrument, (c) require any
registration with, consent or approval of, notice to, or any other action to,
with or by, and Governmental Authority, or (d) result in, or require, the
creation or imposition of any Lien on any of the properties of such Credit
Party or any of its Subsidiaries (other than the Liens granted in connection
herewith).

 

5.4          EQUITY SECURITIES AND OWNERSHIP.

 

The Equity Securities of
each of Borrower and its Subsidiaries has been duly authorized and validly
issued and is fully paid and non-assessable. 
Except as set forth on Schedule 5.4, as of the date hereof, there is no
existing option, warrant, call, right, commitment or other agreement to which
Borrower or any of its Subsidiaries is a party requiring, and there is no
membership interest or other Equity Security of Borrower or any of its
Subsidiaries outstanding which upon conversion or exchange would require, the
issuance by Borrower or any of its Subsidiaries of any additional membership
interests or other Equity Securities of Borrower or any of its Subsidiaries or
other Equity Securities convertible into, exchangeable for or evidencing the
right to subscribe for or purchase, a membership interest or other Equity
Security of Borrower or any of its Subsidiaries.  Schedule 5.4 sets forth a true, complete and
correct list as of the Closing Date, both before and after giving effect to the
Loan Documents and the Related 

 

47

 

Transactions,
of the name of Borrower and each of its Subsidiaries and indicates for each
such Person (other than Borrower) its ownership (by holder and percentage
interest) and the type of entity of each of them, and the number and class of
authorized and issued Equity Securities of such Subsidiary.  Except as set forth on Schedule 5.4, as of
the Closing Date, neither Borrower nor any of its Subsidiaries has any equity
investments in any other corporation or entity.

 

5.5                               FINANCIAL
STATEMENTS; PROJECTIONS; NO MATERIAL ADVERSE EFFECT.

 

(a)           The Historical Financial Statements (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein; (ii) fairly
present in all material respects the financial condition of Borrower and its
Subsidiaries as of the date thereof and their results of operations for the
period covered thereby in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein; and (iii) to
the extent required by GAAP, show all material indebtedness and other
liabilities, direct or contingent, of Borrower and its Subsidiaries as of the
date thereof.

 

(b)           On and as of the relevant date of
determination, the Projections of Borrower and its Subsidiaries for the period
of fiscal year 2007 through and including fiscal year 2012, including quarterly
projections for each month during fiscal years 2007 and 2008 (the “Projections”) are based on good faith estimates and
assumptions made by the management of Borrower and as of the relevant date of
determination, management of Borrower believed that the Projections were
reasonable and attainable.

 

(c)           Since December 31, 2006, (i) there
has been no event or circumstance which could reasonably be expected to have a
Material Adverse Effect and (ii) except as set forth on Schedule 5.5
hereto and as disclosed in the Borrower’s public filings with the Securities
and Exchange Commission from time to time, no Internal Control Event has
occurred.

 

5.6          LITIGATION.

 

Except as disclosed in the Disclosure
Letter, there are (a) no lawsuits, investigations or
proceedings of or before an arbitrator or Governmental Authority pending or, to
the best of knowledge of Borrower, threatened by or against Borrower or any of
its Subsidiaries or against any of their properties or revenues which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect, (b) no orders, writs, injunctions, judgments, or decrees of any
court or government agency or instrumentality to which the Borrower or any of
its Subsidiaries is a party or by which the property or assets of them are
bound, or (c) no grievances, disputes, or controversies outstanding with
any union or other organization of the employees of Borrower or any of its
Subsidiaries, or, to the knowledge of Borrower or such Subsidiaries, threats of
work stoppage, strike, or pending demands for collective bargaining, which
could reasonably be expected to cause or result in a Material Adverse Effect.

 

5.7          NO DEFAULT; CONTINUED BUSINESS.

 

Neither Borrower nor any its Subsidiaries are in
default under or with respect to any Contractual Obligation which could
reasonably be expected to have a Material Adverse Effect, 

 

48

 

and no Default or Event of
Default has occurred and is continuing or will result from the consummation of
this Agreement or any of the other Loan Documents, or the making of the
Extensions of Credit hereunder.  There
exists no actual, pending, or, to Borrower’s knowledge, any threatened
termination, cancellation or limitation of, or any modification or change in
the business relationship of Borrower or any Subsidiary and any customer or
supplier, or any group of customers or suppliers, whose purchases or supplies,
individually or in the aggregate, could reasonably be expected to cause or
result in a Material Adverse Effect, and there exists no present condition or
state of facts or circumstances that could reasonably be expected to have a
Material Adverse Effect or prevent any Credit Party from conducting such
business or the transactions contemplated by this Agreement in substantially
the same manner in which it was previously conducted.

 

5.8          OWNERSHIP OF PROPERTY; LIENS.

 

Borrower and its Subsidiaries have valid fee or
leasehold interests in all real property which they use in their respective
businesses, and Borrower and its Subsidiaries have good and marketable title to
all their other property, and none of such property is subject to any Lien,
except as permitted in Section 7.2.

 

5.9          TAXES.

 

Borrower and its Subsidiaries have timely filed all
material tax returns which are required to be filed, and have paid, or made
provision for the payment of, all taxes whether or not shown as due on any tax
return, except (a) such taxes, if any, as are being contested in good
faith by appropriate proceedings and as to which adequate reserves have been
both established and maintained in accordance with GAAP, and (b) immaterial
taxes in de minimis amounts; provided, however, that in each case no
material item or portion of property of Borrower or any of its Subsidiaries is
in jeopardy of being seized, levied upon or forfeited.  Borrower knows of no proposed tax assessment
against Borrower or any of its Subsidiaries which is not being actively
contested by Borrower or such Subsidiary in good faith and by appropriate
proceedings and as to which adequate reserves have been both established and
maintained in accordance with GAAP.

 

5.10        MARGIN REGULATIONS; INVESTMENT COMPANY
ACT.

 

(a)           Neither Borrower for any of its Subsidiaries
is engaged nor will it engage, principally or as one of its important
activities, in the business of extending credit for the purpose of “purchasing”
or “carrying” “margin stock” within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect.  No part of the proceeds of any Extensions of
Credit hereunder will be used for “purchasing” or “carrying” “margin stock” as
so defined or for any purpose which violates, or which would be inconsistent
with, the provisions of Regulations T, U or X of such Board of Governors.

 

(b)           Neither Borrower nor any of its
Subsidiaries is or is required to be registered as an “investment company”
under the Investment Company Act of 1940.

 

49

 

5.11        ERISA COMPLIANCE; EMPLOYEE MATTERS.

 

(a)           Each Employee Benefits Plan is in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other applicable Laws.  Each
Employee Benefits Plan that is intended to qualify under Section 401(a) of
the Code has received a favorable determination or opinion letter from the IRS
or an application for such a letter is currently being processed by the IRS
with respect thereto and, to the best knowledge of Borrower, nothing has
occurred which would prevent, or cause the loss of, such qualification.  Borrower and each ERISA Affiliate have made
all required contributions to each Pension Plan subject to Section 412 of
the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Pension Plan.  There has
been no prohibited transaction (which is not otherwise exempt under Section 4975
of the Code) or violation of the fiduciary responsibility rules under
ERISA with respect to any Employee Benefits Plan that has or could reasonably
be expected to have a Material Adverse Effect.

 

(b)           (i) No ERISA Event has occurred or,
to the best of knowledge of Borrower or any Subsidiary or ERISA Affiliate, is
reasonably expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) neither Borrower nor any Subsidiary or ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA); (iv) neither Borrower
nor any Subsidiary or ERISA Affiliate has incurred, or, to the best of
knowledge of Borrower or any Subsidiary or ERISA Affiliate, reasonably expects
to incur, any liability (and, to the best of knowledge of Borrower or any
Subsidiary or ERISA Affiliate, no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither
Borrower nor any Subsidiary or ERISA Affiliate has engaged in a transaction
that could be subject to Sections 4069 or 4212(c) of ERISA.  Except to the extent required under Section 4980B
of the Code, no Employee Benefit Plan provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employee of Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates extending beyond the end of the month in which any such retired or
former employee terminates employment.

 

(c)           Borrower and each of its Subsidiaries
has good labor relations.  Borrower, its
Subsidiaries, and their respective employees, agents and representatives have
not committed any material unfair labor practice as defined in the National
Labor Relations Act.  Neither Borrower
nor any of its Subsidiaries has been or is engaged in any unfair labor practice
that could reasonably be expected to have a Material Adverse Effect.  There has been and is (a) no unfair
labor practice charge or complaint pending against Borrower or any of its
Subsidiaries, or to the best knowledge of Borrower, threatened against any of
them before the National Labor Relations Board or any other Governmental
Authority and no grievance or arbitration proceeding arising out of or under
any collective bargaining agreement or similar agreement that is so pending
against Borrower or any of its Subsidiaries or to the best knowledge of
Borrower, threatened against any of them, (b) no labor dispute, strike,
lockout, slowdown or work stoppage in existence or threatened against,
involving or affecting Borrower or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect, (c) no labor
union, labor organization, trade union, works council, or group of employees of
Holdings or any of its 

 

50

 

Subsidiaries
has made a pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened to be brought or
filed with the National Labor Relations Board or any other Governmental
Authority, and (d) to the best knowledge of Borrower, no union
representation question existing with respect to any of the employees of
Holdings or any of its Subsidiaries and, to the best knowledge of Borrower, no
labor union organizing activity with respect to any employees of Borrower or
any of its Subsidiaries that is taking place, except (with respect to any
matter specified in clause (a), (b), (c), or (d) above, either
individually or in the aggregate) such as is not reasonably likely to have a
Material Adverse Effect or as disclosed in Schedule 5.11.

 

5.12        INTANGIBLE ASSETS

 

Borrower and its Subsidiaries own, or possess the
right to use, all trademarks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intangible assets that are used in the conduct
of their respective businesses as now operated or could obtain such right
without causing a Material Adverse Effect, and none of such items, to the best
knowledge of Borrower, conflicts with the valid trademark, trade name,
copyright, patent, patent right or intangible asset of any other Person to the
extent that such conflict has or could reasonably be expected to have a
Material Adverse Effect.

 

5.13        COMPLIANCE WITH LAWS

 

Borrower and its Subsidiaries are in compliance in
all material respects with all material Laws that are applicable to such
Person.

 

5.14        ENVIRONMENTAL COMPLIANCE

 

Borrower and its Subsidiaries conduct in the
ordinary course of business a review of the effect of existing Environmental
Laws and claims alleging potential liability or responsibility for violation of
any Environmental Law on their respective businesses, operations and
properties, and as a result thereof Borrower has reasonably concluded that such
Environmental Laws and claims do not, and could not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.

 

5.15        INSURANCE

 

The properties of Borrower and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of Borrower, in such amounts, with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where Borrower or such Subsidiary operates.  Schedule 5.15 sets forth a list of all
insurance maintained by or on behalf of the Credit Parties and each of their
Subsidiaries as of the Closing Date and, as of the Closing Date, all premiums
in respect of such insurance have been paid

 

51

 

5.16        SWAP OBLIGATIONS

 

Neither Borrower nor any of its Subsidiaries has
incurred any outstanding obligations under any Swap Contracts, other than
Permitted Swap Obligations.  Borrower has
undertaken its own independent assessment of its consolidated assets,
liabilities and commitments and has considered appropriate means of mitigating
and managing risks associated with such matters and has not relied on any swap
counterparty or any Affiliate of any swap counterparty in determining whether
to enter into any Swap Contract.

 

5.17        SOLVENCY

 

Borrower has received consideration that is the
reasonable equivalent value of the obligations and liabilities Borrower has
incurred in favor of Administrative Agent and the Lenders.  Each Credit Party is Solvent and each Credit
Party will be Solvent after giving effect to (i) the execution and
delivery of the Loan Documents to Administrative Agent and the Lenders and the
Extensions of Credit thereunder and (ii)  the Related Transactions (on a
pro forma basis).

 

5.18        DISCLOSURE

 

No statement, information, report, representation,
or warranty made by any Credit Party in any Loan Document or furnished to
Lender in connection with any Loan Document contains any untrue statement of a
material fact or, when viewed together with Borrower’s periodic reports filed
under the Exchange Act and the rules and regulations promulgated
thereunder, omits to state any material fact necessary to make the statements
herein or therein not misleading; provided
that, with respect to projected financial information, the Borrower represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time. 
After due inquiry by Borrower, there is no known fact that any Credit
Party has not disclosed to Administrative Agent and the Lenders that has or is
reasonably likely to have a Material Adverse Effect.

 

5.19        PATRIOT ACT.

 

(a)           Neither the Loans contemplated
hereunder nor the use of the proceeds thereof will violate the Anti-Terrorism Order,
the USA Patriot Act, the Trading with the Enemy Act, as amended, or any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.

 

(b)           Neither Borrower nor any Subsidiary (1) is
a Person described or designated in the Specially Designated Nationals and
Blocked Persons List of the Office of Foreign Assets Control or in Section 1
of the Anti-Terrorism Order, or (2) to the best knowledge of Borrower,
engages in any dealings or transactions with any such Person.  The Borrower and its Subsidiaries are in
compliance, in all material respects, with the USA Patriot Act.

 

(c)           No part of the proceeds from the
Loans hereunder will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

 

52

 

5.20        RELATED TRANSACTIONS.

 

(a)           Borrower has heretofore furnished
Administrative Agent true and correct copies of the Merger Documents.

 

(b)           The Related Transactions have been
(or, on the Closing Date, shall concurrently be) completed in compliance with
the terms of the Merger Documents and all applicable Laws.  No material provision of the Merger Documents
was (or shall be) amended or waived in connection with the transactions
described therein unless consented to by Administrative Agent, which consent
shall not be unreasonably withheld.  All
material and necessary authorizations, consents, approvals, exceptions or other
actions by or notices to or filings with any court or administrative or
governmental body or other Person required in connection with the execution,
delivery or performance of the Merger Documents or the consummation of the
Related Transactions are (or, on the Closing Date, shall concurrently be) final
and in full force and effect.

 

(c)           The execution and delivery of the
Merger Documents did not, and the consummation of the Related Transactions will
not, materially violate any material statute or regulation of the United States
(including any securities law) or of any state or other applicable
jurisdiction, or any material order, judgment or decree of any court or
governmental body binding on Borrower or any Subsidiary, or result in a breach
of, or constitute a default under, any material agreement, indenture,
instrument or other document, or any judgment, order or decree, to which
Borrower or any Subsidiary is a party or by which Borrower or any Subsidiary is
bound.

 

5.21        SECURITY INTEREST IN COLLATERAL.

 

The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral in favor of Administrative Agent, for the benefit of Administrative
Agent and the Lenders, and such Liens constitute perfected and continuing Liens
on the Collateral, securing the Obligations, enforceable against the applicable
Loan Party and all third parties, and having priority over all other Liens on
the Collateral except in the case of (a) Liens permitted pursuant to Section 7.2,
to the extent any such Liens would have priority over the Liens in favor of
Collateral Agent pursuant to any applicable law, (b) Liens perfected only
by possession (including possession of any certificate of title) to the extent
Administrative Agent has not obtained or does not maintain possession of such
Collateral and (c) Liens in favor of the First Lien Administrative Agent.

 

5.22        PERMITS, ETC.

 

Each Credit Party has, and
is in compliance with, all permits, licenses, authorizations, approvals,
entitlements and accreditations required for such Person lawfully to own,
lease, manage or operate, or to acquire, each business currently owned, leased,
managed or operated, or to be acquired, by such Person, which, if not obtained,
could reasonably be expected to have a Material Adverse Effect.  No condition exists or event has occurred
which, in itself or with the giving of notice or lapse of time or both, would
result in the suspension, revocation, impairment, forfeiture or non-renewal of
any such permit, license, authorization, approval, entitlement or
accreditation, and there is no claim that any thereof is not in full force and
effect, except, to the 

 

53

 

extent
any such condition, event or claim could not be reasonably be expected to have
a Material Adverse Effect.

 

5.23        MATERIAL CONTRACTS.

 

Set forth in the Disclosure
Letter is a true, correct and complete list of all the Material Contracts in
effect on the Closing Date.  All such Material
Contracts, together with any updates provided pursuant to Section 6.2(l),
are in full force and effect and no defaults currently exist thereunder (other
than as described in the Disclosure Letter or in such updates).

 

5.24         CERTAIN FEES

 

No broker’s or finder’s fee
or commission will be payable with respect hereto or any of the transactions
contemplated hereby.

 

5.25        AFFILIATE TRANSACTIONS.

 

Except as set forth on
Schedule 5.25, as of the date of this Agreement, there are no existing or
proposed agreements, arrangements, understandings, or transactions between any
Credit Party and any of the officers, members, managers, directors,
stockholders, parents, other interest holders, employees, or Affiliates (other
than other Credit Parties) of any Credit Party or any members of their
respective immediate families, and none of the foregoing Persons are directly
or indirectly indebted to or have any direct or indirect ownership,
partnership, or voting interest in any Affiliate of any Credit Party or any Person
with which any Credit Party has a business relationship or which competes with
any Credit Party.

 

5.26        DORMANT SUBSIDIARIES.

 

None
of the Foreign Subsidiaries of Borrower set forth on Schedule 5.26 (the “Dormant Subsidiaries”) have any material continuing
operations or conduct any material business and all are in the process of being
dissolved by the Borrower.  Borrower is
using its reasonable best efforts to complete the dissolution process with
respect to each Dormant Subsidiary in a timely manner.

 

SECTION VI.

AFFIRMATIVE COVENANTS

 

So long as any Obligation (excluding inchoate
indemnity obligations) remains unpaid or unperformed, Borrower shall, and shall
(except in the case of Borrower’s reporting covenants set forth in Sections 6.1
and 6.2(a)-(c)), cause each Subsidiary, to:

 

6.1          FINANCIAL STATEMENTS.

 

Deliver to Administrative Agent and each Lender, in
form and detail satisfactory to Administrative Agent and Requisite Lenders:

 

54

 

(a)           as soon as available, but in any
event within 90 days after the end of each fiscal year of Borrower, a
consolidated balance sheet, a consolidated statement of income and a
consolidated cash flow statement of Borrower and its Subsidiaries as at the end
of such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail, audited and accompanied
by a report and opinion of an independent certified public accountant of
nationally recognized standing, which report and opinion shall be prepared in
accordance with GAAP and shall not be subject to any qualifications or
exceptions as to the scope of the audit nor to any qualifications or exceptions
not reasonably acceptable to Requisite Lenders;

 

(b)           as soon as available, but in any
event within 45 days after the end of each of the first three fiscal quarters
of each fiscal year of Borrower, a consolidated balance sheet, a consolidated
statement of income and a consolidated cash flow statement of Borrower and its
Subsidiaries as at the end of such fiscal quarter, and for such fiscal quarter
and for the portion of Borrower’s fiscal year then ended, setting forth in each
case in comparative form the figures for the corresponding fiscal quarter of
the previous fiscal year and the corresponding portion of the previous fiscal
year, all in reasonable detail and certified by a Responsible Officer of
Borrower as fairly presenting in all material respects the financial condition,
results of operations and cash flows of Borrower and its Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes.

 

(c)           as soon as available, but in any
event within 45 days after the end of each fiscal month of Borrower (including
months which began prior to the Closing Date), a consolidated balance sheet, a
consolidated statement of income and a consolidated cash flow statement of
Borrower and its Subsidiaries as at the end of such fiscal month, and for such
fiscal month and for the portion of Borrower’s fiscal year then ended, setting
forth in each case in comparative form the figures for the corresponding fiscal
month of the previous fiscal year and the corresponding portion of the previous
fiscal year, all in reasonable detail and certified by a Responsible Officer of
Borrower as fairly presenting in all material respects the financial condition,
results of operations and cash flows of Borrower and its Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes; provided, however,
that with respect to the delivery of such financial statements during fiscal
year 2008, there shall be no requirement to deliver comparisons to the
corresponding month from the prior fiscal year.

 

(d)           if, as a result of any change in
accounting principles and policies (or the application thereof) from those used
in the preparation of the Historical Financial Statements, the consolidated
financial statements of Borrower and its Subsidiaries delivered pursuant to Section 6.1(a) or
6.1(b) will differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such sections had no such
change in accounting principles and policies been made, then, together with the
first delivery of such financial statements after such change, one or more
statements of reconciliation for all such prior financial statements in form
and substance satisfactory to Administrative Agent.

 

Reports required to be delivered pursuant to clauses
(a), (b) and (c) of this Section 6.1 shall be deemed to have
been delivered on the date on which Borrower posts such reports on Borrower’s
internet website at the website address listed on Schedule 10.2 hereof or when
such 

 

55

 

report is posted on the
Securities and Exchange Commission’s website at www.sec.gov; provided that (x) Borrower shall notify Administrative
Agent of the posting of any such new material, and (y) in every instance
Borrower shall provide paper copies of the Compliance Certificates required by
clause (a) of Section 6.2 to Administrative Agent and each
Lender.  Except for the Compliance
Certificates referred to in such clause (a) of Section 6.2,
Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the reports referred to in clauses (a) and (b) of
this Section 6.1, and in any event shall have no responsibility to monitor
compliance by Borrower with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such reports.

 

6.2          CERTIFICATES, NOTICES AND OTHER
INFORMATION.

 

Deliver to Administrative Agent and each Lender, in
form and detail satisfactory to Administrative Agent and Requisite Lenders:

 

(a)           within five (5) days after the
delivery of the financial statements referred to in Sections 6.1(a) and
(b), a duly completed Compliance Certificate signed by a Responsible Officer of
Borrower;

 

(b)           promptly after the same are
available, copies of each annual report, proxy or financial statement or other
report or communication sent to the stockholders of Borrower, and copies of all
annual, regular, periodic and special reports and registration statements which
Borrower may file or be required to file with the Securities and Exchange
Commission under Sections 13 or 15(d) of the Exchange Act, and not
otherwise required to be delivered to Administrative Agent pursuant hereto;

 

(c)           promptly after the occurrence
thereof, notice of any Default or Event of Default;

 

(d)           notice of any change in accounting
policies or financial reporting practices by Borrower or any Subsidiary that is
material to Borrower or to Borrower and its Subsidiaries on a consolidated
basis;

 

(e)           promptly after the commencement
thereof, notice of any litigation, investigation or proceeding affecting
Borrower where the reasonably expected damages to Borrower exceed $2,500,000,
or in which injunctive relief or similar relief is sought, which relief, if
granted, could reasonably be expected to have a Material Adverse Effect;

 

(f)            promptly after the occurrence
thereof, notice of any Reportable Event with respect to any Pension Plan or the
intent to terminate any Pension Plan, or the institution of proceedings or the
taking or expected taking of any other action to terminate any Pension Plan or
withdraw from any Pension Plan;

 

(g)           (i) in advance of, if known, or
promptly after the occurrence of any ERISA Event, a written notice specifying
the nature thereof, what action Borrower, its Subsidiaries or any of their
respective ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the IRS, the
Department of Labor or the PBGC with respect thereto; and (ii) promptly following
such ERISA Event, copies of (1) each 

 

56

 

Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
with the IRS with respect to each Pension Plan; (2) all notices received
by Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies
of such other documents or governmental reports or filings relating to any
Employee Benefit Plan as Administrative Agent shall reasonably request;

 

(h)           promptly after the occurrence
thereof, notice of any Material Adverse Effect;

 

(i)            as soon as practicable and in any
event no later than January 31 of each fiscal year, a consolidated plan
and financial forecast for such fiscal year and each fiscal year (or portion
thereof) through the final maturity date of the Loans (a “Financial
Plan”), including (i) a forecasted consolidated and
consolidating balance sheet and forecasted consolidated and consolidating
statements of income and cash flows of Borrower and its Subsidiaries for each
such fiscal year, together with pro forma Compliance Certificates for each such
fiscal year and an explanation of the assumptions on which such forecasts are
based, (ii) forecasted consolidated statements of income and cash flows of
Borrower and its Subsidiaries for each month of the fiscal year then beginning,
(iii) forecasts demonstrating projected compliance with the requirements
of Section 7.12 through the Maturity Date of the Term Loans, and (iv) forecasts
demonstrating adequate liquidity through the Maturity Date of the Term Loans,
together, in each case, with an explanation of the assumptions on which such
forecasts are based all in form and substance reasonably satisfactory to
Administrative Agent and accompanied by a certificate from a Responsible Office
of Borrower certifying that the projections contained therein are based upon
good faith estimates and assumptions believed by Borrower to be reasonable at
the time made and at the time of delivery thereof; provided,
however, that with respect to fiscal year 2008, the monthly
forecasts described in clause (ii) above may be delivered up to 90 days
after the Closing Date;

 

(j)            as soon as practicable and in any
event by the last day of each fiscal year, a report in form and substance
satisfactory to Administrative Agent outlining all material insurance coverage
maintained as of the date of such report by Borrower and its Subsidiaries and
all material insurance coverage planned to be maintained by Borrower and its
Subsidiaries in the immediately succeeding fiscal year;

 

(k)           with reasonable promptness, written
notice of any change in the board of directors (or similar governing body) of
Borrower;

 

(l)            promptly, and in any event within
ten Business Days (i) after any Material Contract of Borrower or any of
its Subsidiaries is terminated or amended in a manner that would (x) decrease
the revenue to be received by any Credit Party during any fiscal year under
such Material Contract by more than 25% or (y) increase the cost to be
paid by any Credit Party during any fiscal year under such Material Contract by
more than 25%, and (ii) after any new Material Contract is
entered into, a written statement describing such event, with copies of such
material amendments or new contracts, delivered to Administrative Agent (to the
extent such delivery is permitted by the terms of any such Material Contract, provided that no such prohibition on delivery shall be
effective if it were bargained for by Borrower or its applicable 

 

57

 

Subsidiary
with the intent of avoiding compliance with this Section 6.2(l)), and an
explanation of any actions being taken with respect thereto;

 

(m)          as soon as practicable (but, in any
event, within 7  days) following receipt thereof,
copies of all environmental audits and reports with respect to environmental
matters at any facility of Borrower or its Subsidiaries or which relate to any
environmental liabilities of Borrower or its Subsidiaries which, in any such
case, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect;

 

(n)           at least thirty (30) days prior to
the occurrence of any change (i) in any Credit Party’s corporate name, (ii) in
any Credit Party’s identity or corporate structure, or (iii) in any Credit
Party’s Federal Taxpayer Identification Number, Borrower will furnish to the
Administrative Agent notice thereof. 
Borrower agrees not to effect or permit any change referred to in the
preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for Administrative
Agent to continue at all times following such change to have a valid, legal and
perfected security interest in all the Collateral and for the Collateral at all
times following such change to have a valid, legal and perfected security
interest as contemplated in the Security Documents.  Borrower will furnish to Administrative Agent
prompt written notice of any Lien (other than Permitted Liens) or claims made
or asserted against any Collateral or interest therein.  Borrower also agrees promptly to notify
Administrative Agent in writing if any material portion of the Collateral is
lost, damaged or destroyed;

 

(o)           each year, at the time of delivery of
annual financial statements with respect to the preceding fiscal year pursuant
to Section 6.1(a), a certificate (i) either confirming that there has
been no material change in such information since the date of the Collateral
Questionnaire delivered on the Closing Date or the date of the most recent
certificate delivered pursuant to this Section and/or identifying such
changes, and (ii) updating the Collateral Questionnaire to reflect
material changes in such information since the date of the Collateral
Questionnaire delivered on the Closing Date or the date of the most recent
certificate delivered pursuant to this Section;

 

(p)           promptly (i) if any Credit Party
obtains knowledge that any Credit Party or any Person which owns, directly or
indirectly, any Equity Securities of any Credit Party, or any other holder at
any time of any direct or indirect equitable, legal or beneficial interest
therein is the subject of any of the Terrorism Laws, such Credit Party will
notify Administrative Agent and (ii) upon the request of any Lender, such
Credit Party will provide any information such Lender believes is reasonably
necessary to be delivered to comply with the Patriot Act;

 

(q)           promptly, such other data and
information as from time to time may be reasonably requested by Administrative
Agent;

 

(r)            concurrently with the delivery of
all reports, statements and other information delivered pursuant to the First
Lien Credit Agreement, copies of such reports, statements and other
information, except to the extent that such information has already been
delivered to the Administrative Agent and the Lenders in accordance with the
terms hereof; and

 

58

 

(s)           concurrent
notice of and a copy of each amendment (or proposed amendment) to the First
Lien Credit Agreement, regardless of whether such amendment is permitted under
the Intercreditor Agreement without the consent of the Administrative Agent
and/or the Lenders.

 

Each notice pursuant to this Section shall
be accompanied by a statement of a Responsible Officer of Borrower setting
forth details of the occurrence referred to therein and stating what action
Borrower has taken and proposes to take with respect thereto.  The annual reports, proxies, financial
statements or other communications required by Section 6.2(b) above
shall be deemed to have been delivered on the date on which Borrower posts such
reports on Borrower’s website on the Internet at the website address listed on
Schedule 10.2 hereof or when such report is posted on the Securities and
Exchange Commission’s website at www.sec.gov; provided
that Borrower shall notify Administrative Agent of the posting of any such new
material.  Administrative Agent shall
have no obligation to request the delivery or to maintain copies of the reports
and communications referred to in Section 6.2(b), and in any event shall
have no responsibility to monitor compliance by Borrower with any such request
for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such reports and communications.

 

6.3          PAYMENT OF TAXES.

 

Pay and discharge when due all taxes,
assessments, and governmental charges, except for (a) any such tax,
assessment, charge, or levy which is a Lien permitted under Section 7.2(i) and
(b) immaterial taxes in de minimis
amounts.

 

6.4          PRESERVATION OF EXISTENCE.

 

Preserve and maintain its existence,
governmental authorizations, licenses, permits, rights, franchises and
privileges necessary or desirable in the normal conduct of its business, except
(i) as permitted by Section 7.3, or (ii) where failure to do so
could not reasonably be expected to have a Material Adverse Effect.

 

6.5          MAINTENANCE OF PROPERTIES.

 

Maintain, preserve and protect all of its
material properties and equipment necessary in the operation of its business in
good order and condition, subject to wear and tear in the ordinary course of
business, and not permit any waste of its properties, except where failure to
do so could not reasonably be expected to have a Material Adverse Effect.

 

6.6          MAINTENANCE OF INSURANCE.

 

Borrower will maintain or cause to be
maintained, with financially sound and reputable insurers, (i) business
interruption insurance reasonably satisfactory to Administrative Agent, and (ii) casualty
insurance, such public liability insurance, third party property damage
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Borrower and its Subsidiaries as are
customarily carried or maintained under similar circumstances by Persons of
established reputation of similar size and engaged in similar businesses, in
each case in such amounts (giving effect to self insurance which comports with
the requirements of this Section and provided that adequate reserves
therefor are maintained in

 

59

 

accordance
with GAAP), with such deductibles, covering such risks and otherwise on such
terms and conditions as shall be customary for such Persons.  Each such policy of insurance shall (i) name
Administrative Agent, on behalf of Lenders as an additional insured thereunder
as its interests may appear, and (ii) in the case of each casualty
insurance policy, contain a loss payable clause or endorsement, satisfactory in
form and substance to Administrative Agent, that names Administrative Agent, on
behalf of Lenders, as the loss payee thereunder and provides for at least
thirty (30) days’ prior written notice to Administrative Agent of any
modification or cancellation of such policy and that no act or default of
Borrower or any other Person shall affect the right of Administrative Agent to
recover under such policy or policies in case of loss or damage.

 

6.7          COMPLIANCE WITH LAWS.

 

(a)           Comply with the requirements of all
applicable Laws and orders of any Governmental Authority, noncompliance with
which could reasonably be expected to have a Material Adverse Effect.

 

(b)           Conduct its operations and keep and
maintain its property in material compliance with all Environmental Laws.

 

6.8          INSPECTION RIGHTS.

 

At any time during regular business hours and
as often as reasonably requested upon reasonable notice, permit Administrative
Agent or any Lender, or any employee, agent or representative thereof, to
examine, audit and make copies and abstracts from Borrower’s records and books
of account and to visit and inspect its and its Subsidiaries’ properties and to
discuss its affairs, finances and accounts with any of its officers and key
employees, and, upon request, furnish promptly to Administrative Agent or any
Lender true copies of all financial information and internal management reports
made available to their senior management. 
Notwithstanding any provision of this Agreement to the contrary, so long
as no Default or Event of Default shall have occurred and be continuing,
neither Borrower nor any of its Subsidiaries shall be required to disclose,
permit the inspection, examination, photocopying or making extracts of, or
discuss, any document, information or other matter that (i) constitutes
non-financial trade secrets or non-financial proprietary information, or (ii) the
disclosure of which to any Lender, or its designated representative, is then
prohibited by law or any agreement binding on Borrower or any of its
Subsidiaries that was not entered into by Borrower or any such Subsidiary for
the purpose of concealing information from the Lenders.  Borrower shall, however, furnish to
Administrative Agent such information concerning Borrower’s intellectual
property (including, without limitation, application and registration numbers
for any filings in connection with such intellectual property) as is reasonably
necessary to permit Administrative Agent (on behalf of itself and the other
Lenders) to perfect a security interest in such intellectual property.  Borrower will, upon the request of
Administrative Agent or Requisite Lenders, participate in a meeting of Administrative
Agent and Lenders once during each fiscal year to be held at Borrower’s
corporate offices (or at such other location as may be agreed to by Borrower
and Administrative Agent) at such time as may be agreed to by Borrower and
Administrative Agent.

 

60

 

6.9          KEEPING OF RECORDS
AND BOOKS OF ACCOUNT.

 

Keep records and books of account adequate to
prepare financial statements in conformity with GAAP, consistently applied, and
in conformity with all applicable requirements of any Governmental Authority
having regulatory jurisdiction over Borrower or any applicable Subsidiary.

 

6.10        COMPLIANCE WITH ERISA.

 

Cause, and cause each of its ERISA Affiliates
to:  (a) maintain each Employee Benefits Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
applicable Laws; (b) to take all actions to cause each Employee Benefits
Plan which is qualified under Section 401(a) of the Code to maintain
such qualification; and (c) make all required contributions to any Pension
Plan subject to Section 412 of the Code.

 

6.11        COMPLIANCE WITH AGREEMENTS.

 

Promptly and fully comply with all
Contractual Obligations to which any one or more of them is a party, except for
any such Contractual Obligations (a) the nonperformance of which would not
cause a Default or Event of Default, (b) then being contested by any of
them in good faith by appropriate proceedings, or (c) if the failure to
comply therewith could not reasonably be expected to have a Material Adverse
Effect.

 

6.12        SUBSIDIARY GUARANTIES AND PLEDGE OF
OWNERSHIP INTERESTS.

 

(a)           Domestic Subsidiaries.  In the event that the aggregate gross
revenues or assets of Borrower and Guarantors for any fiscal year ending after
the Closing Date when taken together with 65% of the aggregate gross revenues
and assets of Borrower’s Foreign Subsidiaries as to which 65% of the ownership
interests thereof have been pledged in favor of Administrative Agent for the
benefit of Lenders, is less than 95% of the aggregate gross revenues or assets
of Borrower and its Subsidiaries on a consolidated basis for such fiscal year,
Borrower will, within 90 days after the end of such fiscal year, cause one or
more additional Domestic Subsidiaries to execute and deliver to Administrative
Agent a joinder to the Multi-Party Guaranty and to the Pledge and Security
Agreement along with any such other supporting documentation, certificates
(accompanied by irrevocable undated stock powers, duly endorsed in blank),
corporate governance and authorization documents as may be deemed reasonably
necessary or advisable by Administrative Agent such that the aggregate gross
revenues and assets for such fiscal year of Borrower and Guarantors, when taken
together with 65% of the aggregate gross revenues and assets of Borrower’s Foreign
Subsidiaries as to which 65% of the ownership interests thereof have been
pledged in favor of Administrative Agent for the benefit of Lenders, equal to
at least 95% of the aggregate gross revenues and assets of Borrower and its
Subsidiaries on a consolidated basis for such fiscal year.  In addition, in the event that (x) Borrower
creates or acquires a Domestic Subsidiary which is a Material Subsidiary, or (y) any
Domestic Subsidiary of Borrower that has not previously executed a joinder to
the Multi-Party Guaranty and the Pledge and Security Agreement becomes a
guarantor in respect of the obligations of Borrower or any Subsidiary under any
Material Indebtedness Agreement, Borrower shall within forty-five (45) days
(unless a longer period is agreed to by Administrative Agent) (i) cause
such Domestic

 

61

 

Subsidiary
to execute and deliver to Administrative Agent a joinder to the Multi-Party
Guaranty and the Pledge and Security Agreement along with any such other
supporting documentation, certificates (accompanied by irrevocable undated
stock powers, duly endorsed in blank), corporate governance and authorization
documents as may be deemed necessary or advisable by Administrative Agent, (ii) execute
and deliver a supplement to the Pledge and Security Agreement pledging to
Administrative Agent (for the benefit of each Lender in accordance with its Pro
Rata Share) the ownership interests in such Domestic Subsidiary, and (iii) deliver
to Administrative Agent (for the benefit of each Lender in accordance with its
Pro Rata Share) the outstanding share certificates (or other evidence of its
equity) evidencing such pledged ownership interests.

 

(b)           Foreign Subsidiary Stock
Pledge.  In the event Borrower or any
Domestic Subsidiary creates or acquires a First-Tier Material Foreign
Subsidiary, Borrower shall and shall cause its Domestic Subsidiaries to, within
90 days (unless a longer period is agreed to by Administrative Agent), (i) pledge
to Administrative Agent, for the benefit of the Lenders, 65% of the ownership
interest owned by a Credit Party pursuant to the Pledge and Security Agreement,
(ii) deliver to Agent, for the benefit of the Lenders, the outstanding
shares certificates (or other evidence of equity), as applicable, evidencing
such pledged ownership interest, and (iii) take such further actions as
Administrative Agent reasonably requests to perfect the security interest in
such pledged ownership interests; provided,
however, that, if Administrative Agent, in its sole discretion after
consultation with Borrower, determines that the cost of perfecting, in a
foreign jurisdiction, the Administrative Agent’s security interest, for the
benefit of the Lenders, in such ownership interests relating to any First-Tier
Material Foreign Subsidiary is impractical or cost-prohibitive, then the
Administrative Agent may agree to forego the foreign perfection of such
security interest.

 

6.13        FURTHER ASSURANCES.

 

At any time or from time to time upon the
request of Administrative Agent, each Credit Party will, at its expense,
promptly execute, acknowledge and deliver such further documents and do such
other acts and things as Administrative Agent or Requisite Lenders may
reasonably request in order to effect fully the purposes of the Loan Documents,
including providing Lenders with any information reasonably requested pursuant
to Section 10.26.  In furtherance
and not in limitation of the foregoing, each Credit Party shall take such
actions as Administrative Agent may reasonably request from time to time to
ensure that the Obligations are guaranteed by the Guarantors and are secured by
substantially all of the assets of Borrower and its Material Subsidiaries and
all of the outstanding Equity Securities of Borrower and its Material Subsidiaries
(subject to limitations contained in the Loan Documents with respect to Foreign
Subsidiaries), and shall give Administrative Agent prompt written notice of its
acquisition of any asset or assets with a value representing more than 5% of
the combined assets of Borrower and its Subsidiaries as at the Closing Date to
the extent that Collateral Agent’s security interest therein to secure the
Obligations will not be perfected by the Uniform Commercial Code filings
currently in effect at such time.

 

62

 

6.14        USE OF PROCEEDS.

 

Use the proceeds of the Term Loans for lawful
corporate purposes including (i) the Related Transactions, (ii) the
refinancing of existing indebtedness of Borrower, its Subsidiaries and
Haverstick and its Subsidiaries on the Closing Date and (iii) working
capital and general corporate purposes, including Acquisitions, not otherwise
in contravention of this Agreement.  No
part of the proceeds of any Loan will be used, whether directly or indirectly,
for any purpose that entails a violation of any law, including Regulations T, U
and X of the Board of Governors of the Federal Reserve System.

 

6.15        LANDLORD WAIVERS.
Concurrently with
entering into any Material Lease after the Closing Date, use its reasonable
best efforts to obtain a Landlord Waiver with respect to such Material Lease
and the property leased thereby.

 

6.16        ADDITIONAL MATERIAL REAL ESTATE ASSETS.

 

In the event that any Credit Party acquires a
Material Real Estate Asset after the Closing Date or any real property asset
owned or leased on the Closing Date becomes a Material Real Estate Asset and
such interest has not otherwise been made subject to the Lien of the Security
Documents in favor of Administrative Agent, for the benefit of lenders, then
such Credit Party, contemporaneously with acquiring such Material Real Estate
Asset, or promptly after a real estate asset owned or leased on the Closing
Date becomes a Material Real Estate Asset, shall take all such actions and
execute and deliver, or cause to be executed and delivered, all such mortgages,
documents, instruments, agreements, opinions and certificates as Administrative
Agent shall reasonably require with respect to each such Material Real Estate
Asset to create in favor of Administrative Agent, for the benefit of Lenders, a
valid and, subject to any filing and/or recording referred to herein, perfected
security interest in such Material Real Estate Assets.  In addition to the foregoing, Borrower shall,
at the request of Requisite Lenders, deliver, from time to time, to
Administrative Agent such appraisals as are required by law or regulation of
Material Real Estate Assets with respect to which Administrative Agent has been
granted a Lien.

 

6.17        DORMANT SUBSIDIARIES.

 

Borrower
shall not permit any of the Dormant Subsidiaries to have any material
continuing operations or conduct any material business and shall use its
reasonable best efforts to complete the dissolution process with respect to
each Dormant Subsidiary in a timely manner.

 

SECTION VII.

NEGATIVE COVENANTS

 

So long as any Obligations remain unpaid or
unperformed, Borrower shall not, nor shall it permit any Subsidiary to,
directly or indirectly:

 

7.1          INDEBTEDNESS.

 

Create, incur, assume or suffer to exist any
Indebtedness except for the following (“Permitted Indebtedness”):

 

63

 

(a)           (x) Indebtedness under the Loan
Documents and (y) Indebtedness
constituting First Lien Obligations (as defined in the Intercreditor Agreement,
and subject to the limitations and parameters set forth in such definition);

 

(b)           Indebtedness outstanding on the date
hereof and listed on Schedule 7.1 hereto;

 

(c)           Indebtedness of Borrower and its
Subsidiaries under loans and Capital Leases incurred by Borrower or any of its
Subsidiaries to finance the acquisition by such Person of real property,
improvements, fixtures, equipment or other fixed assets (together with
attachments, ascensions, additions, “soft costs” and proceeds thereof); provided that in each case, (i) such
Indebtedness is incurred by such Person at the time of, or not later than six (6) months
after, the acquisition by such Person of the property so financed, (ii) such
Indebtedness does not exceed the purchase price of the property so financed,
and (iii) the aggregate of all such Indebtedness at any time outstanding
does not exceed $2,750,000;

 

(d)           Indebtedness of Borrower and its
Subsidiaries under initial or successive refinancings, refundings, renewals or
extensions of any Indebtedness permitted by subsections (b), (c), (j), (k), (l) and
(m) of this Section 7.1; provided
that, with respect to any such refinanced, refunded, renewed or extended
Indebtedness, (i) the amount of such Indebtedness is not increased at the
time of such refinancing, refunding, renewal or extension except by an amount
equal to the reasonable premium or other amount paid, and reasonable fees and
expenses incurred, in connection with such refinancing and by an amount equal
to any utilized commitments thereunder, (ii) the terms and conditions
thereof, including those relating to amortization, maturity, collateral and
subordination, are not less favorable to the Lenders than the Indebtedness
being refinanced, refunded, renewed or extended, (iii) the weighted
average life of the principal payments pursuant to such Indebtedness shall be
no shorter than the weighted average life of such payments pursuant to such
Indebtedness immediately prior to such refinancing, refunding, renewal or
extension, (iv) such Indebtedness shall not include Indebtedness of an
obligor that was not an obligor with respect to the Indebtedness being
refinanced, refunded, renewed or extended and (v) such Indebtedness shall
not be refinanced, refunded, renewed or extended if any Default or Event of Default
has occurred and is continuing or would result therefrom;

 

(e)           Indebtedness of Borrower to any of
Borrower’s Subsidiaries, Indebtedness of any of Borrower’s Subsidiaries to
Borrower or Indebtedness of any of Borrower’s Subsidiaries to any of Borrower’s
other Subsidiaries; provided that
the aggregate amount of Indebtedness of Borrower or any Guarantor to any
Foreign Subsidiary or any Subsidiary which is not a Guarantor other than
Indebtedness of Foreign Subsidiaries in existence on the Closing Date set forth
on Schedule 7.1(e), does not exceed $550,000 at any time outstanding; and provided further  that (i) all such Indebtedness
shall be evidenced by promissory notes and all such notes shall be subject to a
Lien pursuant to the Pledge and Security Agreement, (ii) all such
Indebtedness shall be unsecured and subordinated in right of payment to the
payment in full of the Obligations pursuant to the terms of the applicable
promissory notes or an intercompany subordination agreement that in any such
case, is reasonably satisfactory to Administrative Agent, and (iii) any
payment by any such Guarantor Subsidiary under any guaranty of the Obligations
shall result in a pro tanto reduction of the amount of any Indebtedness owed by
such Subsidiary to Borrower or to any of its Subsidiaries for whose benefit
such payment is made.

 

64

 

(f)            Subordinated Debt as the same shall
have been approved by Requisite Lenders; provided
that the aggregate amount of such Subordinated Debt at any time outstanding
shall not exceed $5,500,000;

 

(g)           [Intentionally omitted];

 

(h)           Indebtedness incurred in favor of
sellers in connection with Permitted Acquisitions, to the extent permitted in
the definition thereof, and provided that
all such Indebtedness shall be unsecured and subordinated in right of payment
to the payment in full of the Obligations on terms and subject to documentation
reasonably satisfactory to Requisite Lenders;

 

(i)            Indebtedness arising in the ordinary
course of business in connection with the corporate credit card programs of
Borrower and its Subsidiaries in an amount not to exceed $1,138,500 at any time
outstanding;

 

(j)            Guaranty Obligations of Borrower or
any of its Subsidiaries guarantying Indebtedness otherwise permitted hereunder
of Borrower or any Subsidiary of Borrower;

 

(k)           Indebtedness arising from the
honoring of a check, draft or similar instrument against insufficient funds or
from the endorsement of instruments for collection arising in the ordinary
course of Borrower’s or any Subsidiary’s’ business;

 

(l)            Permitted Swap Obligations;

 

(m)          Indebtedness of Borrower or any of its
Subsidiaries with respect to surety, appeal, indemnity, performance or other
similar bonds arising in the ordinary course of business;

 

(n)           Indebtedness with respect to
agreements providing for indemnification, adjustment of purchase price, earnest
money or similar obligations in connection with Acquisitions or Dispositions
otherwise permitted by this Agreement;

 

(o)           Indebtedness with respect to cash
deposited by customers to obtain the right to delivery of future goods or
services; and

 

(p)           Other unsecured Indebtedness not
included in (a) through (n) above and not exceeding, in the aggregate
at any one time $2,750,000; provided that
all such Indebtedness shall be subordinated in right of payment to the payment
in full of the Obligations on terms and subject to documentation reasonably
satisfactory to Requisite Lenders.

 

7.2          LIENS.

 

Incur, assume or suffer to exist, any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for the following (“Permitted
Liens”):

 

(a)           Liens existing on the date hereof and
listed on Schedule 7.1 and any renewals or extensions thereof; provided that the property covered thereby
is not increased and any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 7.1(b);

 

65

 

(b)           Liens pursuant to any Loan Document
and, subject to the Intercreditor Agreement, the First Lien Loan Documents;

 

(c)           Liens on the property or assets of
any Person which becomes a Subsidiary of Borrower after the date of this
Agreement or acquired after the date of this Agreement; provided that (i) such Liens exist at
the time such Person became a Subsidiary or the assets were acquired, (ii) such
Liens were not created in contemplation of the acquisition of such Person or
assets and (iii) such Liens do not at any time apply to any other assets
or properties of the Borrower;

 

(d)           Rights of vendors or lessors under
conditional sale agreements, Capital Leases or other agreements relating to
Indebtedness described in Section 7.1(c) or other title retention
agreements; provided that in each
case, (i) such rights secure or otherwise relate to Permitted
Indebtedness, (ii) such rights do not extend to any property other than
property acquired with the proceeds of such Permitted Indebtedness (together
with accessions, additions, replacements and proceeds thereof), and (iii) such
rights do not secure any Indebtedness other than Permitted Indebtedness;

 

(e)           Liens incurred in the ordinary course
of business in connection with leases, subleases, licenses and sublicenses
granted to Persons not interfering in any material respect with the business of
Borrower and its Subsidiaries and any interest or title of a lessee or licensee
under any such leases, subleases, licenses or sublicenses;

 

(f)            Liens arising in connection with
judgments not constituting an Event of Default pursuant to Section 8.1(i);

 

(g)           [Intentionally omitted];

 

(h)           Liens required in connection with the
corporate credit card program of Borrower and its Subsidiaries, provided that any Collateral securing such Liens shall not
exceed $330,000 at any time;

 

(i)            Liens for taxes not yet due or which
are being contested in good faith and by appropriate proceedings, if adequate
reserves with respect thereto are maintained on the books of the applicable
Person in accordance with GAAP;

 

(j)            carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s, landlord’s or other like Liens arising in the
ordinary course of business which are not overdue for a period of more than 60
days or which are being contested in good faith and by appropriate proceedings,
if adequate reserves with respect thereto are maintained on the books of the
applicable Person in accordance with GAAP;

 

(k)           pledges or deposits in connection
with worker’s compensation, unemployment insurance and other social security
legislation;

 

(l)            deposits to secure the performance
of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business (including,
without limitation, Liens securing all those obligations described in Section 7.1(m));

 

66

 

(m)          easements, rights-of-way,
restrictions, Liens granted by a third-party lessor to any Person and other
similar encumbrances affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of any Person;

 

(n)           Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties and
in connection with the importation of goods in the ordinary course of Borrower’s
and its Subsidiaries’ businesses;

 

(o)           Liens arising in the ordinary course
of business solely by virtue of any statutory or common law provision relating
to banker’s liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with a creditor depository
institution; provided that (i) such
deposit account is not a dedicated cash collateral account and is not subject
to restrictions against access by Borrower in excess of those set forth by
regulations promulgated by the Federal Reserve Board, and (ii) such
deposit account is not intended by Borrower or any Subsidiary to provide
collateral to the depository institution;

 

(p)           Liens on insurance proceeds in favor
of insurance companies with respect to the financing of insurance premiums, in
each case arising in the ordinary course of business; and

 

(q)           purported Liens evidenced by the
filing of Uniform Commercial Code precautionary financing statements relating
to operating leases entered into in the ordinary course of business.

 

(r)            Liens not otherwise permitted
hereunder on the property or assets of Borrower and any of its Subsidiaries
securing Indebtedness, provided
the aggregate Indebtedness secured thereby does not exceed $550,000, and such
Liens either (a) do not encumber any Collateral or (b) are
subordinated to the Liens securing the Obligations on terms and subject to
documentation satisfactory to the Administrative Agent;

 

provided, however, that in no event shall any
Lien (other than Liens granted pursuant to the Security Documents) be permitted
to exist on, or in respect of, (i) any depositary or investment account
containing any cash or Cash Equivalent of Borrower or any of its Domestic
Subsidiaries, except for Liens in favor of the entity (and its affiliates) with
which any such depository or investment account is maintained or (ii) any
Collateral consisting of Securities pledged pursuant to the Security Documents.

 

7.3          FUNDAMENTAL CHANGES.

 

Merge or consolidate with or into any Person
or liquidate, wind-up or dissolve itself, or permit or suffer any liquidation
or dissolution or sell all or substantially all of its assets, except that:

 

(a)           any Subsidiary may merge with (i) Borrower,
provided that Borrower shall be
the continuing or surviving corporation, (ii) any Guarantor Subsidiary or,
if such Subsidiary is not a Guarantor, with any other Subsidiary, and (iii) any
joint venture, partnership or other Person, so long as such joint venture,
partnership and other Person will, as a result of making such merger

 

67

 

and
all other contemporaneous related transactions, become a Guarantor Subsidiary
or, if such Subsidiary is not a guarantor, a Subsidiary;

 

(b)           any Subsidiary may sell or transfer
all or substantially all of its assets (through voluntary liquidation,
dissolution or winding up or otherwise), to Borrower or to another Subsidiary
that is a Guarantor or, if the selling or transferring Subsidiary is not a
Guarantor, to any other Subsidiary;

 

(c)           Borrower may merge into or
consolidate with any other Person; provided
that (i) Borrower is the surviving corporation, and (ii) prior to and
immediately after giving effect to such merger or consolidation, no Default or
Event of Default shall have occurred and be continuing; and

 

(d)           any Subsidiary may merge or
consolidate with or into any other Person or sell all or substantially all of
its assets to the extent such transaction is a Disposition otherwise permitted
under Section 7.4 (other than Section 7.4(c)) or an Investment
otherwise permitted under Section 7.5 (other than Section 7.5(c)) and
prior to and immediately after giving effect to such merger or consolidation,
no Default or Event of Default shall have occurred and be continuing.

 

7.4          DISPOSITIONS.

 

Make any Dispositions, except:

 

(a)           Dispositions of assets (i) that
do not constitute Asset Sales or (ii) made to Borrower or any Guarantor
Subsidiary;

 

(b)           Dispositions consisting of subleases
of leased real property no longer necessary to the operation of the applicable
Credit Party’s business;

 

(c)           Dispositions permitted by Section 7.3;

 

(d)           Dispositions of the property
described on Schedule 7.4;

 

(e)           Dispositions which constitute the
making or liquidating of Permitted Investments;

 

(f)            Dispositions which constitute the
incurrence (but not the enforcement) of Permitted Liens;

 

(g)           Dispositions of surplus equipment or
damaged, obsolete or worn out property, whether now owned or hereafter
acquired, in the ordinary course of business; and

 

(h)           Asset Sales, the proceeds of which
when aggregated with the proceeds of all other Asset Sales made since the
Closing Date, are less than $11,000,000; provided (1) the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof (determined in good faith by the board of
directors of Borrower (or similar governing body)), (2) no less than
eighty percent (80%) thereof shall be paid in cash, and (3) the Net Asset
Sale Proceeds thereof shall be applied as required by Section 2.3(b)(i).

 

68

 

7.5          INVESTMENTS.

 

Make any Investments, except for the
following (“Permitted Investments”):

 

(a)           Investments existing on the Closing
Date and set forth on Schedule 7.5;

 

(b)           Investments in cash and Cash
Equivalents, and which conform to the investment policies adopted by the Board
of Directors of Borrower from time to time;

 

(c)           Investments permitted by Section 7.1
or Section 7.3;

 

(d)           Investments (i) in any
Securities received in satisfaction or partial satisfaction thereof from
financially troubled account debtors, and (ii) constituting deposits,
prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past practices of Borrower and its Subsidiaries;

 

(e)           Investments constituting
Acquisitions; provided that each
such Acquisition (each, a “Permitted
Acquisition”) meets the following criteria: (i) in the case of
a merger, amalgamation or other combination including Borrower, Borrower shall
be the surviving entity, (ii) in the case of a merger, amalgamation or
other combination including a Credit Party (other than Borrower), a Credit
Party shall be the surviving entity; (iii) the business to be acquired
shall be (x) in same business or lines of business in which Borrower and
its Subsidiaries are engaged as of the Closing Date and (y) shall have had
positive Consolidated EBITDA for the four quarter period most recently ended
prior to the date of such acquisition, (iv) no Default or Event of Default
shall exist prior to or after giving effect to such Acquisition or shall result
therefrom, (v) all transactions in connection therewith shall be
consummated, in all material respects, in accordance with all applicable Laws, (vi) Borrower
shall have provided to Administrative Agent and each of the Lenders, at least
ten (10) Business Days prior to such Acquisition, a certificate of a
Responsible Officer of Borrower showing pro
forma compliance with Section 7.12 hereof, both before and
after the proposed Acquisition, together with all relevant financial
information with respect to such Acquisition, including the aggregate
consideration for such Acquisition and any other information required to
demonstrate compliance with Section 7.12, (vii) such Acquisition
shall have been approved by the board of directors or other governing body or
controlling Person of the Person from whom the business is acquired, (viii) (A) the
aggregate consideration in respect of all Acquisitions occurring after the
Closing Date, whether consisting of Cash Acquisition Consideration or Equity
Securities, shall not exceed (x) $220,000,000 during the term of this
Agreement and (y) $110,000,000 in any twelve month period and (B) the
aggregate Cash Acquisition Consideration in respect of all Acquisitions
occurring after the Closing Date shall not exceed $27,500,000 during the term of
this Agreement, in each case unless otherwise approved by the Requisite
Lenders; provided further, that the amount set
forth in clause (viii)(B) of this Section 7.5(e) may be
increased by Net Cash Equity Proceeds (not to exceed $55,000,000 in the aggregate
during the term of this Agreement) received by the Borrower after the Closing
Date, so long as any such Net Cash Equity Proceeds are actually used to fund a
Permitted Acquisition within 90 days of such receipt by Borrower; and provided further that the amount of consideration paid in
respect of any Acquisition, regardless of the form of that consideration, shall
be deemed to be the total purchase price of such Acquisition  (including
all fees and expenses paid in connection therewith), regardless of how any
portion of

 

69

 

such
purchase price may be treated for purposes of calculating Consolidated EBITDA
hereunder or for any other purpose.

 

(f)            Investments of Borrower and its
Subsidiaries in Permitted Swap Obligations;

 

(g)           Advances to officers, directors and
employees of Borrower and its Subsidiaries for travel, entertainment,
relocation and analogous ordinary business purposes;

 

(h)           Investments of Borrower in any of its
Subsidiaries and Investments of any Subsidiary of Borrower in Borrower or
another Subsidiary of Borrower; provided, however,
that in the case of any such Investments that are equity Investments, the
Equity Securities represented thereby shall be pledged to the Administrative
Agent pursuant to the Pledge and Security Agreement; and provided
further, that the aggregate amount of Investments by Borrower and
Guarantors in Foreign Subsidiaries and non-Guarantor Subsidiaries (which are
not otherwise permitted under this Section 7.5), other than Investments in respect of any
Indebtedness of Foreign Subsidiaries in existence on the Closing Date as set
forth on Schedule 7.1(e) that has been converted into Equity Interests in
such Subsidiary after the date hereof, does not exceed $550,000 at any time outstanding;

 

(i)            Extensions of credit to customers or
suppliers of Borrower and its Subsidiaries in the ordinary course of business
and any Investments received in satisfaction or partial satisfaction thereof;

 

(j)            Guaranty Obligations permitted by Section 7.1;

 

(k)           Investments received by Borrower or
any of its Subsidiaries as distributions on claims in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;

 

(l)            Investments of any Subsidiary
existing at the time it becomes a Subsidiary of Borrower, provided
that such Investments were not made in anticipation of such Person becoming a
Subsidiary of Borrower; and

 

(m)          Investments consisting of loans to
employees, officers and directors, the proceeds of which shall be used to
purchase Equity Securities of Borrower or its Subsidiaries and

 

(n)           Other Investments not exceeding
$2,750,000 in the aggregate at any time outstanding.

 

7.6          RESTRICTED PAYMENTS.

 

Make any Restricted Payments, except as
follows:

 

(a)           Borrower or any Subsidiary, as
applicable, may pay dividends or other distributions (i) on account of any
shares of any class of capital stock of Borrower now or hereafter outstanding
solely in shares of that class of stock to holders of that class or (ii) payable
by a Subsidiary to Borrower or to a Guarantor Subsidiary;

 

70

 

(b)           Borrower may distribute rights
pursuant to a shareholder rights plan or redeem such rights, provided that such redemption is in accordance with the
terms of such shareholder rights plan;

 

(c)           Borrower may make Restricted Payments
or purchase its own Equity Securities in connection with or pursuant to any of
its Employee Benefits Plans or in connection with the death, retirement or
termination of its employees, officers or directors, in an amount not to exceed
$1,100,000 in the aggregate in any fiscal year or $3,300,000 in the aggregate over
the life of this Agreement; and

 

(d)           Borrower may repurchase fractional
shares of capital stock arising out of stock dividends, splits or combinations,
business combinations or conversion of convertible securities.

 

7.7          ERISA.

 

At any time engage in a transaction which
could be subject to Section 4069 or 4212(c) of ERISA, or permit any
Employee Benefits Plan to (a) engage in any non-exempt “prohibited
transaction” (as defined in Section 4975 of the Code); (b) fail to
comply with ERISA or any other applicable Laws; or (c) incur any material “accumulated
funding deficiency” (as defined in Section 302 of ERISA), which, with
respect to each event listed above could reasonably be expected to have a
Material Adverse Effect.

 

7.8          CHANGE IN NATURE OF BUSINESS.

 

Engage, either directly or indirectly through
Affiliates or Acquisitions in any line of business other than the business of
designing, engineering, installing and testing C5ISR (command/control,
communications, computing, combat, intelligence, surveillance and
reconnaissance) systems, providing engineering design support and systems
integration services for weapons systems and associated support systems,
operating and maintaining technical services for military target ranges and
weapons system ranges, providing technical support solutions for federal,
state, local and municipal government agencies, and providing a variety of
communication products and surveillance products for federal government
agencies, any other business incidental or reasonably related thereto, or any
businesses that are, as determined by the Board of Directors of Borrower in its
good faith reasonable judgment, appropriate extensions thereof.

 

7.9          TRANSACTIONS WITH AFFILIATES.

 

Enter into any transaction of any kind with
any Affiliate (other than transactions among Credit Parties) of Borrower other
than arm’s-length transactions with Affiliates that are otherwise permitted
hereunder and except as follows:

 

(a)           reasonable and customary fees in
Borrower’s industry paid to members of the board of directors (or similar
governing body) of Borrower; and

 

(b)           reasonable and customary compensation
arrangements and benefit plans for officers and other employees of Borrower and
its Subsidiaries entered into or maintained in the ordinary course of business;
provided that such transactions
could not reasonably be expected to have a Material Adverse Effect on Borrower
or any Subsidiary.

 

71

 

7.10        USE OF PROCEEDS.

 

Use the proceeds of the Loans for any purpose
other than (i) the consummation of the Related Transactions, (ii) the
refinancing of existing indebtedness of Borrower, its Subsidiaries and
Haverstick and its Subsidiaries on the Closing Date and (iii) working
capital and general corporate purposes of Borrower and its Subsidiaries,
including Acquisitions, not otherwise in contravention of this Agreement.

 

7.11        CERTAIN INDEBTEDNESS PAYMENTS, ETC.

 

(a) Pay, prepay, redeem, purchase,
defease or otherwise satisfy in any manner prior to the scheduled payment
thereof any portion of any Subordinated Debt or (b) amend, modify or
otherwise change the terms of any document, instrument or agreement evidencing
Subordinated Debt such that such amendment, modification or change would (i) cause
the outstanding aggregate principal amount of all such Subordinated Debt so
amended, modified or changed to be increased (except as a consequence of the
deferral of cash interest payments by adding such payments to the principal
amount thereof) as a consequence of such amendment, modification or change, (ii) increase
the interest rate applicable thereto, or (iii) accelerate the scheduled
payment thereof.

 

7.12        FINANCIAL COVENANTS.

 

(a)           Maximum First Lien Leverage Ratio. 
Permit the First Lien Leverage Ratio, determined as of the last
day of any fiscal quarter of Borrower (measured on a rolling four quarter basis
for the trailing four fiscal quarters) to be greater than the correlative ratio
indicated in the table set forth on Schedule 7.12(a).

 

(b)           Maximum Total Leverage
Ratio.  Permit the Total
Leverage Ratio, determined as of the last day of any fiscal quarter of Borrower
(measured on a rolling four quarter basis for the trailing four fiscal
quarters) to be greater than the correlative ratio indicated in the table set
forth on Schedule 7.12(b).

 

(c)           Minimum Liquidity
Ratio.  Permit the Liquidity
Ratio at any time to be less than the correlative ratio indicated in the table
set forth on Schedule 7.12(c).

 

(d)           Minimum Fixed Charge
Coverage Ratio.  Permit the
Fixed Charge Coverage Ratio, determined as of the last day of any fiscal
quarter of Borrower (measured on a rolling four quarter basis for the trailing
four fiscal quarters) to be less than the correlative ratio indicated in the
table set forth on Schedule 7.12(d).

 

(e)           Minimum Consolidated
EBITDA.  Permit Consolidated
EBITDA, determined as of the last day of any fiscal quarter of Borrower
(measured on a rolling four quarter basis for the trailing four fiscal
quarters), to be less than the correlative amount indicated in the table set
forth on Schedule 7.12(e).

 

72

 

(f)            Certain Calculations.  With respect to any period during which a
Permitted Acquisition or an Asset Sale has occurred, for purposes of
determining compliance with each of the financial covenants set forth in
Sections 7.12(a), (b), (d) and (e), if during such period the Borrower or
any Subsidiary shall have made any Permitted Acquisition or Asset Sale,
Consolidated EBITDA and the components of Consolidated Fixed Charges for such
period shall be calculated after giving pro
forma effect to such Permitted Acquisition or Asset Sale and any
Indebtedness incurred or repaid in connection therewith as if such Permitted
Acquisition, Asset Sale or Indebtedness had occurred or been incurred or
repaid, as applicable, on the first day of such period; provided that, with respect to Permitted
Acquisitions, the pro forma
effect and add-backs may be derived from the financial statements delivered in
connection with the Permitted Acquisition pursuant to Section 7.5(e)(vi),
as approved by the Administrative Agent (which approval shall not be
unreasonably withheld).

 

7.13        ACCOUNTING CHANGES.

 

Change (i) its fiscal year (currently
ending on December 31), or (ii) its accounting practices except as
required by GAAP.

 

7.14        GUARANTY UNDER
MATERIAL INDEBTEDNESS AGREEMENT.

 

Permit any Domestic Subsidiary of Borrower to
be or become liable as an obligor under any Material Indebtedness Agreement
unless such Subsidiary shall also be a Guarantor under this Agreement prior to
or concurrently therewith.  Permit any
Foreign Subsidiary of Borrower to be or become liable as an obligor under any
Material Indebtedness Agreement unless 65% of the ownership interests thereof have
been pledged in favor of Administrative Agent for the benefit of Lenders.

 

7.15        AMENDMENTS
TO ORGANIZATION AGREEMENTS, MATERIAL CONTRACTS AND FIRST LIEN LOAN DOCUMENTS.

 

(a) Amend or permit any amendments to any Credit
Party’s Organization Documents; (b) amend or permit any
amendments to, or terminate or waive any provision of, any Material Contract requiring
Annual Payments to be made or providing for Annual Payments to be received, in
each case in excess of $5,000,000 if such amendment, termination, or waiver
would (i) decrease the revenue to be received by any Credit Party during
any fiscal year under such Material Contract by more than 25% or (ii) increase
the cost to be paid by any Credit Party during any fiscal year under such
Material Contract by more than 25%; or (c) amend or permit any material amendment to any
First Lien Loan Document in contravention of the Intercreditor Agreement.

 

7.16        NO FURTHER NEGATIVE PLEDGES.

 

Except with respect to (a) specific
property encumbered to secure payment of particular Indebtedness permitted
hereby or to be sold pursuant to an executed agreement with respect to an Asset
Sale permitted under Section 7.4, (b) the First Lien Credit Agreement and any
collateral documents related thereto as in effect on the date hereof and (c) restrictions by
reason of customary provisions restricting assignments, subletting or other
transfers contained in leases, licenses, contracts with Governmental
Authorities and similar agreements entered into in the

 

73

 

ordinary course of business (provided that
such restrictions are limited to the property or assets secured by such Liens
or the property or assets subject to such leases, licenses or similar
agreements, as the case may be) permit any Credit Party to enter into any agreement
prohibiting the creation or assumption of any Lien upon any of its properties
or assets, whether now owned or hereafter acquired.

 

7.17        RESTRICTIONS ON
SUBSIDIARY DISTRIBUTIONS.

 

Except as provided herein and in the First Lien Credit Agreement,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary of
Borrower to (a) pay dividends or make any other distributions on any of
such Subsidiary’s Equity Securities owned by Borrower or any other Subsidiary
of Borrower, (b) repay or prepay any Indebtedness owed by such Subsidiary
to Borrower or any other Subsidiary of Borrower, (c) make loans or
advances to Borrower or any other Subsidiary of Borrower, or (d) transfer
any of its property or assets to Borrower or any other Subsidiary of Borrower
other than restrictions (i) in agreements evidencing Indebtedness
permitted by Section 7.1(c) that impose restrictions on the property
so acquired, (ii) by reason of customary provisions restricting
assignments, subletting or other transfers contained in leases, licenses,
contracts with Governmental Authorities, joint venture agreements and similar
agreements entered into in the ordinary course of business, and (iii) create
customary restrictions on the Disposition of assets contained in agreements
relating to the sale of assets pending such sale, provided such restrictions
and conditions apply only to the assets that are to be sold and such sale is
permitted hereunder.  No Credit Party
shall, nor shall it permit its Subsidiaries to, enter into any Contractual
Obligation which would prohibit a Subsidiary of Borrower from becoming a Credit
Party.

 

7.18        SALES AND LEASE BACKS.

 

Directly or indirectly become or remain
liable as lessee or as a guarantor or other surety with respect to any lease of
any property (whether real, personal or mixed), whether now owned or hereafter
acquired, which such Credit Party (a) has sold or transferred or is to
sell or to transfer to any other Person (other than Borrower or any of its
Subsidiaries) or (b) intends to use for substantially the same purpose as
any other property which has been or is to be sold or transferred by such
Credit Party to any Person (other than Borrower or any of its Subsidiaries) in
connection with such lease.

 

7.19        DEPOSIT ACCOUNTS.

 

Except for any cash collateral account
permitted under Section 6.1(i) and 6.2(h) and necessary to
support the credit card program of Borrower and its Subsidiaries, establish or
maintain a Deposit Account or Securities Account (as each such term is defined
in the Pledge and Security Agreement) that is not subject to a Control
Agreement (as defined in the Pledge and Security Agreement) and no Credit Party
will deposit Collateral (including the proceeds thereof) or the proceeds of
Loans in a Deposit Account or Securities Account that is not subject to a
Control Agreement, except as may be permitted under the Pledge and Security
Agreement.

 

74

 

7.20        ISSUANCE OF DISQUALIFIED CAPITAL STOCK.

 

Issue or sell any Disqualified Capital Stock.

 

SECTION VIII.

EVENTS OF DEFAULT AND REMEDIES

 

8.1          EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an Event of
Default:

 

(a)           Borrower fails to
pay (i) when due the principal of and premium, if any, on any Loan whether
at stated maturity, by acceleration or otherwise; or (ii) when due any
installment of principal of any Loan, by notice of voluntary prepayment, by
mandatory prepayment or otherwise; or

 

(b)           Borrower fails to
pay interest on any Outstanding Obligation or any fees due hereunder within
three (3) Business Days after the date when due; or

 

(c)           Any default occurs
in the observance or performance of any agreement contained in Section 6.4
or Section 7; or

 

(d)           Any default occurs
in the observance or performance of any agreement contained in Section 6.1
and such default continues for three (3) days; or

 

(e)           The occurrence of an
Event of Default (as such term is or may hereafter be specifically defined in
any other Loan Document) under any other Loan Document; or Borrower fails to
perform or observe any other covenant or agreement (not specified in
subsections (a), (b) (c) or (d) above) contained in any Loan
Document on its part to be performed or observed and such failure continues for
30 days; or

 

(f)            Any representation,
warranty, certification or other statement made or deemed made by any Credit
Party in any in any Loan Document proves to have been incorrect in any material
respect when made or deemed made; or

 

(g)           (i) Any Credit
Party (x) defaults on any payment when due, which remains uncured beyond
any applicable cure period, of principal or interest on any Indebtedness (other
than Indebtedness hereunder or under the First Lien Loan Documents) having an
aggregate principal amount in excess of $3,850,000, or (y) defaults in the
observance or performance of any other agreement or covenant relating to any
Indebtedness (other than Indebtedness hereunder or under the First Lien Loan
Documents) or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur, the effect of which default
or other event is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
any Indebtedness in excess of $3,850,000 to become payable or cash collateral
in respect thereof to be demanded on account of such default or other event; or
(ii) the occurrence under any Swap Contract of an “Early Termination Date”
(or such similar term as defined in such Swap Contract) resulting from (x) any
event of default under such Swap Contract as to which Borrower or any Subsidiary
is the “Defaulting Party” (or such similar term as defined in such Swap
Contract) or (y) any termination event under any Swap Contract (as

 

75

 

defined therein) as to which
Borrower or any Subsidiary is an affected party (as so defined) (other than
termination events resulting solely from changes in the value of Borrower’s
stock price or other rates, prices or indices underlying any such Swap
Contract), and as to which, in either event, the “Swap Termination Value” (or
such similar term as defined in such Swap Contract) owed by Borrower or such
Subsidiary as a result thereof is greater than $3,850,000; or (iii) any
Credit Party (x) fails to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) beyond any
applicable cure period in respect of the First Lien Obligations, or any of the
First Lien Obligations are declared to be due and payable (or automatically
become due and payable) prior to the stated maturity of such First Lien
Obligations as a result of a First Lien Event of Default, unless such
declaration by the holders of the First Lien Obligations is rescinded in
accordance with the provisions of the First Lien Credit Agreement as in effect
on the Closing Date, or (y) the occurrence of any other First Lien Event
of Default and such First Lien Event of Default remains uncured and unwaived
for forty-five days after the First Lien Administrative Agent has received
notice of such First Lien Event of Default; or

 

(h)           Any Loan Document,
at any time after its execution and delivery and for any reason other than the
agreement of all Lenders or satisfaction in full of all the Obligations, ceases
to be in full force and effect or is declared by a court of competent
jurisdiction to be null and void, invalid or unenforceable in any respect; or
Administrative Agent shall not have or shall cease to have a valid and
perfected Lien in any Collateral purported to be covered by the Security
Documents with the priority required by the relevant Security Document, in each
case for any reason other than the failure of Administrative Agent to take any
action within its control; or any Credit Party contests the validity or
enforceability of any Loan Document or denies that it has any or further
liability or obligation under any Loan Document to which it is a party, or
purports to revoke, terminate or rescind any such Loan Document; or

 

(i)            A final judgment
(to the extent not covered by insurance (less any deductible) from a solvent
insurer who has accepted tender of defense and is defending such action)
against Borrower or any Subsidiary is entered for the payment of money in
excess of $3,850,000 and such judgment remains unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of thirty (30) days from the date
of its entry, or any non-monetary final judgment is entered against Borrower or
any Subsidiary that could reasonably be expected to have a Material Adverse
Effect and such judgment remains unvacated, unbonded or unstayed by appeal or
otherwise for a period of thirty (30) days from the date of its entry.

 

(j)            (i) A court of
competent jurisdiction shall enter a decree or order for relief in respect of
Borrower or any of its Subsidiaries in an involuntary case under the Bankruptcy
Code or under any other Debtor Relief Laws now or hereafter in effect, which
decree or order is not stayed; or any other similar relief shall be granted
under any applicable federal or state law; or (ii) an involuntary case shall
be commenced against Borrower or any of its Subsidiaries under the Bankruptcy
Code or under any other Debtor Relief Laws now or hereafter in effect; or a
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Borrower or any of its Subsidiaries,
or over all or a substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Borrower or any of its Subsidiaries for all or a
substantial part of its property; or a

 

76

 

warrant of attachment,
execution or similar process shall have been issued against any substantial
part of the property of Borrower or any of its Subsidiaries, and any such event
described in this clause (ii) shall continue for sixty (60) days without
having been dismissed, bonded or discharged; or

 

(k)           (i) Borrower or
any of its Subsidiaries shall have an order for relief entered with respect to
it or shall commence a voluntary case under the Bankruptcy Code or under any 

 

other Debtor Relief Laws now or hereafter in effect, or shall consent
to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property; or Borrower
or any of its Subsidiaries shall make any assignment for the benefit of
creditors; or (ii) Borrower or any of its Subsidiaries shall be unable, or
shall fail generally, or shall admit in writing its inability, to pay its debts
as such debts become due; or the board of directors (or similar governing body)
of Borrower or any of its Subsidiaries (or any committee thereof) shall adopt
any resolution or otherwise authorize any action to approve any of the actions
referred to herein or in Section 8.1(j); or

 

(l)            (i) An ERISA
Event occurs with respect to a Pension Plan or Multiemployer Plan which has
resulted or could reasonably be expected to result in liability of the Borrower
or its Subsidiaries under Title IV of ERISA to the Pension Plan, Multiemployer
Plan or the PBGC in an aggregate amount in excess of $3,850,000; (ii) the
aggregate amount of Unfunded Pension Liability among all Pension Plans at any
time exceeds $3,850,000; (iii) Borrower or any Subsidiary or any ERISA
Affiliate fails to pay when due, after the expiration of any applicable grace
period, any installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$3,850,000; or (iv) the events listed in clauses (i), (ii) and (iii) in
the aggregate have resulted or could reasonably be expected to result in
liability of Borrower or its Material Subsidiaries in excess of $3,850,000; or

 

(m)          There occurs any
Change of Control; or

 

(n)           There occurs a
change in the assets, liabilities, financial condition, operations, affairs or
prospects of Borrower and its Subsidiaries, taken as a whole, which in the
reasonable determination of Requisite Lenders has had or could reasonably be
expected to have a Material Adverse Effect.

 

8.2          REMEDIES UPON EVENT
OF DEFAULT.

 

Without limiting any other rights or remedies of Administrative Agent
or Lenders provided for elsewhere in this Agreement, or the other Loan
Documents, or by applicable Law, or in equity, or otherwise, subject to the
Intercreditor Agreement:

 

(a)           Upon the occurrence,
and during the continuance, of any Event of Default other than an Event of
Default described in Section 8.1(j) or (k):

 

(i)            Requisite
Lenders may request Administrative Agent to, and Administrative Agent thereupon
shall, declare all or any part of the unpaid principal of all Loans, all
interest accrued and unpaid thereon and all other amounts payable under the
Loan Documents to be immediately due and payable, whereupon the same shall
become

 

77

 

and be
immediately due and payable, without protest, presentment, notice of dishonor,
demand or further notice of any kind, all of which are expressly waived by
Borrower.

 

(b)           Upon the occurrence
of any Event of Default described in Section 8.1(j) or (k):

 

(i)            all obligations of
Administrative Agent or Lenders shall automatically terminate without notice to
or demand upon Borrower, which are expressly waived by Borrower; and

 

(ii)           the unpaid principal
of all Loans, all interest accrued and unpaid thereon and all other amounts
payable under the Loan Documents shall be immediately due and payable, without
protest, presentment, notice of dishonor, demand or further notice of any kind,
all of which are expressly waived by Borrower.

 

(c)           [Intentionally
Omitted.]

 

(d)           Upon the occurrence
of any Event of Default, Lenders and Administrative Agent, or any of them,
without notice to (except as expressly provided for in any Loan Document) or
demand upon Borrower, which are expressly waived by Borrower (except as to
notices expressly provided for in any Loan Document), may proceed to (but only
with the consent of Requisite Lenders) protect, exercise and enforce their
rights and remedies under the Loan Documents against Borrower and such other
rights and remedies as are provided by Law or equity (including, without
limitation, the provisions of the applicable Uniform Commercial Code).

 

(e)           Except as permitted
by Section 10.5, no Lender may exercise any rights or remedies with
respect to the Obligations without the consent of Requisite Lenders in their
sole and absolute discretion.  Subject to
the Intercreditor Agreement, the order and manner in which Administrative Agent’s
and Lenders’ rights and remedies are to be exercised shall be determined by
Requisite Lenders in their sole and absolute discretion.  Subject to the Intercreditor Agreement,
regardless of how a Lender may treat payments for the purpose of its own
accounting, for the purpose of computing the Obligations hereunder, payments
shall be applied first, to costs and expenses (including Attorney Costs)
incurred by Administrative Agent and each Lender, second, to the payment of
accrued and unpaid interest on the Loans to and including the date of such application,
third, to the payment of the unpaid principal of the Loans, and fourth, to the
payment of all other amounts (including fees) then owing to Administrative
Agent and Lenders under the Loan Documents, in each case (other than with
respect to any applicable fees that are not shared ratably, which amounts shall
be paid as otherwise directed herein) paid pro rata to each Lender in the same
proportions that the aggregate Obligations owed to each Lender under the Loan
Documents bear to the aggregate Obligations owed under the Loan Documents to
all Lenders, without priority or preference among Lenders.  Each Credit Party acknowledges the relative
rights, priorities and agreements, as set forth in the Intercreditor Agreement
and this Agreement, including as set forth in this Section 8.2(e).  No application of payments will cure any
Event of Default, or prevent acceleration, or continued acceleration, of
amounts payable under the Loan Documents, or prevent the exercise, or continued
exercise, of rights or remedies of Administrative Agent and Lenders hereunder
or thereunder or at Law or in equity.

 

78

 

SECTION IX.

ADMINISTRATIVE AGENT

 

9.1          APPOINTMENT AND
AUTHORIZATION OF ADMINISTRATIVE AGENT.

 

Each Lender hereby irrevocably (subject to Section 9.9) appoints,
designates and authorizes Administrative Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document,
Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall Administrative Agent have or be
deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise exist
against Administrative Agent.  Without
limiting the generality of the foregoing sentence, the use of the term “agent”
in this Agreement with reference to Administrative Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. 
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.

 

9.2          DELEGATION OF DUTIES.

 

Administrative Agent may execute any of its duties under this Agreement
or any other Loan Document by or through agents, employees or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties.  Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.

 

9.3          LIABILITY OF
ADMINISTRATIVE AGENT.

 

No Administrative Agent-Related Person shall (i) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any Lender for any recital, statement,
representation or warranty made by Borrower or any Subsidiary or Affiliate of
Borrower, or any officer thereof, contained in this Agreement or in any other
Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by Administrative Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of Borrower or any other party to
any Loan Document to perform its obligations hereunder or thereunder.  No Administrative Agent-Related Person shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of Borrower or any of Borrower’s Subsidiaries or Affiliates.

 

79

 

9.4          RELIANCE BY
ADMINISTRATIVE AGENT.

 

(a)           Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrower), independent
accountants and other experts selected by Administrative Agent.  Administrative Agent shall be fully justified
in failing or refusing to take any action under any other Loan Document unless
it shall first receive such advice or concurrence of Requisite Lenders as it
deems appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by Lenders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.  Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of Requisite
Lenders or all Lenders, if required hereunder, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of
Lenders.  Where this Agreement expressly
permits or prohibits an action unless Requisite Lenders otherwise determine,
and in all other instances, Administrative Agent may, but shall not be required
to, initiate any solicitation for the consent or a vote of Lenders.

 

(b)           For purposes of
determining compliance with the conditions specified in Section 4.1, each
Lender that has executed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
either sent by Administrative Agent to such Lender for consent, approval,
acceptance or satisfaction, or required thereunder to be consented to or
approved by or acceptable or satisfactory to such Lender.

 

9.5          NOTICE OF DEFAULT.

 

Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default, except with respect to
defaults in the payment of principal, interest and fees required to be paid to
Administrative Agent for the account of Lenders, unless Administrative Agent
shall have received written notice from a Lender or Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a “notice of default”. 
Administrative Agent will notify Lenders of its receipt of any such
notice.  Administrative Agent shall take
such action with respect to such Default or Event of Default as may be directed
by Requisite Lenders in accordance with Section 8; provided,
however, that unless and until Administrative Agent has received any
such direction, Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable or in the best interest of
Lenders.

 

9.6          CREDIT DECISION;
DISCLOSURE OF INFORMATION BY ADMINISTRATIVE AGENT.

 

Each Lender acknowledges that no Administrative Agent-Related Person
has made any representation or warranty to it, and that no act by
Administrative Agent hereinafter taken,

 

80

 

including any consent to and
acceptance of any assignment or review of the affairs of Borrower and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
any Administrative Agent-Related Person to any Lender as to any matter,
including whether Administrative Agent-Related Persons have disclosed material
information in their possession.  Each
Lender, including any Lender by assignment, represents to Administrative Agent
that it has, independently and without reliance upon any Administrative
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to Borrower
hereunder.  Each Lender also represents
that it will, independently and without reliance upon any Administrative
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of Borrower.  Except for notices, reports and other
documents expressly required to be furnished to Lenders by Administrative Agent
herein, Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of Borrower or any of its Subsidiaries which may come into the
possession of any Administrative Agent-Related Person.

 

9.7          INDEMNIFICATION OF
ADMINISTRATIVE AGENT.

 

Lenders shall indemnify upon demand each Administrative Agent-Related
Person (to the extent not reimbursed by or on behalf of Borrower and without
limiting the obligation of Borrower to do so), pro rata,
and hold harmless each Administrative Agent-Related Person from and against any
and all Indemnified Liabilities incurred by it; provided,
however, that no Lender shall be liable for the payment to any
Administrative Agent-Related Person of any portion of such Indemnified
Liabilities resulting from such Person’s gross negligence or willful
misconduct; provided, further, that no action taken
in accordance with the directions of Requisite Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this
Section.  Without limitation of the
foregoing, each Lender shall reimburse Administrative Agent upon demand for its
ratable share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that Administrative Agent is not reimbursed for such expenses by or on behalf
of Borrower.  The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of Administrative Agent.

 

9.8          ADMINISTRATIVE AGENT
IN INDIVIDUAL CAPACITY.

 

KeyBank and its Affiliates may make loans to, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting 

 

81

 

or other business with Borrower
and its Subsidiaries and Affiliates as though KeyBank were not Administrative
Agent hereunder and without notice to or consent of Lenders.  Lenders acknowledge that, pursuant to such
activities, KeyBank or its Affiliates may receive information regarding
Borrower or its Affiliates (including information that may be subject to
confidentiality obligations in favor of Borrower or such Affiliate) and
acknowledge that Administrative Agent shall be under no obligation to provide
such information to them.  With respect
to its Loans, KeyBank shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
Administrative Agent.

 

9.9          SUCCESSOR
ADMINISTRATIVE AGENT.

 

Administrative Agent may, and at the request of Requisite Lenders
(which, for purposes hereof, so long as KeyBank National Association holds at least
20% of the Combined Commitments as of the Closing Date, must include KeyBank
National Association) shall, resign as Administrative Agent upon 30 days’
notice to Lenders.  If Administrative
Agent resigns under this Agreement, Requisite Lenders shall appoint from among
Lenders a successor administrative agent for Lenders which successor
administrative agent shall be approved by Borrower.  If no successor administrative agent is
appointed prior to the effective date of the resignation of Administrative Agent,
Administrative Agent may appoint, after consulting with Lenders and Borrower
and upon approval of Borrower (other than at any time as there exists a Default
or an Event of Default) which will not be unreasonably withheld, a successor
administrative agent from among Lenders. 
Upon the acceptance of its appointment as successor administrative agent
hereunder, such successor administrative agent shall succeed to all the rights,
powers and duties of the retiring Administrative Agent and the term “Administrative Agent” shall mean such successor
administrative agent and the retiring Administrative Agent’s appointment,
powers and duties as Administrative Agent shall be terminated.  After any retiring Administrative Agent’s
resignation hereunder as Administrative Agent, the provisions of this Section 9
and Sections 10.3 and 10.14 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement.  If no successor
administrative agent has accepted appointment as Administrative Agent (whether
due to absence of Borrower approval or otherwise) by the date which is 30 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become
effective and Lenders shall perform all of the duties of Administrative Agent
hereunder until such time, if any, as Requisite Lenders appoint a successor
agent as provided for above.  Any Administrative
Agent hereunder must hold a Commitment in an amount not less than the
$5,000,000.

 

9.10        DESIGNATION OF
ARRANGER; NO AFFILIATE LIABILITY.

 

The parties hereto hereby designate KeyBanc Capital Markets, an
Affiliate of KeyBank as “Sole Arranger” and “Sole Book Runner” under this
Agreement.  None of Lenders (or
Affiliates of Lenders) identified from time to time herein by the titles “Lead
Arranger,” “Book Runner,” or similar titles shall have any right, power,
obligation, liability, responsibility or duty under this Agreement in such
capacity.  Without limiting the
foregoing, none of Lenders (or Affiliates of Lenders) so identified shall have
or be deemed to have any fiduciary relationship with any Lender.  Each Lender acknowledges that it has not
relied, and will not rely, on any of

 

82

 

Lenders (or Affiliates of
Lenders) so identified in deciding to enter into this Agreement or in taking or
not taking action hereunder.

 

9.11        INTERCREDITOR
AGREEMENT.

 

Each of the Lenders hereby acknowledges that it has received and
reviewed the Intercreditor Agreement and agrees to be bound by the terms
thereof.  Each Lender (and each Person
that becomes a Lender hereunder pursuant to Section 10.4) hereby
authorizes and directs the Administrative Agent to enter into the Intercreditor
Agreement on behalf of such Lender and agrees that the Administrative Agent may
take such actions on its behalf as is contemplated by the terms of the
Intercreditor Agreement.  Each Lender
authorizes the Administrative Agent to execute and deliver the Security
Documents as contemplated by the Intercreditor Agreement.

 

SECTION X.

MISCELLANEOUS

 

10.1        AMENDMENTS; CONSENTS.

 

Subject to the terms of the Intercreditor Agreement, no amendment,
modification, supplement, extension, termination or waiver of any provision of
this Agreement or any other Loan Document, no approval or consent thereunder,
and no consent to any departure by Borrower therefrom shall be effective unless
in writing signed by Requisite Lenders and acknowledged by Administrative
Agent, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.  Except as otherwise expressly provided
herein, without the approval in writing of Administrative Agent and all Lenders
that would be affected thereby, no amendment, modification, supplement,
termination, waiver or consent may be effective:

 

(a)           To reduce the amount
of principal, principal prepayments or the rate of interest payable on, any
Loan, or the amount of any fee or other amount payable to any Lender under the
Loan Documents (unless such modification is consented to by each Lender
entitled to receive such fee) or to waive an Event of Default consisting of the
failure of Borrower to pay when due principal or interest;

 

(b)           To postpone any date
fixed for any payment of principal of, prepayment of principal of, or any
installment of interest on, any Loan, to extend the term of, or increase the
amount of, any Lender’s Commitment (it being understood that a waiver of an
Event of Default shall not constitute an extension or increase in the
Commitment of any Lender) or modify the Pro Rata Share of any Lender;

 

(c)           To release
collateral in which Lenders have a security interest to secure the performance
of Borrower’s obligations under the Loan Documents constituting more than
$2,500,000;

 

(d)           To release all or
substantially all of the Guarantors from the Guaranty except as expressly
provided in the Loan Documents;

 

83

 

(e)           To amend the
definition of “Requisite Lenders” or “Pro Rata Share” or the provisions of Section 4,
Section 9, this Section 10.1 or Section 10.6;

 

(f)            To consent to the
assignment or transfer by any Credit Party of any of its rights and obligations
under any Loan Document; and

 

(g)           To amend any
provision of this Agreement that expressly requires the consent or approval of
all Lenders;

 

provided, however,
that (i) no amendment, waiver or consent shall, unless in writing and
signed by Administrative Agent in addition to Requisite Lenders or all Lenders,
as the case may be, affect the rights or duties of Administrative Agent, (ii) the
Facilities Letter and the Fee Letter (or any similar letters that may be
entered into from time to time) may be amended, or rights or privileges
thereunder waived, in a writing executed by the parties thereto, and (iii) any
waiver, amendment or modification of the Intercreditor Agreement (and any
related definitions) may be effected by an agreement or agreements in writing
entered into among the Administrative Agent, the First Lien Administrative
Agent (with the consent of the Requisite Lenders but without the consent of any
Credit Party, so long as such amendment, waiver or modification does not impose
any additional duties or obligations on the Credit Parties or alter or impair
any right of any Credit Party under the Loan Documents).  Any amendment, modification, supplement,
termination, waiver or consent pursuant to this Section shall apply
equally to, and shall be binding upon, all Lenders and Administrative Agent.

 

10.2        TRANSMISSION AND
EFFECTIVENESS OF COMMUNICATIONS AND SIGNATURES.

 

(a)           Modes of
Delivery.  Except as otherwise
provided in any Loan Document, notices, requests, demands, directions,
agreements and documents delivered in connection with the Loan Documents
(collectively, “communications”) shall be
transmitted by Requisite Notice to the number and address set forth on Schedule
10.2, may be delivered by the following modes of delivery, and shall be
effective as follows:

 

	
  Mode of Delivery

  	
   

  	
  Effective on earlier of actual
  receipt and:

  
	
  Courier

  	
   

  	
  Scheduled delivery date

  
	
  Facsimile

  	
   

  	
  When transmission in legible form complete

  
	
  Mail

  	
   

  	
  Fourth Business Day after deposit in U.S. mail first class postage
  pre-paid

  
	
  Personal delivery

  	
   

  	
  When received

  
	
  Telephone

  	
   

  	
  When conversation completed

  

 

provided, however, that communications
delivered to Administrative Agent pursuant to Section 2 must be in writing
and shall not be effective until actually received by Administrative Agent.

 

(b)           Reliance by
Administrative Agent and Lenders. 
Administrative Agent and Lenders shall be entitled to rely and act on
any communications purportedly given by or on behalf of Borrower even if (i) such
communications (A) were not made in a manner specified herein, (B) were
incomplete or (C) were not preceded or followed by any other notice
specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any subsequent related communications provided for
herein.  Borrower shall indemnify
Administrative Agent

 

84

 

and Lenders from any loss,
cost, expense or liability as a result of relying on any communications
permitted herein.

 

(c)           Effectiveness
of Facsimile Documents and Signatures.  Documents and agreements delivered from time
to time in connection with the Loan Documents may be transmitted and/or signed
by facsimile.  The effectiveness of any
such documents and signatures shall, subject to applicable Law, have the same
force and effect as hardcopies with manual signatures and shall be binding on
all Borrower and its Subsidiaries and Administrative Agent and Lenders.  Administrative Agent may also request that
any such documents and signature be confirmed by a manually-signed hardcopy
thereof; provided, however, that the failure to
request or deliver any such manually-signed hardcopy shall not affect the
effectiveness of any facsimile documents or signatures.

 

10.3        ATTORNEY COSTS,
EXPENSES AND TAXES.

 

Borrower agrees (a) to pay or reimburse Administrative Agent and
each Lender for all reasonable costs and expenses incurred in connection with
the development, preparation, negotiation and execution of the Loan Documents,
and the development, preparation, negotiation and execution of any amendment,
waiver, consent, supplement or modification to any Loan Documents, and any
other documents prepared in connection herewith or therewith, including all
reasonable Attorney Costs, and (b) to pay or reimburse Administrative
Agent and each Lender for all costs and expenses incurred in connection with
any refinancing, restructuring, reorganization (including a bankruptcy
reorganization), collection and enforcement or attempted enforcement, or
preservation of any rights under any Loan Documents, and any other documents
prepared in connection herewith or therewith, or in connection with any
refinancing, or restructuring of any such documents in the nature of a “workout”
or of any insolvency or bankruptcy proceeding, including Attorney Costs.  The foregoing costs and expenses shall
include all reasonable search, filing, and appraisal charges and fees and
recording, filing, transfer, court, documentary, stamp or similar taxes related
thereto, and other out-of-pocket expenses incurred by Administrative Agent or
any Lender and the cost of independent public accountants and other outside
experts retained by Administrative Agent or any Lender.  Any amount payable by Borrower under this Section shall
bear interest from the tenth (10th) Business Day following the date of demand
for payment at the Default Rate, unless waived by Administrative Agent.  The agreements in this Section shall
survive repayment of all Obligations.

 

10.4        SUCCESSORS AND
ASSIGNS.

 

(a)           Successors
and Assigns Generally.  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted
hereby, except that the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of the
Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an
assignee in accordance with the provisions of paragraph (b) of this Section 10.4,
(ii) by way of participation in accordance with the provisions of
paragraph (d) of this Section 10.4 or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of paragraph (f) of
this Section 10.4 (and any other attempted assignment or transfer

 

85

 

by any party hereto shall be
null and void).  Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in paragraph (d) of
this Section 10.4 and, to the extent expressly contemplated hereby, the
Related Parties of each of the Administrative Agent and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)           Assignments
by Lenders.  Any Lender may at
any time assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of the Loans at
the time owing to it); provided that
any such assignment shall be subject to the following conditions.

 

(i)            Minimum Amounts.

 

(A)          in
the case of an assignment of the entire remaining amount of the assigning
Lender’s Loans at the time owing to it or in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be
assigned; and

 

(B)           in
any case not described in paragraph (b)(i)(A) of this Section 10.4,
the principal outstanding balance of the Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of
the Trade Date) shall not be less than $1,000,000, unless the Administrative
Agent otherwise consents (such consent not to be unreasonably withheld or
delayed).

 

(ii)           Proportionate Amounts. 
Each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement
with respect to the Loan assigned.

 

(iii)          Required Consents.  No
consent shall be required for any assignment except to the extent required by
paragraph (b)(i)(B) of this Section 10.4 and, in addition the consent
of the Administrative Agent (such consent not to be unreasonably withheld or
delayed) shall be required for assignments to a Person who is not an Eligible
Assignee.

 

(iv)          Assignment
and Assumption.  The parties
to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of
$3,500, and the assignee, if it is not a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

 

(v)           No
Assignment to Borrower.  No
such assignment shall be made to the Borrower or any of the Borrower’s
Affiliates or Subsidiaries.

 

(vi)          No
Assignment to Natural Persons. 
No such assignment shall be made to a natural person.

 

86

 

Subject to acceptance and recording thereof by the Administrative Agent
pursuant to paragraph (c) of this Section 10.4, from and after the
effective date specified in each Assignment and Assumption, the assignee thereunder
shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall
continue to be entitled to the benefits of Sections III, 10.3, 10.14 and 10.15
of this Agreement with respect to facts and circumstances occurring prior to
the effective date of such assignment. 
Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this paragraph shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (d) of this Section 10.4.

 

(c)           Register.  The Administrative Agent, acting solely for
this purpose as an agent of the Borrower, shall maintain at one of its offices
in Cleveland, Ohio a copy of each Assignment and Assumption delivered to it and
a register for the recordation of the names and addresses of the Lenders, and
the Commitments of, and principal amounts of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by the Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

 

(d)           Participations.  Any Lender may at any time, without the
consent of, or notice to, the Borrower or the Administrative Agent, sell
participations to any Person (other than a natural person or the Borrower or
any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent and the Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement.

 

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
which (A) extends the Maturity Date as to such Participant or any other
date upon which any payment of money is due to such Participant, (B) reduces
the rate of interest owing to such Participant, any fee or any other monetary
amount owing to such Participant, or (C) reduces the amount of any
installment of principal owing to such Participant all as described in Sections
10.1(a) and 10.1(b).  Subject to
paragraph (e) of this Section, the Borrower agrees that each Participant
shall be entitled to the

 

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benefits of Section III to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section 10.4.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.5 as
though it were a Lender, provided such
Participant agrees to be subject to Section 10.6 as though it were a
Lender.

 

(e)           Limitations
upon Participant Rights.  A
Participant shall not be entitled to receive any greater payment under Section III
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent.  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section III
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 10.22
as though it were a Lender.

 

(f)            Certain Pledges.  Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

10.5        SET-OFF.

 

Subject to the Intercreditor Agreement, in addition to any rights and remedies
of Administrative Agent and Lenders or any assignee or participant of any
Lender or any Affiliate thereof (each, a “Proceeding Party”)
provided by law, upon the occurrence and during the continuance of any Event of
Default, each Proceeding Party is authorized at any time and from time to time,
without prior notice to Borrower, any such notice being waived by Borrower to
the fullest extent permitted by law, to proceed directly, by right of set-off,
banker’s lien, or otherwise, against any assets of Borrower and its
Subsidiaries which may be in the hands of such Proceeding Party (including all
general or special, time or demand, provisional or other deposits and other
indebtedness owing by such Proceeding Party to or for the credit or the account
of Borrower) and apply such assets against the Obligations, irrespective of
whether such Proceeding Party shall have made any demand therefor and although
such Obligations may be unmatured.  Each
Lender agrees promptly to notify Borrower and Administrative Agent after any
such set-off and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the
validity of such set-off and application.

 

10.6        SHARING OF PAYMENTS.

 

Subject to the Intercreditor Agreement, each Lender severally agrees
that if it, through the exercise of any right of setoff, banker’s lien or
counterclaim against Borrower or otherwise, receives payment on account of the
Outstanding Obligations held by it that is ratably more than any other Lender
receives in payment on account of the Outstanding Obligations held by such
other Lender, then, subject to applicable Laws: 
(a) the Lender exercising the right of setoff, banker’s lien or
counterclaim or otherwise receiving such payment shall purchase, and shall be
deemed to have simultaneously purchased, from such other Lender a participation
in the Outstanding Obligations held by the other Lender and shall pay to such
other Lender a purchase

 

88

 

price in an amount so that the
share of the Outstanding Obligations held by each Lender after the exercise of
the right of setoff, banker’s lien or counterclaim or receipt of payment shall
be in the same proportion that existed prior to the exercise of the right of
setoff, banker’s lien or counterclaim or receipt of payment; and (b) such
other adjustments and purchases of participations shall be made from time to
time as shall be equitable to ensure that all Lenders share any payment
obtained in respect of the Outstanding Obligations ratably in accordance with
each Lender’s share of the Outstanding Obligations immediately prior to, and
without taking into account, the payment; provided that,
if all or any portion of a disproportionate payment obtained as a result of the
exercise of the right of setoff, banker’s lien, counterclaim or otherwise is
thereafter recovered from the purchasing Lender by Borrower or any Person
claiming through or succeeding to the rights of Borrower, the purchase of a
participation shall be rescinded and the purchase price thereof shall be
restored to the extent of the recovery, but without interest.  Each Lender that purchases a participation in
the Outstanding Obligations pursuant to this Section shall from and after
the purchase have the right to give all notices, requests, demands, directions
and other communications under this Agreement with respect to the portion of
the Outstanding Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Outstanding Obligations
purchased.  Borrower expressly consents
to the foregoing arrangements and agrees that any Lender holding a
participation in an Obligation so purchased may exercise any and all rights of
setoff, banker’s lien or counterclaim with respect to the participation as
fully as if Lender were the original owner of the Obligation purchased.

 

10.7        NO SETOFF.

 

As to any and all funds, securities or other assets of Borrower which
are now or hereafter held by Administrative Agent or any Lender as collateral
pursuant to this Agreement or any other Loan Document for any of the
Obligations (collectively the “Collateral Assets”),
Administrative Agent and Lenders agree that they shall not exercise any right
of setoff or recoupment against nor shall they assert any security interest in
the Collateral Assets in connection with any other obligation owed to
Administrative Agent or any Lender which is unrelated to this Agreement or the
Loan Documents, except for:   (i) recovery
for any items deposited with Administrative Agent or any Lender and returned
unpaid or as to which claims have been asserted as to breach of transfer or
presentment warranties, (ii) overdrafts on any account which generated the
funds which constitute part of the Collateral Assets, (iii) automated
clearing house entries, and (iv) Administrative Agent or any Lender’s
usual and customary fees for services rendered in connection with the assets or
bank accounts which constitute the Collateral Assets.

 

10.8        NO WAIVER; CUMULATIVE
REMEDIES.

 

(a)           No failure by any
Lender or Administrative Agent to exercise, and no delay by any Lender or
Administrative Agent in exercising, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. 
Without limiting the generality of the foregoing, the terms and
conditions of Section 4 may be waived in whole or in part, with or without
terms or conditions, in respect of any Extension of Credit without

 

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prejudicing Administrative
Agent’s or Lender’s rights to assert them in whole or in part in respect of any
other Extension of Credit.

 

(b)           The rights,
remedies, powers and privileges herein or therein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by
Law.  Any decision by Administrative Agent
or any Lender not to require payment of any interest (including interest at the
Default Rate), fee, cost or other amount payable under any Loan Document or to
calculate any amount payable by a particular method on any occasion shall in no
way limit or be deemed a waiver of Administrative Agent’s or Lender’s right to
require full payment thereof, or to calculate an amount payable by another
method that is not inconsistent with this Agreement, on any other or subsequent
occasion.

 

(c)           The terms and
conditions of Section 9 are for the sole benefit of Administrative Agent
and Lenders.

 

10.9        USURY.

 

Notwithstanding anything to the contrary contained in any Loan
Document, the interest and fees paid or agreed to be paid under the Loan
Documents shall not exceed the maximum rate of non-usurious interest permitted
by applicable Law (the “Maximum Rate”).  If Administrative Agent or any Lender shall
receive interest or a fee in an amount that exceeds the Maximum Rate, the
excessive interest or fee shall be applied to the principal of the Outstanding
Obligations or, if it exceeds the unpaid principal, refunded to Borrower.  In determining whether the interest or a fee
contracted for, charged, or received by Administrative Agent or any Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate,
and spread in equal or unequal parts the total amount of interest throughout
the contemplated term of the Obligations.

 

10.10      COUNTERPARTS.

 

This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

10.11      INTEGRATION.

 

This Agreement, together with the other Loan Documents and any letter
agreements referred to herein, comprises the complete and integrated agreement
of the parties on the subject matter hereof and supersedes all prior
agreements, written or oral, on the subject matter hereof.  In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern; provided
that the inclusion of supplemental rights or remedies in favor of
Administrative Agent or Lenders in any other Loan Document shall not be deemed
a conflict with this Agreement.  Each
Loan Document was drafted with the joint participation of the respective
parties thereto and shall be construed neither against nor in favor of any
party, but rather in accordance with the fair meaning thereof.

 

90

 

10.12      NATURE OF LENDERS’
OBLIGATIONS.

 

Nothing contained in this Agreement or any other Loan Document and no
action taken by Administrative Agent or Lenders or any of them pursuant hereto
or thereto may, or may be deemed to, make Lenders a partnership, an
association, a joint venture or other entity, either among themselves or with
Borrower or any Affiliate of Borrower. 
Each Lender’s obligation to make any Extension of Credit pursuant hereto
is several and not joint or joint and several; provided
that, in the case of the initial Extension of Credit only, each Lender’s
obligation is conditioned upon the performance by all other Lenders of their
obligations to make the initial Extension of Credit.  A default by any Lender will not increase the
Pro Rata Share attributable to any other Lender.

 

10.13      SURVIVAL OF
REPRESENTATIONS AND WARRANTIES.

 

All representations and warranties made hereunder and in any Loan
Document, certificate or statement delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery
thereof but shall terminate when no Obligations remain outstanding under any
Loan Document.  Such representations and
warranties have been or will be relied upon by Administrative Agent and each
Lender, notwithstanding any investigation made by Administrative Agent or any
Lender or on their behalf.

 

10.14      INDEMNITY BY BORROWER.

 

(a)           Borrower agrees to
indemnify, defend (subject to Indemnitees’ selection of counsel), save and hold
harmless each Administrative Agent-Related Person and each Lender and each of
their respective Affiliates, directors, officers, agents, attorneys and
employees (each, an “Indemnitee”)
from and against:  (a) any and all
claims, demands, actions or causes of action that are asserted against any
Indemnitee by any Person (other than Administrative Agent or any Lender)
relating directly or indirectly to a claim, demand, action or cause of action
that such Person asserts or may assert against Borrower, any of its Affiliates
or any its officers or directors; (b) any and all claims, demands, actions
or causes of action arising out of or relating to, the Loan Documents, any
predecessor loan documents, the Commitments, the use or contemplated use of the
proceeds of any Loan, property that is the subject of any Material Lease or any
other collateral given to secure the obligations of Borrower under this
Agreement, or the relationship of Borrower, Administrative Agent and Lenders
under this Agreement; (c) any administrative or investigative proceeding
by any Governmental Authority arising out of or related to a claim, demand, action
or cause of action described in subsection (a) or (b) above; and (d) all
liabilities, claims, actions, loss, damages, including, without limitation,
foreseeable and unforeseeable consequential damages, costs and expenses
(including sums paid in settlement of claims and all consultant, expert and
legal fees and expenses of Indemnitees’ counsel) directly or indirectly arising
out of or resulting from any Hazardous Substance being present at any time in
or around any part of Borrower’s or any Subsidiary’s properties (leasehold or
fee), or in the soil, groundwater or soil vapor on or under Borrower’s or any
Subsidiary’s properties (leasehold or fee), including those incurred in
connection with any investigation of site conditions or any clean-up, remedial,
removal or restoration work, or any resulting damages or injuries to the person
or property of any third parties or to any natural resources; (e) any and
all liabilities, losses, costs or expenses (including Attorney Costs) that any
Indemnitee suffers or incurs as a result of the assertion of any foregoing
claim, demand, action, cause of action or proceeding, or as a result of the
preparation of any defense in connection with any foregoing claim, demand,

 

91

 

action, cause of action or
proceeding, in all cases, whether or not an Indemnitee is a party to such
claim, demand, action, cause of action or proceeding, including those
liabilities caused by an Indemnitee’s own comparative, contributory or sole
negligence (all the foregoing, collectively, the “Indemnified
Liabilities”); provided that
no Indemnitee shall be entitled to indemnification for any loss caused by its
own gross negligence or willful misconduct as determined by a court of
competent jurisdiction in a final, non-appealable order or for any loss
asserted against it by another Indemnitee. 
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this Section 10.14 may be unenforceable in whole or
in part because they are violative of any law or public policy, the applicable
Credit Party shall contribute the maximum portion that it is permitted to pay
and satisfy under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Indemnitees or any of them.

 

(b)           To the extent
permitted by applicable law, no Credit Party shall assert, and each Credit
Party hereby waives, any claim against each Administrative Agent-Related Person
and each Lender and each of their respective Affiliates, directors, officers,
agents, attorneys and employees, on any theory of liability, for special,
indirect, consequential or punitive damages 
(as opposed to direct or actual damages) (whether or not the claim
therefor is based on contract, tort or duty imposed by any applicable legal
requirement) arising out of, in connection with, as a result of, or in any way
related to, this Agreement or any Loan Document or any agreement or instrument
contemplated hereby or thereby or referred to herein or therein, the
transactions contemplated hereby or thereby, any Loan or the use of the
proceeds thereof or any act or omission or event occurring in connection
therewith, and each Credit Party hereby waives, releases and agrees not to sue upon
any such claim or any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.

 

10.15      NONLIABILITY OF LENDER.

 

Borrower acknowledges and agrees that:

 

(a)           Any inspections of
any property of Borrower made by or through Administrative Agent or Lenders are
for purposes of administration of the Loan Documents only, and Borrower is not
entitled to rely upon the same (whether or not such inspections are at the
expense of Borrower);

 

(b)           By accepting or
approving anything required to be observed, performed, fulfilled or given to
Administrative Agent or Lenders pursuant to the Loan Documents, neither
Administrative Agent nor Lenders shall be deemed to have warranted or
represented the sufficiency, legality, effectiveness or legal effect of the
same, or of any term, provision or condition thereof, and such acceptance or
approval thereof shall not constitute a warranty or representation to anyone
with respect thereto by Administrative Agent or Lenders;

 

(c)           The relationship between
Borrower and Administrative Agent and Lenders is, and shall at all times
remain, solely that of borrower and lenders; neither Administrative Agent nor
Lenders shall under any circumstance be deemed to be in a relationship of
confidence or trust or a fiduciary relationship with Borrower or its
Affiliates, or to owe any fiduciary duty to Borrower or its Affiliates; neither
Administrative Agent nor any Lender undertakes or assumes any responsibility or
duty to Borrower or its Affiliates to select, review, inspect, supervise, pass

 

92

 

 

judgment
upon or inform Borrower or its Affiliates of any matter in connection with
their property or the operations of Borrower or its Affiliates; Borrower and
its Affiliates shall rely entirely upon their own judgment with respect to such
matters; and any review, inspection, supervision, exercise of judgment or
supply of information undertaken or assumed by Lender in connection with such
matters is solely for the protection of Lenders and neither Borrower nor any
other Person is entitled to rely thereon; and

 

(d)           Neither Administrative Agent nor
Lenders shall be responsible or liable to any Person for any loss, damage,
liability or claim of any kind relating to injury or death to Persons or damage
to property caused by the actions, inaction or negligence of Borrower and/or
its Affiliates and Borrower hereby indemnifies and holds Administrative Agent
and Lenders harmless from any such loss, damage, liability or claim.

 

10.16      NO THIRD PARTIES BENEFITED.

 

This Agreement is made for the purpose of
defining and setting forth certain obligations, rights and duties of Borrower,
Administrative Agent and Lenders in connection with the Extensions of Credit,
and is made for the sole benefit of Borrower, Administrative Agent and Lenders,
and Administrative Agent and Lenders’ successors and assigns.  Except as provided in Sections 10.14 and
10.22, no other Person shall have any rights of any nature hereunder or by
reason hereof.

 

10.17      SEVERABILITY.

 

Any provision of the Loan Documents that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

10.18      CONFIDENTIALITY.

 

Administrative Agent and each Lender shall
use any confidential non-public information concerning Borrower and its
Subsidiaries that is furnished to Administrative Agent or such Lender by or on
behalf of Borrower and its Subsidiaries in connection with the Loan Documents
that has been identified in writing as confidential at the time so furnished
(collectively, “Confidential Information”)
solely for the purpose of evaluating and providing products and services to
them and administering and enforcing the Loan Documents, and it will hold the
Confidential Information in confidence in accordance with such Person’s
customary procedures for handling confidential of the same nature.  Notwithstanding the foregoing, Administrative
Agent and each Lender may disclose Confidential Information to:  (a) their
Affiliates, or any of their or their Affiliates’ directors, officers,
employees, advisors, or representatives (collectively, the “Representatives”) whom it determines need
to know such information for the purposes set forth in this Section (it
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Confidential Information and
instructed to keep such Confidential Information confidential); (b) any
bank or financial institution or other entity to which such Lender has assigned
or desires to assign an interest or participation in the Loan 

 

93

 

Documents or
the Obligations or indirect contractual counterparties (or the professional
advisors thereto) in connection with Swap Contracts, provided that any such foregoing recipient of such
Confidential Information agrees to keep such Confidential Information
confidential as specified herein; (c) any governmental agency or
regulatory body having or claiming to have authority to regulate or oversee any
aspect of Administrative Agent’s or such Lender’s business or that of their
Representatives in connection with the exercise of such authority or claimed
authority; (d) to the extent necessary or appropriate to effect or
preserve Administrative Agent or such Lender’s or any of their Affiliates’
security (if any) for any Obligation or to enforce any right or remedy or in
connection with any claims asserted by or against Administrative Agent or such
Lender or any of its Representatives; (e) pursuant to any subpoena or any
similar legal or regulatory process so long as Borrower is, or has been, to the
extent possible, given notice of such legal or regulatory process and the
opportunity to seek a protective order; (f) to any rating agency when
required by it, provided that, prior to any
disclosure, such rating agency shall undertake in writing to preserve the
confidentiality of any confidential information relating to the Credit Parties
received by it from any of the Agents or any Lender; and (g) disclosures
to any Lender’s financing sources, provided that
prior to any disclosure, such financing source is informed of the confidential
nature of the information.  For purposes
hereof, the term “Confidential Information”
shall not include information that (x) is in Administrative Agent’s or
such Lender’s possession prior to its being provided by or on behalf of
Borrower and its Subsidiaries, provided
that such information is not known by Administrative Agent or such Lender to be
subject to another confidentiality agreement with, or other legal or
contractual obligation of confidentiality to, Borrower, (y) is or becomes
publicly available (other than through a breach hereof by Administrative Agent
or such Lender), or (z) becomes available to Administrative Agent or such
Lender on a nonconfidential basis, provided
that the source of such information was not known by Administrative Agent or
such Lender to be bound by a confidentiality agreement or other legal or
contractual obligation of confidentiality with respect to such
information.  Administrative Agent and
each Lender acknowledges that (i) the Confidential Information may include
material non-public information concerning the Borrower or a Subsidiary, as the
case may be, (ii) it has developed compliance procedures regarding the use
of material, non-public information and (iii) it will handle material
non-public information concerning the Borrower or a Subsidiary in accordance
with all Laws, including federal and state securities Laws applicable to
Administrative Agent or such Lender, as applicable, provided that neither Administrative Agent nor any Lender
shall in any way be responsible for compliance with such Laws by Borrower or
any of its Subsidiaries and provided,
further, that nothing in this sentence shall limit the right of
Administrative Agent or any Lender to disclose Confidential Information as
otherwise permitted in this Section 10.18.

 

10.19      FURTHER ASSURANCES.

 

Borrower and its Subsidiaries shall, at their
expense and without expense to Administrative Agent or Lenders, do, execute and
deliver such further acts and documents as any Lender or Administrative Agent
from time to time reasonably requires for the assuring and confirming unto
Lenders of the rights hereby created or intended now or hereafter so to be, or
for carrying out the intention or facilitating the performance of the terms of
any Loan Document.

 

94

 

10.20      HEADINGS.

 

Section headings in this Agreement and
the other Loan Documents are included for convenience of reference only and are
not part of this Agreement or the other Loan Documents for any other purpose.

 

10.21      TIME OF THE ESSENCE.

 

Time is of the essence of the Loan Documents.

 

10.22      FOREIGN LENDERS.

 

Each Lender that is a “foreign corporation,
partnership or trust” within the meaning of the Code (a “Foreign Lender”) shall deliver to Administrative Agent, prior to receipt of any
payment subject to withholding under the Code (or after accepting an assignment
of an interest herein), two duly signed completed copies of either Form W-8BEN
or any successor thereto (relating to such Person and entitling it to a
complete exemption from withholding on all payments to be made to such Person
by Borrower pursuant to this Agreement) or Form W-8ECI or any successor
thereto (relating to all payments to be made to such Person by Borrower
pursuant to this Agreement) of the IRS or such other evidence satisfactory to
Borrower and Administrative Agent that no withholding under the United States
federal income tax laws is required with respect to such Person.  Thereafter and from time to time, each such
Person shall (a) promptly submit to Administrative Agent such additional
duly completed and signed copies of one of such forms (or such successor forms
as shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United States laws and
regulations to avoid, or such evidence as is satisfactory to Borrower and
Administrative Agent of any available exemption from, United States withholding
taxes in respect of all payments to be made to such Person by Borrower pursuant
to this Agreement, and (b) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the re-designation of its Lending Office) to
avoid any requirement of applicable Laws that Borrower make any deduction or
withholding for taxes from amounts payable to such Person.  If such Persons fail to deliver the above
forms or other documentation, then Administrative Agent may withhold from any
interest payment to such Person an amount equivalent to the applicable
withholding tax imposed by Sections 1441 and 1442 of the Code.  If any Governmental Authority asserts that
Administrative Agent did not properly withhold any tax or other amount from
payments made in respect of such Person, such Person shall indemnify
Administrative Agent therefor, including all penalties and interest and costs
and expenses (including Attorney Costs) of Administrative Agent.  The obligation of Lenders under this Section shall
survive the payment of all Obligations and the resignation or replacement of
Administrative Agent.

 

10.23      REMOVAL AND REPLACEMENT OF LENDERS.

 

Under any circumstances set forth in this
Agreement providing that Borrower shall have the right to remove and replace a
Lender as a party to this Agreement, Borrower may, upon notice to such Lender
and Administrative Agent, remove such Lender by causing such Lender to assign
its Commitment to one or more other Lenders or Eligible Assignees acceptable to
Borrower and Administrative Agent; provided, however, that during the existence of any Event of Default,
Borrower may not remove or replace a Lender pursuant to this Section 10.23.  Any 

 

95

 

removed or
replaced Lender shall be entitled to (x) payment in full of all principal,
interest, fees and other amounts owing to such Lender or such Lender’s
affiliated Indemnitees under any Loan Document through the date of termination
or assignment (including any amounts payable pursuant to Section 3.5 and
any applicable prepayment compensation under Section 2.3) and (y) a
release of such Lender from its obligations under the Loan Documents.  Any Lender being replaced shall execute and
deliver an Assignment and Assumption covering such Lender’s Commitment, and
shall otherwise comply with Section 10.4 (and Borrower shall be
responsible for payment of any processing and recordation fee payable under Section 10.4(b)(iv)).  Administrative Agent shall distribute an amended
Schedule 2.1, which shall
thereafter be incorporated into this Agreement, to reflect adjustments to
Lenders and their Commitments.

 

10.24      GOVERNING LAW.

 

(a)           THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; PROVIDED THAT ADMINISTRATIVE AGENT AND EACH LENDER SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)           ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY
OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER,
ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  BORROWER, ADMINISTRATIVE AGENT AND EACH
LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED
HERETO.  BORROWER, ADMINISTRATIVE AGENT
AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH
STATE.

 

10.25      WAIVER OF RIGHT TO TRIAL BY JURY.

 

EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT
TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT 

 

96

 

MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.

 

10.26      PATRIOT ACT NOTIFICATION.

 

Each Lender subject to the Act and the Administrative Agent (for itself
and not on behalf of any Lender) hereby notifies Borrower (and each Subsidiary)
that, pursuant to the requirements of the USA Patriot Act, it is required to
obtain, verify and record information that identifies Borrower (and, to the
extent requested, each Subsidiary), which information includes the name and
address of Borrower (and, to the extent requested, each Subsidiary) and other
information that will allow such Lender or Administrative Agent to identify
Borrower (and, to the extent requested, each Subsidiary) in accordance with the
USA Patriot Act.

 

10.27      ENTIRE AGREEMENT.

 

This Agreement and the other Loan Documents
represent the final agreement between the parties and may not be contradicted
by evidence of prior, contemporaneous, or subsequent oral agreements of the
parties.  There are no unwritten oral
agreements between the parties.

 

[SIGNATURES ON FOLLOWING PAGE.]

 

97

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed as of the
date fast above written.

 

	
  KRATOS DEFENSE & SECURITY 

  SOLUTIONS, INC., 

  a Delaware corporation, 

  as Borrower

  	
  KEYBANK NATIONAL ASSOCIATION,
  

  as Administrative Agent and Lender

  

 

	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
    Raed Y. Alfayourmi

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
    Vice President

  

 

 

Signature Page to Second Lien Credit
Agreement

 

 

SCHEDULE 7.12(a)

 

MAXIMUM FIRST LIEN LEVERAGE RATIO

 

	
  Fiscal Quarter 

  Ending

  	
   

  	
  First Lien 

  Leverage 

  Ratio

  	
   

  
	
  December 31, 2007

  	
   

  	
  5.39:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  5.33:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  4.33:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  4.07:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  3.62:1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  3.34:1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  3.09:1.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  2.83:1.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  2.62:1.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  2.20:1.00

  	
   

  
	
  June 30, 2010

  	
   

  	
  2.04:1.00

  	
   

  
	
  September 30, 2010 and thereafter

  	
   

  	
  1.93:1.00

  	
   

  

 

 

SCHEDULE 7.12(b)

 

MAXIMUM TOTAL LEVERAGE RATIO

 

	
  Fiscal Quarter 

  Ending

  	
   

  	
  Total 

  Leverage 

  Ratio

  	
   

  
	
  December 31, 2007

  	
   

  	
  6.44:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  6.34:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  5.06:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  4.78:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  4.23:1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  3.93:1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  3.67:1.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  3.35:1.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  3.13:1.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  2.75:1.00

  	
   

  
	
  June 30, 2010

  	
   

  	
  2.64:1.00

  	
   

  
	
  September 30, 2010 and thereafter

  	
   

  	
  2.48:1.00

  	
   

  

 

 

SCHEDULE 7.12(c)

 

MINIMUM LIQUIDITY RATIO

 

	
  Fiscal Quarter 

  Ending

  	
   

  	
  Liquidity 

  Ratio

  	
   

  
	
  December 31, 2007

  	
   

  	
  1.17:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  1.25:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  1.25:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  1.26:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  1.39:1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  1.40:1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  1.40:1.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  1.42:1.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  1.42:1.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  1.31:1.00

  	
   

  
	
  June 30, 2010

  	
   

  	
  1.32:1.00

  	
   

  
	
  September 30, 2010

  	
   

  	
  1.35:1.00

  	
   

  
	
  December 31, 2010

  	
   

  	
  1.36:1.00

  	
   

  
	
  March 31, 2011

  	
   

  	
  1.35:1.00

  	
   

  
	
  June 30, 2011

  	
   

  	
  1.35:1.00

  	
   

  
	
  September 30, 2011

  	
   

  	
  1.36:1.00

  	
   

  
	
  December 31, 2011

  	
   

  	
  1.36:1.00

  	
   

  
	
  March 31, 2012

  	
   

  	
  1.36:1.00

  	
   

  
	
  June 30, 2012

  	
   

  	
  1.35:1.00

  	
   

  
	
  September 30, 2012

  	
   

  	
  1.37:1.00

  	
   

  
	
  December 31, 2012

  	
   

  	
  1.25:1.00

  	
   

  

 

 

SCHEDULE 7.12(d)

 

MINIMUM FIXED CHARGE COVERAGE RATIO

 

	
  Fiscal Quarter 

  Ending

  	
   

  	
  Fixed 

  Charge 

  Coverage 

  Ratio

  	
   

  
	
  December 31, 2007

  	
   

  	
  0.45:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  0.49:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  0.55:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  0.71:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  0.93:1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  0.90:1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  0.99:1.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  0.97:1.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  0.98:1.00

  	
   

  
	
  March 31, 2010 and thereafter

  	
   

  	
  1.00:1.00

  	
   

  

 

 

SCHEDULE 7.12(e)

 

MINIMUM CONSOLIDATED EBITDA

 

	
  Fiscal Quarter 

  Ending

  	
   

  	
  Consolidated 

  EBITDA

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  15,607

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  14,817

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  16,515

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  15,800

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  17,220

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  17,583

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  18,123

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  18,714

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  19,131

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  19,078

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  19,116

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  19,854

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  20,686

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  21,528

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  22,194

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  22,762

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  23,343

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  23,584

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  23,833

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  24,075

  	
   

  
	
  December 31, 2012

  	
   

  	
  $

  	
  24,331

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}]]