Document:

exv10w3

 

Exhibit 10.3

CREDIT AGREEMENT

Dated as of December [______], 2002

among

ALION SCIENCE AND TECHNOLOGY CORPORATION,

as the Borrower,

THE INSTITUTIONS FROM TIME TO TIME

PARTIES HERETO AS LENDERS,

and

LASALLE BANK NATIONAL ASSOCIATION,

as Administrative Agent

LASALLE BANK NATIONAL ASSOCIATION

as Arranger

SIDLEY AUSTIN BROWN & WOOD

Bank One Plaza

10 South Dearborn Street

Chicago, Illinois 60603

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 
	 	 	 	Page
	 	 	 	

	ARTICLE I: DEFINITIONS
	 	 	1	 
	 	1.1      Certain Defined Terms; Plural Terms
	 	 	1	 
	 	1.2      References
	 	 	30	 
	 	1.3      Supplemental Disclosure
	 	 	30	 
	 	1.4      Knowledge With Respect to Representations and Warranties
	 	 	31	 
	ARTICLE II: THE TERM LOAN AND REVOLVING LOAN FACILITIES
	 	 	31	 
	 	2.1       Term Loans
	 	 	31	 
	 	2.2       Revolving Loans
	 	 	33	 
	 	2.3       Swing Line Loans
	 	 	33	 
	 	2.4       Rate Options for all Advances; Maximum Interest Periods
	 	 	35	 
	 	2.5       Optional Payments; Mandatory Prepayments
	 	 	36	 
	 	2.6       Reduction of Commitments
	 	 	38	 
	 	2.7       Method of Borrowing
	 	 	38	 
	 	2.8       Method of Selecting Types and Interest Periods for Advances
	 	 	38	 
	 	2.9       Minimum Amount of Each Advance
	 	 	39	 
	 	2.10      Method of Selecting Types and Interest Periods for Conversion and
Continuation of Advances
	 	 	39	 
	 	2.11      Default Rate
	 	 	40	 
	 	2.12      Method of Payment; Collection Account Arrangements
	 	 	40	 
	 	2.13      Evidence of Debt
	 	 	40	 
	 	2.14      Telephonic Notices
	 	 	41	 
	 	2.15      Promise to Pay; Interest and Commitment Fees; Interest Payment Dates; Interest and
Fee Basis; Taxes; Loan and
	 	 	 	 
	 	 Control Accounts
	 	 	42	 
	 	2.16      Notification of Advances, Interest Rates, Prepayments and Aggregate Revolving
Loan Commitment Reductions
	 	 	47	 
	 	2.17      Lending Installations
	 	 	47	 
	 	2.18      Non-Receipt of Funds by the Administrative Agent
	 	 	48	 
	 	2.19      Termination Conditions
	 	 	48	 
	 	2.20      Replacement of Certain Lenders
	 	 	48	 
	ARTICLE III: THE LETTER OF CREDIT FACILITY
	 	 	49	 
	 	3.1       Obligation to Issue Letters of Credit
	 	 	49	 
	 	3.2       Transitional Provision
	 	 	49	 
	 	3.3       Types and Amounts
	 	 	49	 
	 	3.4       Conditions
	 	 	50	 
	 	3.5       Procedure for Issuance of Letters of Credit
	 	 	50	 
	 	3.6       Letter of Credit Participation
	 	 	51	 
	 	3.7       Reimbursement Obligation
	 	 	51	 
	 	3.8       Letter of Credit Fees
	 	 	52	 
	 	3.9       Issuing Bank Reporting Requirements
	 	 	52	 
	 	3.10      Indemnification; Exoneration
	 	 	52	 

i

 

	 	 	 	 	 	 
	 	3.11      Cash Collateral
	 	 	54	 
	ARTICLE IV: CHANGE IN CIRCUMSTANCES
	 	 	54	 
	 	4.1       Yield Protection
	 	 	54	 
	 	4.2       Changes in Capital Adequacy Regulations
	 	 	55	 
	 	4.3       Availability of Types of Advances
	 	 	56	 
	 	4.4       Funding Indemnification
	 	 	56	 
	 	4.5       Lender Statements; Survival of Indemnity
	 	 	56	 
	ARTICLE V: CONDITIONS PRECEDENT
	 	 	57	 
	 	5.1       Initial Advances and Letters of Credit
	 	 	57	 
	 	5.2       Each Advance and Letter of Credit
	 	 	61	 
	ARTICLE VI: REPRESENTATIONS AND WARRANTIES
	 	 	62	 
	 	6.1       Organization; Powers
	 	 	62	 
	 	6.2       Authority, Execution and Delivery; Transaction Documents
	 	 	62	 
	 	6.3       No Conflict; Governmental Consents
	 	 	63	 
	 	6.4       Financial Statements
	 	 	63	 
	 	6.5       No Material Adverse Change
	 	 	64	 
	 	6.6       Taxes
	 	 	64	 
	 	6.7       Litigation; Loss Contingencies and Violations
	 	 	65	 
	 	6.8       Subsidiaries
	 	 	66	 
	 	6.9       ERISA
	 	 	67	 
	 	6.10      Accuracy of Information
	 	 	69	 
	 	6.11      Securities Activities
	 	 	70	 
	 	6.12      Material Agreements
	 	 	70	 
	 	6.13      Compliance with Laws
	 	 	70	 
	 	6.14      Assets and Properties
	 	 	70	 
	 	6.15      Statutory Indebtedness Restrictions
	 	 	70	 
	 	6.16      Insurance
	 	 	70	 
	 	6.17      Labor Matters
	 	 	71	 
	 	6.18      IITRI Acquisition and ESOT Transaction
	 	 	71	 
	 	6.19      Environmental Matters
	 	 	71	 
	 	6.20      Solvency
	 	 	72	 
	 	6.21      Additional ESOP Provisions
	 	 	72	 
	 	6.22      Subordinated Indebtedness
	 	 	74	 
	 	6.23      No Exercise of Set-Off
	 	 	74	 
	ARTICLE VII: COVENANTS
	 	 	74	 
	 	7.1       Reporting
	 	 	74	 
	 	7.2       Affirmative Covenants
	 	 	81	 
	 	7.3       Negative Covenants
	 	 	86	 
	 	7.4       Financial Covenants
	 	 	97	 
	ARTICLE VIII: DEFAULTS
	 	 	100	 
	 	8.1       Defaults
	 	 	100	 
	 	8.2       Termination of Commitments; Acceleration
	 	 	103	 

ii

 

	 	 	 	 	 	 
	ARTICLE IX: AMENDMENTS, WAIVERS AND REMEDIES
	 	 	104	 
	 	9.1       Amendments
	 	 	104	 
	 	9.2       Preservation of Rights
	 	 	105	 
	ARTICLE X: GENERAL PROVISIONS
	 	 	105	 
	 	10.1      Survival of Representations
	 	 	105	 
	 	10.2      Governmental Regulation
	 	 	105	 
	 	10.3      Performance of Obligations
	 	 	105	 
	 	10.4      Headings
	 	 	106	 
	 	10.5      Entire Agreement
	 	 	106	 
	 	10.6      Several Obligations; Benefits of this Agreement
	 	 	106	 
	 	10.7      Expenses; Indemnification
	 	 	107	 
	 	10.8      Numbers of Documents
	 	 	108	 
	 	10.9      Accounting
	 	 	109	 
	 	10.10     Severability of Provisions
	 	 	109	 
	 	10.11     Nonliability of Lenders
	 	 	109	 
	 	10.12     GOVERNING LAW
	 	 	109	 
	 	10.13     CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL
	 	 	110	 
	 	10.14     Other Transactions
	 	 	111	 
	 	10.15     Subordination of Intercompany Indebtedness
	 	 	111	 
	 	10.16     Lender’s Not Utilizing Plan Assets
	 	 	112	 
	ARTICLE XI: THE ADMINISTRATIVE AGENT
	 	 	113	 
	 	11.1      Appointment; Nature of Relationship
	 	 	113	 
	 	11.2      Powers
	 	 	113	 
	 	11.3      General Immunity
	 	 	113	 
	 	11.4      No Responsibility for Loans, Creditworthiness, Recitals, Etc.
	 	 	113	 
	 	11.5      Action on Instructions of Lenders; Actions with Respect to Defaults
	 	 	114	 
	 	11.6      Employment of Agents and Counsel
	 	 	114	 
	 	11.7      Reliance on Documents; Counsel
	 	 	114	 
	 	11.8      The Administrative Agent’s Reimbursement and Indemnification
	 	 	115	 
	 	11.9      Rights as a Lender
	 	 	115	 
	 	11.10     Lender Credit Decision
	 	 	115	 
	 	11.11     Successor Administrative Agent
	 	 	115	 
	 	11.12     Collateral Documents; Collateral
	 	 	116	 
	 	11.13     Arranger
	 	 	117	 
	ARTICLE XII: SETOFF; RATABLE PAYMENTS
	 	 	117	 
	 	12.1      Setoff
	 	 	117	 
	 	12.2      Ratable Payments
	 	 	118	 
	 	12.3      Application of Payments
	 	 	118	 
	 	12.4      Relations Among Lenders
	 	 	119	 
	ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
	 	 	120	 
	 	13.1      Successors and Assigns
	 	 	120	 
	 	13.2      Participations
	 	 	120	 

iii

 

	 	 	 	 	 	 
	 	13.3      Assignments
	 	 	121	 
	 	13.4      Confidentiality
	 	 	124	 
	 	13.5      Dissemination of Information
	 	 	124	 
	ARTICLE XIV: NOTICES
	 	 	124	 
	 	14.1      Giving Notice
	 	 	124	 
	 	14.2     Change of Address
	 	 	124	 
	ARTICLE XV: COUNTERPARTS
	 	 	124	 

iv

 

EXHIBITS AND SCHEDULES

Exhibits

	 	 	 	 	 
	EXHIBIT A	 	
—
	 	Commitments (Definitions)
	EXHIBIT B	 	
—
	 	Form of Borrowing/Election Notice (Section 2.3 and Section
2.8 and Section 2.10)
	EXHIBIT C	 	
—
	 	Form of Request for Letter of Credit (Section 3.4)
	EXHIBIT D	 	
—
	 	Form of Assignment and Acceptance Agreement (Sections 2.20
and 13.3)
	EXHIBIT E	 	
—
	 	Form of Borrower’s Counsel’s Opinion (Section 5.1)
	EXHIBIT F	 	
—
	 	List of Closing Documents (Section 5.1)
	EXHIBIT G	 	
—
	 	Form of Officer’s Certificate (Sections 5.2 and 7.1(A)(iv))
	EXHIBIT H	 	
—
	 	Form of Compliance Certificate (Sections 5.2 and 7.1(A)(iv))
	EXHIBIT I-1	 	
—
	 	Form of Guaranty (Definitions)
	EXHIBIT I-2	 	
—
	 	Form of Pledge Agreement (Borrower) (Definitions; Section
7.2(K))
	EXHIBIT I-3	 	
—
	 	Form of Security Agreement (Definitions)
	EXHIBIT J	 	
—
	 	Form of Borrowing Base Certificate (Definitions)
	EXHIBIT K-1	 	
—
	 	Form of Revolving Loan Note (If Requested)
	EXHIBIT K-2	 	
—
	 	Form of Term Loan Note (If Requested)
	EXHIBIT L	 	
—
	 	Form of L/C Master Agreement (Definitions)

v

 

Schedules

	 	 	 	 	 
	Schedule 1.1.1	 	
—
	 	Permitted Existing Indebtedness (Definitions)
	Schedule 1.1.2	 	
—
	 	Permitted Existing Investments (Definitions)
	Schedule 1.1.3	 	
—
	 	Permitted Existing Liens (Definitions)
	Schedule 1.1.4	 	
—
	 	Permitted Existing Contingent Obligations (Definitions)
	Schedule 1.1.5	 	
—
	 	ESOP Plan Documents (Definitions)
	Schedule 1.1.6	 	
—
	 	ESOT Transaction Documents (Definitions)
	Schedule 3.2	 	
—
	 	Transitional Letters of Credit (Section 3.2)
	Schedule 6.3	 	
—
	 	Conflicts; Governmental Consents (Section 6.3)
	Schedule 6.4	 	
—
	 	Pro Forma Financial Statements (Section 6.4(A))
	Schedule 6.7	 	
—
	 	Disclosed Litigation (Section 6.7)
	Schedule 6.8	 	
—
	 	Subsidiaries (Section 6.8)
	Schedule 6.9	 	
—
	 	ERISA (Section 6.9)
	Schedule 6.12	 	
—
	 	Material Agreements (Section 6.12)
	Schedule 6.16	 	
—
	 	Insurance (Sections 6.16 and 7.2(E))
	Schedule 6.18	 	
—
	 	IITRI Acquisition and ESOT Transaction Conditions
(Section 6.18)
	Schedule 6.19	 	
—
	 	Environmental Matters (Section 6.19)

vi

 

CREDIT AGREEMENT

                    This
Credit Agreement dated as of December [______], 2002 is entered into
among Alion Science and Technology Corporation, a Delaware corporation, the
institutions from time to time parties hereto as Lenders, whether by execution
of this Agreement or an Assignment Agreement pursuant to Section 13.3, and
LaSalle Bank National Association, in its capacity as contractual
representative for itself and the other Lenders (the “Administrative Agent”).
The parties hereto agree as follows:

ARTICLE I: DEFINITIONS

                    1.1 Certain Defined Terms; Plural Terms.

		
	 	             (A) Certain Defined Terms. In addition to the terms defined above,
the following terms used in this Agreement shall have the following
meanings:

                    “Accounting Change” is defined in Section 10.9.

                    “Account Debtor” means the account debtor or obligor with respect to any
of the Receivables and/or the prospective purchaser with respect to any
contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with the Borrower or any Guarantor.

                    “Acquisition” means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any Person, firm, corporation or division
thereof, whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage of
voting power) of the outstanding Equity Interests of another Person.

                    “Administrative Agent” means LaSalle in its capacity as contractual
representative for itself and the Lenders pursuant to Article XI hereof and any
successor Administrative Agent appointed pursuant to Article XI hereof.

                    “Advance” means a borrowing hereunder consisting of the aggregate amount
of the several Loans made by some or all of the Lenders to the Borrower of the
same Type and, in the case of Eurodollar Rate Advances, for the same Interest
Period.

                    “Affected Lender” is defined in Section 2.20.

                    “Affiliate” means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. A Person shall be deemed to control another Person if the controlling Person is the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of greater than fifty percent (50%) or more of the Voting Stock of the controlled Person or  possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
Capital Stock, by contract or otherwise.

 

 

                    “Aggregate Revolving Loan Commitment” means the aggregate of the Revolving
Loan Commitments of all the Lenders, as may be adjusted from time to time
pursuant to the terms hereof. The initial Aggregate Revolving Loan Commitment
is Twenty-Five Million and 00/100 Dollars ($25,000,000).

                    “Agreement” means this Credit Agreement, as it may be amended, restated or
otherwise modified and in effect from time to time.

                    “Agreement Accounting Principles” means generally accepted accounting
principles as in effect in the United States from time to time, applied in a
manner consistent with that used in preparing the financial statements of the
Borrower referred to in Section 5.1(B)(xix)(c), as the same may be adjusted
from time to time in accordance with the provisions of Section 10.9.

                    “Alternate Base Rate” means, for any day, a fluctuating rate of interest
per annum equal to the higher of (i) the Prime Rate for such day and (ii) the
sum of (a) the Federal Funds Effective Rate for such day and (b) one-half of
one percent (0.5%) per annum.

                    “Applicable Commitment Fee Percentage” means, as at any date of
determination, the rate per annum then applicable in the determination of the
amount payable under Section 2.15(C)(i) hereof determined in accordance with
the provisions of Section 2.15(D)(ii) hereof.

                    “Applicable Eurodollar Margins” means, as at any date of determination,
the rate per annum then applicable to Eurodollar Rate Loans which are Revolving
Loans or Term Loans, as applicable, determined in accordance with the
provisions of Section 2.15(D)(ii) hereof.

                    “Applicable Floating Rate Margins” means, as at any date of determination,
the rate per annum then applicable to Floating Rate Loans which are Revolving
Loans or Term Loans, as applicable, determined in accordance with the
provisions of Section 2.15(D)(ii) hereof.

                    “Applicable L/C Fee Percentage” means, as at any date of determination, a
rate per annum equal to the Applicable Eurodollar Margin in effect on such
date.

                    “Approved Fund” means, with respect to any Lender that is a fund or
commingled investment vehicle that invests in commercial loans, any other fund
that invests in commercial loans and is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment
advisor.

                    “Arranger” means LaSalle Bank National Association, in its capacity as
arranger.

                    “Asset
Purchase Agreement” means that certain Fourth Amended and Restated Asset
Purchase Agreement, dated as of November 18, 2002, by and between the
Borrower, as the purchaser, and IITRI, as the seller, as in effect on the
Closing Date and without giving effect to any subsequent amendment or
modification thereto.

2

 

                    “Asset Sale” means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including by way of a sale-leaseback transaction, and including the sale or
other transfer of any of the Equity Interests of any Subsidiary of such Person,
but not the Equity Interests of such Person) to any Person (other than the
Borrower or any of its wholly-owned Subsidiaries) other than (i) the licensing
of the Borrower’s and its Subsidiaries’ intellectual property in the ordinary
course of business and (ii) the sale of products manufactured by or on behalf
of the Borrower and its Subsidiaries in the ordinary course of business.

                    “Assignment Agreement” means an assignment and acceptance agreement
entered into in connection with an assignment pursuant to Section 13.3 hereof
in substantially the form of Exhibit D.

                    “Authorized Officer” means any of the president, chief financial officer,
controller, treasurer or assistant treasurer of the Borrower, acting singly.

                    “Benefit Plan” means a defined benefit plan as defined in Section 3(35) of
ERISA (other than a Multiemployer Plan) which is intended to be qualified under
Section 401(a) of the Code in respect of which the Borrower or any other member
of the Controlled Group is, or within the immediately preceding six (6) years
was, an “employer” as defined in Section 3(5) of ERISA.

                    “Borrower” means Alion Science and Technology Corporation, a Delaware
corporation, together with its permitted successors and assigns, including a
debtor-in-possession on behalf of Alion Science and Technology Corporation.

                    “Borrower Pledge Agreement” means that certain Pledge Agreement of even
date herewith executed by the Borrower in favor of the Administrative Agent for
the benefit of the Holders of Secured Obligations, as amended, restated or
otherwise modified from time to time, pledging 100% of the Capital Stock of
each Subsidiary, as the same may be amended, restated, supplemented or
otherwise modified from time to time.

                    “Borrowing
Base (Monthly)” means, as of any date of calculation, an amount, as set
forth on the most current Borrowing Base Certificate delivered to the
Administrative Agent, equal to the sum of (i) eighty-five percent (85%) of the
Net Amount of Eligible Receivables that are Eligible Billed Government Accounts
Receivable as of such date, plus (ii) eighty percent (80%) of the Net Amount of
Eligible Receivables that are Eligible Billed Commercial Accounts Receivable as
of such date, plus (iii) fifty percent (50%) of the gross
amount of Eligible Unbilled Government Receivables as of such date,
provided that amounts under this clause (iii) shall not exceed twenty-five percent (25%) of the Borrowing Base (Monthly) as of such date.

                    “Borrowing
Base (Senior Debt)” means, (i) for the fiscal year ending
September 30, 2003, an amount, as set forth on the most current
Borrowing Base Certificate delivered to the Administrative Agent,
equal to the sum of (a) ninety percent (90%) of all billed
Receivables from any Account Debtor (other than the Borrower, any
Guarantor or an Affiliate of the Borrower or any
Guarantor) (“Total Billed Receivables”) which are
outstanding less than one hundred twenty-one (121) days from the date
of original invoice as of such date, plus (b) sixty percent (60%) of
Total Billed Receivables which are outstanding one hundred twenty-one
(121) days or more from the date of original invoice, plus (c)
seventy-five percent (75%) of all unbilled Receivables which may in
accordance with Agreement Accounting Principles be included as
current assets of the Borrower or any of its Subsidiaries
notwithstanding that such amounts have not yet been billed, plus (d)
fifty percent (50%) of net property, plants and equipment of the
Borrower and its consolidated Subsidiaries as of such date determined
in accordance with Agreement Accounting Principles, (ii) for
the fiscal periods ending December 19, 2003, March 12,
2004, July 2, 2004, September 30, 2004, an amount, as set
forth on the most current Borrowing Base Certificate delivered to the
Administrative Agent, equal to the sum of (a) ninety percent (90%) of
the Net Amount of Eligible Receivables that are Eligible Billed
Government Accounts Receivable as of such date, plus (b) eighty-five
percent (85%) of the Net Amount of Eligible Receivables that are
Eligible Billed Commercial Accounts Receivable as of such
date, plus (c) sixty-five percent (65%) of the
gross amount of Eligible Unbilled Government Receivables as of such
date, and (iii) as of any date of determination thereafter, the
Borrowing Base (Monthly).

                    “Borrowing Base Certificate” means a certificate, in substantially the
form of Exhibit J attached hereto and made a part hereof, setting forth the
Borrowing Base (Monthly) and, with respect to the Borrowing Base
Certificate delivered for the periods ending September 30, 2003,
December 19, 2003, March 12, 2004, July 2, 2004, September 30, 2004 and
each four-week period thereafter, the Borrowing Base (Senior Debt),
and in each case the component calculations thereof.

                    “Borrowing Date” means a date on which an Advance or Swing Line Loan is
made hereunder.

3

 

                    “Borrowing/Election Notice” is defined in Section 2.8.

                    “Borrowing Representative” means any Authorized Officer or any duly
authorized employee of the Borrower; provided that the Administrative Agent
shall have received a manually signed certificate of the Secretary of the
Borrower as to the incumbency of, and bearing a specimen signature of, such
duly authorized person or employee.

                    “Business Day” means (i) with respect to any borrowing, payment or rate
selection of Loans bearing interest at the Eurodollar Rate, a day (other than a
Saturday or Sunday) on which banks are open for business in Chicago, Illinois
and on which dealings in Dollars are carried on in the London interbank market
and (ii) for all other purposes a day (other than a Saturday or Sunday) on
which banks are open for business in Chicago, Illinois.

                    “Capital Expenditures” means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including
Capitalized Lease Obligations and Permitted Purchase Money Indebtedness) by the
Borrower and its consolidated Subsidiaries during that period that, in
conformity with Agreement Accounting Principles, are required to be included in
or reflected by the property, plant, equipment or similar fixed asset accounts
reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries.

                    “Capitalized Lease” means, with respect to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with Agreement Accounting Principles.

                    “Capitalized Lease Obligations” means, with respect to any Person, the
amount of the obligations of such Person under Capitalized Leases which would
be capitalized on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.

                    “Capital Stock” means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.

                    “Cash Equivalents” means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
Eurodollar certificates of deposit and time deposits, bankers’ acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies, the long-term
indebtedness of which institution at the time of acquisition is rated A- (or
better) by S&P or A3 (or better) by Moody’s, and which certificates of deposit
and time deposits are fully protected against currency fluctuations for any
such deposits with a term of more than ninety (90) days; (iii) shares of money
market, mutual or similar funds having assets in excess of $100,000,000 and the
investments of which are limited to (a) investment grade securities (i.e.,
securities rated at least Baa by Moody’s or at least BBB by S&P) and (b)
commercial paper of United States and foreign

4

 

 banks and bank holding companies and their subsidiaries and United States
and foreign finance, commercial industrial or utility companies which, at the
time of acquisition, are rated A-1 (or better) by S&P or P-1 (or better) by
Moody’s (all such institutions being, “Qualified Institutions”); and (iv)
commercial paper of Qualified Institutions; provided that the maturities of
such Cash Equivalents shall not exceed three hundred sixty-five (365) days from
the date of acquisition thereof.

                    “Cash Interest Expense” means, for any period, the total interest expense
of the Borrower and its consolidated Subsidiaries, whether paid or accrued
(including the interest component of Capitalized Leases), but excluding
interest expense not payable in cash (including amortization of discount and
financing fees), in each case, as determined in conformity with Agreement
Accounting Principles.

                    “Cash Management Agreement” means that certain Cash Management Agreement
dated as of even date herewith, by and between the Borrower and LaSalle, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.

                    “Change” is defined in Section 4.2.

                    “Change of Control” means an event or series of events by which:

		
	 	          (i) Any Person (other than IITRI (or any of its direct assignees
or transferees) or the ESOT, together with their “affiliates” within
the meaning of Rule 12b2 of the Commission under the Exchange Act)
shall acquire beneficial ownership (including beneficial ownership
resulting from the formation of a “group” within the meaning of
Rule13d-5 of the Commission under the Exchange Act) of fifty percent
(50%) or more of the combined voting power of the outstanding Capital
Stock of the Borrower, ordinarily having the right to vote at any
election of directors; or
	 
	 	          (ii) The ESOT ceases to be the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 of the Commission under the Exchange Act),
directly or indirectly, of more than fifty percent (50%) (on a fully
diluted, as if converted, basis) of the combined voting power of the
outstanding Capital Stock of the Borrower ordinarily having the right
to vote at any election of directors; or
	 
	 	          (iii) the majority of the board of directors of the Borrower
fails to consist of Continuing Directors; or
	 
	 	          (iv) except as expressly permitted under the terms of this
Agreement, the Borrower consolidates with or merges into another
Person or conveys, transfers or leases all or substantially all of its
property to any Person in one or a series of transactions, or any
Person consolidates with or merges into the Borrower, in either event
pursuant to a transaction in which the outstanding Capital Stock of
the Borrower is reclassified or changed into or exchanged for cash,
securities or other property; or
	 
	 	          (v) except as otherwise expressly permitted under the terms of
this Agreement, the Borrower shall cease to own and control, directly
or indirectly, at

5

 

		
	 	least eighty percent (80%) of the economic and voting rights
associated with all of the outstanding Capital Stock of each of the
Borrower’s Material Subsidiaries; or
	 
	 	          (vi) any “Change of Control” (as such term is defined in any of
the Securities Purchase Agreements, the Seller Warrants or the Rights
Agreement) shall have occurred.

                    “Closing
Date” means December [______], 2002.

                    “Code” means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

                    “Collateral” means all property and interests in property now owned or
hereafter acquired by the Borrower or any of its Subsidiaries in or upon which
a security interest, lien or mortgage is granted to the Administrative Agent,
for the benefit of the Holders of Secured Obligations, or to the Administrative
Agent, for the benefit of the Lenders, whether under the Security Agreement,
under any of the other Collateral Documents or under any of the other Loan
Documents.

                    “Collateral Documents” means all agreements, instruments and documents
executed in connection with this Agreement, including, without limitation, the
Security Agreement, the Pledge Agreements, the Intellectual Property Security
Agreements, the Guaranties, and all other security agreements, mortgages, loan
agreements, notes, guarantees, subordination agreements, pledges, lockbox
agreements, powers of attorney, consents, assignments, contracts, fee letters,
notices, leases, financing statements and all other written matter whether
heretofore, now, or hereafter executed by or on behalf of the Borrower or any
of its Subsidiaries and delivered to the Administrative Agent or any of the
Lenders, together with all agreements and documents referred to therein or
contemplated thereby.

                    “Commission” means the Securities and Exchange Commission of the United
States of America and any Person succeeding to the functions thereof.

                    “Commitment” means, for each Lender, collectively, such Lender’s Revolving
Loan Commitment and Term Loan Commitment.

                    “Commitment Termination Date” means the earlier of (i) the Revolving Loan
Termination Date, and (ii) the date of termination in whole of the Aggregate
Revolving Loan Commitment pursuant to Section 2.6 hereof or the Commitments
pursuant to Section 8.2 hereof.

                    “Consolidated Total Indebtedness” means, as of any date of determination,
the total amount of that portion of the Indebtedness of the Borrower and its
Subsidiaries which is interest bearing or with respect to which interest
expense accrues or is attributable under Agreement Accounting Principles,
including, without limitation, interest bearing accounts payable not payable in
the ordinary course of business, notes payable, Contingent Obligations,
Capitalized Lease Obligations, reimbursement obligations in respect of
commercial letters of credit, and Off-Balance Sheet Liabilities.

6

 

                    “Constituent Documents” means, as applied to any Person, the certificate
of incorporation, articles of incorporation or certificate of formation,
by-laws or operating agreement and any other applicable organizational document
of such Person.

                    “Contaminant” means any waste, pollutant, hazardous material, hazardous
substance, toxic substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, asbestos, polychlorinated biphenyls
(“PCBs”), or any constituent of any such substance or waste, and includes, but
is not limited to, these terms as defined in Environmental, Health or Safety
Requirements of Law and any other substance or material defined as regulated by
any other Environmental, Health or Safety Requirements of Law.

                    “Contingent Obligation” means, as applied to any Person, any Contractual
Obligation, contingent or otherwise, of that Person with respect to any
indebtedness of another or other obligation or liability of another, including,
without limitation, any such indebtedness, obligation or liability of another
directly or indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including Contractual Obligations (contingent or
otherwise) arising through any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain solvency, assets, level of income, or other financial condition, or to
make payment other than for value received. The amount of any Contingent
Obligation shall be equal to the present value of the portion of the obligation
so guaranteed or otherwise supported, in the case of known recurring
obligations, and the reasonably anticipated liability in respect of the portion
of the obligation so guaranteed or otherwise supported assuming such Person is
required to perform thereunder, in all other cases.

                    “Continuing Director” means, with respect to any person as of any date of
determination, any member of the board of directors of such Person who (i) was
a member of such board of directors on the Closing Date, or (ii) was nominated
for election or elected to such board of directors with the approval of the
required majority of the Continuing Directors who were members of such board at
the time of such nomination or election; provided that an individual who is so
elected or nominated in connection with a merger, consolidation, acquisition or
similar transaction shall not be a Continuing Director unless such individual
was a Continuing Director prior thereto.

                    “Contractual Obligation” means, as applied to any Person, any provision of
any equity or debt securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument, in any case in writing, to which that
Person is a party or by which it or any of its properties is bound, or to which
it or any of its properties is subject.

                    “Controlled Group” means the group consisting of (i) any corporation which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower; (ii) a partnership or other trade
or business (whether or not incorporated) which is under common control (within
the meaning of Section 414(c) of the

7

 

 Code) with the Borrower; and (iii) a member of the same affiliated service
group (within the meaning of Section 414(m) of the Code) as the Borrower, any
corporation described in clause (i) above or any partnership or trade or
business described in clause (ii) above.

                    “Customary Permitted Liens” means:

		
	 	        (i) Liens (other than Environmental Liens and Liens in favor
of the IRS or the PBGC) with respect to the payment of taxes,
assessments or governmental charges in all cases which are not yet
due or (if foreclosure, distraint, sale or other similar
proceedings shall not have been commenced or any such proceeding
after being commenced is stayed) which are being contested in good
faith by appropriate proceedings properly instituted and diligently
conducted and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with
Agreement Accounting Principles;
	 
	 	        (ii) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen, service providers
or workmen and other similar Liens imposed by law created in the
ordinary course of business for amounts not yet due or which are
being contested in good faith by appropriate proceedings properly
instituted and diligently conducted and with respect to which
adequate reserves or other appropriate provisions are being
maintained in accordance with Agreement Accounting Principles;
	 
	 	        (iii) Liens (other than Environmental Liens and Liens in
favor of the IRS or the PBGC) incurred or deposits made in the
ordinary course of business in connection with workers’
compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders,
sales, contracts (other than for the repayment of borrowed money),
surety, appeal and performance bonds; provided that (A) all such
Liens do not in the aggregate materially detract from the value of
the Borrower’s or its Subsidiary’s assets or property taken as a
whole or materially impair the use thereof in the operation of the
businesses taken as a whole, and (B) all Liens securing bonds to
stay judgments or in connection with appeals that do not secure at
any time an aggregate amount exceeding $100,000;
	 
	 	        (iv) Liens arising with respect to zoning restrictions,
easements, encroachments, licenses, reservations, covenants,
rights-of-way, utility easements, building restrictions and other
similar charges, restrictions or encumbrances on the use of real
property which do not in any case materially detract from the value
of the property subject thereto or interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;
	 
	 	        (v) Liens of attachment or judgment with respect to
judgments, writs or warrants of attachment, or similar process
against the Borrower or any of its Subsidiaries which do not
constitute a Default under Section 8.1(H) hereof; and

8

 

		
	 	        (vi) any interest or title of the lessor in the property
subject to any operating lease entered into by the Borrower or any
of its Subsidiaries in the ordinary course of business.

                    “Default” means an event described in Article VIII hereof.

                    “Designated Prepayment” is defined in Section 2.5(B)(i)(e).

                    “Disclosed Litigation” is defined in Section 6.7.

                    “Disqualified Stock” means any Capital Stock 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, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
date that is ninety-one (91) days after the latest of (i) the Revolving Loan
Termination Date, and (ii) the Term Loan Final Maturity Date.

                    “DOL” means the United States Department of Labor and any Person
succeeding to the functions thereof.

                    “Dollars” and “$” means dollars in the lawful currency of the United
States of America.

                    “Domestic Subsidiary” means a Subsidiary of the Borrower organized under
the laws of a jurisdiction located in the United States of America.

                    “EBITDAE” means, for any period, on a consolidated basis for the Borrower
and its Subsidiaries, the sum of the amounts for such period, without
duplication, calculated in each case in accordance with Agreement Accounting
Principles, of (i) Net Income, plus (ii) Interest Expense to the extent
deducted in computing Net Income, plus (iii) charges against income for
foreign, federal, state and local taxes to the extent deducted in computing Net
Income, plus (iv) depreciation expense to the extent deducted in computing Net
Income, plus (v) amortization expense, including, without limitation,
amortization of goodwill and other intangible assets to the extent deducted in
computing Net Income, plus (vi) cash contributions to the ESOP in respect of
the repurchase liability of the Borrower under the ESOP Plan Documents to the
extent deducted in computing Net Income, plus (vii) non-cash ESOP Compensation
Expense to the extent deducted in computing Net Income, plus (viii) other
extraordinary and nonrecurring non-cash charges to the extent deducted in
computing Net Income up to an amount not to exceed $1,000,000, minus (ix) other
extraordinary and nonrecurring non-cash credits to the extent added in
computing Net Income up to an amount not to exceed $1,000,000, plus (x)
non-cash charges classified as minority interest to the extent deducted in
computing Net Income, plus (xi) other nonrecurring adjustments and charges to
the extent deducted in computing Net Income for periods prior to the Closing
Date, plus (xii) non-cash expenses associated with the recognition of the
difference between the fair market value of the Seller Warrants and the
exercise price of the Seller Warrants to the extent deducted in computing Net
Income, plus (xiii) non-cash Management Compensation Expense to
the extent deducted in computing Net Income.

                    “Eligible Billed Government Accounts Receivable” means all Receivables
arising from Government Contracts, or written contracts as a first- or
second-tier subcontractor to

9

 

 a Government Contract, which (i) are outstanding less than one hundred
twenty-one (121) days from the date of original invoice; (ii) represent amounts
due and owing for products actually delivered or services actually performed or
rendered by or on behalf of, or contractually billable amounts due to, the
Borrower or any Guarantor pursuant to a Government Contract; (iii) have been
properly billed; (iv) arise in the ordinary course of the Borrower’s or any
Guarantor’s business; (v) are due, owing and not subject to any defense,
set-off or counterclaim; and (vi) are not otherwise Ineligible Receivables.

                    “Eligible Billed Commercial Accounts Receivable” means all domestic
Receivables (other than Receivables arising from Government Contracts) from any
Account Debtor (other than the Borrower, any Guarantor or an Affiliate of the
Borrower or any Guarantor) which (i) are outstanding less than ninety-one (91)
days from the date of original invoice; (ii) represent amounts due and owing
for products actually delivered or services actually performed or rendered by
or on behalf of, or contractually billable amounts due to, the Borrower or any
Guarantor to or for the benefit of any Account Debtor (other than the Borrower,
any Guarantor or an Affiliate of the Borrower or any Guarantor, or any
Governmental Authority); (iii) have been properly billed; (iv) arise in the
ordinary course of the Borrower’s or any Guarantor’s business; (v) are due,
owing and not subject to any defense, set-off or counterclaim; and (vi) are not
otherwise Ineligible Receivables.

                    “Eligible Unbilled Government Receivables” means all costs actually
incurred and arising out of work actually performed by the Borrower or any
Guarantor under Government Contracts which (i) are properly billable to the
Government in accordance with the applicable Government Contract within thirty
(30) days of the certification date of the related Borrowing Base Certificate;
(ii) may, in accordance with the Agreement Accounting Principles, be included
as current assets of the Borrower or any Guarantor, even though such amounts
have not been billed to the applicable Governmental Authority; (iii) satisfy
all requirements of the definition of “Eligible Billed Government Receivables”
other than clause (iii) thereof (and are therefore not yet due and payable);
and (iv) are not (a) cost or profit retentions, (b) variances from approved
government reimbursement rates, (c) final invoices or (d) would, if billed, be
deemed Ineligible Receivables.

                    “Eligible Designee” means a special purpose corporation, partnership,
limited partnership or limited liability company that is administered by a
Lender or an Affiliate of a Lender and (i) is organized under the laws of the
United States of America or any state thereof, (ii) is engaged primarily in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business and (iii) issues (or the parent of which issues)
commercial paper rated at least A-1 or the equivalent thereof by S&P or the
equivalent thereof by Moody’s.

                    “Eligible Receivables” means, as applicable, Eligible Billed Government
Accounts Receivable and Eligible Billed Commercial Accounts Receivable, which
Receivables are and at all times shall continue to meet standards of
eligibility hereunder.

                    “Environmental, Health or Safety Requirements of Law” means all
Requirements of Law derived from or relating to foreign, federal, state and
local laws, statutes, codes, ordinances, rules, regulations, permits, orders or
determinations (including administrative orders and consent decrees) of any
Governmental Authority regulating, relating to or addressing

10

 

 pollution or protection of the environment, or protection of worker health
or safety, including, but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., the
Occupational Safety and Health Act of 1970, 29 U.S.C. § 651 et seq., and the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., in
each case including any amendments thereto, any successor statutes, and any
regulations or guidance promulgated thereunder, and any state or local
equivalent thereof.

                    “Environmental Lien” means a lien in favor of any Governmental Authority
for (i) any liability under Environmental, Health or Safety Requirements of
Law, or (ii) damages arising from, or costs incurred by such Governmental
Authority in response to, a Release or threatened Release of a Contaminant into
the environment.

                    “Environmental Property Transfer Act” means any applicable requirement of
law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called “Industrial Site Recovery
Act” or “Responsible Property Transfer Act.”

                    “Equity Interests” means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock). Equity Interests will
not include any Incentive Arrangements or obligations or payments thereunder.

                    “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.

                    “ESOP” means the employee benefit plan titled “The Alion Science and
Technology Corporation Employee Ownership, Savings and Investment Plan” and
adopted and maintained by the Borrower pursuant to the applicable ESOP Plan
Documents.

                    “ESOP Compensation Expense” means, for any period, expenses charged with
respect to the ESOP to Net Income for such period in accordance with Agreement
Accounting Principles.

                    “ESOP Fiduciary” means the named fiduciary under ERISA of the ESOP. As of
the Closing Date, the ESOP Fiduciary is the ESOP Committee of the Borrower.

                    “ESOP Plan Documents” means, collectively, the documents identified in
Schedule 1.1.5 to this Agreement, each as may be amended, supplemented or
modified as provided herein.

                    “ESOT” means the trust titled “The Alion Science and Technology
Corporation Employee Ownership, Savings and Investment Trust” and adopted and
maintained by the Borrower pursuant to the applicable ESOP Plan Documents.

11

 

                    “ESOT Stock” means all Capital Stock of the Borrower held by the ESOT
other than Capital Stock of the Borrower which has been allocated to the
accounts of participants in the ESOP pursuant to the ESOP Plan Documents.

                    “ESOT Stock Purchase Agreement” means that certain Stock Purchase
Agreement dated as of December [______], 2002, by and between the Borrower and the
ESOT Trustee, as in effect on the Closing Date.

                    “ESOT Transaction” means the series of transactions contemplated by and
described in the ESOT Transaction Documents, including but not limited to the
ESOT’s purchase of up to 100% of the Capital Stock of the Borrower pursuant to
the ESOT Stock Purchase Agreement.

                    “ESOT Transaction Documents” means, collectively, the ESOT Stock Purchase
Agreement and the other documents identified on Schedule 1.1.6 to this
Agreement, as each may be amended, supplemented or modified as provided herein.

                    “ESOT Trustee” means the trustee of the ESOT. As of the Closing Date the
ESOT Trustee is State Street Bank and Trust Company.

                    “Eurodollar Base Rate” means, with respect to a Eurodollar Rate Loan for
the relevant Interest Period, a rate of interest equal to the per
annum rate of interest at which United States dollar deposits in an
amount comparable to the principal balance of such Eurodollar Rate
Loan and for a period equal to the relevant Interest Period are
offered in the London Interbank Eurodollar market at 11:00 a.m.
(London time) two (2) Business Days prior to the commencement of such
Interest Period, as displayed in Bloomberg Financial Markets system,
or other authoritative source selected by the Administrative Agent in
its sole discretion, divided by a number determined by subtracting
from 1.00 the maximum reserves percentage for determining reserves to
be maintained by member banks of the Federal Reserve System for
Eurocurrency liabilities, such rate to remain fixed for such Interest
Period. The Administrative Agent’s determination of the Eurodollar
Base Rate shall be conclusive, absent manifest error.

                    “Eurodollar Rate” means, with respect to a Eurodollar Rate Loan for the
relevant Interest Period, the Eurodollar Base Rate applicable to such Interest
Period plus the then Applicable Eurodollar Margin, changing as and when the
Applicable Eurodollar Margin changes.

                    “Eurodollar Rate Advance” means an Advance, the several Loans in respect
of which bear interest at the Eurodollar Rate.

                        “Eurodollar Rate Loan” means a Loan made on a fully syndicated basis
pursuant to Section 2.2, which bears interest at the Eurodollar Rate.

                    “Excess Cash Flow” means, without duplication, an amount, for the Borrower
and its consolidated Subsidiaries, equal to:

                  (i) EBITDAE for such period,

                    minus (ii) Cash Interest Expense for such period,

12

 

                    minus (iii) charges against income for foreign, federal, state and local
taxes paid in cash for such period,

                    minus (iv) scheduled amortization of the principal portion of the Term
Loans, prepayments of the Term Loans and scheduled amortization of the
principal portion of all other Indebtedness of the Borrower and its
Subsidiaries during such period;

                    minus (v) permitted cash Capital Expenditures paid during such period,
commencing with the fiscal year ending September 30, 2002,

                    minus (vi) the net repurchase liability of the Borrower under the ESOP
Plan Documents;

                    minus (vii) the Purchase Price of all Permitted Acquisitions paid in cash
during such period;

                    plus (minus) (viii) reductions (additions) to Working Capital for such
fiscal year exclusive of any change to Working Capital attributable to assets
acquired in any Acquisition as determined by the Administrative Agent in its
reasonable judgment,

                    in each case as calculated in accordance with Agreement Accounting
Principles. All such amounts shall be calculated assuming that the Borrower
and its Subsidiaries have conducted their business in the ordinary course and
in accordance with past practices.

                    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

                    “Existing Credit Agreement” means that certain Business Loan and Security
Agreement, dated as of December 22, 1999, by and among IITRI, Human Factors
Applications, Inc., and the other borrower parties from time to time parties
thereto, and First Union National Bank, as the lender, as amended, restated,
supplemented or otherwise modified as of the Closing Date.

                    “Facility Termination Date” means the date on which all of the Termination
Conditions have been satisfied.

                    “Federal Funds Effective Rate” means, for any day, an interest rate per
annum 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 for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10:00
a.m. (Chicago, Illinois time) on such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by the Administrative Agent in its sole discretion.

                    “Financing” means, with respect to any Person, the issuance or sale by
such Person of any Disqualified Stock, Equity Interests of such Person or any
Indebtedness consisting of debt securities of such Person.

13

 

                    “FIRREA” means the Financial Institutions Reform, Recovery, and
Enforcement Act of 1983, as amended, modified or supplemented from time to
time.

                    “Fixed Charge Coverage Ratio” is defined in Section 7.4(C).

                    “Floating Rate” means, for any day for any Loan, a rate per annum equal to
the Alternate Base Rate for such day, changing when and as the Alternate Base
Rate changes, plus the then Applicable Floating Rate Margin.

                    “Floating Rate Advance” means an Advance, the several Loans in respect of
which bear interest at the Floating Rate.

                    “Floating Rate Loan” means a Loan, or portion thereof, which bears
interest at the Floating Rate.

                    “Foreign Subsidiary” means a Subsidiary of the Borrower which is not a
Domestic Subsidiary.

                    “Governmental Acts” is defined in Section 3.10(A).

                    “Governmental Authority” means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative authority or
functions of or pertaining to government, including any authority or other
quasi-governmental entity established to perform any of such functions.

                    “Government Contract” means any written prime contracts of the Borrower or
any Guarantor with a Governmental Authority.

                    “Gross Negligence” means recklessness, or actions taken or omitted with
conscious indifference to or the complete disregard of consequences or rights
of others affected. Gross Negligence does not mean the absence of ordinary care
or diligence, or an inadvertent act or inadvertent failure to act. If the term
“gross negligence” is used with respect to the Administrative Agent or any
Lender or any indemnitee in any of the other Loan Documents, it shall have the
meaning set forth herein.

                    “Guarantor(s)” means (i) each of the Borrower’s Material Subsidiaries; and
(ii) all other Material Subsidiaries which become Guarantors in satisfaction of
the provisions of Section 7.2(K), in each case, and together with their
respective successors and assigns.

     "Guaranty” means each of that certain Guaranty (and any and all
supplements thereto) executed from time to time by each Guarantor in favor of
the Administrative Agent for the benefit of itself and the Holders of Secured
Obligations, in substantially the form of Exhibit I-1 attached hereto, as
amended, restated, supplemented or otherwise modified from time to time.

                    “Hedging Agreements” is defined in Section 7.3(P).

14

 

                    “Hedging Arrangements” is defined in the definition of Hedging Obligations
below.

                    “Hedging Obligations” means, with respect to any Person, any and all
obligations of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under (i) any
and all agreements, devices or arrangements designed to protect at least one of
the parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party’s assets, liabilities
or exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap, swap or collar protection agreements, forward
rate currency or interest rate options, puts and warrants or any similar
derivative transactions (“Hedging Arrangements”), and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.

                    “Holders of Secured Obligations” means the holders of the Secured
Obligations from time to time and shall include (i) each Lender in respect of
its Loans, (ii) each Issuing Bank in respect of Reimbursement Obligations owed
to it, (iii) the Administrative Agent, the Lenders and the Issuing Banks in
respect of all other present and future obligations and liabilities of the
Borrower or any of its Subsidiaries of every type and description arising under
or in connection with this Agreement or any other Loan Document, (iv) each
Indemnitee in respect of the obligations and liabilities of the Borrower or any
of its Subsidiaries to such Person hereunder or under the other Loan Documents,
(v) each Lender (or affiliate thereof), in respect of all Hedging Obligations
of the Borrower and its Subsidiaries to such Lender (or such affiliate) as
exchange party or counterparty under any Hedging Agreements, and (vi) their
respective successors, transferees and assigns.

                    “IITRI” means IIT Research Institute, a not-for-profit Illinois
corporation (“IITRI”) controlled by the Illinois Institute of Technology, a
not-for-profit Illinois corporation (“IIT”).

                    “IITRI Acquisition” means the purchase by the Borrower of the “Transferred
Assets” and “Transferred Business” of IITRI pursuant to the terms and
conditions set forth in the Asset Purchase Agreement as in effect on the
Closing Date and without giving effect to any subsequent amendment or
modification thereto.

                    “Incentive Arrangements” means any stock ownership, restricted stock,
warrants, stock option, or stock appreciation rights plans, “phantom” stock
plans, deferred compensation arrangements, employment agreements,
non-competition agreements, subscription and stockholders agreements and other
incentive and bonus plans and similar arrangements made in connection with the
retention of directors, executives, officers or employees of the Borrower and its
Subsidiaries.

                    “Indebtedness” means, with respect to any Person, without duplication,
such Person’s (i) obligations for borrowed money, including, without
limitation, subordinated indebtedness, (ii) obligations representing the
deferred purchase price of property or services rendered, including, without
limitation earn-outs and other similar forms of contingent purchase

15

 

 prices (but excluding accounts payable arising in the ordinary course of
such Person’s business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from property or assets now or hereafter owned or
acquired by such Person, (iv) obligations which are evidenced by notes,
acceptances, other instruments, letters of credit or letter of credit
reimbursement arrangements, (v) Capitalized Lease Obligations, (vi) Contingent
Obligations, (vii) obligations with respect to letters of credit, (viii) the
Net Mark-To-Market Exposure under all Hedging Arrangements, (ix) Off-Balance
Sheet Liabilities, and (x) Disqualified Stock. The amount of Indebtedness of
any Person at any date shall be, without duplication, (a) the outstanding
balance at such date of all unconditional obligations as described above and
the reasonably anticipated liability of any such Contingent Obligations at such
date and (b) in the case of Indebtedness of others secured by a Lien to which
the property or assets owned or held by such Person is subject, the lesser of
the fair market value at such date of any asset subject to a Lien securing the
Indebtedness of others and the amount of the Indebtedness secured.

                    “Indemnified Matters” is defined in Section 10.7(B).

                    “Indemnitees” is defined in Section 10.7(B).

                    “Ineligible Receivables” means Receivables which are (i) evidenced by a
promissory note or similar instrument; (ii) owed or payable by an Account
Debtor pursuant to a Commercial Contract, if such Account Debtor is more than
ninety (90) days past due from the date of original invoice in the payment of
fifty percent (50%) or more of the aggregate balance due from such Account
Debtor to the Borrower or any Guarantor, as applicable; (iii) owed or payable
by an Account Debtor pursuant to a Government Contract, if such Account Debtor
is more than one hundred twenty (120) days past due from the date of original
invoice in the payment of fifty percent (50%) or more of the aggregate balance
due under such Government Contract; (iv) owing from any person that is the
subject of any (a) suit, lien, levy or judgment which could reasonably be
expected to affect the collectibility of said account(s), or (b) bankruptcy,
insolvency or a similar process or proceeding; (v) owing from foreign Account
Debtors; (vi) unbilled as a result of rate variances or retainage provisions;
(vii) bonded Receivables; (viii) final invoices more than ninety (90) days past
due; (ix) not subject to a valid and enforceable first-priority, perfected
security interest in favor of the Administrative Agent; (x) subject to any
other lien or other encumbrance; (xi) consigned or otherwise assigned to any
other Person for collection or otherwise; (xii) arising under a Government
Contract that expressly prohibits assignment of claims under the Assignment of
Claims Act of 1940, as amended.

                    “Intellectual Property Security Agreements” means each trademark, patent,
copyright or other intellectual property security agreement executed from time
to time by the Borrower or any of the Subsidiaries of the Borrower in favor of
the Administrative Agent for the benefit of the Holders of Secured Obligations
in satisfaction of the provisions of Section 7.2(L), in each case as amended,
restated, supplemented or otherwise modified from time to time.

                    “Interest Expense” means, for any period, the total interest expense of
the Borrower and its consolidated Subsidiaries, whether paid or accrued
(including the interest component of Capitalized Leases, commitment and letter
of credit fees and the discount or implied interest component (or other fees or
charges in securitization transactions) of Off-

16

 

 Balance Sheet Liabilities), and net payments (if any) pursuant to Hedging
Arrangements relating to interest rate protection, all as determined in
conformity with Agreement Accounting Principles.

                    “Interest Period” means, with respect to a Eurodollar Rate Loan, a period
of one (1), two (2), three (3) months or six (6) months commencing on a
Business Day selected by the Borrower on which a Eurodollar Rate Advance is
made to the Borrower pursuant to this Agreement; provided, however,
notwithstanding anything in this Agreement to the contrary for the period from
the Closing Date to the earlier of (y) the date that is 60 days after the
Closing Date and (z) the date upon which the Arranger confirms that the loan
syndication process has been complete (the “Syndication Period”), “Interest
Period” means, with respect to a Eurodollar Rate Advance, a period of not more
than fourteen (14) days selected by the Borrower. Other than during the
Syndication Period, such Interest Period shall end on (but exclude) the day
which corresponds numerically to such date one, two, three or six months
thereafter; provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.

                    “Investment” means, with respect to any Person, (i) any purchase or other
acquisition by that Person of any Indebtedness, Equity Interests or other
securities, or of a beneficial interest in any Indebtedness, Equity Interests
or other securities, issued by any other Person, (ii) any purchase by that
Person of all or substantially all of the assets of a business (whether of a
division, branch, unit operation, or otherwise) conducted by another Person,
and (iii) any loan, advance (other than deposits with financial institutions
available for withdrawal on demand, prepaid expenses, accounts receivable,
advances to employees and similar items made or incurred in the ordinary course
of business) or capital contribution by that Person to any other Person,
including all Indebtedness owing to such Person arising from a sale of property
by such other Person other than in the ordinary course of its business.

                    “IRS” means the Internal Revenue Service and any Person succeeding to the
functions thereof.

                    “Issuing Banks” means LaSalle or any of the other Lenders, or any of their
respective Affiliates in its separate capacity as an issuer of Letters of
Credit pursuant to Section 3.1. The designation of any Lender as an Issuing
Bank after the date hereof shall be subject to the prior written consent of the
Administrative Agent.

                    “Junior Subordinated Notes” means those certain notes due 2010, issued by
the Borrower to IITRI in the aggregate principal amount of $39,900,000 pursuant
to the Junior Subordinated Securities Purchase Agreement, as amended,
supplemented or modified in accordance with Section 7.3(BB) hereof.

                    “Junior Subordinated Securities Purchase Agreement” means that certain
Seller Note Securities Purchase Agreement by and between the Borrower and IITRI
of even date

17

 

 herewith, as in effect on the date hereof and as the same may be amended,
supplemented, and modified in accordance with Section 7.3(BB) hereof.

                    “LaSalle” means LaSalle Bank National Association, in its individual
capacity, and its successors.

                    “L/C Documents” is defined in Section 3.4.

                    “L/C Draft” means a draft drawn on an Issuing Bank pursuant to a Letter of
Credit.

                    “L/C Interest” is defined in Section 3.6.

                    “L/C Master Agreement (LaSalle)” means that certain Master Letter of
Credit Agreement, dated as of even date herewith, by and between the Borrower
and LaSalle, in its capacity as an Issuing Bank, in substantially the form of
Exhibit L hereto, as the same may be amended, restated, supplemented or
otherwise modified from time to time.

                    “L/C Obligations” means, without duplication, an amount equal to the sum
of (i) the aggregate of the amount then available for drawing under each of the
Letters of Credit, (ii) the amount equal to the stated amount of all
outstanding L/C Drafts corresponding to the Letters of Credit, which L/C Drafts
have been accepted by the applicable Issuing Bank, (iii) the aggregate
outstanding amount of all Reimbursement Obligations at such time and (iv) the
aggregate amount equal to the stated amount of all Letters of Credit requested
by the Borrower but not yet issued (unless the request for an unissued Letter
of Credit has been denied).

                    “Lenders” means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.

                    “Lending Installation” means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or affiliate of such
Lender or the Administrative Agent selected by such Lender or the
Administrative Agent pursuant to Section 2.17.

                    “Letter of Credit” means the letters of credit to be (a) issued by the
Issuing Banks pursuant to Section 3.1 hereof or (b) deemed issued by the
Issuing Banks pursuant to Section 3.2 hereof.

                    “Leverage Ratio” is defined in Section 7.4(B).

                    “Lien” means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).

                    “Loan(s)” means, with respect to a Lender, such Lender’s portion of any
Advance made pursuant to Section 2.1 or Section 2.2 hereof, and in the case of
the Swing Line Bank, any Swing Line Loan made pursuant to Section 2.3 hereof,
and collectively, all Term Loans,

18

 

 Revolving Loans and Swing Line Loans, whether made or continued as or
converted to Floating Rate Loans or Eurodollar Rate Loans.

                    “Loan Account” is defined in Section 2.13(A).

                    “Loan Documents” means this Agreement, the Guaranty, the L/C Master
Agreement, the Cash Management Agreement, the Collateral Documents, and all
other documents, instruments, notes and agreements executed in connection
therewith or contemplated thereby, as the same may be amended, restated or
otherwise modified and in effect from time to time.

                    “Loan Parties” is defined in Section 5.1(B)(i).

                    “Management
Compensation Expenses” means, for any period, expenses
charged to Net Income for such period with respect to stock
appreciation rights plans, “phantom” stock plans, the
Junior Subordinated Notes and accretion of the Seller Warrants, in
each case in connection with the retention of directors, executives,
officers or employees of the Borrower and its Subsidiaries, in
accordance with Agreement Accounting Principles.

                    “Management
Compensation Expenses” means, for any period, expenses
charged to Net Income for such period with respect to stock
appreciation rights plans, “phantom” stock plans, the
Junior Subordinated Notes and accretion of the Seller Warrants, in
each case in connection with the retention of directors, executives,
officers or employees of the Borrower and its Subsidiaries, in
accordance with Agreement Accounting Principles.

                    “Margin Stock” shall have the meaning ascribed to such term in Regulation
U.

                    “Material Adverse Effect” means a material adverse effect upon (i) the
business, assets, condition (financial or otherwise), operations, performance,
properties, results of operations or prospects of the Borrower, any Guarantor,
or the Borrower and its Subsidiaries in each case taken as a whole, (ii) the
ability of the Borrower, any Guarantor or the Borrower and its Subsidiaries to
perform their respective obligations under the Loan Documents, (iii) the
ability of the Lenders or the Administrative Agent to enforce the Obligations,
(iv) the validity or enforceability of this Agreement, the Loan Documents to
which the Borrower or any Guarantor is a party, or the rights or remedies of
the Administrative Agent and Lenders hereunder and thereunder, (v) the value of
a Substantial Portion of the Collateral, or (vi) the perfection or priority of
the Administrative Agent’s Liens with respect to a Substantial Portion of the
Collateral.

                    “Material Subsidiary” shall mean, in respect of the Borrower, any
Subsidiary that (i) has total assets (determined as of the last day of the most
recently completed fiscal quarter in accordance with Agreement Accounting
Principles) which constitute ten percent (10%) or more of the total assets of
the Borrower and its consolidated Subsidiaries as of such date of
determination, or (ii) has revenue (determined as of the last day of the most
recently completed fiscal quarter for the four-quarter period then ending in
accordance with Agreement Accounting Principles) which constitutes five percent
(5%) or more of the revenue of the Borrower and its consolidated Subsidiaries
for such period, or (iii) has EBITDAE (determined as of the last day of the
most recently completed fiscal quarter for the four-quarter period then ending
in accordance with Agreement Accounting Principles) which constitutes five
percent (5%) or more of the EBITDAE of the Borrower and its consolidated
Subsidiaries for such period; provided that if (a) a Material Subsidiary no
longer satisfies any condition set forth above and (b) the Board of Directors
of the Borrower determines that such Subsidiary is not material to the
consolidated financial condition or operations of the Borrower and its
Subsidiaries and the Administrative Agent shall have received written notice of
such determination from the Borrower, and (c) no Default shall be continuing,
then for so long as such Subsidiary satisfies none of the conditions in clauses
(i) through (iii) above, such Subsidiary shall not be a Material Subsidiary.

19

 

                    “Maximum Revolving Credit Amount” means, at any particular time, the
lesser of (i) the Aggregate Revolving Loan Commitment at such time and (ii) the
Borrowing Base (Monthly) at such time.

                    “Moody’s” means Moody’s Investors Service, Inc.

                    “Multiemployer Plan” means a “Multiemployer Plan” as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by either the Borrower or any member of the Controlled
Group.

                    “Net Amount of Eligible Receivables” means the outstanding face amount of
Eligible Receivables of the Borrower and the Guarantors, determined in
accordance with Agreement Accounting Principles, consistently applied, less (i)
all finance charges, late fees and other fees that are unearned in respect of
such Eligible Receivables and (ii) the value of any accrual which has been
recorded by the Borrower or any Guarantor with respect to downward price
adjustments in respect of such Eligible Receivables.

                    “Net Cash Proceeds” means, with respect to any Asset Sale or Financing by
any Person, cash or Cash Equivalents (freely convertible into Dollars) received
by such Person or any Subsidiary of such Person from such Asset Sale (including
cash received as consideration for the assumption or incurrence of liabilities
incurred in connection with or in anticipation of such Asset Sale) or
Financing, after (i) provision for all income or other taxes measured by or
resulting from such Asset Sale or Financing, (ii) payment of all brokerage
commissions and other fees and expenses and commissions related to such Asset
Sale or Financing, and (iii) deduction of all amounts used to repay
Indebtedness (and any premium or penalty thereon) secured by a Lien on any
asset disposed of in such Asset Sale or which is or may be required (by the
express terms of the instrument governing such Indebtedness or by applicable
law) to be repaid in connection with such Asset Sale (including payments made
to obtain or avoid the need for the consent of any holder of such
Indebtedness).

                    “Net Income” means, for any period, an amount equal to the net earnings
(or loss) after taxes of the Borrower and its Subsidiaries on a consolidated
basis for such period taken as a single accounting period determined in
conformity with Agreement Accounting Principles.

                    “Net Mark-to-Market Exposure” of a Person means, as of any date of
determination, the excess (if any) of all unrealized losses over all unrealized
profits of such Person arising from Hedging Arrangements. “Unrealized losses”
means the fair market value of the cost to such Person of replacing such
Hedging Arrangement as of the date of determination (assuming the Hedging
Arrangement to be terminated as of that date), and “unrealized profits” means
the fair market value of the gain to such Person of replacing such Hedging
Arrangement as of the date of determination (assuming such Hedging Arrangement
were to be terminated as of that date).

                    “Non-ERISA Commitments” means

		
	 	        (i) each pension, medical, dental, life, accident insurance,
disability, group insurance, sick leave, profit sharing, deferred
compensation, bonus, stock

20

 

		
	 	option, stock purchase, retirement, savings, severance, stock
ownership, performance, incentive, hospitalization or other
insurance, or other welfare, benefit or fringe benefit plan, policy
or trust; and
	 
	 	        (ii) each employee collective bargaining agreement and each
agreement, understanding or arrangement of any kind, with or for
the benefit of any present or prior officer, director or employee
(including, without limitation, each employment, compensation,
deferred compensation or severance or arrangement and any agreement
or arrangement associated with a change in control of the Borrower
or any member of the Controlled Group);

                    to which the Borrower or any member of the Controlled Group is a party or
with respect to which the Borrower or any member of the Controlled Group is or
will be required to make any payment, other than any Plans.

                    “Notice of Assignment” is defined in Section 13.3(B).

                    “Obligations” means all Loans, L/C Obligations, advances, debts,
liabilities, obligations, covenants and duties owing by the Borrower or any of
its Subsidiaries to the Administrative Agent, any Lender, the Swing Line Bank,
the Arranger, any Affiliate of the Administrative Agent or any Lender, any
Issuing Bank or any Indemnitee, of any kind or nature, present or future,
arising under this Agreement, the L/C Documents or any other Loan Document,
whether or not evidenced by any note, guaranty or other instrument, whether or
not for the payment of money, whether arising by reason of an extension of
credit, loan, foreign exchange risk, guaranty, indemnification, or in any other
manner, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising
and however acquired. The term includes, without limitation, all interest,
charges, expenses, fees, attorneys’ fees and disbursements, paralegals’ fees
(in each case whether or not allowed), and any other sum chargeable to the
Borrower or any of its Subsidiaries under this Agreement or any other Loan
Document.

                    “Off-Balance Sheet Liabilities” means, with respect to any Person, (i) any
repurchase obligation or liability of such Person or any of its Subsidiaries
with respect to Receivables sold by such Person or any of its Subsidiaries,
(ii) any liability of such Person or any of its Subsidiaries under any sale and
leaseback transaction which does not create a liability on the consolidated
balance sheet of such Person (iii) any liability of such Person or any of its
Subsidiaries under any financing lease or so-called “synthetic lease” or “tax
ownership operating lease” transaction, or (iv) any obligations of such Person
or any of its Subsidiaries arising with respect to any other transaction which
is the functional equivalent of or takes the place of borrowing but which does
not constitute a liability on the consolidated balance sheet of such Person and
its Subsidiaries.

                    “Other Taxes” is defined in Section 2.15(E)(ii).

                    “Participants” is defined in Section 13.2(A).

21

 

                    “Payment
Date” means each of (i) the last Business Day of each
fiscal quarter of the Borrower, (ii) the Commitment Termination Date and (iii)
the Facility Termination Date.

                    “PBGC” means the Pension Benefit Guaranty Corporation, or any successor
thereto.

                    “Permitted Acquisition” is defined in Section 7.3(G).

                    “Permitted Existing Contingent Obligations” means the Contingent
Obligations of the Borrower and its Subsidiaries identified as such on Schedule
1.1.4 to this Agreement.

                    “Permitted Existing Indebtedness” means the Indebtedness of the Borrower
and its Subsidiaries identified as such on Schedule 1.1.1 to this Agreement.

                    “Permitted Existing Investments” means the Investments of the Borrower and
its Subsidiaries identified as such on Schedule 1.1.2 to this Agreement.

                    “Permitted Existing Liens” means the Liens on assets of the Borrower and
its Subsidiaries identified as such on Schedule 1.1.3 to this Agreement.

                    “Permitted Purchase Money Indebtedness” is defined in Section 7.3(A)(vii).

                    “Permitted Refinancing Indebtedness” means any replacement, renewal,
refinancing or extension of any Indebtedness permitted under Section 7.3(A)(ii)
that (i) does not exceed the aggregate principal amount (plus accrued interest
and any applicable premium and associated fees and expenses) of the
Indebtedness being replaced, renewed, refinanced or extended, (ii) does not
have a Weighted Average Life to Maturity at the time of such replacement,
renewal, refinancing or extension that is less than the Weighted Average Life
to Maturity of the Indebtedness being replaced, renewed, refinanced or
extended, (iii) does not rank at the time of such replacement, renewal,
refinancing or extension senior to the Indebtedness being replaced, renewed,
refinanced or extended, and (iv) does not contain terms (including, without
limitation, terms relating to security, amortization, interest rate, premiums,
fees, covenants, subordination, events of default and remedies), taken as a
whole, materially less favorable to the Borrower, its Subsidiaries or the
Lenders than those applicable to the Indebtedness being replaced, renewed,
refinanced or extended.

                    “Person” means any individual, corporation, firm, enterprise, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company or other entity of any kind, or any
government or political subdivision or any agency, department or
instrumentality thereof.

                    “Plan” means an employee benefit plan defined in Section 3(3) of ERISA,
other than a Multiemployer Plan, in respect of which the Borrower or any member
of the Controlled Group is, or within the immediately preceding six (6) years
was, an “employer” as defined in Section 3(5) of ERISA.

22

 

                    “Pledge Agreements” means (i) the Borrower Pledge Agreement, and (ii) one
or more Pledge Agreements substantially in the form of Exhibit I-2 hereto, duly
executed and delivered by the applicable Subsidiary of the Borrower from time
to time pursuant to the terms of clause (i) of Section 7.2(K) in favor of the
Administrative Agent for the benefit of the Holders of Secured Obligations, in
each case, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

                    “Prime Rate” means the prime rate of interest announced by LaSalle or its
parent from time to time (which is not necessarily the lowest rate charged to
any customer), changing when and as said prime rate changes.

                    “Pro Rata Share” means, with respect to any Lender, (i) at any time prior
to the Closing Date, the percentage obtained by dividing (a) such Lender’s
Commitments at such time (in each case, as adjusted from time to time in
accordance with the provisions of this Agreement) by (b) the sum of the Term
Loan Commitments and the Aggregate Revolving Loan Commitment at such time and
(ii) at any time after the Closing Date, the percentage obtained by dividing
(a) the sum of such Lender’s Term Loans and Revolving Loan Commitment at such
time (in each case, as adjusted from time to time in accordance with the
provisions of this Agreement) by (b) the sum of the aggregate amount of all of
the Term Loans and the Aggregate Revolving Loan Commitment at such time;
provided, however, if all of the Commitments are terminated pursuant to the
terms of this Agreement, then “Pro Rata Share” means the percentage obtained by
dividing (x) the sum of (A) such Lender’s Term Loans and Revolving Loans, plus
(B) such Lender’s share of the obligations to purchase participations in Swing
Line Loans and Letters of Credit, by (y) the sum of (A) the aggregate
outstanding amount of all Term Loans and Revolving Loans, plus (B) the
aggregate outstanding amount of all Swing Line Loans and all Letters of Credit.

                    “Purchase Price” means the total consideration and other amounts payable
in connection with any Acquisition, including, without limitation, any portion
of the consideration payable in cash, the value of any Capital Stock or other
equity interests of the Borrower or any Subsidiary of the Borrower issued as
consideration for such Acquisition, all Indebtedness, liabilities and
Contingent Obligations incurred or assumed in connection with such Acquisition
and all transaction costs and expenses (including all investment banking and
other consultant fees and expenses) incurred in connection with such
Acquisition.

                    “Purchasers” is defined in Section 13.3(A)(i).

                    “Rate Option” means the Eurodollar Rate or the Floating Rate, as
applicable.

                    “Receivable(s)” means and includes all of the Borrower’s and the
Guarantors’ presently existing and hereafter arising or acquired accounts,
accounts receivable, and all present and future rights of the Borrower or any
Guarantor to payment for goods sold or leased or for services rendered (except
those evidenced by instruments or chattel paper), whether or not they have been
earned by performance, and all rights in any merchandise or goods which any of
the same may represent, and all rights, title, security and guaranties with
respect to each of the foregoing, including, without limitation, any right of
stoppage in transit.

                    “Register” is defined in Section 13.3(C).

23

 

                    “Regulation T” means Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to
the extension of credit by and to brokers and dealers of securities for the
purpose of purchasing or carrying margin stock (as defined therein).

                    “Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to
the extension of credit by banks, non-banks and non-broker lenders for the
purpose of purchasing or carrying Margin Stock applicable to member banks of
the Federal Reserve System.

                    “Regulation X” means Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to
the extension of credit by foreign lenders for the purpose of purchasing or
carrying margin stock (as defined therein).

                    “Reimbursement Obligation” is defined in Section 3.7.

                    “Release” means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, including the movement of Contaminants through or in
the air, soil, surface water or groundwater.

                    “Replacement Lender” is defined in Section 2.20.

                    “Reportable Event” means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation or otherwise
waived the requirement of Section 4043(a) of ERISA that it be notified within
thirty (30) days after such event occurs, provided, however, that a failure to
meet the minimum funding standards of Section 412 of the Code and of Section
302 of ERISA shall be a Reportable Event regardless of the issuance of any such
waiver of the notice requirement in accordance with either Section 4043(a) of
ERISA or Section 412(d) of the Code.

                    “Required Lenders” means Lenders whose Pro Rata Shares, in the aggregate,
are sixty-six and two-thirds percent (66 2/3%) or more; provided, however,
that, if any of the Lenders shall have failed to fund its Revolving Loan Pro
Rata Share of (i) any Revolving Loan requested by the Borrower, (ii) any
Revolving Loan required to be made in connection with reimbursement for any L/C
Obligations, or (iii) any participation in any Swing Line Loan as requested by
the Administrative Agent, which such Lenders are obligated to fund under the
terms of this Agreement and any such failure has not been cured, then for so
long as such failure continues, “Required Lenders” means Lenders (excluding all
Lenders whose failure to fund their respective Revolving Loan Pro Rata Shares
of such Revolving Loans or any participation in

24

 

 Swing Line Loans has not been so cured) whose Pro Rata Shares represent
sixty-six and two-thirds percent (66 2/3%) or more of the aggregate Pro Rata
Shares of such Lenders; provided, further, however, that, if the Commitments
have been terminated pursuant to the terms of this Agreement, “Required
Lenders” means Lenders (without regard to such Lenders’ performance of their
respective obligations hereunder) whose aggregate Pro Rata Shares of the
aggregate outstanding principal balance of all Loans and L/C Obligations are
sixty-six and two-thirds percent (66 2/3%) or more.

                    “Requirements of Law” means, as to any Person, the Constituent Documents
of such Person, and any law, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject including, without limitation, the Securities
Act of 1933, the Securities Exchange Act of 1934, Regulations T, U and X,
ERISA, the Fair Labor Standards Act, the Worker Adjustment and Retraining
Notification Act, Americans with Disabilities Act of 1990, and any certificate
of occupancy, zoning ordinance, building, environmental or land use requirement
or permit or environmental, labor, employment, occupational safety or health
law, rule or regulation, including Environmental, Health or Safety Requirements
of Law.

                    “Restricted Payment” means (i) any dividend or other distribution, direct
or indirect, on account of any Equity Interests of the Borrower now or
hereafter outstanding, except a dividend payable solely in the Borrower’s
Capital Stock (other than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock, (ii) any redemption, retirement,
purchase or other acquisition for value, direct or indirect, of any Equity
Interests of the Borrower or any of its Subsidiaries now or hereafter
outstanding, other than in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the Borrower) of
other Equity Interests of the Borrower (other than Disqualified Stock), (iii)
any redemption, purchase, retirement, defeasance, prepayment (by setoff or
otherwise) or other acquisition for value, direct or indirect, of any
Indebtedness other than the Obligations, and (iv) any payment of a claim for
the rescission of the purchase or sale of, or for material damages arising from
the purchase or sale of, any Indebtedness (other than the Obligations) or any
Equity Interests of the Borrower or any of its Subsidiaries, or of a claim for
reimbursement, indemnification or contribution arising out of or related to any
such claim for damages or rescission, (v) any payment of management fees owing
to any holder of Capital Stock of the Borrower or any of its Subsidiaries or
investment banking fees (or other fees of a similar nature) other than pursuant
to a Permitted Acquisition, (vi) any payment in respect of a purchase price
adjustment, earn-out or other similar form of contingent purchase price (by
setoff or otherwise), (vii) any payment or prepayment (whether consisting of
principal, interest, premium or otherwise) with respect to the Subordinated
Notes or any other subordinated Indebtedness permitted under Section 7.3(A),
and

25

 

 (viii) any contribution or other payment (other than in Capital Stock) of
any type by the Borrower or any of its Subsidiaries to the ESOT.

                    “Revolving Credit Availability” means, at any particular time, the amount
by which (i) the Maximum Revolving Credit Amount at such time exceeds (ii) the
amount of the Revolving Credit Obligations outstanding at such time.

                    “Revolving Credit Obligations” means, at any particular time, the sum of
(i) the outstanding principal amount of the Revolving Loans at such time, plus
(ii) the outstanding principal amount of the Swing Line Loans at such time,
plus (iii) the outstanding L/C Obligations at such time.

                    “Revolving Loan” is defined in Section 2.2.

                    “Revolving Loan Commitment” means, for each Lender, the obligation of such
Lender to make Revolving Loans and to purchase participations in Letters of
Credit and to participate in Swing Line Loans not exceeding the amount set
forth on Exhibit A to this Agreement opposite its name thereon under the
heading “Revolving Loan Commitment” or in the Assignment Agreement by which it
became a Lender, as such amount may be modified from time to time pursuant to
the terms of this Agreement or to give effect to any applicable Assignment
Agreement.

                    “Revolving Loan Pro Rata Share” means, with respect to any Lender, the
percentage obtained by dividing (i) the then aggregate amount of such Lender’s
Revolving Loan Commitment (as adjusted from time to time in accordance with the
provisions of this Agreement) by (ii) the Aggregate Revolving Loan Commitment
at such time; provided, however, if all of the Commitments are terminated
pursuant to the terms of this Agreement, then “Revolving Loan Pro Rata Share”
means the percentage obtained by dividing (a) the sum of (x) such Lender’s
Revolving Loans, plus (y) such Lender’s share of the obligations to purchase
participations in Swing Line Loans and Letters of Credit, L/C Drafts and
unreimbursed drawings under Letters of Credit, by (b) the sum of (x) the
aggregate outstanding amount of all Revolving Loans, plus (y) the aggregate
outstanding amount of all Swing Line Loans and all Letters of Credit, L/C
Drafts and unreimbursed drawings under Letters of Credit.

                    “Revolving
Loan Termination Date” means December [______], 2007.1

                    “Rights Agreement” means that certain Rights Agreement, dated as of
December [______], 2002, by and among the Borrower, the ESOT and each other
holder of any shares (or warrants or options therefor) issued by the Borrower.

                    “Risk-Based Capital Guidelines” is defined in Section 4.2.

                    “S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill,
Inc.

	1 N.B.: This date will be five years from the Closing Date.

26

 

                    “Secured Obligations” means, collectively, (i) the Obligations and (ii)
all Hedging Obligations owing under Hedging Agreements to any Lender or any
Affiliate of any Lender, which Hedging Obligations are required pursuant to the
terms of this Agreement.

                    “Securities Act” means the Securities Act of 1933, as amended from time to
time.

                    “Securities Purchase Agreements” means the Senior Subordinated Securities
Purchase Agreement and the Junior Subordinated Securities Purchase Agreement.

                    “Security Agreement” means that certain Security Agreement of even date
herewith executed by the Borrower and each of the Subsidiaries of the Borrower
listed on Schedule 6.8 in favor of the Administrative Agent for the benefit of
the Holders of Secured Obligations, as amended, restated, supplemented or
otherwise modified from time to time.

                    “Seller Warrants” shall mean the Mezzanine Warrant and the Seller Note
Warrant, each as defined in and issued by the Borrower to IITRI pursuant to the
Asset Purchase Agreement as of the Closing Date.

                    “Senior Leverage Ratio” is defined in Section 7.4(A).

                    “Senior Subordinated Notes” means those certain notes due 2008, issued by
the Borrower in the aggregate principal amount of $[______] and purchased
by IITRI pursuant to the Senior Subordinated Securities Purchase Agreement, as
amended, supplemented or modified in accordance with Section 7.3(BB) hereof.

                    “Senior Subordinated Securities Purchase Agreement” means that certain
Mezzanine Note Securities Purchase Agreement by and between the Borrower and
IITRI of even date herewith, as in effect on the date hereof and as the same
may be amended, supplemented, and modified in accordance with Section 7.3(BB)
hereof.

                    “Solvent” means, when used with respect to any Person, that at the time of
determination:

		
	 	          (i) the fair value of its assets (both at fair valuation and at
present fair saleable value) is equal to or in excess of the total amount
of its liabilities, including, without limitation, contingent
liabilities; and
	 
	 	          (ii) it is then able and expects to be able to pay its debts as
they mature; and
	 
	 	          (iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.

         With respect to contingent liabilities (such as litigation, guarantees and
pension plan liabilities), such liabilities shall be computed at the present
value of the amount which, in light of all the facts and circumstances existing
at the time, represent the amount which can be reasonably be expected to become
an actual or matured liability.

27

 

                    “Subordinated Notes” means, collectively, the Senior Subordinated Notes
and the Junior Subordinated Notes

                    “Subsidiary” means, with respect to any Person, (i) any corporation more
than fifty percent (50%) of the outstanding securities having ordinary voting
power of which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any partnership, limited
liability company, association, joint venture or similar business organization
more than fifty percent (50%) of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a “Subsidiary” means a Subsidiary
of the Borrower.

                    “Substantial Portion of the Collateral” means, as of any date of
determination, Collateral having a book value (calculated in accordance with
Agreement Accounting Principles) greater than $1,000,000 in the aggregate.

                    “Swing Line Bank” means LaSalle or any other Lender as a successor Swing
Line Bank pursuant to the terms hereof.

                    “Swing Line Commitment” means the commitment of the Swing Line Bank, in
its sole discretion, to make Swing Line Loans up to a maximum principal amount
of $5,000,000 at any one time outstanding.

                    “Swing Line Loan” means a Loan made available to the Borrower by the Swing
Line Bank pursuant to Section 2.3 hereof.

                    “Syndication Period” shall have the meaning set forth in the definition of
“Interest Period” above.

                    “Taxes” is defined in Section 2.15(E)(i).

                    “Termination Conditions” is defined in Section 2.19.

                    “Termination Event” means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Borrower or any member of the
Controlled Group from a Benefit Plan during a plan year in which the Borrower
or such Controlled Group member was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of twenty percent (20%) of Benefit Plan participants
who are employees of the Borrower or any member of the Controlled Group which,
in either event, could reasonably be expected to have a Material Adverse Effect
or otherwise result in liability to the Borrower or any of its Subsidiaries
that are members of the Controlled Group in an amount in excess of $1,000,000;
(iii) the imposition of an obligation on the Borrower or any member of the
Controlled Group under Section 4041 of ERISA to provide affected parties
written notice of intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC or any
similar foreign governmental authority of proceedings to terminate a Benefit
Plan; (v) any event or condition which constitutes grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Benefit Plan; or (vi) the partial or complete

28

 

 withdrawal of the Borrower or any member of the Controlled Group from a
Multiemployer Plan which could reasonably be expected to have a Material
Adverse Effect or otherwise result in liability to the Borrower or any of its
Subsidiaries that are members of the Controlled Group in an amount in excess of
$1,000,000.

                    “Term Loan” is defined in Section 2.1(A).

                    “Term Loan Commitment” means, for each Lender, the obligation of such
Lender to make its Term Loan pursuant to the terms and conditions of this
Agreement, and which shall not exceed the principal amount set forth on Exhibit
A to this Agreement opposite its name thereon under the heading “Term Loan
Commitment”, as such amount may be modified from time to time pursuant to the
terms hereof.

                    “Term
Loan Final Maturity Date” means December [__], 2007.2

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

                    “Term Loan Pro Rata Share” means, (i) at any particular time prior to
making of the Term Loans and with respect to any Lender, a fraction (expressed
as a percentage), the numerator of which shall be the then aggregate amount of
such Lender’s Term Loan Commitment and the denominator of which shall be the
then aggregate amount of all Term Loan Commitments, and (ii) at any time after
the Term Loans are made and with respect to any Lender, a fraction (expressed
as a percentage) the numerator of which shall be the outstanding principal
balance of such Lender’s Term Loans and the denominator of which shall be the
then outstanding principal balance of the Term Loans.

                    “Transaction Documents” means the Loan Documents and the documents
executed and delivered, or adopted, by the Borrower or any of its Subsidiaries
or the ESOT Trustee or the ESOP Fiduciary in connection with the IITRI
Acquisition, the ESOT Transaction and the issuance of the Subordinated Notes,
including, without limitation, the Asset Purchase Agreement, the Seller
Warrants, the Rights Agreement, the ESOT Transaction Documents, the
Subordinated Notes and the Securities Purchase Agreements, but excluding the
ESOP Plan Documents.

                    “Transferee” is defined in Section 13.5.

                    “Type” means, with respect to any Advance or Loan, its nature as a
Floating Rate Advance or Floating Rate Loan, as applicable, or a Eurodollar
Rate Advance or Eurodollar Rate Loan.

                    “Unmatured Default” means an event which, but for the lapse of time or the
giving of notice, or both, would constitute a Default.

                    “U.S. Qualified Person” shall mean any Person that is (i) a “U.S. person”,
within the meaning of Section 7701(a)(30) of the Code and (ii) a United States
citizen or United States entity not owned, controlled or influenced, directly
or indirectly, by any foreign person (or any

	2 N.B.: This date will be five years from the Closing Date.

29

 

term of like meaning) under the National Industrial Security Program
Operating Manual (or any successor document) as amended from time to time.

                    “Weighted Average Life to Maturity” means when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.

                    “Working Capital” means, as at any date of determination and in conformity
with Agreement Accounting Principles, the excess, if any, of (i) Borrower’s
consolidated current assets, except cash and Cash Equivalents, over (ii) the
Borrower’s consolidated current liabilities, except current maturities of
long-term Indebtedness and Revolving Credit Obligations as of such date and all
accrued interest as of such date.

		
	 	          (B) Singular and Plural Forms; Accounting Terms. The foregoing
definitions shall be equally applicable to both the singular and plural
forms of the defined terms. Any accounting terms used in this Agreement
which are not specifically defined herein shall have the meanings
customarily given them in accordance with Agreement Accounting
Principles.

                    1.2 References. Any references to the Borrower’s Subsidiaries shall not
in any way be construed as consent by the Administrative Agent or any Lender to
the establishment, maintenance or acquisition of any Subsidiary, except as may
otherwise be permitted hereunder.

                    1.3 Supplemental Disclosure. At any time at the reasonable request of the
Administrative Agent and at such additional times as the Borrower determines in
its discretion, the Borrower shall supplement each schedule or representation
herein or in the other Loan Documents with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in such schedule or as an
exception to such representation or which is necessary to correct any
information in such schedule or representation which has been rendered
inaccurate thereby. Notwithstanding that any such supplement to such schedule
or representation may disclose the existence or occurrence of events, facts or
circumstances which are either prohibited by the terms of this Agreement or any
other Loan Documents or which result in the breach of any representation or
warranty, such supplement to such schedule or representation shall not be
deemed either an amendment thereof or a waiver of such breach unless expressly
consented to in writing by Administrative Agent and the Required Lenders, and
no such amendments, except as the same may be consented to in a writing which
expressly includes a waiver, shall be or be deemed a waiver by the
Administrative Agent or any Lender of any Default disclosed therein. Any items
disclosed in any such supplemental disclosures shall be included in the
calculation of any limits, baskets or similar restrictions contained in this
Agreement or any of the other Loan Documents.

30

 

                    1.4 Knowledge With Respect to Representations and Warranties. Each of the
representations and warranties made herein and in each of the other Loan
Documents (including, without limitation any certificates delivered thereunder)
are made to the Knowledge of the Borrower. “Knowledge” means, at any time and
relative to any matter, knowledge that the chairman of the Board of Directors
of the Borrower, any Authorized Officer, any Senior Vice President, any legal
officer or the secretary of the Borrower or any Material Subsidiary would
reasonably be expected to have obtained in the ordinary course exercise of his
or her duties and responsibilities regarding such matter.

ARTICLE II: THE TERM LOAN AND REVOLVING LOAN FACILITIES

                    2.1 Term Loans.

		
	 	          (A) Amounts of Term Loans. Subject to the terms and conditions set
forth in this Agreement, each Term Loan Lender on the Closing Date
severally and not jointly agrees to make on the Closing Date, a term
loan, in Dollars, to the Borrower in an aggregate amount equal to such
Lender’s Term Loan Commitment (each individually, a “Term Loan” and,
collectively, the “Term Loans”). All Term Loans shall be made by the
Lenders on the Closing Date simultaneously and proportionately to their
respective Term Loan Pro Rata Shares, it being understood that no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Term Loan hereunder nor shall the Term Loan
Commitment of any Lender be increased or decreased as a result of any
such failure.
	 
	 	          (B) Borrowing/Election Notice. The Borrower shall deliver to the
Administrative Agent a Borrowing/Election Notice, signed by it, on the
Closing Date. Such Borrowing/Election Notice shall specify (i) the
aggregate amount of the Term Loans being requested and (ii) instructions
for the disbursement of proceeds of such Term Loans. The Term Loans
shall initially be Floating Rate Loans and thereafter may be continued as
Floating Rate Loans or converted into Eurodollar Rate Loans in the manner
provided in Section 2.10 and subject to the other conditions and
limitations therein set forth and set forth in this Article II. Any
Borrowing/Election Notice given pursuant to this Section 2.1(B) shall be
irrevocable.
	 
	 	          (C) Making of Term Loans. Promptly after receipt of the
Borrowing/Election Notice under Section 2.1(B) in respect of the Term
Loans, the Administrative Agent shall notify each Lender by telecopy, or
other similar form of transmission, of the proposed Advance. Each Lender
shall deposit an amount equal to its Term Loan Pro Rata Share of the Term
Loans with the Administrative Agent at its office in Chicago, Illinois,
in immediately available funds, on the Closing Date, as specified in the
Borrowing/Election Notice. Subject to the fulfillment of the conditions
precedent set forth in Sections 5.1 and 5.2, as applicable, the
Administrative Agent shall make the proceeds of such amounts received by
it available to the Borrower at the Administrative Agent’s office in
Chicago, Illinois on such date and shall disburse such proceeds in
accordance with the Borrower’s disbursement instructions set forth in
such Borrowing/Election Notice. The failure of any Lender to deposit the
amount described above with the Administrative Agent on such

31

 

		
	 	date shall not relieve any other Lender of its obligations hereunder
to make its Term Loan on such date.
	 
	 	          (D) Repayment of the Term Loans.

		
	 	        (i) The Term Loans shall be repaid in twenty (20) consecutive
quarterly installments, payable on the last Business Day of each
fiscal quarter of the Borrower, commencing on March 14, 2003 and
continuing thereafter until the Term Loan Final Maturity Date, and the
Term Loans shall be permanently reduced by the amount of each
installment on the date payment thereof is made hereunder. The
installments shall be in the aggregate amounts set forth below:

	 	 	 	 	 
	Installment Date	 	Term Loan Installment Amount
	
	 	

	March 14, 2003
	 	$	1,250,000	 
	July 4, 2003
	 	$	1,250,000	 
	September 30, 2003
	 	$	1,250,000	 
	December 19, 2003
	 	$	1,250,000	 
	March 12, 2004
	 	$	1,250,000	 
	July 2, 2004
	 	$	1,250,000	 
	September 30, 2004
	 	$	1,250,000	 
	December 17, 2004
	 	$	1,250,000	 
	March 11, 2005
	 	$	1,875,000	 
	July 1, 2005
	 	$	1,875,000	 
	September 30, 2005
	 	$	1,875,000	 
	December 16, 2005
	 	$	1,875,000	 
	March 10, 2006
	 	$	2,125,000	 
	June 30, 2006
	 	$	2,125,000	 
	September 30, 2006
	 	$	2,125,000	 
	December 15, 2006
	 	$	2,125,000	 
	March 9, 2007
	 	$	2,250,000	 
	June 29, 2007
	 	$	2,250,000	 
	September 30, 2007
	 	$	2,250,000	 
	Term Loan Final Maturity Date
	 	$	2,250,000	 

		
	 	        (ii) Notwithstanding the foregoing, the final installment shall
be in the amount of the then outstanding principal balance of the Term
Loans. No installment of any Term Loan may be reborrowed once repaid.

		
	 	          (E) Voluntary Prepayments. In addition to the scheduled payments on
the Term Loans, the Borrower (i) may make the voluntary prepayments
described in Section 2.5(A) for credit against the scheduled payments on
the Term Loans pursuant to Section

32

 

		
	 	2.5(A) and (ii) shall make the mandatory prepayments prescribed in
Section 2.5(B) for credit against the scheduled payments on the Term
Loans pursuant to Section 2.5(B).

                    2.2 Revolving Loans.

		
	 	          (A) Amount of Revolving Loans. Upon the satisfaction of the
conditions precedent set forth in Sections 5.1 and 5.2, as applicable,
from and including the Closing Date and prior to the Commitment
Termination Date, each Lender severally and not jointly agrees, on the
terms and conditions set forth in this Agreement, to make revolving loans
to the Borrower from time to time, in Dollars, in an aggregate amount
with respect to any such Loan not to exceed such Lender’s Revolving Loan
Pro Rata Share of Revolving Credit Availability at such time (each
individually, a “Revolving Loan” and, collectively, the “Revolving
Loans”); provided, however, at no time shall the Revolving Credit
Obligations exceed the Maximum Revolving Credit Amount. Subject to the
terms of this Agreement, the Borrower may borrow, repay and reborrow
Revolving Loans at any time prior to the Commitment Termination Date.
The Revolving Loans made on the Closing Date or on or before the third
(3rd) Business Day thereafter shall initially be Floating Rate Loans and
thereafter may be continued as Floating Rate Loans or converted into
Eurodollar Rate Loans in the manner provided in Section 2.10 and subject
to the other conditions and limitations therein set forth and set forth
in this Article II and set forth in the definition of Interest Period.
Revolving Loans made after the third (3rd) Business Day after the Closing
Date shall be, at the option of the Borrower, selected in accordance with
Section 2.10, either Floating Rate Loans or Eurodollar Rate Loans. On
the Commitment Termination Date, the Borrower shall repay in full the
outstanding principal balance of the Revolving Loans. Each Advance under
this Section 2.2 shall consist of Revolving Loans made by each Lender
ratably in proportion to such Lender’s respective Revolving Loan Pro Rata
Share.
	 
	 	          (B) Borrowing/Election Notice. In connection with each Revolving
Loan request, the Borrower shall deliver to the Administrative Agent a
Borrowing/Election Notice, signed by it, in accordance with the terms of
Section 2.8.
	 
	 	          (C) Making of Revolving Loans. Promptly after receipt of the
Borrowing/Election Notice under Section 2.8 in respect of Revolving
Loans, the Administrative Agent shall notify each Lender with a Revolving
Loan Commitment greater than zero by telecopy, or other similar form of
transmission, of the requested Revolving Loan. Each Lender with a
Revolving Loan Commitment greater than zero shall make available its
Revolving Loan in accordance with the terms of Section 2.7. The
Administrative Agent will promptly make the funds so received from the
Lenders available to the Borrower at the Administrative Agent’s office in
Chicago, Illinois on the applicable Borrowing Date and shall disburse
such proceeds in accordance with the Borrower’s disbursement instructions
set forth in such Borrowing/Election Notice. The failure of any Lender
to deposit the amount described above with the Administrative Agent on
the applicable Borrowing Date shall not relieve any other Lender of its
obligations hereunder to make its Revolving Loan on such Borrowing Date.

                    2.3 Swing Line Loans.

33

 

		
	 	          (A) Amount of Swing Line Loans. Upon the satisfaction of the
conditions precedent set forth in Section 5.1 and 5.2, as applicable,
from and including the Closing Date and prior to the Commitment
Termination Date, the Swing Line Bank agrees, on the terms and conditions
set forth in this Agreement, to make swing line loans to the Borrower
from time to time, in Dollars, in an amount not to exceed the Swing Line
Commitment (each, individually, a “Swing Line Loan” and collectively, the
“Swing Line Loans”); provided, however, at no time shall the amount of
the Revolving Credit Obligations exceed the Maximum Revolving Credit
Amount; and provided, further, that at no time shall the sum of (a) the
Swing Line Bank’s Revolving Loan Pro Rata Share of the Swing Line Loans,
plus (b) the outstanding amount of Revolving Loans made by the Swing Line
Bank pursuant to Section 2.2, exceed the Swing Line Bank’s Revolving Loan
Commitment at such time. Subject to the terms of this Agreement, the
Borrower may borrow, repay and reborrow Swing Line Loans at any time
prior to the Commitment Termination Date.
	 
	 	          (B) Borrowing/Election Notice. The Borrower shall deliver to the
Administrative Agent and the Swing Line Bank a Borrowing/Election Notice,
signed by it, not later than 2:00 p.m. (Chicago, Illinois time) on the
Borrowing Date of each Swing Line Loan, specifying (i) the applicable
Borrowing Date (which date shall be a Business Day and which may be the
same date as the date the Borrowing/Election Notice is given), and (ii)
the aggregate amount of the requested Swing Line Loan which shall be an
amount not less than $50,000 (and increments of $50,000 if in excess
thereof). The Swing Line Loans shall at all times be Floating Rate
Loans.
	 
	 	          (C) Making of Swing Line Loans. Promptly after receipt of the
Borrowing/Election Notice under Section 2.3(B) in respect of Swing Line
Loans, the Administrative Agent shall notify each Lender by telex or
telecopy, or other similar form of transmission, of the requested Swing
Line Loan. Not later than 4:00 p.m. (Chicago, Illinois time) on the
applicable Borrowing Date, the Swing Line Bank shall make available its
Swing Line Loan, in funds immediately available in Chicago to the
Administrative Agent at its address specified pursuant to Article XIV.
The Administrative Agent will promptly make the funds so received from
the Swing Line Bank available to the Borrower on the Borrowing Date at
the Administrative Agent’s aforesaid address.
	 
	 	          (D) Repayment of Swing Line Loans. Each Swing Line Loan shall be
paid in full by the Borrower on or before the fifth (5th) Business Day
after the Borrowing Date for such Swing Line Loan. The Borrower may at
any time pay, without penalty or premium, all outstanding Swing Line
Loans or, in a minimum amount of $50,000 and increments of $10,000 in
excess thereof, any portion of the outstanding Swing Line Loans, upon
notice to the Administrative Agent and the Swing Line Bank. In addition,
the Administrative Agent (i) may at any time in its sole discretion with
respect to any outstanding Swing Line Loan, or (ii) shall on the fifth
(5th) Business Day after the Borrowing Date of any Swing Line Loan,
require each Lender (including the Swing Line Bank) to make a Revolving
Loan in the amount of such Lender’s Revolving Loan Pro Rata Share of such
Swing Line Loan, for the purpose of repaying such Swing Line Loan. Not
later than 2:00 p.m. (Chicago, Illinois time) on the date of any notice
received

34

 

		
	 	pursuant to this Section 2.3(D), each Lender shall make available
its required Revolving Loan or Revolving Loans, in funds immediately
available in Chicago to the Administrative Agent at its address specified
pursuant to Article XIV. Revolving Loans made pursuant to this Section
2.3(D) shall initially be Floating Rate Loans and thereafter may be
continued as Floating Rate Loans or converted into Eurodollar Rate Loans
in the manner provided in Section 2.10 and subject to the other
conditions and limitations therein set forth and set forth in this
Article II. Unless a Lender shall have notified the Swing Line Bank,
prior to its making any Swing Line Loan, that any applicable condition
precedent set forth in Sections 5.1 and 5.2, as applicable, had not then
been satisfied, such Lender’s obligation to make Revolving Loans pursuant
to this Section 2.3(D) to repay Swing Line Loans shall be unconditional,
continuing, irrevocable and absolute and shall not be affected by any
circumstances, including, without limitation, (a) any set-off,
counterclaim, recoupment, defense or other right which such Lender may
have against the Administrative Agent, the Swing Line Bank, the Borrower
or any other Person for any reason whatsoever; (b) the occurrence or
continuance of any Default or Unmatured Default; (c) any adverse change
in the condition (financial or otherwise) of the Borrower or any of its
Subsidiaries or any other Person; (d) any breach of this Agreement by the
Borrower or its Subsidiaries or any other Person; (e) any inability of
the Borrower to satisfy the conditions precedent to borrowing set forth
in this Agreement on the date upon which such Advance is to be made or
such participating interest is to be purchased; (f) the termination of
the Commitments hereunder; or (g) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing. In the
event that any Lender fails to make payment to the Administrative Agent
of any amount due under this Section 2.3(D), the Administrative Agent
shall be entitled to receive, retain and apply against such obligation
the principal and interest otherwise payable to such Lender hereunder
until the Administrative Agent receives such payment from such Lender or
such obligation is otherwise fully satisfied. In addition to the
foregoing, if for any reason any Lender fails to make payment to the
Administrative Agent of any amount
due under this Section 2.3(D), such
Lender shall be deemed, at the option of the Administrative Agent, to
have unconditionally and irrevocably purchased from the Swing Line Bank,
without recourse or warranty, an undivided interest and participation in
the applicable Swing Line Loan in the amount of such Revolving Loan, and
such interest and participation may be recovered from such Lender
together with interest thereon at the Federal Funds Effective Rate for
each day during the period commencing on the date of demand and ending on
the date such amount is received. On the Commitment Termination Date,
the Borrower shall repay in full the outstanding principal balance of the
Swing Line Loans.

                    2.4 Rate Options for all Advances; Maximum Interest Periods. The Swing
Line Loans shall be Floating Rate Advances at all times. The Revolving Loans
and Term Loans may be Floating Rate Advances or Eurodollar Rate Advances, or a
combination thereof, selected by the Borrower in accordance with Section 2.10;
provided, however, notwithstanding anything herein to the contrary, the
Borrower may not select Interest Periods for Eurodollar Rate Advances made
during the Syndication Period which exceed fourteen (14) days and the Interest
Periods with respect to all such Eurodollar Rate Advances made during the
Syndication Period shall be required to expire on the same date. The Borrower
may select, in accordance with Section 2.10, Rate Options and Interest Periods
applicable to portions of the Revolving Loans

35

 

 and the Term Loans; provided that there shall be no more than five (5)
Interest Periods in effect with respect to all Eurodollar Rate Loans at any
time.

                    2.5 Optional Payments; Mandatory Prepayments.

		
	 	          (A) Optional Payments. The Borrower may from time to time and at
any time after notice delivered to the Administrative Agent no later than
2:00 p.m. (Chicago, Illinois time) on such date of repayment or
prepayment, repay or prepay, without penalty or premium, all or any part
of outstanding Floating Rate Advances in an aggregate minimum amount of
$500,000 and in integral multiples of $100,000 in excess thereof.
Eurodollar Rate Advances may be voluntarily repaid or prepaid prior to
the last day of the applicable Interest Period, subject to the
indemnification provisions contained in Section 4.4, in an aggregate
minimum amount of $100,000 and in integral multiples of $100,000 in
excess thereof (unless such Eurodollar Rate Advance is repaid or prepaid
in whole); provided, that the Borrower may not so prepay Eurodollar Rate
Advances unless it shall have provided at least three (3) Business Days’
prior written notice to the Administrative Agent of such prepayment.
	 
	 	          (B) Mandatory Prepayments.
	 
	 	          (i) Mandatory Prepayments of Term Loans.

		
	 	        (a) Asset Sales and Loss Proceeds. Upon (1) the consummation
of any Asset Sale (other than any Asset Sale permitted under
clauses (i) through (iii) of Section 7.3(b)) by the Borrower or any
Subsidiary of the Borrower, except to the extent that the Net Cash
Proceeds of such Asset Sale, when combined with the Net Cash
Proceeds of all such Asset Sales during the immediately preceding
twelve-month period, do not exceed $1,000,000, for any such Asset
Sale or series of related Asset Sales or (2) the receipt by
Borrower or any of its Subsidiaries of proceeds from insurance in
connection with any property loss or casualty (other than proceeds
received in respect of business interruption insurance) (“Loss
Proceeds”), except to the extent that such Loss Proceeds, when
combined with all other Loss Proceeds received during the then
current fiscal year, do not exceed $500,000, and, in each case,
except as provided in the second sentence of this Section
2.5(B)(i)(a), within thirty-five (35) days after the Borrower’s or
any of its Subsidiaries’ (x) receipt of any Net Cash Proceeds from
any such Asset Sale or any such Loss Proceeds, or (y) conversion to
cash or Cash Equivalents of non-cash proceeds (whether principal or
interest and including securities, release of escrow arrangements
or lease payments) received from any Asset Sale, the Borrower shall
make a mandatory prepayment of the Obligations in an amount equal
to one hundred percent (100%) of such Net Cash Proceeds or such
Loss Proceeds or such proceeds converted from non-cash to cash or
Cash Equivalents. In the event that the Borrower shall have given
the Administrative Agent written notice within thirty (30) days
after an Asset Sale or event giving rise to such Loss Proceeds of
its intention to replace the assets or use such Net Cash Proceeds
or Loss Proceeds, as applicable, to acquire other like-kind assets
(which shall include, without limitation, assets acquired pursuant
to a Permitted Acquisition)

36

 

		
	 	within six (6) months following such Asset Sale or the receipt
of such Loss Proceeds, as applicable, then such Net Cash Proceeds
or Loss Proceeds shall not be subject to the provisions of the
first sentence of this Section 2.5(B)(i)(a) unless and to the
extent that such applicable period shall have expired without such
replacement having been made.
	 
	 	        (b) Excess Cash Flow. Simultaneously with the delivery of the
annual audited financial statements required to be delivered
pursuant to Section 7.1(A)(iii) for each fiscal year beginning with
the fiscal year ending September 30, 2003, the Borrower shall
calculate Excess Cash Flow for such fiscal year and shall make a
mandatory prepayment of the Obligations, payable not later than
thirty (30) days after the date such financial statements are
required to be delivered pursuant to Section 7.1(A)(iii), in an
amount equal to seventy-five percent (75%) of such Excess Cash
Flow.
	 
	 	        (c) Financings. With the exception of the issuance of Capital
Stock in connection with any Incentive Arrangement, or the
refinancing of the Subordinated Notes to the extent otherwise
permitted hereunder, upon the consummation of any Financing by the
Borrower or any Subsidiary of the Borrower, within three (3)
Business Days after the Borrower’s or any of its Subsidiaries’
receipt of any Net Cash Proceeds from such Financing, the Borrower
shall make a mandatory prepayment of the Obligations in an amount
equal to one hundred percent (100%) of such Net Cash Proceeds.
	 
	 	        (d) No Consent. Nothing in this Section 2.5(B)(i) shall be
construed to constitute the Lenders’ consent to any transaction
referred to in clause (a) or (c) above which is expressly
prohibited by the terms of this Agreement.
	 
	 	        (e) Application of Designated Prepayments. Each mandatory
prepayment required by clauses (a), (b) and (c) of this Section
2.5(B)(i) shall be referred to herein as a “Designated Prepayment.”
Designated Prepayments shall be allocated and applied to the
Obligations as follows:

		
	 	        (1) the amount of each Designated Prepayment shall be
applied to outstanding accrued interest and then ratably to
each of the then remaining installments payable under the
Term Loans; and
	 
	 	        (2) following the payment in full of the Term Loans, the
amount of each Designated Prepayment shall be applied to
repay Revolving Loans (and may, if requested by the Borrower,
reduce the Revolving Loan Commitments) and following the
payment in full of the Revolving Loans, the amount of each
Designated Prepayment shall be

37

 

		
	 	applied first to interest on the Reimbursement
Obligations, then to principal on the Reimbursement
Obligations, then to fees on account of Letters of Credit and
then, to the extent any L/C Obligations are contingent,
deposited with the Administrative Agent as cash collateral in
respect of such L/C Obligations.

		
	 	        (ii) Mandatory
Prepayments of Obligations. In addition to
repayments under Section 2.5(B)(i)(e)(2), if at any time and for any
reason (x) the amount of the Revolving Credit Obligations are greater than
the Maximum Revolving Credit Amount or (b) the amount of the
Revolving Credit Obligations plus the aggregate outstanding principal
amount of the Term Loans are greater than the Borrowing Base (Senior
Debt) as in effect at such time, the Borrower shall immediately
make a mandatory prepayment of the Obligations in an amount equal to
such excess.
	 
	 	        (iii) Application of Prepayments. On the date any Designated
Prepayments or any prepayment under clause (ii) above is received by
the Administrative Agent, such prepayment shall be applied first to
Floating Rate Loans and to any Eurodollar Rate Loans maturing on such
date and then to subsequently maturing Eurodollar Rate Loans in order
of maturity.

                    2.6 Reduction of Commitments. The Borrower may permanently reduce the
Aggregate Revolving Loan Commitment in whole, or in part ratably among the
Lenders, in an aggregate minimum amount of $1,000,000 with respect to each such
Commitment and integral multiples of $500,000 in excess of that amount with
respect to each such Commitment (unless the Aggregate Revolving Loan Commitment
is reduced in whole), upon at least five (5) Business Days’ prior written
notice to the Administrative Agent, which notice shall specify the amount of
any such reduction; provided, however, that the amount of the Aggregate
Revolving Loan Commitment may not be reduced below the aggregate principal
amount of the outstanding Revolving Credit Obligations. All accrued commitment
fees shall be payable on the effective date of any termination of all or any
part of the obligations of the Lenders to make Loans hereunder.

                    2.7 Method of Borrowing. Not later than 2:00 p.m. (Chicago, Illinois
time) on each Borrowing Date, each Lender shall make available its Revolving
Loan or Term Loan, in immediately available funds in Dollars to the
Administrative Agent at its address specified pursuant to Article XIV. The
Administrative Agent will promptly make the funds so received from the Lenders
available to the Borrower at the Administrative Agent’s aforesaid address.

                    2.8 Method of Selecting Types and Interest Periods for Advances. The
Borrower shall select the Type of Advance and, in the case of each Eurodollar
Rate Advance and the Interest Period applicable to each Advance from time to
time. The Borrower shall give the Administrative Agent irrevocable notice in
substantially the form of Exhibit B hereto (a “Borrowing/Election Notice”) not
later than 12:00 noon (Chicago, Illinois time) (A) on or before the Borrowing
Date of each Floating Rate Advance, and (B) three (3) Business Days before the
Borrowing Date for each Eurodollar Rate Advance, specifying: (i) the Borrowing
Date (which shall be a Business Day) of such Advance; (ii) the aggregate amount
of such Advance; (iii) the Type of Advance selected; and (iv) in the case of
each Eurodollar Rate Advance, the Interest Period applicable thereto. The
Borrower shall select Interest Periods so that, to the best of its knowledge,
it will not be necessary to prepay all or any portion of any

38

 

 Eurodollar Rate Loan prior to the last day of the applicable Interest
Period in order to make mandatory prepayments as required pursuant to the terms
hereof. With respect to the Term Loans, the Borrower may not select an
Interest Period that ends after the Term Loan Final Maturity Date. With
respect to the Revolving Loans, the Borrower may not select an Interest Period
that ends after the Revolving Loan Termination Date. Each Floating Rate
Advance and all Obligations other than Loans shall bear interest from and
including the date of the making of such Advance, in the case of Loans, and the
date such Obligation is due and owing in the case of such other Obligations, to
(but not including) the date of repayment thereof at the Floating Rate,
changing when and as such Floating Rate changes. Changes in the rate of
interest on that portion of any Advance maintained as a Floating Rate Loan will
take effect simultaneously with each change in the Alternate Base Rate. Each
Eurodollar Rate Advance shall bear interest from and including the first day of
the Interest Period applicable thereto to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such
Eurodollar Rate Advance and shall change as and when the Applicable Eurodollar
Margin changes.

                    2.9 Minimum Amount of Each Advance. Each Floating Rate Advance (other
than an Advance to repay Swing Line Loans or a Reimbursement Obligation) shall
be in the minimum amount of $1,000,000 and in multiples of $500,000 if in
excess thereof, provided, however, that any Floating Rate Advance may be in the
amount of the unused Aggregate Revolving Loan Commitment. Each Eurodollar Rate
Advance shall be in the minimum amount of $2,500,000 and in multiples of
$500,000 if in excess thereof.

                    2.10 Method of Selecting Types and Interest Periods for Conversion and
Continuation of Advances.

		
	 	          (A) Right to Convert. The Borrower may elect from time to time,
subject to the provisions of Section 2.4 and this Section 2.10, to
convert all or any part of a Loan of any Type into any other Type or
Types of Loans; provided that any conversion of any Eurodollar Rate
Advance shall be made on, and only on, the last day of the Interest
Period applicable thereto.
	 
	 	          (B) Automatic Conversion and Continuation. Floating Rate Loans
shall continue as Floating Rate Loans unless and until such Floating Rate
Loans are converted into Eurodollar Rate Loans. Eurodollar Rate Loans
shall continue as Eurodollar Rate Loans until the end of the then
applicable Interest Period therefor, at which time such Eurodollar Rate
Loans shall be automatically converted into Floating Rate Loans unless
the Borrower shall have given the Administrative Agent notice in
accordance with Section 2.10(D) requesting that, at the end of such
Interest Period, such Eurodollar Rate Loans continue as a Eurodollar Rate
Loan.
	 
	 	          (C) No Conversion Post-Default or Post-Unmatured Default.
Notwithstanding anything to the contrary contained in Section 2.10(A) or
Section 2.10(B), no Loan may be converted into or continued as a
Eurodollar Rate Loan when any Default or Unmatured Default has occurred
and is continuing, except with the consent of the Required Lenders.

39

 

		
	 	          (D) Borrowing/Election Notice. The Borrower shall give the
Administrative Agent irrevocable notice (a “Borrowing/Election Notice”)
of each conversion of a Floating Rate Loan into a Eurodollar Rate Loan or
continuation of a Eurodollar Rate Loan not later than 12:00 noon
(Chicago, Illinois time) three (3) Business Days prior to the date of the
requested conversion or continuation, specifying: (1) the requested date
(which shall be a Business Day) of such conversion or continuation; (2)
the amount and Type of the Loan to be converted or continued; and (3) the
amount of Eurodollar Rate Loan(s) into which such Loan is to be converted
or continued and the duration of the Interest Period applicable thereto.

                    2.11 Default Rate. After the occurrence and during the continuance of a
Default, at the option of the Administrative Agent or at the direction of the
Required Lenders, and in any event automatically upon the occurrence of a
Default under Section 8.1(F), (G) or (I), the interest rate(s) applicable to
(i) all Eurodollar Rate Advances shall be calculated based on the highest
Applicable Eurodollar Margin under the pricing grid set forth in Section
2.15(D)(ii) plus two percent (2.00%) per annum, (ii) all Floating Rate Advances
and all other Obligations and all other fees (including the fees payable under
Section 3.8 with respect to Letters of Credit) shall be calculated based on the
highest Applicable Floating Rate Margins under the pricing grid set forth in
Section 2.15(D)(ii) plus two percent (2.00%) per annum.

                    2.12 Method of Payment; Collection Account Arrangements.

		
	 	          (A) Method of Payment. All payments of principal, interest, fees,
reimbursements, commissions, L/C Obligations and other Obligations
hereunder shall be made, without setoff, deduction or counterclaim
(unless indicated otherwise in Section 2.15(E)), in immediately available
funds to the Administrative Agent at the Administrative Agent’s address
specified pursuant to Article XIV, or at any other Lending Installation
of the Administrative Agent specified in writing by the Administrative
Agent to the Borrower, by 1:00 p.m. (Chicago, Illinois time) on the date
when due and shall be made ratably among the Lenders (unless such amount
is not to be shared ratably in accordance with the terms hereof). Each
payment delivered to the Administrative Agent for the account of any
Lender shall be delivered promptly by the Administrative Agent to such
Lender in the same type of funds that the Administrative Agent received
at its address specified pursuant to Article XIV or at any Lending
Installation specified in a notice received by the Administrative Agent
from such Lender. The Borrower authorizes the Administrative Agent to
charge the account of the Borrower maintained with LaSalle for each
payment of principal, interest, fees, commissions and L/C Obligations as
it becomes due hereunder. Each reference to the Administrative Agent in
this Section 2.12 shall also be deemed to refer, and shall apply equally,
to each Issuing Bank, in the case of payments required to be made by the
Borrower to any Issuing Bank pursuant to Article III.
	 
	 	          (B) Cash Management Arrangements. On or prior to the Closing Date,
the Borrower shall have entered into and shall thereafter maintain cash
management arrangements acceptable to the Administrative Agent and the
Borrower.

                    2.13 Evidence of Debt.

40

 

		
	 	        (A) Loan Account. Each Lender shall maintain in accordance with its
usual practice an account or accounts (a “Loan Account”) evidencing the
indebtedness of the Borrower to such Lender owing to such Lender from
time to time, including the amounts of principal and interest payable and
paid to such Lender from time to time hereunder.
	 
	 	        (B) Register. The Register maintained by the Administrative Agent
pursuant to Section 13.3(C) shall include a control account, and a
subsidiary account for each Lender, in which accounts (taken together)
shall be recorded (i) the date and the amount of each Loan made
hereunder, the Type thereof and the Interest Period, if any, applicable
thereto, (ii) the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each Lender hereunder,
(iii) the effective date and amount of each Assignment Agreement
delivered to and accepted by it and the parties thereto pursuant to
Section 13.3, (iv) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender’s share
thereof, and (v) all other appropriate debits and credits as provided in
this Agreement, including, without limitation, all fees, charges,
expenses and interest.
	 
	 	        (C) Entries in Loan Account and Register. The entries made in the
Loan Account, the Register and the other accounts maintained pursuant to
clauses (A) or (B) of this Section shall be conclusive and binding for
all purposes, absent manifest error, unless the Borrower objects to
information contained in the Loan Accounts, the Register or the other
accounts within thirty (30) days of the Borrower’s receipt of such
information; provided that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the
Loans in accordance with the terms of this Agreement.
	 
	 	        (D) Notes Issued Upon Request. Any Lender may request that the
Revolving Loans or Term Loans made, or to be made, by it each be
evidenced by a promissory note in substantially the forms of Exhibit K-1
or K-2, respectively, to evidence such Lender’s Revolving Loans or Term
Loans, as applicable. In such event, the Borrower shall prepare, execute
and deliver to such Lender a promissory note for such Loans payable to
the order of such Lender and in a form approved by the Administrative
Agent and consistent with the terms of this Agreement. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all
times (including after assignment pursuant to Section 13.3) be
represented by one or more promissory notes in such form payable to the
order of the payee named therein.

                2.14 Telephonic Notices. The Borrower authorizes the Lenders and the
Administrative Agent to extend, convert or continue Advances, effect selections
of Types of Advances and to transfer funds based on telephonic notices made by
any person or persons the Administrative Agent or any Lender in good faith
believes to be a Borrower Representative. The Borrower agrees to deliver
promptly to the Administrative Agent a written confirmation, signed by an
Authorized Officer, if such confirmation is requested by the Administrative
Agent or any Lender, of each telephonic notice. In case of disagreement
concerning such notices, if the Administrative Agent has recorded telephonic
borrowing notices, such recordings will be made available to the Borrower upon
its request therefor.

41

 

                2.15 Promise to Pay; Interest and Commitment Fees; Interest Payment Dates;
Interest and Fee Basis; Taxes; Loan and Control Accounts.

		
	 	        (A) Promise to Pay. All Revolving Loans shall be paid in full by
the Borrower on the earlier of (i) the Commitment Termination Date and
(ii) the Facility Termination Date. All Term Loans shall be paid in full
by the Borrower on the earlier of the (i) Term Loan Final Maturity Date
and (ii) the Facility Termination Date. The Borrower unconditionally
promises to pay when due the principal amount of each Loan and all other
Obligations incurred by it, and to pay all unpaid interest accrued
thereon, in accordance with the terms of this Agreement and the other
Loan Documents.
	 
	 	        (B) Interest Payment Dates. Interest accrued on each Floating Rate
Loan shall be payable on each Payment Date, commencing with the first
such date to occur after the date hereof, upon any prepayment whether by
acceleration or otherwise, and at maturity (whether by acceleration or
otherwise). Interest accrued on each Eurodollar Rate Loan shall be
payable on the last day of its applicable Interest Period, on any date on
which the Eurodollar Rate Loan is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Eurodollar Rate
Loan having an Interest Period longer than three months shall also be
payable on the last day of each three-month interval during such Interest
Period. Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (i) on each Payment Date,
commencing on the first such day following the incurrence of such
Obligation, (ii) upon repayment thereof in full or in part, and (iii) if
not theretofore paid in full, at the time such other Obligation becomes
due and payable (whether by acceleration or otherwise).
	 
	 	        (C) Commitment Fees; Fee Letter.

		
	 	      (i) The Borrower shall pay to the Administrative Agent, for the
account of the Lenders in accordance with their Revolving Loan Pro
Rata Shares, from and after the Closing Date until the date on which
the Aggregate Revolving Loan Commitment shall be terminated in whole,
a commitment fee accruing at the rate of the then Applicable
Commitment Fee Percentage, multiplied by the average daily amount by
which (A) the Aggregate Revolving Loan Commitment exceeds (B) the
Revolving Credit Obligations (excluding the outstanding principal
amount of the Swing Line Loans). All such commitment fees payable
under this clause (C) shall be payable quarterly in arrears on each
Payment Date occurring after the Closing Date (with the first such
payment being calculated for the period from the Closing Date and
ending on the first Payment Date thereafter), and, in addition, on any
date on which the Aggregate Revolving Loan Commitment shall be
terminated in whole.
	 
	 	      (ii) The Borrower agrees to pay to the Administrative Agent for
the sole account of the Administrative Agent and the Arranger (unless
otherwise agreed between the Administrative Agent and the Arranger and
any Lender) the fees set forth in the letter agreement between the
Administrative Agent and the Borrower, dated May 23, 2002, payable at
the times and in the amounts set forth therein.

42

 

		
	 	        (D) Interest and Fee Basis; Applicable Floating Rate Margins,
Applicable Eurodollar Margins and Applicable Commitment Fee Percentage.

		
	 	      (i) Interest on all Eurodollar Rate Loans and on all fees shall
be calculated for actual days elapsed on the basis of a 360-day year.
Interest on all Floating Rate Loans shall be calculated for actual
days elapsed on the basis of a 365-, or when appropriate 366-, day
year. Interest shall be payable for the day an Obligation is incurred
but not for the day of any payment on the amount paid if payment is
received prior to 2:00 p.m. (Chicago, Illinois time) at the place of
payment. If any payment of principal of or interest on a Loan or any
payment of any other Obligations shall become due on a day which is
not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension
of time shall be included in computing interest, fees and commissions
in connection with such payment.
	 
	 	      (ii) The Applicable Floating Rate Margins, Applicable Eurodollar
Margins and Applicable Commitment Fee Percentage shall be determined
from time to time by reference to the tables set forth below, (a) in
the case of the Applicable Floating Rate Margins and Applicable
Eurodollar Margins, on the basis of the then applicable Leverage Ratio
as described in this Section 2.15(D)(ii), and (b) in the case of the
Applicable Commitment Fee Percentage, on the basis of the then
outstanding amount of the Revolving Credit Obligations as a percentage
of the Aggregate Revolving Loan Commitment in effect at such time:

	 	 	 	 	 
	

	LEVERAGE RATIO	 	
APPLICABLE FLOATING

RATE MARGINS
	 	APPLICABLE

EURODOLLAR MARGINS
	

	Greater than or equal

to 3.00 to 1.00	 	
2.00%
	 	3.50%
	

	Greater than or equal

to 2.50 to 1.0 and less

than 3.00 to 1.00	 	
1.75%
	 	3.25%
	

	Greater than or equal

to 2.00 to 1.0 and less

than 2.50 to 1.00	 	
1.50%
	 	3.00%
	

	Less than 2.00 to 1.00	 	
1.25%
	 	2.75%
	

43

 

	 	 	 
	

	USAGE	 	
APPLICABLE COMMITMENT

FEE PERCENTAGE
	

	Revolving Credit

Obligations are greater

than or equal to forty

percent (40%) of the

Aggregate Revolving

Loan Commitment at such

time	 	
0.50%
	

	Revolving Credit

Obligations are less

than forty percent

(40%) of the Aggregate

Revolving Loan

Commitment at such time	 	
1.00%
	

                For purposes of this Section 2.15(D)(ii), the Leverage Ratio shall be
calculated as provided in Section 7.4(B). Upon receipt of the financial
statements delivered pursuant to Sections 7.1(A)(ii) and (iii), as applicable,
the Applicable Floating Rate Margins and Applicable Eurodollar Margins shall be
adjusted, such adjustment being effective five (5) Business Days following the
Administrative Agent’s receipt of such financial statements and the compliance
certificate required to be delivered in connection therewith pursuant to
Section 7.1(A)(iv); provided, that if the Borrower shall not have timely
delivered its financial statements in accordance with Section 7.1(A)(ii) or
(iii), as applicable, then commencing on the date upon which such financial
statements should have been delivered and continuing until five (5) Business
Days following the date such financial statements are actually delivered, the
Applicable Floating Rate Margins and Applicable Eurodollar Margins shall be the
Applicable Floating Rate Margins and Applicable Eurodollar Margins, as
applicable, under the pricing grid set forth in this Section 2.15(D)(ii) in
effect on the date such financial statements were required to be delivered
under Section 7.1(A)(ii) or (iii), as applicable; provided that if upon
delivery of such financial statements any increase of the Applicable Floating
Rate Margins or the Applicable Eurodollar Rate Margins shall be required under
this Section 2.15(D), such adjustment shall be made retroactively to the date
such financial statements were initially required to be delivered under Section
7.1(a)(ii) or (iii), as applicable. The Applicable Commitment Fee Percentage
shall be adjusted on a daily basis based upon the average outstanding daily
balance of the Revolving Credit Obligations of such date.

		
	 	      (iii) Notwithstanding anything herein to the contrary, from the
Closing Date to but not including the fifth (5th) Business Day
following receipt of the Borrower’s financial statements delivered
pursuant to Section 7.1(A)(ii) for the fiscal year ending on or about
September 30, 2003, the Applicable Floating Rate Margins and the
Applicable Eurodollar Margins shall be determined based upon a
Leverage Ratio greater than or equal to 3.0 to 1.0.

		
	 	        (E) Taxes.

		
	 	      (i) Any and all payments by the Borrower hereunder (whether in
respect of principal, interest, fees or otherwise) shall be made free
and clear of and without

44

 

		
	 	deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings or any interest,
penalties and liabilities with respect thereto, including, without
duplication of amounts otherwise reimbursable under Section 4.1(A),
those arising after the date hereof as a result of the adoption of or
any change in any law, treaty, rule, regulation, guideline or
determination of a Governmental Authority or any change in the
interpretation or application thereof by a Governmental Authority, but
excluding, in the case of each Lender and the Administrative Agent,
such taxes (including income taxes, franchise taxes and branch profit
taxes) as are imposed on or measured by such Lender’s or the
Administrative Agent’s, as the case may be, net income by the United
States of America or any Governmental Authority of the jurisdiction
under the laws of which such Lender or the Administrative Agent, as
the case may be, is organized (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings, and liabilities which the
Administrative Agent or a Lender determines to be applicable to this
Agreement, the other Loan Documents, the Revolving Loan Commitments,
the Loans or the Letters of Credit being hereinafter referred to as
“Taxes”). If the Borrower shall be required by law to deduct or
withhold any Taxes from or in respect of any sum payable hereunder or
under the other Loan Documents to any Lender or the Administrative
Agent, (a) the sum payable shall be increased as may be necessary so
that after making all required deductions or withholdings (including
deductions applicable to additional sums payable under this Section
2.15(E)) such Lender or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made, (b) the Borrower shall make such
deductions or withholdings, and (c) the Borrower shall pay the full
amount deducted or withheld to the relevant taxation authority or
other authority in accordance with applicable law. If a withholding
tax of the United States of America or any other Governmental
Authority shall be or become applicable (y) after the date of this
Agreement, to such payments by the Borrower made to the Lending
Installation or any other office that a Lender may claim as its
Lending Installation, or (z) after such Lender’s selection and
designation of any other Lending Installation, to such payments made
to such other Lending Installation, such Lender shall use reasonable
efforts to make, fund and maintain the affected Loans through another
Lending Installation of such Lender in another jurisdiction so as to
reduce the Borrower’s liability hereunder, if the making, funding or
maintenance of such Loans through such other Lending Installation of
such Lender does not, in the judgment of such Lender, otherwise
adversely affect such Loans, or obligations under the Revolving Loan
Commitments of such Lender.
	 
	 	      (ii) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges, or similar levies which arise from any payment made
hereunder, from the issuance of Letters of Credit hereunder, or from
the execution, delivery or registration of, or otherwise with respect
to, this Agreement, the other Loan Documents, the Revolving Loan
Commitments, the Loans or the Letters of Credit (hereinafter referred
to as “Other Taxes”).
	 
	 	      (iii) The Borrower indemnifies each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or

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	 	Other Taxes imposed by any Governmental Authority on amounts
payable under this Section 2.15(E)) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty
(30) days after the date such Lender or the Administrative Agent (as
the case may be) makes written demand therefor. If the Taxes or Other
Taxes with respect to which the Borrower or any Subsidiary has made
either a direct payment to the taxation or other authority or an
indemnification payment hereunder are subsequently refunded to any
Lender, such Lender will return to the Borrower, if no Default has
occurred and is continuing, an amount equal to the lesser of the
indemnification payment or the refunded amount. And if a Default
shall have occurred, such refunded amount shall be applied in the same
manner as Designated Prepayments set forth in Section 2.5(B)(i)(e)
hereof. A certificate as to any additional amount payable to any
Lender or the Administrative Agent under this Section 2.15(E)
submitted to the Borrower and the Administrative Agent (if a Lender is
so submitting) by such Lender or the Administrative Agent shall show
in reasonable detail the amount payable and the calculations used to
determine such amount and shall, absent manifest error, be final,
conclusive and binding upon all parties hereto. With respect to such
deduction or withholding for or on account of any Taxes and to confirm
that all such Taxes have been paid to the appropriate Governmental
Authorities, the Borrower shall promptly (and in any event not later
than thirty (30) days after receipt) furnish to each Lender and the
Administrative Agent such certificates, receipts and other documents
as may be required (in the reasonable judgment of such Lender or the
Administrative Agent) to establish any tax credit to which such Lender
or the Administrative Agent may be entitled.
	 
	 	      (iv) Within thirty (30) days after the date of any payment of
Taxes or Other Taxes by the Borrower, the Borrower shall furnish to
the Administrative Agent the original or a certified copy of a receipt
evidencing payment thereof.
	 
	 	      (v) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.15(E) shall survive the payment in full of
all Obligations, the termination of the Letters of Credit and the
termination of this Agreement.
	 
	 	      (vi) Each Lender shall promptly furnish to the Borrower and the
Administrative Agent such additional documents as may be reasonably
required by the Borrower or the Administrative Agent to establish any
exemption from or reduction of any Taxes or Other Taxes required to be
deducted or withheld and which may be obtained without undue expense
to such Lender (collectively, the “Exemption Documents”).
Notwithstanding any other provision of this Section 2.15(E), the
Borrower shall not be obligated to gross up any payments to any Lender
pursuant to Section 2.15(E)(i), or to indemnify any Lender pursuant to
Section 2.15(E)(iii), in respect of United States federal withholding
taxes to the extent imposed as a result of (x) the failure of such
Lender to deliver to the Borrower the Exemption Documents, or (y)
the Lender designating a successor Lending Installation at which it
maintains its Loans which has the effect of causing such Lender to
become

46

 

		
	 	obligated for tax payments in excess of those in effect
immediately prior to such designation; provided, however, that the
Borrower shall be obligated to gross up any payments to any such
Lender pursuant to Section 2.15(E)(i), and to indemnify any such
Lender pursuant to Section 2.15(E)(iii), in respect of United States
federal withholding taxes if (x) any such failure to deliver any
Exemption Documents or the failure of such Exemption Documents to
establish a complete exemption from U.S. federal withholding tax or
inaccuracy or untruth contained therein resulted from a change in any
applicable statute, treaty, regulation or other applicable law or any
interpretation of any of the foregoing occurring after the date
hereof, which change rendered such Lender no longer legally entitled
to deliver such Exemption Documents or otherwise ineligible for a
complete exemption from U.S. federal withholding tax, or rendered the
information or the certifications made in such Exemption Documents
untrue or inaccurate in any material respect, (y) the redesignation of
the Lender’s Lending Installation was made at the request of the
Borrower or (z) the obligation to gross up payments to any such Lender
pursuant to Section 2.15(E)(i), or to indemnify any such Lender
pursuant to Section 2.15(E)(iii), is with respect to a Purchaser that
becomes a Purchaser as a result of an assignment made at the request
of the Borrower.
	 
	 	      (vii) Upon the request, and at the expense of the Borrower, each
Lender to which the Borrower is required to pay any additional amount
pursuant to this Section 2.15(E), shall reasonably afford the Borrower
the opportunity to contest, and shall reasonably cooperate with the
Borrower in contesting, the imposition of any Tax giving rise to such
payment; provided, that (a) such Lender shall not be required to
afford the Borrower the opportunity to so contest unless the Borrower
shall have confirmed in writing to such Lender its obligation to pay
such amounts pursuant to this Agreement; and (b) the Borrower shall
reimburse such Lender for its reasonable attorneys’ and accountants’
fees and disbursements incurred in so cooperating with the Borrower in
contesting the imposition of such Tax; provided, however, that
notwithstanding the foregoing, no Lender shall be required to afford
the Borrower the opportunity to contest, or cooperate with the
Borrower in contesting, the imposition of any Taxes, if such Lender
reasonably and in good faith determines that to do so would have an
adverse effect on it.

                2.16 Notification of Advances, Interest Rates, Prepayments and Aggregate
Revolving Loan Commitment Reductions. Promptly after receipt thereof, the
Administrative Agent will notify each Lender of the contents of each Aggregate
Revolving Loan Commitment reduction notice, Borrowing/Election Notice, and
repayment notice received by it hereunder. The Administrative Agent will
notify the Borrower and each Lender of the interest rate applicable to each
Eurodollar Rate Loan promptly upon determination of such interest rate and will
give each Lender prompt notice of each change in the Alternate Base Rate.

                2.17 Lending Installations. Subject to the provisions of Section
2.15(E)(i) hereto, each Lender may book its Loans or Letters of Credit at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation. Each Lender may, by written or facsimile notice to
the Administrative Agent and the Borrower, designate a Lending Installation

47

 

 through which Loans will be made by it and for whose account Loan payments
and/or payments of L/C Obligations are to be made.

                2.18 Non-Receipt of Funds by the Administrative Agent. Unless the
Borrower or a Lender, as the case may be, notifies the Administrative Agent
prior to the date on which it is scheduled to make payment to the
Administrative Agent of (A) in the case of a Lender, the proceeds of a Loan or
(B) in the case of the Borrower, a payment of principal, interest or fees to
the Administrative Agent for the account of the Lenders, that it does not
intend to make such payment, the Administrative Agent may assume that such
payment has been made. The Administrative Agent may, but shall not be
obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If such Lender or the Borrower, as
the case may be, has not in fact made such payment to the Administrative Agent,
the recipient of such payment shall, on demand by the Administrative Agent,
repay to the Administrative Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the
date such amount was so made available by the Administrative Agent until the
date the Administrative Agent recovers such amount at a rate per annum equal to
(i) in the case of payment by a Lender, the Federal Funds Effective Rate for
such day or (ii) in the case of payment by the Borrower, the interest rate
applicable to the relevant Loan.

                2.19 Termination Conditions. All of the rights and remedies under this
Agreement and the other Loan Documents shall survive until (A) all of the
Secured Obligations (other than contingent indemnity obligations) shall have
been fully and indefeasibly paid and satisfied in cash, (B) the Commitments and
all financing arrangements among the Borrower and the Lenders shall have been
terminated (including under Hedging Agreements or other agreements with respect
to Hedging Obligations) and (C) all of the Letters of Credit shall have
expired, been cancelled or terminated, or cash collateralized pursuant to the
terms of this Agreement or supported by a letter of credit acceptable to the
Administrative Agent (collectively, the “Termination Conditions”).

                2.20 Replacement of Certain Lenders. In the event a Lender (“Affected
Lender”) shall have: (A) failed to fund its Pro Rata Share of any Advance
requested by the Borrower, or to fund a Revolving Loan in order to repay Swing
Line Loans pursuant to Section 2.3(D), which such Lender is obligated to fund
under the terms of this Agreement and which failure has not been cured, (B)
requested compensation from the Borrower under Sections 2.15(E), 4.1 or 4.2 to
recover Taxes, Other Taxes or other additional costs incurred by such Lender
which are not being incurred generally by the other Lenders, (C) delivered a
notice pursuant to Section 4.3 claiming that such Lender is unable to extend
Eurodollar Rate Loans to the Borrower for reasons not generally applicable to
the other Lenders or (D) has invoked Section 10.2; then, in any such case,
after engagement of one or more “Replacement Lenders” (as defined below) by the
Borrower and/or the Administrative Agent, the Borrower or the Administrative
Agent may (but shall not be obligated to) make written demand on such Affected
Lender (with a copy to the Administrative Agent in the case of a demand by the
Borrower and a copy to the Borrower in the case of a demand by the
Administrative Agent) for the Affected Lender to assign, and such Affected
Lender shall use commercially reasonable efforts to assign pursuant to one or
more duly executed Assignment Agreements five (5) Business Days after the date
of such demand, to one or more financial institutions that comply with the
provisions of

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 Section 13.3(A) which the Borrower or the Administrative Agent, as the
case may be, shall have engaged for such purpose (“Replacement Lender”), all of
such Affected Lender’s rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, its Revolving Loan
Commitment, all Loans owing to it, all of its participation interests in
existing Letters of Credit, L/C Drafts and unreimbursed drawings under Letters
of Credit, and its obligation to participate in additional Letters of Credit
and Swing Line Loans hereunder) in accordance with Section 13.3. The
Administrative Agent is authorized (but not required) to execute one or more of
such assignment agreements as attorney-in-fact for any Affected Lender failing
to execute and deliver the same within five (5) Business Days after the date of
such demand. Further, with respect to such assignment the Affected Lender
shall have concurrently received, in cash, all amounts due and owing to the
Affected Lender hereunder or under any other Loan Document, including, without
limitation, the aggregate outstanding principal amount of the Loans owed to
such Lender, together with accrued interest thereon through the date of such
assignment, amounts payable under Sections 2.15(E), 4.1, and 4.2 with respect
to such Affected Lender and compensation payable under Section 2.15(C) in the
event of any replacement of any Affected Lender under clause (B) or clause (C)
of this Section 2.20; provided that upon such Affected Lender’s replacement,
such Affected Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.15(E), 4.1, 4.2, 4.4, and 10.7 (with
respect to all amounts arising under such Sections while such Lender was a
party hereto), as well as to any fees accrued for its account hereunder and not
yet paid, and shall continue to be obligated under Section 11.8.

ARTICLE III: THE LETTER OF CREDIT FACILITY

                3.1 Obligation to Issue Letters of Credit. Subject to the terms and
conditions of this Agreement and in reliance upon the representations,
warranties and covenants of the Borrower herein set forth, each Issuing Bank
hereby agrees to issue for the account of the Borrower through such Issuing
Bank’s branches as it and the Borrower may jointly agree, one or more Letters
of Credit denominated in Dollars in accordance with this Article III, from time
to time during the period, commencing on the Closing Date and ending on the
sixth (6th) Business Day prior to the Commitment Termination Date.

                3.2 Transitional Provision. Schedule 3.2 contains a schedule of certain
letters of credit issued for the account of the Borrower and its Subsidiaries
by any of the Lenders prior to the Closing Date. Subject to the satisfaction
of the conditions contained in Sections 5.1 and 5.2, from and after the Closing
Date such letters of credit shall be deemed to be Letters of Credit issued
pursuant to this Article III.

                3.3 Types and Amounts. No Issuing Bank shall have any obligation to and
no Issuing Bank shall:

		
	 	        (A) issue (or amend) any Letter of Credit if on the date of issuance
(or amendment), before or after giving effect to the Letter of Credit
requested hereunder, (i) the amount of the Revolving Credit Obligations
at such time would exceed the Maximum Revolving Credit Amount at such
time, or (ii) the aggregate outstanding amount of the L/C Obligations
would exceed $3,000,000 calculated as of the date of issuance of any
Letter of Credit; or

49

 

		
	 	        (B) issue (or amend) any Letter of Credit which has an expiration
date later than the date which is the earlier of (i) one (1) year after
the date of issuance thereof or (ii) five (5) Business Days immediately
preceding the Commitment Termination Date; provided, that any Letter of
Credit with a one year tenor may provide for the renewal thereof for
additional one year periods (which in no event shall extend beyond the
date referred to in clause (ii) above).

                3.4 Conditions. In addition to being subject to the satisfaction of the
conditions contained in Sections 5.1 and 5.2, the obligation of an Issuing Bank
to issue any Letter of Credit is subject to the satisfaction in full of the
following conditions:

		
	 	        (A) the Borrower shall have delivered to the applicable Issuing Bank
(at such times and in such manner as such Issuing Bank may reasonably
prescribe) and the Administrative Agent, a request for issuance of such
Letter of Credit in substantially the form of Exhibit C hereto (each such
request a “Request For Letter of Credit”), duly executed applications for
such Letter of Credit, and such other documents, instructions and
agreements as may be required pursuant to the terms thereof (all such
applications, documents, instructions, and agreements being referred to
herein as the “L/C Documents”), and the proposed Letter of Credit shall
be reasonably satisfactory to such Issuing Bank as to form and content;
and
	 
	 	        (B) as of the date of issuance no order, judgment or decree of any
court, arbitrator or Governmental Authority shall purport by its terms to
enjoin or restrain the applicable Issuing Bank from issuing such Letter
of Credit and no law, rule or regulation applicable to such Issuing Bank
and no request or directive (whether or not having the force of law) from
a Governmental Authority with jurisdiction over such Issuing Bank shall
prohibit or request that such Issuing Bank refrain from the issuance of
Letters of Credit generally or the issuance of that Letter of Credit; and
	 
	 	        (C) in the case of LaSalle acting in its capacity as Issuing Bank,
the Borrower shall have duly executed and delivered to LaSalle the L/C
Master Agreement and the Borrower shall be in compliance therewith;
provided that in the event that the terms and conditions of the L/C
Master Agreement (or any similar agreement entered into with any other
Issuing Bank) shall conflict with the terms and conditions of this
Agreement, the terms and conditions of this Agreement shall govern and
control to the extent of such conflict.

                3.5 Procedure for Issuance of Letters of Credit.

		
	 	        (A) Issuance. Subject to the terms and conditions of this Article
III and provided that the applicable conditions set forth in Sections 5.1
and 5.2 hereof have been satisfied, the applicable Issuing Bank shall, on
the requested date, issue a Letter of Credit on behalf of the Borrower in
accordance with such Issuing Bank’s usual and customary business
practices and, in this connection, such Issuing Bank may assume that the
applicable conditions set forth in Section 5.2 hereof have been satisfied
unless it shall have received notice to the contrary from the
Administrative Agent or a Lender or has knowledge that the applicable
conditions have not been met.

50

 

		
	 	        (B) Notice. The applicable Issuing Bank shall give the
Administrative Agent written notice and or telephonic notice confirmed
promptly thereafter in writing, of the issuance of a Letter of Credit,
provided, however, that the failure to provide such notice shall not
result in any liability on the part of such Issuing Bank.
	 
	 	        (C) No Amendment. No Issuing Bank shall extend or amend any Letter
of Credit unless the requirements of this Section 3.5 are met as though a
new Letter of Credit was being requested and issued.

                3.6 Letter of Credit Participation. On the date of this Agreement, with
respect to the Letters of Credit identified on Schedule 3.2, and immediately
upon the issuance of each Letter of Credit hereunder, each Lender with a
Revolving Loan Pro Rata Share shall be deemed to have automatically,
irrevocably and unconditionally purchased and received from the applicable
Issuing Bank an undivided interest and participation in and to such Letter of
Credit, the obligations of the Borrower in respect thereof, and the liability
of such Issuing Bank thereunder (collectively, an “L/C Interest”) in an amount
equal to the amount available for drawing under such Letter of Credit
multiplied by such Lender’s Revolving Loan Pro Rata Share. Each Issuing Bank
will notify each Lender promptly upon presentation to it of an L/C Draft or
upon any other draw under a Letter of Credit. On or before the Business Day on
which an Issuing Bank makes payment of each such L/C Draft or, in the case of
any other draw on a Letter of Credit, on demand by the Administrative Agent or
the applicable Issuing Bank, each Lender shall make payment to the
Administrative Agent, for the account of the applicable Issuing Bank, in
immediately available funds in Dollars in an amount equal to such Lender’s
Revolving Loan Pro Rata Share of the amount of such payment or draw. The
obligation of each Lender to reimburse the Issuing Banks under this Section 3.6
shall be unconditional, continuing, irrevocable and absolute. In the event
that any Lender fails to make payment to the Administrative Agent of any amount
due under this Section 3.6, the Administrative Agent shall be entitled to
receive, retain and apply against such obligation the principal and interest
otherwise payable to such Lender hereunder until the Administrative Agent
receives such payment from such Lender or such obligation is otherwise fully
satisfied; provided, however, that nothing contained in this sentence shall
relieve such Lender of its obligation to reimburse the applicable Issuing Bank
for such amount in accordance with this Section 3.6.

                3.7 Reimbursement Obligation. The Borrower agrees unconditionally,
irrevocably and absolutely to pay immediately to the Administrative Agent, for
the account of the Lenders, the amount of each advance drawn under or pursuant
to a Letter of Credit or an L/C Draft related thereto (such obligation of the
Borrower to reimburse the Administrative Agent for an advance made under a
Letter of Credit or L/C Draft being hereinafter referred to as a “Reimbursement
Obligation” with respect to such Letter of Credit or L/C Draft), each such
reimbursement to be made by the Borrower no later than the Business Day on
which the applicable Issuing Bank makes payment of each such L/C Draft or, if
the Borrower shall have received notice of a Reimbursement Obligation later
than 12:00 noon (Chicago, Illinois time), on any Business Day or on a day which
is not a Business Day, no later than 12:00 noon (Chicago, Illinois time), on
the immediately following Business Day or, in the case of any other draw on a
Letter of Credit, the date specified in the demand of such Issuing Bank. If
the Borrower at any time fails to repay a Reimbursement Obligation pursuant to
this Section 3.7, the Borrower shall be deemed to have elected to borrow
Revolving Loans from the Lenders, as of the date of the

51

 

 advance giving rise to the Reimbursement Obligation, equal in amount to
the amount of the unpaid Reimbursement Obligation. Such Revolving Loans shall
be made as of the date of the payment giving rise to such Reimbursement
Obligation, automatically, without notice and without any requirement to
satisfy the conditions precedent otherwise applicable to an Advance of
Revolving Loans. Such Revolving Loans shall constitute a Floating Rate
Advance, the proceeds of which Advance shall be used to repay such
Reimbursement Obligation. If, for any reason, the Borrower fails to repay a
Reimbursement Obligation on the day such Reimbursement Obligation arises and,
for any reason, the Lenders are unable to make or have no obligation to make
Revolving Loans, then such Reimbursement Obligation shall bear interest from
and after such day, until paid in full, at the interest rate applicable to a
Floating Rate Advance.

                3.8 Letter of Credit Fees. The Borrower agrees to pay:

		
	 	        (A) on each Payment Date, in arrears, to the Administrative Agent
for the ratable benefit of the Lenders, a letter of credit fee at a rate
per annum equal to the Applicable L/C Fee Percentage on the average daily
outstanding amount available for drawing under all standby Letters of
Credit;
	 
	 	        (B) on the date of issuance of each standby Letter of Credit, to the
applicable Issuing Bank, a letter of credit fronting fee equal to 0.25%
of the stated amount available for drawing under such Letter of Credit;
and
	 
	 	        (C) to the applicable Issuing Bank, all customary fees and other
issuance, amendment, cancellation, document examination, negotiation,
transfer and presentment expenses and related charges in connection with
the issuance, amendment, cancellation, presentation of L/C Drafts,
negotiation, transfer and the like customarily charged by such Issuing
Banks with respect to standby and commercial Letters of Credit,
including, without limitation, standard commissions with respect to
commercial Letters of Credit, payable at the time of invoice of such
amounts.

                3.9 Issuing Bank Reporting Requirements. In addition to the notices
required by Section 3.5(B), each Issuing Bank shall, no later than the tenth
Business Day following the last day of each month, provide to the
Administrative Agent, upon the Administrative Agent’s request, schedules, in
form and substance reasonably satisfactory to the Administrative Agent, showing
the date of issue, account party and amount in Dollars, expiration date and the
reference number of each Letter of Credit issued by it outstanding at any time
during such month and the aggregate amount payable by the Borrower during such
month. In addition, upon the request of the Administrative Agent, each Issuing
Bank shall furnish to the Administrative Agent copies of any Letter of Credit
and any application for or reimbursement agreement with respect to a Letter of
Credit to which the Issuing Bank is party and such other documentation as may
reasonably be requested by the Administrative Agent. Upon the request of any
Lender, the Administrative Agent will provide to such Lender information
concerning such Letters of Credit.

                3.10 Indemnification; Exoneration.

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	 	        (A) Indemnification. In addition to amounts payable as elsewhere
provided in this Article III, the Borrower hereby agrees to protect,
indemnify and pay the Administrative Agent, each Issuing Bank and each
Lender from and against any and all liabilities and costs which the
Administrative Agent, such Issuing Bank or such Lender may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of
any Letter of Credit other than, in the case of the applicable Issuing
Bank, as a result of its Gross Negligence or willful misconduct, as
determined by the final judgment of a court of competent jurisdiction, or
(ii) the failure of the applicable Issuing Bank to honor a drawing under
a Letter of Credit as a result of any act or omission, whether rightful
or wrongful, of any present or future Governmental Authority (all such
acts or omissions herein called “Governmental Acts”).
	 
	 	        (B) Risk Assumption. As among the Borrower, the Lenders, the
Administrative Agent and the Issuing Banks, the Borrower assumes all
risks of the acts and omissions of, or misuse of such Letter of Credit
by, the beneficiary of any Letters of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of the Letter of
Credit applications and Letter of Credit reimbursement agreements
executed by the Borrower at the time of request for any Letter of Credit,
neither the Administrative Agent, any Issuing Bank nor any Lender shall
be responsible (in the absence of Gross Negligence or willful misconduct
in connection therewith, as determined by the final judgment of a court
of competent jurisdiction): (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of the Letters
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) 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; (iii) for failure of
the beneficiary of a Letter of Credit to comply duly with conditions
required in order to draw upon such Letter of Credit; (iv) for errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable or other similar form of teletransmission or
otherwise; (v) for errors in interpretation of technical trade terms;
(vi) for the misapplication by the beneficiary of a Letter of Credit of
the proceeds of any drawing under such Letter of Credit; and (vii) for
any consequences arising from causes beyond the control of the
Administrative Agent, the Issuing Banks and the Lenders, including,
without limitation, any Governmental Acts. None of the above shall
affect, impair, or prevent the vesting of any Issuing Bank’s rights or
powers under this Section 3.10.
	 
	 	        (C) No Liability. In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any action
taken or omitted by any Issuing Bank under or in connection with the
Letters of Credit or any related certificates shall not, in the absence
of negligence in the Issuing Bank’s performance or non-performance of the
express terms of this Agreement or willful misconduct, as determined by
the final judgment of a court of competent jurisdiction, put the
applicable Issuing Bank, the Administrative Agent or any Lender under any
resulting liability to the Borrower or relieve the Borrower of any of its
obligations hereunder to any such Person.

53

 

		
	 	        (D) Survival of Agreements and Obligations. Without prejudice to
the survival of any other agreement of the Borrower hereunder, the
agreements and obligations of the Borrower contained in this Section 3.10
shall survive the payment in full of principal and interest hereunder,
the termination of the Letters of Credit and the termination of this
Agreement.

                3.11 Cash Collateral. Notwithstanding anything to the contrary herein or
in any application for a Letter of Credit, after the occurrence and during the
continuance of a Default, the Borrower shall, on the Business Day that it
receives Administrative Agent’s demand, deliver to the Administrative Agent for
the benefit of the Lenders and the Issuing Banks, cash, or other collateral of
a type satisfactory to the Required Lenders, having a value, as determined by
such Lenders, equal to one hundred and five percent (105%) of the aggregate
amount of the outstanding L/C Obligations. Any such collateral shall be held
by the Administrative Agent in a separate account appropriately designated as a
cash collateral account in relation to this Agreement and the Letters of Credit
and retained by the Administrative Agent for the benefit of the Lenders and the
Issuing Banks as collateral security for the Borrower’s obligations in respect
of this Agreement and each of the Letters of Credit and L/C Drafts. Such
amounts shall be applied to reimburse the Issuing Banks for drawings or
payments under or pursuant to Letters of Credit or L/C Drafts, or if no such
reimbursement is required, to payment of such of the other Obligations as the
Administrative Agent shall determine. If no Default shall be continuing,
amounts remaining in any cash collateral account established pursuant to this
Section 3.11 which are not to be applied to reimburse an Issuing Bank for
amounts actually paid or to be paid by such Issuing Bank in respect of a Letter
of Credit or L/C Draft, shall be promptly returned to the Borrower, after
deduction of the Administrative Agent’s expenses incurred in connection with
such cash collateral account.

ARTICLE IV: CHANGE IN CIRCUMSTANCES

                4.1 Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement and
having general applicability to all banks within the jurisdiction in which such
Lender operates (excluding, for the avoidance of doubt, the effect of and
phasing in of capital requirements or other regulations or guidelines passed
prior to the date of this Agreement), or any interpretation or application
thereof by any Governmental Authority charged with the interpretation or
application thereof, or the compliance of any Lender therewith,

		
	 	        (A) subjects any Lender or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due from the
Borrower (other than taxation of the overall net income of any Lender or
taxation of a similar basis, which are governed by Section 2.15(E)), or
changes the basis of taxation of payments to any Lender in respect of its
Revolving Loan Commitment, Loans, its L/C Interests, the Letters of
Credit or other amounts due it hereunder, or
	 
	 	        (B) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the

54

 

		
	 	interest rate applicable to Eurodollar Rate Loans) with respect to
its Revolving Loan Commitment, Loans, L/C Interests or the Letters of
Credit, or
	 
	 	        (C) imposes any other condition the result of which is to increase
the cost to any Lender (other than the cost of funding or borrowing) or
any applicable Lending Installation of making, funding or maintaining its
Revolving Loan Commitment, the Loans, the L/C Interests or the Letters of
Credit or reduces any amount receivable by any Lender or any applicable
Lending Installation in connection with its Revolving Loan Commitment,
Loans or Letters of Credit, or requires any Lender or any applicable
Lending Installation to make any payment calculated by reference to the
amount of Revolving Loan Commitment, Loans or L/C Interests held or
interest received by it or by reference to the Letters of Credit, by an
amount deemed material by such Lender;

                and the result of any of the foregoing is to increase the cost to that
Lender of making, renewing or maintaining its Revolving Loan Commitment, Loans,
L/C Interests, or Letters of Credit or to reduce any amount received under this
Agreement, then, within fifteen (15) days after receipt by the Borrower of
written demand by such Lender pursuant to Section 4.5, the Borrower shall pay
such Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making, funding
and maintaining its Loans, L/C Interests, Letters of Credit and its Revolving
Loan Commitment; provided that the Borrower shall be responsible for any such
of the foregoing amounts that has accrued or been assessed to any Lender not
more than 180 days prior to such written demand (or, if longer, such period
during which because of the retroactive application of such law, rule,
regulation, policy, guideline or directive such Lender did not know in good
faith that such amount would arise or accrue).

                4.2 Changes in Capital Adequacy Regulations. If a Lender reasonably
determines (A) the amount of capital required or expected to be maintained by
such Lender, any Lending Installation of such Lender or any corporation
controlling such Lender is increased as a result of a “Change” (as defined
below), and (B) such increase in capital will result in an increase in the cost
to such Lender of maintaining its Revolving Loan Commitment, Loans, L/C
Interests, the Letters of Credit or its obligation to make Loans hereunder,
then, within fifteen (15) days after receipt by the Borrower of written demand
by such Lender pursuant to Section 4.5, the Borrower shall pay such Lender the
amount necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender determines is attributable
to this Agreement, its Revolving Loan Commitment, its Loans, its L/C Interests,
the Letters of Credit or its obligation to make Loans hereunder (after taking
into account such Lender’s policies as to capital adequacy). “Change” means
(i) any change after the date of this Agreement in the “Risk-Based Capital
Guidelines” (as defined below) excluding, for the avoidance of doubt, the
effect of any phasing in of such Risk-Based Capital Guidelines or any other
capital requirements passed prior to the date hereof, or (ii) any adoption of
or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or any
Lending Installation or any corporation controlling any Lender. “Risk-Based
Capital Guidelines” means (i) the risk-based capital guidelines in effect in
the United States on the date of this Agreement, including transition rules,
and (ii) the corresponding capital regulations promulgated by

55

 

 regulatory authorities outside the United States implementing the July
1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled “International Convergence of Capital Measurements and
Capital Standards,” including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.

                4.3 Availability of Types of Advances. If (A) any Lender reasonably
determines that maintenance of its Eurodollar Rate Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation or directive of
any Governmental Authority, whether or not having the force of law, or (B) the
Required Lenders reasonably determine that, other than during the Syndication
Period, deposits of a type or maturity appropriate to match fund Eurodollar
Rate Loans are not available, then the Administrative Agent shall suspend the
availability of the affected Type of Advance and, in the case of any occurrence
set forth in clause (A), require any Advances of the affected Type to be repaid
or converted into another Type, provided that such repayment or conversion
shall entitle the Lenders to funding indemnification contained in Section 4.4
with respect to any Eurodollar Rate Advance only upon the occurrence of a
change in a law, rule or regulation occurring after the Borrowing Date of such
Eurodollar Rate Advance.

                4.4 Funding Indemnification. If any payment of a Eurodollar Rate Loan
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment, or otherwise, or a Eurodollar Rate
Loan is not made on the date specified by the Borrower for any reason other
than default by the Lenders, or a Eurodollar Rate Loan is not prepaid on the
date specified by the Borrower for any reason, the Borrower indemnifies each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Eurodollar Rate Loan. In connection with any
assignment by any Lender of any portion of the Loans made pursuant to Section
13.3 and made during the Syndication Period, and if, notwithstanding the
provisions of Section 2.4, the Borrower has requested and the Administrative
Agent has consented to the use of the Eurodollar Rate, the Borrower shall be
deemed to have repaid all outstanding Eurodollar Rate Advances as of the
effective date of such assignment and reborrowed such amount as a Floating Rate
Advance and/or Eurodollar Rate Advance (chosen in accordance with the
provisions of Section 2.4) and the indemnification provisions under this
Section 4.4 shall apply.

                4.5 Lender Statements; Survival of Indemnity. If reasonably possible,
each Lender shall designate an alternate Lending Installation with respect to
its Eurodollar Rate Loan to reduce any liability of the Borrower to such Lender
under Sections 4.1 and 4.2 or to avoid the unavailability of a Type of Advance
under Section 4.3, so long as such designation is not, in the reasonable
judgment of the Lender, disadvantageous to such Lender. Each Lender shall
deliver a written statement of such Lender to the Borrower (with a copy to the
Administrative Agent) as to the amount due, if any, under Section 2.15(E), 4.1,
4.2 or 4.4 and shall set forth in reasonable detail the calculations upon which
such Lender determined such amount and shall be final, conclusive and binding
on the Borrower in the absence of demonstrable error. Determination of amounts
payable under such Sections in connection with a Eurodollar Rate Loan shall be
calculated as though each Lender funded its Eurodollar Rate Loan through the
purchase of a deposit of the type and maturity corresponding to the deposit
used as a reference in determining the Eurodollar Rate applicable to such Loan,
whether in fact that is the case or not. Unless

56

 

 otherwise provided herein, the amount specified in the written statement
of any Lender shall be payable on demand after receipt by the Borrower of such
statement. The obligations of the Borrower under Sections 2.15(E), 4.1, 4.2
and 4.4 shall survive payment of the Obligations and termination of this
Agreement.

ARTICLE V: CONDITIONS PRECEDENT

                5.1 Initial Advances and Letters of Credit. The Lenders shall not be
required to make the initial Loans or issue any Letters of Credit unless (A)
such initial Loans are made not later than December [______], 2002; and (B) the
Borrower has furnished to the Administrative Agent each of the following, with
sufficient copies for the Lenders, all in form and substance satisfactory to
the Administrative Agent and the Lenders in their sole and absolute discretion:

		
	 	      (i) Copies of the Certificate of Incorporation or Articles of
Incorporation or other applicable organizational document of the
Borrower and each of the Guarantors as of the Closing Date
(collectively, the “Loan Parties”), together with all amendments and a
certificate of good standing, both certified as of a recent date by
the appropriate governmental officer in its jurisdiction of
organization;
	 
	 	      (ii) Copies, certified by the Secretary or Assistant Secretary of
each of the Loan Parties of their respective by-laws or operating
agreement and of their respective Board of Directors’ resolutions (and
resolutions of other bodies, if any are deemed necessary by counsel
for any Lender) authorizing the execution of the Loan Documents
entered into by it;
	 
	 	      (iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of each of the Loan Parties, which shall identify
by name and title and bear the signature of the officers of the
applicable Loan Party authorized to sign the Loan Documents entered
into by it and, of the Borrower to make borrowings hereunder, upon
which certificate the Lenders shall be entitled to rely until informed
of any change in writing by the Borrower;
	 
	 	      (iv) A certificate, in form and substance satisfactory to the
Administrative Agent and the Arranger, signed by the Chief Financial
Officer of the Borrower, certifying that on the Closing Date (a) all
the representations in this Agreement are true and correct in all
material respects (unless such representation and warranty is made as
of a specific date, in which case, such representation and warranty
shall be true and correct as of such date), (b) no Default or
Unmatured Default has occurred and is continuing, and (c) since
September 30, 2001 no material adverse change in the business,
financial condition, operations or results of operations of the
Borrower, any Guarantor, the Borrower and its Subsidiaries, in each
case taken as a whole, or the assets acquired pursuant to the terms of
the Asset Purchase Agreement shall have occurred;
	 
	 	      (v) The written opinion of the Loan Parties’ counsel, addressed
to the Administrative Agent, the Arranger and the Lenders, in
substantially the form attached hereto as Exhibit E;

57

 

		
	 	      (vi) A copy of (a) an opinion of Duff & Phelps, LLC, including to
the effect that (1) the consideration to be paid by the ESOT for the
“Shares” under (and as defined in) the ESOT Stock Purchase Agreement
is not in excess of “adequate consideration,” within the meaning of
Section 3(18) of ERISA and (2) the transactions contemplated in
connection with the ESOT Transaction Documents are fair to the ESOT
from a financial point of view, which opinion shall be in full force
and effect and not withdrawn as of the Closing Date, and (b) the stock
repurchase liability forecasts and stock and cash allocations in
respect of the ESOP prepared by Benefits Consulting, Inc.;
	 
	 	      (vii) Evidence satisfactory to the Administrative Agent and the
Arranger that (a) all conditions precedent to the consummation of the
IITRI Acquisition and the ESOT Transaction have been satisfied or
waived with the approval of the Administrative Agent and the Arranger
(which approval shall not be unreasonably withheld), (b) the IITRI
Acquisition and the ESOT Transaction have been approved by all
necessary action of the Borrower’s Board of Directors and shareholders
and of the ESOT Trustee, and the ESOP Plan Documents (including all
amendments, waivers and other modifications thereto as of the Closing
Date) are reasonably acceptable to the Administrative Agent and the
Arranger, (c) the IITRI Acquisition has been approved by the members
of IITRI, (d) the representations and warranties in the Asset Purchase
Agreement and the ESOT Transaction Documents shall be accurate in all
material respects as of the Closing Date, and (e) the ESOT shall own
not less than one hundred percent (100%) of the Capital Stock of the
Borrower as of the Closing Date; and the Administrative Agent, the
Arranger and the Lenders shall have received an opinion of counsel
satisfactory to them as to the enforceability of the Asset Purchase
Agreement and the ESOT Transaction Documents and the Borrower’s, the
ESOT Trustee’s and the ESOT’s compliance with law in respect thereof;
	 
	 	      (viii) Evidence reasonably satisfactory to the Administrative
Agent that the Borrower shall have (x) issued Senior Subordinated
Notes to IITRI pursuant to the Securities Purchase Agreements in
partial satisfaction of the “Purchase Price” under (and as defined in)
the Asset Purchase Agreement in an aggregate amount not to exceed
$[______], (y) issued Junior Subordinated Notes to IITRI in
partial satisfaction of the “Purchase Price” under (and as defined in)
the Asset Purchase Agreement in an amount not to exceed $39,900,000
plus the amount of any adjustments under the Asset Purchase Agreement,
and (z) received not less than $30,000,000 in proceeds from the
issuance of Capital Stock to the ESOT, which amount is received by the
ESOT from the rollover pension and tax-sheltered annuity plans of
employees of IITRI as of the Closing Date, on the terms and conditions
set forth in the ESOT Transaction Documents;
	 
	 	      (ix) Evidence satisfactory to the Administrative Agent,
including, without limitation, opinion letters from the ESOT Trustee’s
counsel addressed to the Administrative Agent and the Lenders, to the
effect that (a) the ESOT has been duly organized and is a validly
existing trust and has all the requisite powers and authority to
execute and deliver the Transaction Documents and the ESOP Plan
Documents

58

 

		
	 	which have been or are to be executed by it and to perform its
obligations under and the transactions contemplated by the Transaction
Documents and the ESOP Plan Documents, (b) the execution and delivery
by the ESOT of the Transaction Documents and the ESOP Plan Documents
have been duly authorized and completed by all necessary actions of it
and such executions and deliveries and the performance by it of its
obligations under and the transactions contemplated by the Transaction
Documents and the ESOP Plan Documents do not contravene any provision
of law and the Transaction Documents and the ESOP Plan Documents which
have been or are to be executed by it are legal, valid and binding
obligations of it enforceable against it in accordance with the terms
thereof, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, or moratorium or other similar
laws relating to the enforcement of creditors’ rights generally and by
general equitable principles other than general equitable principles
as may be applicable to any prohibited transactions described in
Section 406 of ERISA or Section 4975 of the Code; (c) the ESOT
Transaction does not constitute, nor will it constitute a prohibited
transaction described in Section 406 of ERISA or Section 4975 of the
Code, (d) the ESOP is qualified under Section 401(a) of the Code, (e)
the ESOP is an employee stock ownership plan as defined in Section
4975(e)(7) of the Code, and (f) neither the Borrower nor any of its
Subsidiaries shall be subject to the tax imposed by Section 4978 of
the Code with respect to any “disposition” by the ESOT of any Capital
Stock of the Borrower occurring as a result of the ESOT Transaction;
	 
	 	      (x) Evidence reasonably satisfactory to the Administrative Agent
(which satisfaction may come through the opinions referenced in other
clauses of this Section 5.1(B)) that as of the Closing Date and
effective for the tax year ending September 30 2002, the Borrower
shall be an “S corporation” as such term is defined in Section 1361 of
the Code and the ESOT shall not be subject to tax imposed under the
Code with respect to any item of income or loss of the Borrower or any
Subsidiary of the Borrower;
	 
	 	      (xi) Copies of the Asset Purchase Agreement, the ESOP Plan
Documents and the ESOT Transaction Documents that will be in effect on
and after the date of this Agreement all in form and substance
satisfactory to the Administrative Agent and their counsel in their
reasonable discretion, and which documents and agreements shall be in
material compliance with ERISA and any applicable rules and
regulations of the United States Treasury Department;
	 
	 	      (xii) Evidence reasonably satisfactory to the Administrative
Agent that all necessary governmental and third party approvals and
consents, if any, related to the Asset Purchase Agreement and the ESOT
Transaction have been obtained and all related filings made and any
applicable waiting periods shall have expired or been terminated;
	 
	 	      (xiii) Evidence reasonably satisfactory to the Administrative
Agent and the Arranger that there exists no injunction or temporary
restraining order which, in the reasonable judgment of the
Administrative Agent and the Arranger, would prohibit the making of
the Loans or the consummation of the IITRI Acquisition or the ESOT

59

 

		
	 	Transaction and the other transactions contemplated by the
Transaction Documents and the ESOP Plan Documents or any litigation
seeking such an injunction or restraining order or which could
reasonably be expected to result in a Material Adverse Effect;
	 
	 	      (xiv) The ESOP Plan Documents together with the Borrower’s most
recently filed information return Form 5500 Series and all schedules
and attachments thereto (if available) for the ESOP, the ESOT
Transaction Documents and such other documents as the Administrative
Agent shall reasonably require in connection therewith, all in form
and substance satisfactory to the Administrative Agent in its
reasonable discretion;
	 
	 	      (xv) A field examination conducted by the Administrative Agent’s
internal auditors (or similar outside auditors), including
satisfactory reviews of Receivables, contracts, contract collection
and reimbursement provisions, and pension and tax-sheltered annuity
add-backs, satisfactory to the Administrative Agent and the Lenders;
	 
	 	      (xvi) Evidence reasonably satisfactory to the Administrative
Agent that there exists no action, suit, investigation, litigation, or
proceeding pending or threatened in any court or before any arbitrator
or governmental instrumentality that in Administrative Agent’s
reasonable judgment could reasonably be expected to have a Material
Adverse Effect;
	 
	 	      (xvii) Such other documents as the Administrative Agent or any
Lender or its counsel may have reasonably requested, including,
without limitation, all of the documents reflected on the List of
Closing Documents attached as Exhibit F to this Agreement;
	 
	 	      (xviii) (a) The audited financial statements of IITRI and its
consolidated Subsidiaries for the 12-month period ending as of
September 30, 2001, (b) the unaudited quarterly financial statements
of IITRI and its consolidated Subsidiaries for the fiscal quarter
ending as of September 30, 2002 certified by the chief financial
officer of the Borrower, (c) the audited financial statements of the
business and assets of IITRI to be acquired by the Borrower pursuant
to the Asset Purchase Agreement for the 12-month period ending as of
September 30, 2001, (d) the unaudited quarterly financial statements
of the business and assets of IITRI to be acquired by the Borrower
pursuant to the Asset Purchase Agreement for the fiscal quarter ending
as of September 30, 2002 certified by the chief financial officer of
the Borrower, and (e) the pro forma opening consolidated financial
statements of the Borrower and its Subsidiaries, based on the
September 30, 2002 financial statements described in clause (d)
above after giving effect to the transactions contemplated by the
Transaction Documents, which financial statements shall demonstrate,
in the reasonable judgement of the Administrative Agent and the
Arranger, together with all other information then available to the
Administrative Agent and the Arranger, the ability of the Borrower and
its Subsidiaries to repay their debts and satisfy their respective
other obligations as and when due, and to comply with the financial

60

 

		
	 	covenants set forth in Section 7.4 hereof;
	 
	 	      (xix) Evidence reasonably satisfactory to the Administrative
Agent and the Arranger of the payment of all principal, interest, fees
and premiums, if any, on all Indebtedness under the Existing Credit
Agreement, and the agreement to release all Liens and the termination
of the applicable agreements relating thereto, in each case taking
effect concurrently with the effectiveness of this Agreement and the
consummation of the IITRI Acquisition and the ESOT Transaction;
	 
	 	      (xx) An initial executed Borrowing Base Certificate dated as of
the Closing Date, reflecting the calculation of the Borrowing Base
(Monthly) as
of [December 1, 2002], together with an initial compliance
certificate, substantially in the form of Exhibit H attached hereto,
signed by an Authorized Officer, setting forth calculations for the
period ending [______, 2002]3 for (a) the Senior Leverage Ratio, which
Senior Leverage Ratio shall be not more than 2.50 to 1.00 and (b)
EBITDAE attributable to the business and assets of IITRI acquired by
the Borrower pursuant to the Asset Purchase Agreement, but exclusive
of non-recurring costs and expenses associated with this Agreement,
the ESOT Transaction Documents and the Asset Acquisition Agreement,
which EBITDAE shall be not less than $17,000,000;
	 
	 	      (xxi) A financial condition certificate, together with
appropriate supporting factual information, in form and substance
reasonably satisfactory to it from the Chief Financial Officer of the
Borrower supporting the conclusions that after giving effect to the
ESOT Transaction, the Borrower and its Subsidiaries on a consolidated
basis are Solvent and will be Solvent subsequent to incurring the
Indebtedness contemplated under the Transaction Documents, would
reasonably be expected to be able to pay its debts and liabilities as
they become due and will not be left with unreasonably small capital
with which to engage in its business;
	 
	 	      (xxii) Evidence satisfactory to the Administrative Agent and the
Arranger that the Borrower has paid to the Administrative Agent and
the Arranger the fees agreed to in the fee letter dated May 23, 2002,
between the Administrative Agent and the Borrower.

                5.2 Each Advance and Letter of Credit. The Lenders shall not be required
to make any Advance, or convert or continue any Advance, or issue any Letter of
Credit and no Swing Line Bank shall be required to make any Swing Line Loans
hereunder, unless on the applicable Borrowing Date, or in the case of a Letter
of Credit, the date on which the Letter of Credit is to be issued:

		
	 	        (A) No Defaults. There exists no Default or Unmatured Default;

	3 N.B.: This date shall be the last day of the most recently completed
four-week accounting period closing immediately prior to the Closing Date.

61

 

		
	 	        (B) Representations and Warranties. All of the representations and
warranties contained in Article VI are true and correct as of such
Borrowing Date (unless such representation and warranty is made as of a
specific date, in which case, such representation and warranty shall be
true and correct as of such date) except for changes in the Schedules to
this Agreement reflecting transactions permitted by or not in violation
of this Agreement; and
	 
	 	        (C) Maximum Revolving Credit Amount. The Revolving Credit
Obligations do not, and after making such proposed Advance or issuing
such Letter of Credit would not, exceed the Maximum Revolving Credit
Amount.

                Each Borrowing/Election Notice with respect to each such Advance and the
letter of credit application with respect to each Letter of Credit shall
constitute a representation and warranty by the Borrower that the conditions
contained in Sections 5.2(A), (B) and (C) have been satisfied.

ARTICLE VI: REPRESENTATIONS AND WARRANTIES

                In order to induce the Administrative Agent and the Lenders to enter into
this Agreement and to make the Loans and the other financial accommodations to
the Borrower and to issue the Letters of Credit described herein, the Borrower
represents and warrants as follows to each Lender and the Administrative Agent
as of the Closing Date, giving effect to the consummation of the transactions
contemplated by the Transaction Documents on the Closing Date, and thereafter
on each date as required by Section 5.2:

                6.1 Organization; Powers. The Borrower and each of its Subsidiaries (A)
is a corporation, limited liability company, or partnership duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (B) is duly qualified to do business as a foreign entity and is
in good standing under the laws of each jurisdiction in which failure to be so
qualified and in good standing could reasonably be expected to have a Material
Adverse Effect, and (C) has all requisite power and authority to own, operate
and encumber its property and to conduct its business as presently conducted
and as proposed to be conducted.

                6.2 Authority, Execution and Delivery; Transaction Documents.

		
	 	        (A) Power and Authority. The Borrower and each of its Subsidiaries
has the requisite power and authority to execute, deliver and perform
each of the Transaction Documents which are to be executed by it in
connection with the IITRI Acquisition and the ESOT Transaction or which
have been executed by it as required by this Agreement and the other Loan
Documents and (ii) to file the Transaction Documents which must be filed
by it in connection with IITRI Acquisition or the ESOT Transaction or
which have been filed by it as required by this Agreement, the other Loan
Documents or otherwise with any Governmental Authority.
	 
	 	        (B) Execution and Delivery. The execution, delivery, performance
and filing, as the case may be, of each of the Transaction Documents
which must be executed or filed by the Borrower or any of its
Subsidiaries in connection with the IITRI Acquisition or the ESOT
Transaction or which have been executed or filed as required by this

62

 

		
	 	Agreement, the other Loan Documents or otherwise and to which the
Borrower or any of its Subsidiaries is party, and the consummation of the
transactions contemplated thereby, have been duly approved by the
respective boards of directors and, if necessary, the stockholders or
unitholders of the Borrower and its Subsidiaries, and such approvals have
not been rescinded. No other action or proceedings on the part of the
Borrower or its Subsidiaries are necessary to consummate such
transactions.
	 
	 	        (C) Transaction Documents. Each of the Transaction Documents to
which the Borrower or any of its Subsidiaries is a party has been duly
executed, delivered or filed, as the case may be, by it and constitutes
its legal, valid and binding obligation, enforceable against it in
accordance with its terms (except as enforceability may be limited by
bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors’ rights generally), is in full force and effect, and no
material term or condition thereof has been amended, modified or waived
from the terms and conditions contained in the Transaction Documents
delivered to the Administrative Agent pursuant to Section 5.1 without the
prior written consent of the Administrative Agent, and the Borrower and
its Subsidiaries have, and, to the best of the Borrower’s and its
Subsidiaries’ knowledge, all other parties thereto have, performed and
complied with all the terms, provisions, agreements and conditions set
forth therein and required to be performed or complied with in all
material respects by such parties, and no unmatured default, default or
breach of any covenant by any such party exists thereunder.

                6.3 No Conflict; Governmental Consents. The execution, delivery and
performance of each of the Loan Documents and other Transaction Documents to
which the Borrower or any of its Subsidiaries is a party do not and will not
(A) conflict with the Constituent Documents of the Borrower or any such
Subsidiary, (B) (i) constitute a tortious interference with any Contractual
Obligation of any Person or (ii) conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a default under
any Requirement of Law (including, without limitation, any Environmental
Property Transfer Act) or Contractual Obligation of the Borrower or any such
Subsidiary, or require termination of any Contractual Obligation of the
Borrower or any such Subsidiary which, in the case of this clause (ii), could
be reasonably anticipated to result in a Material Adverse Effect, (C) result in
or require the creation or imposition of any Lien whatsoever upon any of the
property or assets of the Borrower or any such Subsidiary, other than Liens
permitted or created by the Transaction Documents, or (D) require any approval
of the Borrower’s or any such Subsidiary’s Board of Directors or shareholders
or unitholders except such as have been obtained. Except as set forth on
Schedule 6.3 to this Agreement, the execution, delivery and performance of each
of the Transaction Documents to which the Borrower or any of its Subsidiaries
is a party do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by any Governmental
Authority, including under any Environmental Property Transfer Act, except
filings, consents or notices which have been made, obtained or given, or which,
if not made, obtained or given, individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.

                6.4 Financial Statements.

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	 	        (A) Pro Forma Financials. The combined, projected pro forma balance
sheet, income statements and statements of cash flow of the Borrower and
its Subsidiaries, copies of which are attached hereto as Schedule 6.4 to
this Agreement, present on a pro forma basis the financial condition of
the Borrower and such Subsidiaries as of such date, and reflect on a pro
forma basis those liabilities reflected in the notes thereto and
resulting from consummation of the IITRI Acquisition, the ESOT
Transaction, the issuance of the Subordinated Notes and the other
transactions contemplated by this Agreement, and the payment or accrual
of all transaction costs payable on the Closing Date with respect to any
of the foregoing. The projections and assumptions expressed in the pro
forma financials referenced in this Section 6.4(A) were prepared in good
faith and represent management’s opinion based on the information
available to the Borrower at the time so furnished and, since the
preparation thereof and up to the Closing Date, there has occurred no
change in the business, financial condition, operations, or prospects of
the Borrower or any of its Subsidiaries, or the Borrower and its
Subsidiaries taken as a whole which has had or could reasonably be
expected to have a Material Adverse Effect.
	 
	 	        (B) Audited Financial Statements. Complete and accurate copies of
the audited financial statements and the audit reports related thereto of
IITRI and its consolidated Subsidiaries as at September 30, 2001 and of
the business and assets of IITRI to be acquired by the Borrower pursuant
to the Asset Purchase Agreement as at September 30, 2001, and (ii) the
unaudited financial statements of IITRI and its consolidated Subsidiaries
as of September 30, 2002 and of the business and assets of IITRI to be
acquired by the Borrower pursuant to the Asset Purchase Agreement as of
September 30, 2002, have been delivered to the Administrative Agent.

                6.5 No Material Adverse Change.

		
	 	        (A) Prior to Closing Date. Since September 30, 2001 up to the
Closing Date, there has occurred no change in the business, properties,
condition (financial or otherwise), performance, results of operations or
prospects of IITRI and its consolidated Subsidiaries, the Borrower, any
Guarantor, or the Borrower and its Subsidiaries, in each case, taken as a
whole or any other event which has had or could reasonably be expected to
have a Material Adverse Effect.
	 
	 	        (B) From and After Closing Date. Since the Closing Date, there has
occurred no change in the business, properties, condition (financial or
otherwise), performance, results of operations or prospects of the
Borrower, any Guarantor or the Borrower and its Subsidiaries, in each
case, taken as a whole or any other event which has had or could
reasonably be expected to have a Material Adverse Effect.

                6.6 Taxes.

		
	 	        (A) Tax Examinations. All deficiencies which have been asserted
against the Borrower or any of the Borrower’s Subsidiaries as a result of
any federal, state, local or foreign tax examination for each taxable
year in respect of which an examination has been conducted have been
fully paid or finally settled or are being contested in good faith, and
no issue has been raised by any taxing authority in any such examination

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	 	which, by application of similar principles, could reasonably be
expected to result in assertion by such taxing authority of a material
deficiency for any other year not so examined which has not been reserved
for in the Borrower’s consolidated financial statements to the extent, if
any, required by Agreement Accounting Principles. Except as permitted
pursuant to Section 7.2(D), neither the Borrower nor any of the
Borrower’s Subsidiaries anticipates any tax liability with respect to the
years which have not been closed pursuant to applicable law.
	 
	 	        (B) Payment of Taxes. All tax returns and reports of the Borrower
and its Subsidiaries required to be filed have been timely filed, and all
taxes, assessments, fees and other governmental charges thereupon and
upon their respective property, assets, income and franchises which are
shown in such returns or reports to be due and payable have been paid
except those items which are being contested in good faith and have been
reserved for in accordance with Agreement Accounting Principles. The
Borrower has no knowledge of any proposed tax assessment against the
Borrower or any of its Subsidiaries that will have or could reasonably be
expected to have a Material Adverse Effect.
	 
	 	        (C) Subchapter S Status; ESOT Tax-Exempt Status. As of the Closing
Date, the Borrower will have executed the applicable election forms or
other filings required to be made for purposes of the Borrower’s election
to be taxed as an “S corporation” as such term is defined in Section 1361
of the Code. Beginning with the Borrower’s taxable year ending September
30, 2002, the Borrower is taxable as an S corporation. The ESOT is not
subject to tax imposed under the Code with respect to any item of income
or loss of the Borrower or any Subsidiary of the Borrower.

                6.7 Litigation; Loss Contingencies and Violations.

		
	 	        (A) Litigation. Except as set forth in Schedule 6.7 (the “Disclosed
Litigation”), there is no action, suit, proceeding, arbitration or, to
the Borrower’s knowledge, investigation before or by any Governmental
Authority or private arbitrator pending or, to the Borrower’s knowledge,
threatened against or affecting the Borrower or any of its Subsidiaries
or any property of any of them. Neither any of the Disclosed Litigation
nor any action, suit, proceeding, arbitration or investigation which has
commenced since the Closing Date (or the most recent update of the
Disclosed Litigation) (i) challenges the validity or the enforceability
of any material provision of the Transaction Documents or (ii) has or
could reasonably be expected to have a Material Adverse Effect. Neither
the Borrower nor any of its Subsidiaries is (x) in violation of any
applicable Requirements of Law which violation will have or could
reasonably be expected to have a Material Adverse Effect, or (y) subject
to or in default with respect to any final judgment, writ, injunction,
restraining order or order of any nature, decree, rule or regulation of
any court or Governmental Authority which will have or could reasonably
be expected to have a Material Adverse Effect. To the Borrower’s
knowledge, neither the ESOP Fiduciary nor the ESOT Trustee has made any
assertion with respect to the ESOP or ESOT contrary to or inconsistent
with the accuracy of any representation or warranty set forth at Section
6.6(C) or Section 6.20 that could reasonably be expected to result in a
Material Adverse Effect.

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	 	        (B) Loss Contingencies. There is no material loss contingency
within the meaning of Agreement Accounting Principles which has not been
reflected in the consolidated financial statements of the Borrower
prepared and delivered pursuant to Section 7.1(A) for the fiscal period
during which such material loss contingency was incurred.

                6.8 Subsidiaries.

		
	 	        (A) Subsidiaries and Redemption Rights. Schedule 6.8(A) to this
Agreement (i) contains a description of the corporate structure of the
Borrower and its Subsidiaries; and (ii) accurately sets forth (a) the
correct legal name, the jurisdiction of incorporation and the
jurisdictions in which each of the Borrower and the direct and indirect
Subsidiaries of the Borrower are qualified to transact business as a
foreign corporation, (b) the authorized, issued and outstanding shares of
each class of Capital Stock of the Borrower and each of its Subsidiaries
and the owners of such shares, and (c) a summary of the direct and
indirect partnership, joint venture, or other Equity Interests, if any,
of the Borrower and each of its Subsidiaries in any Person. None of the
Borrower’s Subsidiaries is a Foreign Subsidiary. Except for (a)
mandatory redemption or repurchase of Capital Stock of the Borrower as a
result of distributions by the ESOT to participants of the ESOP pursuant
to the ESOP Plan Documents subsequent to their termination of
employment with the Borrower or any Controlled Group member (b) the requirements of Section 401(a)(28) of the Code or any substantially similar
Requirement of Law or as otherwise permitted by Section 7.3(F) hereto,
(c) the vesting provisions of the ESOP, (d) the Incentive Arrangements,
(e) the put and call rights contained in the Seller Warrants and (f)
agreements otherwise disclosed on Schedule 6.8(A), none of the issued and
outstanding Capital Stock of the Borrower or any of the Borrower’s
Subsidiaries is subject to any vesting, redemption, or repurchase
agreement, and there are no warrants or options outstanding with respect
to such Capital Stock, except for the Seller Warrants and except as may
be in effect from time to time with respect to Incentive Arrangements.
The outstanding Capital Stock of the Borrower and each of its
Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and is not Margin Stock.
	 
	 	        (B) As of the Closing Date:

		
	 	      (i) except as provided in the Rights Agreement and the Seller
Warrants, the Borrower's Capital Stock is not subject to any preemptive right, right of first refusal
or offer or similar right on the part of any other Person, and all of
such Capital Stock has been (or will have been) offered and issued in
accordance with all applicable laws; and, except as set forth on
Schedule 6.8(B)(i) and except to the extent Persons may be deemed
beneficial owners by virtue of familial relationships with a holder of
Capital Stock or in connection with a trust established for the
benefit of family members by a holder of Capital Stock, the owners of
the Capital Stock indicated on Schedule 6.8(B)(i) own the Capital
Stock indicated on such exhibit free of any Lien, proxy, voting
agreement, voting trust, stockholders agreement (other than the Rights
Agreement) or similar agreement or restriction; and, except as set
forth on Schedule 6.8(B)(i), neither the Constituent Documents nor
any other agreement, document or instrument binding on or applicable
to the Borrower or any of its Subsidiaries or any of its stockholders

66

 

		
	 	contains any provision requiring a higher voting requirement with
respect to action taken (and/or to be taken) by its board of directors
or stockholders than that which would apply in the absence of such
provision;
	 
	 	      (ii) except as provided in the Rights Agreement and the Seller
Warrants and except as set forth on Schedule 6.8(B)(ii) attached hereto
(after giving effect to the consummation of the transactions
consummated on the Closing Date under the Transaction Documents), (a)
there are no outstanding securities convertible into or exercisable or
exchangeable for any Capital Stock of the Borrower or any of its
Subsidiaries and no outstanding agreements for the purchase from, or
sale or issuance by, the Borrower or any of its Subsidiaries of any of
their respective Capital Stock or any securities convertible into or
exercisable or exchangeable for such Capital Stock; (b) there are no
agreements on the part of the Borrower or any of its Subsidiaries to
issue, sell or distribute any of their respective Capital Stock, other
securities or assets; (c) neither the Borrower nor any of its
Subsidiaries has any obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of their respective Capital Stock or
other securities or any interest therein or to pay any dividend or
make any distribution in respect thereof; and (d) no Person is
entitled to any rights with respect to the registration of any Capital
Stock or other securities of the Borrower or any of its Subsidiaries
under the Securities Act (or the securities laws of any other
jurisdiction); and
	 
	 	      (iii) the aggregate number of shares of common stock of the
Borrower issuable upon exercise in full of the Seller Warrants issued
pursuant to the terms of the Senior Subordinated Securities Purchase
Agreement immediately after the Closing is [______], which, if
then issued, would constitute
[______ percent
(____%)] of the common
stock of the Borrower (calculated assuming the conversion, exercise
and exchange of all outstanding securities convertible into and
exercisable or exchangeable for shares of common stock of the
Borrower, including, without limitation, the Seller Warrants.
The Borrower has
reserved [______] shares of common stock of the Borrower solely
for issuance upon exercise of the Seller Warrants issued pursuant to
the terms of the Senior Subordinated Securities Purchase Agreement.
The Borrower has adopted a stock appreciation rights plan. The Borrower has not reserved any shares of common stock of the Borrower pursuant to the Borrower stock appreciation rights plan.

                6.9 ERISA.

		
	 	        (A) List of Plans. Set forth in Schedule 6.9(A) is a true and
complete list of each material Plan that, as of the date of this
Agreement, is or was an “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA). Set forth in Schedule 6.9(A) is a
true and complete list of each material Plan that, as of the date of this
Agreement, is or was an “employee welfare benefit plan” (as such term is
defined in Section 3(1) of ERISA).

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	 	        (B) List of Non-ERISA Commitments. Set forth in Schedule 6.9(B) is
a true and complete list of each material Non-ERISA Commitment adopted by
the Borrower or any of its Subsidiaries and in effect as of the date of
this Agreement. Upon the Request of the Administrative Agent, the
Borrower will deliver to the Administrative Agent true and complete
copies in existence as of the date of this Agreement of (i) all written
Non-ERISA Commitments disclosed on Schedule 6.9(B) and (ii) all insurance
and annuity policies and contracts and other funding arrangements and
other documents relevant to any Non-ERISA Commitment disclosed on
Schedule 6.9(B).
	 
	 	        (C) Plan Documents. The ESOP Plan Documents identified in Schedule
1.1.5 (each as may be amended from time to time as provided herein) are
all of the material documents pursuant to which the ESOP and ESOT are
maintained by the Borrower, or concerning the Borrower’s obligations with
respect to the ESOP and ESOT. The ESOT Transaction Documents identified
in Schedule 1.1.6 (without any modifications or amendments thereto),
together with the ESOP Plan Documents identified in Schedule 1.1.5
(without any modifications or amendments thereto), are all duly adopted
by the Borrower to the extent intended to be so adopted.
	 
	 	        (D) Plan Events. The representations and warranties in this Section
6.9(D) are subject to the disclosures made on Schedule 6.9 (D). No
Benefit Plan has incurred any material accumulated funding deficiency (as
defined in Sections 302(a)(2) of ERISA and 412(a) of the Code) whether or
not waived. Neither the Borrower nor any member of the Controlled Group
has incurred any material liability to the PBGC which remains outstanding
other than the payment of premiums, and there are no premium payments
which have become due which are unpaid. With respect to each Benefit
Plan, Schedule B to the most recent annual report filed with the IRS with
respect to such plan is complete and accurate in all material respects.
Since the date of each such Schedule B, there has been no material
adverse change in the funding status or financial condition of the
Benefit Plan relating to such Schedule B. As of the last day of the most
recent prior plan year, the market value of assets under each Benefit
Plan, other than any Multiemployer Plan, was not by a material amount
less than the present value of benefit liabilities thereunder (determined
in accordance with the actuarial valuation assumptions described
therein). Neither the Borrower nor any member of the Controlled Group
has (i) failed to make a required contribution or payment to a
Multiemployer Plan of a material amount or (ii) incurred a material
complete or partial withdrawal under Sections 4203 or 4205 of ERISA from
a Multiemployer Plan. Neither the Borrower nor any member of the
Controlled Group has failed to make a required installment or any other
required payment under Section 412 of the Code on or before the due date
for such installment or other payment. Neither the Borrower nor any
member of the Controlled Group is required to provide security of a
material amount to a Benefit Plan pursuant to Section 401(a)(29) of the
Code due to a Plan amendment that results in an increase in current
liability for the plan year. Except as set forth on Schedule 6.9,
neither the Borrower nor any of its Subsidiaries maintains or contributes
to any employee welfare benefit plan within the meaning of Section 3(1)
of ERISA or any other arrangement which provides benefits to one or more
employees, officers, directors, or consultants after termination of
employment other than as required by Section 601 of ERISA or Section
4980(B) of the Code or applicable law and other than any such plan or
arrangement with respect to

68

 

		
	 	which the Borrower and its Subsidiaries do not have any liability of
a material amount. Each Plan which is intended to be qualified under
Section 401(a) of the Code as currently in effect is designed to be
qualified, and each trust related to any such Plan is designed to be
exempt from federal income tax under Section 501(a) of the Code as
currently in effect. With respect to each Plan, the Borrower and each of
its Subsidiaries and the ESOP Fiduciary and, to the best knowledge of the
Borrower, the ESOT Trustee are in compliance in all material respects
with the responsibilities, obligations and duties, if any, imposed on them by
ERISA and the Code. Each Plan and Non-ERISA Commitment complies in all
material respects in form, and has been administered in all material
respects in accordance with its terms and, in accordance with all
applicable laws and regulations, including but not limited to ERISA and
the Code. On the Closing Date and, to the best knowledge
of the
Borrower, at all times thereafter, there is no material action, suit or
claim pending or threatened with respect to any Plan other than routine
claims for benefits. On the Closing Date and, to the best knowledge of
the Borrower, at all times thereafter, there have been no and there is no
non-exempt prohibited transaction described in Sections 406 of ERISA or
4975 of the Code which could reasonably be expected to subject the
Borrower to material liability. Neither the Borrower nor any member of
the Controlled Group has taken or failed to take any action which would
constitute or result in a Termination Event, which action or inaction
could reasonably be expected to subject the Borrower or any of its
Subsidiaries to liability, individually or in the aggregate, in excess of
$1,000,000. Neither the Borrower nor any Subsidiary is subject to any
material liability under, or to the best of Borrower’s knowledge, has any
potential material liability under, Sections 4063, 4064, 4069, 4204 or
4212(c) of ERISA and no other member of the Controlled Group is subject
to any liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of
ERISA. Except as set forth on Schedule 6.9(D), neither the Borrower nor
any of its Subsidiaries has, by reason of the ESOT Transaction or the
making of any Advances hereunder, any obligation to make any payment to
any current or former employee, director, officer or consultant pursuant
to any Plan or Non-ERISA Commitment or any obligation to make any such
payment at a time earlier than when it would be otherwise payable except
for any payment to be made upon termination of employment. For purposes
of this Section 6.9(D), “material” means any amount, noncompliance or
basis for liability which could reasonably be expected to subject the
Borrower or any of its Subsidiaries to liability, individually or in the
aggregate, in excess of $1,000,000.

                6.10 Accuracy of Information. The information, exhibits and reports (i)
prepared by the Borrower and (ii) prepared by any other Person, in each case,
furnished by or on behalf of the Borrower and any of its Subsidiaries to the
Administrative Agent or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents, the representations and warranties of the
Borrower and its Subsidiaries contained in the Loan Documents, and all
certificates and documents delivered to the Administrative Agent and the
Lenders pursuant to the terms thereof, taken as a whole, do not contain, and
with respect to the information, exhibits and reports identified in clause (ii)
above, to the best of the Borrower’s knowledge do not contain, as of the date
furnished any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.

69

 

                6.11 Securities Activities. Neither the Borrower nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock. Margin Stock constitutes less than 25% of
the value of those assets of the Borrower and its Subsidiaries which are
subject to any limitation on sale, pledge, or other restriction hereunder.

                6.12 Material Agreements. Neither the Borrower nor any of its
Subsidiaries is a party to any Contractual Obligation or subject to any charter
or other corporate restriction which individually or in the aggregate has had
or could reasonably be expected to have a Material Adverse Effect. Except as
set forth on Schedule 6.12, neither the Borrower nor any of its Subsidiaries
has received notice or has knowledge that (A) it is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation applicable to it, or (B) any
condition exists which, with the giving of notice or the lapse of time or both,
would constitute a default with respect to any such Contractual Obligation, in
each case, except where such default or defaults, if any, individually or in
the aggregate will not have or could not reasonably be expected to have a
Material Adverse Effect.

                6.13 Compliance with Laws. The Borrower and its Subsidiaries are in
compliance with all Requirements of Law applicable to them and their respective
businesses, in each case where the failure to so comply individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.

                6.14 Assets and Properties. The Borrower and each of its Subsidiaries has
good and marketable title to all of its assets and properties (tangible and
intangible, real or personal) owned by it and a valid leasehold interest in all
of its leased assets (except insofar as marketability may be limited by any
laws or regulations of any Governmental Authority affecting such assets), and
all such assets and property are free and clear of all Liens, except Liens
permitted under Section 7.3(C). Substantially all of the assets and properties
owned by, leased to or used by the Borrower and/or each such Subsidiary of the
Borrower are in adequate operating condition and repair, ordinary wear and tear
excepted. Neither this Agreement nor any other Transaction Document, nor any
transaction contemplated under any such agreement, will affect any right, title
or interest of the Borrower or such Subsidiary in and to any of such assets in
a manner that would have or could reasonably be expected to have a Material
Adverse Effect.

                6.15 Statutory Indebtedness Restrictions. Neither the Borrower nor any of
its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or the
Investment Company Act of 1940, or any other foreign, federal or state statute
or regulation which limits its ability to incur indebtedness or its ability to
consummate the transactions contemplated hereby.

                6.16 Insurance. Schedule 6.16 to this Agreement accurately sets forth as
of the Closing Date all insurance policies and programs currently in effect
with respect to the respective properties and assets and business of the
Borrower and its Subsidiaries, specifying, for each such policy and program,
(A) the amount thereof, (B) the risks insured against thereby, (C) the name of
the insurer and each insured party thereunder, (D) the policy or other
identification number thereof, (E) the expiration date thereof, and (F) any
reserves relating to any self-insurance program that is in effect. Such
insurance policies and programs reflect coverage that is

70

 

 reasonably consistent with prudent industry practice, and shall include,
without limitation, property and liability (and, if appropriate, business
interruption) insurance.

                6.17 Labor Matters. As of the Closing Date, no attempt to organize the
employees of the Borrower or any of its Subsidiaries, and no labor disputes,
strikes or walkouts affecting the operations of the Borrower or any of its
Subsidiaries, is pending, or, to the Borrower’s knowledge, threatened, planned
or contemplated.

                6.18 IITRI Acquisition and ESOT Transaction. As of the Closing Date and
immediately prior to the making of the initial Loans:

		
	 	        (A) The Asset Purchase Agreement and the ESOT Transaction Documents
are in full force and effect, no material breach, default or waiver of
any term or provision thereof by the Borrower or any of its Subsidiaries,
which are parties thereto, or, to the best of the Borrower’s knowledge,
the other parties thereto, has occurred (except for such breaches,
defaults and waivers, if any, consented to in writing by the
Administrative Agent) and no action has been taken by any competent
authority which restrains, prevents or imposes any material adverse
condition upon, or seeks to restrain, prevent or impose any material
adverse condition upon, the IITRI Acquisition or the ESOT Transaction;
	 
	 	        (B) The representations and warranties of the Borrower contained in
the ESOT Stock Purchase Agreement are true and correct in all material
respects; and
	 
	 	        (C) Except as set forth in Schedule 6.18 to this Agreement, all
conditions precedent to, and all consents necessary to permit, the
funding of the IITRI Acquisition and the ESOT Transaction have been
satisfied or waived with the approval of the Administrative Agent (such
approval not to be unreasonably withheld).

                6.19 Environmental Matters.

		
	 	        (A) Environmental Representations. Except as disclosed on Schedule
6.19 to this Agreement:

		
	 	      (i) the operations of the Borrower and its Subsidiaries comply in
all material respects with Environmental, Health or Safety
Requirements of Law;
	 
	 	      (ii) the Borrower and its Subsidiaries have all material permits,
licenses or other authorizations required under Environmental, Health
or Safety Requirements of Law and are in material compliance with such
permits;
	 
	 	      (iii) neither the Borrower, any of its Subsidiaries nor any of
their respective present property or operations, or, to the Borrower’s
or any of its Subsidiaries’ knowledge, any of their respective past
property or operations, are subject to or the subject of, any
investigation known to the Borrower or any of its Subsidiaries, any
judicial, administrative or regulatory proceeding (including
enforcement proceeding), order, judgment, decree, settlement or other
agreement respecting: (a) any alleged or actual material violation of
Environmental, Health or Safety Requirements of Law;

71

 

		
	 	(b) any material remedial action; or (c) any material claims or
liabilities arising from the Release or threatened Release of a
Contaminant into the environment;
	 
	 	      (iv) there is not now, nor to the Borrower’s or any of its
Subsidiaries’ knowledge has there ever been, on or in the property of
the Borrower or any of its Subsidiaries any landfill, waste pile,
underground storage tanks, aboveground storage tanks, surface
impoundment or hazardous waste or hazardous material storage facility
of any kind, any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electric transformers or other equipment, or any asbestos
containing material nor any improperly stored, handled or disposed of
contaminant of any kind not maintained or operated in compliance with
Environmental, Health or Safety Requirements of Law; and
	 
	 	      (v) neither the Borrower nor any of its Subsidiaries has any
material Contingent Obligation in connection with any Release or
threatened Release of a Contaminant into the environment.

		
	 	        (B) Materiality. For purposes of this Section 6.19 “material” means
any noncompliance or basis for liability which could reasonably be likely
to subject the Borrower or any of its Subsidiaries to liability,
individually or in the aggregate, in excess of $1,000,000.

                6.20 Solvency. After giving effect to (A) the Loans to be made on the
Closing Date or such other date as Loans requested hereunder are made, (B) the
other transactions contemplated by this Agreement and the other Transaction
Documents, including the consummation of the ESOT Transaction and (C) the
payment and accrual of all transaction costs with respect to the foregoing, the
Borrower and its Subsidiaries taken as a whole are Solvent.

                6.21 Additional ESOP Provisions.

		
	 	        (A) Organization and Powers. As of the Closing Date and, to the
best of Borrower’s knowledge at all times thereafter, the ESOT has been
duly organized and is a validly existing trust and has all the requisite
powers and authority to execute and deliver the Transaction Documents and
the ESOP Plan Documents which have been or are to be executed by it and
to perform its obligations under and the transactions contemplated by the
Transaction Documents and the ESOP Plan Documents. As of the Closing
Date and, to the best of Borrower’s knowledge at all times thereafter,
the execution and delivery by the ESOT of the Transaction Documents and
the ESOP Plan Documents have been duly authorized and completed by all
necessary actions of it and such executions and deliveries and the
performance by it of its obligations under and the transactions
contemplated by the Transaction Documents and the ESOP Plan Documents do
not contravene any provision of law and the Transaction Documents and the
ESOP Plan Documents which have been or are to be executed by it are
legal, valid and binding obligations of it enforceable against it in
accordance with the terms thereof, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, or moratorium
or other similar laws relating to the enforcement of creditors’ rights
generally and by general equitable principles other than general
equitable principles as may be

72

 

		
	 	applicable to any non-exempt prohibited transactions described in
Section 406 of ERISA or Section 4975 of the Code. Each of such
Transaction Documents and the ESOP Plan Documents is in full force and
effect and no term or condition thereof has been amended, modified or
waived from the terms and conditions contained in the Transaction
Documents and the ESOP Plan Documents delivered to the Administrative
Agent pursuant to Section 5.1 without the consent of the Administrative
Agent (which consent shall not be unreasonably withheld), except to the
extent such amendment, modification or waiver could not reasonably be
anticipated to have a material adverse effect upon the Administrative
Agent or any of the Lenders or otherwise have a Material Adverse Effect.
As of the Closing Date and, to the best of Borrower’s knowledge at all
times thereafter, the ESOT has performed and complied with all the
material terms, provisions, agreements and conditions set forth therein
and required to be performed or complied with by the ESOT, and no
unmatured default, default or breach of any covenant by any such party
exists thereunder.
	 
	 	        (B) No Conflicts. As of the Closing Date and, to the best of
Borrower’s knowledge at all times thereafter, the execution, delivery and
performance of each of the Transaction Documents and the ESOP Plan
Documents to which the ESOT is a party do not (i) conflict with the ESOP
Plan Documents, (ii) conflict with any Requirement of Law, or (iii)
require a registration with, consent or approval of, or notices to, or
other action to, with or by any Governmental Authority, other than
filings as required by Section 7.2(M).
	 
	 	        (C) Assets of ESOP and ESOT. As of the Closing Date and, to the
best of the Borrower’s knowledge, at all times thereafter, none of the
assets of the Borrower constitute, for any purpose of ERISA or Section
4975 of the Code, assets of the ESOP or any other “plan” as defined in
Section 3(3) of ERISA or Section 4975 of the Code.
	 
	 	        (D) No Prohibited Transaction. As of the Closing Date and, to the
best knowledge of the Borrower, at all times thereafter, no non-exempt
prohibited transaction described in Section 406 of ERISA or Section 4975
of the Code has occurred with respect to the ESOP, and neither any Loan
hereunder nor the ESOT Transaction constitute or shall constitute or give
rise to any such non-exempt prohibited transaction.
	 
	 	        (E) Qualification. The ESOP is qualified under
Section 401(a) of the Code, and the ESOP is an employee stock ownership
plan as defined in Section 4975(e)(7) of the Code.
	 
	 	        (F) ESOP Documents. The Borrower has provided the Administrative
Agent a complete and true copy of the ESOP Plan Documents pursuant to
which the ESOP and ESOT are maintained by the Borrower, or which concern
the Borrower’s obligations with respect to the ESOP and ESOT, as of the
Closing Date and the ESOT Transaction Documents and has not subsequently
amended or in any other way modified or replaced such ESOP Plan Documents
or ESOT Transaction Documents in any manner adverse to the interests of
the Lenders without the prior written consent of the Administrative Agent
except for any amendment, modification or replacement required by the IRS
or by

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	 	applicable law (and the Borrower shall use its best efforts to
deliver a copy of any such amendment, modification or replacement to the
Agent prior to the execution thereof).
	 
	 	        (G) Exempt Loan. To the Borrower’s knowledge, no Loan hereunder is
for any purpose of Section 406 of ERISA or Section 4975 of the Code a
direct or indirect loan or other transaction between the Administrative
Agent or any of the Lenders and the ESOT which, if it is assumed that the
Administrative Agent and Lenders are “parties in interest” and
“disqualified persons” (as defined in Section 3(14) of ERISA and Section
4975 of the Code), is a non-exempt prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code.
	 
	 	        (H) No Taxable Event. Neither the Borrower nor any of its
Subsidiaries is or shall be subject to the tax imposed by Section 4978 of
the Code with respect to any “disposition” by the ESOT of any shares of
Capital Stock of the Borrower.
	 
	 	        (I) No Investigations. To the Borrower’s knowledge, there is no
investigation or review by any Governmental Agency, or action, suit,
proceeding or arbitration, pending or concluded, concerning any matter
with respect to the ESOP or ESOT relevant as to whether any
representation set forth at Section 6.6(C) or this Section 6.21 was, or
has or will at anytime become, inaccurate or breached or, if were to be
made at any time prior to the satisfaction of all Obligations, would be
inaccurate when made (other than in respect of (i) periodic requests to
the IRS to issue a favorable determination letter to the effect that the
ESOP is and continues to be a qualified plan and employee stock ownership
plan and (ii) Annual Reports (IRS Form 5500 Series) for the ESOP), and
neither the ESOP Fiduciary nor, to the best knowledge of the Borrower,
the ESOT Trustee has made any assertion with respect to the ESOP or ESOT
contrary to or inconsistent with the accuracy of any such representation
which assertion could reasonably be expected to have a Material Adverse
Effect.

                6.22 Subordinated Indebtedness. The subordination provisions of the
Subordinated Notes are enforceable against the holders of the Subordinated
Notes.

                6.23 No Exercise of Set-Off. No Account Debtor with respect to any
Government Contract has exercised any right of set-off against any Receivable
owing to the Borrower or any Guarantor under any such Government Contract that,
individually or in the aggregate with all other Account Debtors, exceeds
$1,000,000.

ARTICLE VII: COVENANTS

                The Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until all of the Termination Conditions have been
satisfied, unless the Required Lenders shall otherwise give prior written
consent:

                7.1 Reporting. The Borrower shall:

		
	 	        (A) Financial Reporting. Furnish to the Administrative Agent (with
sufficient copies for each of the Lenders):

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	 	      (i) Monthly Reports. As soon as practicable, and in any event
within thirty (30) days after the end of each four-week fiscal period
(other than the end of a fiscal quarter), the consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as at
the end of such period and the related consolidated and consolidating
statements of income and statement of cash flow of the Borrower and
its Subsidiaries for such fiscal period and cumulatively for the
period from the beginning of the then current fiscal year to the end
of such fiscal period, certified by the chief financial officer of the
Borrower on behalf of the Borrower as fairly presenting the
consolidated and consolidating financial position of the Borrower and
its Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the fiscal periods indicated in
accordance with Agreement Accounting Principles, subject to normal
year end adjustments, and in comparative form (a) the corresponding
figures as set forth in the budget delivered pursuant to clause (v) of
this Section 7.1(A) for such period, and (b) the actual financial
position of the Borrower and its Subsidiaries for the period ending on
the corresponding fiscal period in the previous fiscal year.
	 
	 	      (ii) Quarterly Reports. As soon as practicable, and in any event
within forty-five (45) days after the end of each fiscal quarter, the
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such period and the related consolidated
and consolidating statements of income, stockholder’s equity and cash
flows of the Borrower and its Subsidiaries for such fiscal quarter and
cumulatively for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, certified by the chief
financial officer of the Borrower on behalf of the Borrower as fairly
presenting the consolidated and consolidating financial position of
the Borrower and its Subsidiaries as at the dates indicated and the
results of their operations and cash flows for the periods indicated
in accordance with Agreement Accounting Principles, subject to normal
year-end audit adjustments, together with (x) in comparative form (a)
the corresponding figures as set forth in the budget, if any,
delivered pursuant to clause (v) of this Section 7.1(A) for such
period, and (b) the corresponding figures of the Borrower and its
Subsidiaries for the period ending on the corresponding calendar
quarter in the previous fiscal year if such corresponding calendar
quarter began after the Closing Date, and (y) any management
discussion and analysis of such financial statements prepared for
presentation to the Board of Directors of the Borrower.
	 
	 	      (iii) Annual Reports. As soon as practicable, and in any event
within ninety (90) days after the end of each fiscal year, (a) the
consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of such fiscal year and the related consolidated statements of
income, stockholders’ equity and cash flows of the Borrower and its
Subsidiaries for such fiscal year, and in comparative form the
corresponding figures for the previous fiscal year along with
consolidating schedules in form and substance sufficient to calculate
the financial covenants set forth in Section 7.4, (b) a schedule from
the Borrower setting forth for each item in clause (a) hereof, the
corresponding figures from the consolidated financial budget for the
current fiscal year most recently delivered pursuant to Section
7.1(A)(v), and (c) an audit report on the items listed in clause (a)
hereof (other than the consolidating

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	 	schedules) of KPMG LLP or any other independent certified public
accountants of recognized national standing, which audit report shall
be unqualified and shall state that such financial statements fairly
present the consolidated and consolidating financial position of the
Borrower and its Subsidiaries as at the dates indicated and the
results of their operations and cash flows for the periods indicated
in conformity with Agreement Accounting Principles and that the
examination by such accountants in connection with such consolidated
and consolidating financial statements has been made in accordance
with generally accepted auditing standards. The deliveries made
pursuant to this clause (iii) shall be accompanied by (x) any
management letter prepared by the above-referenced accountants, and
(y) a copy of a certificate of such accountants that, in the course of
their examination necessary for their certification of the foregoing,
they have obtained no knowledge of any Default in respect of the
financial covenants set forth in Section 7.4, or if, in the opinion of
such accountants, any such Default shall exist, stating the nature and
status thereof.
	 
	 	      (iv) Officer’s Certificate. Together with each delivery of any
financial statement (a) pursuant to clauses (i), (ii) and (iii) of
this Section 7.1(A), an Officer’s Certificate of the Borrower,
substantially in the form of Exhibit G attached hereto and made a part
hereof, stating that (1) the representations and warranties of the
Borrower contained in Article VI hereof shall have been true and
correct (unless such representation or warranty is made as of a
specific date, in which case, such representation and warranty shall
be true and correct as of such date) at all times during the period
covered by such financial statements and as of the date of such
Officer’s Certificate and (2) as of the date of such Officer’s
Certificate no Default or Unmatured Default exists, or if any Default
or Unmatured Default exists, stating the nature and status thereof and
(b) pursuant to clauses (ii) and (iii) of this Section 7.1(A), a
compliance certificate, substantially in the form of Exhibit H
attached hereto and made a part hereof, signed by an Authorized
Officer, setting forth calculations for the period then ended for
purposes of compliance with Section 2.5(B), if applicable, which
demonstrate compliance, when applicable, with the provisions of
Sections 7.3(A) through (G) and Section 7.4, and which calculates the
Leverage Ratio for purposes of determining the then Applicable
Floating Rate Margin, Applicable Eurodollar Margin and Applicable
Commitment Fee Percentage.
	 
	 	      (v) Budgets; Business Plans; Financial Projections. As soon as
practicable and in any event not later than (a) sixty (60) days after
the beginning of each fiscal year commencing with the fiscal year
beginning on or about October 1, 2003, a copy of the Borrower’s
fiscal year operating budget for such fiscal year, and (b) ninety (90)
days after the beginning of each fiscal year commencing with the
fiscal year beginning on or about October 1, 2003, a copy of the
plan and forecast (including a projected balance sheet, income
statement, a statement of cash flow and related footnotes) of the
Borrower and its Subsidiaries for the upcoming five (5) fiscal years,
in each case prepared in such detail as shall be reasonably
satisfactory to the Administrative Agent.
	 
	 	      (vi) Borrowing Base Certificate. As soon as practicable, and in
any event within twenty-five (25) days after the close of each
four-week period, commencing

76

 

		
	 	with the four-week period ending on
[November     , 2002] (and,
during the continuation of any Default, more often if reasonably
requested by the Administrative Agent or the Required Lenders), the
Borrower shall provide the Administrative Agent and the Lenders with a
Borrowing Base Certificate substantially in the form of Exhibit J
hereto, together with such supporting documents as the Administrative
Agent reasonably deems desirable, all certified as being true and
correct by an Authorized Officer of the Borrower. The Borrower may
update the Borrowing Base Certificate and supporting documents more
frequently than required under this clause (vi) and the most recently
delivered Borrowing Base Certificate shall be the applicable Borrowing
Base Certificate for purposes of determining the Borrowing Base
(Monthly) and Borrowing Base (Senior Debt) at any
time.

		
	 	        (B) Notices of Default, Set-Off and Other Events. Promptly upon any
of the chief executive officer, chief financial officer, controller,
chief legal officer or general counsel of the Borrower obtaining
knowledge (i) of any condition or event which constitutes a Default or
Unmatured Default, or becoming aware that any Lender or Administrative
Agent has given any written notice with respect to a claimed Default or
Unmatured Default under this Agreement, or (ii) that any Person has given
any written notice to the Borrower or any Subsidiary of the Borrower or
taken any other action with respect to a claimed default or event or
condition of the type referred to in Section 8.1(E), or (iii) any Account
Debtor with respect to any Government Contract exercising any right of
set-off against any Receivable owing to the Borrower or any Guarantor
under any such Government Contract, or (iv) that any other development,
financial or otherwise, which could reasonably be expected to have a
Material Adverse Effect has occurred, the Borrower shall deliver to the
Administrative Agent an Officer’s Certificate specifying (a) the nature
and period of existence of any such claimed default, Default, Unmatured
Default, condition or event, (b) the notice given or action taken by such
Person in connection therewith, and (c) what action the Borrower has
taken, is taking and proposes to take with respect thereto.
	 
	 	        (C) Lawsuits.

		
	 	      (i) Promptly upon the Borrower obtaining knowledge of the
institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration, by or before any
Governmental Authority, against or affecting the Borrower or any of
its Subsidiaries or any property of the Borrower or any of its
Subsidiaries not previously disclosed pursuant to Section 6.7, which
action, suit, proceeding, governmental investigation or arbitration
exposes, or in the case of multiple actions, suits, proceedings,
governmental investigations or arbitrations arising out of the same
general allegations or circumstances which, in the Borrower’s
reasonable judgment, will result in liability to the Borrower or any
of its Subsidiaries in an amount aggregating $1,000,000 or more
(exclusive of claims covered by insurance policies of the Borrower or
any of its Subsidiaries unless the insurers of such claims have
disclaimed coverage or reserved the right to disclaim coverage on such
claims and exclusive of claims covered by the indemnity of a
financially responsible indemnitor in favor of the Borrower or any of
its Subsidiaries unless the indemnitor has disclaimed or reserved the
right to disclaim coverage thereof), give

77

 

		
	 	written notice thereof to the Administrative Agent, and, subject
to preservation of the attorney-client privilege and to the extent not
prejudicial to the Borrower or any of its Subsidiaries, provide such
other information as may be reasonably available to enable each Lender
and the Administrative Agent and its counsel to evaluate such matters;
and
	 
	 	      (ii) Within five (5) days of the Borrower or any of its
Subsidiaries obtaining knowledge of any material adverse developments
with respect to any of the Disclosed Litigation, give written notice
thereof to the Administrative Agent and provide such other information
as may be reasonably available to enable each Lender and the
Administrative Agent and its counsel to evaluate such matters; and
	 
	 	      (iii) In addition to the requirements set forth in clauses (i)
and (ii) of this Section 7.1(C), upon written request of the
Administrative Agent or the Required Lenders, promptly give written
notice of the status of any Disclosed Litigation or any action, suit,
proceeding, governmental investigation or arbitration covered by a
report delivered pursuant to clause (i) above and provide such other
information as may be reasonably available to it that would not
jeopardize any attorney-client privilege or otherwise be prejudicial
to the Borrower or its Subsidiaries, by disclosure to the Lenders to
enable each Lender and the Administrative Agent and its counsel to
evaluate such matters.

		
	 	        (D) ERISA Notices. Deliver or cause to be delivered to the
Administrative Agent, at the Borrower’s expense, the following
information and notices as soon as reasonably possible, and in any event:

		
	 	      (i) (a) within ten (10) Business Days after the Borrower obtains
knowledge that a Termination Event has occurred, a written statement
of the chief financial officer of the Borrower describing such
Termination Event and the action, if any, which the Borrower has
taken, is taking or proposes to take with respect thereto, and when
known, any action taken or threatened by the IRS, DOL or PBGC with
respect thereto and (b) within ten (10) Business Days after any member
of the Controlled Group obtains knowledge that a Termination Event has
occurred which could reasonably be expected to subject the Borrower to
liability in excess of $250,000, a written statement of the chief
financial officer, treasurer or designee of the Borrower describing
such Termination Event and the action, if any, which the member of the
Controlled Group has taken, is taking or proposes to take with respect
thereto, and when known, any action taken or threatened by the IRS,
DOL or PBGC with respect thereto;
	 
	 	      (ii) within ten (10) Business Days after the Borrower or any of
its Subsidiaries obtains knowledge that a material non-exempt
prohibited transaction (defined in Section 406 of ERISA and Section
4975 of the Code) has occurred with respect to the ESOP or to any
other Plan, or that the IRS or DOL or any other Governmental Authority
is investigating whether any such material non-exempt prohibited
transaction might have occurred, a statement of the chief financial
officer, treasurer or designee of the Borrower describing such
transaction and the action which the

78

 

		
	 	Borrower or such Subsidiary has taken, is
taking or proposes to take with respect thereto;
	 
	 	      (iii) within ten (10) Business Days after the material increase
in the benefits of any Benefit Plan or Non-ERISA Commitment in
existence on the date of this Agreement or the establishment of any
new material Benefit Plan or Non-ERISA Commitment or the commencement
of, or obligation to commence, material contributions to any Benefit
Plan or Multiemployer Plan to which the Borrower or any member of the
Controlled Group was not previously contributing, notification of such
increase, establishment, commencement or obligation to commence and
the amount of such contributions;
	 
	 	      (iv) within ten (10) Business Days after the Borrower or any of
its Subsidiaries receives written notice (whether preliminary, final
or otherwise but excluding any notice of any proposed amendments) of
any unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code or status of
the ESOP as an employee stock ownership plan (as defined in Section
4975(e)(7) of the Code), copies of each such letter;
	 
	 	      (v) within ten (10) Business Days after the filing thereof with
the DOL, IRS or PBGC, copies of each annual report (Form 5500 series),
including Schedule B thereto, filed with respect to each Benefit Plan;
	 
	 	      (vi) within ten (10) Business Days after receipt by the Borrower
or any member of the Controlled Group of each actuarial report for any
Benefit Plan or Multiemployer Plan and each annual report for any
Multiemployer Plan, copies of each such report;
	 
	 	      (vii) within ten (10) Business Days after the filing thereof with
the IRS, a copy of each funding waiver request filed with respect to
any Benefit Plan and all communications received by the Borrower or a
member of the Controlled Group with respect to such request;
	 
	 	      (viii) within ten (10) Business Days after receipt by the
Borrower or any member of the Controlled Group of the PBGC’s intention
to terminate a Benefit Plan or to have a trustee appointed to
administer a Benefit Plan, copies of each such notice;
	 
	 	      (ix) within ten (10) Business Days after receipt by the Borrower
or any member of the Controlled Group of a notice from a Multiemployer
Plan regarding the imposition of material withdrawal liability, copies
of each such notice;
	 
	 	      (x) within ten (10) Business Days after the Borrower or any
member of the Controlled Group fails to make a required installment or
any other required payment under Section 412 of the Code on or before
the due date for such installment or payment to a Benefit Plan, a
notification of such failure;
	 
	 	      (xi) within ten (10) Business Days after the Borrower or any
member of the Controlled Group knows that (a) a material Multiemployer
Plan has been terminated,

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	 	(b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a material Multiemployer Plan, or (c) the PBGC
has instituted or will institute proceedings under Section 4042 of
ERISA to terminate a material Multiemployer Plan;
	 
	 	      (xii) within ten (10) Business Days after receipt by the Borrower
or any of its Subsidiaries of notice of any audit, investigation,
litigation or inquiry by the DOL or IRS relating to the ESOP or the
ESOT, which would reasonably be expected to subject the Borrower or
any of its Subsidiaries to liability, individually or in the
aggregate, in excess of $1,000,000, copies of such notice and copies
of all subsequent correspondence relating thereto within ten (10)
Business Days of receipt of such correspondence;
	 
	 	      (xiii) together with the financial statements delivered pursuant
to Section 7.1(A)(iii) or upon the written request of the
Administrative Agent, any amendment to any of the ESOP Plan Documents
or ESOT Transaction Documents; and
	 
	 	      (xiv) within ten (10) Business Days after an Authorized Officer
of the Borrower obtains knowledge that at any time on or after the
Closing Date the Borrower is not taxable as an “S corporation” as such
item is defined in Section 1361 of the Code or that the ESOT is
subject to tax imposed under the Code with respect to any item of
income or loss of the Borrower or any Subsidiary of the Borrower,
written notice of such knowledge.

                For purposes of this Section 7.1(D), the Borrower, any of its Subsidiaries
and any member of the Controlled Group shall be deemed to know all facts known
by the administrator of any Plan of which the Borrower or any member of the
Controlled Group or such Subsidiary is the plan sponsor. In addition, for
purposes of this Section 7.1(D), “material” means any noncompliance or basis
for liability which could reasonably be likely to subject the Borrower or any
of its Subsidiaries to liability, individually or in the aggregate, in excess
of $1,000,000.

		
	 	        (E) Labor Matters. Notify the Administrative Agent in writing,
promptly upon an Authorized Officer learning of (i) any material labor
dispute to which the Borrower or any of its Subsidiaries may become a
party, including, without limitation, any strikes, lockouts or other
disputes relating to such Persons’ plants and other facilities and (ii)
any material Worker Adjustment and Retraining Notification Act liability
incurred with respect to the closing of any plant or other facility of
the Borrower or any of its Subsidiaries.
	 
	 	        (F) Other Reports. Deliver or cause to be delivered to the
Administrative Agent copies of (i) all financial statements, reports and
notices, if any, sent or made available generally by the Borrower to its
securities holders or filed with the Commission by the Borrower, and (ii)
all press releases, if any, made available generally by the Borrower or
any of the Borrower’s Subsidiaries to the public concerning material
developments in the business of the Borrower or any such Subsidiary.

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	 	        (G) Environmental Notices. As soon as possible and in any event
within ten (10) days after receipt by the Borrower, provide written
notice to the Administrative Agent of, and which notice shall describe in
reasonable detail, (i) any notice or claim to the effect that the
Borrower or any of its Subsidiaries is or may be liable to any Person as
a result of the Release by the Borrower, any of its Subsidiaries, or any
other Person of any Contaminant into the environment, and (ii) any notice
alleging any violation of any Environmental, Health or Safety
Requirements of Law by the Borrower or any of its Subsidiaries if, in
either case, such notice or claim relates to an event which could
reasonably be expected to subject the Borrower and each of its
Subsidiaries to liability individually or in the aggregate in excess of
$1,000,000.
	 
	 	        (H) Other Information. Promptly upon receiving a written request
therefor from the Administrative Agent, prepare and deliver to the
Administrative Agent such other information with respect to the Borrower,
any of its Subsidiaries, or the Collateral, including, without
limitation, schedules identifying and describing the Collateral and any
dispositions thereof or any Asset Sale or Financing (and the use of the
Net Cash Proceeds thereof), as from time to time twice during any fiscal
year (unless a Default shall be continuing or in the event of an Asset
Sale) may be reasonably requested by the Administrative Agent.
	 
	 	        (I) ESOP Valuation, Audit and Repurchase Liability Study. As soon
as practicable and in any event (i) within one hundred eighty (180) days
after the end of each fiscal year of the Borrower, commencing with the
fiscal year ending September 30, 2003, deliver to the Administrative
Agent copies of the annual valuation report and audit prepared for the
ESOP for such fiscal year and (ii) on the date that is the earlier of (a) one hundred eighty (180)
days after the date of any Permitted Acquisition with a Purchase Price in
excess of $10,000,000 or the target of which shall employ 100 or more
employees, and (b) the second anniversary of the delivery of the most
recent repurchase liability study of the Borrower prepared for the ESOP,
deliver to the Administrative Agent copies of a repurchase liability
study of the Borrower prepared for the ESOP as of a recent date, in each
case in form and substance reasonably acceptable to the Administrative
Agent.

                7.2 Affirmative Covenants.

		
	 	        (A) Existence, Etc. Except as permitted pursuant to Section 7.3(I),
the Borrower shall, and shall cause each of its Material Subsidiaries to,
at all times maintain its existence and preserve and keep, or cause to be
preserved and kept, in full force and effect its rights and franchises
material to its businesses.
	 
	 	        (B) Powers; Conduct of Business. The Borrower shall, and shall
cause each of its Material Subsidiaries to, qualify and remain qualified
to do business in each jurisdiction in which the nature of its business
requires it to be so qualified and where the failure to be so qualified
will have or could reasonably be expected to have a Material

81

 

		
	 	Adverse Effect. The Borrower will, and will cause each Material
Subsidiary to, carry on and conduct its business in substantially the
same manner and in substantially the same fields of enterprise as it is
presently conducted and logical extensions thereof.
	 
	 	        (C) Compliance with Laws, Etc. The Borrower shall, and shall cause
its Material Subsidiaries to, (a) comply with all Requirements of Law and
all restrictive covenants affecting such Person or the business,
properties, assets or operations of such Person, and (b) obtain as needed
all permits necessary for its operations and maintain such permits in
good standing unless failure to comply or obtain such permits could not
reasonably be expected to have a Material Adverse Effect.
	 
	 	        (D) Payment of Taxes and Claims; Tax Consolidation. The Borrower
shall pay, and cause each of its Material Subsidiaries to pay when due,
(i) all taxes, assessments and other governmental charges imposed upon it
or on any of its properties or assets or in respect of any of its
franchises, business, income or property before any penalty or interest
accrues thereon, and (ii) all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums which have
become due and payable and which by law have or may become a Lien (other
than a Lien permitted by Section 7.3(C)) upon any of the Borrower’s or
such Material Subsidiary’s property or assets, prior to the time when any
penalty or fine shall be incurred with respect thereto; provided,
however, that no such taxes, assessments and governmental charges
referred to in clause (i) above or claims referred to in clause (ii)
above (and interest, penalties or fines relating thereto) need be paid if
being contested in good faith by appropriate proceedings diligently
instituted and conducted and if such reserve or other appropriate
provision, if any, as shall be required in conformity with Agreement
Accounting Principles shall have been made therefor.
	 
	 	        (E) Insurance. The Borrower shall maintain for itself and its
Material Subsidiaries, or shall cause each of its Material Subsidiaries
to maintain in full force and effect, the insurance policies and programs
listed on Schedule 6.16 to this Agreement or substantially similar
policies and programs or other policies and programs as reflect coverage
that is reasonably consistent with prudent industry practice. Subject to
the provisions of Section 2.5(B)(i)(a) above, the Borrower shall deliver
to the Administrative Agent certificates evidencing (a) all “All Risk”
physical damage insurance policies on all of the Borrower’s tangible real
and personal property and assets (and, if appropriate, business
interruption insurance), policies naming the Administrative Agent loss
payee, and (b) all general liability and other liability policies naming
the Administrative Agent an additional insured. In the event the
Borrower or any of its Subsidiaries at any time or times hereafter shall
fail to obtain or maintain any of the policies or insurance required
herein or to pay any premium in whole or in part relating thereto, then
the Administrative Agent, without waiving or releasing any obligations or
resulting Default hereunder, may at any time or times thereafter (but
shall be under no obligation to do so) obtain and maintain such policies
of insurance and pay such premiums and take any other action with respect
thereto which the Administrative Agent deems advisable. All sums so
disbursed by the Administrative Agent shall constitute part of the
Obligations, payable as provided in this Agreement.

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	 	        (F) Inspection of Property; Books and Records; Discussions. The
Borrower shall permit and cause each of the Borrower’s Material
Subsidiaries to permit, any authorized representative(s) designated by
either the Administrative Agent or any Lender to visit and inspect any of
the properties of the Borrower or any of its Material Subsidiaries, to
examine, audit, check and make copies of their respective financial and
accounting records, books, journals, orders, receipts and any
correspondence and other data relating to their respective businesses or
the transactions contemplated hereby (including, without limitation, in
connection with environmental compliance, hazard or liability, subject to
preservation of the attorney-client privilege), and to discuss their
affairs, finances and accounts with their officers and their independent
certified public accountants (and such accountants are hereby authorized
to disclose to the Administrative Agent any and all financial statements
and other supporting financial documents with respect to the business,
financial conditions and other affairs of the Borrower and its Material
Subsidiaries), all upon reasonable notice and at such reasonable times
during normal business hours. Such inspections and audits described in
the preceding sentence (i) by or on behalf of any Lender shall, unless
occurring at a time when a Default shall be continuing, be at such
Lender’s expense and (ii) by or on behalf of the Administrative Agent,
other than the first such inspection or audit occurring during any
calendar year or any inspections and audits occurring at a time when a
Default be continuing, shall be at the Administrative Agent’s expense;
all other such inspections and visitations shall be at the Borrower’s
expense. The Borrower shall keep and maintain, and cause each of the
Borrower’s Material Subsidiaries to keep and maintain, in all material
respects, proper books of record and account in which entries in
conformity with Agreement Accounting Principles shall be made of all
dealings and transactions in relation to their respective businesses and
activities. If a Default has occurred and is continuing, the Borrower,
upon the Administrative Agent’s request, shall provide copies of such
records to the Administrative Agent or its representatives.
	 
	 	        (G) ERISA Compliance. The Borrower shall, and shall cause each of
the Borrower’s Material Subsidiaries to, establish, maintain and operate
all Plans and Non-ERISA Commitments to comply in all material respects
with the applicable provisions of ERISA, the Code, all other applicable
laws, and the regulations and interpretations thereunder and the
respective requirements of the governing documents for such Plans and
Non-ERISA Commitments.
	 
	 	        (H) Maintenance of Property. The Borrower shall cause all property
reasonably deemed by the Borrower as necessary to the conduct of its
business or the business of any Material Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all
necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Borrower may be necessary so that the business
carried on in connection therewith may be properly and advantageously
conducted at all times.
	 
	 	        (I) Environmental Compliance. The Borrower and its Subsidiaries
shall comply with all Environmental, Health or Safety Requirements of
Law, except where noncompliance will not have or is not reasonably likely
to subject the Borrower or any of its Subsidiaries to liability,
individually or in the aggregate, in excess of $1,000,000.

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	 	        (J) Use of Proceeds. The Borrower shall use the proceeds of the
Term Loans made on the Closing Date to fund the Asset Acquisition and to
refinance the Indebtedness under the Existing Credit Agreement. The
Borrower shall use the proceeds of Revolving Loans made on and after the
Closing Date to fund the Asset Acquisition, to pay fees and expenses
incurred in connection with this Agreement, the Asset Acquisition and the
ESOT Transaction, for Capital Expenditures, and for the additional
working capital needs and other general corporate purposes of the
Borrower and its Material Subsidiaries, including, without limitation,
the financing of Permitted Acquisitions. The Borrower will not, nor will
it permit any Material Subsidiary to, use any of the proceeds of the
Loans to purchase or carry any Margin Stock or to make any Acquisition,
other than a Permitted Acquisition pursuant to Section 7.3(G).
	 
	 	        (K) Material Subsidiary Collateral Documents; Pledge Agreements;
Guarantors. The Borrower shall execute or cause to be executed:

		
	 	      (i) within ten (10) Business Days of the date any Subsidiary
becomes a Subsidiary of the Borrower, a Pledge Agreement (or
supplement thereto) in favor of the Administrative Agent for the
benefit of the Holders of Secured Obligations with respect to all of
the Capital Stock of such Material Subsidiary owned by the Borrower
and its Material Subsidiaries in the form of Exhibit I-2 hereto;
	 
	 	      (ii) within ten (10) Business Days after an Authorized Officer or
legal officer of the Borrower has knowledge that any Subsidiary has
become a Material Subsidiary, an executed Guaranty in the form of
Exhibit I-1 hereto (or a supplement thereto) pursuant to which such
Material Subsidiary shall become a Guarantor;
	 
	 	      (iii) within ten (10) Business Days after an Authorized Officer
or legal officer of the Borrower has knowledge that any Subsidiary has
become a Material Subsidiary, a supplement to the Security Agreement
in the form of Annex I thereto and the other documents required
thereby; and
	 
	 	      (iv) within thirty (30) days after the Administrative Agent’s
request, obtain waivers in respect of landlord’s Liens on the
Collateral, owned by such Material Subsidiary from each of the lessors
of real property at which the Material Subsidiary shall maintain
Collateral with a book value of $1,000,000 or more;

and the Borrower shall deliver to the Administrative Agent all such Pledge
Agreements, Guarantees, supplements to the Security Agreement and other
Collateral Documents, together with appropriate corporate resolutions and other
documentation (including opinions, UCC financing statements, the stock
certificates representing the Capital Stock subject to such pledge, stock
powers with respect thereto executed in blank, and such other documents as
shall be reasonably requested to perfect the Lien of such pledge) in each case
in form and substance reasonably satisfactory to the Administrative Agent, and
the Administrative Agent shall be reasonably satisfied that it has a first
priority perfected pledge of or charge over the Collateral related thereto.

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	 	        (L) Borrower and Other Collateral Documents; Intellectual Property
Security Agreements. The Borrower shall, within thirty (30) Business
Days of the Administrative Agent’s request, use reasonable efforts to
obtain waivers in respect of landlord’s Liens on the Collateral from each
of the lessors of real property at which the Borrower shall maintain
Collateral. Within ten (10) Business Days after an Authorized Officer or
legal officer of the Borrower has knowledge that the net book value of
the Borrower’s and its Subsidiaries’ patents, trademarks, copyrights and
other intellectual property rights shall equal or exceed $1,000,000 in
the aggregate, the Borrower shall execute, and shall cause each
applicable Subsidiary to execute, such Intellectual Property Security
Agreements as shall reasonably be requested by the Administrative Agent
to perfect a first-priority Lien in favor of the Administrative Agent,
for the benefit of the Holders of Secured Obligations, in all such
intellectual property.
	 
	 	        (M) Determination Letter. The Borrower shall promptly submit a
request to the IRS to issue a favorable determination letter to the
effect that the ESOP is a qualified plan and employee stock ownership
plan within the meanings of Section 401(a) and 4975(e)(7), respectively,
of the Code.
	 
	 	        (N) Hedging Agreements. Within one hundred twenty days after the
Closing Date, the Borrower shall enter into, and shall thereafter
maintain, Hedging Agreements on terms determined by the Borrower and
reasonably acceptable to the Administrative Agent by which the Borrower
is protected, by means of an interest rate swap, cap or collar, during
the three-year period beginning on the Closing Date against increases in
interest rates from and after the date of such contracts as to a notional
amount of at least $17,500,000. In the event a Lender elects to enter
into any Hedging Agreement with the Borrower, the obligations of the
Borrower with respect to such Hedging Agreement shall be Secured
Obligations secured by the Collateral.
	 
	 	        (O) Perfection Matters; Federal Assignment of Claims Act Compliance;
Proceeds of Eligible Government Contracts. The Borrower and each
Guarantor shall execute and deliver and pay the costs of recording and
filing financing statements, continuation statements, termination
statements, assignments and other documents, as the Administrative Agent
may from time to time deem necessary or appropriate for the perfection of
any Liens granted to the Administrative Agent for the benefit of the
Holders of Secured Obligations pursuant hereto or pursuant to any other
Loan Document. The Borrower and each Guarantor shall execute and
deliver, or cause to be executed and delivered, to the Administrative
Agent all documents or materials necessary or appropriate in order to
comply with the Assignment of Claims Act of 1940, as amended (the
“Government Contract Assignments”) in connection with the assignment of
payments due under each Government Contract, which Government Contract
Assignments shall satisfy such requirement when executed and delivered by
the Borrower to the Administrative Agent (and which shall not be
delivered to any relevant Governmental Authority unless a Default shall
be continuing); it being understood and agreed that no Government
Contract Assignment is being required for any Government Contract which
(a)(i) has a remaining value of less than $1,000,000 and (ii) has a
remaining term of less than twelve (12) months or (b) expressly prohibits
assignment of claims under the Assignment of Claims Act of 1940, as
amended. The Borrower shall

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	 	not assign payments due under any Government Contract to any Person
other than the Administrative Agent as Collateral hereunder. All costs
and expenses incurred in connection with the Government Contract
Assignments shall be borne solely by the Borrower. The Borrower shall
use its best efforts to cause all Receivables of Government Contracts to
be received into an account subject to the terms of the Cash Management
Agreement or otherwise subject to control in favor of the Administrative
Agent on terms and conditions reasonably acceptable to the Administrative
Agent.

                7.3 Negative Covenants.

		
	 	        (A) Indebtedness. Neither the Borrower nor any of its Subsidiaries
shall directly or indirectly create, incur, assume or otherwise become or
remain directly or indirectly liable with respect to any Indebtedness,
except:

		
	 	      (i) the Secured Obligations;
	 
	 	      (ii) Permitted Existing Indebtedness and Permitted Refinancing
Indebtedness in respect thereof;
	 
	 	      (iii) Indebtedness in respect of obligations secured by Customary
Permitted Liens;
	 
	 	      (iv) Indebtedness constituting Contingent Obligations permitted
by Section 7.3(E);
	 
	 	      (v) subject to the terms of Section 7.3(Q), Indebtedness arising
from intercompany loans and advances (a) from any Subsidiary to the
Borrower or any wholly-owned Subsidiary or (b) from the Borrower to
any wholly-owned Subsidiary; provided, that such Indebtedness shall be
expressly subordinate to the payment in full in cash of the Secured
Obligations on terms satisfactory to the Administrative Agent;
	 
	 	      (vi) Indebtedness in respect of Hedging Obligations permitted
under Section 7.3(P);
	 
	 	      (vii) secured or unsecured purchase money Indebtedness (including
Capitalized Leases) incurred by the Borrower or any of its
Subsidiaries after the Closing Date to finance the acquisition of
fixed assets, if (a) at the time of such incurrence, no Default or
Unmatured Default has occurred and is continuing or would result from
such incurrence, (b) such Indebtedness has a scheduled maturity and is
not due on demand, (c) such Indebtedness does not exceed the lower of
the fair market value or the cost of the applicable fixed assets on
the date acquired, (d) such Indebtedness does not exceed $1,000,000 in
the aggregate principal amount outstanding at any time, and (e) any
Lien securing such Indebtedness is permitted under Section 7.3(C)
(such Indebtedness being referred to herein as “Permitted Purchase
Money Indebtedness”);
	 
	 	      (viii) Indebtedness with respect to surety, appeal and
performance bonds obtained by the Borrower or any of its Subsidiaries
in the ordinary course of business;

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	 	      (ix) Indebtedness incurred by the Borrower or any of its
Subsidiaries (whether assumed by the Borrower or such Subsidiary or
issued to the seller) in any Permitted Acquisition as part of the
consideration therefor, provided that such Indebtedness is unsecured
and is subordinated to the Obligations on terms reasonably acceptable
to the Administrative Agent (including, without limitation those with
respect to amount, maturity (which shall not be prior to six (6)
months after the Commitment Termination Date), amortization, interest
rate, premiums, fees, covenants, subordination, events of default and
remedies);
	 
	 	      (x) Indebtedness evidenced by the Subordinated Notes and
Permitted Refinancing Indebtedness in respect thereof;
	 
	 	      (xi) guaranties by the Borrower of Indebtedness permitted to be
incurred by any Subsidiary; and
	 
	 	      (xii) additional unsecured Indebtedness in an aggregate amount at
any time outstanding not exceeding $1,000,000.

		
	 	        (B) Sales of Assets. Neither the Borrower nor any of its Material
Subsidiaries shall consummate any Asset Sale, except:

		
	 	      (i) subject to the limitations set forth in the Intellectual
Property Security Agreements, licenses or sublicenses (but not the
sale of any licensing rights) by the Borrower or its Material
Subsidiaries of software, customer lists, trademarks, service marks,
patents, trade names and copyrights and other intellectual property in
the ordinary course of business; provided, that such licenses or
sublicenses shall not interfere in any respect with the business of
the Borrower or any such Material Subsidiary;
	 
	 	      (ii) the disposition in the ordinary course of business of
equipment that is obsolete, excess or no longer used or useful in the
Borrower’s or its Material Subsidiaries’ businesses;
	 
	 	      (iii) transfers of assets between the Borrower and any
wholly-owned Material Subsidiary of the Borrower or between
wholly-owned Material Subsidiaries of the Borrower not otherwise
prohibited by this Agreement, provided, that the security interests
granted pursuant to the Security Agreement in the assets so
transferred shall remain in full force and effect and perfected (to at
least the same extent as in effect immediately prior to such
transfer); and
	 
	 	      (iv) sales, assignments, transfers, leases, conveyances or other
dispositions of other assets if such transaction (a) is for
consideration consisting at least seventy-five percent (75%) of cash,
(b) is for not less than fair market value (as determined in good
faith by the Borrower’s board of directors), and (c) when combined
with all such other transactions (each such transaction being valued
at net book value) (i) during the immediately preceding twelve-month
period, represents the disposition of not greater than $1,000,000,
and (ii) during the period from the Closing Date to the

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	 	date of such proposed transaction, represents the disposition of
not greater than $2,000,000.

		
	 	        (C) Liens. Neither the Borrower nor any of its Material
Subsidiaries shall directly or indirectly create, incur, assume or permit
to exist any Lien on or with respect to any of their respective property
or assets except:

		
	 	      (i) Liens created by the Loan Documents or otherwise securing the
Secured Obligations;
	 
	 	      (ii) Permitted Existing Liens;
	 
	 	      (iii) Customary Permitted Liens; and
	 
	 	      (iv) purchase money Liens (including the interest of a lessor
under a Capitalized Lease and Liens to which any property is subject
at the time of acquisition thereof) securing Permitted Purchase Money
Indebtedness; provided that such Liens shall not apply to any property
of the Borrower or its Material Subsidiaries other than that purchased
or subject to such Capitalized Lease;
	 
	 	      (v) Liens with respect to property acquired by the Borrower or
any of its Material Subsidiaries after the Closing Date (and not
created in contemplation of such acquisition) pursuant to a Permitted
Acquisition; provided, that such Liens shall extend only to the
property so acquired, shall not secure any working capital financing
of the business acquired and shall secure Indebtedness permitted
pursuant to the terms of Section 7.3(A);
	 
	 	      (vi) Liens incurred in connection with sale leaseback
transactions permitted under Section 7.3(J);
	 
	 	      (vii) Environmental Liens securing obligations not to exceed
$1,000,000 in the aggregate; and
	 
	 	      (viii) other Liens securing Indebtedness (other than subordinated
Indebtedness) not to exceed $250,000 in the aggregate.

                In addition, neither the Borrower nor any of its Material Subsidiaries
shall become a party to any agreement, note, indenture or other instrument, or
take any other action, which would prohibit the creation of a first priority
Lien on any of its properties or other assets in favor of the Administrative
Agent for the benefit of itself and the Holders of Secured Obligations, as
collateral for the Obligations; provided that any agreement, note, indenture or
other instrument in connection with Permitted Purchase Money Indebtedness
(including Capitalized Leases) incurred in compliance with the terms of this
Agreement may prohibit the creation of a Lien in favor of the Administrative
Agent for the benefit of itself and the Holders of Secured Obligations on the
items of property obtained with the proceeds of such Permitted Purchase Money
Indebtedness.

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	 	        (D) Investments. Except to the extent permitted pursuant to Section
7.3(G), neither the Borrower nor any of its Material Subsidiaries shall
directly or indirectly make or own any Investment except:

		
	 	      (i) Investments in cash and Cash Equivalents;
	 
	 	      (ii) Permitted Existing Investments in an amount not greater than
the amount thereof on the Closing Date;
	 
	 	      (iii) Investments consisting of trade receivables or received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course
of business;
	 
	 	      (iv) Investments consisting of deposit accounts maintained by the
Borrower and its Material Subsidiaries in the ordinary course of
business in connection with its cash management system;
	 
	 	      (v) Investments consisting of non-cash consideration from a sale,
assignment, transfer, lease, conveyance or other disposition of
property permitted by Section 7.3(B);
	 
	 	      (vi) Investments consisting of (a) intercompany loans from any
Material Subsidiary of the Borrower to the Borrower or any other
Material Subsidiary permitted by Section 7.3(A)(v), (b) intercompany
loans from the Borrower to its Material Subsidiaries permitted under
Section 7.3(Q) and (c) Equity Interests in Material Subsidiaries;
	 
	 	      (vii) Investments constituting Permitted Acquisitions;
	 
	 	      (viii) Investments constituting Indebtedness permitted by Section
7.3(A) or Contingent Obligations permitted by Section 7.3(E) or
Restricted Payments permitted by Section 7.3(F);
	 
	 	      (ix) Investments consisting of loans or advances made by any
party to the Loan Documents to employees and officers of the Borrower
or any of the Borrower’s wholly-owned Material Subsidiaries for
travel, entertainment and relocation expenses in the ordinary course
of business in an aggregate principal amount outstanding at any one
time not to exceed $500,000;
	 
	 	      (x) Investments in addition to those permitted elsewhere in this
Section 7.3(D) in an amount not to exceed $500,000 in the aggregate at
any time outstanding;

provided, however, that the Investments described in clauses (vii) or (x) above
shall not be permitted to be made at a time when a Default shall have occurred
and be continuing or would result therefrom.

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	 	        (E) Contingent Obligations. Neither the Borrower nor any of its
Material Subsidiaries shall directly or indirectly create or become or be
liable with respect to any Contingent Obligation, except: (i) recourse
obligations resulting from endorsement of negotiable instruments for
collection in the ordinary course of business; (ii) Permitted Existing
Contingent Obligations; (iii) obligations, warranties, guaranties,
reserves and indemnities, not relating to Indebtedness of any Person,
which have been or are undertaken or made in the ordinary course of
business and not in favor of an Affiliate of the Borrower or such
Material Subsidiary (unless entered into on terms substantially similar
to those applicable to a third party transaction at arm’s length); (iv)
obligations, warranties, and indemnities of Borrower to IITRI arising out
of the Asset Purchase Agreement and the Exhibits thereto; (v) Contingent
Obligations with respect to surety, appeal and performance bonds obtained
by the Borrower or any Material Subsidiary in the ordinary course of
business, (vi) Contingent Obligations of the Subsidiaries of the
Borrower under the Guaranty and the other Collateral Documents to which
they are a party, (vii) Contingent Obligations in connection
with (x) the
redemption or repurchase of any Capital Stock of the Borrower as a result
of distributions by the ESOT to participants in the ESOP pursuant to the
ESOP Plan Documents subsequent to their termination of employment
with the Borrower or any Controlled Group member or (y)  the
requirements of
Section 401(a)(28) of the Code or any substantially similar Requirement
of Law, and (viii) guarantees of Indebtedness permitted by Section
7.3(A), provided, that to the extent such Indebtedness shall be
subordinated to the Obligations, each such guarantee shall be
subordinated to the Obligations on terms reasonably acceptable to the
Administrative Agent.
	 
	 	        (F) Restricted Payments. The Borrower shall not declare or make any
Restricted Payment, except:

		
	 	      (i) Restricted Payments made in connection with the defeasance,
redemption or repurchase of any Indebtedness with the Net Cash
Proceeds of Permitted Refinancing Indebtedness; and
	 
	 	      (ii) Restricted Payments of any Subsidiary of the Borrower to the
Borrower or to another wholly-owned Subsidiary of the Borrower; and
	 
	 	      (iii) Restricted Payments made in connection with claims for
reimbursement, indemnification or contribution arising out of or
related to the Asset Purchase Agreement; and
	 
	 	      (iv) any Restricted Payment that constitutes a payment in respect
of a purchase price adjustment, earn-out or other similar form of
contingent purchase price in connection with any Acquisition
(including the IITRI Acquisition) consummated on or before the Closing
Date and any Permitted Acquisition; and
	 
	 	      (v) Restricted Payments that constitute mandatory payments of
interest due on the Senior Subordinated Notes pursuant to the Senior
Subordinated Securities Purchase Agreement and the Senior Subordinated
Notes, unless such payments are

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	 	prohibited by the terms of such Indebtedness (or any
subordination agreement applicable thereto);
	 
	 	      (vi) Restricted Payments made (v) in connection with the
redemption or repurchase for value of any Capital Stock of the
Borrower as a result of distributions by the ESOT of such Capital
Stock to participants in the ESOP pursuant to the ESOP Plan Documents
subsequent to their termination of employment with the Borrower or
any Controlled Group member (w) as required by Section 401(a)(28)
of the Code or any substantially similar Requirement of Law, (x) in
good faith and believed by the Borrower to be made with respect to the
payments described in the preceding clauses (v) or (w), as
applicable, but which do not so
qualify for the status described in the preceding clauses (v) or (w) on
account of administrative error or mistake, provided that such payment
would not otherwise result in a Default or Unmatured Default and
either (1) such payments do not collectively exceed $250,000 during
the period from the Closing Date through the date of such payment or
(2) such payment is recovered by the Borrower within thirty (30) days
thereof and the Borrower’s books and records are accordingly adjusted
to reflect such recovery and such payment, together with all other such
payments under this subclause (2), do not collectively exceed
$1,000,000 during the period from the Closing Date through the date of
such payment, or (y) in the form of administrative fees or expenses of
the ESOP or the ESOT including, without limitation, the fees of the
ESOT Trustee; or (z) as contributions to the ESOT as required under
the ESOP Plan Documents;
	 
	 	      (vii) Restricted Payments made in connection with stock
appreciation rights plans, phantom stock plans and other equity-based
incentive compensation arrangements or plans to the extent such
payments would not be in violation of the terms of this Agreement or
any other Loan Document.

provided, however, that in no event shall any Restricted Payments (other than
(1) to the Borrower, (2) as permitted by clause (ii) above, and (3) Restricted
Payments resulting from distributions by the ESOT to participants in the ESOP
pursuant to the ESOP Plan Documents (x) subsequent to the termination by
participants in the ESOP of employment with the Borrower or any Controlled
Group member or (y) as required by Section 401(a)(28) of the Code or any
substantially similar Requirement of Law, and (4) Restricted Payments resulting
from contributions to the ESOT as required under the ESOP Plan Documents) be
declared or made if either a Default or an Unmatured Default shall have
occurred and be continuing at the date of declaration or payment thereof or
would result therefrom; provided, further, that in no event shall any
Restricted Payment be permitted under clause (v) above unless the Borrower
shall have delivered to the Administrative Agent a compliance certificate in
substantially the form of Exhibit H hereto for the most recently completed
fiscal quarter calculated giving effect to such Restricted Payment as of the
last day of such prior fiscal quarter and certifying that the Borrower is in
compliance with the financial covenants in Section 7.4 as of the last day of
such prior fiscal quarter.

		
	 	        (G) Conduct of Business; Subsidiaries; Acquisitions. Neither the
Borrower nor any of its Material Subsidiaries shall engage in any
business other than the businesses engaged in by the Borrower and its
Material Subsidiaries on the Closing Date and any business or activities
which are substantially similar, related or incidental thereto or

91

 

		
	 	logical extensions thereof. The Borrower shall not create, acquire
or capitalize any Material Subsidiary after the Closing Date unless (i)
no Default shall have occurred and be continuing or would result
therefrom; (ii) after such creation, acquisition or capitalization, all
of the representations and warranties contained herein shall be true and
correct (unless such representation and warranty is made as of a specific
date, in which case, such representation or warranty shall be true and
correct as of such date); and (iii) after such creation, acquisition or
capitalization the Borrower and such Material Subsidiary shall comply
with the terms of Section 7.2(K). Neither the Borrower nor its
Subsidiaries shall make any Acquisitions, other than (a) the IITRI
Acquisition and (b) Acquisitions meeting the following requirements or
otherwise approved by the Required Lenders (each such Acquisition
constituting a “Permitted Acquisition”):

		
	 	      (i) no Default or Unmatured Default shall have occurred and be
continuing or would result from such Acquisition or the incurrence of
any Indebtedness in connection therewith;
	 
	 	      (ii) in the case of an Acquisition of Equity Interests of an
entity, (x) if such Acquisition shall be consummated pursuant to a
merger, the acquired entity shall be merged with and into the Borrower
or any wholly-owned Subsidiary of the Borrower immediately following
such Acquisition, with the Borrower or such wholly-owned Subsidiary
being the surviving corporation following such merger and (y) the
results of operations of such entity shall be reported on a
consolidated basis with the Borrower and its consolidated
Subsidiaries;
	 
	 	      (iii) the purchase is consummated on a non-hostile basis and
approved by the target company’s board of directors (and shareholders,
if necessary) prior to the consummation of the Acquisition; and the
acquisition documents in respect of which are satisfactory to the
Administrative Agent (including, without limitation, in respect of
representations, indemnities and opinions) and the results of due
diligence in respect of such purchase are satisfactory to the
Administrative Agent;
	 
	 	      (iv) the Purchase Price for the Acquisition shall not exceed
without the prior written consent of the Required Lenders an amount
equal to $5,000,000 (including the incurrence or assumption of any
Indebtedness in connection therewith), and in any event shall not
exceed, together with all other Permitted Acquisitions permitted under
this Section 7.3(G), $10,000,000 (including the incurrence or
assumption of any Indebtedness in connection therewith) in the
aggregate during the term of this Agreement, and the Borrower shall
have complied with all of the requirements of the Collateral Documents
in respect thereof;
	 
	 	      (v) the businesses being acquired shall be substantially similar,
related or incidental to the businesses or activities engaged in by
the Borrower and its Subsidiaries on the Closing Date;
	 
	 	      (vi) effective as of the date of each such Acquisition (taking
into account the effect of such purchase and any Indebtedness incurred
in connection therewith), the Borrower shall deliver to the
Administrative Agent a Borrowing Base Certificate,

92

 

		
	 	which Borrowing Base Certificate shall demonstrate that Revolving
Credit Availability shall not be less than $7,000,000; and
	 
	 	      (vii) prior to each such Acquisition the Purchase Price of which
(including the incurrence or assumption of any Indebtedness in
connection therewith) shall be $1,000,000 or more, the Borrower shall
deliver to the Administrative Agent and the Lenders a certificate from
one of the Authorized Officers, demonstrating to the satisfaction of
the Administrative Agent that after giving effect to such Acquisition
and the incurrence of any Indebtedness permitted by Section 7.3(A) in
connection therewith, on a pro forma basis using historical audited or
reviewed unaudited financial statements obtained from the seller(s) in
respect of each such Acquisition as if the Acquisition and such
incurrence of Indebtedness had occurred on the first day of the
twelve-month period ending on the last day of the Borrower’s most
recently completed fiscal quarter, the Borrower would have been in
compliance with the financial covenants in Section 7.4 and not
otherwise in Default.

		
	 	        (H) Transactions with Shareholders and Affiliates. Neither the
Borrower nor any of its Subsidiaries shall directly or indirectly enter
into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of
any service) with, or make loans or advances to any holder or holders of
any of the Equity Interests of the Borrower, or with any Affiliate of the
Borrower or any other Person controlling or controlled by any Person that
is the “beneficial owner” (as defined in Rule 13d-3 of the Commission
under the Exchange Act) of greater than five percent (5%) or more of any
class of voting securities (or other voting interests) of the Borrower or
any of its Subsidiaries, in either case which is not a Subsidiary of the
Borrower, on terms that are less favorable to the Borrower or any of its
Subsidiaries, as applicable, than those that could reasonably be obtained
in an arm’s length transaction at the time from Persons who are not such
a holder or Affiliate, except for (a) Restricted Payments permitted by
Section 7.3(F) and Investments permitted by Section 7.3(D) (b) the
transactions contemplated under the Asset Purchase Agreement, the ESOT
Transaction Documents and the ESOP Plan Documents, (c) the incurrence of
Indebtedness described in Section 7.3(A)(v) hereof, (d) sales of assets
described in Section 7.3(B)(iii) hereof, (e) any Investment permitted by
Section 7.3(D)(vi) hereof, and (f) any deferred compensation plans or
arrangements, employment contracts, employee benefits, Incentive
Arrangements and other, similar contracts or arrangements with or for the
benefit of officers or directors of the Borrower or Subsidiaries of the
Borrower to the extent the terms thereof are in violation of the terms of this Agreement or
any other Loan Document.
	 
	 	        (I) Restriction on Fundamental Changes. Neither the Borrower nor
any of its Subsidiaries shall enter into any merger or consolidation, or
liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution), or convey, lease, sell, transfer or otherwise dispose of,
in one transaction or series of transactions, all or substantially all of
the Borrower’s consolidated business or property (each such transaction a
“Fundamental Change”), whether now or hereafter acquired, except (i)
Fundamental Changes permitted under Sections 7.3(B), 7.3(D) or 7.3(G),
(ii) a Subsidiary of the Borrower may be merged into or consolidated with
the Borrower (in which case the Borrower shall be the surviving
corporation) or any wholly-owned Subsidiary of the Borrower provided the
Borrower owns, directly or indirectly, a percentage of the equity of the
merged entity not less than

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	 	the percentage it owned of the Subsidiary prior to such Fundamental
Change and if the predecessor Subsidiary was a Guarantor, the surviving
Subsidiary shall be a Guarantor hereunder, (iii) any liquidation of any
Subsidiary of the Borrower, into the Borrower or another Subsidiary of
the Borrower, as applicable, and (iv) upon not less than thirty (30)
days’ prior written notice to the Administrative Agent, any merger or
reincorporation of the Borrower or any Subsidiary solely for purposes of
reincorporation in a different jurisdiction.
	 
	 	        (J) Sales and Leasebacks. Neither the Borrower nor any of its
Subsidiaries shall become liable, directly, by assumption or by
Contingent Obligation, with respect to any lease, whether an operating
lease or a Capitalized Lease, of any property (whether real or personal
or mixed), (i) which it or one of its Subsidiaries sold or transferred or
is to sell or transfer to any other Person, or (ii) which it or one of
its Subsidiaries intends to use for substantially the same purposes as
any other property which has been or is to be sold or transferred by it
or one of its Subsidiaries to any other Person in connection with such
lease, unless in either case the sale involved is not prohibited under
Section 7.3(B) and the lease involved is not prohibited under Section
7.3(A) and any related Investment is not prohibited under Section 7.3(D).
	 
	 	        (K) Margin Regulations. Neither the Borrower nor any of its
Subsidiaries, shall use all or any portion of the proceeds of any credit
extended under this Agreement to purchase or carry Margin Stock.
	 
	 	        (L) ERISA. (i) The Borrower shall not

		
	 	      (a) engage, or permit any of its Subsidiaries to engage, in
any material prohibited transaction described in Sections 406 of
ERISA or 4975 of the Code for which a statutory or class exemption
is not available or a private exemption has not been previously
obtained from the DOL;
	 
	 	      (b) permit to exist any material accumulated funding
deficiency (as defined in Sections 302 of ERISA and 412 of the
Code), with respect to any Benefit Plan, whether or not waived;
	 
	 	      (c) fail, or permit any Controlled Group member to fail, to
pay timely required material contributions or annual installments
due with respect to any waived funding deficiency to any Benefit
Plan;
	 
	 	      (d) terminate, or permit any Controlled Group member to
terminate, any Benefit Plan which would result in any material
liability of the Borrower or any Controlled Group member under
Title IV of ERISA;
	 
	 	      (e) fail to make any material contribution or payment to any
Multiemployer Plan which the Borrower or any Controlled Group
member may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto;

94

 

		
	 	      (f) fail, or permit any Controlled Group member to fail, to
pay to any Benefit Plan any required material installment or any
other payment required under Section 412 of the Code on or before
the due date for such installment or other payment; or
	 
	 	      (g) amend, or permit any Controlled Group member to amend, a
Benefit Plan resulting in a material increase in current liability
for the plan year such that the Borrower or any Controlled Group
member is required to provide security to such Benefit Plan under
Section 401(a)(29) of the Code.

		
	 	    (ii) For purposes of this Section 7.3(L), “material” means any
noncompliance or basis for liability which could reasonably be likely
to subject the Borrower or any of its Subsidiaries to liability,
individually or in the aggregate, in excess of $1,000,000.

		
	 	        (M) Constituent Documents. Neither the Borrower nor any of its
Subsidiaries shall amend, modify or otherwise change any of the terms or
provisions in any of their respective Constituent Documents as in effect
on the Closing Date in any manner adverse to the interests of the
Lenders, without the prior written consent of the Required Lenders other
than to accommodate or facilitate transactions and changes otherwise
expressly permitted by this Agreement.
	 
	 	        (N) Fiscal Year. Neither the Borrower nor any of its consolidated
Subsidiaries shall change its fiscal year for accounting or tax purposes
from a period consisting of a 52/53 calendar week year ending on
September 30 of each year without the prior
written consent of the Administrative Agent.
	 
	 	        (O) Subsidiary Covenants. The Borrower will not, and will not
permit any Subsidiary to, create or otherwise cause to become effective
or suffer to exist any consensual encumbrance (other than Permitted
Liens) or restriction of any kind on the ability of any Subsidiary to pay
dividends or make any other distribution on its stock, or make any other
Restricted Payment, pay any Indebtedness or other Obligation owed to the
Borrower or any other Subsidiary, make loans or advances or other
Investments in the Borrower or any other Subsidiary, or sell, transfer or
otherwise convey any of its property to the Borrower or any other
Subsidiary, or merge, consolidate with or liquidate into the Borrower or
any other Subsidiary.
	 
	 	        (P) Hedging Obligations. The Borrower shall not and shall not
permit any of its Subsidiaries to enter into any Hedging Arrangements
evidencing Hedging Obligations, other than Hedging Arrangements entered
into by the Borrower or its Subsidiaries pursuant to which the Borrower
or its Subsidiaries has hedged its actual or anticipated interest rate,
foreign currency or commodity exposure, and which are non-speculative in
nature. The agreements in respect of such permitted Hedging Arrangements
entered into by the Borrower or its Subsidiaries and any Lender or any
affiliate of any Lender including, without limitation, to hedge floating
interest rate risk in an aggregate notional amount not to exceed at any
time an amount equal to the outstanding balance of the Term Loans at such
time are sometimes referred to herein as “Hedging Agreements.” In the

95

 

		
	 	event a Lender or any of its Affiliates elects to enter into any
Hedging Agreement with the Borrower or any of its Subsidiaries, the
obligations of the Borrower and such Subsidiary with respect to such
Hedging Agreement shall be Secured Obligations secured by the Collateral.
	 
	 	        (Q) Intercompany Loans. Neither the Borrower nor any of its
Subsidiaries shall make any loans to any other Subsidiary of the Borrower
except to the extent any such loans shall be evidenced by promissory
notes which provide that (i) if any acceleration of the Obligations under
this Agreement shall occur, the obligations under such promissory note
shall immediately become due and payable without any election or action
on the part of such Person, and (ii) such promissory notes shall be
pledged to the Administrative Agent pursuant to the terms of the
Collateral Documents.
	 
	 	        (R) Issuance of Disqualified Stock. From and after the Closing
Date, neither the Borrower, nor any of its Subsidiaries shall issue any
Disqualified Stock. All issued and outstanding Disqualified Stock shall
be treated as Consolidated Total Indebtedness for all purposes of this
Agreement (and as funded Indebtedness for purposes of Section 7.1(F)),
and the amount of such deemed Indebtedness shall be the aggregate amount
of the liquidation preference of such Disqualified Stock.
	 
	 	        (S) Loss of S Corporation Status. The Borrower shall not fail to be
qualified as an “S corporation” as defined in Section 1361 of the Code at
all times on or after the Closing Date.
	 
	 	        (T) Imposition of UBIT on ESOT. The ESOT shall not be subject to
tax imposed under the Code with respect to any item of income or loss of
the Borrower or any Subsidiary of the Borrower at any time on or after
the Closing Date that could reasonably be anticipated to result in tax
liability to the ESOT, the Borrower or any of its Subsidiaries in an
amount in excess of $1,000,000.
	 
	 	        (U) ESOP Conflict. The Borrower shall not permit the performance of
any of the Transaction Documents to which the ESOT is a party to conflict
with the ESOP Plan Documents, conflict with any Requirement of Law, or
require the registration with, consent or approval of, or notice to, or
other action to, with or by any Governmental Authority other than (i)
filings that are made regarding the status of the Borrower as an “S
Corporation” as such term is defined in Section 1361 of the Code, which
filings shall have been made on or prior to the Closing Date, (ii)
filings as required by Section 7.2(M) and subsequent requests to the IRS
to issue a favorable determination letter to the effect that the ESOP is
and continues to be such a qualified plan and employee stock ownership
plan, and (iii) Annual Reports (IRS Form 5500 series) for the ESOP.
	 
	 	        (V) Assets as Plan Assets. The Borrower shall not permit any of the
assets of the Borrower to constitute, for any purpose of ERISA or Section
4975 of the Code, assets of the ESOP or any other “plan” as defined in
Section 3(3) of ERISA or Section 4975 of the Code.

96

 

		
	 	        (W) Prohibited Transaction. The Borrower shall not permit any
material non-exempt prohibited transaction described in Section 406 of
ERISA or Section 4975 of the Code to occur with respect to the ESOP.
	 
	 	        (X) Non-Qualification of ESOP. The Borrower shall not take any
action, nor fail to take any action, the result of which action or
inaction is that the ESOP shall fail to be qualified under Section 401(a)
of the Code. The Borrower shall not permit the ESOP to fail to be an
employee stock ownership plan as defined in Section 4975(e)(7) of the
Code.
	 
	 	        (Y) Excise Tax. The Borrower and its Subsidiaries shall not be
subject to the tax imposed by Section 4978 of the Code with respect to
any “disposition” by the ESOT of any shares of Capital Stock of the
Borrower occurring as a result of the ESOT Transaction.
	 
	 	        (Z) Lender/ESOT Transactions. No Loan hereunder shall for any
purpose of Section 406 of ERISA or Section 4975 of the Code be a direct
or indirect loan or other transaction between the Administrative Agent or
any of the Lenders and the ESOT which, if it is assumed that the
Administrative Agent and Lenders are “parties in interest” and
“disqualified persons” (as defined in Section 3(14) of ERISA and Section
4975 of the Code), is a non-exempt prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code.
	 
	 	        (AA) ERISA Judgments and Determinations. There shall be no finding,
holding, ruling or other determination not subject to cure made by any
court or Governmental Authority, and there shall be no assertion by the
ESOP Fiduciary or, to the best knowledge of the Borrower, the ESOT
Trustee, concerning any matter with respect to the ESOP or ESOT contrary
to or inconsistent with any covenant set forth in Section 7.3(S) through
(Z) which assertion could reasonably be expected to have a Material
Adverse Effect.
	 
	 	        (BB) Subordinated Indebtedness. The Borrower shall not and shall
not permit any of its Subsidiaries to amend, supplement or modify the
terms of the Subordinated Notes or the Securities Purchase Agreements, or
make any payment required as a result of an amendment or change thereto,
other than amendments, supplements or modifications which (i) (a)
decrease the rate of interest payable on the Subordinated Notes, (b)
provide for the payment in kind in lieu of cash of any portion of the
interest on the Subordinated Notes, (c) provide for the extension of the
maturity date with respect to any principal or interest payment to be
made under the Subordinated Notes, (d) provide more flexibility to the
Borrower or its Subsidiaries in connection with any covenants or (e)
waive any defaults existing in connection with the Subordinated Notes or
the Securities Purchase Agreements and (ii) do not adversely affect in
any material respect the interests of the Administrative Agent or any
Lender.

                7.4 Financial Covenants. The Borrower shall comply with the following
(provided that for purposes of calculating the following financial covenants,
EBITDAE shall be deemed to be equal to (i) $3,707,773 (ii)

97

 

for the fiscal quarter ending March 15, 2002 and (ii)
$6,013,561 for the fiscal quarter ending July 5, 2002, and
(iii) $5,487,256 for the fiscal quarter ending September 30,
2002):

		
	 	        (A) Maximum Senior Leverage Ratio. The Borrower shall not permit
the ratio (the “Senior Leverage Ratio”) of (i) the sum of the aggregate
outstanding principal amount of all Term Loans and Revolving Credit
Obligations to (ii) EBITDAE to be greater than:

		
	 	      (i)
2.75 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 20,
2002 through the fiscal quarter ending September 30, 2003;
	 
	 	      (ii)
2.50 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 19,
2003
through the fiscal quarter ending September 30, 2004;
	 
	 	      (iii)
2.00 to 1.00 as of the end of each fiscal quarter
for the period commencing with the fiscal quarter ending
December 17, 2004 through the fiscal quarter ending
September 30, 2005;
	 
	 	      (iv)
1.75 to 1.00 as of the end of each fiscal quarter
for the period commencing with the fiscal quarter ending
December 16, 2005 through the fiscal quarter ending
September 30, 2006;
	 
	 	      (v)
1.30 to 1.00 as of the end of each fiscal quarter
thereafter.

The Senior Leverage Ratio shall be calculated, in each case, as of the last day
of each fiscal quarter based upon (a) for Term Loans and Revolving Credit
Obligations, the principal amount of Term Loans and Revolving Credit
Obligations as of the last day of each such fiscal quarter; and (b) for
EBITDAE, the actual amount for the four-quarter period ending on such last day
of such fiscal quarter, taking into account Permitted Acquisitions and
calculated, with respect to Permitted Acquisitions, on a pro forma basis using
historical audited and reviewed unaudited financial statements obtained from
the seller(s) in such Permitted Acquisitions (adjusted for non-recurring seller
expenses and other add-backs to EBITDAE, in each case, agreed upon by the
Borrower and the Administrative Agent) and reasonably acceptable to the
Administrative Agent, broken down by fiscal quarter in the Borrower’s
reasonable judgment and satisfactory to the Administrative Agent.

		
	 	        (B) Maximum Leverage Ratio. The Borrower shall not permit the ratio
(the “Leverage Ratio”) of (i) the principal amount of Consolidated Total
Indebtedness (other than the Junior Subordinated Notes) to (ii) EBITDAE
to be greater than:

		
	 	      (i)
4.00 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 20,
2002
through the fiscal quarter ending September 30, 2003;
	 
	 	      (ii)
3.60 to 1.00 as of the end of each fiscal quarter for the
period commencing with the fiscal quarter ending December 19,
2003
through the fiscal quarter ending September 30, 2004;
	 
	 	      (iii)
3.25 to 1.00 as of the end of each fiscal quarter
for the period commencing with the fiscal quarter ending
December 17, 2004 through the fiscal quarter ending
September 30, 2005;
	 
	 	      (iv)
3.00 to 1.00 as of the end of each fiscal quarter
for the period commencing with the fiscal quarter ending
December 16, 2005 through the fiscal quarter ending
September 30, 2006;
	 
	 	      (v)
2.50 to 1.00 as of the end of each fiscal quarter
thereafter.

98

 

The Leverage Ratio shall be calculated, in each case, as of the last day of
each fiscal quarter based upon (a) for Consolidated Total Indebtedness, the
principal amount of Consolidated Total Indebtedness as of the last day of each
such fiscal quarter; and (b) for EBITDAE, the actual amount for the
four-quarter period ending on such last day of such fiscal quarter, taking into
account Permitted Acquisitions and calculated, with respect to Permitted
Acquisitions, on a pro forma basis using historical audited and reviewed
unaudited financial statements obtained from the seller(s) in such Permitted
Acquisitions (adjusted for non-recurring seller expenses and other add-backs to
EBITDAE, in each case, agreed upon by the Borrower and the Administrative
Agent) and reasonably acceptable to the Administrative Agent, broken down by
fiscal quarter in the Borrower’s reasonable judgment and satisfactory to the
Administrative Agent.

		
	 	        (C) Minimum Fixed Charge Coverage Ratio. The Borrower and its
consolidated Subsidiaries shall maintain a ratio (“Fixed Charge Coverage
Ratio”) of (i) EBITDAE for such period minus Capital Expenditures for
such period, to (ii) the sum of the amounts of (a) scheduled amortization during such period of the principal portion of the
Term Loans and scheduled amortization during such period of the principal
portion of all other Consolidated Total Indebtedness, plus (b) Restricted
Payments paid in cash and, if positive, net ESOP repurchase obligations during such
period, plus (c) all charges for
foreign, federal, state and local income taxes paid in cash by the
Borrower and its consolidated Subsidiaries during such period, plus (d)
Cash Interest Expense during such period plus (e) cash payments in
respect of purchase price adjustments, earn-outs or other similar
forms of
contingent purchase price during such period (exclusive of cash
purchase price adjustments related to the IITRI Acquisition paid on
the Closing Date), of at least (1) 1.20 to
1.00 as of the end of each fiscal quarter for the period commencing with
the fiscal quarter ending on December 20, 2002 through the fiscal
quarter ending September 30, 2003; (2) 1.25 to 1.00 as of the
end of each fiscal quarter for the period commencing with the fiscal
quarter ending on December 19, 2003 through the fiscal quarter
ending March 10, 2006; and (3) 1.35 to 1.00 as of the end of
each fiscal quarter thereafter.
	 
	 	        In each case, the Fixed Charge Coverage Ratio shall be determined as
of the last day of each fiscal quarter for the four fiscal quarter period
ending on such last day of such fiscal quarter, taking into account
Permitted Acquisitions and calculated, with respect to Permitted
Acquisitions, on a pro forma basis using historical audited and reviewed
unaudited financial statements obtained from the seller(s) in such
Permitted Acquisitions (adjusted for non-recurring seller expenses and
other add-backs to EBITDAE, in each case, agreed upon by the Borrower and
the Administrative Agent) and reasonably acceptable to the Administrative
Agent, broken down by fiscal quarter in the Borrower’s reasonable
judgment and satisfactory to the Administrative Agent.
	 
	 	        (D) Minimum EBITDAE. The Borrower shall not permit EBITDAE to be
less than the amounts set forth below for the fiscal periods ending on
the dates set forth below:

	 	 	 
	Fiscal Quarter Ending On or About the

Date Set Forth Below	 	
Minimum EBITDAE
	
	 	 

	 	 	 	 	 
	December 20, 2002
	 	$	17,000,000	 
	
	
	
	

	March 14, 2003
	 	$	17,000,000	 
	
	
	
	

	July 4, 2003
	 	$	17,000,000	 
	
	
	
	

	September 30, 2003
	 	$	17,000,000	 
	
	
	
	

	December 19, 2003
	 	$	17,000,000	 
	
	
	
	

	March 12, 2004
	 	$	17,500,000	 
	
	
	
	

	July 2, 2004
	 	$	18,000,000	 
	
	
	
	

	September 30, 2004
	 	$	18,000,000	 
	
	
	
	

	December 17, 2004
	 	$	18,500,000	 
	
	
	
	

	March 11, 2005
	 	$	18,500,000	 
	
	
	
	

	July 1, 2005
	 	$	18,500,000	 
	
	
	
	

	September 30, 2005
	 	$	18,500,000	 
	
	
	
	

	December 16, 2005
	 	$	19,000,000	 
	March 10, 2006
	 	$	19,000,000	 
	
	
	
	

	June 30, 2006
	 	$	19,000,000	 
	
	
	
	

	September 30, 2006
	 	$	19,000,000	 
	
	
	
	

	December 15, 2006 and each fiscal quarter
thereafter
	 	$	20,000,000	 

99

 

	 	 	 
	       quarter thereafter	 	 

		
	 	              In each case EBITDAE shall be determined as of the last day of each
fiscal quarter for the four-quarter period ending on such last day of
such fiscal quarter, taking into account Permitted Acquisitions and
calculated, with respect to Permitted Acquisitions, on a pro forma basis
using historical audited and reviewed unaudited financial statements
obtained from the seller(s) in such Permitted Acquisitions (adjusted for
non-recurring seller expenses and other add-backs to EBITDAE, in each
case, agreed upon by the Borrower and the Administrative Agent) and
reasonably acceptable to the Administrative Agent, broken down by fiscal
quarter in the Borrower’s reasonable judgment and satisfactory to the
Administrative Agent.
	 
	 	        (E) Capital Expenditures. The Borrower will not, nor will it permit
any Subsidiary to expend, for Capital Expenditures in the acquisition of
fixed assets in any fiscal year, on a non-cumulative basis, in the
aggregate for the Borrower and its Subsidiaries, in excess of:

		
	 	         (i) $3,000,000 for the fiscal year ending September 30, 2003;
	 
	 	         (ii) $3,000,000 for the fiscal year ending September 30, 2004,
plus any amount permitted to be expended in the immediately preceding
fiscal year (pursuant to the absolute dollar limitation for such
preceding fiscal year and not pursuant to any carryover provision
from a prior fiscal year) but not expended;
	 
	 	         (iii) $3,500,000 for the fiscal year ending September 30, 2005,
plus any amount permitted to be expended in the immediately preceding
fiscal year (pursuant to the absolute dollar limitation for such
preceding fiscal year and not pursuant to any carryover provision
from a prior fiscal year) but not expended;
	 
	 	         (iv) $4,000,000 for the fiscal year ending September 30, 2006,
plus any amount permitted to be expended in the immediately preceding
fiscal year (pursuant to the absolute dollar limitation for such
preceding fiscal year and not pursuant to any carryover provision
from a prior fiscal year) but not expended; and
	 
	 	         (v) $4,500,000 for the fiscal year ending September 30, 2007,
plus any amount permitted to be expended in the immediately preceding
fiscal year (pursuant to the absolute dollar limitation for such
preceding fiscal year and not pursuant to any carryover provision from a prior fiscal year) but not
expended.

ARTICLE VIII: DEFAULTS

                8.1 Defaults. Each of the following occurrences shall constitute a
Default under this Agreement:

		
	 	        (A) Failure to Make Payments When Due. The Borrower shall (i) fail
to pay when due any of the Obligations consisting of principal with
respect to the Loans or (ii) fail to pay within two (2) Business Days of
the date when due any interest with respect to the Loans or any fees due
under Sections 2.15(C) or 3.8 or (iii) fail to pay within thirty (30)
days any other Obligations under this Agreement or the other Loan
Documents.

100

 

		
	 	        (B) Breach of Certain Covenants. The Borrower shall fail duly and
punctually to perform or observe any agreement, covenant or obligation
binding on the Borrower under:

		
	 	      (i) Sections 7.1 or 7.2 and such failure shall continue
unremedied for ten (10) Business Days after the occurrence thereof; or
	 
	 	      (ii) Sections 7.3 or 7.4.

		
	 	        (C) Breach of Representation or Warranty. Any representation or
warranty made or deemed made by the Borrower (i) to the Administrative
Agent or any Lender herein or by the Borrower or any of its Material
Subsidiaries in any of the other Loan Documents shall be false or
misleading in any material respect as of the date as of which made (or
deemed made) or (ii) in any other statement or certificate or information
at any time given by any such Person pursuant to the Loan Documents shall
be false or misleading in any material respect as of the date as of which
made (or deemed made) if such misrepresentation would be reasonably
anticipated to result in a Material Adverse Effect.
	 
	 	        (D) Other Defaults. The Borrower shall default in the performance
of or compliance with any term contained in this Agreement (other than as
covered by paragraphs (A) or (B) or (C) of this Section 8.1), or the
Borrower or any of its Subsidiaries shall default in the performance of
or compliance with any term contained in any of the other Loan Documents,
and such default shall continue for thirty (30) days after the occurrence
thereof.
	 
	 	        (E) Default as to Other Indebtedness. The Borrower or any of its
Subsidiaries shall fail to make any payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) with respect to any Indebtedness (other than Indebtedness
hereunder, but including, without limitation, Disqualified Stock), beyond
any period of grace provided with respect thereto, which individually or
together with other such Indebtedness as to which any such failure exists
has an aggregate outstanding principal amount in excess of $5,000,000; or
any breach, default or event of default (including any amortization event
or event of like import in connection with any Off-Balance Sheet
Liability) shall occur, or any other condition shall exist under any
instrument, agreement or indenture pertaining to any such Indebtedness
having such aggregate outstanding principal amount, beyond any period of
grace, if any, provided with respect thereto, if the effect thereof is to
cause an acceleration, mandatory redemption, a requirement that the
Borrower offer to purchase such Indebtedness or other required repurchase
or early amortization of such Indebtedness, or permit the holder(s) of
such Indebtedness to accelerate the maturity of any such Indebtedness or
require a redemption, early amortization or repurchase of such
Indebtedness; or any such Indebtedness having such aggregate outstanding
principal amount shall be otherwise declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed, amortized
or otherwise repurchased by the Borrower or any of its Subsidiaries
(other than by a regularly scheduled required prepayment) prior to the
stated maturity thereof.

101

 

		
	 	        (F) Involuntary Bankruptcy; Appointment of Receiver, Etc.

		
	 	      (i) An involuntary case shall be commenced against the Borrower
or any of the Borrower’s Material Subsidiaries and the petition shall
not be dismissed, stayed, bonded or discharged within sixty (60) days
after commencement of the case; or a court having jurisdiction in the
premises shall enter a decree or order for relief in respect of the
Borrower or any of the Borrower’s Material Subsidiaries in an
involuntary case, under any applicable bankruptcy, insolvency or other
similar law now or hereinafter in effect; or any other similar relief
shall be granted under any applicable federal, state, local or foreign
law.
	 
	 	      (ii) 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 the
Borrower or any of the Borrower’s Subsidiaries or over all or a
substantial part of the property of the Borrower or any of the
Borrower’s Subsidiaries shall be entered; or an interim receiver,
trustee or other custodian of the Borrower or any of the Borrower’s
Subsidiaries or of all or a substantial part of the property of the
Borrower or any of the Borrower’s Subsidiaries shall be appointed or a
warrant of attachment, execution or similar process against any
substantial part of the property of the Borrower or any of the
Borrower’s Subsidiaries shall be issued and any such event shall not
be stayed, dismissed, bonded or discharged within sixty (60) days
after entry, appointment or issuance.

		
	 	        (G) Voluntary Bankruptcy; Appointment of Receiver, Etc. The
Borrower or any of the Borrower’s Subsidiaries shall (i) commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (ii) 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, (iii) consent
to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property, (iv) make
any assignment for the benefit of creditors or (v) take any corporate
action to authorize any of the foregoing.
	 
	 	        (H) Judgments and Attachments. Any money judgment(s), writ or
warrant of attachment, or similar process against the Borrower or any of
its Subsidiaries or any of their respective assets involving in any
single case or in the aggregate an amount in excess of $1,000,000 is or
are entered and shall remain undischarged, unvacated, uninsured, unbonded
or unstayed for a period of thirty (30) days or in any event later than
fifteen (15) days prior to the date of any proposed sale thereunder.
	 
	 	        (I) Dissolution. Any order, judgment or decree shall be entered
against the Borrower or any Subsidiary decreeing its involuntary
dissolution or split up and such order shall remain undischarged and
unstayed for a period in excess of sixty (60) days; or the Borrower or
any Material Subsidiary shall otherwise dissolve or cease to exist except
as specifically permitted by this Agreement.
	 
	 	        (J) Loan Documents. At any time, for any reason, any Loan Document
as a whole that materially affects the ability of the Administrative
Agent, or any of the

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	 	Lenders to enforce the Obligations or enforce their rights against
the Collateral ceases to be in full force and effect or the Borrower or
any of the Borrower’s Subsidiaries party thereto seeks to repudiate its
obligations thereunder.
	 
	 	        (K) Termination Event. Any Termination Event occurs.
	 
	 	        (L) Waiver of Minimum Funding Standard. If the plan administrator
of any Benefit Plan applies under Section 412(d) of the Code for a waiver
of the minimum funding standards of Section 412(a) of the Code and any
Lender believes the substantial business hardship upon which the
application for the waiver is based could reasonably be expected to
subject either the Borrower or any Controlled Group member to liability
in excess of $1,000,000.
	 
	 	        (M) Change of Control. A Change of Control shall occur.
	 
	 	        (N) Environmental Matters. The Borrower or any of its Subsidiaries
shall be the subject of any proceeding or investigation pertaining to (i)
the Release by the Borrower or any of its Subsidiaries of any Contaminant
into the environment, (ii) the liability of the Borrower or any of its
Subsidiaries arising from the Release by any other Person of any
Contaminant into the environment, or (iii) any violation of any
Environmental, Health or Safety Requirements of Law which by the Borrower
or any of its Subsidiaries, which, in any case, has or is reasonably
likely to subject the Borrower to liability individually or in the
aggregate in excess of $1,000,000.
	 
	 	        (O) Guarantor Revocation. Any guarantor of the Obligations shall
terminate or revoke, or take any action to revoke, any of its duties or
obligations under the applicable Guaranty or breach any of the material
terms of such Guaranty.
	 
	 	        (P) Collateral Documents. Any of the following shall occur: (i)
any Collateral Document shall for any reason fail to create a valid and
perfected first priority security interest in any Substantial Portion of
the Collateral purported to be covered thereby, except as permitted by
the terms of any Collateral Document or any other Loan Document, (ii) any
Collateral Document shall fail to remain in full force or effect, except
with respect to any Collateral released pursuant to the express terms of
the applicable Collateral Documents or any other Loan Document, or (iii)
any action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Collateral Document.
	 
	 	        (Q) Negative Determination by IRS. The IRS shall notify the
Borrower in writing that it has made a final determination not subject to
cure that the ESOP is not a qualified plan and employee stock ownership
plan within the meanings of Section 401(a) and 4975(e)(7), respectively,
of the Code.

A Default shall be deemed “continuing” until cured or until waived in writing
in accordance with Section 9.1.

                8.2 Termination of Commitments; Acceleration. If any Default described in
Section 8.1(F) or 8.1(G) occurs with respect to the Borrower or any Material
Subsidiary, the obligations of the Lenders to make Loans hereunder and the
obligation of any Issuing Banks to

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 issue Letters of Credit hereunder shall automatically terminate and the
Obligations shall immediately become due and payable without any election or
action on the part of the Administrative Agent or any Lender. If any other
Default occurs, the Required Lenders may terminate or suspend the obligations
of the Lenders to make Loans hereunder and the obligation of the Issuing Banks
to issue Letters of Credit hereunder, or declare the Obligations to be due and
payable, or both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which the Borrower expressly waives.

ARTICLE IX: AMENDMENTS, WAIVERS AND REMEDIES

                9.1 Amendments. The Required Lenders (or the Administrative Agent with
the consent in writing of the Required Lenders) and the Borrower may enter into
agreements supplemental hereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the rights of the
Lenders or the Borrower hereunder or waiving any Default hereunder; provided,
however, that no such supplemental agreement shall, without the consent of each
Lender affected thereby:

		
	 	        (A) Postpone or extend the Revolving Loan Termination Date or the
Term Loan Final Maturity Date or any other date fixed for any payment of
principal of, or interest on, the Loans, the Reimbursement Obligations or
any fees or other amounts payable to such Lender (except with respect to
(i) any modifications of the provisions relating to amounts, timing or
application of prepayments of Loans and other Obligations, which
modification shall require only the approval of the Required Lenders
(other than the provisions relating to the amounts, timing or application
of prepayments of the Term Loans which modifications shall also require
the approval of Term Loan Lenders with sixty-six and two-thirds percent
(66 2/3%) or more of the then outstanding Term Loans) and (ii) a waiver
of the application of the default rate of interest pursuant to Section
2.11 hereof which waiver shall require only the approval of the Required
Lenders).
	 
	 	        (B) Reduce the principal amount of any Loans or L/C Obligations, or
reduce the rate or extend the time of payment of interest or fees thereon
(other than (i) a waiver of the application of the default rate of
interest pursuant to Section 2.11 hereof, and (ii) as a result of a
change in the definition of Leverage Ratio or any of the components
thereof or the method of calculation thereof).
	 
	 	        (C) Reduce the percentage specified in the definition of Required
Lenders or any other percentage of Lenders specified to be the applicable
percentage in this Agreement to act on specified matters or amend the
definitions of “Required Lenders”, “Revolving Loan Pro Rata Share”, “Term
Loan Pro Rata Share,” or “Pro Rata Share”.
	 
	 	        (D) Increase the amount of the Revolving Loan Commitment or Term
Loan Commitment of any Lender hereunder or increase any Lender’s
Revolving Loan Pro Rata Share, Term Loan Pro Rata Share or Pro Rata Share
(except with respect to an increase in the amount, or other modification
to the terms or components, of the Borrowing Base (Monthly) or
Borrowing Base (Senior Debt)) .
	 
	 	        (E) Permit the Borrower to assign its rights under this Agreement.

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	 	        (F) Other than pursuant to a transaction permitted by the terms of
this Agreement, release all or substantially all of the Collateral which
is subject to any Loan Document.
	 
	 	        (G) Other than pursuant to a transaction permitted by the terms of
this Agreement, release any guarantor from its obligations under the
Guaranty.
	 
	 	        (H) Amend Section 7.2(K), Section 12.2, Section 12.3 or this Section
9.1.

No amendment of any provision of this Agreement relating to (i) the
Administrative Agent shall be effective without the written consent of the
Administrative Agent, (ii) Swing Line Loans shall be effective without the
written consent of the Swing Line Bank and (iii) any Issuing Bank shall be
effective without the written consent of such Issuing Bank. The Administrative
Agent may waive payment of the fee required under Section 13.3(B) without
obtaining the consent of any of the Lenders.

                9.2 Preservation of Rights. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Loan or the issuance of a Letter of
Credit notwithstanding the existence of a Default or the inability of the
Borrower to satisfy the conditions precedent to such Loan or issuance of such
Letter of Credit shall not constitute any waiver or acquiescence. Any single
or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment
or other variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the requisite number of
Lenders required pursuant to Section 9.1, and then only to the extent in such
writing specifically set forth. All remedies contained in the Loan Documents
or by law afforded shall be cumulative and all shall be available to the
Administrative Agent and the Lenders until all of the Termination Conditions
shall have been satisfied.

ARTICLE X: GENERAL PROVISIONS

                10.1 Survival of Representations. All representations and warranties of
the Borrower contained in this Agreement shall survive delivery of this
Agreement and the making of the Loans herein contemplated so long as any
principal, accrued interest, fees, or any other amount due and payable under
any Loan Document is outstanding and unpaid (other than contingent
reimbursement and indemnification obligations) and so long as the Commitments
have not been terminated.

                10.2 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

                10.3 Performance of Obligations. The Borrower agrees that the
Administrative Agent may, but shall have no obligation to (i) at any time, pay
or discharge taxes, liens, security interests or other encumbrances levied or
placed on or threatened against any property of the Borrower (including,
without limitation, the Collateral) to the extent the Borrower is required by
the terms hereof to pay any such amount, but has not done so (other than such
taxes, liens,

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 security interests or other encumbrances as shall be actively and in good
faith contested by the Borrower and in respect of which the Borrower shall have
established reserves in accordance with Agreement Accounting Principles to the
extent such taxes, liens, security interests or other encumbrances would
otherwise be permitted hereunder) and (ii), after the occurrence and during the
continuance of a Default, to make any other payment or perform any act required
of the Borrower under any Loan Document or take any other action which the
Administrative Agent in its discretion deems necessary or desirable to protect
or preserve such property of the Borrower. The Administrative Agent shall use
its reasonable efforts to give the Borrower notice of any action taken under
this Section 10.3 prior to the taking of such action or promptly thereafter
provided the failure to give such notice shall not affect the Borrower’s
obligations in respect thereof. The Borrower agrees to pay the Administrative
Agent, upon demand, the principal amount of all funds advanced by the
Administrative Agent under this Section 10.3, together with interest thereon at
the rate from time to time applicable to Floating Rate Loans from the date of
such advance until the outstanding principal balance thereof is paid in full.
If the Borrower fails to make payment in respect of any such advance under this
Section 10.3 within one (1) Business Day after the date the Borrower receives
written demand therefor from the Administrative Agent, the Administrative Agent
shall promptly notify each Lender and each Lender agrees that it shall
thereupon make available to the Administrative Agent, in Dollars in immediately
available funds, the amount equal to such Lender’s Pro Rata Share of such
advance. If such funds are not made available to the Administrative Agent by
such Lender within one (1) Business Day after the Administrative Agent’s demand
therefor, the Administrative Agent will be entitled to recover any such amount
from such Lender together with interest thereon at the Federal Funds Effective
Rate for each day during the period commencing on the date of such demand and
ending on the date such amount is received. The failure of any Lender to make
available to the Administrative Agent its Pro Rata Share of any such
unreimbursed advance under this Section 10.3 shall neither relieve any other
Lender of its obligation hereunder to make available to the Administrative
Agent such other Lender’s Pro Rata Share of such advance on the date such
payment is to be made nor increase the obligation of any other Lender to make
such payment to the Administrative Agent. All outstanding principal of, and
interest on, advances made under this Section 10.3 shall constitute Obligations
secured by the Collateral until paid in full by the Borrower.

                10.4 Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.

                10.5 Entire Agreement. The Loan Documents and the letter agreement
between the Administrative Agent and the Borrower dated May 23, 2002 embody the
entire agreement and understanding among the Borrower, the Administrative Agent
and the Lenders and supersede all prior agreements and understandings among the
Borrower, the Administrative Agent and the Lenders relating to the subject
matter thereof.

                10.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other Lender (except to the extent to
which the Administrative Agent is authorized to act as such). The failure of
any Lender to perform any of its obligations hereunder shall not relieve any
other Lender from any of its obligations hereunder. This Agreement shall

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 not be construed so as to confer any right or benefit upon any Person
other than the parties to this Agreement and their respective successors and
assigns.

                10.7 Expenses; Indemnification.

		
	 	        (A) Expenses. The Borrower shall reimburse the Administrative Agent
and the Arranger for any reasonable costs, and out-of-pocket expenses
(including reasonable attorneys’ and paralegals’ fees and time charges of
attorneys and paralegals for the Administrative Agent, paid or incurred
by the Administrative Agent or the Arranger in connection with the
preparation, negotiation, execution, delivery, syndication, distribution
(including, via the internet), review, amendment, modification, and
administration of the Loan Documents. The Borrower also agrees to
reimburse the Administrative Agent and the Arranger and the Lenders for
any costs, and out-of-pocket expenses (including reasonable attorneys’
and paralegals’ fees and time charges of attorneys and paralegals for the
Administrative Agent and the Arranger and the Lenders) paid or incurred
by the Administrative Agent or the Arranger or any Lender in connection
with the collection of the Obligations and enforcement of their rights
and remedies under the Loan Documents. In addition to expenses set forth
above, the Borrower agrees to reimburse the Administrative Agent,
promptly after the Administrative Agent’s request therefor, for each
audit, or other business analysis conducted in accordance with the terms
hereof and performed by or for the benefit of the Lenders in connection
with this Agreement or the other Loan Documents in an amount equal to the
Administrative Agent’s then customary charges for each person employed to
perform such audit or analysis, plus all reasonable costs and expenses
(including without limitation, travel expenses) incurred by the
Administrative Agent in the performance of such audits or analysis.
Administrative Agent shall provide the Borrower with a detailed statement
of all reimbursements requested under this Section 10.7(A).
	 
	 	        (B) Indemnity. The Borrower further agrees to defend, protect and
indemnify the Administrative Agent, the Arranger and each and all of the
Lenders and each of their respective Affiliates extending financial
accommodations pursuant to any of the Loan Documents, and each of such
Administrative Agent’s, Arranger’s, Lender’s, or Affiliate’s respective
officers, directors, trustees, investment advisors, employees, attorneys
and agents (including, without limitation, those retained in connection
with the satisfaction or attempted satisfaction of any of the conditions
set forth in Article V) (collectively, the “Indemnitees”) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses of any kind or nature
whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding), imposed on,
incurred by, or asserted against such Indemnitees in any manner relating
to or arising out of:

		
	 	      (i) this Agreement or any of the other Loan Documents or any of
the Transaction Documents, or any act, event or transaction related or
attendant thereto or to the IITRI Acquisition, the ESOT Transaction,
the making of the Loans, and the issuance of and participation in
Letters of Credit hereunder, the management of such Loans or Letters
of Credit, the use or intended use of the proceeds of the Loans or

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	 	Letters of Credit hereunder, or any of the other transactions
contemplated by the Transaction Documents; or
	 
	 	      (ii) any costs, liabilities, obligations, responsibilities,
losses, damages, personal injury, death, punitive damages, economic
damages, consequential damages, treble damages, intentional, willful
or wanton injury, damage or threat to the environment, natural
resources or public health or welfare, costs and expenses (including,
without limitation, reasonable attorney, expert and consulting fees
and costs of investigation, feasibility or remedial action studies),
fines, penalties and monetary sanctions, interest, direct or indirect,
known or unknown, absolute or contingent, past, present or future
relating to the violation or alleged violation of any Environmental,
Health or Safety Requirements of Law arising from or in connection
with the past, present or future operations of the Borrower, its
Subsidiaries or any of their respective predecessors in interest, or,
the past, present or future environmental, health or safety condition
of any respective property of the Borrower or its Subsidiaries, the
presence of asbestos-containing materials at any respective property
of the Borrower or its Subsidiaries or the Release or threatened
Release of any Contaminant into the environment (collectively, the
“Indemnified Matters”);

provided, however, the Borrower shall have no obligation to an Indemnitee
hereunder (i) with respect to Indemnified Matters caused solely by or resulting
solely from the willful misconduct or Gross Negligence of such Indemnitee with
respect to the Loan Documents, as determined by the final non-appealed judgment
of a court of competent jurisdiction, or (ii) for reimbursement of amounts
asserted against any Indemnitee by the Borrower, any of its Subsidiaries or any
other Indemnitee (each a “Claimant”) and paid by such Indemnitee on any final,
non-appealable judgement in the Claimant’s favor against such Indemnitee by a
court of competent jurisdiction. If the undertaking to indemnify and pay set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the Borrower shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law, to the payment
and satisfaction of all Indemnified Matters incurred by the Indemnitees.

		
	 	        (C) Waiver of Certain Claims; Settlement of Claims. The Borrower
further agrees to assert no claim against any of the Indemnitees on any
theory of liability seeking consequential, special, indirect, exemplary
or punitive damages. No settlement shall be entered into by the Borrower
or any of its Subsidiaries with respect to any claim, litigation,
arbitration or other proceeding relating to the Indemnified Matters
(whether or not the Administrative Agent or any Lender or any Indemnitee
is a party thereto) unless such settlement releases all Indemnitees from
any and all liability with respect thereto.
	 
	 	        (D) Survival of Agreements. The obligations and agreements of the
Borrower under this Section 10.7 shall survive the termination of this
Agreement.

                10.8 Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to
each of the Lenders.

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                10.9 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.

                If any changes in generally accepted accounting principles are hereafter
required or permitted and are adopted by the Borrower or any of its
Subsidiaries with the agreement of its independent certified public accountants
and such changes result in a change in the method of calculation of any of the
financial covenants, tests, restrictions or standards herein or in the related
definitions or terms used therein (“Accounting Changes”), the parties hereto
agree, at the Borrower’s request, to enter into negotiations, in good faith, in
order to amend such provisions in a credit neutral manner so as to reflect
equitably such changes with the desired result that the criteria for evaluating
the Borrower’s and its Subsidiaries’ financial condition shall be the same in
all material respects after such changes as if such changes had not been made;
provided, however, that no accounting change shall be given effect in such
calculations until such provisions are amended in a manner reasonably
satisfactory to the Required Lenders. In the event such amendment is entered
into, all references in this Agreement to Agreement Accounting Principles means
generally accepted accounting principles as of the date of such amendment.
After the occurrence of any such accounting change but until such time as such
amendment has been entered into, all financial statements and other financial
reports required to be delivered under this Agreement shall be prepared and
delivered in accordance with Agreement Accounting Principles.

                10.10 Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.

                10.11 Nonliability of Lenders. The relationship between the Borrower and
the Lenders and the Administrative Agent shall be solely that of borrower and
lender. Neither the Administrative Agent nor any Lender shall have any
fiduciary responsibilities to the Borrower. Neither the Administrative Agent
nor any Lender undertakes any responsibility to the Borrower to review or
inform the Borrower of any matter in connection with any phase of the
Borrower’s business or operations.

                10.12 GOVERNING LAW. ANY DISPUTE BETWEEN THE BORROWER AND ANY AGENT, ANY
LENDER OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, SHALL BE
RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING § 735 ILCS 105/5-1 ET
SEQ., BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE
STATE OF ILLINOIS. THE PARTIES TO THIS AGREEMENT HAVE VOLUNTARILY ELECTED THAT
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL LOANS BE GOVERNED BY THE LAWS
OF THE STATE OF ILLINOIS, WHICH IS THE PRINCIPAL PLACE OF BUSINESS OF THE
ADMINISTRATIVE AGENT.

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                10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.

		
	 	        (A) NON-EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION
(B), EACH OF THE PARTIES HERETO AGREES AND ACCEPTS FOR ALL DISPUTES AMONG
THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS THE NON-EXCLUSIVE JURISDICTION OF THE
STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE PARTIES
HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE
PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION
(A) ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE.
	 
	 	        (B) OTHER JURISDICTIONS. THE BORROWER AGREES THAT THE
ADMINISTRATIVE AGENT, ANY LENDER OR ANY OTHER HOLDER OF SECURED
OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST THE BORROWER OR ITS
RESPECTIVE PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO
(1) OBTAIN PERSONAL JURISDICTION OVER THE BORROWER OR (2) REALIZE ON THE
COLLATERAL, OR (3) IN ORDER TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF SUCH PERSON. THE BORROWER AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING THAT IS SEPARATE
FROM ANY PROCEEDING BROUGHT UNDER CLAUSE (A) ABOVE AND THAT IS BROUGHT BY
SUCH PERSON SOLELY TO REALIZE ON ANY SECURITY FOR THE OBLIGATIONS OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. THE
BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION (B).
	 
	 	        (C) SERVICE OF PROCESS. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED
TO LIMIT THE ABILITY OF ANY AGENT OR THE HOLDERS OF THE OBLIGATIONS TO
SERVE ANY WRITS, SERVICE OF PROCESS OR SUMMONSES IN ANY SUIT ACTION OR
PROCEEDING ISSUED BY ANY COURT REFERRED TO IN THIS SECTION 11.13 IN ANY
MANNER PERMITTED BY APPLICABLE LAW.
	 
	 	        (D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND
CONSENTS THAT

110

 

		
	 	ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
	 
	 	        (E) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF SECTION 10.7 AND THIS SECTION 10.13, WITH ITS COUNSEL.

                10.14 Other Transactions. Each of the Administrative Agent, the Arranger,
the Lenders, the Swing Line Bank, the Issuing Banks and the Borrower
acknowledge that the Lenders (or Affiliates of the Lenders) may, from time to
time, effect transactions for their own accounts or the accounts of customers,
and hold positions in loans or options on loans of the Borrower, the Borrower’s
Subsidiaries and other companies that may be the subject of this credit
arrangement and nothing in this Agreement shall impair the right of any such
Person to enter into any such transaction (to the extent it is not expressly
prohibited by the terms of this Agreement) or give any other Person any claim
or right of action hereunder as a result of the existence of the credit
arrangements hereunder, all of which are hereby waived. In addition, certain
Affiliates of one or more of the Lenders are or may be securities firms and as
such may effect, from time to time, transactions for their own accounts or for
the accounts of customers and hold positions in securities or options on
securities of the Borrower, the Borrower’s Subsidiaries and other companies
that may be the subject of this credit arrangement and nothing in this
Agreement shall impair the right of any such Person to enter into any such
transaction (to the extent it is not expressly prohibited by the terms of this
Agreement) or give any other Person any claim or right of action hereunder as a
result of the existence of the credit arrangements hereunder, all of which are
hereby waived. Each of the Administrative Agent, the Arranger, the Lenders,
the Swing Line Bank, the Issuing Banks and the Borrower acknowledges and
consents to these multiple roles, and further acknowledges that the fact that
any such unit or Affiliate is providing another service or product or proposal
therefor to the Borrower or any of its Subsidiaries does not mean that such
service, product, or proposal is or will be acceptable to any of the
Administrative Agent, the Arranger, the Lenders, the Swing Line Bank or the
Issuing Banks.

                10.15 Subordination of Intercompany Indebtedness. The Borrower agrees
that any and all claims of the Borrower against any of its Subsidiaries that is
a Guarantor with respect to any “Intercompany Indebtedness” (as hereinafter
defined), any endorser, obligor or any other guarantor of all or any part of
the Obligations, or against any of its properties shall be subordinate and
subject in right of payment to the prior payment, in full and in cash, of all
Obligations and Hedging Obligations under Hedging Arrangements entered into
with the Lenders or any of their Affiliates (“Designated Hedging Agreements”);
provided that, and not in contravention of the foregoing, so long as no Default
has occurred and is continuing the Borrower may make loans to and receive
payments in the ordinary course with respect to such Intercompany Indebtedness
from each such Guarantor to the extent not prohibited by the terms of this
Agreement and the other Loan Documents. Notwithstanding any right of the
Borrower to ask, demand, sue for, take or receive any payment from any
Guarantor, all rights, liens and

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 security interests of the Borrower, whether now or hereafter arising and
howsoever existing, in any assets of any Guarantor shall be and are
subordinated to the rights of the holders of the Obligations and the
Administrative Agent in those assets. The Borrower shall have no right to
possession of any such asset or to foreclose upon any such asset, whether by
judicial action or otherwise, unless and until all of the Obligations (other
than contingent indemnity obligations) and the Hedging Obligations under
Designated Hedging Agreements shall have been fully paid and satisfied (in
cash) and all financing arrangements pursuant to any Loan Document or
Designated Hedging Agreement have been terminated. If all or any part of the
assets of any Guarantor, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of such Guarantor,
whether partial or complete, voluntary or involuntary, and whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the benefit
of creditors or any other action or proceeding, or if the business of any such
Guarantor is dissolved or if substantially all of the assets of any such
Guarantor are sold, then, and in any such event (such events being herein
referred to as an “Insolvency Event”), any payment or distribution of any kind
or character, either in cash, securities or other property, which shall be
payable or deliverable upon or with respect to any indebtedness of any
Guarantor to the Borrower (“Intercompany Indebtedness”) shall be paid or
delivered directly to the Administrative Agent for application on any of the
Obligations and the Hedging Obligations under Designated Hedging Agreements,
due or to become due, until such Obligations or Hedging Obligations (other than
contingent indemnity obligations) shall have first been fully paid and
satisfied (in cash). Should any payment, distribution, security or instrument
or proceeds thereof be received by the Borrower upon or with respect to the
Intercompany Indebtedness after an Insolvency Event prior to the satisfaction
of all of the Obligations (other than contingent indemnity obligations) and the
Hedging Obligations under Designated Hedging Agreements and the termination of
all financing arrangements pursuant to any Loan Document and/or Designated
Hedging Agreement, the Borrower shall receive and hold the same in trust, as
trustee, for the benefit of the holders of the Obligations and such Hedging
Obligations and shall forthwith deliver the same to the Administrative Agent,
for the benefit of such Persons, in precisely the form received (except for the
endorsement or assignment of the Borrower where necessary), for application to
any of the Obligations and such Hedging Obligations, due or not due, and, until
so delivered, the same shall be held in trust by the Borrower as the property
of the holders of the Obligations and such Hedging Obligations. If the
Borrower fails to make any such endorsement or assignment to the Administrative
Agent, the Administrative Agent or any of its officers or employees are
irrevocably authorized to make the same. The Borrower agrees that until the
Obligations (other than the contingent indemnity obligations) and such Hedging
Obligations have been paid in full (in cash) and satisfied and all financing
arrangements pursuant to any Loan Document and all Designated Hedging
Agreements have been terminated, the Borrower will not assign or transfer to
any Person (other than the Administrative Agent) any claim the Borrower has or
may have against any Guarantor.

                10.16 Lender’s Not Utilizing Plan Assets. Each Lender represents and
warrants to the Borrower and the Administrative Agent that none of the
consideration used by such Lender to make or fund its Loans constitutes for any
purpose of ERISA or Section 4975 of the Code assets of any “plan” as defined in
Section 3(3) of ERISA or Section 4975 of the Code and the rights and interests
of such Lender in and under the Loan Documents shall not constitute such “plan
assets” under ERISA.

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ARTICLE XI: THE ADMINISTRATIVE AGENT

                11.1 Appointment; Nature of Relationship. LaSalle is appointed by the
Holders of Secured Obligations as the Administrative Agent hereunder and under
each other Loan Document, and each of the Holders of Secured Obligations
irrevocably authorizes the Administrative Agent to act as the contractual
representative of such Holder of Secured Obligations with the rights and duties
expressly set forth herein and in the other Loan Documents. The Administrative
Agent agrees to act as such contractual representative upon the express
conditions contained in this Article XI. Notwithstanding the use of the
defined term “Administrative Agent,” it is expressly understood and agreed that
the Administrative Agent shall not have any fiduciary responsibilities to any
Holder of Secured Obligations by reason of this Agreement and that the
Administrative Agent is merely acting as the representative of the Holders of
Secured Obligations with only those duties as are expressly set forth in this
Agreement and the other Loan Documents. In its capacity as the Holders of
Secured Obligations’ contractual representative, the Administrative Agent (A)
does not assume any fiduciary duties to any of the Holders of Secured
Obligations, (B) is a “representative” of the Holders of Secured Obligations
within the meaning of Section 9-102 of the Uniform Commercial Code and (C) is
acting as an independent contractor, the rights and duties of which are limited
to those expressly set forth in this Agreement and the other Loan Documents.
Each of the Holders of Secured Obligations, for itself and on behalf of its
affiliates as Holders of Secured Obligations, agrees to assert no claim against
the Administrative Agent on any agency theory or any other theory of liability
for breach of fiduciary duty, all of which claims each Holder of Secured
Obligations waives.

                11.2 Powers. The Administrative Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the
Administrative Agent by the terms of each thereof, together with such powers as
are reasonably incidental thereto. The Administrative Agent shall have no
implied duties or fiduciary duties or responsibilities to the Holders of
Secured Obligations, or any obligation to the Holders of Secured Obligations,
to take any action hereunder or under any of the other Loan Documents except
any action specifically provided by the Loan Documents required to be taken by
the Administrative Agent.

                11.3 General Immunity. Neither the Administrative Agent nor any of its
directors, officers, agents, employees or legal counsel shall be liable to the
Borrower, the Holders of Secured Obligations or any Holder of Secured
Obligations for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
to the extent such action or inaction is found in a final judgment by a court
of competent jurisdiction to have arisen solely from the Gross Negligence or
willful misconduct of such Person.

                11.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc.
Neither the Administrative Agent nor any of its directors, officers, agents,
employees or legal counsel shall be responsible for or have any duty to
ascertain, inquire into, or verify (A) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (B) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document; (C) the satisfaction of any
condition specified in Article V, except receipt of items required to be
delivered solely to the Administrative Agent; (D) the

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 existence or possible existence of any Default or Unmatured Default or (E)
the validity, effectiveness or genuineness of any Loan Document or any other
instrument or writing furnished in connection therewith. The Administrative
Agent shall not be responsible to any Holder of Secured Obligations for any
recitals, statements, representations or warranties herein or any of the other
Loan Documents, for the perfection or priority of the Liens on any of the
Collateral, or for the execution, effectiveness, genuineness, validity,
legality, enforceability, collectibility, or sufficiency of this Agreement or
any of the other Loan Documents or the transactions contemplated thereby, or
for the financial condition of any guarantor of any or all of the Obligations,
the Borrower or any of its Subsidiaries.

                11.5 Action on Instructions of Lenders; Actions with Respect to Defaults.
The Administrative Agent shall have the right to request instructions from the
Lenders at any time. If the Administrative Agent shall request instructions
from the Lenders with respect to any act or action (including the failure to
act) in connection with this Agreement or any other Loan Document, the
Administrative Agent shall be entitled to refrain from such act or taking such
action unless and until the Administrative Agent shall have received
instructions signed by the Required Lenders (or all of the Lenders in the event
that and to the extent that this Agreement or any other Loan Document expressly
requires such), and the Administrative Agent shall not incur liability to any
Person by reason of so refraining, and such instructions and any action taken
or failure to act pursuant thereto shall be binding on all of the Holders of
Secured Obligations and on all owners of Loans and on all Holders of Secured
Obligations. Without limiting the foregoing, no Holder of Secured Obligation
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent acting or refraining from acting hereunder
in accordance with the instructions of all of the Lenders. The Administrative
Agent shall be fully justified in failing or refusing to take any action
hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action. In addition to the Administrative Agent’s right to
take actions on its own accord as permitted under this Agreement, the
Administrative Agent shall take such action with respect to an Unmatured
Default or Default as shall be directed by the Required Lenders; provided, that
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Unmatured Default or
Default as it shall deem advisable and in the best interests of the Holders of
Secured Obligations.

                11.6 Employment of Agents and Counsel. The Administrative Agent may
execute any of its duties as the Administrative Agent hereunder and under any
other Loan Document by or through employees, agents, and attorneys-in-fact and
shall not be liable to the Holders of Secured Obligations, except as to money
or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. The Administrative Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Administrative Agent
and the Holders of Secured Obligations and all matters pertaining to the
Administrative Agent’s duties hereunder and under any other Loan Document.

                11.7 Reliance on Documents; Counsel. The Administrative Agent shall be
entitled to rely upon any notice, consent, certificate, affidavit, letter,
telegram, statement, paper

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 or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Administrative Agent,
which counsel may be employees of the Administrative Agent.

                11.8 The Administrative Agent’s Reimbursement and Indemnification. The
Holders of Secured Obligations agree to reimburse and indemnify the
Administrative Agent ratably in proportion to its Pro Rata Share (A) for any
amounts not reimbursed by the Borrower for which the Administrative Agent is
entitled to reimbursement by the Borrower under the Loan Documents, (B) for any
other expenses incurred by the Administrative Agent on behalf of the Holders of
Secured Obligations, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents and (C) for any
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever which
may be imposed on, incurred by or asserted against the Administrative Agent in
any way relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby, or
the enforcement of any of the terms thereof or of any such other documents,
provided that no Holder of Secured Obligations shall be liable for any of the
foregoing to the extent any of the foregoing is found in a final non-appealable
judgment by a court of competent jurisdiction to have arisen solely from the
Gross Negligence or willful misconduct of the Administrative Agent.

                11.9 Rights as a Lender. With respect to its Revolving Loan Commitment,
its Term Loan Commitment, Loans made by it, and Letters of Credit issued by it,
the Administrative Agent shall have the same rights and powers hereunder and
under any other Loan Document as any Lender or Issuing Bank and may exercise
the same as though it were not the Administrative Agent, and the term “Lender”
or “Lenders”, “Issuing Bank” or “Issuing Banks” shall, unless the context
otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent may accept deposits from, lend money to,
and generally engage in any kind of trust, debt, equity or other transaction,
in addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which such Person is not
prohibited hereby from engaging with any other Person.

                11.10 Lender Credit Decision. Each Holder of Secured Obligations
acknowledges that it has, independently and without reliance upon the
Administrative Agent, the Arranger or any other Holder of Secured Obligations
and based on the financial statements prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan
Documents. Each Holder of Secured Obligations also acknowledges that it will,
independently and without reliance upon the Administrative Agent, the Arranger
or any other Holder of Secured Obligations and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.

                11.11 Successor Administrative Agent. The Administrative Agent may resign
at any time by giving written notice thereof to the Lenders and the Borrower.
Upon any such resignation, the Required Lenders shall have the right (with, so
long as no Default is continuing, the Borrower’s consent (which consent shall
not be unreasonably withheld or delayed)) to appoint, on behalf of the Borrower
and the Holders of Secured Obligations, a successor

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 Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within thirty days after the retiring Administrative Agent’s giving
notice of resignation, then the retiring Administrative Agent may appoint
(with, so long as no Default or Unmatured Default is continuing, the Borrower’s
consent), on behalf of the Borrower and the Holders of Secured Obligations, a
successor Administrative Agent. Notwithstanding anything herein to the
contrary, so long as no Default has occurred and is continuing, each such
successor Administrative Agent shall be subject to approval by the Borrower,
which approval shall not be unreasonably withheld or delayed. Such successor
Administrative Agent shall be a commercial bank or other financial institution
having capital and retained earnings of at least $500,000,000. Upon the
acceptance of any appointment as the Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents. After any retiring
Administrative Agent’s resignation hereunder as Administrative Agent, the
provisions of this Article XI shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Administrative Agent hereunder and under the other Loan Documents.

                11.12 Collateral Documents; Collateral.

		
	 	        (A) Authority to Take Action. Each Holder of Secured Obligations
authorizes the Administrative Agent to enter into each of the Collateral
Documents to which it is a party and to take all action contemplated by
such documents. Each Holder of Secured Obligations agrees that no Holder
of Secured Obligations (other than the Administrative Agent) shall have
the right individually to seek to realize upon the security granted by
any Collateral Document, it being understood and agreed that such rights
and remedies may be exercised solely by the Administrative Agent for the
benefit of the Holders of Secured Obligations upon the terms of the
Collateral Documents.
	 
	 	        (B) Authority to Execute and Deliver. In the event that any
Collateral is hereafter pledged by any Person as collateral security for
the Obligations, the Administrative Agent is hereby authorized to execute
and deliver on behalf of the Holders of Secured Obligations any Loan
Documents necessary or appropriate to grant and perfect a Lien on such
Collateral in favor of the Administrative Agent on behalf of the Holders
of Secured Obligations.
	 
	 	        (C) Authority to Release Liens. The Holders of Secured Obligations
hereby authorize the Administrative Agent, at its option and in its
discretion, to release any Lien granted to or held by the Administrative
Agent upon any Collateral (i) upon termination of the Commitments and
payment in cash and satisfaction of all of the Obligations at any time
arising under or in respect of this Agreement or the Loan Documents or
the transactions contemplated hereby or thereby; (ii) as permitted by,
but only in accordance with, the terms of the applicable Loan Document;
or (iii) if approved, authorized or ratified in writing by the Required
Lenders, unless such release is required to be approved by all of the
Lenders hereunder. Upon request by the Administrative Agent at any time,

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	 	the Lenders will confirm in writing the Administrative Agent’s
authority to release particular types or items of Collateral pursuant to
this Section 11.12(C).
	 
	 	        (D) Additional Authority. Upon any sale or transfer of assets
constituting Collateral which is expressly permitted pursuant to the
terms of any Loan Document, or consented to in writing by the Required
Lenders or all of the Lenders, as applicable, and upon at least five (5)
Business Days’ prior written request by the Borrower, the Administrative
Agent shall (and is hereby irrevocably authorized by the Holders of
Secured Obligations to) execute such documents as may be necessary to
evidence the release of the Liens granted to the Administrative Agent for
the benefit of the Holders of Secured Obligations herein or pursuant
hereto upon the Collateral that was sold or transferred; provided,
however, that (i) the Administrative Agent shall not be required to
execute any such document on terms which, in the Administrative Agent’s
opinion, would expose the Administrative Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any
manner discharge, affect or impair the Secured Obligations or any Liens
upon (or obligations of the Borrower or any Subsidiary in respect of) all
interests retained by the Borrower or any Subsidiary, including (without
limitation) the proceeds of the sale, all of which shall continue to
constitute part of the Collateral.
	 
	 	        (E) No Obligation to Monitor Collateral. The Administrative Agent
shall have no obligation whatsoever to the Holders of Secured Obligations
or to any other Person to assure that the Collateral exists or is owned
by the Borrower or any of its Subsidiaries or is cared for, protected or
insured or that the Liens granted to the Administrative Agent under the
Loan Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any
manner or under any duty of care, disclosure or fidelity any of the
rights, authorities and powers granted or available to the Administrative
Agent in this Article XI or in any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Administrative Agent may act in
any manner it may deem appropriate, in its sole discretion, given the
Administrative Agent’s own interest in the Collateral as one of the
Holders of Secured Obligations and that the Administrative Agent shall
have no duty or liability whatsoever to the Holders of Secured
Obligations, except for its Gross Negligence or willful misconduct.

                11.13 Arranger. The Arranger shall have no right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such. Without limiting the foregoing, the
Arranger shall not have or be deemed to have a fiduciary relationship with any
Holder of Secured Obligations. Each Holder of Secured Obligations hereby makes
the same acknowledgements with respect to the Arranger as it makes with respect
to the Administrative Agent in Section 11.10.

ARTICLE XII: SETOFF; RATABLE PAYMENTS

                12.1 Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if any Default occurs and is continuing, any
Indebtedness from any Lender

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 to the Borrower (including all account balances, whether provisional or
final and whether or not collected or available) may be offset and applied
toward the payment of the Obligations owing to such Lender, whether or not the
Obligations, or any part hereof, shall then be due. Such Lender shall give
prompt notice to the Borrower and the Administrative Agent of any such offset.

                12.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
Sections 4.1, 4.2 or 4.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion
of the Loans held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligation or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to the obligations owing to
them. In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.

                12.3 Application of Payments. The Administrative Agent shall, unless
otherwise specified at the direction of the Required Lenders which direction
shall be consistent with the last two sentences of this Section 12.3, apply all
payments and prepayments in respect of any Obligations and all proceeds of the
Collateral in the following order:

		
	 	      (i) first, to pay interest on and then principal of any portion
of the Loans which the Administrative Agent may have advanced on
behalf of any Lender for which the Administrative Agent has not then
been reimbursed by such Lender or the Borrower;
	 
	 	      (ii) second, to pay interest on and then principal of any advance
made under Section 10.3 for which the Administrative Agent has not
then been paid by the Borrower or reimbursed by the Lenders;
	 
	 	      (iii) third, to the ratable payment of the Obligations in respect
of any fees, expenses, reimbursements or indemnities then due to the
Administrative Agent;
	 
	 	      (iv) fourth, to pay Obligations in respect of any fees, expenses,
reimbursements or indemnities then due to the Lenders and the
issuer(s) of Letters of Credit;
	 
	 	      (v) fifth, to pay interest due in respect of Swing Line Loans;
	 
	 	      (vi) sixth, to pay interest due in respect of Loans.
	 
	 	      (vii) seventh, to the ratable payment or prepayment of principal
outstanding on Swing Line Loans;
	 
	 	      (viii) eighth, to the ratable payment or prepayment of principal
outstanding on the Term Loans;

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	 	      (ix) ninth, to the ratable payment or prepayment of principal
outstanding on Loans (other than Swing Line Loans and Term Loans) and
Reimbursement Obligations in such order as the Administrative Agent
may determine;
	 
	 	      (x) tenth, to the ratable payment or prepayment of Hedging
Obligations under Hedging Agreements in such order as the
Administrative Agent may determine in its sole discretion;
	 
	 	      (xi) eleventh, to provide required cash collateral, if required
pursuant to Section 3.11 and
	 
	 	      (xii) twelfth, to the ratable payment of all other Obligations.

Unless otherwise required by the terms of this Agreement, all principal
payments in respect of Loans (other than Swing Line Loans) shall be applied
first, to repay outstanding Floating Rate Loans, and then to repay outstanding
Eurodollar Rate Loans with those Eurodollar Rate Loans which have earlier
expiring Interest Periods being repaid prior to those which have later expiring
Interest Periods. The order of priority set forth in this Section 12.3 and the
related provisions of this Agreement are set forth solely to determine the
rights and priorities of the Administrative Agent, the Lenders, the Swing Line
Bank and the issuer(s) of Letters of Credit as among themselves. The order of
priority set forth in clauses (iv) through (x) of this Section 12.3 may at any
time and from time to time be changed at the direction of the Lenders without
necessity of notice to or consent of or approval by the Borrower, or any other
Person; provided, that the order of priority of payments in respect of Swing
Line Loans may be changed only with the prior written consent of the Swing Line
Bank. The order of priority set forth in clauses (i) through (iii) of this
Section 12.3 may be changed only with the prior written consent of the
Administrative Agent, and, in the case of clause (iii), with the prior written
consent of the Arranger.

                12.4 Relations Among Lenders.

		
	 	        (A) No Action Without Consent. Except with respect to the exercise
of set-off rights of any Lender in accordance with Section 12.1, the
proceeds of which are applied in accordance with this Agreement, each
Lender agrees that it will not take any action, nor institute any actions
or proceedings, against the Borrower or any other obligor hereunder or
with respect to any Loan Document, without the prior written consent of
the Required Lenders or, as may be provided in this Agreement or the
other Loan Documents, with the consent of the Administrative Agent.
	 
	 	        (B) Not Partners; No Liability. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of,
or (except as otherwise set forth herein in case of the Administrative
Agent) authorized to act for, any other Lender. The Administrative Agent
shall have the exclusive right on behalf of the Lenders to enforce the
payment of the principal of and interest on any Loan after the date such
principal or interest has become due and payable pursuant to the terms of
this Agreement.

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ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

                13.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Lenders and their respective successors and assigns, except that (A) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents without the consent of all of the Lenders, and any such
assignment in violation of this Section 13.1(A) shall be null and void, and (B)
any assignment by any Lender must be made in compliance with Section 13.3
hereof. Notwithstanding clause (B) of this Section 13.1 or Section 13.3, (i)
any Lender may at any time, without the consent of the Borrower or the
Administrative Agent, assign all or any portion of its rights under this
Agreement to a Federal Reserve Bank and (ii) any Lender which is a fund or
commingled investment vehicle that invests in commercial loans in the ordinary
course of its business may at any time, without the consent of the Borrower or
the Administrative Agent, pledge or assign all or any part of its rights under
this Agreement to a trustee or other representative of holders of obligations
owed or securities issued by such Lender as collateral to secure such
obligations or securities; provided, however, that no such assignment or pledge
shall release the transferor Lender from its obligations hereunder, unless and
until the parties thereto have complied with the provisions of Section 13.3.
The Administrative Agent may treat each Lender as the owner of the Loans made
by such Lender hereunder for all purposes hereof unless and until such Lender
complies with Section 13.3 hereof in the case of an assignment thereof or, in
the case of any other transfer, a written notice of the transfer is filed with
the Administrative Agent. Any assignee or transferee of a Loan, Commitment,
L/C Interest or any other interest of a Lender under the Loan Documents agrees
by acceptance thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the owner of any
Loan, shall be conclusive and binding on any subsequent owner, transferee or
assignee of such Loan.

                13.2 Participations.

		
	 	        (A) Permitted Participants; Effect. Subject to the terms set forth
in this Section 13.2, any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one
or more banks or other entities that are U.S. Qualified Persons
(“Participants”) participating interests in any Loan owing to such
Lender, any Revolving Loan Commitment of such Lender, any L/C Interest of
such Lender or any other interest of such Lender under the Loan Documents
on a pro rata or non-pro rata basis. Notice of such participation to the
Borrower and the Administrative Agent shall be required prior to any
participation becoming effective with respect to a Participant which is
not a Lender or an Affiliate thereof. Upon receiving said notice, the
Administrative Agent shall record the participation in the Register it
maintains. Moreover, notwithstanding such recordation, such
participation shall not be considered an assignment under Section 13.3 of
this Agreement and such Participant shall not be considered a Lender. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender’s obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, such Lender
shall remain the owner of all Loans made by it for all purposes under the
Loan Documents, all amounts payable by the Borrower under this Agreement
shall be determined as if such Lender had not sold such

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	 	participating interests, and the Borrower and the Administrative
Agent shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under the Loan
Documents except that, for purposes of Article IV hereof, the
Participants shall be entitled to the same rights as if they were
Lenders.
	 
	 	        (B) Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Loan, Letter of
Credit or Revolving Loan Commitment in which such Participant has an
interest which forgives principal, interest or Letter of Credit or
commitment fees or reduces the interest rate or Letter of Credit or
commitment fees payable pursuant to the terms of this Agreement with
respect to any such Loan or Revolving Loan Commitment, or postpones any
date fixed for any regularly-scheduled payment (but not any prepayment)
of principal of, or interest or Letter of Credit or commitment fees on,
any such Loan or Revolving Loan Commitment, or releases all or
substantially all of the Collateral, if any, securing any such Loan or
Letter of Credit.
	 
	 	        (C) Benefit of Setoff. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Section 12.1
hereof in respect to its participating interest in amounts owing under
the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the
Loan Documents, provided that each Lender shall retain the right of
setoff provided in Section 12.1 hereof with respect to the amount of
participating interests sold to each Participant except to the extent
such Participant exercises its right of setoff. The Lenders agree to
share with each Participant, and each Participant, by exercising the
right of setoff provided in Section 12.1 hereof, agrees to share with
each Lender, any amount received pursuant to the exercise of its right of
setoff, such amounts to be shared in accordance with Section 12.2 as if
each Participant were a Lender.

                13.3 Assignments.

		
	 	        (A) Permitted Assignments.

		
	 	      (i) Any Lender (each such assigning Lender under this Section
13.3 being a “Seller”) may, in accordance with applicable law, at any
time assign to one or more banks or other entities (other than the
Borrower or any of its Affiliates) that are U.S. Qualified Persons
(“Purchasers”) all or a portion of its rights and obligations under
this Agreement and the other Loan Documents (including, without
limitation, its Revolving Loan Commitment, all Loans owing to it, all
of its participation interests in existing Letters of Credit and Swing
Line Loans, and its obligation to participate in additional Letters of
Credit and Swing Line Loans hereunder) in accordance with the
provisions of this Section 13.3. Each assignment shall be of a
constant, and not a varying, ratable percentage of all of the Seller’s
rights and obligations under this Agreement. Such assignment shall be
substantially in the form of Exhibit D hereto and shall not be
permitted hereunder unless such assignment is either for all of such
Seller’s rights and obligations under the Loan Documents or, without
the prior written consent of the Administrative Agent, involves loans
and commitments in an

121

 

		
	 	aggregate amount of at least $5,000,000 (or, if less, all of such
Lender’s rights and obligations under the Loan Documents, and which
minimum amount shall not apply to any assignment between Lenders. The
written consent of the Administrative Agent, and, prior to the
occurrence of a Default, and only with respect to any assignment other
than to another Lender, the Borrower (which consent, in each such
case, shall not be unreasonably withheld or delayed), shall be
required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender, an Affiliate of such assigning Lender
or Approved Fund of such assigning Lender; provided, no consent of the
Borrower shall be required in connection with any assignment by any
Lender consummated after consultation with the Borrower during the
Syndication Period.
	 
	 	      (ii) Notwithstanding anything to the contrary contained herein,
any Lender (each such Lender, a “Granting Bank”) may grant to a
special purpose funding vehicle (each such special purpose funding
vehicle, a “SPC”), identified as such in writing from time to time by
the applicable Granting Bank to the Administrative Agent and the
Borrower, the option to provide to the Borrower all or any part of any
Advance that such Granting Bank would otherwise be obligated to make
to the Borrower pursuant to this Agreement; provided, that (i) nothing
herein shall constitute a commitment by any SPC to make any Advance,
(ii) if an SPC elects not to exercise such option or otherwise fails
to provide all or any part of such Advance, the applicable Granting
Bank shall be obligated to make such Advance pursuant to the terms
hereof. The making of an Advance by any SPC hereunder shall utilize
the Revolving Loan Commitment of the applicable Granting Bank to the
same extent, and as if, such Advance were made by such Granting Bank.
Each party hereto hereby agrees that no SPC shall be liable for any
indemnity or other similar payment obligation under this Agreement
(all liability for which shall remain with the applicable Granting
Bank). All notices hereunder to any Granting Bank or the related SPC,
and all payments in respect of the Obligations due to such Granting
Bank or the related SPC, shall be made to such Granting Bank. In
addition, each Granting Bank shall vote as a Lender hereunder without
giving effect to any assignment under this Section 13.3(A)(ii), and no
SPC shall have any vote as a Lender under this Agreement for any
purpose. In furtherance of the foregoing, each party hereto hereby
agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after
the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against, or join
any other person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof in relation
to matters arising under this Agreement. In addition, notwithstanding
anything to the contrary contained in this Section 13.3, any SPC may
(i) with notice to, but without the prior written consent of, the
Borrower and the Administrative Agent and without paying any
processing or administrative fee therefor, assign all or a portion of
its interests in any Advances to the Granting Bank or to any financial
institutions (consented to by the Borrower and the Administrative
Agent in accordance with the terms of Section 13.3(A)(i)) providing
liquidity and/or credit support to or for the account of such SPC to
support the funding or maintenance of Advances and (ii) disclose on a
confidential basis any

122

 

		
	 	non-public information relating to its Advances to any rating
agency, commercial paper dealer or provider of any surety, guarantee
or credit or liquidity enhancement to such SPC. This Section
13.3(A)(ii) may not be amended without the written consent of each SPC
affected thereby.

		
	 	        (B) Effect; Effective Date. Upon (i) delivery to the Administrative
Agent of a notice of assignment, substantially in the form attached as
Appendix I to Exhibit D hereto (a “Notice of Assignment”), together with
any consent required by Section 13.3(A) hereof, (ii) payment of a $3,500
fee by the assignor to the Administrative Agent for processing such
assignment, and (iii) the completion of the recording requirements in
Section 13.3(C), such assignment shall become effective on the later of
such date when the requirements in clauses (i), (ii), and (iii) are met
or the effective date specified in such Notice of Assignment. The Notice
of Assignment shall contain a representation by the Purchaser to the
effect that none of the consideration used to make the purchase of the
Commitment, Loans and L/C Obligations under the applicable assignment
agreement are “plan assets” as defined under ERISA and that the rights
and interests of the Purchaser in and under the Loan Documents will not
be “plan assets” under ERISA. On and after the effective date of such
assignment, such Purchaser, if not already a Lender, shall for all
purposes be a Lender party to this Agreement and any other Loan Documents
executed by the Lenders and shall have all the rights and obligations of
a Lender under the Loan Documents, to the same extent as if it were an
original party hereto, and no further consent or action by the Borrower,
the Lenders or the Administrative Agent shall be required to release the
Seller with respect to the percentage of the Aggregate Revolving Loan
Commitment, Loans and Letter of Credit and Swing Line Loan participations
assigned to such Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 13.3(B), the Seller, the
Administrative Agent and the Borrower shall make appropriate arrangements
so that, to the extent notes have been issued to evidence any of the
transferred Loans, replacement notes are issued to such Seller and new
notes or, as appropriate, replacement notes, are issued to such
Purchaser, in each case in principal amounts reflecting their Revolving
Loan Commitment and their Term Loans, as adjusted pursuant to such
assignment. Notwithstanding anything to the contrary herein, the
Borrower shall not, at any time, be obligated to pay under Section
2.15(E) to any Lender that is a Purchaser, assignee or transferee any sum
in excess of the sum which the Borrower would have been obligated to pay
in respect of such transferred Loan to the Lender that was the Seller,
assignor or transferor had such assignment or transfer not been effected.
	 
	 	        (C) The Register. Notwithstanding anything to the contrary in this
Agreement, the Borrower hereby designates the Administrative Agent, and
the Administrative Agent, hereby accepts such designation, to serve as
the Borrower’s contractual representative solely for purposes of this
Section 13.3(C). In this connection, the Administrative Agent shall
maintain at its address referred to in Section 14.1 a copy of each
assignment delivered to and accepted by it pursuant to this Section 13.3
and a register (the “Register”) for the recordation of the names and
addresses of the Lenders and the Revolving Loan Commitment of, principal
amount of and interest on the Loans owing to, each Lender from time to
time and whether such Lender is an original Lender or the assignee of
another Lender pursuant to an assignment under this Section 13.3. The

123

 

		
	 	entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower and each of its
Subsidiaries, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.

                13.4 Confidentiality. Subject to Section 13.5, the Administrative Agent
and the Lenders and their respective representatives, consultants and advisors
shall hold all nonpublic information obtained pursuant to the requirements of
this Agreement and identified as such by the Borrower in accordance with such
Person’s customary procedures for handling confidential information of this
nature and in accordance with safe and sound commercial lending or investment
practices and in any event may make disclosure reasonably required by a
prospective Transferee in connection with the contemplated participation or
assignment or as required or requested by any Governmental Authority or any
securities exchange or similar self-regulatory organization or representative
thereof or pursuant to a regulatory examination or legal process, or to any
direct or indirect contractual counterparty in swap agreements or such
contractual counterparty’s professional advisor, and shall require any such
Transferee to agree (and require any of its Transferees to agree) to comply
with this Section 13.4. In no event shall the Administrative Agent or any
Lender be obligated or required to return any materials furnished by the
Borrower; provided, however, each prospective Transferee shall be required to
agree that if it does not become a participant or assignee it shall return all
materials furnished to it by or on behalf of the Borrower in connection with
this Agreement.

                13.5 Dissemination of Information. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a “Transferee”) and
any prospective Transferee any and all information in such Lender’s possession
concerning the Borrower and its Subsidiaries; provided that prior to any such
disclosure, such prospective Transferee shall agree to preserve in accordance
with Section 13.4 the confidentiality of any confidential information described
therein.

ARTICLE XIV: NOTICES

                14.1 Giving Notice. Except as otherwise permitted by Section 2.14 with
respect to Borrowing/Election Notices, all notices and other communications
provided to any party hereto under this Agreement or any other Loan Documents
shall be in writing or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as
may be designated by such party in a notice to the other parties. For all
purposes under this Agreement and the other Loan Documents, notice to any party
hereto from any other party hereto shall not be deemed to be effective until
actually received.

                14.2 Change of Address. The Borrower, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.

ARTICLE XV: COUNTERPARTS

124

 

                This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto
may execute this Agreement by signing any such counterpart. This Agreement
shall be effective when it has been executed by the Borrower, the
Administrative Agent and the Lenders and each party has notified the
Administrative Agent by telephone, that it has taken such action.

[Remainder of This Page Intentionally Blank]

125

 

                IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative Agent
have executed this Agreement as of the date first above written.

	 	 
	ALION SCIENCE AND TECHNOLOGY

CORPORATION, as the Borrower
	 
	By:
	 	

Name:

Title:

	 
	
	 
	Address:
	 
	 

	 
	 

	 

	 
	
Attention: Chief Financial Officer

	
Telephone No.:

	 	

	

Facsimile No.:

	 	

	 
	LASALLE BANK NATIONAL ASSOCIATION, as

Administrative Agent and as a Lender
	 
	By:
	 	

Name:

Title:

	 
	
	 
	

Address:

135 South LaSalle Street

Chicago, IL  60603

	
Attention:
	Telephone No.:
	 	

	Facsimile No.:
	 	

126<PAGE>
                                                                    Exhibit 10.4

                    ALION SCIENCE AND TECHNOLOGY CORPORATION
                              1750 Tysons Boulevard
                                   Suite 1300
                             McLean, Virginia 22102

                  $__________ 12% Senior Subordinated Notes of
                    Alion Science and Technology Corporation
                              due ___________, 2008

              Warrants for [___________] Shares of Common Stock of
        Alion Science and Technology Corporation (subject to adjustment)

                                 --------------

                  MEZZANINE NOTE SECURITIES PURCHASE AGREEMENT
                                 --------------

                               _____________, 2002
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          PAGE
<S>                                                                       <C>
1.    Description of Acquisition.............................................1

2.    Authorization of Securities; etc.......................................1

3.    Sale and Purchase of Securities........................................2

4.    Closing................................................................2

5.    Conditions To Closing..................................................2

      5.1   Representations and Warranties Correct...........................2

      5.2   Performance; No Default..........................................2

      5.3   Related Transactions.............................................3

      5.4   Compliance Certificate...........................................3

      5.5   Opinion of Counsel for the Company...............................4

      5.6   Opinion of Counsel for the ESOP..................................4

      5.7   Opinion of Your Special Counsel..................................4

      5.8   Legal Investment; Certificate....................................4

      5.9   Sale and Purchase Not Forbidden by Law...........................4

      5.10  Payment of Transactions Costs....................................4

      5.11  Proceedings and Documents........................................4

      5.12  Existence and Authority of the Company...........................4

      5.13  Private Placement Number.........................................4

      5.14  Consents and Approvals...........................................5

      5.15  Absence of Litigation, Orders, Etc...............................5

      5.16  Blue Sky.........................................................5

      5.17  Satisfactory Proceedings.........................................5

      5.18  Waiver of Conditions.............................................5

6.    Representations and Warranties.........................................5

      6.1   Organization; Powers.............................................5

      6.2   Authority, Execution and Delivery; Transaction Documents.........6

      6.3   No Conflict; Governmental Consents...............................6
</TABLE>

                                      -i-
<PAGE>
                               TABLE OF CONTENTS

                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                          PAGE
<S>                                                                       <C>
      6.4   Financial Statements.............................................7

      6.5   Taxes............................................................8

      6.6   Litigation; Loss Contingencies...................................8

      6.7   Subsidiaries; Capitalization.....................................9

      6.8   ERISA...........................................................10

      6.9   Accuracy of Information.........................................12

      6.10  Securities Activities...........................................12

      6.11  Material Agreements.............................................13

      6.12  Compliance with Laws............................................13

      6.13  Assets and Properties...........................................13

      6.14  Statutory Indebtedness Restrictions.............................13

      6.15  Insurance.......................................................13

      6.16  [RESERVED]......................................................14

      6.17  IITRI Acquisition and ESOT Transaction..........................14

      6.18  Environmental Matters...........................................14

      6.19  Solvency........................................................15

      6.20  Additional ESOP Provisions......................................15

7.    Use of Proceeds.......................................................17

8.    Prepayment of Notes...................................................17

      8.1   Optional Prepayment With Premium of Notes.......................17

      8.2   Prepayment With Premium of the Notes at the Option of the
            Company upon a Qualified IPO....................................18

      8.3   Prepayment With Premium of the Notes at the Option of
            Holders of Notes Upon a Change of Control.......................19

      8.4   Allocation of Partial Prepayments of Notes......................20

      8.5   Notice of Optional Prepayments of Notes.........................20

      8.6   Maturity; Accrued Interest; Surrender, etc. of Notes............21
</TABLE>

                                      -ii-
<PAGE>
                               TABLE OF CONTENTS

                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                          PAGE
<S>                                                                       <C>
      8.7   Purchase of Notes...............................................21

      8.8   Payment on Non-Business Days....................................21

9.    Subordination of Notes and Subsidiary Guarantees......................21

10.   Reporting, Affirmative and Negative Covenants of the Company..........21

      10.1  Reporting.......................................................21

      10.2  Affirmative Covenants...........................................28

      10.3  Negative Covenants..............................................31

      10.4  Financial Covenants.............................................44

11.   Definitions...........................................................46

      11.1  Definitions of Capitalized Terms................................47

      11.2  Other Definitions...............................................66

      11.3  Accounting Terms and Principles; Laws...........................67

12.   Events of Default; Remedies...........................................67

      12.1  Events of Default Defined; Acceleration of Maturity.............67

      12.2  Suits for Enforcement, etc......................................72

      12.3  No Election of Remedies.........................................72

      12.4  Remedies Not Waived.............................................72

      12.5  Application of Payments.........................................72

13.   Registration, Transfer and Exchange of Securities.....................73

14.   Replacement of Securities.............................................73

16.   Amendment and Waiver..................................................73

17.   Method of Payment of Securities.......................................74

18.   Expenses; Indemnity...................................................74

19.   Taxes.................................................................75

20.   Communications........................................................75

21.   Survival of Agreements, Representations and Warranties, etc...........76
</TABLE>

                                     -iii-
<PAGE>
                               TABLE OF CONTENTS

                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                          PAGE
<S>                                                                       <C>
22.   Successors and Assigns; Rights of Other Holders.......................77

23.   Purchase for Investment; ERISA........................................77

25.   Governing Law; Jurisdiction; Waiver of Jury Trial.....................82

26.   Rule 144A.............................................................82

27.   Miscellaneous.........................................................82

28.   Confidential Information..............................................83
</TABLE>

                                      -iv-
<PAGE>
Schedule I              Schedule of holders
Schedule II             Bank Documents

Exhibit 2(a)            Form of Note
Exhibit 2(b)            Form of Warrant
Exhibit 2(d)            Form of Subsidiary Guarantee
Exhibit 5.3(a)          Form of Seller Note
Exhibit 5.3(b)          Outstanding Indebtedness
Exhibit 5.3(e)          Form of Rights Agreement
Exhibit 5.5             Opinion of Baker & McKenzie
Exhibit 5.6             Opinion of [Paul, Weiss, Rifkind, Wharton & Garrison]
Exhibit 5.7             Opinion of McDermott, Will & Emery
Exhibit 6.3             Conflicts; Governmental Consents
Exhibit 6.4             Pro Forma Financial Statements
Exhibit 6.6             Disclosed Litigation
Exhibit 6.7             Subsidiaries
Exhibit 6.8(b)          Plan Events
Exhibit 6.15            Insurance
Exhibit 6.17            IITRI Acquisition and ESOT Transaction Conditions
Exhibit 6.18            Environmental Matters
Exhibit 7               Use of Proceeds
Exhibit 10.1(a)(iv)(a)  Form of Officers' Certificate
Exhibit 10.1(a)(iv)(b)  Form of Compliance Certificate
Exhibit 10.3(f)         Purchase Price Adjustments; Earn-Outs
Exhibit 11.1.1          Permitted Existing Contingent Obligations
Exhibit 11.1.2          Permitted Existing Indebtedness
Exhibit 11.1.3          Permitted Existing Investments
Exhibit 11.1.4          Permitted Existing Liens
Exhibit 11.1.5          ESOP Plan Documents
Exhibit 11.1.6          ESOT Transaction Documents
<PAGE>
                    ALION SCIENCE AND TECHNOLOGY CORPORATION
                              1750 Tysons Boulevard
                                   Suite 1300
                             McLean, Virginia 22102

                                                                __________, 2002

To each of the Holders named
on Schedule I attached hereto

Ladies and Gentlemen:

            ALION SCIENCE AND TECHNOLOGY CORPORATION, a Delaware corporation
(the "Company"), agrees with you as follows. Certain terms used herein are
defined in section 11.

1.    Description of Acquisition. The Company has agreed to acquire
substantially all of the assets of IIT Research Institute, a not-for-profit
Illinois corporation ("IITRI") for consideration of $117,100,000 (subject to
certain adjustments as provided in the Asset Purchase Agreement) pursuant to the
Acquisition Documents. In order to consummate the IITRI Acquisition, the holders
have agreed to accept as a portion of the purchase price in Notes and Warrants
of the Company on the terms and pursuant to the conditions set forth in this
Agreement.

2.    Authorization of Securities; etc.

            (a) The Company has authorized the issue of its 12% Senior
      Subordinated Notes due __________, 2008 (herein, together with any notes
      issued in exchange therefor or replacement thereof, called the "Notes") in
      the aggregate principal amount of $____________. The Notes are to be
      substantially in the form of Exhibit 2(a) attached hereto.

            (b) The Company has authorized the issue of its warrants evidencing
      rights to purchase ___________ shares of its Common Stock (subject to
      adjustment) (herein, together with any warrants issued in exchange
      therefor or replacement thereof, called the "Warrants"). The Warrants are
      to be substantially in the form of Exhibit 2(b) attached hereto.

            (c) Interest on the Notes shall accrue at 12% per annum computed on
      the actual number of days elapsed in any year (based on a year of twelve
      30-day months and a 360 day year). The first installment of interest on
      the Notes is payable on _________, 2002, and thereafter interest is
      payable on the Notes, quarterly in arrears on the last Business Day of
      March, June, September and December of each year, commencing
<PAGE>
      _________, 2002 and at maturity. In no event shall the amount paid or
      agreed to be paid by the Company as interest and premium on any Note
      exceed the highest lawful rate permissible under any law applicable
      thereto.

            (d) Each Material Subsidiary of the Company and each Person, if any,
      that hereafter becomes a Material Subsidiary of the Company shall
      unconditionally guarantee the Notes and all other obligations of the
      Company and its Subsidiaries, if any, under the Operative Documents
      pursuant to separate guarantees, each substantially in the form of Exhibit
      2(d) attached hereto (as amended, modified and supplemented from time to
      time, each a "Subsidiary Guarantee"; collectively the "Subsidiary
      Guarantees").

3.    Sale and Purchase of Securities. The Company will issue to you as
consideration under the Asset Purchase Agreement and, subject to the terms and
conditions hereof and in reliance upon the representations and warranties of the
Company contained herein and in the other Operative Documents, you will accept
from the Company, at the Closing specified in section 4, such Securities as are
specified on that portion of Schedule I attached hereto as is applicable to you.

4.    Closing. The closing of the sale and delivery of the Securities hereunder
(the "Closing") shall take place at the office of Baker & McKenzie, Chicago, on
________, 2002 (or such other date to which you may agree) (the "Closing Date").
At the Closing, the Company will deliver to you the Securities in the form of
one or more Notes and Warrants, in such denominations and registered in such
names as are specified on Schedule I attached hereto, and in each case dated
and, in the case of each Note, bearing interest from, the Closing Date. If at
the Closing the Company shall fail to tender the Securities to be delivered to
you thereat as provided herein, or if at the Closing any of the conditions
specified in section 5 shall not have been fulfilled to your satisfaction, you
shall, at your election, be relieved of all further obligations under this
Agreement or to close the acquisition transaction contemplated by the
Acquisition Documents, without thereby waiving any other rights you may have by
reason of such failure or such non-fulfillment.

5.    Conditions To Closing. Your obligation to accept the Securities to be
delivered to you hereunder at the Closing is subject to the fulfillment to your
satisfaction, prior to or at the Closing, of the following conditions:

      5.1 Representations and Warranties Correct. The representations and
warranties made by the Company herein and in the other Operative Documents shall
have been true and correct when made and shall be true and correct as of the
time of the Closing (after giving effect to the transactions consummated at the
Closing).

      5.2 Performance; No Default. The Company shall have performed all
agreements and complied with all conditions contained herein and in the other
Operative Documents required to be performed or complied with by it prior to or
at the Closing, and at the time of the Closing, no

                                      -2-
<PAGE>
Default or Event of Default shall exist and no condition shall exist which has
resulted in, or could reasonably be expected to result in, a Material Adverse
Effect.

      5.3 Related Transactions.

            (a) The IITRI Acquisition shall have been consummated in accordance
      with the Acquisition Documents. No material term or condition of the
      Acquisition Documents shall have been amended, modified, supplemented or
      waived, other than as the same may be or may have been amended as of the
      Closing pursuant to the terms and conditions of the applicable Acquisition
      Document (true and correct copies of which have been or will be provided
      to you on or prior to Closing). The purchase price of the Acquired
      Business shall be paid at the time of the Closing as follows: (i) an
      aggregate of $56,000,000 shall be paid in cash in immediately available
      funds, (ii) an aggregate of $39,900,000 shall be paid by the issuance of
      the Seller Notes, each in the form of Exhibit 5.3(a) attached hereto, and
      (iii) an aggregate of $_________ shall be paid by the issuance of the
      Notes hereunder. The terms of the Acquisition Documents shall be
      satisfactory to you in all material respects.

            (b) The debt and equity capitalization of the Company and each of
      its Subsidiaries shall be satisfactory to you in all material respects.
      Without limiting the generality of the foregoing, after giving effect to
      the IITRI Acquisition, as of the Closing, the Company shall not have any
      outstanding Indebtedness other than that evidenced by the Notes and that
      which is specified on Exhibit 5.3(b) attached hereto.

            (c) The Bank Documents shall have been executed and delivered and
      shall be in full force and effect. The Company shall have established
      pursuant thereto (i) a $25,000,000 five-year senior secured revolving
      credit facility, and (ii) a $35,000,000 five-year senior secured term loan
      facility. The terms of the Bank Documents, including, without limitation,
      those pursuant to which the Notes are subordinated to the Bank Secured
      Obligations, shall be satisfactory to you in all material respects.

            (d) The Organizational Documents of the Company and its Subsidiaries
      shall be satisfactory to you in all material respects.

            (e) You, the ESOP and each other holder of any Shares (or warrants
      or options therefor) issued by the Company shall have entered into a
      rights agreement in substantially the form of Exhibit 5.3(e) attached
      hereto (the "Rights Agreement"), the terms of which shall be satisfactory
      to you and which shall be in full force and effect.

            (f) You, the ESOP and the Company shall have entered into a Warrant
      in substantially the form of Exhibit 2(b) attached hereto, the terms of
      which shall be satisfactory to you and which shall be in full force and
      effect.

                                      -3-
<PAGE>
      5.4 Compliance Certificate. At the Closing, you shall have received an
Officers' Certificate, dated the Closing Date, certifying that the conditions
specified in sections 5.1, 5.2 and 5.3 (a) and (c) have been fulfilled.

      5.5 Opinion of Counsel for the Company. At the Closing, you shall have
received opinions, dated the Closing Date, from Baker & McKenzie, counsel to the
Company, in substantially the form of Exhibit 5.5 attached hereto.

      5.6 Opinion of Counsel for the ESOP. At the Closing, you shall have
received an opinion, dated the Closing Date, from [Paul, Weiss, Rifkind, Wharton
& Garrison], special counsel to the ESOP, in substantially the form of Exhibit
5.6 attached hereto.

      5.7 Opinion of Your Special Counsel. At the Closing, you shall have
received an opinion, dated the Closing Date, from McDermott, Will & Emery, your
special counsel, addressing such legal matters as you may reasonably request.

      5.8 Legal Investment; Certificate. Your acceptance of the Securities to be
issued pursuant hereto shall be permitted under the laws and regulations of any
jurisdiction to which you are subject (without resort to any provision of any
such law permitting limited investments by you without restriction as to the
character of the particular investment).

      5.9 Sale and Purchase Not Forbidden by Law. The offer, issue, sale and
delivery by the Company of the Securities to be issued pursuant hereto and your
acceptance of such Securities at the Closing shall not be prohibited by and
shall not subject you to any tax, penalty or liability under or pursuant to any
law, statute, rule or regulation.

      5.10 Payment of Transactions Costs. The Company shall have paid in
immediately available funds all fees, expenses and disbursements incurred by you
at or prior to the time of the Closing (including reasonable fees and
disbursements of your special counsel) in connection with the transactions
contemplated by the Operative Documents to the extent and subject to the
limitations provided in the Asset Purchase Agreement.

      5.11 Proceedings and Documents. All proceedings in connection with the
transactions contemplated by the Operative Documents and all agreements,
documents and instruments incident to such transactions shall be satisfactory in
substance and form to you and your special counsel, and you and your special
counsel shall have received all such counterpart originals or copies of such
agreements, documents and instruments as you or they may reasonably request.

      5.12 Existence and Authority of the Company. On or prior to the Closing
Date, you shall have received a certificate of good standing with respect to the
Company and each Subsidiary Guarantor, certified copies of the Organizational
Documents of the Company and each Subsidiary Guarantor, certified copies of the
ESOP Plan Documents and the other Transaction Documents and evidence with
respect to the authorization by the Company, each

                                      -4-
<PAGE>
Subsidiary Guarantor, the ESOT and the ESOP of the transactions contemplated by
this Agreement, the other Operative Documents and the other Transaction
Documents.

      5.13 Private Placement Number. On or prior to the Closing Date, Baker &
McKenzie, special counsel for the Company, shall have duly made the appropriate
filings with Standard & Poor's CUSIP Service Bureau in order to obtain the
requisite private placement numbers for the Notes and the Warrants.

      5.14 Consents and Approvals. All necessary consents, approvals and
authorizations of, and declarations, registrations and filings with,
governmental bodies and non-governmental Persons required in order to consummate
the transactions contemplated herein, in the Bank Documents, the Acquisition
Documents, and the other Transaction Documents shall have been obtained or made
and shall be in full force and effect.

      5.15 Absence of Litigation, Orders, Etc. There shall not be pending or, to
the knowledge of the Company or its Subsidiaries, threatened, any action, suit,
proceeding, governmental investigation or arbitration against or affecting any
of the Company or its Subsidiaries, or the respective assets or property of such
Persons which seeks to enjoin or restrain any of the transactions contemplated
herein, in the other Operative Documents, in the Bank Documents, or the
Acquisition Documents or which is reasonably likely to have a Material Adverse
Effect. No order of any court, arbitrator or governmental body shall be in
effect which purports to enjoin or restrain any of the transactions contemplated
herein or which you reasonably believe in good faith could constitute a Material
Adverse Effect.

      5.16 Blue Sky. The Company shall have made all filings reasonably
requested by you (if any shall be required) under applicable state securities
laws necessary to consummate the issuance of the Notes and Warrants pursuant to
this Agreement in compliance with such laws.

      5.17 Satisfactory Proceedings. All proceedings taken in connection with
the transactions contemplated by this Agreement, the Notes, the Warrants, the
Bank Documents, the Acquisition Documents, and the other Transaction Documents,
shall be satisfactory in form and substance to you and your special counsel, and
you shall have received a copy (executed or certified as may be appropriate) of
all legal documents or proceedings taken in connection with the consummation of
said transactions.

      5.18 Waiver of Conditions. If the conditions specified in this section 5
have not been fulfilled, you may waive compliance by the Company with any such
condition to such extent as you may in your sole discretion determine. Nothing
in this section 5.18 shall operate to relieve the Company of its obligations
hereunder or to waive any of your rights against the Company.

6.    Representations and Warranties. The Company represents and warrants that
as of the Closing (after giving effect to the transactions consummated at the
Closing under the Transaction Documents, including, without limitation, the
IITRI Acquisition):

                                      -5-
<PAGE>
      6.1 Organization; Powers. The Company and each of its Subsidiaries (a) is
a corporation validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) is duly qualified to do business as a
foreign entity and is in good standing under the laws of each jurisdiction in
which failure to be so qualified and in good standing could reasonably be
expected to have a Material Adverse Effect, and (c) has all requisite power and
authority to own, operate and encumber its property and to conduct its business
as presently conducted and as proposed to be conducted.

      6.2 Authority, Execution and Delivery; Transaction Documents.

            (a) Power and Authority. The Company and each of its Subsidiaries
      has the requisite power and authority to execute, deliver and perform this
      Agreement and the other Operative Documents, each of the Transaction
      Documents which are to be executed by it in connection with the IITRI
      Acquisition and the ESOT Transaction and which have been executed by it as
      required by the Bank Documents and (ii) to file the Transaction Documents
      which must be filed by it in connection with this Agreement and the other
      Operative Documents, the IITRI Acquisition or the ESOT Transaction or
      which have been filed by it as required by this Agreement, the other
      Operative Documents, the Bank Documents or otherwise with any Governmental
      Authority.

            (b) Execution and Delivery. The execution, delivery, performance and
      filing, as the case may be, of each of this Agreement and the other
      Operative Documents, and each of the other Transaction Documents which
      must be executed or filed by the Company or any of its Subsidiaries in
      connection with the IITRI Acquisition or the ESOT Transaction or which
      have been executed or filed as required by the Bank Documents or otherwise
      and to which the Company or any of its Subsidiaries is party, and the
      consummation of the transactions contemplated hereby and thereby, have
      been duly approved by the respective boards of directors and, if
      necessary, the stockholders of the Company and its Subsidiaries, and such
      approvals have not been rescinded. No other action or proceedings on the
      part of the Company or its Subsidiaries are necessary to consummate such
      transactions.

            (c) Transaction Documents. Each of this Agreement, the other
      Operative Documents and the other Transaction Documents to which the
      Company or any of its Subsidiaries is a party has been duly executed,
      delivered or filed, as the case may be, by it and constitutes its legal,
      valid and binding obligation, enforceable against it in accordance with
      its terms (except as enforceability may be limited by bankruptcy,
      insolvency, or similar laws affecting the enforcement of creditors' rights
      generally), is in full force and effect, and no material term or condition
      thereof has been amended, modified or waived from the terms and conditions
      contained in the Transaction Documents delivered to the holders pursuant
      to section 5.3 of this Agreement without the prior written consent of the
      Required Holders, and the Company and its Subsidiaries have, and, to the
      best of the Company's and its Subsidiaries' knowledge, all other parties
      thereto have, performed and

                                      -6-
<PAGE>
      complied with all the terms, provisions, agreements and conditions set
      forth therein and required to be performed or complied with in all
      material respects by such parties, and no unmatured default, default or
      breach of any covenant by any such party exists thereunder.

      6.3 No Conflict; Governmental Consents. The execution, delivery and
performance of each of this Agreement, the other Operative Documents and the
other Transaction Documents to which the Company or any of its Subsidiaries is a
party do not and will not (a) conflict with the Organizational Documents of the
Company or any such Subsidiary, (b) (i) constitute a tortious interference with
any Contractual Obligation of any Person (ii) conflict with, result in a breach
of or constitute (with or without notice or lapse of time or both) a default
under any Requirement of Law (including, without limitation, any Environmental
Property Transfer Act) or Contractual Obligation of the Company or any such
Subsidiary, or require termination of any Contractual Obligation of the Company
or any such Subsidiary which, in the case of clause (ii), could be reasonably
expected to have a Material Adverse Effect, (c) result in or require the
creation or imposition of any Lien whatsoever upon any of the property or assets
of the Company or any such Subsidiary, other than Liens permitted or created by
the Transaction Documents, or (d) require any approval of the Company's or any
such Subsidiary's board of directors or stockholders except such as have been
obtained. Except as set forth on Exhibit 6.3 attached hereto, the execution,
delivery and performance of each of the Transaction Documents to which the
Company or any of its Subsidiaries is a party do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by any Governmental Authority, including under any Environmental
Property Transfer Act, except filings, consents or notices which have been made,
obtained or given, or which, if not made, obtained or given, individually or in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.

      6.4 Financial Statements.

            (a) Pro Forma Financials. The combined, projected pro forma balance
      sheet, income statements and statements of cash flow of the Company and
      its Subsidiaries, copies of which are attached hereto as Exhibit 6.4,
      present on a pro forma basis the financial condition of the Company and
      such Subsidiaries as of such date, and reflect on a pro forma basis those
      liabilities reflected in the notes thereto and resulting from consummation
      of the IITRI Acquisition, the ESOT Transaction, the issuance of the Notes
      and the Seller Notes and the other transactions contemplated by this
      Agreement, the other Operative Documents and the Bank Documents, and the
      payment or accrual of all transaction costs payable on the Closing Date
      with respect to any of the foregoing. The projections and assumptions
      expressed in the pro forma financials referenced in this section 6.4(a)
      were prepared in good faith and represent management's opinion based on
      the information available to the Company at the time so furnished and,
      since the preparation thereof and up to the Closing Date, there has
      occurred no change in the business, financial condition, operations, or
      prospects of the Company or any of its

                                      -7-
<PAGE>
      Subsidiaries, or the Company and its Subsidiaries taken as a whole which
      has had or could reasonably be expected to have a Material Adverse Effect.

            (b) Audited Financial Statements. Complete and accurate copies of
      the audited financial statements and the audit reports related thereto of
      IITRI and its consolidated Subsidiaries as at September 30, 2001 and of
      the business and assets of IITRI to be acquired by the Company pursuant to
      the Asset Purchase Agreement as at September 30, 2001, and (ii) the
      unaudited financial statements of IITRI and its consolidated Subsidiaries
      as of September 30, 2002 and of the business and assets of IITRI to be
      acquired by the Company pursuant to the Asset Purchase Agreement as of
      September 30, 2002, have been delivered to the initial holders.

      6.5 Taxes.

            (a) Tax Examinations. All deficiencies which have been asserted
      against the Company or any of the Company's Subsidiaries as a result of
      any federal, state, local or foreign tax examination for each taxable year
      in respect of which an examination has been conducted have been fully paid
      or finally settled or are being contested in good faith, and no issue has
      been raised by any taxing authority in any such examination which, by
      application of similar principles, could reasonably be expected to result
      in assertion by such taxing authority of a material deficiency for any
      other year not so examined which has not been reserved for in the
      Company's consolidated financial statements to the extent, if any,
      required by Agreement Accounting Principles. Except as permitted pursuant
      to section 10.2(d), neither the Company nor any of its Subsidiaries
      anticipates any tax liability with respect to the years which have not
      been closed pursuant to applicable law.

            (b) Payment of Taxes. All tax returns and reports of the Company and
      its Subsidiaries required to be filed have been timely filed, and all
      taxes, assessments, fees and other governmental charges thereupon and upon
      their respective property, assets, income and franchises which are shown
      in such returns or reports to be due and payable have been paid except
      those items which are being contested in good faith and have been reserved
      for in accordance with Agreement Accounting Principles. The Company has no
      knowledge of any proposed tax assessment against the Company or any of its
      Subsidiaries that will have or could reasonably be expected to have a
      Material Adverse Effect.

            (c) Subchapter S Status. As of the Closing Date, the Company has
      executed and has caused all other Persons to execute the applicable
      election forms or other filings required to be made for purposes of the
      Company's election to be taxed as an "S corporation" as such term is
      defined in Section 1361 of the Code. Beginning with the Company's taxable
      year ending September 30, 2002, the Company was and as of the Closing Date
      remains taxable as an S corporation. The ESOT is not subject to tax

                                      -8-
<PAGE>
      imposed under the Code with respect to any item of income or loss of the
      Company or any Subsidiary of the Company.

      6.6 Litigation; Loss Contingencies. Except as set forth in Exhibit 6.6
attached hereto (the "Disclosed Litigation"), there is no action, suit,
proceeding, arbitration or, to the Company's knowledge, investigation before or
by any Governmental Authority or private arbitrator pending or, to the Company's
knowledge, threatened against or affecting the Company or any of its
Subsidiaries or any property of any of them. Neither any of the Disclosed
Litigation nor any action, suit, proceeding, arbitration or investigation which
has commenced on or prior to the Closing Date (a) challenges the validity or the
enforceability of any material provision of the Transaction Documents or (b) has
or could reasonably be expected to have a Material Adverse Effect. There is no
material loss contingency within the meaning of Agreement Accounting Principles
which has not been reflected in the consolidated financial statements of the
Company prepared and delivered pursuant to section 6.4(b) for the fiscal period
during which such material loss contingency was incurred. Neither the Company
nor any of its Subsidiaries is (x) in violation of any applicable Requirements
of Law which violation will have or could reasonably be expected to have a
Material Adverse Effect, or (y) subject to or in default with respect to any
final judgment, writ, injunction, restraining order or order of any nature,
decree, rule or regulation of any court or Governmental Authority which will
have or could reasonably be expected to have a Material Adverse Effect. To the
Company's knowledge, neither the ESOP Fiduciary nor the ESOT Trustee has made
any assertion with respect to the ESOP or the ESOT contrary to or inconsistent
with the accuracy of any representation or warranty set forth in section 6.5(c)
or section 6.19 that could reasonably be expected to have in a Material Adverse
Effect.

      6.7 Subsidiaries; Capitalization.

            (a) Exhibit 6.7(a) attached hereto (i) contains a description of the
      corporate structure of the Company or its Subsidiaries; and (ii)
      accurately sets forth (A) the correct legal name, the jurisdiction of
      incorporation and the jurisdictions in which each of the Company and the
      direct and indirect Subsidiaries of the Company are qualified to transact
      business as a foreign corporation, and (B) the authorized, issued and
      outstanding shares of each class of Capital Stock of the Company and each
      of its Subsidiaries and the owners of such shares (both as of the Closing
      Date and on a fully-diluted basis). Except for (i) mandatory redemption or
      repurchase of Capital Stock of the Company as a result of distributions by
      the ESOT to participants of the ESOP pursuant to the ESOP Plan Documents
      subsequent to their termination of employment with the Company or any
      Controlled Group member, (ii) the requirements of Section 401(a)(28) of
      the Code or any substantially similar Requirement of Law, (iii) the
      Incentive Arrangements disclosed on Exhibit 6.7(a), and the Warrants and
      the Seller Warrants, (iv) the put and call rights contained in the
      Warrants and the Seller Warrants, (v) the vesting provisions of the ESOP,
      or (vi) agreements otherwise disclosed on Exhibit 6.7(a), none of the
      issued and outstanding Capital Stock of the Company or any of the
      Company's Subsidiaries is

                                      -9-
<PAGE>
      subject to any vesting, redemption, or repurchase agreement, and there are
      no warrants or options outstanding with respect to such Capital Stock
      except for the Warrants and the Seller Warrants and except as may be in
      effect from time to time with respect Incentive Arrangements. The
      outstanding Capital Stock of the Company and each of its Subsidiaries is
      duly authorized, validly issued, fully paid and nonassessable and is not
      Margin Stock; and, except as provided in the Rights Agreement, the
      Warrants and the Seller Warrants, not subject to any preemptive right,
      right of first refusal or offer or similar right on the part of any other
      Person, and all of such Capital Stock has been (or will have been) offered
      and issued in accordance with all applicable laws. Except as set forth on
      Exhibit 6.7(a) attached hereto and except to the extent Persons may be
      deemed beneficial owners by virtue of familial relationships with a holder
      of Capital Stock or in connection with a trust established for the benefit
      of family members by a holder of Capital Stock, the owners of the Capital
      Stock indicated on Exhibit 6.7(a) attached hereto own the Capital Stock
      indicated on such exhibit free of any Lien, proxy, voting agreement,
      voting trust, stockholders agreement (other than the Rights Agreement) or
      similar agreement or restriction. Except as set forth on Exhibit 6.7(a)
      attached hereto, neither the Organizational Documents nor any other
      agreement, document or instrument binding on or applicable to the Company
      or any of its Subsidiaries or any of its stockholders contains any
      provision requiring a higher voting requirement with respect to action
      taken (and/or to be taken) by its board of directors or stockholders than
      that which would apply in the absence of such provision.

            (b) Except as provided in the Rights Agreement, the Warrants, the
      Seller Warrants and except as set forth on Exhibit 6.7(b) attached hereto
      (after giving effect to the consummation of the transactions consummated
      at the Closing under the Transaction Documents), (i) there are no
      outstanding securities convertible into or exercisable or exchangeable for
      any Capital Stock of the Company or any of its Subsidiaries and no
      outstanding agreements for the purchase from, or sale or issuance by, the
      Company or any of its Subsidiaries of any of their respective Capital
      Stock or any securities convertible into or exercisable or exchangeable
      for such Capital Stock; (ii) there are no agreements on the part of the
      Company or any of its Subsidiaries to issue, sell or distribute any of
      their respective Capital Stock, other securities or assets; (iii) neither
      the Company nor any of its Subsidiaries has any obligation (contingent or
      otherwise) to purchase, redeem or otherwise acquire any of their
      respective Capital Stock or other securities or any interest therein or to
      pay any dividend or make any distribution in respect thereof; and (iv) no
      Person is entitled to any rights with respect to the registration of any
      Capital Stock or other securities of the Company or any of its
      Subsidiaries under the Securities Act (or the securities laws of any other
      jurisdiction).

            (c) The aggregate number of shares of Common Stock issuable upon
      exercise in full of the Warrants immediately after the Closing is
      __________, which, if then issued, would constitute [________ percent
      (__%)] of the Common Stock (calculated assuming the conversion, exercise
      and exchange of all outstanding securities convertible

                                      -10-
<PAGE>
      into and exercisable or exchangeable for shares of Common Stock,
      including, without limitation, the Warrants and the Seller Warrants. The
      Company has reserved __________ shares of Common Stock solely for issuance
      upon exercise of the Warrants. The Company has adopted stock appreciation
      rights plan. The Company has not reserved any shares of Common Stock
      pursuant to the Company's stock appreciation rights plan.

      6.8 ERISA.

            (a) Plan Documents. The ESOP Plan Documents identified in Exhibit
      11.1.5 to this Agreement (each as may be amended from time to time as
      provided therein) are all of the material documents pursuant to which the
      ESOP and ESOT are maintained by the Company, or concerning the Company's
      obligations with respect to the ESOP and ESOT. The ESOT Transaction
      Documents identified in Exhibit 11.1.6 to this Agreement (without any
      modifications or amendments thereto), together with the ESOP Plan
      Documents identified in Exhibit 11.1.5 to this Agreement (without any
      modifications or amendments thereto), are all duly adopted by the Company
      to the extent intended to be so adopted.

            (b) Plan Events. The representations and warranties in this section
      6.8(b) are subject to the disclosures made on Exhibit 6.8(b) attached
      hereto. No Benefit Plan has incurred any material accumulated funding
      deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the
      Code) whether or not waived. Neither the Company nor any member of the
      Controlled Group has incurred any material liability to the PBGC which
      remains outstanding other than the payment of premiums, and there are no
      premium payments which have become due which are unpaid. With respect to
      each Benefit Plan, Schedule B to the most recent annual report filed with
      the IRS with respect to such plan is complete and accurate in all material
      respects. Since the date of each such Schedule B, there has been no
      material adverse change in the funding status or financial condition of
      the Benefit Plan relating to such Schedule B. As of the last day of the
      most recent prior plan year, the market value of assets under each Benefit
      Plan, other than any Multiemployer Plan, was not by a material amount less
      than the present value of benefit liabilities thereunder (determined in
      accordance with the actuarial valuation assumptions described therein).
      Neither the Company nor any member of the Controlled Group has (i) failed
      to make a required contribution or payment to a Multiemployer Plan of a
      material amount or (ii) incurred a material complete or partial withdrawal
      under Sections 4203 or 4205 of ERISA from a Multiemployer Plan. Neither
      the Company nor any member of the Controlled Group has failed to make a
      required installment or any other required payment under Section 412 of
      the Code on or before the due date for such installment or other payment.
      Neither the Company nor any member of the Controlled Group is required to
      provide security of a material amount to a Benefit Plan pursuant to
      Section 401(a)(29) of the Code due to a Plan amendment that results in an
      increase in current liability for the plan year. Except as set forth on
      Exhibit 6.8(b), neither the Company nor any of its Subsidiaries maintains
      or contributes to any employee welfare

                                      -11-
<PAGE>
      benefit plan within the meaning of Section 3(1) of ERISA or any other
      arrangement which provides benefits to one or more employees, officers,
      directors, or consultants after termination of employment other than as
      required by Section 601 of ERISA or Section 4980(B) of the Code or
      applicable law and other than any such plan or arrangement with respect to
      which the Company and its Subsidiaries do not have any liability of a
      material amount. Each Plan is designed to be qualified under Section
      401(a) of the Code as currently in effect, and each trust related to any
      such Plan is designed to be exempt from federal income tax under Section
      501(a) of the Code as currently in effect. With respect to each Plan, the
      Company and each of its Subsidiaries, the ESOP Fiduciary and, to the best
      knowledge of the Company, the ESOT Trustee are in compliance in all
      material respects with the responsibilities, obligations and duties, if
      any, imposed on them by ERISA and the Code. Each Plan and Non-ERISA
      Commitment complies in all material respects in form, and has been
      administered in all material respects in accordance with its terms and, in
      accordance with all applicable laws and regulations, including but not
      limited to ERISA and the Code. There is no material action, suit or claim
      pending or threatened with respect to any Plan other than routine claims
      for benefits. There have been no and there is no non-exempt prohibited
      transaction described in Sections 406 of ERISA or 4975 of the Code which
      could reasonably be expected to subject the Company to material liability.
      Neither the Company nor any member of the Controlled Group has taken or
      failed to take any action which would constitute or result in a
      Termination Event, which action or inaction could reasonably be expected
      to subject the Company or any of its Subsidiaries to liability,
      individually or in the aggregate, in excess of $1,500,000. Neither the
      Company nor any Subsidiary is subject to any material liability under, or
      to the best of Company's knowledge, has any potential material liability
      under, Sections 4063, 4064, 4069, 4204 or 4212(c) of ERISA and no other
      member of the Controlled Group is subject to any liability under Sections
      4063, 4064, 4069, 4204 or 4212(c) of ERISA. Except as set forth on Exhibit
      6.8(c), neither the Company nor any of its Subsidiaries has, by reason of
      the ESOT Transaction or any other transaction contemplated hereby, any
      obligation to make any payment to any current or former employee,
      director, officer or consultant pursuant to any Plan or Non-ERISA
      Commitment or any obligation to make any such payment at a time earlier
      than when it would be otherwise payable except for any payment to be made
      upon termination of employment. For purposes of this section 6.8(b),
      "material" means any amount, noncompliance or basis for liability which
      could reasonably be expected to subject the Company or any of its
      Subsidiaries to liability, individually or in the aggregate, in excess of
      $1,500,000.

      6.9 Accuracy of Information. The information, exhibits and reports (i)
prepared by the Company and (ii) prepared by any other Person, in each case,
furnished by or on behalf of the Company and any of its Subsidiaries to the
holders in connection with the negotiation of, or compliance with, this
Agreement and the other Operative Documents, the representations and warranties
of the Company and its Subsidiaries contained in this Agreement and the other

                                      -12-
<PAGE>
Operative Documents, and all certificates and documents delivered to the holders
pursuant to the terms thereof, taken as a whole, do not contain, and with
respect to the information, exhibits and reports identified in clause (ii)
above, to the best of the Company's knowledge do not contain, as of the date
furnished any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.

      6.10 Securities Activities. Neither the Company nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock. Margin Stock constitutes less than 25% of
the value of the assets of the Company and its Subsidiaries.

      6.11 Material Agreements. Neither the Company nor any of its Subsidiaries
is a party to any Contractual Obligation or subject to any charter or other
corporate restriction which individually or in the aggregate has had or could
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Exhibit 6.11, neither the Company nor any of its Subsidiaries has received
notice or has knowledge that (a) it is in default in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained in
any Contractual Obligation applicable to it, or (b) any condition exists which,
with the giving of notice or the lapse of time or both, would constitute a
default with respect to any such Contractual Obligation, in each case, except
where such default or defaults, if any, individually or in the aggregate will
not have or could not reasonably be expected to have a Material Adverse Effect.

      6.12 Compliance with Laws. The Company and its Subsidiaries are in
compliance with all Requirements of Law applicable to them and their respective
businesses, in each case where the failure to so comply individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.

      6.13 Assets and Properties. The Company and each of its Subsidiaries has
good and marketable title to all of its assets and properties (tangible and
intangible, real or personal) owned by it and a valid leasehold interest in all
of its leased assets (except insofar as marketability may be limited by any laws
or regulations of any Governmental Authority affecting such assets), and all
such assets and property are free and clear of all Liens, except Liens permitted
under section 10.3(c) of this Agreement. Substantially all of the assets and
properties owned by, leased to or used by the Company and/or each such
Subsidiary of the Company are in adequate operating condition and repair,
ordinary wear and tear excepted. Neither this Agreement, the other Operative
Documents nor any other Transaction Document, nor any transaction contemplated
under any such agreement, will affect any right, title or interest of the
Company or such Subsidiary in and to any of such assets in a manner that would
have or could reasonably be expected to have a Material Adverse Effect.

                                      -13-
<PAGE>
      6.14 Statutory Indebtedness Restrictions. Neither the Company nor any of
its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or the
Investment Company Act of 1940, or any other foreign, federal or state statute
or regulation which limits its ability to incur indebtedness or its ability to
consummate the transactions contemplated hereby.

      6.15 Insurance. Exhibit 6.15 attached hereto accurately sets forth as of
the Closing Date all insurance policies and programs currently in effect with
respect to the respective properties and assets and business of the Company and
its Subsidiaries, specifying, for each such policy and program, (a) the amount
thereof, (b) the risks insured against thereby, (c) the name of the insurer and
each insured party thereunder, (d) the policy or other identification number
thereof, (e) the expiration date thereof, and (f) any reserves relating to any
self-insurance program that is in effect. Such insurance policies and programs
reflect coverage that is reasonably consistent with prudent industry practice,
and shall include, without limitation, property and liability (and, if
appropriate, business interruption) insurance.

      6.16 [RESERVED].

      6.17 IITRI Acquisition and ESOT Transaction. As of the Closing Date and
immediately prior to issuing the Notes:

            (a) The Asset Purchase Agreement and the ESOT Transaction Documents
      are in full force and effect, no material breach, default or waiver of any
      term or provision thereof by the Company or any of its Subsidiaries which
      are parties thereto or, to the best of the Company's knowledge, the other
      parties thereto, has occurred (except for such breaches, defaults and
      waivers, if any, consented to in writing by the Required Holders) and no
      action has been taken by any competent authority which restrains, prevents
      or imposes any material adverse condition upon, or seeks to restrain,
      prevent or impose any material adverse condition upon, the IITRI
      Acquisition or the ESOT Transaction;

            (b) The representations and warranties of the Company contained in
      the ESOT Stock Purchase Agreement are true and correct in all material
      respects; and

            (c) Except as set forth on Exhibit 6.17 attached hereto, all
      conditions precedent to, and all consents necessary to permit, the funding
      of the IITRI Acquisition and the ESOT Transaction have been satisfied or
      waived with the approval of the Required Holders (such approval not to be
      unreasonably withheld).

      6.18 Environmental Matters.

            (a) Environmental Representations. Except as disclosed on Exhibit
      6.18 attached hereto:

                                      -14-
<PAGE>
                  (i) the operations of the Company and its Subsidiaries comply
            in all material respects with Environmental, Health or Safety
            Requirements of Law;

                  (ii) the Company and its Subsidiaries have all material
            permits, licenses or other authorizations required under
            Environmental, Health or Safety Requirements of Law and are in
            material compliance with such permits;

                  (iii) neither the Company, any of its Subsidiaries nor any of
            their respective present property or operations, or, to the
            Company's or any of its Subsidiaries' knowledge, any of their
            respective past property or operations, are subject to or the
            subject of, any investigation known to the Company or any of its
            Subsidiaries, any judicial, administrative or regulatory proceeding
            (including enforcement proceeding), order, judgment, decree,
            settlement or other agreement respecting: (A) any alleged or actual
            material violation of Environmental, Health or Safety Requirements
            of Law; (B) any material remedial action; or (c) any material claims
            or liabilities arising from the Release or threatened Release of a
            Contaminant into the environment;

                  (iv) there is not now, nor to the Company's or any of its
            Subsidiaries' knowledge has there ever been, on or in the property
            of the Company or any of its Subsidiaries any landfill, waste pile,
            underground storage tanks, aboveground storage tanks, surface
            impoundment or hazardous waste or hazardous material storage
            facility of any kind, any polychlorinated biphenyls (PCBs) used in
            hydraulic oils, electric transformers or other equipment, or any
            asbestos containing material nor any improperly stored, handled or
            disposed of contaminant of any kind not maintained or operated in
            compliance with Environmental, Health or Safety Requirements of Law;
            and

                  (v) neither the Company nor any of its Subsidiaries has any
            material Contingent Obligation in connection with any Release or
            threatened Release of a Contaminant into the environment.

            (b) Materiality. For purposes of this section 6.18 "material" means
      any noncompliance or basis for liability which could reasonably be likely
      to subject the Company or any of its Subsidiaries to liability,
      individually or in the aggregate, in excess of $1,500,000.

      6.19 Solvency. After giving effect to (a) the issuance of the Notes on the
Closing Date under this Agreement, (b) the other transactions contemplated by
the this Agreement, the other Operative Documents and the other Transaction
Documents, including the consummation of the ESOT Transaction and (c) the
payment and accrual of all transaction costs with respect to the foregoing, the
Company and its Subsidiaries taken as a whole are Solvent.

                                      -15-
<PAGE>
      6.20 Additional ESOP Provisions.

            (a) Organization and Powers. The ESOT has been duly organized and is
      a validly existing trust and has all the requisite powers and authority to
      execute and deliver the Transaction Documents which have been or are to be
      executed by it and to perform its obligations under and the transactions
      contemplated by the Transaction Documents. The execution and delivery by
      the ESOT of the Transaction Documents have been duly authorized and
      completed by all necessary actions of it and such executions and
      deliveries and the performance by it of its obligations under and the
      transactions contemplated by the Transaction Documents do not contravene
      any provision of law and the Transaction Documents which have been or are
      to be executed by it are legal, valid and binding obligations of it
      enforceable against it in accordance with the terms thereof, except as the
      enforceability thereof may be limited by bankruptcy, insolvency,
      reorganization, or moratorium or other similar laws relating to the
      enforcement of creditors' rights generally and by general equitable
      principles other than general equitable principles as may be applicable to
      any non-exempt prohibited transactions described in Section 406 of ERISA
      or Section 4975 of the Code. Each of such Transaction Documents is in full
      force and effect and no term or condition thereof has been amended,
      modified or waived from the terms and conditions contained in the
      Transaction Documents delivered to the holders pursuant to Section 5.3 of
      this Agreement without the consent of the Required Holders (which consent
      shall not be unreasonably withheld), except to the extent such amendment,
      modification or waiver could not reasonably be expected to have a material
      adverse effect upon the holders or otherwise have a Material Adverse
      Effect (true and correct copies of which have been provided to you on or
      prior to the Closing). The ESOT has performed and complied with all the
      material terms, provisions, agreements and conditions set forth therein
      and required to be performed or complied with by the ESOT, and no
      unmatured default, default or breach of any covenant by any such party
      exists thereunder.

            (b) No Conflicts. The execution, delivery and performance of each of
      the Transaction Documents to which the ESOT is a party do not (i) conflict
      with the ESOP Plan Documents, (ii) conflict with any Requirement of Law,
      or (iii) require a registration with, consent or approval of, or notices
      to, or other action to, with or by any Governmental Authority, other than
      filings as required by section 10.2(l).

            (c) Assets of ESOP and ESOT. None of the assets of the Company
      constitute, for any purpose of ERISA or Section 4975 of the Code, assets
      of the ESOP or any other "plan" as defined in Section 3(3) of ERISA or
      Section 4975 of the Code.

            (d) No Prohibited Transaction. No non-exempt prohibited transaction
      described in Section 406 of ERISA or Section 4975 of the Code has occurred
      with respect to the ESOP, and neither issuance of the Notes pursuant to
      this Agreement, the

                                      -16-
<PAGE>
      issuance of the Seller Notes, the loans under the Bank Credit Agreement
      nor the ESOT Transaction constitute or give rise to any such non-exempt
      prohibited transaction.

            (e) Qualification. The ESOP is qualified under Section 401(a) of the
      Code, and the ESOP is an employee stock ownership plan as defined in
      Section 4975(e)(7) of the Code.

            (f) ESOP Documents. The Company has provided each holder of Notes a
      complete and accurate copy of the ESOP Plan Documents pursuant to which
      the ESOP and ESOT are maintained by the Company, or which concern the
      Company's obligations with respect to the ESOP and ESOT, as of the Closing
      Date and the ESOT Transaction Documents as in effect on the Closing Date
      and the ESOP Plan Documents and the ESOT Transaction Documents are in full
      force and effect and have not been amended or modified.

            (g) Exempt Transaction. To the Company's knowledge, neither the
      issuance of the Notes or the Seller Notes is for any purpose of Section
      406 of ERISA or Section 4975 of the Code a direct or indirect loan or
      other transaction between any holder of Notes or Seller Notes and the ESOT
      which, if it is assumed that any holder is a "party in interest" and a
      "disqualified person" (as defined in Section 3(14) of ERISA and Section
      4975 of the Code), is a non-exempt prohibited transaction described in
      Section 406 of ERISA or Section 4975 of the Code.

            (h) No Taxable Event. Neither the Company nor any of its
      Subsidiaries is or shall be subject to the tax imposed by Section 4978 of
      the Code with respect to any "disposition" by the ESOT of any shares of
      Capital Stock of the Company.

            (i) No Investigations. To the Company's knowledge, there is no
      investigation or review by any Governmental Agency, or action, suit,
      proceeding or arbitration, pending or concluded, concerning any matter
      with respect to the ESOP or ESOT relevant as to whether any representation
      set forth at section 6.5(c) or this section 6.20 was, or has or will at
      anytime become, inaccurate or breached or, if were to be made at any time
      prior to the satisfaction of all obligations under this Agreement and the
      other Operative Documents, would be inaccurate when made (other than in
      respect of (A) periodic requests to the IRS to issue a favorable
      determination letter to the effect that the ESOP is and continues to be a
      qualified plan and employee stock ownership plan and (B) Annual Reports
      (IRS Form 5500 Series) for the ESOP, and neither the ESOP Fiduciary nor,
      to the best knowledge of the Company, the ESOT Trustee, has made any
      assertion with respect to the ESOP or ESOT contrary to or inconsistent
      with the accuracy of any such representation which assertion could
      reasonably be expected to have a Material Adverse Effect.

                                      -17-
<PAGE>
7.    Use of Proceeds. The proceeds of the loans made on the Closing Date under
the Bank Credit Agreement will be used by the Company to pay certain fees and
expenses incurred in connection with the IITRI Acquisition, this Agreement and
the Seller Notes and to partially fund the purchase price paid in the IITRI
Acquisition, all as further specified on Exhibit 7 attached hereto.

8.    Prepayment of Notes.

      8.1 Optional Prepayment With Premium of Notes.

            (a) At any time and from time to time after the second anniversary
      of the Closing Date, the Company may, at its option, upon notice as set
      forth in section 8.5, prepay all or any part (in an integral multiple of
      $500,000 and a minimum of $1,000,000 or such lesser principal amount
      thereof as shall then be outstanding) of the Notes, together with all
      accrued and unpaid interest thereon, upon the concurrent payment of a
      premium (a percentage of the principal amount so prepaid pursuant to this
      section 8.1) (the "Applicable Premium") applicable in accordance with the
      following table depending on the period in which the date fixed for such
      prepayment occurs:

<TABLE>
<CAPTION>
        If the Prepayment Occurs                Applicable Premium
        ------------------------                ------------------
<S>                                             <C>
        From and after _________, 2004 to and           6%
           including __________, 2005
        From and after _________, 2005 to and           3%
           including __________, 2006
        From and after _________, 2006 to and           1%
           including __________, 2007
        From and after _________, 2007                  0%
</TABLE>

            (b) The Applicable Premium shall apply if, by reason of the
      occurrence of an Event of Default and acceleration of the maturity of the
      Notes, the principal amount of the Notes shall be prepaid, except that if
      such prepayment occurs on or before the second anniversary of the Closing
      Date, the Applicable Premium shall be deemed to be seven percent (7%).

      8.2 Prepayment With Premium of the Notes at the Option of the Company upon
a Qualified IPO.

                                      -18-
<PAGE>
            (a) In connection with a Qualified IPO, the Company may, at its
      option, upon notice as set forth in section 8.5, prepay all or any part
      (in an integral multiple of $500,000 and a minimum of $1,000,000) of the
      Notes upon the concurrent payment of an amount equal to the Adjusted
      Applicable Premium if a Qualified IPO occurs on or before the second
      anniversary of the Closing Date and thereafter subject to payment of the
      Applicable Premium, provided that any prepayment of the Notes pursuant to
      this section 8.2 must be made concurrently with the closing of such
      Qualified IPO (such prepayment date being hereinafter referred to as the
      "Qualified IPO Closing Date"). Each notice pursuant to section 8.5 of a
      prepayment under this section 8.2 shall be accompanied by an Officers'
      Certificate certifying and demonstrating that this section 8.2 is being
      complied with in connection with such prepayment.

            (b) For purposes of this section 8.2:

                  (i) "Adjusted Applicable Premium" shall mean: (A) if the
            Investment IRR is equal to or greater than 25%, zero; (B) if the
            Investment IRR is less than 25%, such percentage as shall cause the
            Investment IRR (after giving effect to the payment of such amount)
            to be equal to 25%;

                  (ii) "Investment IRR" shall mean the internal per annum rate
            of return (compounded annually and determined in accordance with
            Agreement Accounting Principles as of the Qualified IPO Closing
            Date) earned on a combined basis by the holders of the Notes and
            Warrants on the [$_________] aggregate amount of Notes received on
            the Closing Date through the Qualified IPO Closing Date, but in any
            event (A) taking into account the payments (x) of principal,
            interest and premium and fees, if any, on the Notes and (y) on or in
            respect of the Warrants and Warrant Shares, if any, which were
            actually received prior to or concurrently with the Qualified IPO
            Closing Date, and (B) assuming (1) that the Notes are prepaid in
            full without premium (notwithstanding the provisions of this section
            8 to the contrary) on the Qualified IPO Closing Date, and (2) that
            the holders of the Warrants and Warrant Shares receive on the
            Qualified IPO Closing Date a payment in respect of or in exchange
            for the Warrants and Warrant Shares equal to the aggregate number of
            Warrants and Warrant Shares then outstanding multiplied by the
            public offering price per Share (less all underwriting discounts and
            commissions);

                  (iii) "Qualified IPO" shall mean the consummation of one or
            more underwritten public offerings of the Company's Common Stock
            pursuant to an effective registration statement which results in
            gross aggregate proceeds to the sellers in such offerings of not
            less than U.S. $30,000,000 (excluding proceeds received in such
            offerings from "affiliates" of the Company, within the meaning of
            Rule 12b-2 of the SEC under the 34 Act (other than any holder of
            Notes) or the ESOP) and pursuant to which the Company obtains a
            listing for its shares on a

                                      -19-
<PAGE>
      United States national securities exchange, the Nasdaq National Market
      System, or an automated quotation system of nationally recognized
      standing.

      8.3 Prepayment With Premium of the Notes at the Option of Holders of Notes
Upon a Change of Control.

            (a) Within five Business Days following the date upon which an
      Authorized Officer of the Company first has knowledge that a Change of
      Control has occurred or executes a definitive written agreement with
      respect to an impending Change of Control, the Company shall give written
      notice of such Change of Control (a "Change of Control Notice") to each
      holder of a Note, which Change of Control Notice shall (i) describe the
      facts and circumstances of such Change of Control in reasonable detail,
      (ii) refer to this section 8.3 and the rights of the holders of Notes
      hereunder, (iii) contain an offer to prepay on a date, which shall be no
      more than 60 days and not less than 30 days after the date upon which an
      Authorized Officer of the Company first acquired knowledge of such Change
      of Control, the entire unpaid principal amount of the Notes held by such
      holder, together with interest thereon to the prepayment date and,
      together with the Change of Control Premium with respect to each Note
      prepaid (showing in such offer the amount of interest which would be paid
      on such prepayment date and the Change of Control Premium), and (iv)
      request such holder to notify the Company in writing by a stated date (a
      "Response Date"), which date is not less than 10 days prior to the
      prepayment date and not more than 30 days after such holder's receipt of
      the Change of Control Notice, of its acceptance or rejection of such
      prepayment offer. If a holder does not notify the Company on or before the
      Response Date specified in the Change of Control Notice of such holder's
      acceptance of the prepayment offer contained therein, then the holder
      shall be deemed to have accepted such offer. On the date that the Change
      of Control Premium, if any, can be calculated, the Company shall notify
      each holder which has not rejected such prepayment offer by facsimile of
      the Change of Control Premium payable to such holder on the prepayment
      date, showing the Company's computation thereof in reasonable detail.

            (b) On the prepayment date specified in the Change of Control
      Notice, the entire unpaid principal amount of the Notes held by each
      holder of a Note who has accepted such prepayment offer, together with
      accrued and unpaid interest thereon to the prepayment date and together
      with the Change of Control Premium with respect to each such Note, shall
      become due and payable. Upon such payment by the Company in accordance
      with the provisions of this section 8.3(b), each such holder shall
      surrender the Notes held by it to the Company for cancellation and the
      Notes shall be deemed to be no longer outstanding and interest shall cease
      to accrue thereon.

            (c) The Company will promptly provide any holder of a Note with all
      information in the possession of the Company or any Subsidiary which such
      holder may

                                      -20-
<PAGE>
      reasonably request in order to enable such holder to evaluate the effect
      of a Change of Control on such holder's investment in the Notes.

            (d) Each notice from the Company pursuant to this section 8.3 shall
      make explicit reference to this section 8.3 and shall state that the right
      of any holders of the Notes to require prepayment of the Notes must be
      exercised by the Response Date.

            (e) The provisions of this section 8.3 are applicable to successive
      Changes of Control until the Notes are paid in full and no failure on the
      part of any holder to exercise any right under this section 8.3 arising on
      account of such Change of Control shall affect or impair any right of any
      holder of Securities under this Agreement or any of the other Operative
      Documents whether upon the occurrence of any other or any subsequent
      Change of Control or otherwise.

      8.4 Allocation of Partial Prepayments of Notes. In the case of each
partial prepayment of the Notes under section 8.1 and 8.2, the principal amount
to be prepaid shall be allocated among all of the Notes at the time outstanding
(excluding any Notes at the time owned by the Company or any of its Affiliates)
in proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof, with adjustments, to the extent practicable, to compensate for
any prior prepayments not made exactly in such proportion.

      8.5 Notice of Optional Prepayments of Notes. In the case of each
prepayment under sections 8.1 and 8.2, the Company shall give written notice
thereof to each holder of any Notes not less than 30 nor more than 60 days prior
to the date fixed for such prepayment. Each such notice shall set forth: (a) the
date fixed for prepayment; (b) the aggregate principal amount of Notes to be
prepaid on such date; (c) the aggregate principal amount of Notes held by such
holder to be prepaid on such date; and (d) the amount of the accrued interest
and premium, if any, to be paid to such holder on such date (together with the
calculation of such premium, which calculation shall be satisfactory to each
holder of the Notes to be so prepaid).

      8.6 Maturity; Accrued Interest; Surrender, etc. of Notes. In the case of
each prepayment of all or any part of any Note, the principal amount to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the premium, if any, due thereon. Any Note prepaid in full shall be marked
"paid in full", surrendered to the Company at the Company's principal place of
business promptly following prepayment and canceled and shall not be reissued,
and no Note shall be issued in lieu of any prepaid principal amount of any Note.

      8.7 Purchase of Notes. The Company will not, and will not permit any of
its Affiliates to, directly or indirectly, purchase or otherwise acquire, or
offer to purchase or otherwise acquire, any outstanding Notes except by way of
payment or prepayment in accordance with the provisions of the Notes and this
Agreement.

                                      -21-
<PAGE>
      8.8 Payment on Non-Business Days. If any amount hereunder or under the
Notes shall become due on a day which is not a Business Day, such payment shall
be due on the next succeeding Business Day.

9.    Subordination of Notes and Subsidiary Guarantees. Notwithstanding anything
contained herein to the contrary, payments on the Notes and the Subsidiary
Guarantees (if any), and the rights of the holders of the Notes and the
Subsidiary Guarantees (if any), are subordinated to payments on, and the rights
of the holders of, Senior Indebtedness (as defined in the Subordination
Agreement set forth in clause (a) of the definition thereof), all as further
provided in such Subordination Agreement. To the extent the Company is not a
party to a Subordination Agreement, you agree to use reasonable efforts to
promptly furnish to the Company a copy of such Subordination Agreement; provided
the failure to provide such copy shall not result in any liability to any holder
or otherwise effect the obligations of the Company or any Subsidiary under this
Agreement or the other Operative Documents.

10.   Reporting, Affirmative and Negative Covenants of the Company. From and
after the date of this Agreement, and thereafter so long as any of the Notes
shall remain outstanding, the Company will duly perform and observe, for the
benefit of the holders of the Notes, each and all of the covenants and
agreements applicable to it as hereinafter set forth:

      10.1 Reporting. The Company shall:

            (a) Financial Reporting. Furnish to each holder of Notes:

                  (i) Monthly Reports. As soon as practicable, and in any event
            within thirty (30) days after the end of each four-week fiscal
            period (other than the end of a fiscal quarter), the consolidated
            and consolidating balance sheet of the Company and its Subsidiaries
            as at the end of such period and the related consolidated and
            consolidating statements of income and statement of cash flow of the
            Company and its Subsidiaries for such fiscal period and cumulatively
            for the period from the beginning of the then current fiscal year to
            the end of such fiscal period, certified by the chief financial
            officer of the Company on behalf of the Company as fairly presenting
            the consolidated and consolidating financial position of the Company
            and its Subsidiaries as at the dates indicated and the results of
            their operations and cash flow for the fiscal periods indicated in
            accordance with Agreement Accounting Principles, subject to normal
            year end adjustments, and in comparative form (a) the corresponding
            figures as set forth in the budget delivered pursuant to clause (v)
            of this section 10.1(a) for such period, and (b) the actual
            financial position of the Company and its Subsidiaries for the
            period ending on the corresponding fiscal period in the previous
            fiscal year.

                  (ii) Quarterly Reports. As soon as practicable, and in any
            event within forty-five (45) days after the end of each fiscal
            quarter, the consolidated and

                                      -22-
<PAGE>
            consolidating balance sheet of the Company and its Subsidiaries as
            at the end of such period and the related consolidated and
            consolidating statements of income, stockholder's equity and cash
            flows of the Company and its Subsidiaries for such fiscal quarter
            and cumulatively for the period from the beginning of the then
            current fiscal year to the end of such fiscal quarter, certified by
            the chief financial officer of the Company on behalf of the Company
            as fairly presenting the consolidated and consolidating financial
            position of the Company and its Subsidiaries as at the dates
            indicated and the results of their operations and cash flows for the
            periods indicated in accordance with Agreement Accounting
            Principles, subject to normal year-end audit adjustments, together
            with (x) in comparative form (a) the corresponding figures as set
            forth in the budget, if any, delivered pursuant to clause (v) of
            this section 10.1(a) for such period, and (b) the corresponding
            figures of the Company and its Subsidiaries for the period ending on
            the corresponding calendar quarter in the previous fiscal year if
            such corresponding calendar quarter began after the Closing Date,
            and (y) any management discussion and analysis of such financial
            statements prepared for presentation to the Board of Directors of
            the Company.

                  (iii) Annual Reports. As soon as practicable, and in any event
            within ninety (90) days after the end of each fiscal year, (a) the
            consolidated balance sheet of the Company and its Subsidiaries as at
            the end of such fiscal year and the related consolidated statements
            of income, stockholders' equity and cash flows of the Company and
            its Subsidiaries for such fiscal year, and in comparative form the
            corresponding figures for the previous fiscal year along with
            consolidating schedules in form and substance sufficient to
            calculate the financial covenants set forth in section 10.4, (b) a
            schedule from the Company setting forth for each item in clause (a)
            hereof, the corresponding figures from the consolidated financial
            budget for the current fiscal year most recently delivered pursuant
            to section 10.1(a)(v), and (c) an audit report on the items listed
            in clause (a) hereof (other than the consolidating schedules) of
            KPMG LLP or any other independent certified public accountants of
            recognized national standing, which audit report shall be
            unqualified and shall state that such financial statements fairly
            present the consolidated and consolidating financial position of the
            Company and its Subsidiaries as at the dates indicated and the
            results of their operations and cash flows for the periods indicated
            in conformity with Agreement Accounting Principles and that the
            examination by such accountants in connection with such consolidated
            and consolidating financial statements has been made in accordance
            with generally accepted auditing standards. The deliveries made
            pursuant to this clause (iii) shall be accompanied by (x) any
            management letter prepared by the above-referenced accountants, and
            (y) a copy of a certificate of such accountants that, in the course
            of their examination necessary for their certification of the
            foregoing, they have obtained no knowledge of any Default in respect
            of the

                                      -23-
<PAGE>
            financial covenants set forth in section 10.4, or if, in the opinion
            of such accountants, any such Default shall exist, stating the
            nature and status thereof.

                  (iv) Officer's Certificate. Together with each delivery of any
            financial statement (a) pursuant to clauses (i), (ii) and (iii) of
            this section 10.1(a), an Officer's Certificate of the Company,
            substantially in the form of Exhibit 10(a)(iv)(a) attached hereto
            and made a part hereof, stating that as of the date of such
            Officer's Certificate no Event of Default or Default exists, or if
            any Default or Event of Default exists, stating the nature and
            status thereof and (b) pursuant to clauses (ii) and (iii) of this
            section 10.1(a), a compliance certificate, substantially in the form
            of Exhibit 10(a)(iv)(b) attached hereto and made a part hereof,
            signed by an Authorized Officer, setting forth calculations which
            demonstrate compliance, when applicable, with the provisions of
            sections 10.3(a) through (g) and section 10.4, and which calculates
            the Leverage Ratio.

                  (v) Budgets; Business Plans; Financial Projections. As soon as
            practicable and in any event not later than (a) sixty (60) days
            after the beginning of each fiscal year commencing with the fiscal
            year beginning on or about October 1, 2003, a copy of the Company's
            fiscal year operating budget for such fiscal year, and (b) ninety
            (90) days after the beginning of each fiscal year commencing with
            the fiscal year beginning on or about October 1, 2003, a copy of the
            plan and forecast (including a projected balance sheet, income
            statement, a statement of cash flow and related footnotes) of the
            Company and its Subsidiaries for the upcoming five (5) fiscal years,
            in each case prepared in such detail as shall be comparable to any
            such budgets prepared for and delivered under the Bank Credit
            Agreement.

            (b) Notice of Default. Promptly upon any of the chief executive
      officer, chief financial officer, controller, chief legal officer or
      general counsel of the Company obtaining knowledge (i) of any condition or
      event which constitutes an Event of Default or Default, or becoming aware
      that any holder of Notes has given any written notice with respect to a
      claimed Event of Default or Default under this Agreement, or (ii) of any
      condition or event which constitutes an Event of Default within the
      meaning of the Bank Credit Agreement, or (iii) that any Person has given
      any written notice to the Company or any Subsidiary of the Company or
      taken any other action with respect to a claimed default or event or
      condition of the type referred to in Section 12.1(h), or (iv) that any
      other development, financial or otherwise, which could reasonably be
      expected to have a Material Adverse Effect has occurred, the Company shall
      deliver to each holder of Notes an Officer's Certificate specifying (a)
      the nature and period of existence of any such claimed default, Default,
      Event of Default, condition or event, (b) the notice given or action taken
      by such Person in connection therewith, and (c) what action the Company
      has taken, is taking and proposes to take with respect thereto; provided
      that the Company's failure in good faith to deliver the foregoing notice
      pursuant to the foregoing

                                      -24-
<PAGE>
      clause (ii) shall not result in liability to the Company so long as the
      Company has received no written notice pursuant to the Bank Credit
      Agreement.

            (c) Lawsuits.

                  (i) Promptly upon any Authorized Officer of the Company
            obtaining knowledge of the institution of, or written threat of, any
            action, suit, proceeding, governmental investigation or arbitration,
            by or before any Governmental Authority, against or affecting the
            Company or any of its Subsidiaries or any property of the Company or
            any of its Subsidiaries not previously disclosed pursuant to section
            6.6, which action, suit, proceeding, governmental investigation or
            arbitration exposes, or in the case of multiple actions, suits,
            proceedings, governmental investigations or arbitrations arising out
            of the same general allegations or circumstances which, in the
            Company's reasonable judgment, could reasonably be expected to
            result in liability the Company or any of its Subsidiaries in an
            amount aggregating $1,500,000 or more (exclusive of claims covered
            by insurance policies of the Company or any of its Subsidiaries
            unless the insurers of such claims have disclaimed coverage or
            reserved the right to disclaim coverage on such claims and exclusive
            of claims covered by the indemnity of a financially responsible
            indemnitor in favor of the Company or any of its Subsidiaries unless
            the indemnitor has disclaimed or reserved the right to disclaim
            coverage thereof), give written notice thereof to the holders of the
            Notes and subject to preservation of the Company's or such
            Subsidiary's attorney-client privilege and to the extent not
            prejudicial to the Company or any of its Subsidiaries in any
            material respect, provide such other information as may be
            reasonably available to enable each such holder and its counsel to
            evaluate such matters; and

                  (ii) Within five (5) days the Company or any of its
            Subsidiaries obtaining knowledge of any material adverse
            developments with respect to any of the Disclosed Litigation, give
            written notice thereof to the holders of the Notes and provide such
            other information as may be reasonably available to enable each such
            holder and its counsel to evaluate such matters; and

                  (iii) In addition to the requirements set forth in clauses (i)
            and (ii) of this section 10.1(c), upon written request of the
            Required Holders, promptly give written notice of the status of any
            Disclosed Litigation or any action, suit, proceeding, governmental
            investigation or arbitration covered by a report delivered pursuant
            to clause (i) above and provide such other information as may be
            reasonably available to it that would not jeopardize any
            attorney-client privilege or otherwise be prejudicial to the
            Borrower or its Subsidiaries in any material respect by disclosure
            to the holders of the Notes to enable each holder of Notes and its
            counsel to evaluate such matters.

                                      -25-
<PAGE>
            (d) ERISA Notices. Deliver or cause to be delivered to the holders
      of the Notes, at the Company's expense, the following information and
      notices as soon as reasonably possible, and in any event:

                  (i) (a) within ten (10) Business Days after the Company
            obtains knowledge that a Termination Event has occurred, a written
            statement of the chief financial officer of the Company describing
            such Termination Event and the action, if any, which the Company has
            taken, is taking or proposes to take with respect thereto, and when
            known, any action taken or threatened by the IRS, DOL or PBGC with
            respect thereto and (b) within ten (10) Business Days after any
            member of the Controlled Group obtains knowledge that a Termination
            Event has occurred which could reasonably be expected to subject the
            Company to liability in excess of $500,000, a written statement
            of the chief financial officer, treasurer or designee of the Company
            describing such Termination Event and the action, if any, which the
            member of the Controlled Group has taken, is taking or proposes to
            take with respect thereto, and when known, any action taken or
            threatened by the IRS, DOL or PBGC with respect thereto;

                  (ii) within ten (10) Business Days after the Company or any of
            its Subsidiaries obtains knowledge that a material non-exempt
            prohibited transaction (defined in Sections 406 of ERISA and Section
            4975 of the Code) has occurred with respect to the ESOP or to any
            other Plan, or that the IRS or DOL or any other Governmental
            Authority is investigating whether any such material non-exempt
            prohibited transaction might have occurred, a statement of the chief
            financial officer, treasurer or designee of the Company describing
            such transaction and the action which the Company or such Subsidiary
            has taken, is taking or proposes to take with respect thereto;

                  (iii) within ten (10) Business Days after the material
            increase in the benefits of any Benefit Plan or Non-ERISA Commitment
            in existence on the date of this Agreement or the establishment of
            any new material Benefit Plan or Non-ERISA Commitment or the
            commencement of, or obligation to commence, material contributions
            to any Benefit Plan or Multiemployer Plan to which the Company or
            any member of the Controlled Group was not previously contributing,
            notification of such increase, establishment, commencement or
            obligation to commence and the amount of such contributions;

                  (iv) within ten (10) Business Days after the Company or any of
            its Subsidiaries receives written notice (whether preliminary, final
            or otherwise, but excluding any notice of proposed amendments) of
            any unfavorable determination letter from the IRS regarding the
            qualification of a Plan under Section 401(a) of the Code or status
            of the ESOP as an employee stock ownership plan (as defined in
            Section 4975(e)(7) of the Code), copies of each such letter;

                                      -26-
<PAGE>
                  (v) within ten (10) Business Days after the filing thereof
            with the DOL, IRS or PBGC, copies of each annual report (Form 5500
            series), including Schedule B thereto, filed with respect to each
            Benefit Plan;

                  (vi) within ten (10) Business Days after receipt by the
            Company or any member of the Controlled Group of each actuarial
            report for any Benefit Plan or Multiemployer Plan and each annual
            report for any Multiemployer Plan, copies of each such report;

                  (vii) within ten (10) Business Days after the filing thereof
            with the IRS, a copy of each funding waiver request filed with
            respect to any Benefit Plan and all communications received by the
            Company or a member of the Controlled Group with respect to such
            request;

                  (viii) within ten (10) Business Days after receipt by the
            Company or any member of the Controlled Group of the PBGC's
            intention to terminate a Benefit Plan or to have a trustee appointed
            to administer a Benefit Plan, copies of each such notice;

                  (ix) within ten (10) Business Days after receipt by the
            Company or any member of the Controlled Group of a notice from a
            Multiemployer Plan regarding the imposition of material withdrawal
            liability, copies of each such notice;

                  (x) within ten (10) Business Days after the Company or any
            member of the Controlled Group fails to make a required installment
            or any other required payment under Section 412 of the Code on or
            before the due date for such installment or payment to a Benefit
            Plan, a notification of such failure;

                  (xi) within ten (10) Business Days after the Company or any
            member of the Controlled Group knows that (a) a material
            Multiemployer Plan has been terminated, (b) the administrator or
            plan sponsor of a Multiemployer Plan intends to terminate a material
            Multiemployer Plan, or (c) the PBGC has instituted or will institute
            proceedings under Section 4042 of ERISA to terminate a material
            Multiemployer Plan;

                  (xii) within ten (10) Business Days after receipt by the
            Company or any of its Subsidiaries of notice of any audit,
            investigation, litigation or inquiry by the DOL or IRS relating to
            the ESOP or the ESOT, which would reasonably be expected to subject
            the Company or any of its Subsidiaries to liability, individually or
            in the aggregate, in excess of $1,500,000, copies of such notice and
            copies of all subsequent correspondence relating thereto within ten
            (10) Business Days of receipt of such correspondence;

                                      -27-
<PAGE>
                  (xiii) together with the financial statements delivered
            pursuant to section 10.1(a)(iii) or upon the written request of any
            holder of Notes, any amendment to any of the ESOP Plan Documents or
            ESOT Transaction Documents; and

                  (xiv) within ten (10) Business Days after an Authorized
            Officer obtains knowledge that at any time on or after the Closing
            Date the Company is not taxable as an "S corporation" as such item
            is defined in Section 1361 of the Code or that the ESOT is subject
            to tax imposed under the Code with respect to any item of income or
            loss of the Company or any Subsidiary of the Company, written notice
            of such knowledge.

      For purposes of this section 10.1(d), the Company, any of its Subsidiaries
      and any member of the Controlled Group shall be deemed to know all facts
      known by the administrator of any Plan of which the Company or any member
      of the Controlled Group or such Subsidiary is the plan sponsor. In
      addition, for purposes of this section 10.1(d), "material" means any
      noncompliance or basis for liability which could reasonably be likely to
      subject the Company or any of its Subsidiaries to liability, individually
      or in the aggregate, in excess of $1,500,000.

            (e) Labor Matters. Notify the holders of the Notes in writing,
      promptly upon an Authorized Officer learning of (i) any material labor
      dispute to which the Company or any of its Subsidiaries may become a
      party, including, without limitation, any strikes, lockouts or other
      disputes relating to such Persons' plants and other facilities and (ii)
      any material Worker Adjustment and Retraining Notification Act liability
      incurred with respect to the closing of any plant or other facility of the
      Company or any of its Subsidiaries.

            (f) Other Reports. Deliver or cause to be delivered to the holders
      of the Notes copies of (i) all financial statements, reports and notices,
      if any, sent or made available generally by the Company to its securities
      holders or filed with the Commission by the Company, and (ii) all press
      releases, if any, made available generally by the Company or any of the
      Company's Subsidiaries to the public concerning material developments in
      the business of the Company or any such Subsidiary.

            (g) Environmental Notices. As soon as possible and in any event
      within ten (10) days after receipt by the Company, provide written notice
      to the holders of the Notes which notice shall describe in reasonable
      detail (i) any notice or claim to the effect that the Company or any of
      its Subsidiaries is or may be liable to any Person as a result of the
      Release by the Company, any of its Subsidiaries, or any other Person of
      any Contaminant into the environment, and (ii) any notice alleging any
      violation of any Environmental, Health or Safety Requirements of Law by
      the Company or any of its Subsidiaries if, in either case, such notice or
      claim relates to an event which could reasonably be expected

                                      -28-
<PAGE>
      to subject the Company and each of its Subsidiaries to liability
      individually or in the aggregate in excess of $1,500,000.

            (h) Other Information. Promptly upon receiving a written request
      therefor from the Required Holders, prepare and deliver to the holders of
      the Notes such other information with respect to the Company and any of
      its Subsidiaries, as from time to time may be reasonably requested by the
      Required Holders.

            (i) Repurchase Liability Study On the date that is the earlier of
(a) one hundred eighty (180) days after the date of any Permitted Acquisition
with a Purchase Price in excess of $12,000,000 or the target of which
shall employ 100 or more employees, and (b) the second anniversary of the
delivery of the most recent repurchase liability study of the Company prepared
for the ESOP, deliver to the holders of the Notes copies of a repurchase
liability study of the Company prepared for the ESOP as of a recent date, in
each case in form and substance reasonably acceptable to the Required Holders.

      10.2 Affirmative Covenants.

            (a) Existence, Etc. Except as permitted pursuant to section 10.3(i),
      the Company shall, and shall cause each of its Material Subsidiaries to,
      at all times maintain its existence and preserve and keep, or cause to be
      preserved and kept, in full force and effect its rights and franchises
      material to its businesses.

            (b) Powers; Conduct of Business. The Company shall, and shall cause
      each of its Material Subsidiaries to, qualify and remain qualified to do
      business in each jurisdiction in which the nature of its business requires
      it to be so qualified and where the failure to be so qualified will have
      or could reasonably be expected to have a Material Adverse Effect. Except
      as otherwise permitted by this Agreement, the Company will, and will cause
      each Material Subsidiary to, carry on and conduct its business in
      substantially the same manner and in substantially the same fields of
      enterprise as it is presently conducted and logical extensions thereof.

            (c) Compliance with Laws, Etc. The Company shall, and shall cause
      each of its Material Subsidiaries to, (a) comply with all Requirements of
      Law and all restrictive covenants affecting such Person or the business,
      properties, assets or operations of such Person, and (b) obtain as needed
      all permits necessary for its operations and maintain such permits in good
      standing unless failure to comply or obtain such permits could not
      reasonably be expected to have a Material Adverse Effect.

            (d) Payment of Taxes and Claims; Tax Consolidation. The Company
      shall pay, and cause each of its Material Subsidiaries to pay when due,
      (i) all taxes, assessments and other governmental charges imposed upon it
      or on any of its properties or assets or in respect of any of its
      franchises, business, income or property before any penalty or interest
      accrues thereon, and (ii) all claims (including, without limitation,

                                      -29-
<PAGE>
      claims for labor, services, materials and supplies) for sums which have
      become due and payable and which by law have or may become a Lien (other
      than a Lien permitted by section 10.3(c)) upon any of the Company's or
      such Material Subsidiary's property or assets, prior to the time when any
      penalty or fine shall be incurred with respect thereto; provided, however,
      that no such taxes, assessments and governmental charges referred to in
      clause (i) above or claims referred to in clause (ii) above (and interest,
      penalties or fines relating thereto) need be paid if being contested in
      good faith by appropriate proceedings diligently instituted and conducted
      and if such reserve or other appropriate provision, if any, as shall be
      required in conformity with Agreement Accounting Principles shall have
      been made therefor.

            (e) Insurance. The Company shall maintain for itself and its
      Material Subsidiaries, or shall cause each of its Material Subsidiaries to
      maintain in full force and effect, the insurance policies and programs
      listed on Exhibit 6.15 to this Agreement or substantially similar policies
      and programs or other policies and programs as reflect coverage that is
      reasonably consistent with prudent industry practice.

            (f) Inspection of Property; Books and Records; Discussions. The
      Company shall permit and cause each of the Company's Material Subsidiaries
      to permit, any authorized representative(s) designated by any holder of
      the Notes to visit and inspect any of the properties of the Company or any
      of its Material Subsidiaries, to examine, audit, check and make copies of
      their respective financial and accounting records, books, journals,
      orders, receipts and any correspondence and other data relating to their
      respective businesses or the transactions contemplated hereby (including,
      without limitation, in connection with environmental compliance, hazard or
      liability, subject to preservation of the attorney-client privilege), and
      to discuss their affairs, finances and accounts with their officers and
      their independent certified public accountants (and such accountants are
      hereby authorized to disclose to such holder any and all financial
      statements and other supporting financial documents with respect to the
      business, financial conditions and other affairs of the Company and its
      Subsidiaries), all upon reasonable notice and at such reasonable times
      during normal business hours. Such inspections and audits in the preceding
      sentence (i) subject to clause (ii) below on behalf of any holder shall,
      unless occurring at a time when an Event of Default shall be continuing,
      be at such holders expense and (ii) by or on behalf of the Required
      Holders or any holder owning at least 30% of the outstanding principal
      amount of the Notes, other than first such inspection or audit occurring
      during any calendar year or any inspections and audits occurring at a time
      when a Default shall be continuing, shall be at the Required Holders or
      such holder's expense; all other such inspections, visitations and audits
      shall be at the Company's expense. The Company shall keep and maintain,
      and cause each of the Company's Material Subsidiaries to keep and
      maintain, in all material respects, proper books of record and account in
      which entries in conformity with Agreement Accounting Principles shall be
      made of all dealings and transactions in relation to their respective
      businesses and activities. If an Event of Default has occurred

                                      -30-
<PAGE>
      and is continuing, the Company, upon the request of any holder, shall
      provide copies of such records to such holder or such holder's
      representatives.

            (g) ERISA Compliance. The Company shall, and shall cause each of the
      Company's Material Subsidiaries to, establish, maintain and operate all
      Plans and Non-ERISA Commitments to comply in all material respects with
      the applicable provisions of ERISA, the Code, all other applicable laws,
      and the regulations and interpretations thereunder and the respective
      requirements of the governing documents for such Plans and Non-ERISA
      Commitments.

            (h) Maintenance of Property. The Company shall cause all property
      reasonably deemed by the Borrower as necessary to the conduct of its
      business or the business of any Material Subsidiary to be maintained and
      kept in good condition, repair and working order and supplied with all
      necessary equipment and shall cause to be made all necessary repairs,
      renewals, replacements, betterments and improvements thereof, all as in
      the judgment of the Company may be necessary so that the business carried
      on in connection therewith may be properly and advantageously conducted at
      all times.

            (i) Environmental Compliance. The Company and its Subsidiaries shall
      comply with all Environmental, Health or Safety Requirements of Law,
      except where noncompliance will not have or is not reasonably likely to
      subject the Company or any of its Subsidiaries to liability, individually
      or in the aggregate, in excess of $1,500,000.

            (j) Use of Proceeds. The Company shall use the proceeds of Revolving
      Loans (as defined in the Bank Credit Agreement) made on the Closing Date
      of the Bank Credit Agreement to pay fees and expenses incurred in
      connection with, the IITRI Acquisition, the Bank Credit Agreement and the
      ESOT Transaction, for Capital Expenditures, and for the additional working
      capital needs and other general corporate purposes of the Company and its
      Material Subsidiaries, including, without limitation, the financing of
      Permitted Acquisitions. The Company will not, nor will it permit any
      Material Subsidiary to, use any of the proceeds of the Loans to purchase
      or carry any Margin Stock.

            (k) Subsidiary Guarantors. Within ten (10) Business Days of the date
      any Authorized Officer or legal officer of the Company has knowledge that
      any Subsidiary has become a Material Subsidiary of the Company or a
      guarantor of the Bank Secured Obligations, the Company shall cause such
      Subsidiary of the Company, to execute a Subsidiary Guaranty in the form of
      Exhibit 2(d) hereto (or a supplement thereto) pursuant to which such
      Subsidiary shall become a Subsidiary Guarantor;

            (l) Determination Letter. The Company shall promptly submit a
      request to the IRS to issue a favorable determination letter to the effect
      that the ESOP is a qualified

                                      -31-
<PAGE>
      plan and employee stock ownership plan within the meanings of Section
      401(a) and 4975(e)(7), respectively, of the Code.

      10.3 Negative Covenants.

            (a) Indebtedness. Neither the Company nor any of its Subsidiaries
      shall directly or indirectly create, incur, assume or otherwise become or
      remain directly or indirectly liable with respect to any Indebtedness,
      except:

                  (i) Indebtedness evidenced by the Notes;

                  (ii) the Bank Secured Obligations in an aggregate principal
            amount not to exceed the Permitted Senior Additional Indebtedness
            and Permitted Refinancing Indebtedness in respect thereof, subject
            to the terms of the Subordination Agreement set forth in clause (a)
            of the definition thereof;

                  (iii) Permitted Existing Indebtedness and Permitted
            Refinancing Indebtedness in respect thereof;

                  (iv) Indebtedness in respect of obligations secured by
            Customary Permitted Liens;

                  (v) Indebtedness constituting Contingent Obligations permitted
            by section 10.3(e);

                  (vi) subject to the terms of section 10.3(q), Indebtedness
            arising from intercompany loans and advances (a) from any Subsidiary
            to the Company or any wholly-owned Subsidiary or (b) from the
            Company to any wholly-owned Subsidiary; provided, that such
            Indebtedness shall subordinated to the Notes on subordination terms
            set forth in Exhibit 10.3;

                  (vii) Indebtedness in respect of Hedging Obligations permitted
            under Section 7.3(p) of the Bank Credit Agreement as in effect on
            the Closing Date or under any Permitted Refinancing Indebtedness to
            the extent permitted under the Subordination Agreement set forth in
            clause (a) of the definition thereof;

                  (viii) secured or unsecured purchase money Indebtedness
            (including Capitalized Leases) incurred by the Company or any of its
            Subsidiaries after the Closing Date to finance the acquisition of
            fixed assets, if (a) at the time of such incurrence, no Default or
            Event of Default has occurred and is continuing or would result from
            such incurrence, (b) such Indebtedness has a scheduled maturity and
            is not due on demand, (c) such Indebtedness does not exceed the
            lower of the fair market value or the cost of the applicable fixed
            assets on the date acquired, (d) such Indebtedness does not exceed
            $1,500,000 in the aggregate

                                      -32-
<PAGE>
            principal amount outstanding at any time, and (e) any Lien securing
            such Indebtedness is permitted under section 10.3(c) (such
            Indebtedness being referred to herein as "Permitted Purchase Money
            Indebtedness");

                  (ix) Indebtedness with respect to surety, appeal and
            performance bonds obtained by the Company or any of its Subsidiaries
            in the ordinary course of business;

                  (x) Indebtedness incurred by the Company or any of its
            Subsidiaries (whether assumed by the Company or such Subsidiary or
            issued to the seller) in any Permitted Acquisition as part of the
            consideration therefor, provided that such Indebtedness is unsecured
            and is subordinated to the Notes on terms reasonably acceptable to
            the Required Holders;

                  (xi) Indebtedness evidenced by the Seller Notes and Permitted
            Refinancing Indebtedness in connection therewith;

                  (xii) guaranties by the Company of Indebtedness permitted to
            be incurred by any Subsidiary;

                  (xiii) additional unsecured Indebtedness incurred by the
            Company or any of its Subsidiaries not otherwise permitted under
            this section 10.3; provided that at the time of and immediately
            after giving pro forma effect to the incurrence of such
            Indebtedness, the [Leverage Ratio], [Senior Leverage Ratio] and/or
            [Fixed Charge Coverage Ratio] would not exceed [__] to 1, ____ to 1
            or ___ to 1, respectively, which [Leverage Ratio][Senior Leverage
            Ratio] and/or [Fixed Charge Coverage Ratio], as the case may be,
            shall be calculated as of the last day of the immediately preceding
            fiscal quarter; and

                  (xiv) additional unsecured Indebtedness in an aggregate amount
            at any time outstanding not exceeding $1,500,000.

            (b) Sales of Assets. Neither the Company nor any of its Material
      Subsidiaries shall consummate any Asset Sale, except:

                  (i) licenses or sublicenses (but not the sale of any licensing
            rights) by the Company or its Material Subsidiaries of software,
            customer lists, trademarks, service marks, patents, trade names and
            copyrights and other intellectual property in the ordinary course of
            business; provided, that such licenses or sublicenses shall not
            interfere with the business of the Company or any such Material
            Subsidiary;

                                      -33-
<PAGE>
                  (ii) the disposition in the ordinary course of business of
            equipment that is obsolete, excess or no longer used or useful in
            the Company's or its Material Subsidiaries' businesses;

                  (iii) transfers of assets between the Company and any
            wholly-owned Material Subsidiary of the Company or between
            wholly-owned Material Subsidiaries of the Company not otherwise
            prohibited by this Agreement; and

                  (iv) sales, assignments, transfers, leases, conveyances or
            other dispositions of other assets if such transaction (a) is for
            consideration consisting at least seventy-five percent (75%) of
            cash, (b) is for not less than fair market value (as determined in
            good faith by the Company's board of directors), and (c) when
            combined with all such other transactions (each such transaction
            being valued at net book value) (i) during the immediately preceding
            twelve-month period, represents the disposition of not greater than
            $1,500,000 of the Company's Consolidated Tangible Assets determined
            as at the end of the fiscal year immediately preceding that in which
            such transaction is proposed to be entered into, and (ii) during the
            period from the Closing Date to the date of such proposed
            transaction, represents the disposition of not greater than
            $2,400,000;

; provided that it shall not constitute an Event of Default under this section
10.3(b) if such sale or other transfer of assets results in a Change of Control
and the Company offers to prepay the Notes of all holders pursuant to section
8.3 and the Company prepays the Notes of all holders who elect to accept the
Company's offer to prepay the Notes.

            (c) Liens. Neither the Company nor any of its Material Subsidiaries
      shall directly or indirectly create, incur, assume or permit to exist any
      Lien on or with respect to any of their respective property or assets
      except:

                  (i) Liens created by the Bank Documents securing the Bank
            Secured Obligations and Permitted Refinancing Indebtedness in
            respect thereof;

                  (ii) Permitted Existing Liens;

                  (iii) Customary Permitted Liens; and

                  (iv) purchase money Liens (including the interest of a lessor
            under a Capitalized Lease and Liens to which any property is subject
            at the time of acquisition thereof) securing Permitted Purchase
            Money Indebtedness; provided that such Liens shall not apply to any
            property of the Company or its Material Subsidiaries other than that
            purchased or subject to such Capitalized Lease;

                                      -34-

<PAGE>
                  (v) Liens with respect to property acquired by the Company or
            any of its Material Subsidiaries after the Closing Date (and not
            created in contemplation of such acquisition) pursuant to a
            Permitted Acquisition; provided, that such Liens shall extend only
            to the property so acquired, shall not secure any working capital
            financing of the business acquired and shall secure Indebtedness
            permitted pursuant to the terms of section 10.3(a);

                  (vi) Liens incurred in connection with sale leaseback
            transactions permitted under section 10.3(j); and

                  (vii) [Environmental Liens securing obligations not to exceed
            $1,500,000 in the aggregate; and]

                  (viii) other Liens securing Indebtedness (other than
            subordinated Indebtedness) not to exceed $500,000 in the aggregate.

In addition, neither the Company nor any Material Subsidiary or Subsidiary
Guarantor shall become a party to any agreement, note, indenture or other
instrument, or take any other action, which would subordinate any of its
Indebtedness to the Bank Secured Obligations unless such Indebtedness shall, at
the Company's election, be pari passu with or subordinated to the Notes on
subordination terms set forth in Exhibit 10.3.

            (d) Investments. Except to the extent permitted pursuant to section
      10.3(g), neither the Company nor any of its Material Subsidiaries shall
      directly or indirectly make or own any Investment except:

                  (i) Investments in cash and Cash Equivalents;

                  (ii) Permitted Existing Investments in an amount not greater
            than the amount thereof on the Closing Date;

                  (iii) Investments consisting of trade receivables or received
            in connection with the bankruptcy or reorganization of suppliers and
            customers and in settlement of delinquent obligations of, and other
            disputes with, customers and suppliers arising in the ordinary
            course of business;

                  (iv) Investments consisting of deposit accounts maintained by
            the Company and its Material Subsidiaries in the ordinary course of
            business in connection with its cash management system;

                  (v) Investments consisting of non-cash consideration from a
            sale, assignment, transfer, lease, conveyance or other disposition
            of property permitted by section 10.3(b);

                                      -35-
<PAGE>
                  (vi) Investments consisting of (a) intercompany loans from any
            Subsidiary of the Company to the Company or any other Material
            Subsidiary permitted by section 10.3(a)(v), (b) intercompany loans
            from the Company to its Material Subsidiaries permitted under
            section 10.3(q), and (c) Equity Interests in Material Subsidiaries;

                  (vii) Investments constituting Permitted Acquisitions;

                  (viii) Investments constituting Indebtedness permitted by
            Section 10.3(a) or Contingent Obligations permitted by section
            10.3(e) or Restricted Payments permitted by section 10.3(f);

                  (ix) Investments consisting of loans or advances made by any
            party to the Bank Documents to employees and officers of the Company
            or any of the Company's wholly-owned Material Subsidiaries for
            travel, entertainment and relocation expenses in the ordinary course
            of business in an aggregate principal amount outstanding at any one
            time not to exceed $1,000,000;

                  (x) Investments in addition to those permitted elsewhere in
            this section 10.3(d) in an amount not to exceed $1,000,000 in the
            aggregate at any time outstanding;

provided, however, that the Investments described in clauses (vii) or (x) above
shall not be permitted to be made at a time when a Default shall have occurred
and be continuing or would result therefrom.

            (e) Contingent Obligations. Neither the Company nor any of its
      Material Subsidiaries shall directly or indirectly create or become or be
      liable with respect to any Contingent Obligation, except: (i) recourse
      obligations resulting from endorsement of negotiable instruments for
      collection in the ordinary course of business; (ii) Permitted Existing
      Contingent Obligations; (iii) obligations, warranties, guaranties,
      reserves and indemnities, not relating to Indebtedness of any Person,
      which have been or are undertaken or made in the ordinary course of
      business and not in favor of an Affiliate of the Company or such Material
      Subsidiary (unless entered into on terms substantially similar to those
      applicable to a non-Affiliate third party transaction at arm's length);
      (iv) obligations, warranties and indemnities of the Company to IITRI
      arising out of the Asset Purchase Agreement and the Exhibits thereto; (v)
      Contingent Obligations with respect to surety, appeal and performance
      bonds obtained by the Company or any Material Subsidiary in the ordinary
      course of business, (v) Contingent Obligations of the Subsidiaries of the
      Company under this Agreement and the other Operative Documents to which
      they are a party, (vi) Contingent Obligations in connection with (x) the
      redemption or repurchase of any Capital Stock of the Company as a result
      of distributions by the ESOT to participants in the ESOP pursuant to the
      ESOP Plan Documents subsequent to

                                      -36-
<PAGE>
      their termination of employment with the Company or any Controlled Group
      member or (y) the requirements of Section 401(a)(28) of the Code or any
      substantially similar Requirement of Law, (viii) guarantees of
      Indebtedness permitted by section 10.3(a), provided, that to the extent
      such Indebtedness shall be subordinated to the Bank Secured Obligations,
      each such guarantee shall, at the Company's election, be pari passu with
      or subordinated to the Notes on subordination terms set forth in Exhibit
      10.3, and (ix) Contingent Obligations for amounts that may become due on
      the Securities pursuant to the Warrants and the Seller Warrants.

            (f) Restricted Payments. The Company shall not declare or make any
      Restricted Payment, except:

                  (i) Restricted Payments made in connection with the
            defeasance, redemption or repurchase of any Indebtedness with the
            Net Cash Proceeds of Permitted Refinancing Indebtedness; and

                  (ii) Restricted Payments of any Subsidiary of the Company to
            the Company or to another wholly-owned Subsidiary of the Company;
            and

                  (iii) Restricted Payments made in connection with claims for
            reimbursement, indemnification or contribution arising out of or
            related to the Asset Purchase Agreement; and

                  (iv) any Restricted Payment that constitutes a payment in
            respect of a purchase price adjustment, earn-out or other similar
            form of contingent purchase price in connection with any Acquisition
            (including the IITRI Acquisition) consummated on or before the
            Closing Date as set forth on Exhibit 10.3(f) and any Permitted
            Acquisition; and

                  (v) Restricted Payments that constitute payments of principal,
            interest, premium, fees, expenses or other amounts due on the
            Securities pursuant to this Agreement and the other Operative
            Documents, and Restricted Payments that constitute mandatory
            payments of principal, interest, premium, fees or expenses due on or
            under the Seller Note Securities Purchase Agreement, the Seller
            Notes or the Seller Warrants or the other Operative Documents (as
            defined in the Seller Note Securities Purchase Agreement), in each
            case subject to the terms of the Subordination Agreements and any
            restrictions provided in the documents for such Indebtedness; and

                  (vi) Restricted Payments made (v) in connection with the
            redemption or repurchase for value of any Capital Stock of the
            Company as a result of distributions by the ESOT of such Capital
            Stock to participants in the ESOP pursuant to the ESOP Plan
            Documents subsequent to their termination of

                                      -37-
<PAGE>
            employment with the Company or any Controlled Group member, (w) as
            required by Section 401(a)(28) of the Code or any substantially
            similar Requirement of Law, (x) in good faith and belief by the
            Company to be made with respect to the payments described in the
            preceding clauses (v) or (w) but which do not so qualify for the
            status described in the preceding clauses (v) or (w) on account of
            administrative error or mistake, provided that such payment would
            not otherwise result in a Default or Event of Default hereunder and
            either (A) such payments do not collectively exceed $250,000 during
            the period from the Closing Date through the date of such payment or
            (B) such payment is recovered by the Company within thirty (30) days
            thereof and the Company's books and records are accordingly adjusted
            to reflect such recovery, together with all other such payments
            under this subclause (B), do not collectively exceed $1,000,000
            during the period from the Closing Date through the date of such
            payment, or (y) in the form of administrative fees or expenses of
            the ESOP or the ESOT including, without limitation, the fees of the
            ESOT Trustee or (z) as contributions to the ESOT as required under
            the ESOP Plan Documents; and

                  (vii) Restricted Payments made in connection with stock
            appreciation rights plans, phantom stock plans and other
            equity-based incentive compensation arrangements or plans to the
            extent such payments would not be in violation of the terms of this
            Agreement or any other Operative Document.

            provided, however, that in no event shall any Restricted Payments
            (other than (1) to the Company, (2) as permitted by clause (ii)
            above, (3) Restricted Payments (x) resulting from distributions by
            the ESOT to participants in the ESOP pursuant to the ESOP Plan
            Documents subsequent to the termination by participants in the ESOP
            of employment with the Company or any Controlled Group member or (y)
            as required by Section 401(a)(28) of the Code or any substantially
            similar Requirement of Law, and (4) Restricted Payments resulting
            from contributions to the ESOT as required under the ESOP Plan
            Documents) be declared or made if either a Default or an Event of
            Default shall have occurred and be continuing at the date of
            declaration or payment thereof or would result therefrom; provided,
            further, that in no event shall any Restricted Payment be permitted
            under clause (v) above with respect to the Seller Notes, Seller
            Warrants or other Operative Documents (as defined in the Seller Note
            Securities Purchase Agreement) unless the Company shall have
            delivered to the holders of the Notes a compliance certificate in
            substantially the form of Exhibit 10.1(a)(iv)(b) hereto for the most
            recently completed fiscal quarter calculated giving effect to such
            Restricted Payment as of the last day of such prior fiscal quarter
            and certifying that the Company is in compliance with the financial
            covenants in section 10.4 as of the last day of such prior fiscal
            quarter.

                                      -38-
<PAGE>
            (g) Conduct of Business; Subsidiaries; Acquisitions. Neither the
      Company nor any of its Material Subsidiaries shall engage in any business
      other than the businesses engaged in by the Company and its Material
      Subsidiaries on the Closing Date and any business or activities which are
      substantially similar, related or incidental thereto or logical extensions
      thereof. The Company shall not create, acquire or capitalize any Material
      Subsidiary after the Closing Date unless (i) no Default or Event of
      Default shall have occurred and be continuing or would result therefrom;
      (ii) after such creation, acquisition or capitalization, all of the
      representations and warranties contained herein shall be true and correct
      (unless such representation and warranty is made as of a specific date, in
      which case, such representation or warranty shall be true and correct as
      of such date); and (iii) after such creation, such creation, acquisition
      or capitalization the Company and such Material Subsidiary shall comply
      with the terms of Section 10.2(k). Neither the Company nor its
      Subsidiaries shall make any Acquisitions, other than (a) the IITRI
      Acquisition and (b) Acquisitions meeting the following requirements or
      otherwise approved by the Required Holders (each such Acquisition
      constituting a "Permitted Acquisition"):

                  (i) no Default or Event of Default shall have occurred and be
            continuing or would result from such Acquisition or the incurrence
            of any Indebtedness in connection therewith;

                  (ii) in the case of an Acquisition of Equity Interests of an
            entity (x) such Acquisition shall be consummated as a merger the
            acquired entity shall be merged with and into the Company or any
            wholly-owned Subsidiary of the Company immediately following such
            Acquisition, with the Company or such wholly-owned Subsidiary being
            the surviving corporation following such merger and (y) the results
            of operations of such entity shall be reported on a consolidated
            basis with the Company and its consolidated Subsidiaries;

                  (iii) the purchase is consummated on a non-hostile basis and
            approved by the target company's board of directors (and
            stockholders, if necessary) prior to the consummation of the
            Acquisition; and the acquisition documents in respect of which are
            satisfactory to the Required Holders (including, without limitation,
            in respect of representations, indemnities and opinions) and the
            results of due diligence in respect of such purchase are
            satisfactory to the Required Holders;

                  (iv) the Purchase Price for the Acquisition shall not exceed
            without the prior written consent of the Required Holders an amount
            equal to $6,000,000 (including the incurrence or assumption of any
            Indebtedness in connection therewith), and in any event shall not
            exceed, together with all other Permitted Acquisitions permitted
            under this section 10.3(g), $12,000,000 (including the incurrence or
            assumption of any Indebtedness in connection therewith) in the
            aggregate during the term of this Agreement;

                                      -39-
<PAGE>
                  (v) the businesses being acquired shall be substantially
            similar, related or incidental to the businesses or activities
            engaged in by the Company and its Subsidiaries on the Closing Date;

                  (vi) effective as of the date of each such Acquisition (taking
            into account the effect of such purchase and any Indebtedness
            incurred in connection therewith), the Company shall deliver to the
            holders of the Notes a certificate of an Authorized Officer of the
            Company certifying the Company's compliance with the Bank Credit
            Agreement, including, without limitation, Section 7.3(G) thereof;
            and

                  (vii) prior to each such Acquisition, the Purchase Price of
            which (including the incurrence or assumption of any Indebtedness in
            connection therewith) shall be $1,500,000 or more, the Company shall
            deliver to the holders of the Notes a certificate from one of the
            Authorized Officers, demonstrating to the satisfaction of the
            Required Holders that after giving effect to such Acquisition and
            the incurrence of any Indebtedness permitted by section 10.3(a) in
            connection therewith, on a pro forma basis using historical audited
            or reviewed unaudited financial statements obtained from the
            seller(s) in respect of each such Acquisition as if the Acquisition
            and such incurrence of Indebtedness had occurred on the first day of
            the twelve-month period ending on the last day of the Company's most
            recently completed fiscal quarter, the Company would have been in
            compliance with the financial covenants in section 10.4 and not
            otherwise in Default.

            (h) Transactions with Stockholders and Affiliates. Neither the
      Company nor any of its Subsidiaries shall directly or indirectly enter
      into or permit to exist any transaction (including, without limitation,
      the purchase, sale, lease or exchange of any property or the rendering of
      any service) with, or make loans or advances to any holder or holders of
      any of the Equity Interests of the Company, or with any Affiliate of the
      Company or any other Person controlling or controlled by any Person that
      is the "beneficial owner" (as defined in Rule 13d-3 of the Commission
      under the Exchange Act) of greater than five percent (5%) or more of any
      class of Voting Stock (or other voting interests) of the Company or any of
      its Subsidiaries, in either case which is not a Subsidiary of the Company,
      on terms that are less favorable to the Company or any of its
      Subsidiaries, as applicable, than those that could reasonably be obtained
      in an arm's length transaction at the time from Persons who are not such a
      holder or Affiliate, except for (a) Restricted Payments permitted by
      section 10.3(f) and Investments permitted by section 10.3(d), (b) the
      transactions contemplated under the Asset Purchase Agreement, the ESOT
      Transaction Documents and the ESOP Plan Documents, (c) the incurrence of
      Indebtedness described in Section 10.3(a) hereof, (d) sales of assets
      described in section 10.3(b)(iii) hereof, (e) any Investment permitted by
      section 10.3(d)(vi) hereof, and (f) any deferred compensation plans or
      arrangements, employment contracts, employee benefits,

                                      -40-
<PAGE>
      Incentive Arrangements and other similar contracts or arrangements with or
      for the benefit of officers and directors of the Company and Subsidiaries
      of the Company to the extent the terms thereof are not in violation of the
      terms of this Agreement or any other Operative Document.

            (i) Restriction on Fundamental Changes. Neither the Company nor any
      of its Subsidiaries shall enter into any merger or consolidation, or
      liquidate, wind-up or dissolve (or suffer any liquidation or dissolution),
      or convey, lease, sell, transfer or otherwise dispose of, in one
      transaction or series of transactions, all or substantially all of the
      Company's consolidated business or property (each such transaction a
      "Fundamental Change"), whether now or hereafter acquired, except (i)
      Fundamental Changes permitted under sections 10.3(b), 10.3(d) or 10.3(g),
      (ii) a Subsidiary of the Company may be merged into or consolidated with
      the Company (in which case the Company shall be the surviving corporation)
      or any wholly-owned Subsidiary of the Company provided the Company owns,
      directly or indirectly, a percentage of the equity of the merged entity
      not less than the percentage it owned of the Subsidiary prior to such
      Fundamental Change and if the predecessor Subsidiary was a Subsidiary
      Guarantor, the surviving Subsidiary shall be a Subsidiary Guarantor
      hereunder, (iii) any liquidation of any Subsidiary of the Company, into
      the Company or another Subsidiary of the Company, as applicable, and (iv)
      upon not less than thirty (30) days' prior written notice to the holders
      of the Notes, any merger or reincorporation of the Company or any
      Subsidiary solely for purposes of reincorporation in a different
      jurisdiction.

            (j) Sales and Leasebacks. Neither the Company nor any of its
      Subsidiaries shall become liable, directly, by assumption or by Contingent
      Obligation, with respect to any lease, whether an operating lease or a
      Capitalized Lease, of any property (whether real or personal or mixed),
      (i) which it or one of its Subsidiaries sold or transferred or is to sell
      or transfer to any other Person, or (ii) which it or one of its
      Subsidiaries intends to use for substantially the same purposes as any
      other property which has been or is to be sold or transferred by it or one
      of its Subsidiaries to any other Person in connection with such lease,
      unless in either case the sale involved is not prohibited under section
      10.3(b) and the lease involved is not prohibited under section 10.3(a) and
      any related Investment is not prohibited under section 10.3(d).

            (k) Margin Regulations. Neither the Company nor any of its
      Subsidiaries, shall use all or any portion of the proceeds of any credit
      extended under this Agreement or the Bank Credit Agreement to purchase or
      carry Margin Stock.

            (l) ERISA.

                  (i) The Company shall not

                                      -41-
<PAGE>
                              (A) engage, or permit any of its Subsidiaries to
                        engage, in any material prohibited transaction described
                        in Sections 406 of ERISA or 4975 of the Code for which a
                        statutory or class exemption is not available or a
                        private exemption has not been previously obtained from
                        the DOL;

                              (B) permit to exist any material accumulated
                        funding deficiency (as defined in Sections 302 of ERISA
                        and 412 of the Code), with respect to any Benefit Plan,
                        whether or not waived;

                              (C) fail, or permit any Controlled Group member to
                        fail, to pay timely required material contributions or
                        annual installments due with respect to any waived
                        funding deficiency to any Benefit Plan;

                              (D) terminate, or permit any Controlled Group
                        member to terminate, any Benefit Plan which would result
                        in any material liability of the Company or any
                        Controlled Group member under Title IV of ERISA;

                              (E) fail to make any material contribution or
                        payment to any Multiemployer Plan which the Company or
                        any Controlled Group member may be required to make
                        under any agreement relating to such Multiemployer Plan,
                        or any law pertaining thereto;

                              (F) fail, or permit any Controlled Group member to
                        fail, to pay any Benefit Plan any required material
                        installment or any other payment required under Section
                        412 of the Code on or before the due date for such
                        installment or other payment; or

                              (G) amend, or permit any Controlled Group member
                        to amend, a Benefit Plan resulting in a material
                        increase in current liability for the plan year such
                        that the Company or any Controlled Group member is
                        required to provide security to such Benefit Plan under
                        Section 401(a)(29) of the Code.

                        (ii) For purposes of this section 10.3(l), "material"
                  means any noncompliance or basis for liability which could
                  reasonably be likely to subject the Company or any of its
                  Subsidiaries to liability, individually or in the aggregate,
                  in excess of $1,500,000.

                  (m) Organizational Documents. Neither the Company nor any of
            its Subsidiaries shall amend, modify or otherwise change any of the
            terms or provisions in any of their respective Organizational
            Documents as in effect on the Closing Date in any manner adverse to
            the interests of the holders of Securities, without the prior
            written consent of the Required Holders.

                                      -42-
<PAGE>
                  (n) Fiscal Year. Neither the Company nor any of its
            consolidated Subsidiaries shall change its fiscal year for
            accounting or tax purposes from a period consisting of a 52/53
            calendar week year ending on September 30 of each year without the
            prior written consent of the Required Holders.

                  (o) Subsidiary Covenants. Except as set forth in the Bank
            Documents and this Agreement, the Company will not, and will not
            permit any Subsidiary to, create or otherwise cause to become
            effective or suffer to exist any consensual encumbrance (other than
            Permitted Liens) or restriction of any kind on the ability of any
            Subsidiary to pay dividends or make any other distribution on its
            stock, or make any other Restricted Payment, pay any Indebtedness or
            other obligation owed to the Company or any other Subsidiary, make
            loans or advances or other Investments in the Company or any other
            Subsidiary, or sell, transfer or otherwise convey any of its
            property to the Company or any other Subsidiary, or merge,
            consolidate with or liquidate into the Company or any other
            Subsidiary.

                  (p) Hedging Obligations. The Company shall not and shall not
            permit any of its Subsidiaries to enter into any Hedging
            Arrangements evidencing Hedging Obligations, other than Hedging
            Arrangements entered into by the Company or its Subsidiaries
            pursuant to which the Company or its Subsidiaries has hedged its
            actual or anticipated interest rate, foreign currency or commodity
            exposure, and which are non-speculative in nature. The agreements in
            respect of such permitted Hedging Arrangements entered into by the
            Company or its Subsidiaries and any Bank Lender or any affiliate of
            any Bank Lender including, without limitation, to hedge floating
            interest rate risk in an aggregate notional amount not to exceed at
            any time an amount equal to the outstanding balance of the Term
            Loans at such time are sometimes referred to herein as "Hedging
            Agreements."

                  (q) [RESERVED]

                  (r) Issuance of Disqualified Stock. From and after the Closing
            Date of this Agreement, neither the Company, nor any of its
            Subsidiaries shall issue any Disqualified Stock. All issued and
            outstanding Disqualified Stock shall be treated as Consolidated
            Total Indebtedness for all purposes of this Agreement (and as funded
            Indebtedness for purposes of section 10.1(f)), and the amount of
            such deemed Indebtedness shall be the aggregate amount of the
            liquidation preference of such Disqualified Stock.

                  (s) Loss of S Corporation Status. Except as a result of the
            consummation of (i) an underwritten initial public offering of the
            Common Stock of the Company pursuant to which the Company obtains a
            listing for its Common Stock on a United States national securities
            exchange, the Nasdaq National Market System, or an automated
            quotation system of nationally recognized standing or (ii) the sale
            of Equity Interests by or the merger of the Company, the proceeds of
            which are used to prepay the principal, interest, premium, fees and
            expenses on the Notes in full concurrently with the issuance of such

                                      -43-
<PAGE>
            Equity Interests or the consummation of such merger, the Company
            shall not fail to be qualified as an "S corporation" as defined in
            Section 1361 of the Code at all times on or after the Closing Date.

                  (t) Imposition of UBIT on ESOT. The ESOT shall not be subject
            to tax imposed under the Code with respect to any item of income or
            loss of the Company or any Subsidiary of the Company at any time on
            or after the Closing Date that could reasonably be expected to
            result in tax liability to the ESOT, the Company or any of its
            Subsidiaries in an amount in excess of $1,500,000.

                  (u) ESOP Conflict. The Company shall not permit the
            performance of any of the Transaction Documents to which the ESOT is
            a party to conflict with the ESOP Plan Documents, conflict with any
            Requirement of Law, or require the registration with, consent or
            approval of, or notice to, or other action to, with or by any
            Governmental Authority other than (i) filings that are made
            regarding the status of the Company as an "S Corporation" as such
            term is defined in Section 1361 of the Code, which filings shall
            have been made on or prior to the Closing Date, (ii) filings as
            required by section 10.2(m) and subsequent requests to the IRS to
            issue a favorable determination letter to the effect that the ESOP
            continues to be such a qualified plan and employee stock ownership
            plan, and (iii) Annual Reports (IRS Form 5500 series) for the ESOP.

                  (v) Assets as Plan Assets. The Company shall not permit any of
            the assets of the Company to constitute, for any purpose of ERISA or
            Section 4975 of the Code, assets of the ESOP or any other "plan" as
            defined in Section 3(3) of ERISA or Section 4975 of the Code.

                  (w) Prohibited Transaction. The Company shall not permit any
            material non-exempt prohibited transaction described in Section 406
            of ERISA or Section 4975 of the Code to occur with respect to the
            ESOP.

                  (x) Non-Qualification of ESOP. The Company shall not take any
            action, nor fail to take any action, the result of which action or
            inaction is that the ESOP shall fail to be qualified under Section
            401(a) of the Code. The Company shall not permit the ESOP to fail to
            be an employee stock ownership plan as defined in Section 4975(e)(7)
            of the Code.

                  (y) Excise Tax. The Company and its Subsidiaries shall not be
            subject to the tax imposed by Section 4978 of the Code with respect
            to any "disposition" by the ESOT of any shares of Capital Stock of
            the Company occurring as a result of the ESOT Transaction.

                  (z) holder/ESOT Transactions. No deemed proceeds hereunder
            shall for any purpose of Section 406 of ERISA or Section 4975 of the
            Code be a direct or indirect loan

                                      -44-
<PAGE>
            or other transaction between any holder and the ESOT which, if it is
            assumed that the holders of Notes are "parties in interest" and
            "disqualified persons" (as defined in Section 3(14) of ERISA and
            Section 4975 of the Code), is a non-exempt prohibited transaction
            described in Section 406 of ERISA or Section 4975 of the Code.

                  (aa) ERISA Judgments and Determinations. There shall be no
            finding, holding, ruling or other determination not subject to cure
            made by any court or Governmental Authority, and there shall be no
            assertion by the ESOP Fiduciary, or, to the best knowledge of the
            Company, the ESOT Trustee, concerning any matter with respect to the
            ESOP or ESOT contrary to or inconsistent with any covenant set forth
            in section 10.3(s) through (z) which assertion could reasonably be
            expected to have a Material Adverse Effect.

                  (bb) Junior Subordinated Indebtedness. The Company shall not
            and shall not permit any of its Subsidiaries to amend, supplement or
            modify the terms of the Junior Subordinated Notes, or make any
            payment required as a result of an amendment or change thereto,
            other than amendments, supplements or modifications which (i) (a)
            decrease the rate of interest payable on the Junior Subordinated
            Notes, (b) provide for the payment in kind in lieu of cash of any
            portion of the interest on the Junior Subordinated Notes, (c)
            provide for the extension of the maturity date with respect to any
            principal or interest payment to be made under the Junior
            Subordinated Notes, (d) provide more flexibility to the Company or
            its Subsidiaries in connection with any covenants or (e) waive any
            defaults existing in connection with the Junior Subordinated Notes
            and (ii) do not adversely affect in any respect the interests of the
            holders of the Notes.

            10.4 Financial Covenants. The Company shall comply with the
      following (provided that for purposes of calculating the following
      financial covenants, EBITDAE shall be deemed to be equal to (i)
      $3,707,773 for the fiscal quarter ended March 15, 2002, (ii) $6,013,561
      for the fiscal quarter ended July 5, 2002 and (iii) $5,487,256 for the
      fiscal quarter ended September 30, 2002):

                  (a) Maximum Senior Leverage Ratio. The Company shall not
            permit the ratio (the "Senior Leverage Ratio") of (i) the sum of the
            aggregate outstanding principal amount of all Term Loans and
            Revolving Credit Obligations to (ii) EBITDAE to be greater than:

                        (i) 3.25 to 1.00 as of the end of each fiscal quarter
                  for the period commencing with the fiscal quarter ending
                  December 20, 2002 through the fiscal quarter ending
                  September 30, 2003;

                        (ii) 2.90 to 1.00 as of the end of each fiscal quarter
                  for the period commencing with the fiscal quarter ending
                  December 19, 2003 through the fiscal quarter ending
                  September 30, 2004;

                                      -45-

<PAGE>
                      (iii) 2.30 to 1.00 as of the end of each fiscal quarter
                  for the period commencing with the fiscal quarter ending
                  December 17, 2004 through the fiscal quarter ending
                  September 30, 2005;

                       (iv) 2.00 to 1.00 as of the end of each fiscal quarter
                  for the period commencing with the fiscal quarter ending
                  December 16, 2005 through the fiscal quarter ending
                  September 30, 2006 and

                        (v) 1.5 to 1.00 as of the end of each fiscal
                  quarter thereafter.

      The Senior Leverage Ratio shall be calculated, in each case, as of the
last day of each fiscal quarter based upon (a) for Term Loans and Revolving
Credit Obligations (each as defined in the Bank Credit Agreement), the principal
amount of Term Loans and Revolving Credit Obligations as of the last day of each
such fiscal quarter; and (b) for EBITDAE, the actual amount for the four-quarter
period ending on such last day of such fiscal quarter, taking into account
Permitted Acquisitions and calculated, with respect to Permitted Acquisitions,
on a pro forma basis using historical audited and reviewed unaudited financial
statements obtained from the seller(s) in such Permitted Acquisitions (adjusted
for reasonable non-recurring seller expenses and other add-backs to EBITDAE;
provided that such add-backs have been approved in writing by 66 2/3% of the
Bank Lenders if such add-backs are required to permit the Company on a pro-forma
basis to meet the maximum Senior Leverage Ratio in connection with such
Permitted Acquisitions).

            (b) Maximum Leverage Ratio. The Company shall not permit the ratio
      (the "Leverage Ratio") of (i) the principal amount of Consolidated Total
      Indebtedness (other than the Seller Notes) to (ii) EBITDAE to be greater
      than:

                  (i) 4.60 to 1.00 as of the end of each fiscal quarter for the
            period commencing with the fiscal quarter ending December 20, 2002
            through the fiscal quarter ending September 30, 2003;

                 (ii) 4.10 to 1.00 as of the end of each fiscal quarter for the
            period commencing with the fiscal quarter ending December 19, 2003
            through the fiscal quarter ending September 30, 2004; and

                (iii) 3.75 to 1.00 as of the end of each fiscal quarter for the
            period commencing with the fiscal quarter ending December 17, 2004
            through the fiscal quarter ending September 30, 2005;

                 (iv) 3.50 to 1.00 as of the end of each fiscal quarter for the
            period commencing with the fiscal quarter ending December 16, 2005
            through the fiscal quarter ending September 30, 2006; and

                  (v) 2.75 to 1.00 as of the end of each fiscal quarter
            thereafter.

            The Leverage Ratio shall be calculated, in each case, as of the last
day of each fiscal quarter based upon (a) for Consolidated Total Indebtedness,
the principal amount of Consolidated Total Indebtedness as of the last day of
each such fiscal quarter; and (b) for EBITDAE, the actual amount for the
four-quarter period ending on such last day of such fiscal quarter, taking into
account Permitted Acquisitions and calculated, with respect to Permitted
Acquisitions, on a pro forma basis using historical audited and reviewed
unaudited financial statements obtained from the seller(s) in such Permitted
Acquisitions (adjusted for reasonable non-recurring seller expenses and other
add-backs to EBITDAE; provided that such add-backs have been approved in writing
by 66 2/3% of the Bank Lenders if such add-backs are required to permit the
Company on a pro-forma basis to meet the maximum Leverage Ratio in connection
with such Permitted Acquisitions).

            (c) Minimum Fixed Charge Coverage Ratio. The Company and its
      consolidated Subsidiaries shall maintain a ratio ("Fixed Charge Coverage
      Ratio") of (i)

                                      -46-

<PAGE>

      EBITDAE for such period minus Capital Expenditures for such period, to
      (ii) the sum of the amounts of (a) scheduled amortization during such
      period of the principal portion of the Term Loans and scheduled
      amortization during such period of the principal portion of all other
      Consolidated Total Indebtedness, plus (b) Restricted Payments paid in cash
      and, if positive,  net ESOP repurchase obligations during such period,
      plus (c) all charges for foreign, federal, state and local income taxes
      paid in cash by the Company and its consolidated Subsidiaries during such
      period, plus (d) Cash Interest Expense during such period plus (e) cash
      payments in respect of a purchase price adjustment, earn-out or other
      similar form of contingent purchase price during such period, of at least
      (1) 1.00 to 1.00 as of the end of each fiscal quarter for the period
      commencing with the fiscal quarter ending on December 20, 2002 through the
      fiscal quarter ending September 30, 2003; (2) 1.05 to 1.00 as of the end
      of each fiscal quarter for the period commencing with the fiscal quarter
      ending on December 19, 2003 through the fiscal quarter ending March 10,
      2006; and (3) 1.15 to 1.00 as of the end of each fiscal quarter
      thereafter.

      In each case, the Fixed Charge Coverage Ratio shall be determined as of
the last day of each fiscal quarter for the four fiscal quarter period ending on
such last day of such fiscal quarter, taking into account Permitted Acquisitions
and calculated, with respect to Permitted Acquisitions, on a pro forma basis
using historical audited and reviewed unaudited financial statements obtained
from the seller(s) in such Permitted Acquisitions (adjusted for reasonable
non-recurring seller expenses and other add-backs to EBITDAE; provided that such
add-backs have been approved in writing by 66 2/3% of the Bank Lenders if such
add-backs are required to permit the Company on a pro-forma basis to meet the
minimum Fixed Charge Coverage Ratio in connection with such Permitted
Acquisitions).

            (d) Minimum EBITDAE. The Company shall not permit EBITDAE to be less
      than the amounts set forth below for the fiscal periods ending on the
      dates set forth below:

<Table>
<Caption>
-------------------------------------------------------------------------
Fiscal Quarter Ending On or About the Date                Minimum EBITDAE
Set Forth Below
-------------------------------------------------------------------------
<S>                                                    <C>

December 20, 2002                                          $14,500,000
-------------------------------------------------------------------------
March 14, 2003                                             $14,500,000
-------------------------------------------------------------------------
July 4, 2003                                               $14,500,000
-------------------------------------------------------------------------
September 30, 2003                                         $14,500,000
-------------------------------------------------------------------------
December 19, 2003                                          $14,500,000
-------------------------------------------------------------------------
March 12, 2004                                             $15,000,000
-------------------------------------------------------------------------
July 2, 2004                                               $15,750,000
-------------------------------------------------------------------------
September 30, 2004                                         $15,750,000
-------------------------------------------------------------------------
December 17, 2004                                          $16,000,000
-------------------------------------------------------------------------
March 11, 2005                                             $16,000,000
-------------------------------------------------------------------------
July 1, 2005                                               $16,000,000
-------------------------------------------------------------------------
September 30, 2005                                         $16,000,000
-------------------------------------------------------------------------
December 16, 2005                                          $17,000,000
-------------------------------------------------------------------------
March 10, 2006                                             $17,000,000
-------------------------------------------------------------------------
June 30, 2006                                              $17,000,000
-------------------------------------------------------------------------
September 30, 2006                                         $17,000,000
-------------------------------------------------------------------------
December 15, 2006 and each fiscal quarter thereafter       $18,000,000
-------------------------------------------------------------------------
</Table>

      In each case EBITDAE shall be determined as of the last day of each fiscal
quarter for the four-quarter period ending on such last day of such fiscal
quarter, taking into account Permitted Acquisitions and calculated, with respect
to Permitted Acquisitions, on a pro forma basis using historical audited and/or
reviewed unaudited financial statements obtained from the seller(s) in such
Permitted Acquisitions (adjusted for reasonable non-recurring seller expenses
and other add-backs to EBITDAE; provided that such add-backs have been approved
in writing by 66 2/3% of the Bank Lenders if such add-backs are required to
permit the Company on a pro-forma basis to meet the minimum EBITDAE in
connection with such Permitted Acquisitions).

                                      -47-
<PAGE>
            (e) Capital Expenditures. The Company will not, nor will it permit
      any Subsidiary to expend, for Capital Expenditures in the acquisition of
      fixed assets in any fiscal year, on a non-cumulative basis, in the
      aggregate for the Company and its Subsidiaries, in excess of:

                  (i) $3,600,000 for the fiscal year ending September 30, 2003;
            and

                  (ii) $3,600,000 for the fiscal year ending September 30, 2004,
            plus any amount permitted to be expended in the immediately
            preceding fiscal year (pursuant to the absolute dollar limitation
            for such preceding fiscal year and not pursuant to any carryover
            provision from a prior fiscal year) but not expended;

                  (iii) $4,200,000 for the fiscal year ending September 30,
            2005, plus any amount permitted to be expended in the immediately
            preceding fiscal year (pursuant to the absolute dollar limitation
            for such preceding fiscal year and not pursuant to any carryover
            provision from a prior fiscal year) but not expended;

                  (iv) $4,800,000 for the fiscal year ending September 30, 2005,
            plus any amount permitted to be expended in the immediately
            preceding fiscal year (pursuant to the absolute dollar limitation
            for such preceding fiscal year and not pursuant to any carryover
            provision from a prior fiscal year) but not expended; and

                  (v) $5,400,000 for the fiscal year ending September 30, 2007
            and for each fiscal year thereafter, plus any amount permitted to be
            expended in the immediately preceding fiscal year (pursuant to the
            absolute dollar limitation for such preceding fiscal year and not
            pursuant to any carryover provision from a prior fiscal year) but
            not expended.

1.1   Definitions.

      11.1 Definitions of Capitalized Terms. The terms defined in this section
11.1, whenever used in this Agreement, shall, unless the context otherwise
requires, have the following respective meanings:

      "Acquired Business" means the Business, as described in the Acquisition
Documents.

      "Acquisition" means any transaction, or any series of related
transactions, consummated on or after the Closing Date, by which the Company or
any of its Subsidiaries (i) acquires any going business or all or substantially
all of the assets of any Person, firm, corporation or division thereof, whether
through purchase of assets, merger or otherwise or (ii) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage of voting power) of the outstanding
Equity Interests of another Person.

                                      -48-
<PAGE>
      "Acquisition Documents" means the Asset Purchase Agreement and the other
agreements, documents and instruments related thereto or executed and delivered
in connection therewith.

      "Adjusted Applicable Premium" shall have the meaning specified in section
8.2.

      "Administrative Agent" means the administrative agent in its capacity as
contractual representative for itself and the Lenders pursuant to the Bank
Credit Agreement and any successor Administrative Agent appointed pursuant to
the Bank Credit Agreement.

      "Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. A Person shall be deemed to control another Person if the controlling
Person is the "beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of greater than fifty percent (50%) or more of the Voting
Stock of the controlled Person or possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of the controlled
Person, whether through ownership of Capital Stock, by contract or otherwise;
provided that, for purposes hereof, in no event shall any holder or other
institutional holder of Securities be deemed to be an Affiliate of the Company
or any of its Subsidiaries.

      "Agreement Accounting Principles" means generally accepted accounting
principles as in effect in the United States from time to time, applied in a
manner consistent with that used in preparing the financial statements of the
Company referred to in Section 5 of this Agreement as the same may be adjusted
from time to time in accordance with the provisions of this Agreement.

      "Applicable Premium" shall have the meaning specified in section 8.1.

      "Asset Purchase Agreement" means that certain Fourth Amended and Restated
Asset Purchase Agreement made on November 18, 2002 with effect as of June 4,
2002, by and between the Company, as the purchaser, and IITRI, as the seller, as
in effect on the Closing Date and without giving effect to any subsequent
amendment or modification thereto.

      "Asset Sale" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including by way of a sale-leaseback transaction, and including the sale or
other transfer of any of the Equity Interests of any Subsidiary of such Person,
but not the Equity Interests of such Person) to any Person (other than the
Company or any of its wholly-owned Subsidiaries) other than (i) the licensing of
the Company's and its Subsidiaries intellectual property in the ordinary course
of business and (ii) the sale of products manufactured by or on behalf of the
Company and its Subsidiaries in the ordinary course of business.

      "Authorized Officer" means any of the president, chief financial officer,
controller, treasurer or assistant treasurer of the Company, acting singly.

                                      -49-
<PAGE>
      "Bank Credit Agreement" means the Credit Agreement dated as of ______,
2002 by and among the Company, various financial institutions party thereto,
LaSalle Bank National Association, as agent, as amended, restated, supplemented,
refunded, substituted, modified, replaced or refinanced from time to time in
accordance with the terms of the Subordination Agreement.

      "Bank Documents" means the Bank Credit Agreement, the Collateral
Documents, and all other documents, instruments, notes and agreements executed
in connection therewith or contemplated thereby identified in Schedule II, as
the same may be amended, restated, supplemented, refunded, substituted,
modified, replaced or refinanced and in effect from time to time, subject to the
terms of the Subordination Agreement as set forth in clause (a) of the
definition thereof.

      "Bank Lenders" means the financial institutions from time to time who may
be lenders under the Bank Credit Agreement and their respective successors and
assigns.

      "Bank Obligations" means "Obligations" or other similar term as such term
is defined in the Bank Credit Agreement.

      "Bank Secured Obligations" means, collectively, (i) the Bank Obligations
and (ii) all Hedging Obligations owing under Hedging Agreements to any Bank
Lender or any Affiliate of any Lender, which Hedging Obligations are permitted
pursuant to the terms of the Bank Credit Agreement.

      "Benefit Plan" means a defined benefit plan as defined in Section 3(35) of
ERISA (other than a Multiemployer Plan) which is intended to be qualified under
Section 401(a) of the Code in respect of which the Company or any other member
of the Controlled Group is, or within the immediately preceding six (6) years
was, an "employer" as defined in Section 3(5) of ERISA.

      "Business Day" means a day (other than a Saturday or Sunday) on which
banks are open for business in New York, New York and Chicago, Illinois.

      "Capital Expenditures" means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including
Capitalized Lease Obligations and Permitted Purchase Money Indebtedness) by the
Company and its consolidated Subsidiaries during that period that, in conformity
with Agreement Accounting Principles, are required to be included in or
reflected by the property, plant, equipment or similar fixed asset accounts
reflected in the consolidated balance sheet of the Company and its Subsidiaries.

      "Capitalized Lease" means, with respect to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with Agreement Accounting Principles.

                                      -50-
<PAGE>
      "Capitalized Lease Obligations" means, with respect to any Person, the
amount of the obligations of such Person under Capitalized Leases which would be
capitalized on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.

      "Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.

      "Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies, the long-term
indebtedness of which institution at the time of acquisition is rated A- (or
better) by S&P or A3 (or better) by Moody's, and which certificates of deposit
and time deposits are fully protected against currency fluctuations for any such
deposits with a term of more than ninety (90) days; (iii) shares of money
market, mutual or similar funds having assets in excess of $100,000,000 and the
investments of which are limited to (a) investment grade securities (i.e.,
securities rated at least Baa by Moody's or at least BBB by S&P) and (b)
commercial paper of United States and foreign banks and bank holding companies
and their subsidiaries and United States and foreign finance, commercial
industrial or utility companies which, at the time of acquisition, are rated A-1
(or better) by S&P or P-1 (or better) by Moody's (all such institutions being,
"Qualified Institutions"); and (iv) commercial paper of Qualified Institutions;
provided that the maturities of such Cash Equivalents shall not exceed three
hundred sixty-five (365) days from the date of acquisition thereof.

      "Cash Interest Expense" means, for any period, the total interest expense
of the Company and its consolidated Subsidiaries, whether paid or accrued
(including the interest component of Capitalized Leases), but excluding interest
expense not payable in cash (including amortization of discount and financing
fees), in each case, as determined in conformity with Agreement Accounting
Principles.

      "Change of Control" means an event or series of events by which:

            (a) Any Person (other than IITRI (or any of its direct assignees or
      transferees) or the ESOT, together with their "affiliates" within the
      meaning of Rule 12b2 of the Commission under the Exchange Act) shall
      acquire beneficial ownership (including beneficial ownership resulting
      from the formation of a "group" within the meaning of Rule13d-5 of the
      Commission under the Exchange Act) of more than fifty percent (50%)

                                      -51-
<PAGE>

      of the combined voting power of the outstanding Capital Stock of the
      Company, ordinarily having the right to vote at any election of directors;
      or

            (b) Except as expressly permitted under the terms of this Agreement,
      the Company consolidates with or merges into another Person or conveys,
      transfers or leases all or substantially all of its property to any Person
      in one or a series of transactions, or any Person consolidates with or
      merges into the Company, in either event pursuant to a transaction in
      which the outstanding Capital Stock of the Company is reclassified or
      changed into or exchanged for cash, securities or other property.

      "Change of Control Premium" means an amount equal to 1% of the principal
amount of the Notes prepaid as a result of a Change of Control.

      "Closing" and "Closing Date" shall have the respective meanings specified
in section 4.

      "Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

      "Collateral Documents" means all agreements, instruments and documents
provided under the Bank Credit Agreement evidencing liens or securities
interests of the Bank Lenders thereunder.

      "Commission" means the Securities and Exchange Commission of the United
States of America and any Person succeeding to the functions thereof.

      "Common Stock" means the Common Stock, [$.01] par value, of the Company as
constituted on the Closing Date and any shares into which such Common Stock
shall have been changed or any Shares resulting from any reclassification of
such Common Stock.

      "Company" shall have the meaning specified in the first paragraph of this
Agreement.

      "Competitor" means any Person which generated at least twenty percent
(20%) of its total revenue (on a consolidated basis together with its direct and
indirect subsidiary entities and its direct and indirect parent entities) from
government contracts in its last fiscal year preceding the proposed transfer,
other than any Financial Institution.

      "Consolidated Total Indebtedness" means, as of any date of determination,
the total amount of that portion of the Indebtedness of the Company and its
Subsidiaries which is interest

                                      -52-
<PAGE>
bearing or with respect to which interest expense accrues or is attributable
under Agreement Accounting Principles, including, without limitation, interest
bearing accounts payable not payable in the ordinary course of business, notes
payable, Contingent Obligations, Capitalized Lease Obligations, reimbursement
obligations in respect of commercial letters of credit, and Off-Balance Sheet
Liabilities.

      "Contaminant" means any waste, pollutant, hazardous material, hazardous
substance, toxic substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, asbestos, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste, and includes, but
is not limited to, these terms as defined in Environmental, Health or Safety
Requirements of Law and any other substance or material defined as regulated by
any other Environmental, Health or Safety Requirements of Law.

      "Contingent Obligation" means, as applied to any Person, any Contractual
Obligation, contingent or otherwise, of that Person with respect to any
indebtedness of another or other obligation or liability of another, including,
without limitation, any such indebtedness, obligation or liability of another
directly or indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including Contractual Obligations (contingent or
otherwise) arising through any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain solvency, assets, level of income, or other financial condition, or to
make payment other than for value received. The amount of any Contingent
Obligation shall be equal to the present value of the portion of the obligation
so guaranteed or otherwise supported, in the case of known recurring
obligations, and the reasonably anticipated liability in respect of the portion
of the obligation so guaranteed or otherwise supported assuming such Person is
required to perform thereunder, in all other cases.

      "Contractual Obligation" means, as applied to any Person, any provision of
any equity or debt securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument, in any case in writing, to which that
Person is a party or by which it or any of its properties is bound, or to which
it or any of its properties is subject.

      "Controlled Group" means the group consisting of (i) any corporation which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company; (ii) a partnership or other trade or
business (whether or not incorporated) which is under common control (within the
meaning of Section 414(c) of the Code) with the Company; and (iii) a member of
the same affiliated service group (within the meaning of Section 414(m) of the
Code) as the Company, any corporation described in clause (i) above or any
partnership or trade or business described in clause (ii) above.

                                      -53-
<PAGE>
      "Customary Permitted Liens" means:

            (a) Liens (other than Environmental Liens and Liens in favor of the
      IRS or the PBGC) with respect to the payment of taxes, assessments or
      governmental charges in all cases which are not yet due or (if
      foreclosure, distraint, sale or other similar proceedings shall not have
      been commenced or any such proceeding after being commenced is stayed)
      which are being contested in good faith by appropriate proceedings
      properly instituted and diligently conducted and with respect to which
      adequate reserves or other appropriate provisions are being maintained in
      accordance with Agreement Accounting Principles;

            (b) statutory Liens of landlords and Liens of suppliers, mechanics,
      carriers, materialmen, warehousemen, service providers or workmen and
      other similar Liens imposed by law created in the ordinary course of
      business for amounts not yet due or which are being contested in good
      faith by appropriate proceedings properly instituted and diligently
      conducted and with respect to which adequate reserves or other appropriate
      provisions are being maintained in accordance with Agreement Accounting
      Principles;

            (c) Liens (other than Environmental Liens and Liens in favor of the
      IRS or the PBGC) incurred or deposits made in the ordinary course of
      business in connection with workers' compensation, unemployment insurance
      or other types of social security benefits or to secure the performance of
      bids, tenders, sales, contracts (other than for the repayment of borrowed
      money), surety, appeal and performance bonds; provided that (A) all such
      Liens do not in the aggregate materially detract from the value of the
      Company's or its Subsidiary's assets or property taken as a whole or
      materially impair the use thereof in the operation of the businesses taken
      as a whole, and (B) all Liens securing bonds to stay judgments or in
      connection with appeals that do not secure at any time an aggregate amount
      exceeding $200,000;

            (d) Liens arising with respect to zoning restrictions, easements,
      encroachments, licenses, reservations, covenants, rights-of-way, utility
      easements, building restrictions and other similar charges, restrictions
      or encumbrances on the use of real property which do not in any case
      materially detract from the value of the property subject thereto or
      interfere with the ordinary conduct of the business of the Company or any
      of its Subsidiaries;

            (e) Liens of attachment or judgment with respect to judgments, writs
      or warrants of attachment, or similar process against the Company or any
      of its Subsidiaries which do not constitute a Default under section
      12.1(i) of this Agreement; and (vi) any interest or title of the lessor in
      the property subject to any operating lease entered into by the Company or
      any of its Subsidiaries in the ordinary course of business.

                                      -54-
<PAGE>
      "Default" means any condition or event which constitutes or, after notice
or lapse of time or both, would constitute an Event of Default.

      "Disclosed Litigation" is defined in section 6.6 hereof.

      "Disqualified Stock" means any Capital Stock 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, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is ninety-one (91) days after the Maturity Date.

      "DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.

      "Domestic Subsidiary" means a Subsidiary of the Company organized under
the laws of a jurisdiction located in the United States of America.

      "EBITDAE" means, for any period, on a consolidated basis for the Company
and its Subsidiaries, the sum of the amounts for such period, without
duplication, calculated in each case in accordance with Agreement Accounting
Principles, of (i) Net Income, plus (ii) Interest Expense to the extent deducted
in computing Net Income, plus (iii) charges against income for foreign, federal,
state and local taxes to the extent deducted in computing Net Income, plus (iv)
depreciation expense to the extent deducted in computing Net Income, plus (v)
amortization expense, including, without limitation, amortization of goodwill
and other intangible assets to the extent deducted in computing Net Income, plus
(vi) cash contributions to the ESOP in respect of the repurchase liability of
the Company under the ESOP Plan Documents to the extent deducted in computing
Net Income, plus (vii) non-cash ESOP Compensation Expense to the extent deducted
in computing Net Income, plus (viii) other extraordinary and nonrecurring
non-cash charges to the extent deducted in computing Net Income up to an amount
not to exceed $1,500,000, minus (ix) other extraordinary and nonrecurring
non-cash credits to the extent added in computing Net Income up to an amount not
to exceed $1,500,000, plus (x) non-cash charges classified as minority interest
to the extent deducted in computing Net Income, plus (xi) other nonrecurring
adjustments and charges to the extent deducted in computing Net Income for
periods prior to the Closing Date, plus (xii) non-cash expenses associated with
the recognition of the difference between the fair market value of the Warrants
and Seller Warrants and the exercise price of the Warrants and Seller Warrants
to the extent deducted in computing Net Income, plus (xiii) non-cash Management
Compensation Expense to the extent deducted in computing Net Income.

      "Environmental, Health or Safety Requirements of Law" means all
Requirements of Law derived from or relating to foreign, federal, state and
local laws, statutes, codes, ordinances, rules, regulations, permits, orders or
determinations (including administrative orders and consent decrees) of any
Governmental Authority regulating, relating to or addressing pollution or
protection of the environment, or protection of worker health or safety,
including, but not limited

                                      -55-
<PAGE>
to, the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq., the Occupational Safety and Health Act of 1970, 29
U.S.C. Section 651 et seq., and the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Section 6901 et seq., in each case including any amendments
thereto, any successor statutes, and any regulations or guidance promulgated
thereunder, and any state or local equivalent thereof.

      "Environmental Lien" means a lien in favor of any Governmental Authority
for (i) any liability under Environmental, Health or Safety Requirements of Law,
or (ii) damages arising from, or costs incurred by such Governmental Authority
in response to, a Release or threatened Release of a Contaminant into the
environment.

      "Environmental Property Transfer Act" means any applicable requirement of
law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called "Industrial Site Recovery
Act" or "Responsible Property Transfer Act."

      "Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock). Equity Interests will not
include any Incentive Arrangements or obligations or payments thereunder.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.

      "ERISA Affiliate" means each trade or business (whether or not
incorporated) that, together with the Company, would be treated as a single
employer under section 4001(b) of ERISA, or that is a member of a group of which
the Company is a member and that is a controlled group within the meaning of
section 4971(e)(2)(B) of the Code.

      "ESOP" means the employee benefit plan titled "The Alion Science and
Technology Corporation Employee Ownership, Savings and Investment Plan" and
adopted and maintained by the Company pursuant to the applicable ESOP Plan
Documents.

      "ESOP Compensation Expense" means, for any period, expenses charged with
respect to the ESOP to Net Income for such period in accordance with Agreement
Accounting Principles.

      "ESOP Fiduciary" means the named fiduciary under ERISA of the ESOP. As of
the Closing Date, the ESOP Fiduciary is the ESOP Committee of the Company.

                                      -56-
<PAGE>
      "ESOP Plan Documents" means, collectively, the documents identified in
Exhibit 11.1.5 to this Agreement [and the ESOT Transaction Documents,] each as
may be amended, supplemented or modified as provided herein.

      "ESOT" means the trust titled "The Alion Science and Technology
Corporation Employee Ownership, Savings and Investment Trust" and adopted and
maintained by the Company pursuant to the applicable ESOP Plan Documents.

      "ESOT Stock Purchase Agreement" means that certain Stock Purchase
Agreement dated as of ______________ __, 2002, by and between the Borrower and
the ESOT Trustee, as in effect on the Closing Date.

      "ESOT Transaction" means the series of transactions contemplated by and
described in the ESOT Transaction Documents, including but not limited to the
ESOT's purchase of up to 100% of the Capital Stock of the Company pursuant to
the ESOT Stock Purchase Agreement.

      "ESOT Transaction Documents" means, collectively, the ESOT Stock Purchase
Agreement and the other documents identified on Exhibit 11.1.6 to this
Agreement, as each may be amended, supplemented or modified as provided herein.

      "ESOT Trustee" means the trustee of the ESOT. As of the Closing Date the
ESOT Trustee is State Street Bank and Trust Company.

      "Event of Default" shall have the meaning specified in section 12.1.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.

      "Financial Institution" means any insurance company, bank, trust company,
pension fund (whether private, public or governmental), mutual fund or any other
entity which is primarily engaged in the business of investing for its own
account or accounts of others in debt or equity securities of issuers that are
not Affiliates of the Company, regardless of whether or not such Financial
Institution has an investment in a person or entity that generated at least 20%
of its total revenue from government contracts; provided that not more than 50%
of the Voting Stock of such Financial Institution is owned and controlled,
directly or indirectly, by a person or entity that generated at least 20% of its
total revenue on a consolidated basis from government contracts.

      "Financing" means, with respect to any Person, the issuance or sale by
such Person of any Disqualified Stock, Equity Interests of such Person or any
Indebtedness consisting of debt securities of such Person.

      "Fixed Charge Coverage Ratio" is defined in section 10.4(c).

                                      -57-
<PAGE>
      "Foreign Subsidiary" means a Subsidiary of the Company which is not a
Domestic Subsidiary.

      "Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative authority or
functions of or pertaining to government, including any authority or other
quasi-governmental entity established to perform any of such functions.

      "Government Contract" means any prime contract of the Company or any
direct or indirect subsidiary of the Company with a Governmental Authority or
any sub-contract of the Company and its direct or indirect Subsidiaries with any
other Person with respect to any contract with a Governmental Authority.

      "Guaranty" means each of that certain Guaranty in substantially the form
of Exhibit 2(d) attached hereto, executed and delivered by Subsidiary Guarantors
from time to time as amended, restated, supplemented or otherwise modified from
time to time.

      "Hedging Agreements" is defined in section 10.3(p).

      "Hedging Arrangements" is defined in the definition of Hedging Obligations
below.

      "Hedging Obligations" means, with respect to any Person, any and all
obligations of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under (i) any
and all agreements, devices or arrangements designed to protect at least one of
the parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap, swap or collar protection agreements, forward
rate currency or interest rate options, puts and warrants or any similar
derivative transactions ("Hedging Arrangements"), and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.

      "holders of Secured Obligations" has the meaning set forth in the Bank
Credit Agreement.

      "IITRI" means IIT Research Institute, a not-for-profit Illinois
corporation ("IITRI") controlled by the Illinois Institute of Technology, a
not-for-profit Illinois corporation ("IIT").

      "IITRI Acquisition" means the acquisition by the Company of the Acquired
Business pursuant to the Acquisition Documents.

      "Incentive Arrangements" means warrants, any stock ownership, restricted
stock, stock option, stock appreciation rights plans, "phantom" stock plans,
deferred compensation

                                      -58-
<PAGE>
arrangements, employment agreements, non-competition agreements, subscription
and stockholders agreements and other incentive and bonus plans and similar
arrangements made in connection with the retention of directors, executives,
officers or employees of the Company and its Subsidiaries.

      "Indebtedness" means, with respect to any Person, without duplication,
such Person's (i) obligations for borrowed money, including, without limitation,
subordinated indebtedness, (ii) obligations representing the deferred purchase
price of property or services rendered, including, without limitation earn-outs
and other similar forms of contingent purchase prices (but excluding accounts
payable arising in the ordinary course of such Person's business payable on
terms customary in the trade), (iii) obligations, whether or not assumed,
secured by Liens or payable out of the proceeds or production from property or
assets now or hereafter owned or acquired by such Person, (iv) obligations which
are evidenced by notes, acceptances, other instruments, letters of credit or
letter of credit reimbursement arrangements, (v) Capitalized Lease Obligations,
(vi) Contingent Obligations, (vii) obligations with respect to letters of
credit, (viii) the net mark-to-market exposure under all Hedging Arrangements,
(ix) Off-Balance Sheet Liabilities, and (x) Disqualified Stock. The amount of
Indebtedness of any Person at any date shall be, without duplication, (a) the
outstanding balance at such date of all unconditional obligations as described
above and the reasonably anticipated liability of any such Contingent
Obligations at such date and (b) in the case of Indebtedness of others secured
by a Lien to which the property or assets owned or held by such Person is
subject, the lesser of the fair market value at such date of any asset subject
to a Lien securing the Indebtedness of others and the amount of the Indebtedness
secured.

      "Indemnified Costs" shall have the meaning specified in section 18.

      "Indemnitee" shall have the meaning specified in section 18.

      "Interest Expense" means, for any period, the total interest expense of
the Company and its consolidated Subsidiaries, whether paid or accrued
(including the interest component of Capitalized Leases, commitment and letter
of credit fees and the discount or implied interest component (or other fees or
charges in securitization transactions) of Off-Balance Sheet Liabilities), and
net payments (if any) pursuant to Hedging Arrangements relating to interest rate
protection, all as determined in conformity with Agreement Accounting
Principles.

      "Investment" means, with respect to any Person, (i) any purchase or other
acquisition by that Person of any Indebtedness, Equity Interests or other
securities, or of a beneficial interest in any Indebtedness, Equity Interests or
other securities, issued by any other Person, (ii) any purchase by that Person
of all or substantially all of the assets of a business (whether of a division,
branch, unit operation, or otherwise) conducted by another Person, and (iii) any
loan, advance (other than deposits with financial institutions available for
withdrawal on demand, prepaid expenses, accounts receivable, advances to
employees and similar items made or incurred in the ordinary course of business)
or capital contribution by that Person to any other

                                      -59-
<PAGE>
Person, including all Indebtedness owing to such Person arising from a sale of
property by such other Person other than in the ordinary course of its business.

      "Investment IRR" shall have the meaning specified in section 8.2.

      "IRS" means the Internal Revenue Service and any Person succeeding to the
functions thereof.

      "Junior Subordinated Notes" means (a) any unsecured Indebtedness of the
Company and/or any of its Subsidiaries which has been subordinated to the Notes
and the Note Guarantees upon terms of subordination approved in writing by the
Required Holders of the Notes and (b) the Seller Notes.

      "LaSalle" means LaSalle Bank National Association, in its individual
capacity, and its successors.

      "Leverage Ratio" is defined in section 10.4(b).

      "Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a vendor or lessor
under any conditional sale, Capitalized Lease or other title retention
agreement).

      "Management Compensation Expenses" means, for any period, expenses
charged to Net Income for such period with respect to stock appreciation rights
plans, "phantom" stock plans, the Junior Subordinated Notes and accretion of
the Seller Warrants, in each case in connection with the retention of
directors, executives, officers or employees of the Company and its
Subsidiaries, in accordance with Agreement Accounting Principles.

      "Margin Stock" shall have the meaning ascribed to such term in Regulation
U.

      "Material Adverse Effect" means a material adverse effect upon (i) the
business, assets, condition (financial or otherwise), operations, performance,
properties, results of operations or prospects of the Company, any Subsidiary
Guarantor, or the Company and its Subsidiaries in each case taken as a whole,
(ii) the ability of the Company, any Subsidiary Guarantor or the Company and its
Subsidiaries to perform their respective obligations under this Agreement and
the other Operative Documents, (iii) the ability of the Holders to enforce their
respective obligations under this Agreement and the other Operative Documents,
or (iv) the validity or enforceability of this Agreement, other Operative
Documents, or the rights or remedies of the Holders hereunder and thereunder.

      "Material Subsidiary" shall mean, in respect of the Company, any
Subsidiary that (a) has total assets (determined as of the last day of the most
recently completed fiscal quarter in accordance with Agreement Accounting
Principles) which constitute ten percent (10%) or more of the total assets of
the Company and its consolidated Subsidiaries as of such date of determination,
or (b) has revenue (determined as of the last day of the most recently completed
fiscal quarter for the four-quarter period then ending in accordance with
Agreement Accounting Principles) which constitutes five percent (5%) or more of
the revenue of the Company and its consolidated Subsidiaries for such period, or
(c) has EBITDAE (determined as of the last day of

                                      -60-

<PAGE>

the most recently completed fiscal quarter for the four-quarter period then
ending in accordance with Agreement Accounting Principles) which constitutes
five percent (5%) or more of the revenue of the Company and its consolidated
Subsidiaries for such period, or (c) has EBITDAE (determined as of the last day
of the most recently completed fiscal quarter for the four-quarter period then
ending in accordance with Agreement Accounting Principles) which constitutes
five percent (5%) or more of the EBITDAE of the Company and its consolidated
Subsidiaries for such period; provided that if (i) a Material Subsidiary no
longer satisfies any condition set forth above and (ii) the Board of Directors
of the Company determines that such Subsidiary is not material to the
consolidated financial condition or operations of the Company and its
Subsidiaries and the holders of Notes shall have received written notice of such
determination from the Company, and (iii) no Event of Default shall be
continuing, then for so long as such Subsidiary satisfies none of the conditions
in clauses (a) through (c) above, such Subsidiary shall not be a Material
Subsidiary.

         "Maturity Date" means _______ ___, 2008.

         "Moody's" means Moody's Investors Service, Inc.

         "Multiemployer Plan" means a "Multiemployer Plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by either the Company or any member of the Controlled Group.

         "Net Cash Proceeds" means, with respect to any Asset Sale or Financing
by any Person, cash or Cash Equivalents (freely convertible into Dollars)
received by such Person or any Subsidiary of such Person from such Asset Sale
(including cash received as consideration for the assumption or incurrence of
liabilities incurred in connection with or in anticipation of such Asset Sale)
or Financing, after (i) provision for all income or other taxes measured by or
resulting from such Asset Sale or Financing, (ii) payment of all brokerage
commissions and other fees and expenses and commissions related to such Asset
Sale or Financing, and (iii) deduction of all amounts used to repay Indebtedness
(and any premium or penalty thereon) secured by a Lien on any asset disposed of
in such Asset Sale or which is or may be required (by the express terms of the
instrument governing such Indebtedness or by applicable law) to be repaid in
connection with such Asset Sale (including payments made to obtain or avoid the
need for the consent of any holder of such Indebtedness).

         "Net Income" means, for any period, an amount equal to the net earnings
(or loss) after taxes of the Company and its Subsidiaries on a consolidated
basis for such period taken as a single accounting period determined in
conformity with Agreement Accounting Principles.

         "Non-ERISA Commitments" means

                  (a) each pension, medical, dental, life, accident insurance,
         disability, group insurance, sick leave, profit sharing, deferred
         compensation, bonus, stock option, stock purchase, retirement, savings,
         severance, stock ownership, performance, incentive, hospitalization or
         other insurance, or other welfare, benefit or fringe benefit plan,
         policy, or trust; and

                                      -61-
<PAGE>
                  (b) each employee collective bargaining agreement and each
         agreement, understanding or arrangement of any kind, with or for the
         benefit of any present or prior officer, director, employee (including,
         without limitation, each employment, compensation, deferred
         compensation, severance arrangement and any agreement or arrangement
         associated with a change in control of the Company or any member of the
         Controlled Group);

                  (c) to which the Company or any member of the Controlled Group
         is a party or with respect to which the Company or any member of the
         Controlled Group is or will be required to make any payment other than
         any Plans.

         "Notes" shall have the meaning specified in section 2.

         "Off-Balance Sheet Liabilities" means, with respect to any Person, (i)
any repurchase obligation or liability of such Person or any of its Subsidiaries
with respect to Receivables sold by such Person or any of its Subsidiaries, (ii)
any liability of such Person or any of its Subsidiaries under any sale and
leaseback transaction which does not create a liability on the consolidated
balance sheet of such Person (iii) any liability of such Person or any of its
Subsidiaries under any financing lease or so-called "synthetic lease" or "tax
ownership operating lease" transaction, or (iv) any obligations of such Person
or any of its Subsidiaries arising with respect to any other transaction which
is the functional equivalent of or takes the place of borrowing but which does
not constitute a liability on the consolidated balance sheet of such Person and
its Subsidiaries.

         "Officers' Certificate" means a certificate signed on behalf of the
Company by an Authorized Officer.

         "Operative Documents" means this Agreement, the Securities, the Note
Guarantees, the Rights Agreement, the Subordination Agreements, and each of the
other agreements, documents and instruments executed in connection herewith and
therewith, each as it may from time to time be amended, modified or
supplemented.

         "Organizational Documents" means, as applied to any Person, the
certificate of incorporation, articles of incorporation or certificate of
formation, by-laws or operating agreement and any other applicable
organizational document of such Person.

         "PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.

         "Permitted Acquisition" is defined in section 10.3(g).

         "Permitted Existing Contingent Obligations" means the Contingent
Obligations of the Company and its Subsidiaries identified as such on Exhibit
11.1.1 to this Agreement.

                                      -62-
<PAGE>
         "Permitted Existing Indebtedness" means the Indebtedness of the Company
and its Subsidiaries identified as such on Exhibit 11.1.2 to this Agreement.

         "Permitted Existing Investments" means the Investments of the Company
and its Subsidiaries identified as such on Exhibit 11.1.3 to this Agreement.

         "Permitted Existing Liens" means the Liens on assets of the Company and
its Subsidiaries identified as such on Exhibit 11.1.4 to this Agreement.

         "Permitted Purchase Money Indebtedness" is defined in section
10.3(a)(viii).

         "Permitted Refinancing Indebtedness" means any replacement, renewal,
refinancing or extension of any Indebtedness permitted under section 10.3(a)(ii)
or 10.3(a)(iii) that (i) does not exceed the aggregate principal amount (plus
accrued interest and any applicable premium and associated fees and expenses) of
the Indebtedness being replaced, renewed, refinanced or extended, (ii) does not
have a Weighted Average Life to Maturity at the time of such replacement,
renewal, refinancing or extension that is less than the Weighted Average Life to
Maturity of the Indebtedness being replaced, renewed, refinanced or extended,
(iii) does not rank at the time of such replacement, renewal, refinancing or
extension senior to the Indebtedness being replaced, renewed, refinanced or
extended, and (iv) does not contain terms (including, without limitation, terms
relating to security, amortization, interest rate, premiums, fees, covenants,
subordination, events of default and remedies), taken as a whole, materially
less favorable to the Company, its Subsidiaries or the holders of the Notes than
those applicable to the Indebtedness being replaced, renewed, refinanced or
extended, subject to the terms of the Subordination Agreements.

         "Permitted Senior Additional Indebtedness" means $72,000,000, less the
sum of (i) all regularly scheduled or optional payments on the Term Loans (as
defined in the Bank Credit Agreement) actually made, (ii) all regularly
scheduled or optional payments on the Revolving Loans (as defined in the Bank
Credit Agreement) to the extent the aggregate Revolving Loan Commitment (as
defined in the Bank Credit Agreement) is reduced as a result of such payment,
plus (A) all other mandatory prepayments of the Term Loans actually made (other
than in connection with a refinancing agreement (a "Refinancing Agreement")
thereof, and any guaranty of the Bank Secured Obligations under the Bank Credit
Agreement or any Refinancing Agreement, whether now existing or hereinafter
arising whether such obligations arise or accrue before or after the
commencement of any bankruptcy, insolvency or receivership proceedings,
including, without limitation, interest and fees accruing pre-petition or
post-petition at the rate or rates prescribed in the Bank Credit Agreement or
Refinancing Agreement and costs, expenses and attorneys' and paralegals' fees,
whenever incurred (and whether or not such claims, interest, costs, expenses or
fees are allowed or allowable in any such proceeding); plus (B) all obligations
under interest rate or foreign currency hedging, swap, cap, collar or similar
agreements of the Company and its Material Subsidiaries to the Bank Lenders, in
each case within the meaning of the Senior Subordination Agreement, entered into
to hedge the actual or anticipated interest rate or foreign currency exposure
with respect to the Senior Credit Agreement and which are non-speculative in
nature, whether now existing or hereinafter arising directly between the Company
and its Material Subsidiaries and the Bank Lenders, or acquired outright,
conditionally or as collateral security from another by the Bank Lenders,
together with any guaranty of such obligations by any Loan Party, whether such
obligations arise or accrue before or after the commencement of any bankruptcy,
insolvency or receivership proceedings, including, without limitation, interest
and fees accruing pre-petition or post-petition at the rate or rates prescribed
in the applicable agreement and costs, expenses and attorneys' and paralegals'
fees whenever incurred (and whether or not such claims, interest, costs,
expenses or fees are allowed or allowable in any such proceeding); plus (C)
amounts disbursed or advanced (including, without limitation, in connection with
the provision of any financing or other financial accommodations pursuant to
Section 364 of the United States Bankruptcy Code) by the Bank Lenders, which in
their good faith discretion they deem necessary or desirable to preserve or
protect any Collateral (as defined in the Bank Credit Agreement) or to enhance
the likelihood or maximize the amount of repayment of the amounts outstanding
under the Bank Credit Agreement, in an amount not to exceed $1,000,000,
including, but not limited to all protective advances, costs, expenses and
attorneys' and paralegals' fees, whenever made, advanced or incurred by the Bank
Lenders in connection with the Senior Credit Agreement or the Collateral.

         "Person" means any individual, corporation, firm, enterprise,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, limited liability company or other entity of any kind, or
any government or political subdivision or any agency, department or
instrumentality thereof.

         "Plan" means an employee benefit plan defined in Section 3(3) of ERISA,
other than a Multiemployer Plan, in respect of which the Company or any member
of the Controlled Group is, or within the immediately preceding six (6) years
was, an "employer" as defined in Section 3(5) of ERISA.

         "Purchase Price" means the total consideration and other amounts
payable in connection with any Acquisition, including, without limitation, any
portion of the consideration payable in cash, the value of any Capital Stock or
other Equity Interests of the Company or any Subsidiary issued as consideration
for such Acquisition, all Indebtedness, liabilities and Contingent Obligations
incurred or assumed in connection with such Acquisition and all transaction
costs and expenses (including all investment banking and other consultant fees
and expenses) incurred in connection with such Acquisition.

                                      -63-
<PAGE>
         "Qualified IPO" shall have the meaning specified in section 8.2.

         "Qualified IPO Closing Date" shall have the meaning specified in
section 8.2.

         "Receivable(s)" means and includes all of the Company's and the
Subsidiary Guarantors' presently existing and hereafter arising or acquired
accounts, accounts receivable, and all present and future rights of the Company
or any Subsidiary Guarantor to payment for goods sold or leased or for services
rendered (except those evidenced by instruments or chattel paper), whether or
not they have been earned by performance, and all rights in any merchandise or
goods which any of the same may represent, and all rights, title, security and
guaranties with respect to each of the foregoing, including, without limitation,
any right of stoppage in transit.

         "Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as form time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by and to brokers and dealers of securities for the purpose
of purchasing or carrying margin stock (as defined therein).

         "Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks, non-banks and non-broker lenders for the purpose
of purchasing or carrying Margin Stock applicable to member banks of the Federal
Reserve System.

         "Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by foreign lenders for the purpose of purchasing or carrying
margin stock (as defined therein).

         "Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Contaminants
through or in the air, soil, surface water or groundwater.

         "Rentals" means for any Person, for any period, the aggregate fixed
amounts paid by such Person on a consolidated basis with its Subsidiaries under
any lease of real or personal property and deducted in computing Net Income for
such period in accordance with Agreement Accounting Principles.

         "Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation or otherwise
waived the requirement of Section 4043(a) of ERISA that it be notified within
thirty (30) days after such event occurs, provided, however, that a failure to
meet the minimum funding standards of Section 412 of the Code and of Section 302

                                      -64-
<PAGE>
of ERISA shall be a Reportable Event regardless of the issuance of any such
waiver of the notice requirement in accordance with either Section 4043(a) of
ERISA or Section 412(d) of the Code.

         "Required Holders" as applied to describe the requisite holder or
holders of any class of the Securities, shall mean, at any date, the holder or
holders of 51% or more in interest of such class of Securities at the time
outstanding (excluding all Securities at the time owned by the Company or any
Affiliate of the Company).

         "Requirements of Law" means, as to any Person, the Organizational
Documents of such Person, and any law, rule or regulation, or determination of
an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject including, without limitation, the
Securities Act, the Exchange Act, Regulations T, U and X, ERISA, the Fair Labor
Standards Act, the Worker Adjustment and Retraining Notification Act, Americans
with Disabilities Act of 1990, and any certificate of occupancy, zoning
ordinance, building, environmental or land use requirement or permit or
environmental, labor, employment, occupational safety or health law, rule or
regulation, including Environmental, Health or Safety Requirements of Law.

         "Restricted Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any Equity Interests of the Company now or
hereafter outstanding, except a dividend payable solely in the Company's Capital
Stock (other than Disqualified Stock) or in options, warrants or other rights to
purchase such Capital Stock, (ii) any redemption, retirement, purchase or other
acquisition for value, direct or indirect, of any Equity Interests of the
Company or any of its Subsidiaries now or hereafter outstanding, other than in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of the Company) of other Equity Interests of the
Company (other than Disqualified Stock), (iii) any redemption, purchase,
retirement, defeasance, prepayment (by setoff or otherwise) or other acquisition
for value, direct or indirect, of any Indebtedness other than the Obligations,
and (iv) any payment of a claim for the rescission of the purchase or sale of,
or for material damages arising from the purchase or sale of, any Indebtedness
(other than the Obligations) or any Equity Interests of the Company or any of
its Subsidiaries, or of a claim for reimbursement, indemnification or
contribution arising out of or related to any such claim for damages or
rescission, (v) any payment of management fees owing to any holder of Capital
Stock of the Company or any of its Subsidiaries or investment banking fees (or
other fees of a similar nature) other than pursuant to a Permitted Acquisition,
(vi) any payment in respect of a purchase price adjustment, earn-out or other
similar form of contingent purchase price (by setoff or otherwise), (vii) any
payment or prepayment (whether consisting of principal, interest, premium or
otherwise) with respect to the Seller Notes or any other subordinated
Indebtedness permitted under section 10.3(a), and (viii) any contribution or
other payment (other than in Capital Stock) of any type by the Company or any of
its Subsidiaries to the ESOT.

         "Revolving Credit Obligations" or similar term, has the meaning set
forth in the Bank Credit Agreement.

                                      -65-
<PAGE>
         "Revolving Loan" has the meaning set forth in the Bank Credit
Agreement.

         "Rights Agreement" shall have the meaning specified in section 5.3(e).

         "S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc.

         "Securities" means the Notes, the Warrants and, unless the context
clearly requires otherwise, the Warrant Shares, each of which is a "Security".

         "Securities Act" means the Securities Act of 1933, as amended from time
to time.

         "Seller Note Securities Purchase Agreement" means the Seller Note
Securities Purchase Agreement, dated as of ____________, 2002, among the Company
and the holders set forth in Schedule I thereto, as amended or modified in
accordance with the terms of the Subordination Agreement.

         "Seller Notes" means those certain 6% Junior Subordinated Notes due
2010, issued by the Company to IITRI in the aggregate principal amount of
$39,900,000 pursuant to the Asset Purchase Agreement, as amended, supplemented
or modified in accordance with section 10.3(bb) hereof.

         "Seller Warrants" means warrants of the Company evidencing rights to
purchase ________ shares of the Company's Common stock (subject to adjustment)
issued pursuant to the terms of the Seller Note Securities Purchase Agreement to
the holders of the Company's Seller Notes and includes any warrants issued in
exchange therefor or in replacement thereof.

         "Seller Warrant Shares" means any Shares or other securities issued or
issuable upon exercise of any Seller Warrant pursuant to the terms and
conditions of such Seller Warrant, each of which is a "Seller Warrant Share".

         "Senior Leverage Ratio" is defined in section 10.4(a).

         "Shares" of any Person shall include any and all shares of capital
stock, partnership interests, membership interests, or other shares, interests,
participations or other equivalents (however designated and of any class) in the
capital of, or other ownership interests in, such Person.

         "Solvent" means, when used with respect to any Person, that at the time
of determination:

                  (a) the fair value of its assets (both at fair valuation and
         at present fair saleable value) is equal to or in excess of the total
         amount of its liabilities, including, without limitation, contingent
         liabilities; and

                  (b) it is then able and expects to be able to pay its debts as
         they mature; and

                                      -66-
<PAGE>
                  (c) it has capital sufficient to carry on its business as
         conducted and as proposed to be conducted.

         With respect to contingent liabilities (such as litigation, guarantees
and pension plan liabilities), such liabilities shall be computed at the present
value of the amount which, in light of all the facts and circumstances existing
at the time, represent the amount which can reasonably be expected to become an
actual or matured liability.

         "Source" shall have the meaning specified in section 23.

         "Subordination Agreements" means, collectively, (a) that certain
Subordination Agreement dated as of the date hereof by and among the Company,
the holders of the Notes and LaSalle Bank National Association, as agent, and
(b) that certain Subordination Agreement dated the date hereof by and among the
Company, the holders of the Notes and the holders of the Seller Notes.

         "Subsidiary" means, with respect to any Person, (i) any corporation
more than fifty percent (50%) of the outstanding securities having ordinary
voting power of which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any partnership, limited
liability company, association, joint venture or similar business organization
more than fifty percent (50%) of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" means a Subsidiary
of the Company.

         "Subsidiary Guarantee" shall have the meaning specified in section 2.

         "Subsidiary Guarantor(s)" means (i) each of the Company's Material
Subsidiaries; (ii) all other Material Subsidiaries which become Subsidiary
Guarantors in satisfaction of the provisions of section 10.2(k) and (iii) any
Subsidiary of the Company which has executed a guaranty under the Bank
Agreement, in each case, and together with their respective successors and
assigns.

         "Term Loans" has the meaning set forth in the Bank Credit Agreement.

         "Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Company or any member of the Controlled
Group from a Benefit Plan during a plan year in which the Company or such
Controlled Group member was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of twenty percent (20%) of Benefit Plan participants
who are employees of the Company or any member of the Controlled Group which, in
either event, could reasonably be expected to have a Material Adverse Effect or
otherwise result in liability to the Company or any of its Subsidiaries that are
members of the Controlled Group in an amount in excess of $1,500,000; (iii) the
imposition of an obligation on the Company or

                                      -67-
<PAGE>
any member of the Controlled Group under Section 4041 of ERISA to provide
affected parties written notice of intent to terminate a Benefit Plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the institution
by the PBGC or any similar foreign governmental authority of proceedings to
terminate a Benefit Plan; (v) any event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Benefit Plan; or (vi) the partial or complete
withdrawal of the Company or any member of the Controlled Group from a
Multiemployer Plan, which could reasonably be expected to have a Material
Adverse Effect or otherwise result in liability to the Company or any of its
Subsidiaries in an amount in excess of $1,500,000.

         "Transaction Documents" means this Agreement, the other Operative
Documents, the Bank Documents, and the documents executed and delivered, or
adopted, by the Company or any of its Subsidiaries or the ESOT Trustee or the
ESOP Fiduciary in connection with the IITRI Acquisition, the ESOT Transaction
and the issuance of the Seller Notes, including, without limitation, the Asset
Purchase Agreement, the ESOT Agreements, the ESOP Plan Documents, the Seller
Notes, the Warrants and the Seller Warrants.

         "U.S. Qualified Persons" means those persons that (i) are defined in
the U.S. persons in Section 7701(a)(3) of the Code and (ii) are U.S. citizens or
entities organized under U.S. federal or state laws which are not owned,
controlled or influenced, directly or indirectly, by a foreign person (or term
of like meaning) under the National Industrial Security Program Operating Manual
(or any successor document) as amended from time to time.

         "Voting Stock" shall mean Shares of a Person having ordinary voting
power for the election of a majority of the members of the board of directors of
the Person, other than Shares having such power only by reason of the happening
of a contingency.

         "Warrant Shares" means any Shares (or Other Securities (as defined in
the Warrants)) issued (or issuable, as applicable) upon exercise of any
Warrants, each of which is a "Warrant Share".

         "Warrants" shall have the meaning specified in section 2.

         "Weighted Average Life to Maturity" of any Indebtedness or obligation
shall mean, at any date, the number of years obtained by dividing the then
Remaining Dollar-years of such Indebtedness or obligation by the then
outstanding principal amount of such Indebtedness or obligation. For purposes of
this definition, the "Remaining Dollar-years" of any Indebtedness or obligation
shall mean, at any date, the total of the products obtained by multiplying (a)
the amount of each then remaining installment, sinking fund, serial maturity or
other required payments of principal , including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) which will elapse between such date and the making of such payment,
by (ii) the then outstanding principal amount of such Indebtedness.

                                      -68-
<PAGE>
         11.2 Other Definitions. The terms defined in this section 11.2,
whenever used in this Agreement, shall, unless the context otherwise requires,
have the respective meanings hereinafter specified.

                  "this Agreement" (and similar references to any of the other
Operative Documents) shall mean, and the words "herein" (and "therein"),
"hereof" (and "thereof"), "hereunder" (and "thereunder") and words of similar
import shall refer to, such instruments as they may from time to time be
amended, modified or supplemented.

                  "beneficial ownership" of any Shares or other securities of
any Person shall be determined in the manner set forth in Rule 13d-3 of the
Commission under the Exchange Act.

                  a "class" of Securities shall refer to the Notes, the Warrants
and/or the Warrant Shares, as the case may be, each of which is a separate
class.

                  "corporation" shall include an association, joint stock
company, business trust or other similar organization.

                  "premium" when used in conjunction with references to
principal of and interest on the Notes, shall mean any amount due upon any
payment or prepayment of any of the Notes, other than principal and interest,
and shall include the premium specified in section 8.1.

         11.3 Accounting Terms and Principles; Laws.

                  (a) All accounting terms used herein which are not expressly
         defined in this Agreement shall have the respective meanings given to
         them in accordance with Agreement Accounting Principles, all
         computations made pursuant to this Agreement shall be made in
         accordance with Agreement Accounting Principles, provided that if the
         Company notifies the holders of the Notes that it wishes to amend any
         covenant in section 10 to eliminate or to take into account the effect
         of any change in Agreement Accounting Principles on the operation of
         such covenant (or if the Required Holders of the Notes notify the
         Company that they wish to amend section 14 for such purpose), then
         compliance with such covenant shall be determined on the basis of
         Agreement Accounting Principles in effect immediately before the
         relevant change in Agreement Accounting Principles became effective,
         until either such notice is withdrawn or such covenant is amended in a
         manner satisfactory to the Company and the Required Holders of the
         Notes. All financial statements shall be prepared in accordance with
         Agreement Accounting Principles.

                  (b) All references herein to laws, statutes, rules and
         regulations shall, unless the context clearly requires otherwise, be
         deemed to refer to any law, statute, rule, regulation and any other
         governmental restriction, standard and/or requirement promulgated,
         issued and/or enforced by any domestic or foreign federal, state or
         local

                                      -69-
<PAGE>
         government, governmental agency, authority, court, instrumentality or
         regulatory body, including, without limitation, those of the United
         States of America or any state thereof or the District of Columbia.

         11.4 Singular and Plural Forms; Accounting Terms. The foregoing
definitions shall be equally applicable to both the singular and plural forms of
the defined terms. Any accounting terms used in this Agreement which are not
specifically defined herein shall have the meanings customarily given them in
accordance with Agreement Accounting Principles.

         11.5 References. Any references to the Company's Subsidiaries shall not
in any way be construed as consent by the holders of the Notes to the
establishment, maintenance or acquisition of any Subsidiary, except as may
otherwise be permitted hereunder.

12. Events of Default; Remedies.

         12.1 Events of Default Defined; Acceleration of Maturity. If any one or
more of the following events ("Events of Default") shall occur (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), that is to say:

                  (a) if default shall be made in the due and punctual payment
         of all or any part of the principal of, or premium (if any) on, any
         Note when and as the same shall become due and payable, whether at the
         stated maturity thereof, by notice of or demand for prepayment, or
         otherwise; or

                  (b) if default shall be made in the due and punctual payment
         of any interest on any Note when and as such interest shall become due
         and payable and such default shall have continued for a period of three
         Business Days; or

                  (c) if (i) default shall be made in the performance or
         observance of any covenant, agreement or condition contained in section
         10.1 or 10.2 and such default shall continue unremedied for ten (10)
         Business Days after the occurrence thereof or (ii) default shall be
         made in the performance or observance of any covenant, agreement or
         condition contained in section 10.3 or 10.4; or

                  (d) if default shall be made in the performance or observance
         of any other of the covenants, agreements or conditions contained in
         this Agreement or any of the other Operative Documents (other than as
         covered by paragraphs (a), (b) and (c) of this Section 12.1) and such
         default shall have continued for a period of 30 days after the
         occurrence thereof; or

                                      -70-
<PAGE>
                  (e) if an involuntary case shall be commenced against the
         Company or any of the Company's Material Subsidiaries and the petition
         shall not be dismissed, stayed, bonded or discharged within sixty (60)
         days after commencement of the case; or a court having jurisdiction in
         the premises shall enter a decree or order for relief in respect of the
         Company or any of the Company's Material Subsidiaries in an involuntary
         case, under any applicable bankruptcy, insolvency or other similar law
         now or hereinafter in effect; or any other similar relief shall be
         granted under any applicable federal, state, local or foreign law.; or

                  (f) if 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 the
         Company or any of the Company's Subsidiaries or over all or a
         substantial part of the property of the Company or any of the Company's
         Subsidiaries shall be entered; or an interim receiver, trustee or other
         custodian of the Company or any of the Company's Subsidiaries or of all
         or a substantial part of the property of the Company or any of the
         Company's Subsidiaries shall be appointed or a warrant of attachment,
         execution or similar process against any substantial part of the
         property of the Company or any of the Company's Subsidiaries shall be
         issued and any such event shall not be stayed, dismissed, bonded or
         discharged within sixty (60) days after entry, appointment or issuance
         provided that such Event of Default shall not arise in respect of any
         Subsidiary of the Company that is not a Material Subsidiary and for
         which a waiver of any Event of Default (or similar term within the
         meaning of the Bank Credit Agreement) arising from the foregoing events
         has been granted to the Company by the requisite percentage of Bank
         Lenders pursuant to the Bank Credit Agreement prior to the expiry of
         the preceding sixty (60) day period; or

                  (g) if the Company or any of the Company's Subsidiaries shall
         (i) commence a voluntary case under any applicable bankruptcy,
         insolvency or other similar law now or hereafter in effect, (ii)
         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, (iii) consent to the appointment of or taking possession by a
         receiver, trustee or other custodian for all or a substantial part of
         its property, (iv) make any assignment for the benefit of creditors or
         (v) take any corporate action to authorize any of the foregoing;
         provided that such Event of Default shall not arise in respect of any
         Subsidiary of the Company that is not a Material Subsidiary and for
         which a waiver of any Event of Default (or similar term within the
         meaning of the Bank Credit Agreement) arising from the foregoing events
         has been granted to the Company by the requisite percentage of Bank
         Lenders pursuant to the Bank Credit Agreement prior to taking any of
         the foregoing actions; or

                  (h) if the Company or any of its Subsidiaries shall fail to
         (i) make any payment due on any Indebtedness (other than the Notes or
         the Senior Bank Obligations) or other obligation (including any in
         respect of any lease or any Capital Stock upon the exercise by any
         Person of any put or call option or other similar right of redemption
         or

                                      -71-
<PAGE>

         repurchase with regard to such Shares) when due (subject to applicable
         grace periods), if the aggregate outstanding amount thereof (and of any
         other Indebtedness or other obligation as to which the Company or any
         of its Subsidiaries is in default) exceeds $6,000,000 (or the
         equivalent thereof, as at any date of determination, in any other
         currency) or (ii) perform, observe or discharge any covenant, condition
         or obligation in any agreement, document or instrument evidencing,
         securing or relating to such Indebtedness or other obligation, if the
         effect of any such failure of the character described in this clause
         (ii) is to cause, or permit such Person to cause, any payment in an
         aggregate amount of $6,000,000 (or the equivalent thereof, as at any
         date of determination, in any other currency) or more to become due and
         payable, or if any such Indebtedness or other obligation in an
         aggregate amount of $6,000,000 (or the equivalent thereof, as at any
         date of determination, in any other currency) or more shall become due
         and payable by its terms and shall not be paid or extended; or

                  (i) if a final judgment for the payment of money which,
         together with all other outstanding final judgments for the payment of
         money against the Company or any of its Subsidiaries, exceeds an
         aggregate of $1,500,000 (or the equivalent thereof, as at any date
         of determination, in any other currency) shall be rendered by a court
         of record against the Company or any of its Subsidiaries, and the
         Company or any of its Subsidiaries shall not discharge the same or
         provide for its discharge in accordance with its terms, or procure a
         stay of execution thereof within 30 days from the date of entry thereof
         and within such period of 30 days, or such longer period during which
         execution of such judgment shall have been stayed, move to vacate such
         judgment or appeal therefrom and cause the execution thereof to be
         stayed pending determination of such motion or during such appeal; or

                  (j) if any representation or warranty made by or on behalf of
         the Company or any of its Subsidiaries in this Agreement or in any of
         the other Operative Documents or in any agreement, document or
         instrument delivered under or pursuant to any provision hereof or
         thereof shall prove to have been materially false or incorrect on the
         date as of which made; or

                  (k) if, at any time, this Agreement or any of the other
         Operative Documents shall for any reason (other than the scheduled
         termination thereof in accordance with its terms) expire, fail to be in
         full force and effect or be disaffirmed, repudiated, canceled,
         terminated or declared to be unenforceable, null and void; or

                  (l) if (i) any Plan shall fail to satisfy the minimum funding
         standards of ERISA or the Code for any plan year or part thereof or a
         waiver of such standards or extension of any amortization period is
         sought or granted under section 412 of the Code, (ii) a notice of
         intent to terminate any Plan shall have been or is reasonably expected
         to be filed with the PBGC or the PBGC shall have instituted proceedings
         under section 4042 of ERISA to terminate or appoint a trustee to
         administer any Plan or the PBGC shall have

                                      -72-
<PAGE>

         notified the Company or any ERISA Affiliate that a Plan may become a
         subject of any such proceedings, (iii) the aggregate "amount of
         unfunded benefit liabilities" (within the meaning of section
         4001(a)(18) of ERISA) under all Plans, determined in accordance with
         Title IV of ERISA, shall exceed $1,500,000 (or the equivalent thereof,
         as at any date of determination, in any other currency), (iv) the
         Company or any ERISA Affiliate shall have incurred or is reasonably
         expected to incur any liability pursuant to Title I or IV of ERISA or
         the penalty or excise tax provisions of the Code relating to employee
         benefit plans, (v) the Company or any ERISA Affiliate withdraws from
         any Multiemployer Plan, (vi) the Company or any Subsidiary of the
         Company establishes or amends any employee welfare benefit plan that
         provides post-employment welfare benefits in a manner that would
         increase the liability of the Company and/or its Subsidiaries
         thereunder, or (vii) any termination Event occurs; and any such event
         or events described in clauses (i) through (vii) above, either
         individually or together with any other such event or events, has
         resulted in, or could reasonably be expected to result in, a Material
         Adverse Effect;

                  (m) acceleration of any Indebtedness under the Bank Credit
         Agreement or the Seller Notes, subject to the terms of the
         Subordination Agreements; or

                  (n) the IRS shall notify Borrower in writing that it has made
         a final determination not subject to cure that the ESOP is not a
         qualified plan and employee stock ownership plan within the meanings of
         Section 401(a) and 4975(e)(7), respectively, of the Code;

then, in the case of any Event of Default (other than one of the character
described in subdivisions (e), (f) or (g) of this section 12.1 with respect to
the Company or any Material Subsidiary) and at the option of the Required
Holders of the Notes at the time outstanding (excluding any Notes at the time
owned by any of the Company or any of its Affiliates), exercised by written
notice to the Company, the principal of all Notes shall forthwith become due and
payable, together with interest accrued thereon, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
and the Company shall forthwith upon any such acceleration pay to the holder or
holders of all the Notes then outstanding (i) the entire principal of and
interest accrued on the Notes, and (ii) in addition, to the extent permitted by
applicable law, an amount equal to the premium that would be payable upon a
prepayment of the Notes pursuant to section 8.1 at such time, as liquidated
damages and not as a penalty; provided that, in the case of an Event of Default
of the character described in subdivisions (a) or (b) of this section 12.1 and
irrespective of whether all of the Notes have been declared due and payable by
the Required Holders of the Notes at the time outstanding, any holder of Notes
who or which has not consented to any waiver with respect to such Event of
Default may, at the option of such holder, by written notice to the Company,
declare all Notes then held by such holder to be, and such Notes shall thereupon
become, forthwith due and payable, together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Company shall forthwith

                                      -73-
<PAGE>
upon any such acceleration pay to such holder (i) the entire principal of and
interest accrued on such Notes, and (ii) in addition, to the extent permitted by
applicable law, an amount equal to the premium that would be payable upon a
prepayment of the Notes pursuant to section 8.1 at such time, as liquidated
damages and not as a penalty; provided, further, that, in the case of an Event
of Default of the character described in subdivisions (e), (f) or (g) of this
section 12.1 with respect to the Company or any Material Subsidiary, the
principal of all Notes shall forthwith become due and payable, together with
interest accrued thereon (including any interest accruing after the commencement
of any action or proceeding under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable domestic or foreign federal or
state bankruptcy, insolvency or other similar law, and any other interest that
would have accrued but for the commencement of such proceeding, whether or not
any such interest is allowed as an enforceable claim in such proceeding),
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Company shall forthwith upon any such
acceleration pay to the holder or holders of all the Notes then outstanding (i)
the entire principal of and interest accrued on the Notes, and (ii) in addition,
to the extent permitted by applicable law, an amount equal to the premium that
would be payable upon a prepayment of the Notes pursuant to section 8.1 at such
time, as liquidated damages and not as a penalty.

                  Notwithstanding the foregoing provisions, at any time after
the occurrence of any Event of Default and of notice thereof, if any, by any
holder or holders of Notes and before any judgment, decree or order for payment
of the money due has been obtained by or on behalf of any holder or holders of
the Notes, the Required Holders of the Notes by written notice to the Company,
may rescind and annul such Event of Default and/or notice of such Event of
Default and the consequences thereof with respect to all of the Notes (including
any Notes which were accelerated pursuant to the first proviso in the preceding
paragraph by any holder or holders on account of an Event of Default of the
character described in subdivision (a) or (b) of this section 12.1) if:

                  (1) the Company has paid a sum sufficient to pay

                           (A) all overdue installments of interest on all Notes
                  at the rate specified in the Notes;

                           (B) the principal of (and premium, if any, on) any
                  Notes which have become due otherwise than by such Event of
                  Default or notice thereof and interest thereon at the rate for
                  overdue amounts specified in such Notes; and

                           (C) to the extent that payment of such interest is
                  lawful, interest upon overdue interest at the rate for overdue
                  amounts specified in such Notes; and

                  (2) all Defaults and Events of Default, other than the
         non-payment of the principal of Notes which have become due solely by
         such acceleration, have been cured or waived as provided in section 12.

                                      -74-
<PAGE>
No such rescission shall affect any subsequent default or impair any right
consequent thereon.

         12.2 Suits for Enforcement, etc. In case any one or more of the Events
of Default specified in section 12.1 shall have occurred, and irrespective of
whether any Notes have become or have been declared immediately due and payable
under section 12.1, the holder of any Note may proceed to protect and enforce
its rights either by suit in equity or by action at law, or both. The Company
stipulates that the remedies at law of the holder or holders of the Securities
in the event of any default or threatened default by the Company in the
performance of or compliance with any covenant or agreement in this Agreement or
any of the other Operative Documents are not and will not be adequate and that,
to the fullest extent permitted by law, such terms may be specifically enforced
by a decree for the specific performance thereof, whether by an injunction
against a violation thereof or otherwise.

         12.3 No Election of Remedies. No remedy conferred in this Agreement or
in any of the other Operative Documents upon the holder of any Security is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or thereunder or now or hereafter existing at law or in equity or by
statute or otherwise.

         12.4 Remedies Not Waived. No course of dealing between the Company
and/or any of its Subsidiaries, on the one hand, and any holder of any Security,
on the other hand, and no delay by any such holder in exercising any rights
hereunder or under any of the other Operative Documents shall operate as a
waiver of any rights of any such holder.

         12.5 Application of Payments. In case any one or more of the Events of
Default specified in section 12.1 shall have occurred, all amounts to be applied
to the prepayment or payment of any Notes, shall be applied, after the payment
of all related costs and expenses incurred by the holders of the Notes
(including, without limitation, compensation to any and all trustees,
liquidators, receivers or similar officials and reasonable fees, expenses and
disbursements of counsel) first to premium, if any, then to interest and then to
the principal amount.

                                      -75-
<PAGE>
13. Registration, Transfer and Exchange of Securities. Securities issued
hereunder shall be issued in registered form. The Company shall keep at its
principal executive office (which is now located at the address set forth at the
beginning of this Agreement), registers in which it shall provide for the
registration and transfer of the Securities. The name and address of each holder
of the Securities shall be registered in such registers. The Company shall give
to any institutional holder of any Security promptly (but in any event within 10
days) following request therefor, a complete and correct copy of the names and
addresses of all registered holders of the Securities issued by it and the
amount and kind of Securities held by each. Whenever any Security or Securities
shall be surrendered for transfer or exchange, the Company(ies) that issued such
Security, at its expense, will execute and deliver in exchange therefor a new
Security or Securities (in such denominations and registered in such name or
names as may be requested by the holder of the surrendered Security or
Securities), in the same aggregate unpaid principal amount (in the case of the
Notes) or exercisable for the same aggregate number of Shares (in the case of
any Warrants) or in the same aggregate number of Shares (in the case of any
Warrant Share), as applicable, as that of the Security or Securities so
surrendered. Each such new Note shall be dated and bear interest from the date
to which interest shall have been paid on the surrendered Note or dated the date
of the surrendered Note if no interest shall have been paid thereon. The Company
may treat the Person in whose name any Security is registered as the owner of
such Security for all purposes.

14. Replacement of Securities. Upon receipt of satisfactory evidence of the
loss, theft, destruction or mutilation of any Security and (in the case of loss,
theft or destruction) of satisfactory indemnity, and (in the case of mutilation)
upon surrender of such Security, the Company(ies) that issued such Security at
its (or their) expense, will execute and deliver in lieu of such Security a new
Security of like tenor and, in the case of any new Note, dated so as not to
result in any loss of interest. Your unsecured agreement to indemnify and/or
affidavit and that of any other institutional holder shall constitute
satisfactory indemnity and/or satisfactory evidence of loss, theft or
destruction for the purpose of this section 14.

15. Appointment of Directors. As provided in the Rights Agreement and subject to
the terms thereof, (a) the Required Holders of the Notes shall have the right to
nominate one member of the board of directors of the Company, provided that such
nominee satisfies the eligibility criteria for board members of the Company (as
in effect on the Closing Date) and provided further that the Company's board of
directors shall consist of no more than twelve members, (b) the ESOT trustee
shall vote the ESOP's shares in favor of such nominee, subject to the trustee's
fiduciary obligations, and (c) the right granted under the Rights Agreement with
respect to the nomination of one member of the board of directors shall exist
until the earlier of (i) repayment in full of the Notes or (ii) a Qualified IPO.

16. Amendment and Waiver.

                  (a) Any term of this Agreement and, unless explicitly provided
         otherwise therein, of any of the other Operative Documents may, with
         the consent of the Company,

                                      -76-
<PAGE>
         be amended, or compliance therewith may be waived, in writing only, by
         the Required Holders of each class of Securities entitled to the
         benefits of such term, provided that (i) without the consent of the
         holders of all of the Notes at the time outstanding, no such amendment
         or waiver shall (A) change the amount of the principal of or any rate
         of interest on or the amount of any premium payable with respect to any
         of the Notes or change the payment terms of any of the Notes, or,
         except as provided in the Notes (and the Note Guarantees), subordinate
         the obligation of the Company (or any Subsidiary Guarantor) to pay any
         amount due on the Notes (or on the Note Guarantees) to any other
         obligation, or (B) change the percentage of holders of Notes required
         to approve any such amendment, effectuate any such waiver or accelerate
         payment of the Notes. Executed or true and correct copies of any
         amendment, waiver or consent effected pursuant to this section 16 shall
         be delivered by the Company to each holder of Securities forthwith (but
         in any event not later than five days) following the effective date
         thereof.

                  (b) The Company will not, directly or indirectly, request or
         negotiate for, or offer or pay any remuneration or grant any security
         as an inducement for, any proposed amendment or waiver of any of the
         provisions of this Agreement or any of the other Operative Documents
         unless each holder of the Securities (irrespective of the kind and
         amount of Securities then owned by it) shall be informed thereof by the
         Company and, if such holder is entitled to the benefit of any such
         provision proposed to be amended or waived, shall be afforded the
         opportunity of considering the same, shall be supplied by the Company
         with sufficient information to enable it to make an informed decision
         with respect thereto and, if such offer is accepted by such holder,
         shall be offered and paid such remuneration and granted such security
         on the same terms.

                  (c) In determining whether the requisite holders of Securities
         have given any authorization, consent or waiver under this section 16,
         any Securities owned by the Company or any of their respective
         Affiliates shall be disregarded and deemed not to be outstanding.

17. Method of Payment of Securities. Irrespective of any provision hereof or of
the other Operative Documents to the contrary, so long as you or any other
institutional holder shall hold any Security, all payments due on such Security
shall be made to you or such other institutional holder by the method and at the
address for such purpose specified in Schedule I attached hereto or by such
other method or at such other address as you or such institutional holder may
designate in writing (given as provided in section 20), without requiring any
presentation or surrender of such Security, except that if any Security shall be
paid, prepaid and/or repurchased in full, such Security shall be surrendered to
the Company(ies) that issued such Security promptly following such payment,
prepayment or repurchase and canceled.

18. Expenses; Indemnity. The Company will (without duplication as to any
holder), jointly and severally, pay or cause to be paid (or reimbursed, as the
case may be) and will defend, indemnify and hold you (and each other holder of
any of the Securities) and each of your (and

                                      -77-
<PAGE>
such other holder's) directors, officers, employees, agents, advisors and
Affiliates (each, an "Indemnitee") harmless in respect of all reasonable costs,
losses, expenses (including, without limitation, the reasonable fees, costs,
expenses and disbursements of counsel) and damages (collectively, "Indemnified
Costs") incurred by or asserted against any Indemnitee in connection with the
negotiation, execution, delivery, performance and/or enforcement of this
Agreement or any of the other Operative Documents (including, without
limitation, so-called work-outs and/or restructurings and all amendments,
waivers and consents hereunder and thereunder, whether or not effected) and/or
the consummation of the transactions contemplated hereby and thereby or which
may otherwise be related in any way to this Agreement or any other Operative
Documents or such transactions or such Indemnitee's relationship to the Company
or any of their respective Affiliates or any of their respective properties and
assets arose solely and directly as a result of the gross negligence, willful
misconduct or bad faith of such Indemnitee.

19. Taxes. The Company will pay all taxes and fees (including interest and
penalties), including, without limitation, all issuance and documentary stamp
and similar taxes, which may be payable in respect of the execution and delivery
of this Agreement and each of the other Operative Documents.

20. Communications. Unless otherwise provided herein, any notice required or
permitted under this Agreement shall be given in writing and shall be delivered
(a) by hand, (b) by mail, certified mail, return receipt requested, or (c) by
facsimile to the party to be notified, at the address indicated for such party
on the signature page hereof, or at such other address as such party may
designate by prior written notice to the other party. Unless otherwise provided
herein, notices shall be deemed to have been given and served (a) where
delivered by hand, at time of delivery, (b) where delivered by mail, on
acknowledgement of receipt as shown by the date indicated on the return receipt
as having been received, and (c) where delivered by facsimile, 24 hours after
transmission confirmation by the transmitting machine unless within those 24
hours the intended recipient has informed the sender that the transmission was
received in an incomplete or unreadable form, or the transmission report of the
sender indicates a faulty or incomplete transmission. If such receipt is on a
day that is not a working day or is later than 5 p.m. (local time) on a working
day, the notice shall be deemed to have been given and served on the next
working day. Any such communication must be sent (i) if to the Company (or any
Subsidiary of the Company), to the Company (or such Subsidiary) at:

                                      -78-
<PAGE>
                           Alion Science and Technology Corporation
                           1750 Tysons Boulevard
                           Suite 1300
                           McLean, VA 22102
                           Attention: Stephen Trichka, Esq.
                           Telecopy No.: (703) 714-6508

                           with a copy (which shall not constitute notice) to:

                           Baker & McKenzie
                           815 Connecticut Avenue, N.W.
                           Washington, D.C. 20006
                           Attention: Marc R. Paul
                           Telecopy No.: (202) 452-7074

or at such other address (or telecopy number) as may be furnished in writing by
the Company to each holder of any Security and (ii) if to you, at your address
for such purpose set forth in Schedule I attached hereto, with a copy (which
shall not constitute notice) to:

                           McDermott, Will & Emery
                           227 West Monroe
                           Suite 4700
                           Chicago, IL 60606
                           Attention: Michael L. Boykins, Esq.
                           Telecopy No.: (312) 984-7700

and if to any other holder of any Security, at the address of such holder as it
appears on the applicable register maintained pursuant to section 13, or at such
other address as may be furnished in writing by you or by any other holder to
the Company. Communications under this section 20 shall be deemed given only
when actually received.

21. Survival of Agreements, Representations and Warranties, etc. All agreements,
representations and warranties of the Company contained herein and in the other
Operative Documents shall be deemed to have been relied upon by you and shall
survive the execution and delivery of this Agreement and each of the other
Operative Documents, the issue, sale and delivery of the Securities and payment
therefor and any disposition of the Securities by you, whether or not any
investigation at any time is made by you or on your behalf. All indemnification
provisions, shall survive the date upon which none of the Securities shall be
outstanding and the termination of this Agreement and each of the other
Operative Documents.

                                      -79-
<PAGE>
22. Successors and Assigns; Rights of Other Holders. This Agreement and, unless
explicitly provided otherwise therein, each of the other Operative Documents
shall bind and inure to the benefit of and be enforceable by the Company and
you, successors to the Company and your successors and permitted assigns, and,
in addition, shall inure to the benefit of and be enforceable by each holder
from time to time of any Securities who, upon acceptance thereof, shall, without
further action, be entitled to enforce the applicable provisions and enjoy the
applicable benefits hereof and thereof. The Company may not assign any of their
rights or obligations hereunder or under any of the other Operative Documents
without the written consent of the Required Holders of each class of Securities
then outstanding.

23. Purchase for Investment; ERISA.

                  (a) You represent and warrant (i) that you have been furnished
         with all information that you have requested for the purpose of
         evaluating your proposed acquisition of the Notes to be issued to you
         pursuant hereto, (ii) that you will acquire such Notes for your own
         account for investment and not for distribution in any manner that
         would violate applicable securities laws, but without prejudice to your
         rights to dispose of such Notes or a portion thereof to a transferee or
         transferees, in accordance with such laws and the Rights Agreement, if
         applicable, if at some future time you deem it advisable to do so and
         (iii) that you are an "accredited investor", as defined in Regulation D
         of the Commission under the Securities Act. The acquisition of such
         Notes by you at the Closing shall constitute your confirmation of the
         foregoing representations and warranties. You understand that such
         Notes are being sold to you in a transaction which is exempt from the
         registration requirements of the Securities Act, and that, in making
         the representations and warranties contained in section 5.16, each of
         the Company is relying, to the extent applicable, upon your
         representations and warranties contained herein.

                  (b) You represent that at least one of the following
         statements is an accurate representation as to each source of funds (a
         "Source") to be used by you to pay the purchase price of the Notes to
         be purchased by you hereunder:

                           (i) the Source is an "insurance company general
                  account" as defined in Section V(e) of Prohibited Transaction
                  Exemption ("PTE") 95-60 (issued July 12, 1995) and, except as
                  you have disclosed to the Company in writing pursuant to this
                  section (i), the amount of reserves and liabilities for the
                  general account contract(s) held by or on behalf of any
                  employee benefit plan or group of plans maintained by the same
                  employer or employee organization do not exceed 10% of the
                  total reserves and liabilities of the general account
                  (exclusive of separate account liabilities) plus surplus as
                  set forth in the NAIC Annual Statement filed with the state of
                  domicile of the insurer; or

                                      -80-
<PAGE>
                           (ii) the Source is a separate account of an insurance
                  company maintained by you in which an employee benefit plan
                  (or its related trust) has an interest, which separate account
                  is maintained solely in connection with your fixed contractual
                  obligations under which the amounts payable, or credited, to
                  such plan and to any participant or beneficiary of such plan
                  (including any annuitant) are not affected in any manner by
                  the investment performance of the separate account; or

                           (iii) the Source is either (A) an insurance company
                  pooled separate account, within the meaning of PTE 90-1
                  (issued January 29, 1990), or (B) a bank collective investment
                  fund, within the meaning of the PTE 91-38 (issued July 12,
                  1991) and, except as you have disclosed to the Company in
                  writing pursuant to this section (iii), no employee benefit
                  plan or group of plans maintained by the same employer or
                  employee organization beneficially owns more than 10% of all
                  assets allocated to such pooled separate account or collective
                  investment fund; or

                           (iv) the Source constitutes assets of an "investment
                  fund" (within the meaning of Part V of the QPAM Exemption)
                  managed by a "qualified professional asset manager" or "QPAM"
                  (within the meaning of Part V of the QPAM Exemption), no
                  employee benefit plan's assets that are included in such
                  investment fund, when combined with the assets of all other
                  employee benefit plans established or maintained by the same
                  employer or by an affiliate (within the meaning of Section
                  V(c)(1) of the QPAM Exemption) of such employer or by the same
                  employee organization and managed by such QPAM, exceed 20% of
                  the total client assets managed by such QPAM, the conditions
                  of Part I(c) and (g) of the QPAM Exemption are satisfied,
                  neither the QPAM nor a person controlling or controlled by the
                  QPAM (applying the definition of "control" in Section V(e) of
                  the QPAM Exemption) owns a 5% or more interest in the Company
                  and (A) the identity of such QPAM and (B) the names of all
                  employee benefit plans whose assets are included in such
                  investment fund have been disclosed to the Company in writing
                  pursuant to this section (iv); or

                           (v) the Source is a governmental plan; or

                           (vi) the Source is one or more employee benefit
                  plans, or a separate account or trust fund comprised of one or
                  more employee benefit plans, each of which has been identified
                  to the Company in writing pursuant to this section (vi); or

                           (vii) the Source does not include assets of any
                  employee benefit plan, other than a plan exempt from the
                  coverage of ERISA.

                                      -81-
<PAGE>
         As used in this section 23(b), the terms "employee benefit plan",
         "governmental plan", "party in interest" and "separate account" shall
         have the respective meanings assigned to such terms in Section 3 of
         ERISA, and the term "QPAM Exemption" means PTE 84-14 (issued March 13,
         1984).

24. Assignment; Right of First Offer.

         24.1 Right of First Offer. Subject to the provisions of this section
24, the Notes may not be assigned to any Person that (so long as no Event of
Default described in any of Sections 11.1(a), (b), (e), (f), or (g) has
occurred) is either (a) a Competitor (provided that this limitation shall be
waived with respect to a proposed transferee if the Company determines in its
reasonable discretion that such proposed transferee does not then compete with
the Company or any entity controlled by the Company) or (b) is not a U.S.
Qualified Person at the time of assignment. In other cases, the Company shall
have a right of first offer on such assignment as follows:

                  (a) First Offer.

                           (i) If the holder proposes to sell or otherwise
                  transfer the Notes or any portion thereof it holds at such
                  time (collectively, the "Transfer Interests") to any third
                  party other than an Affiliate of such holder (other than a
                  sale or transfer in connection with a Demand Registration or
                  Piggy-Back Registration under the Rights Agreement), the
                  holder is required to first notify the Company, by delivering
                  to the Company a written notice ("Sale Notice") in accordance
                  with section 20, stating the holder's bona fide intention to
                  sell or otherwise transfer the Transfer Interests. The Company
                  shall have the exclusive right, for a period of thirty (30)
                  days from its receipt of the Sale Notice, to make an offer to
                  purchase the Transfer Interests at a price to be proposed by
                  the Company.

                           (ii) Subject to Section 24.1(c) below, if either (x)
                  the Company does not deliver to the holder written notice of
                  an offer to purchase the Transfer Interests ("Purchase
                  Notice") within thirty (30) days after the Company's receipt
                  of the Sale Notice, or (y) the holder has rejected the
                  Company's offer, the holder shall be entitled to sell the
                  Transfer Interests at a price which is no less than ninety
                  percent (90%) of the last price offered by the Company for the
                  Transfer Interests (the "Last Offer Price"), to any third
                  party that is not an Affiliate of the holder at any time
                  during the period of nine (9) months following the date of
                  delivery of the Sale Notice by the holder to the Company,
                  without the obligation to provide any further offers or
                  notices to the Company.

                  (b) Second Offer.

                                      -82-
<PAGE>
                           (i) If the holder proposes to sell or otherwise
                  transfer the Transfer Interests to a third party that is not
                  an Affiliate of the holder at a price that is less than ninety
                  percent (90%) of the Last Offer Price (the "Proposed Sale
                  Price"), the holder shall, prior to consummating such sale or
                  transfer of the Transfer Interests to the third party, make an
                  offer to the Company in writing and in accordance with Section
                  20 (the "Second Sale Notice"), to sell the Transfer Interests
                  to the Company at the Proposed Sale Price.

                           (ii) Subject to Section 24.1(c) below, if the Company
                  does not deliver to the holder written notice of acceptance of
                  any offer made pursuant to Section 24.1(b)(i) within thirty
                  (30) days after the Company's receipt of the Second Sale
                  Notice, the Company shall be deemed to have waived its rights
                  to purchase the Transfer Interests, and the holder shall be
                  entitled to sell or otherwise transfer the Transfer Interests
                  at the Proposed Sale Price to such unrelated third party
                  within nine (9) months following the date of delivery of the
                  Sale Notice, without the obligation to provide any further
                  offers or notices to the Company.

                  (c) If the holder proposes to sell or otherwise transfer the
         Transfer Interests to a third party that is not an Affiliate of the
         holder at any time after the expiry of the nine-month period referenced
         in Section 24.1(a)(ii) or Section 24.1(b)(ii), as the case may be, then
         the holder shall again be required to comply with all the obligations
         and requirements contained in Sections 24.1(a) and 24.1(b).

                  (d) Payment of the Purchase Price shall be made in cash in
         immediately available funds within sixty (60) days after the date (if
         any) that a purchase price is agreed for the Company's purchase of the
         Transfer Interests.

         24.2 Minimum Amount. The Notes may be assigned in minimum amounts of
$2,500,000 and in increments of $500,000 in excess thereof, provided that the
Holder may assign the Notes in a smaller minimum amount in connection with the
transfer of all of the remaining Notes of such Holder.

         24.3 Company Pro Rata Offer to Purchase.

         (a) Notwithstanding any provision in this section 24 to the contrary,
if the Company proposes to purchase any portion of the Notes of any Holder (the
"Selling Holder") pursuant to section 24.1(a) or (b), the Company shall provide
to each holder of Notes, at least 20 days prior to the closing of such sale,
written notice, in accordance with section 20 herein, of its intention to
purchase Notes from the Selling Holder, the aggregate principal amount of Notes
proposed to be purchased from the Selling Holder, the price and other material
terms under which the sale is proposed to be made and that the holder is
entitled to sell a certain principal amount of the Notes then held by the holder
to the Company on the terms and conditions contained therein (the "First Offer
Notice").

                                      -83-
<PAGE>
         (b) Upon receipt of the First Offer Notice, the holder shall have the
right, exercisable upon written notice in accordance with section 20 herein to
the Company (which shall provide such notice to the Selling Holder), sent within
twenty (20) days after the holder's receipt of the First Offer Notice (the
"Participation Notice"), to sell to the Company an aggregate principal amount of
Notes then held by the holder in an amount no greater than:

                           A X  B
                                --
                                C

         where: A =  the aggregate principal amount of Notes to be sold by the
                     Selling Holder to the Company (the "First Offer Notes");

         where: B =  the aggregate principal amount of Notes then held by the
                     holder;

         where: C =  the total aggregate principal of Notes then outstanding.

Any Notes sold to the Company by the holder pursuant to this section 24.3 shall
be sold at the same price and on the same terms and conditions as specified in
the First Offer Notice or any modification thereof, but in no event less
favorable than the terms and conditions of Notes sold by the Selling Holder. The
Participation Notice shall be deemed given and served on the date the Company
receives the Participation Notice. Any prepayment of Notes in accordance with
this section 24.3 shall not be subject to any Applicable Premium pursuant to
Section 8.1; provided that nothing contained herein shall be deemed to otherwise
permit the Company to initiate any discussion with respect to, or solicit, any
purchase of the Notes of any holder except in compliance with the terms of
section 8 (including, without limitation, payment of any Applicable Premium).

         (c) The Selling Holder and the Company agree that the aggregate
principal amount of First Offer Notes that the Selling Holder may sell to the
Company in the transaction will be reduced by the aggregate principal amount of
Notes necessary to permit the sale of Notes by the other holders pursuant to any
Participation Notice delivered in accordance with the provisions of section
24.3(b). The Company agrees it will not purchase and the Selling Holder agrees
that it shall not be entitled to sell to the Company any of the First Offer
Notes unless the Notes of each holder set forth in the Participation Notice are
simultaneously purchased by the Company.

         (d) If the transaction that is the subject of the First Offer Notice
delivered by the Company to the holder in accordance with section 24.3(a) herein
is terminated then the first Offer Notice and corresponding Participation Noted
shall be deemed voided.

The provisions of this section 24.3 are applicable to successive purchases of
Notes by the Company under section 24.3(a) and (b) until the Notes are paid in
full and no failure on the part of any holder to exercise any right under this
section 24.3 shall affect or impair any right of any holder of Notes under this
Agreement or any of the other Operative Documents whether upon the occurrence of
any other or any subsequent purchase by the Company or otherwise.

                                      -84-
<PAGE>
25. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement and,
unless explicitly provided otherwise therein, each of the other Operative
Documents, including the validity hereof and thereof and the rights and
obligations of the parties hereunder and thereunder, and all amendments and
supplements hereof and thereof and all waivers and consents hereunder and
thereunder, shall be construed in accordance with and governed by the domestic
substantive laws of the State of Illinois without giving effect to any choice of
law or conflicts of law provision or rule that would cause the application of
the domestic substantive laws of any other jurisdiction. The Company, to the
extent that it may lawfully do so, hereby consents to service of process, and to
be sued, in the State of Illinois and consents to the jurisdiction of the courts
of the State of Illinois and the United States District Court for the Northern
District of Illinois, as well as to the jurisdiction of all courts to which an
appeal may be taken from such courts, for the purpose of any suit, action or
other proceeding arising out of any of its obligations hereunder or thereunder
or with respect to the transactions contemplated hereby or thereby, and
expressly waives any and all objections it may have as to venue in any such
courts. The Company further agrees that a summons and complaint commencing an
action or proceeding in any of such courts shall be properly served and shall
confer personal jurisdiction if served personally or by certified mail to it at
its address set forth in section 20 or as otherwise provided under the laws of
the State of Illinois. Notwithstanding the foregoing, each of the Company agrees
that nothing contained in this section 25 shall preclude the institution of any
such suit, action or other proceeding in any jurisdiction other than the State
of Illinois. THE COMPANY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST IT IN RESPECT OF ITS
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

26. Rule 144A. The Company will take, or will cause to be taken, such action as
any holder of Securities may reasonably request from time to time to facilitate
any sale or disposition by any such holder of any Securities without
registration under the Securities Act and/or any applicable securities laws
within the limitation of the exemptions provided by any rule or regulation
thereunder, including, without limitation, Rule 144A under the Securities Act.

27. Miscellaneous. The headings in this Agreement and in each of the other
Operative Documents are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof or thereof. This Agreement (together with
the other Operative Documents) embodies the entire agreement and understanding
between you and each of the Company and supersedes all prior agreements and
understandings relating to the subject matter hereof. Each covenant contained
herein and in each of the other Operative Documents shall be construed (absent
an express provision to the contrary) as being independent of each other
covenant contained herein and therein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. If any provision in this Agreement or in any
of the other Operative Documents refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable, whether such action is taken directly or indirectly by such
Person, whether or not expressly specified in such provision. In case any
provision in this Agreement or any of the

                                      -85-
<PAGE>
other Operative Documents shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby. This Agreement and, unless explicitly
provided otherwise therein, each of the other Operative Documents, may be
executed in any number of counterparts and by the parties hereto or thereto, as
the case may be, on separate counterparts but all such counterparts shall
together constitute but one and the same instrument.

28. Confidential Information.

                  For the purposes of this Section 28, "Confidential
Information" means such information delivered to each holder by or on behalf of
the Company or any Subsidiary in connection with the transactions contemplated
by or otherwise pursuant to this Agreement that is proprietary in nature and
that was clearly marked or labeled or otherwise adequately identified when
received by such holder as being confidential information of the Company or such
Subsidiary, provided that such term does not include information that (i)
becomes publicly available other than as a result of a breach of this Agreement,
(ii) becomes available to any holder on a non-confidential basis from a source
other than the Company or its Subsidiaries or (iii) was available to any holder
on a non-confidential basis prior to its disclosure to such holder.

                  Each holder will use reasonable efforts to maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such holder in good faith to protect confidential information of
third parties delivered to such holder; provided that such holder may deliver or
disclose Confidential Information to (i) each holder's directors, trustees,
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by such holder's Notes), (ii) each holder's financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 28, (iii)
any other holder, (iv) any Person to which any holder sells or offers to sell
its Notes or any part thereof or any participation therein (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 28), (v) any Person from whom any holder
offers to purchase any security of the Company (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 28), (vi) any federal or state regulatory authority
having jurisdiction over any holder, (vii) the National Association of Insurance
Commissioners or any similar organization, or any nationally recognized rating
agency that requires access to information about such holder's investment
portfolio, (viii) each holder's investors or fund participants in the ordinary
course, (ix) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule, regulation
or order applicable to such holder, (x) in response to any subpoena or other
legal process, (y) in connection with any litigation to which such holder is a
party or (z) if an Event of Default has occurred and is continuing, to the
extent such holder may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under its Notes and the other Operative Documents. Each holder, by
its acceptance of a Note,

                                      -86-
<PAGE>
will be deemed to have agreed to be bound by and to be entitled to the benefits
of this Section 28 as though it were a party to this Agreement.

           [The remainder of this page is intentionally left blank.]

                                      -87-
<PAGE>
                  If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterparts of this letter, whereupon
this letter shall become a binding agreement under seal among you and the
Company. Please then return one of such counterparts to the Company.

                                           Very truly yours,

                                           ALION SCIENCE AND TECHNOLOGY
                                           CORPORATION

                                           By:_________________________________
                                           Name:_______________________________
                                           Title:______________________________

The foregoing Agreement is hereby agreed to as of the date thereof.

IIT RESEARCH INSTITUTE

By:_________________________________
Name:_______________________________
Title:______________________________

                                      -88-

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