AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Exhibit 10.15

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of October 31, 2008 (this “Agreement”), is executed by and among HILL INTERNATIONAL, INC., a Delaware corporation, which has its chief executive office located at 303 Lippincott Centre, Marlton, New Jersey 08053 (“Hill International”), PCI Group LLC, a Nevada limited liability company, which has its chief executive office located at 5905 Granite Lake Drive, Suite 180, Douglas Office Park at Granite Bay, Building 5, Granite Bay, California 95746-6824 (“PCI Group”)(Hill International, PCI Group and any other Person that shall become a borrower hereto pursuant to a Joinder Agreement are each individually a “Borrower” and collectively the “Borrowers”), and BANK OF AMERICA, N.A., a national banking association, as successor by merger to LaSalle Bank N.A. (“Lender”), having an office at 135 South LaSalle Street, Chicago, Illinois 60603.

R E C I T A L S :

WHEREAS, prior hereto, Lender provided certain extensions of credit, loans and other financial accommodations to Hill International pursuant to (i) that certain Loan and Security Agreement dated as of December 18, 2006, as amended by that certain First Amendment to Loan and Security Agreement dated as of October 15, 2007, each by and between Hill International and Lender (collectively, the “Prior Loan Agreement”), and (ii) the other agreements, documents and instruments referenced therein or executed and delivered pursuant thereto or in connection therewith;

WHEREAS, Borrowers desire Lender to, among other things, (i) increase the maximum principal amount of the Revolving Loan, (ii) add PCI Group as a co-borrower under all Loans, and (iii) amend and restate the Prior Loan Agreement as set forth in this Agreement (collectively the “Financial Accommodations”); and

WHEREAS, Lender is willing to provide the Financial Accommodations to Borrowers, but solely on the terms and subject to the conditions set forth in this Agreement, which is an amendment and restatement of the Prior Loan Agreement, and the other documents, instruments and agreements executed and delivered pursuant to this Agreement or referenced herein.

NOW THEREFORE, in consideration of any Financial Accommodations, the mutual promises and understandings of Lender and Borrowers set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and Borrowers hereby agree as follows:

A G R E E M E N T S :

Section 1. DEFINITIONS .

1.1 Defined Terms . For the purposes of this Agreement, the following capitalized words and phrases shall have the meanings set forth below.

“ Affiliate ” of any Person shall mean (a) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person, (b) any officer or director of such Person, and (c) with respect to Lender, any entity administered or managed by Lender, or an Affiliate or investment advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans. A Person shall be deemed to be “controlled by” any other Person if such Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract, ownership of voting securities, membership interests or otherwise.

“ Applicable Margin ” shall mean the rate per annum added to the Prime Rate and/or LIBOR to determine the Revolving Interest Rate as determined by the ratio of Borrowers’ consolidated Total Debt to EBITDA calculated on a trailing twelve (12) month basis as of the last day of each fiscal quarter, as set forth below:

 

The Applicable Margin as of the date hereof is one hundred seventy-five (175) basis points for Prime Loans and one hundred seventy-five (175) basis points for LIBOR Loans and shall be adjusted as of each Interest Rate Change Date.

“ Asset Disposition ” shall mean the sale, lease, assignment or other transfer for value (each a “Disposition”) by the Borrowers or any Subsidiary to any Person (other than the Borrowers or any Subsidiary) of any asset or right of the Borrowers or any Subsidiary (including, the loss, destruction or damage of any thereof or any actual or threatened (in writing to the Borrowers or such Subsidiary) condemnation, confiscation, requisition, seizure or taking thereof), other than (a) the Disposition of any asset which is to be replaced, and is in fact replaced, within thirty (30) days with another asset performing the same or a similar function, and (b) the sale or lease of inventory in the ordinary course of business.

 

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“ Closing Date ” shall mean the date on which all conditions precedent set forth in Section III have been satisfied or waived in writing by Lender and the initial Revolving Loan is advanced hereunder.

“ Bank Product Agreements ” shall mean those certain agreements entered into from time to time by the Borrowers, any Borrower or any Subsidiary with Lender or any Affiliate of Lender concerning Bank Products.

“ Bank Product Obligations ” shall mean all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by the Borrowers, any Borrower or any Subsidiary to Lender or any Affiliate of Lender pursuant to or evidenced by Bank Product Agreements and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.

“ Bank Products ” shall mean any service or facility extended to the Borrowers, any Borrower or any Subsidiary by Lender or any Affiliate of Lender, including: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) Hedging Agreements.

“ Bankruptcy Code ” shall mean the United States Bankruptcy Code, as now existing or hereafter amended.

“ Basic Fixed Charge Coverage Ratio ” shall mean the ratio of (a) the sum of EBITDA plus lease expense and rent expense minus the sum of taxes, dividends and distributions paid in cash, to (b) the sum of Interest Charges, lease expense, rent expense, the current portion of long-term Liabilities and current portion of Capitalized Lease Obligations.

“ Business Day ” shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required to be closed for the conduct of commercial banking business in Chicago, Illinois.

“ Capital Expenditures ” shall mean all expenditures (including Capitalized Lease Obligations) which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of the Borrowers, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

“ Capital Lease ” shall mean, as to any Person, a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such Person, as lessee, that is, or should be, in accordance with Financial Accounting Standards Board Statement No. 13, as amended from time to time, or, if such statement is not then in effect, such statement of GAAP as may be applicable, recorded as a “capital lease” on the financial statements of such Person prepared in accordance with GAAP.

 

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“ Capital Securities ” shall mean, with respect to any Person, all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued or acquired after the date hereof, including common shares, preferred shares, membership interests in a limited liability company, limited or general partnership interests in a partnership or any other equivalent of such ownership interest.

“ Capitalized Lease Obligations ” shall mean, as to any Person, all rental obligations of such Person, as lessee under a Capital Lease which are or will be required to be capitalized on the books of such Person.

“ Cash Equivalent Investment ” shall mean, at any time, (a) any evidence of Debt, maturing not more than one year after such time, issued or guaranteed by the United States government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case (unless issued by Lender or its holding company) rated at least A-1 by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or P-1 by Moody’s Investors Service, Inc., (c) any certificate of deposit, time deposit or banker’s acceptance, maturing not more than one year after such time, or any overnight Federal Funds transaction that is issued or sold by Lender or its holding company (or by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000), (d) any repurchase agreement entered into with Lender, or other commercial banking institution of the nature referred to in clause (c) , which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) above, and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of Lender, or other commercial banking institution, thereunder, (e) money market accounts or mutual funds which invest exclusively in assets satisfying the foregoing requirements, and (f) other short term liquid investments approved in writing by Lender.

“ Collateral ” shall have the meaning set forth in Section 6.1 hereof.

“ Collateral Access Agreement ” shall mean an agreement in form and substance reasonably satisfactory to Lender pursuant to which a mortgagee or lessor of real property on which Collateral is stored or otherwise located, or a warehouseman, processor or other bailee of Inventory or other property owned by any Borrower or any Subsidiary, acknowledges the Liens of Lender and waives any Liens held by such Person on such property, and, in the case of any such agreement with a mortgagee or lessor, permits Lender reasonable access to and use of such real property following the occurrence and during the continuance of an Event of Default to assemble, complete and sell any collateral stored or otherwise located thereon.

“ Contingent Liability ” and “ Contingent Liabilities ” shall mean, respectively, each obligation and liability of the Borrowers or any Borrower and all such obligations and liabilities of the Borrowers or any Borrower incurred pursuant to any agreement, undertaking or arrangement

 

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by which any Borrower: (a) guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend, obligation or other liability of any other Person in any manner (other than by endorsement of instruments in the course of collection), including without limitation, any indebtedness, dividend or other obligation which may be issued or incurred at some future time; (b) guarantees the payment of dividends or other distributions upon the shares or ownership interest of any other Person; (c) undertakes or agrees (whether contingently or otherwise): (i) to purchase, repurchase, or otherwise acquire any indebtedness, obligation or liability of any other Person or any property or assets constituting security therefor, (ii) to advance or provide funds for the payment or discharge of any indebtedness, obligation or liability of any other Person (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of any other Person, or (iii) to make payment to any other Person other than for value received; (d) agrees to lease property or to purchase securities, property or services from such other Person with the purpose or intent of assuring the owner of such indebtedness or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (e) to induce the issuance of, or in connection with the issuance of, any letter of credit for the benefit of such other Person; or (f) undertakes or agrees otherwise to assure a creditor against loss. The amount of any Contingent Liability shall (subject to any limitation set forth herein) be deemed to be the outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness, obligation or other liability guaranteed or supported thereby.

“ Debt ” shall mean, as to any Person, without duplication, (a) all indebtedness of such Person; (b) all borrowed money of such Person (including principal, interest, fees and charges), whether or not evidenced by bonds, debentures, notes or similar instruments; (c) all obligations to pay the deferred purchase price of property or services; (d) all obligations, contingent or otherwise, with respect to the maximum face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of such Person (including the Letters of Credit), and all unpaid drawings in respect of such letters of credit, bankers’ acceptances and similar obligations; (e) all indebtedness secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided, however, if such Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the fair market value of the property subject to such Lien at the time of determination); (f) the aggregate amount of all Capitalized Lease Obligations of such Person; (g) all Contingent Liabilities of such Person, whether or not reflected on its balance sheet; (h) all Hedging Obligations of such Person; (i) all Debt of any partnership of which such Person is a general partner; and (j) all monetary obligations of such Person under (i) a so-called synthetic, off-balance sheet or tax retention lease, or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). Notwithstanding the foregoing, Debt shall not include trade payables, accrued expenses and current operating liabilities incurred by such Person in accordance with customary practices and in the ordinary course of business of such Person.

 

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“ Default Rate ” shall mean a per annum rate of interest equal to the Prime Rate plus three percent (3.0%).

“ Depreciation ” shall mean the total amounts added to depreciation, amortization, obsolescence, valuation and other proper reserves, as reflected on a Person’s financial statements and determined in accordance with GAAP.

“ EBITDA ” shall mean, net income, less income or plus loss from discontinued operations and extraordinary items, plus the sum of income taxes, Interest Charges, depreciation, depletion, amortization and other non-cash charges.

“ Employee Plan ” includes any pension, stock bonus, employee stock ownership plan, retirement, profit sharing, deferred compensation, stock option, bonus or other incentive plan, whether qualified or nonqualified, or any disability, medical, dental or other health plan, life insurance or other death benefit plan, vacation benefit plan, severance plan or other employee benefit plan or arrangement, including those pension, profit-sharing and retirement plans of the Borrowers described from time to time in the financial statements of any Borrower and any pension plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA) or any multi-employer plan, maintained or administered by any Borrower or to which any Borrower is a party or may have any liability or by which any Borrower is bound.

“ Environmental Laws ” shall mean all present or future federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative or judicial orders, consent agreements, directed duties, requests, licenses, authorizations and permits of, and agreements with, any governmental authority, in each case relating to any matter arising out of or relating to public health and safety, or pollution or protection of the environment or workplace, including any of the foregoing relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, discharge, emission, release, threatened release, control or cleanup of any Hazardous Substance.

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

“ Event of Default ” shall mean any of the events or conditions which are set forth in Section 11 hereof.

“ Federal Funds Rate ” shall mean, for any day, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Lender from three Federal funds brokers of recognized standing selected by Lender. Lender’s determination of such rate shall be binding and conclusive absent manifest error.

 

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“ Fee Letter ” shall mean the fee letter agreement dated on or around the date hereof between the Borrowers and Lender.

“ GAAP ” shall mean generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination, provided, however, that interim financial statements or reports shall be deemed in compliance with GAAP despite the absence of footnotes and fiscal year-end adjustments as required by GAAP.

“ Guarantor ” and “ Guarantors ” shall mean, respectively, each of and collectively, any Person that provides a guaranty of all or any portion of the Obligations.

“ Guaranty ” shall mean any guaranty of all or any part of the Obligations executed and delivered in favor of Lender.

“ Hazardous Substances ” shall mean (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, dielectric fluid containing levels of polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials, pollutant or substances defined as or included in the definition of “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous substances”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, the exposure to, or release of which is prohibited, limited or regulated by any governmental authority or for which any duty or standard of care is imposed pursuant to, any Environmental Law.

“ Hedging Agreement ” shall mean any interest rate, currency or commodity swap agreement, cap agreement or collar agreement, and any other agreement or arrangement designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices.

“ Hedging Obligation ” shall mean, with respect to any Person, any liability of such Person under any Hedging Agreement.

“ Hill Luxembourg ” shall mean Hill International S.A.

“ Hill Middle East ” shall mean Hill International (Middle East) Ltd.

“ Hill UK ” shall mean Hill International (UK) Ltd.

 

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“ Indemnified Party ” and “ Indemnified Parties ” shall mean, respectively, each of Lender and any parent corporation, Affiliate or Subsidiary of Lender, and each of their respective officers, directors, employees, attorneys and agents, and all of such parties and entities.

“ Intellectual Property ” shall mean the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, patents, service marks and trademarks, and all registrations and applications for registration therefor and all licensees thereof, trade names, domain names, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

“ Interest Charges ” shall mean, for any period, the sum of: (a) all interest, charges and related expenses payable with respect to that fiscal period to a lender in connection with borrowed money or the deferred purchase price of assets that are treated as interest in accordance with GAAP, plus (b) the portion of Capitalized Lease Obligations with respect to that fiscal period that should be treated as interest in accordance with GAAP, plus (c) all charges paid or payable (without duplication) during that period with respect to any Hedging Agreements.

“ Interest Period ” shall mean successive one, two, three, six or nine month periods, beginning and ending as provided in this Agreement.

“ Interest Rate Change Date ” shall mean the date two (2) Business Days after the delivery to Lender of the quarterly or year-end financial statements of the Borrowers, which initial change date shall occur after the delivery to Lender of the financial statements of the Borrowers for the fiscal year ending September 30, 2008.

“ Investment ” shall mean, with respect to any Person, any investment in another Person, whether by acquisition of any debt or equity security, by making any loan or advance, by becoming obligated with respect to a Contingent Liability in respect of obligations of such other Person (other than travel and similar advances to employees in the ordinary course of business).

“ JKH ” shall mean James R. Knowles (Holdings) Ltd., an English limited company.

“ Joinder Agreement ” means a joinder agreement establishing a new borrower under this Agreement and the other Loan Documents entered into by Lender, Borrowers and such new borrower, in form and substance satisfactory to Lender.

“ Letter of Credit ” and “ Letters of Credit ” shall mean, respectively, a letter of credit and all such letters of credit issued by Lender, in its sole discretion, upon the execution and delivery by the Borrowers or any Borrower and the acceptance by Lender of a Master Letter of Credit Agreement and a Letter of Credit Application, as set forth in Section 2.5 of this Agreement.

 

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“ Letter of Credit Applicable Margin ” shall mean the rate per annum to determine the standby Letter of Credit fee as determined by the ratio of Borrowers’ consolidated Total Debt to EBITDA calculated on a trailing twelve (12) month basis as of the last day of each fiscal quarter, as set forth below:

 

The Letter of Credit Applicable Margin as of the date hereof is 175 basis points and shall be adjusted as of each Interest Rate Change Date.

“ Letter of Credit Application ” shall mean, with respect to any request for the issuance of a Letter of Credit, a letter of credit application in the form being used by Lender at the time of such request for the type of Letter of Credit requested.

“ Letter of Credit Commitment ” shall mean, at any time, an amount equal to the lesser of (a) the Revolving Loan Commitment minus the aggregate amount of all Revolving Loans outstanding, or (b) Twenty Million and no/100 Dollars ($20,000,000.00).

“ Letter of Credit Maturity Date ” shall mean the Revolving Loan Maturity Date.

“ Letter of Credit Obligations ” shall mean, at any time, an amount equal to the aggregate of the original face amounts of all Letters of Credit minus the sum of (i) the amount of any reductions in the original face amount of any Letter of Credit which did not result from a draw thereunder, (ii) the amount of any payments made by Lender with respect to any draws made under a Letter of Credit for which the Borrowers have reimbursed Lender, (iii) the amount of any payments made by Lender with respect to any draws made under a Letter of Credit which have been converted to a Revolving Loan as set forth in Section 2.2 , and (iv) the portion of any issued but expired Letter of Credit which has not been drawn by the beneficiary thereunder. For purposes of determining the outstanding Letter of Credit Obligations at any time, Lender’s acceptance of a draft drawn on Lender pursuant to a Letter of Credit shall constitute a draw on the applicable Letter of Credit at the time of such acceptance.

“ Liabilities ” shall mean at all times all liabilities of a Borrower that would be shown as such on the balance sheet of such Borrower prepared in accordance with GAAP.

 

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“ LIBOR ” shall mean a rate of interest equal to (a) the per annum rate of interest at which United States dollar deposits 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 Business Days prior to the commencement of such Interest Period (or three Business Days prior to the commencement of such Interest Period if banks in London, England were not open and dealing in offshore United States dollars on such second preceding Business Day), as displayed in the Bloomberg Financial Markets system (or other authoritative source selected by Lender in its sole discretion), divided by (b) a number determined by subtracting from 1.00 the then stated maximum reserve percentage for determining reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), or as LIBOR is otherwise determined by Lender in its sole and absolute discretion. Lender’s determination of LIBOR shall be conclusive, absent manifest error.

“ LIBOR Loan ” or “ LIBOR Loans ” shall mean that portion, and collectively those portions, of the aggregate outstanding principal balance of the Loans that bear interest at the LIBOR Rate, of which at any time, the Borrowers may identify no more than three (3) advances of the Revolving Loans which bear interest at the LIBOR Rate.

“ LIBOR Rate ” shall mean a per annum rate of interest equal to LIBOR for the relevant Interest Period, plus the Applicable Margin, which LIBOR Rate shall remain fixed during such Interest Period.

“ Lien ” shall mean, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person (including an interest in respect of a Capital Lease) which secures payment or performance of any obligation and shall include any mortgage, lien, encumbrance, title retention lien, charge or other security interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise.

“ Loans ” shall mean, collectively, all Revolving Loans made by Lender to the Borrowers and all Letter of Credit Obligations, under and pursuant to this Agreement.

“ Loan Documents ” shall mean each of the agreements, documents, instruments and certificates set forth in Section 3.1 hereof, and any and all such other instruments, documents, certificates and agreements from time to time executed and delivered by the Borrowers, the Guarantors or any of their Subsidiaries for the benefit of Lender pursuant to any of the foregoing, and all amendments, restatements, supplements and other modifications thereto.

“ Master Letter of Credit Agreement ” shall mean, at any time, with respect to the issuance of Letters of Credit, a Master Letter of Credit Agreement in the form being used by Lender at such time.

“ Material Adverse Effect ” shall mean (a) a material adverse change in, or a material adverse effect upon, the assets, business, properties, prospects, condition (financial or otherwise) or results of operations of the Borrowers and their Subsidiaries taken as a whole, (b) a

 

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material impairment of the ability of the Borrowers and their Subsidiaries to perform any of the Obligations under any of the Loan Documents, or (c) a material adverse effect on (i) any substantial portion of the Collateral, (ii) the legality, validity, binding effect or enforceability against the Borrowers and their Subsidiaries of any of the Loan Documents, (iii) the perfection or priority of any Lien granted to Lender under any Loan Document, or (iv) the rights or remedies of Lender under any Loan Document.

“ Net Income ” shall mean, with respect to any Person for any period, the consolidated net income (or loss) of such Person for such period as determined in accordance with GAAP, excluding any gains from Asset Dispositions, any extraordinary gains and any gains from discontinued operations.

“ Non-Excluded Taxes ” shall have the meaning set forth in Section 2.5(a) hereof.

“ Note ” and “ Notes ” shall mean, respectively, each of and collectively, the Revolving Note and any other promissory notes executed and delivered by Borrowers to Lender under this Agreement.

“ Obligations ” shall mean the Loans, as evidenced by any Note, all interest accrued thereon (including interest which would be payable as post-petition in connection with any bankruptcy or similar proceeding, whether or not permitted as a claim thereunder), any fees due Lender hereunder, any expenses incurred by Lender hereunder, including without limitation, all liabilities and obligations under this Agreement, under any other Loan Document, any reimbursement obligations of the Borrowers or any Borrower to Lender in respect of Letters of Credit and surety bonds, all Hedging Obligations of the Borrowers or any Borrower which are owed to Lender or any Affiliate of Lender, and all Bank Product Obligations of the Borrowers or any Borrower, and any and all other liabilities and obligations owed by the Borrowers or any Borrower to Lender from time to time, howsoever created, arising or evidenced, whether direct or indirect, joint or several, absolute or contingent, now or hereafter existing, or due or to become due, together with any and all renewals, extensions, restatements or replacements of any of the foregoing.

“ Obligor ” shall mean each Borrower, any of the Guarantors, accommodation endorser, third party pledgor, or any other party liable with respect to the Obligations.

“ Organizational Identification Number ” means, with respect to each Borrower, the organizational identification number assigned to such Borrower by the applicable governmental unit or agency of the jurisdiction of organization of such Borrower.

“ Other Taxes ” shall mean any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from the execution, delivery, enforcement or registration of, or otherwise with respect to, this Agreement or any of the other Loan Documents.

 

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“ Permitted Acquisition ” shall mean a Borrower’s acquisition of the Capital Securities or substantially all of the assets of a single Person or group of related Persons (A) which meets the following requirements and conditions: (a) Borrowers shall have notified Lender of such proposed acquisition not less than 30 days prior to the closing thereof and shall have provided Lender with all information requested by Lender in connection with such acquisition; (b) the sum of the cash paid for each such acquisition shall not exceed Ten Million and no/100 Dollars ($10,000,000.00); (c) the sum of the debt incurred (including drawings under the Revolving Loan) for each such acquisition shall not exceed Five Million and no/100 Dollars ($5,000,000.00); (d) no Event of Default or Unmatured Event of Default then exists; (e) Borrowers shall have provided proof to Lender that on a pro-forma basis, immediately after giving effect to the proposed acquisition, Borrowers will be in compliance with the financial covenants set forth in Section 10 below; (f) if any Borrower acquires a foreign entity deemed material by Lender in Lender’s sole and absolute discretion, then such Borrower shall grant to Lender a first priority lien in 66  ² / 3 % of the issued and outstanding stock of such foreign entity; and (g) contemporaneously with any such acquisition of a United States domestic entity or substantially all of the assets thereof, (i) Lender shall be granted a first priority lien in all of the assets of such domestic entity, and (ii) the acquired entity shall execute and deliver to Lender such agreements, documents and instruments as required by Lender to make such entity a co-Borrower or Guarantor of the Obligations, as selected by Lender in its sole discretion, or (B) as approved by Lender in writing in its sole and absolute discretion.

“ Permitted Liens ” shall mean (a) Liens for Taxes, assessments or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves in accordance with GAAP and in respect of which no Lien has been filed; (b) Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by law, and (ii) Liens in the form of deposits or pledges incurred in connection with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being contested in good faith by appropriate proceedings and not involving any advances or borrowed money or the deferred purchase price of property or services, which do not in the aggregate materially detract from the value of the property or assets of the Borrowers or materially impair the use thereof in the operation of the Borrowers’ business and, in each case, for which it maintains adequate reserves in accordance with GAAP and in respect of which no Lien has been filed; (c) Liens described on Schedule 9.2 as of the Closing Date; (d) attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding One Hundred Thousand and 00/100 Dollars ($100,000) arising in connection with court proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings and to the extent such judgments or awards do not constitute an Event of Default under Section 11.8 hereof; (e) easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Borrowers or any of their Subsidiaries; (f) subject to the limitation set forth in Section 9.1(f) , Liens for Capital Expenditures (including Liens that constitute purchase money security interests on any property securing Debt

 

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incurred for the purpose of financing all or any part of the cost of acquiring such property), provided that any such Lien attaches to such property within twenty (20) days of the acquisition thereof and attaches solely to the property so acquired; (g) deposits or Liens to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of the Borrowers’ business; provided that no Liens shall be granted in favor of such surety encumbering Inventory, Accounts or Equipment; and (h) Liens granted to Lender hereunder and under the Loan Documents.

“ Person ” shall mean any natural person, partnership, limited liability company, corporation, trust, joint venture, joint stock company, association, unincorporated organization, government or agency or political subdivision thereof, or other entity, whether acting in an individual, fiduciary or other capacity.

“ Prime Loan ” or “ Prime Loans ” shall mean that portion, and collectively, those portions of the aggregate outstanding principal balance of the Loans that bear interest at the Prime Rate plus the Applicable Margin.

“ Prime Rate ” shall mean the floating per annum rate of interest which at any time, and from time to time, shall be most recently announced by Lender as its Prime Rate, which is not intended to be Lender’s lowest or most favorable rate of interest at any one time. The effective date of any change in the Prime Rate shall for purposes hereof be the date the Prime Rate is changed by Lender. Lender shall not be obligated to give notice of any change in the Prime Rate.

“ Regulatory Change ” shall mean the introduction of, or any change in any applicable law, treaty, rule, regulation or guideline or in the interpretation or administration thereof by any governmental authority or any central bank or other fiscal, monetary or other authority having jurisdiction over Lender or its lending office.

“ Revolving Interest Rate ” shall mean the Borrowers’ from time to time option of (i) a floating per annum rate of interest equal to the Prime Rate plus the Applicable Margin, or (ii) the LIBOR Rate.

“ Revolving Loan ” and “ Revolving Loans ” shall mean, respectively, each direct advance and the aggregate of all such direct advances made by Lender to the Borrowers or any Borrower under and pursuant to this Agreement, as set forth in Section 2.1 of this Agreement.

“ Revolving Loan Availability ” shall mean, at any time, an amount equal to the Revolving Loan Commitment minus the Letter of Credit Obligations.

“ Revolving Loan Commitment ” shall mean Sixty Million and no/100 Dollars ($60,000,000.00).

 

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“ Revolving Loan Maturity Date ” shall mean October 31, 2011, unless extended by Lender pursuant to any modification, extension or renewal note executed by the Borrowers and accepted by Lender in its sole and absolute discretion in substitution for the Revolving Note.

“ Revolving Note ” shall mean a revolving note in the form prepared by and acceptable to Lender, dated as of the date hereof, in the amount of the Revolving Loan Commitment and maturing on the Revolving Loan Maturity Date, duly executed by the Borrowers and payable to the order of Lender, together with any and all renewal, extension, modification or replacement notes executed by the Borrowers and delivered to Lender and given in substitution therefor.

“ Subordinated Debt ” shall mean liabilities subordinated to Borrowers’ obligations to Lender in a manner acceptable to Lender in its sole discretion.

“ Subsidiary ” and “ Subsidiaries ” shall mean, respectively, with respect to any Person, each and all such corporations, partnerships, limited partnerships, limited liability companies, limited liability partnerships, joint ventures or other entities of which or in which such Person owns, directly or indirectly, such number of outstanding Capital Securities as have more than fifty percent (50.00%) of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of any Borrower.

“ Tangible Net Worth ” shall mean the value of Borrowers’ total assets (including leaseholds and leasehold improvements and reserves against assets but excluding goodwill, patents, trademarks, trade names, organization expense, unamortized debt discount and expense, capitalized or deferred research and development costs, deferred marketing expenses, and other like intangibles, and monies due from affiliates, officers, directors, employees, shareholders, members or managers of any Borrower) less total liabilities, including but not limited to accrued and deferred income taxes, but excluding the non-current portion of Subordinated Debt.

“ Taxes ” shall mean any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings, and any and all liabilities (including interest and penalties and other additions to taxes) with respect to the foregoing.

“ Total Debt ” shall mean, at any date of determination, all outstanding Debt for borrowed money and other interest-bearing liabilities, including current and long-term Debt, plus Letters of Credit issued under the Revolving Loan, less the non-current portion of Subordinated Debt, determined on a consolidated basis.

“ UCC ” shall mean the Uniform Commercial Code in effect in the state of Illinois from time to time.

“ Unmatured Event of Default ” shall mean any event which, with the giving of notice, the passage of time or both, would constitute an Event of Default.

 

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“ Voidable Transfer ” shall have the meaning set forth in Section 13.21 hereof.

“ Wholly-Owned Subsidiary ” shall mean any Subsidiary of which or in which any Borrower owns, directly or indirectly, one hundred percent (100%) of the Capital Securities of such Subsidiary.

“ Working Capital ” shall mean the total of cash on hand, cash equivalents, marketable securities, Accounts minus adequate reserves for doubtful Accounts, and readily salable Inventory at the lower of cost or market value, minus the total of all liabilities payable within one year, all as determined in accordance with GAAP.

1.2 Accounting Terms . Any accounting terms used in this Agreement which are not specifically defined herein shall have the meanings customarily given them in accordance with GAAP. Calculations and determinations of financial and accounting terms used and not otherwise specifically defined hereunder and the preparation of financial statements to be furnished to Lender pursuant hereto shall be made and prepared, both as to classification of items and as to amount, in accordance with sound accounting practices and GAAP as used in the preparation of the financial statements of the Borrowers on the date of this Agreement. If any changes in accounting principles or practices from those used in the preparation of the financial statements are hereafter occasioned by the promulgation of rules, regulations, pronouncements and opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or any successor thereto or agencies with similar functions), which results in a material change in the method of accounting in the financial statements required to be furnished to Lender hereunder or in the calculation of financial covenants, standards or terms contained in this Agreement, the parties hereto agree to enter into good faith negotiations to amend such provisions so as equitably to reflect such changes to the end that the criteria for evaluating the financial condition and performance of the Borrowers will be the same after such changes as they were before such changes; and if the parties fail to agree on the amendment of such provisions, the Borrowers will furnish financial statements in accordance with such changes, but shall provide calculations for all financial covenants, perform all financial covenants and otherwise observe all financial standards and terms in accordance with applicable accounting principles and practices in effect immediately prior to such changes. Calculations with respect to financial covenants required to be stated in accordance with applicable accounting principles and practices in effect immediately prior to such changes shall be reviewed and certified by the Borrowers’ accountants.

1.3 Other Terms Defined in UCC . All other capitalized words and phrases used herein and not otherwise specifically defined herein shall have the respective meanings assigned to such terms in the UCC, to the extent the same are used or defined therein.

1.4 Other Interpretive Provisions .

(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. Whenever the context so requires, the neuter gender includes the masculine and feminine, the single number includes the plural, and vice versa, and in particular the words “Borrower” and “Borrowers” shall be so construed.

 

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(b) Section and Schedule references are to this Agreement unless otherwise specified. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement

(c) The term “including” is not limiting, and means “including, without limitation”.

(d) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including”.

(e) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement and the other Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, supplements and other modifications thereto, but only to the extent such amendments, restatements, supplements and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such statute or regulation.

(f) To the extent any of the provisions of the other Loan Documents are inconsistent with the terms of this Agreement, the provisions of this Agreement shall govern.

(g) This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms.

Section 2. COMMITMENT OF LENDER .

2.1 Revolving Loans .

(a) Revolving Loan Commitment . Subject to the terms and conditions of this Agreement and the other Loan Documents, and in reliance upon the representations and warranties of the Borrowers set forth herein and in the other Loan Documents, Lender agrees to make such Revolving Loans at such times as the Borrowers may from time to time request until, but not including, the Revolving Loan Maturity Date, and in such amounts as the Borrowers may from time to time request, provided, however, that the aggregate principal balance of all Revolving Loans outstanding at any time shall not exceed the Revolving Loan Availability. Revolving Loans made by Lender may be repaid

 

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and, subject to the terms and conditions hereof, borrowed again up to, but not including the Revolving Loan Maturity Date unless the Revolving Loans are otherwise accelerated, terminated or extended as provided in this Agreement. The Revolving Loans shall be used by the Borrowers for the purpose of working capital and to finance Permitted Acquisitions. All revolving loans outstanding under the Prior Loan Agreement shall be deemed Revolving Loans outstanding hereunder.

(b) Revolving Loan Interest and Payments . Except as otherwise provided in this Section 2.1(b) , the principal amount of the Revolving Loans outstanding from time to time shall bear interest at the applicable Revolving Interest Rate. Accrued and unpaid interest on the unpaid principal balance of all Revolving Loans outstanding from time to time which are Prime Loans, shall be due and payable quarterly, in arrears, commencing on October 31, 2008, and continuing on the last day of each calendar quarter thereafter, and on the Revolving Loan Maturity Date. Accrued and unpaid interest on the unpaid principal balance of all Revolving Loans outstanding from time to time which are LIBOR Loans shall be payable on the last Business Day of each Interest Period (provided, however, that for Interest Periods of six months or longer, accrued interest shall also be paid every three months from the first day of such Interest Period), commencing on the first such date to occur after the date hereof, on the date of any principal repayment of a LIBOR Loan and on the Revolving Loan Maturity Date. From and after maturity, or after the occurrence and during the continuation of an Event of Default, interest on the outstanding principal balance of the Revolving Loans, at the option of Lender, may accrue at the Default Rate and shall be payable upon demand from Lender.

(c) Revolving Loan Principal Payments .

(i) Revolving Loan Mandatory Payments . All Revolving Loans hereunder shall be repaid by the Borrowers on the Revolving Loan Maturity Date, unless payable sooner pursuant to the provisions of this Agreement. In the event the aggregate outstanding principal balance of all Revolving Loans and Letter of Credit Obligations hereunder exceeds the Revolving Loan Availability, the Borrowers shall, without notice or demand of any kind, immediately make such repayments of the Revolving Loans or take such other actions as are satisfactory to Lender as shall be necessary to eliminate such excess. Also, if the Borrowers choose not to convert any Revolving Loan which is a LIBOR Loan to a Prime Loan as provided in Section 2.2(b) and Section 2.2(c) , then such Revolving Loan shall immediately be due and payable on the last Business Day of the then existing Interest Period or on such earlier date as required by law, all without further demand, presentment, protest or notice of any kind, all of which are hereby waived by the Borrowers.

(ii) Optional Prepayments . The Borrowers may from time to time prepay the Revolving Loans which are Prime Loans, in whole or in part, without any prepayment penalty whatsoever, provided that any prepayment of the entire principal balance of the Prime Loans shall include accrued interest on such Prime Loans to the date of such prepayment.

 

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2.2 Additional LIBOR Loan Provisions .

(a) LIBOR Loan Prepayments . Notwithstanding anything to the contrary contained herein, the principal balance of any LIBOR Loan may not be prepaid in whole or in part at any time. If, for any reason, a LIBOR Loan is paid prior to the last Business Day of any Interest Period, whether voluntary, involuntary, by reason of acceleration or otherwise, each such prepayment of a LIBOR Loan will be accompanied by the amount of accrued interest on the amount prepaid and any and all costs, expenses, penalties and charges incurred by Lender as a result of the early termination or breakage of a LIBOR Loan, plus the amount, if any, by which (i) the additional interest which would have been payable during the Interest Period on the LIBOR Loan prepaid had it not been prepaid, exceeds (ii) the interest which would have been recoverable by Lender by placing the amount prepaid on deposit in the domestic certificate of deposit market, the eurodollar deposit market, or other appropriate money market selected by Lender, for a period starting on the date on which it was prepaid and ending on the last day of the Interest Period for such LIBOR Loan. The amount of any such loss or expense payable by the Borrowers to Lender under this section shall be determined in Lender’s sole discretion based upon the assumption that Lender funded its loan commitment for LIBOR Loans in the London Interbank Eurodollar market and using any reasonable attribution or averaging methods which Lender deems appropriate and practical, provided, however, that Lender is not obligated to accept a deposit in the London Interbank Eurodollar market in order to charge interest on a LIBOR Loan at the LIBOR Rate.

(b) LIBOR Unavailability . If Lender determines in good faith (which determination shall be conclusive, absent manifest error) prior to the commencement of any Interest Period that (i) the making or maintenance of any LIBOR Loan would violate any applicable law, rule, regulation or directive, whether or not having the force of law, (ii) United States dollar deposits in the principal amount, and for periods equal to the Interest Period for finding any LIBOR Loan are not available in the London Interbank Eurodollar market in the ordinary course of business, (iii) by reason of circumstances affecting the London Interbank Eurodollar market, adequate and fair means do not exist for ascertaining the LIBOR Rate to be applicable to the relevant LIBOR Loan, or (iv) the LIBOR Rate does not accurately reflect the cost to Lender of a LIBOR Loan, Lender shall promptly notify the Borrowers thereof and, so long as the foregoing conditions continue, none of the Loans may be advanced as a LIBOR Loan thereafter. In addition, at the Borrowers’ option, each existing LIBOR Loan shall be immediately (i) converted to a Prime Loan on the last Business Day of the then existing Interest Period, or (ii) due and payable on the last Business Day of the then existing Interest Period, without further demand, presentment, protest or notice of any kind, all of which are hereby waived by the Borrowers.

 

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(c) Regulatory Change . In addition, if, after the date hereof, a Regulatory Change shall, in the reasonable determination of Lender, make it unlawful for Lender to make or maintain the LIBOR Loans, then Lender shall promptly notify the Borrowers and none of the Loans may be advanced as a LIBOR Loan thereafter. In addition, at the Borrowers’ option, each existing LIBOR Loan shall be immediately (i) converted to a Prime Loan on the last Business Day of the then existing Interest Period or on such earlier date as required by law, or (ii) due and payable on the last Business Day of the then existing Interest Period or on such earlier date as required by law, all without further demand, presentment, protest or notice of any kind, all of which are hereby waived by the Borrowers.

(d) LIBOR Indemnity . If any Regulatory Change, or compliance by Lender or any Person controlling Lender with any request or directive of any governmental authority, central bank or comparable agency (whether or not having the force of law) shall (a) impose, modify or deem applicable any assessment, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of or loans by, or any other acquisition of funds or disbursements by, Lender; (b) subject Lender or any LIBOR Loan to any tax, duty, charge, stamp tax or fee or change the basis of taxation of payments to Lender of principal or interest due from the Borrowers to Lender hereunder (other than a change in the taxation of the overall net income of Lender); or (c) impose on Lender any other condition regarding such LIBOR Loan or Lender’s funding thereof, and Lender shall determine (which determination shall be conclusive, absent manifest error) that the result of the foregoing is to increase the cost to, or to impose a cost on, Lender or such controlling Person of making or maintaining such LIBOR Loan or to reduce the amount of principal or interest received by Lender hereunder, then the Borrowers shall pay to Lender or such controlling Person, on demand, such additional amounts as Lender shall, from time to time, determine are sufficient to compensate and indemnify Lender for such increased cost or reduced amount.

2.3 Interest and Fee Computation; Collection of Funds . Except as otherwise set forth herein, all interest and fees shall be calculated on the basis of a year consisting of 360 days and shall be paid for the actual number of days elapsed. Principal payments submitted in funds not immediately available shall continue to bear interest until collected. If any payment to be made by the Borrowers hereunder or under any Note shall become due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing any interest in respect of such payment. Notwithstanding anything to the contrary contained herein, the final payment due under any of the Loans must be made by wire transfer or other immediately available funds. All payments made by the Borrowers hereunder or under any of the Loan Documents shall be made without setoff, counterclaim, or other defense. To the extent permitted by applicable law, all payments hereunder or under any of the Loan Documents (including any payment of principal, interest, or fees) to, or for the benefit, of any Person shall be made by the Borrowers free and clear of, and without deduction or withholding for, or account of, any taxes now or hereinafter imposed by any taxing authority.

 

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2.4 Late Charge . If any payment of interest or principal due hereunder is not made within ten (10) days after such payment is due in accordance with the terms hereof, then, in addition to the payment of the amount so due, the Borrowers shall pay to Lender a “late charge” of five cents for each whole dollar so overdue to defray part of the cost of collection and handling such late payment. The Borrowers agree that the damages to be sustained by Lender for the detriment caused by any late payment are extremely difficult and impractical to ascertain, and that the amount of five cents for each one dollar due is a reasonable estimate of such damages, does not constitute interest, and is not a penalty.

2.5 Letters of Credit . Subject to the terms and conditions of this Agreement and upon (i) the execution by the Borrowers and Lender of a Master Letter of Credit Agreement in form and substance acceptable to Lender, if requested by Lender (together with all amendments, modifications and restatements thereof, the “Master Letter of Credit Agreement”), and (ii) the execution and delivery by the Borrowers, and the acceptance by Lender, in its sole and absolute discretion, of a Letter of Credit Application, Lender agrees to issue for the account of the Borrowers such Letters of Credit in the standard form of Lender and otherwise in form and substance acceptable to Lender, from time to time during the term of this Agreement, provided that the Letter of Credit Obligations may not at any time exceed the Letter of Credit Commitment and provided further, that no Letter of Credit shall have an expiration date later than the Letter of Credit Maturity Date. The amount of any payments made by Lender with respect to draws made by a beneficiary under a Letter of Credit for which the Borrowers have failed to reimburse Lender upon the earlier of (i) Lender’s demand for repayment, or (ii) five (5) days from the date of such payment to such beneficiary by Lender, shall be deemed to have been converted to a Revolving Loan as of the date such payment was made by Lender to such beneficiary. Upon the occurrence of an Event of a Default and at the option of Lender, all Letter of Credit Obligations shall be converted to Revolving Loans consisting of Prime Loans, all without demand, presentment, protest or notice of any kind, all of which are hereby waived by the Borrowers. To the extent the provisions of the Master Letter of Credit Agreement differ from, or are inconsistent with, the terms of this Agreement, the provisions of this Agreement shall govern.

2.6 Taxes .

(a) All payments made by the Borrowers under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any governmental authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on Lender as a result of a present or former connection between Lender and the jurisdiction of the governmental authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (collectively, “Non-Excluded Taxes”) or Other Taxes are required to be withheld from any amounts payable to Lender hereunder, the amounts so

 

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payable to Lender shall be increased to the extent necessary to yield to Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided, however, that the Borrowers shall not be required to increase any such amounts payable to Lender with respect to any Non-Excluded Taxes that are attributable to Lender’s failure to comply with the requirements of subsection 2.8(c).

(b) The Borrowers shall pay any Other Taxes to the relevant governmental authority in accordance with applicable law.

(c) At the request of the Borrowers and at the Borrowers’ sole cost, Lender shall take reasonable steps to (i) contest its liability for any Non-Excluded Taxes or Other Taxes that have not been paid, or (ii) seek a refund of any Non-Excluded Taxes or Other Taxes that have been paid.

(d) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrowers, as promptly as possible thereafter the Borrowers shall send to Lender a certified copy of an original official receipt received by the Borrowers showing payment thereof. If the Borrowers fail to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to Lender the required receipts or other required documentary evidence or if any governmental authority seeks to collect a Non-Excluded Tax or Other Tax directly from Lender for any other reason, the Borrowers shall indemnify Lender on an after-tax basis for any incremental taxes, interest or penalties that may become payable by Lender.

(e) The agreements in this Section shall survive the satisfaction and payment of the Obligations and the termination of this Agreement.

2.7 All Loans to Constitute Single Obligation . The Loans shall constitute one general obligation of the Borrowers, and shall be secured by Lender’s priority security interest in and Lien upon all of the Collateral and by all other security interests, Liens, claims and encumbrances heretofore, now or at any time or times hereafter granted by the Borrowers and/or any Subsidiary to Lender.

Section 3. CONDITIONS OF BORROWING .

Notwithstanding any other provision of this Agreement, Lender shall not be required to disburse, make or continue all or any portion of the Loans, if any of the following conditions shall have occurred.

3.1 Loan Documents . The Borrowers shall have failed to execute and deliver to Lender any of the following Loan Documents, all of which must be satisfactory to Lender and Lender’s counsel in form, substance and execution:

(a) Loan Agreement . Two copies of this Agreement duly executed by the Borrowers.

 

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(b) Revolving Note . A Revolving Note duly executed by the Borrowers, in the form prepared by and acceptable to Lender.

(c) Master Letter of Credit Agreement . A Master Letter of Credit Agreement prepared by and acceptable to Lender, duly executed by the Borrowers in favor of Lender.

(d) Stock Pledge Agreement . A separate Stock Pledge Agreement in favor of Lender in the form prepared by and acceptable to Lender, together with original stock certificates and stock powers duly executed in blank for all stock pledged to Lender, pledging to Lender 66.6% of the issued and outstanding Capital Securities of Hill Luxembourg, Hill UK, Hill Middle East and JKH.

(e) Collateral Access Agreement . Unless waived by Lender, Collateral Access Agreements dated as of the date of this Agreement, from the owner, lessor or mortgagee, as the case may be, of any real estate whereon any Collateral is stored or otherwise located, in the form prepared by and acceptable to Lender. Lender hereby acknowledges and agrees that no Collateral Access Agreements will be required to close the Loans referenced in this Agreement; provided, however, Lender reserves the right to request Collateral Access Agreements at any time hereafter, in which case Borrowers shall use their commercially reasonable best efforts to obtain such Collateral Access Agreements and shall provide proof thereof to Lender.

(f) Search Results; Lien Terminations . Copies of UCC search reports dated such a date as is reasonably acceptable to Lender, listing all effective financing statements which name each Borrower under its present name and any previous names, as debtor, together with (i) copies of such financing statements, (ii) payoff letters evidencing repayment in full of all existing Debt to be repaid with the Loans, the termination of all agreements relating thereto and the release of all Liens granted in connection therewith, with UCC or other appropriate termination statements and documents effective to evidence the foregoing (other than Permitted Liens), and (iii) such other UCC termination statements as Lender may reasonably request.

(g) Organizational and Authorization Document . Copies of (i) the Articles of Incorporation or Articles of Organization and Bylaws or Operating Agreement of each Borrower; (ii) resolutions of the board of directors or the members of each Borrower approving and authorizing such Person’s execution, delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby; (iii) signature and incumbency certificates of the officers of each Borrower executing any of the Loan Documents, each of which the respective Borrower hereby certifies to be true and complete, and in full force and effect without modification, it being understood that Lender may conclusively rely on each such document and certificate until formally advised by each Borrower of any changes therein; and (iv) good standing certificates in the state of incorporation or organization of each Borrower and in each other state requested by Lender.

 

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(h) Insurance . Evidence satisfactory to Lender of the existence of insurance required to be maintained pursuant to Section 8.6 , together with evidence that Lender has been named as a lender’s loss payee on all related insurance policies.

(i) Additional Documents . Such other certificates, financial statements, schedules, resolutions, opinions of counsel, notes and other documents which are provided for hereunder or which Lender shall require.

3.2 Event of Default . Any Event of Default, or Unmatured Event of Default shall have occurred and be continuing.

3.3 Material Adverse Effect . The occurrence of any event having a Material Adverse Effect upon the Borrowers.

3.4 Litigation . Any litigation or governmental proceeding shall have been instituted against the Borrowers or any of their officers, shareholders, members or managerse having a Materially Adverse Effect upon the Borrowers.

3.5 Representations and Warranties . Any representation or warranty of the Borrowers or any Borrower contained herein or in any Loan Document shall be untrue or incorrect as of the date of any Loan as though made on such date, except to the extent such representation or warranty expressly relates to an earlier date.

3.6 Commitment Fee . The Borrowers shall have failed to pay to Lender the fees set forth in the Fee Letter.

Section 4. NOTES EVIDENCING LOANS .

4.1 Revolving Note . The Revolving Loans and the Letter of Credit Obligations shall be evidenced by the Revolving Note. At the time of the initial disbursement of a Revolving Loan and at each time any additional Revolving Loan shall be requested hereunder or a repayment made in whole or in part thereon, a notation thereof shall be made on the books and records of Lender. All amounts recorded shall be, absent manifest error, conclusive and binding evidence of (i) the principal amount of the Revolving Loans advanced hereunder and the amount of all Letter of Credit Obligations, (ii) any accrued and unpaid interest owing on the Revolving Loans, and (iii) all amounts repaid on the Revolving Loans or the Letter of Credit Obligations. The failure to record any such amount or any error in recording such amounts shall not, however, limit or otherwise affect the obligations of the Borrowers under the Revolving Note to repay the principal amount of the Revolving Loans, together with all interest accruing thereon.

 

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Section 5. MANNER OF BORROWING .

5.1 Borrowing Procedures . Each Revolving Loan may be advanced either as a Prime Loan or a LIBOR Loan, provided, however, that at any time, the Borrowers may identify no more than three (3) Revolving Loans which may be LIBOR Loans. Each Loan shall be made available to the Borrowers upon any written, verbal, electronic, telephonic or telecopy loan request which Lender in good faith believes to emanate from a properly authorized representative of the Borrowers or any Borrower, whether or not that is in fact the case. Each such notice shall be effective upon receipt by Lender, shall be irrevocable, and shall specify the date, amount and type of borrowing and, in the case of a LIBOR Loan, the initial Interest Period therefor. The Borrowers shall select Interest Periods so as not to require a payment or prepayment of any LIBOR Loan during an Interest Period for such LIBOR Loan. The final Interest Period for any LIBOR Loan must be such that its expiration occurs on or before the Maturity Date of such Loan. A request for a Prime Loan must be received by Lender no later than 11:00 a.m. Chicago, Illinois time, on the day it is to be funded. A request for a LIBOR Loan must be (i) received by Lender no later than 11:00 a.m. Chicago, Illinois time, three days before the day it is to be funded, and (ii) in an amount equal to One Hundred Thousand and 00/100 Dollars ($100,000.00) or a higher integral multiple of One Hundred Thousand and 00/100 Dollars ($100,000.00). The proceeds of each Loan shall be made available at the office of Lender by credit to the account of the Borrowers or by other means requested by the Borrowers and acceptable to Lender. The Borrowers do hereby irrevocably confirm, ratify and approve all such advances by Lender and does hereby indemnify Lender against losses and expenses (including court costs, attorneys’ and paralegals’ fees) and shall hold Lender harmless with respect thereto.

5.2. LIBOR Conversion and Continuation Procedures . Each LIBOR Loan shall automatically renew for the Interest Period specified in the initial request received by Lender pursuant to Section 5.1, at the then current LIBOR Rate unless the Borrowers, pursuant to a subsequent written notice received by Lender, shall elect a different Interest Period or the conversion of all or a portion of such LIBOR Loan to a Prime Loan. Each Interest Period occurring after the initial Interest Period with respect to any LIBOR Loan shall commence on the same day of each applicable month as the first day of the initial Interest Period. Whenever the last day of any Interest Period with respect to any LIBOR Loan would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day. Whenever an Interest Period with respect to any LIBOR Loan would otherwise end on a day of a month for which there is no numerically corresponding day in the calendar month, such Interest Period shall end on the last day of such calendar month, unless such day is not a Business Day, in which event such Interest Period shall be extended to end on the next Business Day. Upon receipt by Lender of such subsequent notice, the Borrowers may, subject to the terms and conditions of this Agreement, elect, as of the last day of the applicable Interest Period, to continue any LIBOR Loan having an Interest Period expiring on such day for a different Interest Period, or to convert any such LIBOR Loan to a Prime Loan. Such notice shall, in the case of a conversion to a Prime Loan, be given before 11:00 a.m., Chicago time, on the proposed date of such conversion, and in the case of conversion to a LIBOR Loan having a different Interest Period, be given before 11:00 a.m., Chicago time, at least three Business Days prior to the proposed date of such conversion, specifying: (i) the proposed date of conversion; (ii)

 

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the aggregate amount of Loans to be converted; (iii) the type of Loans resulting from the proposed conversion; and (iv) the duration of the requested Interest Period. The Borrowers may not elect a LIBOR Rate, and an Interest Period for a LIBOR Loan shall not automatically renew, with respect to any principal amount which is scheduled to be repaid before the last day of the applicable Interest Period, and any such amounts shall bear interest at the Prime Rate plus the Applicable Margin until repaid.

5.3. Letters of Credit . All Letters of Credit shall bear such application, issuance, renewal, negotiation and other fees and charges, and bear such interest as charged by Lender or otherwise payable pursuant to the Master Letter of Credit Agreement. In addition to the foregoing, each standby Letters of Credit issued under and pursuant to this Agreement shall bear an issuance fee equal to the Letter of Credit Applicable Margin multiplied by the face amount of such standby Letter of Credit, payable by the Borrowers quarterly in arrears, until (i) such Letter of Credit has expired or has been returned to Lender, or (ii) Lender has paid the beneficiary thereunder the full face amount of such Letter of Credit.

5.4 Automatic Debit . In order to effectuate the timely payment of any of the Obligations when due, the Borrowers hereby authorize and direct Lender, at Lender’s option, to (a) debit the amount of the Obligations to any ordinary deposit account of the Borrowers or any Borrower, or (b) make a Revolving Loan hereunder to pay the amount of the Obligations.

5.5 Discretionary Disbursements . Lender, in its sole and absolute discretion, may immediately upon notice to the Borrowers, disburse any or all proceeds of the Loans made or available to the Borrowers pursuant to this Agreement to pay any fees, costs, expenses or other amounts required to be paid by the Borrowers hereunder and not so paid. All monies so disbursed shall be a part of the Obligations, payable by the Borrowers on demand from Lender.

5.6 Co-Obligor Provisions . (A) Each Borrower is and shall remain jointly and severally liable for all amounts due to Lender under this Agreement and the other Loan Documents, including, without limitation, all Obligations, regardless of which Borrower actually receives Loans or other extensions of credit hereunder or the amount of such Loans received or the manner in which Lender accounts for such Loans or other extensions of credit on its books and records, and accordingly, each Borrower hereby unconditionally guaranties for the benefit of Lender the full and timely payment of the Obligations.

(B) Lender shall not be required or obligated to take any of the following action prior to pursuing any rights or remedies Lender may have against any Borrower: (1) take any action to collect from, or to file any claim of any kind against, any other Borrower or any Obligor; (2) take any steps to protect, enforce, take possession of, perfect any interest in, foreclose or realize on any collateral or security, if any, securing the Obligations; or (3) in any other respect, exercise any diligence whatsoever in enforcing, collecting or attempting to collect any of the Obligations by any means.

(C) Each Borrower unconditionally and irrevocably waives each and every defense which would otherwise impair, restrict, diminish or affect any of the Obligations. Without limiting

 

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the foregoing, Lender shall have the exclusive right from time to time without impairing, restricting, diminishing or affecting any of the Obligations, and without notice of any kind to all Borrowers, to (1) provide additional financial accommodations to Borrowers or any Borrower; (2) accept partial payments on the Obligations; (3) take and hold collateral or security to secure the Obligations, or take any other guaranty to secure the Obligations; (4) in its sole discretion, apply any such collateral or security, and direct the order or manner of sale thereof, and the application of the proceeds thereof; (5) release any guarantor or co-obligor of the Obligations; and (6) settle, release, compromise, collect or otherwise liquidate the Obligations or exchange, enforce, sell, lease, use, maintain, impair and release any collateral or security therefor in any manner, without affecting or impairing any of the Obligations hereunder.

(D) Each Borrower hereby unconditionally waives (1) notice of any default by Borrowers in the full and prompt payment or performance of the Obligations, and (2) presentment, notice of dishonor, protest, demand for payment and any other notices of any kind.

(E) Each Borrower assumes full responsibility for keeping informed of (1) the financial condition of the other Borrowers; (2) the extent of the Obligations; and (3) all other circumstances bearing upon Borrowers or the risk of non-payment of the Obligations. Each Borrower agrees that Lender shall have no duty or obligation to advise, furnish or supply such Borrower of or with any information known to Lender, including, but not limited to, the financial condition of the other Borrowers, any other circumstances relating to non-payment of the Obligations or otherwise. If Lender, in its sole discretion, provides any advice or information to any Borrower, Lender shall be under no obligation to investigate the matters contained in such advice or information, or to correct such advice or information if Lender thereafter knows or should have known that such advice or information is misleading or untrue, in whole or in part, or to update or provide any other advice or information in the future.

(F) Each Borrower acknowledges and agrees that it may have a right of indemnification, subrogation, contribution and reimbursement from the other Borrowers, Lender or any other Obligor based upon its execution of this Agreement. Each Borrower understands the benefits of having such rights, including, but not limited to, (1) such Borrower’s right to reimbursement from the other Borrowers of all monies expended for the payment of the Obligations; and (2) such Borrower’s subrogation to the rights of Lender after payment of the Obligations. No Borrower shall exercise any such rights of indemnification, subrogation, contribution or reimbursement from the other Borrowers, Lender or any Obligor prior to the indefeasible payment and satisfaction in full to Lender of the Obligations.

(G) Each Borrower appoints each other Borrower as its agent for all purposes relevant to this Agreement and the other Loan Documents, including, without limitation, the giving and receipt of notices and execution and delivery of all documents, instruments and certificates contemplated herein and all modifications hereto. Any acknowledgment, consent, direction, certification or other action which might otherwise be valid or effective only if given or taken by all of the Borrowers or any Borrower acting singly, shall be valid and effective if given or taken only by one Borrower, whether or not the other Borrowers join therein.

 

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Section 6. SECURITY FOR THE OBLIGATIONS .

6.1 Security for Obligations . As security for the payment and performance of the Obligations, Hill International hereby reaffirms its prior grant of a security interest and lien to Lender in all of Hill International’s assets, as set forth in the Prior Loan Agreement, and the each Borrower hereby pledges, assigns, transfers, delivers and grants to Lender, for its own benefit and as agent for its Affiliates, a continuing and unconditional first priority secur